Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Everi Holdings Inc. | |
Entity Central Index Key | 1,318,568 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 67,366,979 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | EVRI |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | $ 247,322 | $ 222,177 | $ 727,089 | $ 641,946 |
Costs and expenses | ||||
Operating expenses | 29,463 | 26,996 | 87,235 | 87,735 |
Research and development | 4,545 | 4,460 | 13,706 | 14,499 |
Depreciation | 12,539 | 12,367 | 34,765 | 37,172 |
Amortization | 17,322 | 24,104 | 52,086 | 70,887 |
Total costs and expenses | 227,527 | 210,605 | 663,399 | 620,530 |
Operating income | 19,795 | 11,572 | 63,690 | 21,416 |
Other expenses | ||||
Interest expense, net of interest income | 23,368 | 24,815 | 72,306 | 74,548 |
Loss on extinguishment of debt | 14,615 | |||
Total other expenses | 23,368 | 24,815 | 86,921 | 74,548 |
Loss before income tax | (3,573) | (13,243) | (23,231) | (53,132) |
Income tax provision (benefit) | 716 | (4,989) | 3,623 | (20,930) |
Net loss | (4,289) | (8,254) | (26,854) | (32,202) |
Foreign currency translation | 602 | (394) | 1,710 | (1,314) |
Comprehensive loss | $ (3,687) | $ (8,648) | $ (25,144) | $ (33,516) |
Loss per share | ||||
Basic | $ (0.06) | $ (0.12) | $ (0.40) | $ (0.49) |
Diluted | $ (0.06) | $ (0.12) | $ (0.40) | $ (0.49) |
Weighted average common shares outstanding | ||||
Basic | 66,897 | 66,049 | 66,449 | 66,041 |
Diluted | 66,897 | 66,049 | 66,449 | 66,041 |
Games | ||||
Revenues | $ 55,452 | $ 56,218 | $ 165,832 | $ 158,660 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 13,820 | 15,467 | 39,503 | 36,871 |
Operating income | 1,787 | (4,183) | 9,301 | (14,638) |
Payments | ||||
Revenues | 191,870 | 165,959 | 561,257 | 483,286 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 149,838 | 127,211 | 436,104 | 373,366 |
Operating income | $ 18,008 | $ 15,755 | $ 54,389 | $ 36,054 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 108,471 | $ 119,051 |
Settlement receivables | 127,443 | 128,821 |
Trade and other receivables, net of allowances for doubtful accounts of $5,427 and $4,701 at September 30, 2017 and December 31, 2016, respectively | 44,971 | 56,651 |
Inventory | 23,790 | 19,068 |
Prepaid expenses and other assets | 22,538 | 18,048 |
Total current assets | 327,213 | 341,639 |
Non-current assets | ||
Property, equipment and leased assets, net | 109,399 | 98,439 |
Goodwill | 640,593 | 640,546 |
Other intangible assets, net | 338,074 | 317,997 |
Other receivables | 2,876 | 2,020 |
Other assets | 7,450 | 7,522 |
Total non-current assets | 1,098,392 | 1,066,524 |
Total assets | 1,425,605 | 1,408,163 |
Current liabilities | ||
Settlement liabilities | 197,494 | 239,123 |
Accounts payable and accrued expenses | 126,625 | 94,391 |
Current portion of long-term debt | 8,200 | 10,000 |
Total current liabilities | 332,319 | 343,514 |
Non-current liabilities | ||
Deferred tax liability | 60,785 | 57,611 |
Long-term debt, less current portion | 1,130,671 | 1,111,880 |
Other accrued expenses and liabilities | 25,634 | 2,951 |
Total non-current liabilities | 1,217,090 | 1,172,442 |
Total liabilities | 1,549,409 | 1,515,956 |
Commitments and contingencies (Note 12) | ||
Stockholders’ deficit | ||
Common stock, $0.001 par value, 500,000 shares authorized and 91,918 and 90,952 shares issued at September 30, 2017 and December 31, 2016, respectively | 92 | 91 |
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at September 30, 2017 and December 31, 2016, respectively | ||
Additional paid-in capital | 273,906 | 264,755 |
Accumulated deficit | (221,152) | (194,299) |
Accumulated other comprehensive loss | (399) | (2,109) |
Treasury stock, at cost, 24,872 and 24,867 shares at September 30, 2017 and December 31, 2016, respectively | (176,251) | (176,231) |
Total stockholders’ deficit | (123,804) | (107,793) |
Total liabilities and stockholders’ deficit | $ 1,425,605 | $ 1,408,163 |
CONDENSED CONSOLIDATED BALANCE4
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Allowances for doubtful accounts | $ 5,427 | $ 4,701 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 91,918,086 | 90,952,185 |
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Convertible preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 24,872,000 | 24,867,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Cash flows from operating activities | ||
Net loss | $ (26,854) | $ (32,202) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Depreciation and amortization | 86,851 | 108,059 |
Amortization of financing costs | 4,567 | 5,023 |
Loss on sale or disposal of assets | 1,580 | 2,554 |
Accretion of contract rights | 5,845 | 6,521 |
Provision for bad debts | 7,946 | 7,192 |
Deferred income taxes | 3,174 | (22,259) |
Write-down of assets | 4,289 | |
Reserve for obsolescence | 46 | 942 |
Loss on extinguishment of debt | 14,615 | |
Stock-based compensation | 5,125 | 4,146 |
Changes in operating assets and liabilities: | ||
Settlement receivables | 1,569 | 9,158 |
Trade and other receivables | 2,767 | (1,386) |
Inventory | (5,314) | 6,315 |
Prepaid and other assets | (3,337) | 2,912 |
Settlement liabilities | (41,799) | (22,000) |
Accounts payable and accrued expenses | 12,981 | 6,544 |
Net cash provided by operating activities | 69,762 | 85,808 |
Cash flows from investing activities | ||
Capital expenditures | (70,057) | (67,025) |
Acquisitions, net of cash acquired | (694) | |
Proceeds from sale of fixed assets | 4 | 4,608 |
Placement fee agreements | (13,132) | (11,187) |
Changes in restricted cash | (149) | 88 |
Net cash used in investing activities | (83,334) | (74,210) |
Cash flows from financing activities | ||
Repayments of new credit facility | (2,050) | |
Repayments of prior credit facility | (465,600) | (21,900) |
Repayments of secured notes | (335,000) | |
Proceeds from current credit facility | 820,000 | |
Debt issuance costs and discounts | (19,748) | (480) |
Proceeds from exercise of stock options | 4,046 | |
Purchase of treasury stock | (21) | (17) |
Net cash provided by (used in) financing activities | 1,627 | (22,397) |
Effect of exchange rates on cash | 1,365 | (743) |
Cash and cash equivalents | ||
Net decrease for the period | (10,580) | (11,542) |
Balance, beginning of the period | 119,051 | 102,030 |
Balance, end of the period | 108,471 | 90,488 |
Supplemental cash disclosures | ||
Cash paid for interest | 59,894 | 55,465 |
Cash paid for income tax | 760 | 1,124 |
Cash refunded for income tax | 200 | 92 |
Supplemental non-cash disclosures | ||
Accrued and unpaid capital expenditures | 4,736 | 1,427 |
Accrued and unpaid placement fees | 39,074 | |
Accrued and unpaid contingent liability for acquisitions | (3,169) | |
Transfer of leased gaming equipment to inventory | $ 6,093 | $ 6,222 |
BUSINESS
BUSINESS | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
