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8-K - FORM 8-K - APX Group Holdings, Inc.d622632d8k.htm

Exhibit 99.1

APX GROUP HOLDINGS, INC. ANNOUNCES RESULTS FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013

Provo, UT – November 4, 2013 – APX Group Holdings, Inc. (“APX Group” or the “Company”), a leading residential security solutions and home automation services company, announced today its results for the three and nine months ended September 30, 2013.

Highlights for the three months ended September 30, 2013 included the following:

 

    $42.6 million of Total Recurring Monthly Revenue (“RMR”) at September 30, 2013, a 23.5% increase compared to Total RMR of $34.5 million at September 30, 2012

 

    78,309 net new subscribers originated, an increase of 23.5% from 63,386 net new subscribers in the same period of 2012

 

    Net loss before non-controlling interests of $34.9 million, an increase of 232.4%, compared to $10.5 million for the three months ended September 30, 2012

 

    Adjusted EBITDA1 of $77.7 million, an increase of 12.1%, compared to $69.3 million for the three months ended September 30, 2012

 

    Total net revenues of $129.5 million, an increase of 3.9%, compared to $124.6 million for the same period of 2012

Highlights for the nine months ended September 30, 2013 included the following:

 

    198,595 net new subscribers originated, an increase of 20.4% from 165,007 net new subscribers in the same period of 2012

 

    Net loss before non-controlling interests of $87.3 million, an increase of 119.3%, compared to $39.8 million for the same period of 2012

 

    Adjusted EBITDA1 of $212.5 million, an increase of 17.9%, compared to $180.2 million for the same period in 2012

 

    10.1% increase in total net revenues compared to the nine months ended September 30, 2012

“The Company delivered another strong quarter with 23.5% growth in net new subscriber originations, 12.1% growth in Adjusted EBITDA, and Total RMR ending at $42.6 million. We are very pleased with the consistent, strong results achieved in the third quarter and year-to-date in 2013”, said Todd Pedersen, CEO of APX Group.

Three and Nine Months Ended September 30, 2013 Results

Vivint, Inc.

Key Metrics at September 30, 2013

Total Subscribers base greater than 803,000

$42.6 million in Total RMR

 

1  Adjusted EBITDA is a non-GAAP measure. See the “Statement Regarding Non-GAAP Financial Measures and Certain Definitions” section at the end of this Earnings Release for the definition of Adjusted EBITDA and a reconciliation to net loss before non-controlling interests.

 

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Average RMR per Subscriber was $53.00

Subscriber Account LTM Attrition Rate of 13.0%

Vivint reported total net revenues of $129.5 million for the three months ended September 30, 2013, an increase of 19.0% compared to $108.8 million for the three months ended September 30, 2012. The nine months ended September 30, 2013 produced net revenues of $350.7 million, or an increase of 20.8% as compared to the prior year period. The primary drivers behind the increase in total net revenues for the three and nine month periods were growth in monitoring revenue and service and other sales revenue. The increase in monitoring revenue was driven by an increase of approximately 122,000 subscribers in the portfolio as of September 30, 2013 compared to September 30, 2012 and higher average RMR related to the continued growth in the percentage of subscribers signing up for additional service offerings.

Operating expenses for the three months ended September 30, 2013 were $40.2 million, an increase of 13.2%, as compared to $35.5 million for the prior year period. For the nine months ended September 30, 2013, operating expenses increased by 23.8% to $112.7 million. The increase for the three months ended September 30, 2013 is attributable to personnel cost within Vivint’s monitoring, customer service and field service departments driven by the growth in the subscriber base. The increase for the nine months ended September 30, 2013 was associated with growth in personnel cost to support the increased subscriber base, postage and delivery cost associated with the field service operations, inventory reserves and cellular communication cost associated with the monitoring of subscribers.

Selling expenses, net of capitalized subscriber acquisition costs, were $26.5 million for the three months ended September 30, 2013, an increase of 76.7%, as compared to $15.0 million for the three months ended September 30, 2012. For the nine months ended September 30, 2013, selling expenses, net of capitalized subscriber acquisition costs, increased by 70.6% to $75.4 million. The increases were primarily attributable to personnel, facility, and information technology costs to support the growth in the direct-to-home and inside sales channels, along with increased advertising cost to support growth in inside sales.