BUSINESS | 1. BUSINESS Everi Holdings Inc. (formerly known as Global Cash Access Holdings, Inc.) (“Everi Holdings,” “Holdings” or “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Games Holding Inc. (formerly known as Multimedia Games Holding Company, Inc.) (“Everi Games Holding”), which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (formerly known as Multimedia Games, Inc.) (“Everi Games” or “Games”) and Everi Payments Inc. (formerly known as Global Cash Access, Inc.) (“Everi Payments” or “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries. Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software to casino operators. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including both Wide-Area Progressive (“WAP”) systems and the TournEvent® slot tournament solution; and (b) the central determinant system for the video lottery terminals installed in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via Automated Teller Machine (“ATM”) cash withdrawals, credit card cash access transactions, point of sale (“POS”) debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of results to be expected for the full fiscal year. The Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. There have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. Fair Values of Financial Instruments The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. The carrying amount of cash and cash equivalents, settlement receivables, trade receivables, other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of our borrowings are estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity and similar instruments trading in more active markets. The estimated fair value and outstanding balances of our borrowings are as follows (in thousands). Level of Hierarchy Fair Value Outstanding Balance September 30, 2017 Term loan 2 $ 826,130 $ 817,950 Senior unsecured notes 1 $ 378,875 $ 350,000 December 31, 2016 Term loan 1 $ 451,632 $ 465,600 Senior secured notes 3 $ 324,950 $ 335,000 Senior unsecured notes 1 $ 350,000 $ 350,000 The term loan facility was reported at fair value using a Level 2 input as there were quoted prices in markets that were not considered active as of September 30, 2017. The senior unsecured notes were reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of September 30, 2017. The term loan was reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of December 31, 2016. The senior secured notes were reported at fair value using a Level 3 input as there was no market activity or observable inputs as of December 31, 2016. The senior unsecured notes were reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of December 31, 2016. Reclassification of Prior Year Balances Reclassifications were made to the prior-period Financial Statements to conform to the current period presentation. Recent Accounting Guidance Recently Adopted Accounting Guidance In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, which provides updated guidance on the goodwill impairment test and the method by which an entity recognizes an impairment charge. These amendments eliminate Step 2 from the current goodwill impairment process and require that an entity recognize an impairment charge equal to the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, a company should also take into consideration income tax effects from tax deductible goodwill on the carrying amount of a reporting unit when recording an impairment loss. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a prospective approach. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this guidance in the current period. As no indicators of impairment were identified for our goodwill during the three and nine months ended September 30, 2017, this ASU did not impact our Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. This guidance will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. Early adoption is permitted. We adopted this guidance in the current period on a prospective basis. As of September 30, 2017, the adoption of ASU No. 2016-09 has not materially impacted our Financial Statements. With respect to forfeitures, the Company will continue to estimate the number of awards expected to be forfeited in accordance with our existing accounting policy. In addition, our Cash Flows present excess tax benefits as operating activities in the current period, as the prior period was not adjusted. In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value. The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory method. The amendments do not apply to inventory that is measured using LIFO or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (“FIFO”) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We adopted this guidance in the current period. This ASU did not have a material impact on our Financial Statements. Recent Accounting Guidance Not Yet Adopted In May 2017, the FASB issued ASU No. 2017-09 to clarify which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. An entity is required to account for the effects of a modification unless all of the following conditions are met: (i) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in the first period of the year this guidance is adopted. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In January 2017, the FASB issued ASU No. 2017-01, which clarifies the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a prospective approach as of the beginning of the first period of adoption. Early adoption is permitted for acquisitions, or disposals that occur before the issuance date or effectiveness date of the amendments when the transaction has not been reported in financial statements that have been issued or made available for issuance. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In October 2016, the FASB issued ASU No. 2016-18, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a retrospective approach to each period presented. Early adoption is permitted and adoption in an interim period should reflect adjustments as of the beginning of the fiscal year that includes that interim period. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In October 2016, the FASB issued ASU No. 2016-16, which provides updated guidance on the recognition of the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs, and this eliminates the exception for an intra-entity transfer of such assets. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach through a cumulative-effective adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted during the first interim period of the year this guidance is adopted. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In August 2016, the FASB issued ASU No. 2016-15, which provides updated guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a retrospective approach. If it is impracticable to apply the amendments retrospectively for some of the issues within this ASU, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted including adoption in an interim period. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, which provides updated guidance on credit losses for financial assets measured at amortized cost basis and available-for sale debt securities. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach for the cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective and using a prospective approach for debt securities for which any other-than-temporary impairment had been recognized before the effective date. Early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, which provides guidance on the accounting treatment of leases. The ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. While we are currently assessing the impact of this ASU on our Financial Statements, we expect the primary impact to our consolidated financial position upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases on our Balance Sheets, which will result in the recording of right of use assets and lease obligations and are currently discussed in “Note 12 — Commitments and Contingencies.” In May 2014, the FASB issued ASU No. 2014-09, which creates FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. The guidance in ASU 2014-09 was further updated by ASU 2016-08 in March 2016, which provides clarification on the implementation of the principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, which provides clarification on the implementation of performance obligations and licensing in ASU 2014-09. In May 2016, the FASB issued ASU 2016-11, which amends guidance provided in two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force meeting over various topics relating to ASU 606. In May 2016, the FASB issued ASU 2016-12, which clarified various topics in ASU 606. In December 2016, the FASB issued ASU 2016-20, which clarified additional topics in ASU 606. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016. However, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2015, including interim reporting periods within that reporting period. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We have performed a review of the requirements of the standard and identified our major revenue streams and the anticipated impact to each of them: Major Revenue Stream Preliminary Expected Impact Upon Adoption Games Segment: Game Sales We expect revenue recognition to be consistent with our current practices, however, there may be some differences as we continue to evaluate the implications. Game Operations We expect revenue recognition to be consistent with our current practices, however, with respect to our WAP offering(s), for which we initiated this year, we will be required to net the direct costs with Games revenues as opposed to our existing practice of recording those amounts to Games cost of revenues. WAP jackpot expense was approximately $0.1 million and $0.3 million for the three and nine months ended September 30, 2017, respectively. Payments Segment: Cash Advance, ATM and Check Services We generally expect revenue recognition to be consistent with our current practices, however, there may potentially be significant differences as we continue to evaluate the implications specifically related to our reporting these revenues on a gross versus net basis. As such, there will be no effect on operating income, net loss, cash flows or the timing of revenues recognized and costs incurred. In addition, there may be changes to the Kiosk Sales and Services and Compliance Sales and Services offerings that impact cash advance, ATM and check services revenue streams as we continue to evaluate the revenue recognition standard. Central Credit We expect revenue recognition to be consistent with our current practices, however, there may be differences as we continue to evaluate the implications. Kiosk Sales and Services We expect to encounter some level of change to our revenue recognition practices for these revenue streams under the new guidance, however, the amounts are not anticipated to be material as we continue to evaluate the implications. Compliance Sales and Services We expect to encounter some level of change to our revenue recognition practices for these revenue streams under the new guidance, however, the amounts are not anticipated to be material as we continue to evaluate the implications. Currently, we do not expect our Games or certain of our Payments revenues to be materially impacted by the implementation of this guidance; however, we continue to evaluate certain of our other Payments-related revenue streams as there may be a potentially significant impact, depending on our final interpretation of the accounting guidance. More specifically, based on the transition guidance related to the new revenue recognition standard, we are in the process of determining if our cash advance, ATM and check services revenue streams will be required to be reported “net of transaction price” rather than our current gross revenue presentation basis. Under the existing Topic 605, certain factors that supported our gross reporting position have been eliminated in the new Topic 606. In addition, our understanding of the new transition guidance, as it specifically pertains to payments from customers, may further require us to report certain of these Payments-related revenue streams on a net presentation basis. If our conclusions, in accordance with GAAP, support a net reporting of these specific revenue streams, this will have a significant impact on our revenues, cost of revenues and margins for the affected revenue streams, however, there will be no effect on operating income, net loss, cash flows or the timing of revenues recognized and costs incurred. As we continue to take the necessary measures of preparedness in connection with the adoption of the new revenue recognition standard, we continue to do the following: • Evaluate our revenue streams to determine the extent, if any, of the changes to the timing and amount of revenue recorded in each reporting period. • Review our existing accounting policies, procedures and internal controls to further determine the impact of the new standard on our Financial Statements. • Prepare the enhanced disclosures and updates to our revenue recognition policies to identify performance obligations to customers and that will require significant judgment in both measurement and recognition. • Review in detail our sales contract terms and conditions to determine the necessary adjustments, if any. • Monitor the activity of the FASB and the transition resource group as it relates to specific interpretive guidance that may impact us. We may identify other impacts from the implementation of this guidance as we continue our assessment. We expect to adopt this guidance using the modified retrospective method beginning in the first quarter of 2018. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | 3. BUSINESS COMBINATIONS We account for business combinations in accordance with ASC 805, which requires that the identifiable assets acquired and liabilities assumed be recorded at their estimated fair values on the acquisition date separately from goodwill, which is the excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities. We include the results of operations of an acquired business as of the acquisition date. We had no material acquisitions for the three and nine months ended September 30, 2017 and 2016. |
FUNDING AGREEMENTS
FUNDING AGREEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
A T M Funding Agreement Disclosure [Abstract] | |
FUNDING AGREEMENTS | 4. FUNDING AGREEMENTS Contract Cash Solutions Agreement Our Contract Cash Solutions Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Statements of Loss, were $1.2 million and $3.5 million for the three and nine months ended September 30, 2017, respectively, and $0.7 million and $2.3 million for the three and nine months ended September 30, 2016, respectively. We are exposed to interest rate risk to the extent that the applicable London Interbank Offered Rate (“LIBOR”) increases. Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable which is recorded on a net basis. As these funds are not our assets, supplied cash is not reflected on the Balance Sheets. The outstanding balances of ATM cash utilized by us from Wells Fargo were $226.6 million and $285.4 million as of September 30, 2017 and December 31, 2016, respectively. The Contract Cash Solutions Agreement, as amended, provides us with cash in the maximum amount of $425.0 million during the term of the agreement, which expires on June 30, 2019. We are responsible for any losses of cash in the ATMs under this agreement, and we self‑insure for this risk. We incurred no material losses related to this self‑insurance for the three and nine months ended September 30, 2017 and 2016. Site-Funded ATMs We operate ATMs at certain customer gaming establishments where the gaming establishment provides the cash required for the ATM operational needs. We are required to reimburse the customer for the amount of cash dispensed from these site-funded ATMs. The site-funded ATM liability included within settlement liabilities in the accompanying Balance Sheets was $134.1 million and $151.0 million as of September 30, 2017 and December 31, 2016, respectively. Prefunded Cash Access Agreements Due to certain regulatory requirements, some international gaming establishments require prefunding of cash to cover all outstanding settlement amounts in order for us to provide cash access services to their properties. We enter into agreements with these operators for which we supply our cash access services for their properties. Under these agreements, we maintain sole discretion to either continue or cease operations as well as discretion over the amounts prefunded to the properties and may request amounts to be refunded to us, with appropriate notice to the operator, at any time. The initial prefunded amounts and subsequent amounts from the settlement of transactions are deposited into a bank account that is to be used exclusively for cash access services, and we maintain the right to monitor all transaction activity in that account. The total amount of prefunded cash outstanding was approximately $9.3 million and $8.5 million at September 30, 2017 and December 31, 2016, respectively, and is included in prepaid expenses and other assets on our Balance Sheets. |
TRADE AND OTHER RECEIVABLES
TRADE AND OTHER RECEIVABLES | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
TRADE AND OTHER RECEIVABLES | 5. TRADE AND OTHER RECEIVABLES Trade and loans receivables represent short-term credit granted to customers as well as long-term loans receivable on our games, fully integrated kiosks and compliance products. Trade and loans receivables generally do not require collateral. The balance of trade and loans receivables consists of outstanding balances owed to us by gaming establishments and casino patrons. Other receivables include income taxes receivables and other miscellaneous receivables. The balance of trade and other receivables consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Trade and other receivables, net Games trade and loans receivables $ 36,837 $ 44,410 Payments trade and loans receivables 10,214 12,337 Other receivables 796 1,924 Total trade and other receivables, net $ 47,847 $ 58,671 Less: non-current portion of receivables 2,876 2,020 Total trade and other receivables, current portion $ 44,971 $ 56,651 At least quarterly, we evaluate the collectability of the outstanding balances and establish a reserve for the face amount of the expected losses on our receivables. The allowance for doubtful accounts for trade receivables was $5.4 million and $4.7 million as of September 30, 2017 and December 31, 2016, respectively, and includes reserves for both Games and Payments receivables. The provision for doubtful accounts is generally included within operating expenses in the Statements of Loss. We also have a provision for doubtful accounts specifically associated with our outstanding check warranty receivables, which is included within Payments cost of revenues (exclusive of depreciation and amortization) in the Statements of Loss. The outstanding balances of the check warranty and general reserves were $3.0 million and $2.4 million, respectively, as of September 30, 2017 and $2.7 million and $2.0 million, respectively, as of December 31, 2016. |
PREPAID AND OTHER ASSETS
PREPAID AND OTHER ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expense And Other Assets [Abstract] | |
PREPAID AND OTHER ASSETS | 6. PREPAID AND OTHER ASSETS Prepaid and other assets include the balance of prepaid expenses, deposits, debt issuance costs on our Revolving Credit Facility (defined herein), restricted cash and other assets. The current portion of these assets is included in prepaid and other assets and the non-current portion is included in other assets, both of which are contained within the Balance Sheets. The balance of the current portion of prepaid and other assets consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Prepaid expenses and other assets Deposits $ 9,971 $ 8,622 Prepaid expenses 7,870 5,937 Other 4,697 3,489 Total prepaid expenses and other assets $ 22,538 $ 18,048 The balance of the non-current portion of other assets consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Other assets Prepaid expenses and deposits $ 3,464 $ 3,399 Debt issuance costs of revolving credit facility 898 689 Other 3,088 3,434 Total other assets $ 7,450 $ 7,522 |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORY | 7. INVENTORY Our inventory primarily consists of component parts as well as work-in-progress and finished goods. The cost of inventory includes cost of materials, labor, overhead and freight. The inventory is stated at the lower of cost or net realizable value and accounted for using the FIFO method. Inventory consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Inventory Raw materials and component parts, net of reserves of $1,523 and $2,155 at September 30, 2017 and December 31, 2016, respectively $ 15,974 $ 12,570 Work-in-progress 3,516 1,502 Finished goods 4,300 4,996 Total inventory $ 23,790 $ 19,068 |
PROPERTY, EQUIPMENT AND LEASED
PROPERTY, EQUIPMENT AND LEASED ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
PROPERTY, EQUIPMENT AND LEASED ASSETS | 8. PROPERTY, EQUIPMENT AND LEASED ASSETS Property, equipment and leased assets consist of the following (in thousands): At September 30, 2017 At December 31, 2016 Useful Life Accumulated Net Book Accumulated Net Book (Years) Cost Depreciation Value Cost Depreciation Value Property, equipment and leased assets Rental pool - deployed 2-4 $ 149,895 $ 73,623 $ 76,272 $ 123,812 $ 59,188 $ 64,624 Rental pool - undeployed 2-4 19,829 10,874 8,955 13,456 5,721 7,735 ATM equipment 5 17,154 11,992 5,162 16,537 11,189 5,348 Leasehold and building improvements Lease Term 10,723 4,820 5,903 10,023 3,698 6,325 Cash advance equipment 3 8,492 5,544 2,948 8,590 4,499 4,091 Machinery, office and other equipment 2-5 33,217 23,058 10,159 30,424 20,108 10,316 Total $ 239,310 $ 129,911 $ 109,399 $ 202,842 $ 104,403 $ 98,439 Depreciation expense related to property, equipment and leased assets totaled approximately $12.5 million and $34.8 million for the three and nine months ended September 30, 2017, respectively, and $12.4 million and $37.2 million for the three and nine months ended September 30, 2016, respectively. There was no material impairment of our property, equipment and leased assets for the three and nine months ended September 30, 2017 and 2016. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 9. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. The balance of goodwill was $640.6 million and $640.5 million at September 30, 2017 and December 31, 2016, respectively. In accordance with ASC 350, we test goodwill at the reporting unit level, which are identified as operating segments or one level below, for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We test for impairment annually on a reporting unit basis, at the beginning of our fourth fiscal quarter, or more often under certain circumstances. The annual impairment test is completed using either: a qualitative Step 0 assessment based on reviewing relevant events and circumstances; or a quantitative Step 1 assessment, which determines the fair value of the reporting unit, using an income approach that discounts future cash flows based on the estimated future results of our reporting units and a market approach that compares market multiples of comparable companies to determine whether or not any impairment exists. If the fair value of a reporting unit is less than its carrying amount, we will use the Step 1 assessment to determine the impairment in accordance with the adoption of ASU No 2017-04. No impairment was identified for our goodwill for the three and nine months ended September 30, 2017 and 2016. Other Intangible Assets Other intangible assets consist of the following (in thousands): At September 30, 2017 At December 31, 2016 Useful Life Accumulated Net Book Accumulated Net Book (years) Cost Amortization Value Cost Amortization Value Other intangible assets Contract rights under placement fee agreements 1-7 $ 59,605 $ 1,782 $ 57,823 $ 17,742 $ 6,281 $ 11,461 Customer contracts 7-14 50,975 42,768 8,207 50,975 40,419 10,556 Customer relationships 8-12 231,100 58,412 172,688 231,100 42,688 188,412 Developed technology and software 1-6 244,151 152,706 91,445 224,265 126,721 97,544 Patents, trademarks and other 1-17 28,834 20,923 7,911 27,771 17,747 10,024 Total $ 614,665 $ 276,591 $ 338,074 $ 551,853 $ 233,856 $ 317,997 Amortization expense related to other intangible assets was approximately $17.3 million and $52.1 million for the three and nine months ended September 30, 2017, respectively, and $24.1 million and $70.9 million for the three and nine months ended September 30, 2016, respectively. We evaluate our other intangible assets for potential impairment in connection with our quarterly review process. There was no material impairment identified for any of our other intangible assets for the three and nine months ended September 30, 2017 and 2016. We enter into placement fee agreements to provide financing for new gaming facilities or for the expansion or improvement of existing facilities. The funding under placement fee agreements is not reimbursed. In return for the fees under these agreements, each facility dedicates a percentage of its floor space, or an agreed upon unit count, for the placement of our electronic gaming machines (“EGMs”) over the term of the agreement, generally 12 to 83 months, and we receive a fixed percentage or flat fee of those machines’ hold per day. Certain of the agreements contain EGM performance standards that could allow the respective facility to reduce a portion of our guaranteed floor space. Placement fees and amounts advanced in excess of those to be reimbursed by the customer for real property and land improvements are allocated to intangible assets and are generally amortized over the term of the contract, which is recorded as a reduction of revenue generated from the facility. In the past we have, and in the future, we may, by mutual agreement, amend these agreements to reduce our floor space at the facilities. Any proceeds received for the reduction of floor space are first applied against the intangible asset for that particular placement fee agreement, if any, and the remaining net book value of the intangible asset is prospectively amortized on a straight-line method over the remaining estimated useful life. In July 2017, we entered into a placement fee agreement with a customer for certain of its locations for approximately $49.1 million, net of $10.1 million of unamortized fees related to superseded contracts. During the three and nine months ended September 30, 2017, we paid approximately $10.1 million and $13.1 million, respectively, in placement fees primarily related to this agreement. For the nine months ended September 30, 2016, $11.2 million was paid to extend the term of placement fee agreements with the same customer for certain of its locations. We did not enter into any placement fee agreements or incur related fees during the three months ended September 30, 2016. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2017 | |
Payables And Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The following table presents our accounts payable and accrued expenses (in thousands): At September 30, At December 31, 2017 2016 Accounts payable and accrued expenses Trade accounts payable $ 62,422 $ 55,352 Placement fees (1) 16,746 — Accrued interest 7,650 82 Payroll and related expenses 10,207 12,305 Deferred and unearned revenues 9,981 9,222 Cash access processing and related expenses 7,682 7,001 Accrued taxes 2,734 2,587 Other 9,203 7,842 Total accounts payable and accrued expenses $ 126,625 $ 94,391 (1) The total outstanding balance of the placement fees was $39.1 million. The remaining $22.3 million of non-current placement fees was included in other accrued expenses and liabilities in our Balance Sheets as of September 30, 2017. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 11. LONG-TERM DEBT The following table summarizes our outstanding indebtedness (in thousands): At September 30, At December 31, 2017 2016 Long-term debt Senior secured term loan $ 817,950 $ 465,600 Senior secured notes — 335,000 Senior unsecured notes 350,000 350,000 Total debt 1,167,950 1,150,600 Less: debt issuance costs and discount (29,079 ) (28,720 ) Total debt after debt issuance costs and discount 1,138,871 1,121,880 Less: current portion of long-term debt (8,200 ) (10,000 ) Long-term debt, less current portion $ 1,130,671 $ 1,111,880 Refinancing On May 9, 2017 (the “Closing Date”), Everi Payments, as borrower, and Holdings entered into a credit agreement with the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender, letter of credit issuer, sole lead arranger and sole book manager (the “New Credit Agreement”). The New Credit Agreement provides for: (i) a $35.0 million, five-year senior secured revolving credit facility (the “New Revolving Credit Facility”); and (ii) an $820.0 million, seven-year senior secured term loan facility (the “New Term Loan Facility,” and together with the New Revolving Credit Facility, the “New Credit Facilities”). The fees associated with the New Credit Facilities included discounts of approximately $4.1 million and debt issuance costs of approximately $15.5 million. All borrowings under the New Credit Facilities are subject to the satisfaction of customary conditions, including the absence of defaults and the accuracy of representations and warranties. The proceeds from the New Term Loan Facility incurred on the Closing Date were used to: (i) refinance: (a) the Everi Payments existing credit facility with an outstanding balance of approximately $462.3 million with Bank of America, N.A., as administrative agent, collateral agent, swing line lender and letter of credit issuer, Deutsche Bank Securities Inc., as syndication agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc., as joint lead arrangers and joint book managers (the “Prior Credit Facility”); and (b) the Everi Payments 7.25% Senior Secured Notes due 2021 in the aggregate original principal amount of $335.0 million (the “Refinanced Secured Notes”); and (ii) pay related transaction fees and expenses. In connection with the refinancing, we recorded a non-cash charge of approximately $14.6 million during the second quarter of 2017 related to the unamortized deferred financing fees and discounts related to the extinguished term loan under the Prior Credit Facility and the redeemed Refinanced Secured Notes. No prepayment penalties were incurred. New Credit Facilities The New Term Loan Facility matures seven