Vivint’s general and administrative (“G&A”) expenses were $20.7 million for the three months ended September 30, 2013, an increase of 61.7%, as compared to $12.8 million for the three months ended September 30, 2012. G&A expenses for the nine months ended September 30, 2013 totaled $60.4 million, an increase of 80.8% as compared to the prior year period. The primary drivers behind the increase for the three months period were costs related to an increase in research and development activities and higher personnel costs to support the growth in its business. The increase for the nine months period were driven by personnel costs, research and development activities, transaction bonuses associated with the sale of our indirect wholly-owned subsidiary, 2GIG Technologies, Inc. (“2GIG”), and bad debt expense from an increased subscriber base and higher RMR across the subscriber base.

Adjusted EBITDA2 for Vivint increased 14.9% to $77.7 million for the three months ended September 30, 2013. For the nine months ended September 30, 2013, Adjusted EBITDA was $212.1 million, an increase of 18.1% as compared to the prior year period. For the three months ended September 30, 2013, Vivint had an operating loss of $8.7 million as compared to operating income of $20.1 million for the prior year period. For the nine months ended September 30, 2013, Vivint had an operating loss of $38.6 million as compared to operating income of $54.4 million for the prior year period.

 

2  Adjusted EBITDA is a non-GAAP measure. See the “Statement Regarding Non-GAAP Financial Measures and Certain Definitions” section at the end of this Earnings Release for the definition of Adjusted EBITDA and reconciliation to income (loss) from operations for Vivint.

 

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Liquidity

As of September 30, 2013, our liquidity position on a consolidated basis, defined as cash on hand and available borrowing capacity totaled approximately $309.5 million.

Certain Credit Statistics

Our net leverage ratio, defined as the ratio of net debt to LTM Adjusted EBITDA was 5.0x at September 30, 2013.

Other

On October 29, 2013, APX Group, Inc., the Company’s wholly-owned subsidiary, completed an offer to exchange $925 million aggregate principal amount of 6.375% senior secured notes due 2019, which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all of its outstanding 6.375% senior secured notes due 2019 and $580 million aggregate principal amount of 8.75% senior notes due 2020, which have been registered under the Securities Act, for any and all outstanding 8.75% senior secured notes due 2020.

Conference Call

The Company will also host a conference call to review and discuss its third quarter results at 10:00 a.m. EST on November 4, 2013.

To join the conference call, please dial 866-792-1873, if you are calling from the U.S. or 904-520-5760, if you are calling outside the U.S. A replay of the conference call will be made available on the Investor Relations page of the Company’s website at www.vivint.com/en/investors. A financial results presentation will be made available immediately prior to the call on the Investor Relations page of the Company’s website at www.vivint.com/en/investors.

Vivint’s President Alex Dunn will be participating in Citi’s 2013 North American Credit Conference held at the Conrad New York on November 5–6, 2013. Mr. Dunn’s presentation will be posted on the Investor Relations page of the Company’s website at www.vivint.com/en/investors immediately prior to the time he is scheduled to present at 4:15 p.m. EST on Tuesday, November 5, 2013. The presentation will be webcast and the webcast will be available on the Company’s website at www.vivint.com/en/investors.

Forward Looking Statements

This earnings release includes forward-looking statements regarding, among other things, our plans, strategies and prospects, both business and financial... These statements are based on the beliefs and assumptions of our management. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of this date hereof. You should understand that the following important factors, in addition to those

 

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discussed in “Risk Factors” in the Company’s prospectus dated September 24, 2013, filed with the Securities Exchange Commission in accordance with Rule 424(b) of the Securities Act, which is available on the SEC’s website at sec.gov, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

 

    risks of the security and home automation industry, including risks of and publicity surrounding the sales, subscriber origination and retention process;

 

    the highly competitive nature of the security and home automation industry and product introductions and promotional activity by our competitors;

 

    litigation, complaints or adverse publicity;

 

    the impact of changes in consumer spending patterns, consumer preferences, local, regional, and national economic conditions, crime, weather, demographic trends and employee availability;

 

    adverse publicity and product liability claims;

 

    increases and/or decreases in utility and other energy costs, increased costs related to utility or governmental requirements; and

 

    cost increases or shortages in security and home automation technology products or components.

In addition, the origination and retention of new subscribers will depend on various factors, including, but not limited to, market availability, subscriber interest, the availability of suitable components, the negotiation of acceptable contract terms with subscribers, local permitting, licensing and regulatory compliance, and our ability to manage anticipated expansion and to hire, train and retain personnel, the financial viability of subscribers and general economic conditions.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this press release are more fully described in the “Risk Factors” section of our prospectus dated September 24, 2013. The risks described in “Risk Factors” are not exhaustive. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Basis of Presentation

On November 16, 2012, APX Group, Inc. and two of its historical affiliates, V Solar Holdings, Inc. (“Solar”) and 2GIG Technologies, Inc. (“2GIG”), were acquired by an investor group (the “Investors”) comprised of certain investment funds affiliated with Blackstone Capital Partners VI L.P. (“Blackstone” or the “Sponsor”), and certain co-investors and management investors. This acquisition was accomplished through certain mergers and related reorganization transactions (collectively, the “Merger”) pursuant to which each of APX Group, Inc., Solar and 2GIG became indirect wholly-owned subsidiaries of 313 Acquisition, LLC (“Acquisition LLC”), an entity wholly-owned by the Investors. Upon the consummation of the Merger, APX Group, Inc. and 2GIG became consolidated subsidiaries of APX Group, which in turn is wholly-owned by APX Parent Holdco, Inc., which in turn is wholly-owned by Acquisition LLC, and Solar became a direct wholly-owned subsidiary of Acquisition LLC. Acquisition, LLC, APX Parent Holdco, Inc. and APX Group have no operations and were formed for the purpose of facilitating the Merger. The condensed consolidated statements of operations of the Company for the three months ended September 30, 2013 and September 30, 2012 are presented for two periods: January 1 through September 30, 2012 (the “Predecessor”) and January 1 through September 30, 2013 (the “Successor”) which relate to the period preceding and the period succeeding the Merger, respectively. The condensed consolidated statements of operations of the Predecessor are presented for APX Group, Inc. and its wholly-owned subsidiaries, as well as Solar, 2GIG and their respective subsidiaries. The condensed consolidated statements of operations for the Successor Period reflect the Merger, presenting the results of operations of the Company and its wholly-owned subsidiaries. On April 1, 2013, the company completed the sale of 2GIG and its subsidiaries to Nortek, Inc. The Company’s historical results of operations include the results of 2GIG through March 31, 2013.

 

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Statement Regarding Non-GAAP Financial Measures and Certain Definitions

Non-GAAP Financial Measures

This earnings release includes Adjusted EBITDA, which is a supplemental measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or any other measure derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. We define “Adjusted EBITDA” as net income (loss) before interest expense (net of interest income), income and franchise taxes and depreciation and amortization (including amortization of capitalized subscriber acquisition costs), further adjusted to exclude the effects of certain contract sales to third parties, non-capitalized subscriber acquisition costs, stock based compensation, the historical results of Solar and certain unusual, non-cash, non-recurring and other items permitted in certain covenant calculations under the indenture governing our senior secured notes, the indenture governing our senior unsecured notes and the credit agreement governing the Company’s revolving credit facility. We believe that Adjusted EBITDA provides useful information about flexibility under our covenants to investors, lenders, financial analysts and rating agencies since these groups have historically used EBITDA-related measures in our industry, along with other measures, to estimate the value of a company, to make informed investment decisions, and to evaluate a company’s ability to meet its debt service requirements. Adjusted EBITDA eliminates the effect of non-cash depreciation of tangible assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting. Adjusted EBITDA also eliminates the effects of interest rates and changes in capitalization which management believes may not necessarily be indicative of a company’s underlying operating performance. Adjusted EBITDA is also used by us to measure covenant compliance under the indenture governing our senior secured notes, the indenture governing our senior unsecured notes and the credit agreement governing the Company’s revolving credit facility.