years after the Closing Date (the “Stated Term Maturity Date”); provided that, if on the date that is 91 days prior to the maturity date (the “Unsecured Notes Maturity Date”) for the Everi Payments 10.00% Senior Unsecured Notes due 2022 in the aggregate original principal amount of $350.0 million (the “Unsecured Notes”), any Unsecured Notes remain outstanding and the Unsecured Notes Maturity Date has not been extended to a date that is at least six months after the Stated Term Maturity Date, then the New Term Loan Facility shall mature on the date that is 91 days before the Unsecured Notes Maturity Date. The New Revolving Credit Facility matures five years after the Closing Date; provided, that, if on the date that is 121 days prior to the Unsecured Notes Maturity Date, any Unsecured Notes remain outstanding and the Unsecured Notes Maturity Date has not been extended to a date that is at least six months after the Stated Term Maturity Date, then the New Revolving Credit Facility shall mature on the date that is 121 days before the Unsecured Notes Maturity Date. The New Revolving Credit Facility is available for general corporate purposes, including permitted acquisitions, working capital and the issuance of letters of credit. The interest rate per annum applicable to loans under the New Revolving Credit Facility will be, at Everi Payments’ option, the base rate or the Eurodollar Rate (defined to be the London Interbank Offered Rate or a comparable or successor rate) (the “Eurodollar Rate”) plus, in each case, an applicable margin. The interest rate per annum applicable to the New Term Loan Facility will also be, at Everi Payments’ option, the base rate or the Eurodollar Rate plus, in each case, an applicable margin. The Eurodollar Rate will be reset at the beginning of each selected interest period based on the Eurodollar Rate then in effect; provided that, if the Eurodollar Rate is below 1.0%, then such rate will be equal to 1.0% plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of: (i) the prime lending rate announced by the administrative agent; (ii) the federal funds effective rate from time to time plus 0.50%; and (iii) the Eurodollar Rate (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%. The applicable margins for both the New Revolving Credit Facility and the New Term Loan Facility are: (i) 4.50% in respect of Eurodollar Rate loans and (ii) 3.50% in respect of base rate loans. Voluntary prepayments of the term loan and the revolving loans and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the New Credit Agreement governing the New Credit Facilities, with prior notice but without premium or penalty, except that certain refinancings of the term loans within six months after the Closing Date will be subject to a prepayment premium of 1.00% of the principal amount repaid. Subject to certain exceptions, the obligations under the New Credit Facilities are secured by substantially all of the present and subsequently acquired assets of each of Everi Payments, Holdings and the subsidiary guarantors party thereto including: (i) a perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned material restricted subsidiary held by Holdings, Everi Payments or any such subsidiary guarantor; and (ii) a perfected first priority security interest in substantially all other tangible and intangible assets of Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the New Credit Facilities are unconditionally guaranteed by Holdings and such subsidiary guarantors. The New Credit Agreement governing the New Credit Facilities contains certain covenants that, among other things, limit Holdings’ ability, and the ability of certain of its subsidiaries, to incur additional indebtedness, sell assets or consolidate or merge with or into other companies, pay dividends or repurchase or redeem capital stock, make certain investments, issue capital stock of subsidiaries, incur liens, prepay, redeem or repurchase subordinated debt, and enter into certain types of transactions with its affiliates. The New Credit Agreement governing the New Credit Facilities also requires Holdings, together with its subsidiaries, to comply with a consolidated secured leverage ratio. At September 30, 2017, our consolidated secured leverage ratio was 3.63 to 1.00, with a maximum allowable ratio of 5.00 to 1.00. Our maximum consolidated secured leverage ratio will be 5.00 to 1.00, 4.75 to 1.00, and 4.50 to 1.00 as of December 31, 2017, 2018, and 2019 and thereafter, respectively. We were in compliance with the terms of the New Credit Facilities as of September 30, 2017. Events of default under the New Credit Agreement governing the New Credit Facilities include customary events such as a cross-default provision with respect to other material debt. In addition, an event of default will occur if Holdings undergoes a change of control. This is defined to include the case where Holdings ceases to own 100% of the equity interests of Everi Payments, or where any person or group acquires a percentage of the economic or voting interests of Holdings’ capital stock of 35% or more (determined on a fully diluted basis). We are required to repay the New Term Loan Facility in an amount equal to 0.25% per quarter of the initial aggregate principal, with the final principal repayment installment on the maturity date. Interest is due in arrears on each interest payment date applicable thereto and at such other times as may be specified in the New Credit Agreement. As to any loan other than a base rate loan, the interest payment dates shall be the last day of each interest period applicable to such loan and the maturity date (provided, however, that if any interest period for a Eurodollar Rate loan exceeds three months, the respective dates that fall every three months after the beginning of such interest period shall also be interest payment dates). As to any base rate loan, the interest payment dates shall be last business day of each March, June, September and December and the maturity date. For the quarter ended September 30, 2017, the New Term Loan Facility had an applicable weighted average interest rate of 5.74%. For the nine months ended September 30, 2017, the Prior Credit Facility had an applicable weighted average interest rate of 6.29%; the New Term Loan Facility had an applicable weighted average interest rate of 5.71%; and a blended weighted average interest rate of 5.87% for the period ended September 30, 2017. At September 30, 2017, we had $818.0 million of borrowings outstanding under the New Term Loan Facility and no borrowings outstanding under the New Revolving Credit Facility. We had $35.0 million of additional borrowing availability under the New Revolving Credit Facility as of September 30, 2017. Refinanced Senior Secured Notes In connection with entering into the New Credit Agreement, on May 9, 2017, Everi Payments redeemed in full $335.0 million face value (plus accrued interest) of the Refinanced Secured Notes. As a result of the redemption, the Company recorded $1.7 million, which consisted of unamortized deferred financing fees of $0.2 million and discounts of $1.5 million. These fees are included in the total $14.6 million non-cash charge. Senior Unsecured Notes In December 2014, we issued $350.0 million in aggregate principal amount of 10.00% Unsecured Notes due 2022 (the “Unsecured Notes”). The fees associated with the Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million. Interest is due semi-annually in arrears each January and July. The Unsecured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement. Under the terms of the purchase agreement, during a one-year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Unsecured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015. In December 2015, we completed an exchange offer in which all of the unregistered Unsecured Notes were exchanged for a like amount of Unsecured Notes that had been registered under the Securities Act. We were in compliance with the terms of the Unsecured Notes as of September 30, 2017 and December 31, 2016. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES The following transactions have resulted in a change in our commitments under contractual obligations as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016: In May 2017, we entered into the New Credit Agreement, which provides for the $35.0 million New Revolving Credit Facility and the $820.0 million New Term Loan Facility. Under the New Credit Agreement, we are required to make principal payments of 1% annually of $2.0 million in 2017, $8.2 million in years 2018 through 2021 and $783.1 million thereafter. We also have required interest payments, computed using a weighted average interest rate at September 30, 2017 of 5.74%, of $12.0 million, $46.6 million, $46.1 million, $45.7 million, $45.3 million and $104.5 million from 2017 through 2021 and thereafter, respectively. In July 2017, we extended the term of our placement fee agreements to 6 years and 11 months with our largest customer in Oklahoma. Under the terms of the agreement, we made a $10.0 million cash payment in August 2017 and will pay approximately $5.6 million per quarter in placement fees, beginning in January 2018 and ending in July 2019. We are involved in various investigations, claims and lawsuits in the ordinary course of our business. In addition, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries. Although the outcome of our legal proceedings cannot be predicted with certainty and no assurances can be provided, based upon current information, we do not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on our financial position, liquidity or results of operations. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | 13. SHAREHOLDERS’ EQUITY Preferred Stock. Our amended and restated certificate of incorporation, as amended, allows our Board of Directors, without further action by stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences. As of September 30, 2017 and December 31, 2016, we had no shares of preferred stock outstanding. Common Stock. Subject to the preferences that may apply to shares of preferred stock that may be outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as our Board of Directors may from time to time determine. All dividends are non-cumulative. In the event of the liquidation, dissolution or winding up of Everi, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. There are no sinking fund provisions applicable to the common stock. Each outstanding share of common stock is fully paid and non-assessable. As of September 30, 2017 and December 31, 2016, we had 91,918,086 and 90,952,185 shares of common stock issued, respectively. Treasury Stock. Employees may direct us to withhold vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to their restricted stock vesting. We withheld from restricted stock awards 1,365 and 4,394 shares of common stock for the three and nine months ended September 30, 2017, respectively, at an aggregate purchase price of $10,115 and $20,706, respectively, and 2,223 and 7,135 shares of common stock for the three and nine months ended September 30, 2016, respectively, at an aggregate purchase price of $3,879 and $16,894, respectively, to satisfy the minimum applicable tax withholding obligations related to the vesting of such restricted stock awards. |
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
WEIGHTED AVERAGE COMMON SHARES | 14. WEIGHTED AVERAGE COMMON SHARES The weighted average number of shares of common stock outstanding used in the computation of basic and diluted loss per share is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average shares Weighted average number of common shares outstanding - basic 66,897 66,049 66,449 66,041 Potential dilution from equity awards (1) — — — — Weighted average number of common shares outstanding - diluted 66,897 66,049 66,449 66,041 (1) The Company was in a net loss position for the three and nine months ended September 30, 2017 and 2016; therefore, potentially dilutive common shares were excluded as their effects would be antidilutive under the application of the treasury method. Equity awards to purchase approximately 8.0 million and 12.0 million shares of common stock for the three and nine months ended September 30, 2017, respectively, and 18.5 million and 15.9 million shares of common stock for the three and nine months ended September 30, 2016, respectively, were excluded from the diluted net loss per share results. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
SHARE-BASED COMPENSATION | 15. SHARE-BASED COMPENSATION Equity Incentive Awards Our 2014 Equity Incentive Plan (as amended and restated effective May 23, 2017, the “Amended and Restated 2014 Plan”) and our 2012 Equity Incentive Plan (as amended, the “2012 Plan”) are used to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business. The Amended and Restated 2014 Plan superseded the then current 2005 Stock Incentive Plan (the “2005 Plan”). The 2012 Plan was assumed in connection with our acquisition of Everi Games Holding and conformed to include similar provisions to those as set forth in the Amended and Restated 2014 Plan. Our equity incentive plans are administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive equity incentive awards and to specify the terms and conditions of grants of such awards, including, but not limited to, the vesting provisions and exercise prices. Generally, we grant the following award types: (a) time-based options, (b) market-based options and (c) restricted stock. These awards have varying vesting provisions and expiration periods. For the three and nine months ended September 30, 2017, we granted time- and market-based options. Our time-based stock options granted under our equity plans generally vest at a rate of 25% per year on each of the first four anniversaries of the option grant dates. These options expire after a ten-year period. We estimate forfeiture amounts based on historical patterns. Our market-based options granted in 2017 vest at a rate of 25% per year on each of the first four anniversaries of the grant date, provided that as of the vesting date for each vesting tranche, the closing price of the Company’s shares on the New York Stock Exchange is at least a specified price hurdle, defined as a 25% premium to the closing stock price on the grant date. If the price hurdle is not met as of the vesting date for a vesting tranche, then the vested tranche shall vest and become vested shares on the last day of a period of 30 consecutive trading days during which the closing price is at least the price hurdle. These options expire after a ten-year period. Our market-based options granted in 2016 vest at a rate of 25% per year on each of the first four anniversaries of the grant date, provided that as of the vesting date for each vesting tranche, the closing price of the Company’s shares on the New York Stock Exchange is at least a specified price hurdle, defined as a 50% premium to the closing stock price on the grant date. If the price hurdle