We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate Adjusted EBITDA in the same manner.

A reconciliation of Adjusted EBITDA to net loss before noncontrolling interests for the Company, and to income (loss) from operations for Vivint, is included at the end of this earnings release. Adjusted EBITDA should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.

Certain Definitions

“Total Subscribers” means the aggregate number of active subscribers at the end of a given period

“RMR” means the recurring monthly revenue billed to a subscriber

“Total RMR” means the aggregate RMR billed for all subscribers

“Average RMR per Subscriber” means the Total RMR divided by Total Subscribers. This is also commonly referred to as Average Revenue per User, or “ARPU.”

“Average RMR per New Subscriber” means the aggregate RMR for new subscribers originated during a period divided by the number of new subscribers originated during such period

“Attrition” means the aggregate number of canceled subscribers during a period divided by the monthly weighted average number of total subscribers for such period. Subscribers are considered canceled when they terminate in accordance with the terms of their contract, are terminated by the Company, or if payment from such subscribers is deemed uncollectible (120 days past due). Sales of contracts to third parties and certain moves are excluded from the attrition calculation

 

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“Net Subscriber Acquisition Cost” means the gross costs to generate and install a subscriber net of any fees collected at the time of the contract signing. A portion of subscriber acquisition cost is expensed as incurred. The remaining portion of the costs is considered to be directly tied to subscriber creation 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. Vivint amortizes these costs using a 150% declining balance method over 12 years and converts to a straight-line method when the resulting amortization charge is greater than that from the accelerated method for the remaining estimated life of the subscriber relationship

“LTM Adjusted EBITDA” is Adjusted EBITDA for the last twelve months and has been derived by (i) adding Adjusted EBITDA for the three months ended September 30, 2013 and the combined year end December 31, 2012, and (ii) subtracting Adjusted EBITDA for the three months ended September 30, 2012

Investor Relations Contact:

Dale R. Gerard

Vice President of Finance and Treasurer

801-705-8011

dgerard@vivint.com

 

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APX GROUP HOLDINGS, INC. and SUBSIDIARIES (Successor) and APX GROUP, INC. and SUBSIDIARIES (Predecessor)

Condensed Consolidated Statements of Operations

(Amounts in thousands)

(Unaudited)

 

     Successor          Predecessor     Successor          Predecessor  
     Three Months Ended September     Nine Months Ended September  
     2013          2012     2013          2012  

Revenues:

                  

Monitoring revenue

   $ 123,329           $ 102,263      $ 334,344           $ 272,604   

Service and other sales revenue

     5,587             20,624        32,902             57,411   

Activation fees

     587             1,674        951             4,461   
  

 

 

        

 

 

   

 

 

        

 

 

 

Total revenues

     129,503             124,561        368,197             334,476   

Costs and expenses:

                  

Operating expenses

     40,208             44,065        124,336             118,698   

Selling expenses

     26,488             14,954        75,394             44,175   

General and administrative expenses

     20,661             18,557        65,910             49,358   

Depreciation and amortization

     50,835             25,037        142,967             66,666   
  

 

 

        

 

 

   

 

 

        

 

 

 

Total costs and expenses

     138,192             102,613        408,607             278,897   
  

 

 

        

 

 

   

 

 

        

 

 

 

(Loss) income from operations

     (8,689          21,948        (40,410          55,579   

Other expenses (income):

                  

Interest expense

     30,055             29,472        83,309             89,932   

Interest income

     (411          (4     (1,087          (54

Other (income) expenses

     (84          4        233             114   

Gain on 2GIG Sale

     (479          —          (47,122          —     
  

 

 

        

 

 

   

 

 

        

 

 

 

Loss from continuing operations before income taxes

     (37,770          (7,524     (75,743          (34,413

Income tax (benefit) expense

     (2,865          2,991        11,598             5,195   
  

 

 

        

 

 

   

 

 

        

 

 

 

Net loss from continuing operations

     (34,905          (10,515     (87,341          (39,608

Discontinued operations:

                  

Loss from discontinued operations

     —               —          —               (239
  

 

 

        

 

 

   

 

 

        

 

 

 

Net loss before non-controlling interests

     (34,905          (10,515     (87,341          (39,847
  

 

 

        

 

 

   

 

 

        

 

 

 

Net income attributable to non-controlling interests

     —               1,697        —               3,556   
  

 

 

        

 

 

   

 

 

        

 

 

 

Net loss

   $ (34,905        $ (12,212   $ (87,341        $ (43,403
  

 

 

        

 

 

   

 

 

        

 

 

 

 

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APX GROUP HOLDINGS, INC. and SUBSIDIARIES (Successor) and APX GROUP, INC. and SUBSIDIARIES (Predecessor)

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     September 30,
2013
     December 31,
2012
 

ASSETS

     

Current assets:

     

Cash

   $ 111,733       $ 8,090   

Accounts receivable, net

     2,547         10,503   

Inventories, net

     36,661         32,327   

Deferred tax assets

     —           8,124   

Prepaid expenses and other current assets

     12,216         16,229   
  

 

 

    

 

 

 

Total current assets

     163,157         75,273   

Property and equipment, net

     29,236         30,206   

Subscriber contract costs, net

     267,004         12,753   

Deferred financing costs, net

     56,206         57,322   

Intangible assets, net

     882,733         1,053,019   

Goodwill

     837,419         876,642   

Restricted cash

     28,428         28,428   

Long-term investments and other assets

     27,358         21,705   
  

 

 

    

 

 

 

Total assets

   $ 2,291,541       $ 2,155,348   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 27,792       $ 26,037   

Accrued payroll and commissions

     87,854         20,446   

Accrued expenses and other current liabilities

     61,220         38,232   

Deferred revenue

     28,291         19,391   

Current portion of capital lease obligations

     3,632         4,001   
  

 

 

    

 

 

 

Total current liabilities

     208,789         108,107   

Notes payable

     1,508,385         1,305,000   

Long-term portion of revolving line of credit

     —           28,000   

Capital lease obligations, net of current portion

     2,918         4,768   

Deferred revenue, net of current portion

     17,237         708   

Other long-term obligations

     11,562         2,257   

Deferred income tax liabilities

     11,298         27,229   
  

 

 

    

 

 

 

Total liabilities

     1,760,189         1,476,069   
  

 

 

    

 

 

 

Total stockholders’ equity

     531,352         679,279   
  

 

 

    

 

 

 

Total liabilities & stockholders’ equity

   $ 2,291,541       $ 2,155,348   
  

 

 

    

 

 

 

 

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APX GROUP HOLDINGS, INC. and SUBSIDIARIES (Successor) and APX GROUP, INC. and SUBSIDIARIES (Predecessor)

Condensed Consolidated Statement of Cash Flows

(Amounts in thousands)

(Unaudited)

 

     Successor          Predecessor  
     Nine Months Ended September 30,  
     2013           2012  

Net cash provided by operating activities

   $ 139,671           $ 132,645   

Net cash used in investing activities

     (140,722          (246,095

Net cash provided by financing activities

     104,863             127,995   

Effect of exchange rate changes on cash

     (169          161   
  

 

 

        

 

 

 

Net increase in cash

     103,643             14,706   

Cash:

         

Beginning of period

     8,090             3,680   
  

 

 

        

 

 

 

End of period

   $ 111,733           $ 18,386   
  

 

 

        

 

 

 

 

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Reconciliation of Non-GAAP Financial Measures

APX Group Holdings, Inc.

(Unaudited)

 

     Three Months     Nine Months     LTM  
     Ended September 30,     Ended September 30,     September 30,  
     2013     2012     2013     2012     2013  

Net loss before non-controlling interests

   $ (34.9   $ (10.5   $ (87.3   $ (39.8   $ (232.4

Interest expense, net

     29.6        29.5        82.2        89.9        111.5   

Other (income) expense

     (0.1     —          0.2        0.1        2.6   

Gain on 2GIG Sale (i)

     (0.5     —          (47.1     —          (47.1

Income tax (benefit) expense

     (2.9     3.0        11.6        5.2        0.4   

Amortization of subscriber contract costs

     7.9        22.7        12.8        60.2        24.8   

Depreciation and amortization (ii)

     42.9        2.3        130.2        6.5        142.6   

Transaction related costs (iii)

     0.3        1.8        0.6        4.0        128.9   

Transaction costs related to 2GIG Sale (iv)

     —          —          5.5        —          5.5   

Non-capitalized subscriber acquisition costs (v)

     25.5        17.2        78.1        45.7        102.7   

Non-cash compensation (vi)

     0.6        0.2        1.3        0.5        1.7   

Adjustment for Solar business (vii)

     —          1.4        —          2.0        5.1   

Other Adjustments (viii)

     9.3        1.7        24.4        5.9        30.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 77.7      $ 69.3      $ 212.5      $ 180.2      $ 276.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(i) Non-recurring gain on the 2GIG Sale
(ii) Excludes loan amortization costs that are included in interest expense
(iii) Reflects total bonus and other payments to employees and to third parties directly related to the Merger
(iv) Reflects total bonus and other payments to employees and to third parties directly related to the 2GIG Sale
(v) Reflects subscriber acquisition costs that are expensed as incurred because they are not directly related to the acquisition of specific subscribers. Certain other industry participants purchase subscribers through subscriber contract bulk purchases, and as a result, may capitalize the full cost to purchase these subscriber contracts, as compared to our organic generation of new subscribers, which requires us to expense a portion of our subscriber acquisition costs under GAAP
(vi) Reflects non-cash compensation costs related to employee and director stock and stock option plans
(vii) Reflects the exclusion of Solar results from the time it commenced operations in 2011
(viii) Represents adjustments for: non-operating legal and professional fees, new product development, non-cash payroll tax reserve, the monitoring fee payable to Blackstone Management Partners, L.L.C , an adjustment to exclude the impact of revenue deductions directly related to purchase accounting and certain other adjustments

 

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Reconciliation of Non-GAAP Financial Measures

Vivint, Inc.

(Unaudited)

 

     Three Months
Ended September 30,
     Nine Months
Ended September 30,
 
     2013     2012      2013     2012  

Income (loss) from operations

   $ (8.7   $ 20.1       $ (38.6   $ 54.4   

Amortization of subscriber contract costs

     7.9        23.3         13.1        61.3   

Depreciation and amortization (i)

     42.9        2.1         128.0        6.1   

Transaction related costs (ii)

     0.3        1.8         0.7        4.1   

Transaction costs related to 2GIG Sale (iii)

     —          —           5.5        —     

Non-capitalized subscriber acquisition costs (iv)

     25.5        17.2         78.1        45.7   

Non-cash compensation (v)

     0.6        0.1         1.3        0.4   

Adjustment for Solar business (vi)

     —          1.4         —          2.0   

Other Adjustments (vii)

     9.2        1.6         24.0        5.6   
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA

   $ 77.7      $ 67.6       $ 212.1      $ 179.6   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(i) Excludes loan amortization costs that are included in interest expense
(ii) Reflects total bonus and other payments to employees and to third parties directly related to the Merger
(iii) Reflects total bonus and other payments to employees and to third parties directly related to the 2GIG Sale
(iv) Reflects subscriber acquisition costs that are expensed as incurred because they are not directly related to the acquisition of specific subscribers. Certain other industry participants purchase subscribers through subscriber contract bulk purchases, and as a result, may capitalize the full cost to purchase these subscriber contracts, as compared to our organic generation of new subscribers, which requires us to expense a portion of our subscriber acquisition costs under GAAP
(v) Reflects non-cash compensation costs related to employee and director stock and stock option plans
(vi) Reflects the exclusion of Solar results from the time it commenced operations in 2011
(vii) Represents adjustments for: non-operating legal and professional fees, new product development, non-cash payroll tax reserve, the monitoring fee payable to Blackstone Management Partners, L.L.C , an adjustment to exclude the impact of revenue deductions directly related to purchase accounting and certain other adjustments

 

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