is not met as of the vesting date for a vesting tranche, then the vested tranche shall vest and become vested shares on the last day of a period of 30 consecutive trading days during which the closing price is at least the price hurdle. These options expire after a ten-year period. A summary of award activity is as follows (in thousands): Stock Options Restricted Stock Granted Granted Outstanding, December 31, 2016 18,233 80 Granted 4,107 40 Exercised options or vested shares (950 ) (16 ) Cancelled or forfeited (358 ) — Outstanding, September 30, 2017 21,032 104 The maximum number of shares available for future equity awards, both under the Amended and Restated 2014 Plan and the 2012 Plan, is approximately 4.6 million shares of our common stock. There are no shares available for future equity awards under the 2005 Plan. Stock Options The fair values of our standard time-based options were determined as of the date of grant using the Black-Scholes option pricing model with the following assumptions: Nine months ended September 30, 2017 2016 Risk-free interest rate 2 % 1 % Expected life of options (in years) 6 5 Expected volatility 54 % 51 % Expected dividend yield — % — % For the nine months ended September 30, 2016, certain executive and director grants were valued under the Black-Scholes option pricing model that utilized different assumptions from those used for our standard time-based options. For the time-based options granted on February 25, 2016, the assumptions were: (a) risk-free interest rate of 1%; (b) expected term of five years; (c) expected volatility of 49%; and (d) no expected dividend yield. For the time-based options granted on February 13, 2016, the assumptions were: (a) risk-free interest rate of 1%; (b) expected term of six years; (c) expected volatility of 49%; and (d) no expected dividend yield. The fair values of our market-based options were determined as of the date of grant using a lattice-based option valuation model with the following assumptions: Nine months ended September 30, 2017 2016 Risk-free interest rate 3 % 2 % Measurement period (in years) 10 10 Expected volatility 70 % 68 % Expected dividend yield — % — % For the market-based options granted during the third quarter of 2016, the assumptions were: (a) risk-free interest rate of 2%; (b) expected term of ten years; (c) expected volatility of 69% and (d) no expected dividend yield. The following tables present the options activity: Weighted Number of Weighted Average Average Life Aggregate Common Shares Exercise Price Remaining Intrinsic Value (in thousands) (per share) (years) (in thousands) Outstanding, December 31, 2016 18,233 $ 6.02 6.4 $ 2,387 Granted 4,107 3.38 Exercised (950 ) 4.29 Canceled or forfeited (358 ) 5.99 Outstanding, September 30, 2017 21,032 $ 5.58 6.5 $ 48,106 Vested and expected to vest, September 30, 2017 18,401 $ 5.71 6.3 $ 40,291 Exercisable, September 30, 2017 10,539 $ 6.85 4.8 $ 13,298 There were 45,750 and 4.1 million options granted for the three and nine months ended September 30, 2017, respectively, and 0.2 million and 4.2 million options granted for the three and nine months ended September 30, 2016, respectively. The weighted average grant date fair value per share of options granted was $3.85 and $1.86 for the three and nine months ended September 30, 2017, respectively, and $0.89 and $0.81 for the three and nine months ended September 30, 2016, respectively. The total intrinsic value of options exercised was $0.8 million and $2.8 million for the three and nine months ended September 30, 2017, respectively. No options were exercised during the three and nine months ended September 30, 2016. There was $11.7 million in unrecognized compensation expense related to options expected to vest as of September 30, 2017. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.3 years. We recorded $4.8 million in non-cash compensation expense related to options granted that were expected to vest as of September 30, 2017. We received $2.2 million and $4.0 million in cash from the exercise of options for the three and nine months ended September 30, 2017, respectively. There was $13.5 million in unrecognized compensation expense related to options expected to vest as of September 30, 2016. This cost was expected to be recognized on a straight-line basis over a weighted average period of 2.3 years. We recorded $3.8 million in non-cash compensation expense related to options granted that were expected to vest as of September 30, 2016. There were no proceeds received from the exercise of options as no exercises occurred for the three and nine months ended September 30, 2016. Restricted Stock The following is a summary of non-vested share awards for our time-based restricted stock: Weighted Shares Average Grant Outstanding Date Fair Value (in thousands) (per share) Outstanding, December 31, 2016 80 $ 7.12 Granted 40 6.66 Vested (16 ) 6.91 Forfeited — — Outstanding, September 30, 2017 104 $ 6.97 There were no shares and 40,000 shares of restricted stock granted for the three and nine months ended September 30, 2017, respectively, and there were no shares of restricted stock granted for the three and nine months ended September 30, 2016. The total fair value of restricted stock vested was $37,958 and $121,979 for the three and nine months ended September 30, 2017, respectively, and $23,393 and $74,100 for the three and nine months ended September 30, 2016, respectively. There was $0.7 million in unrecognized compensation expense related to shares of time based restricted stock expected to vest as of September 30, 2017. This cost is expected to be recognized on a straight-line basis over a weighted average period of 1.2 years. There were 16,071 shares of restricted stock that vested and we recorded $0.3 million in non-cash compensation expense related to the restricted stock granted that was expected to vest during the nine months ended September 30, 2017. There was $1.3 million in unrecognized compensation expense related to shares of time-based restricted shares expected to vest as of September 30, 2016. This cost was expected to be recognized on a straight-line basis over a weighted average period of 1.9 years. There were 30,000 shares of time-based restricted shares vested and we recorded $0.3 million in non-cash compensation expense related to the restricted stock granted that was expected to vest during the nine months ended September 30, 2016. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 16. INCOME TAXES The income tax provision reflected an effective income tax rate of negative 20.0% and negative 15.6% for the three and nine months ended September, 30, 2017, respectively, which was less than the statutory federal rate of 35.0%, primarily due to an increase in our valuation allowance for deferred tax assets, partially offset by state taxes, and the benefit from a research credit. The income tax benefit reflected an effective income tax rate of 37.7% and 39.4% for the three and nine months ended September 30, 2016, respectively, which was higher than the statutory federal rate of 35.0%, primarily due to state taxes, the lower foreign tax rate applicable to our foreign source income, and the benefit from a research credit, partially offset by non-statutory stock options that expired in the year. During the third quarter of 2017, we increased our valuation allowance by approximately $2.4 million for our deferred tax assets. We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. As of September 30, 2017, the Company recorded $0.8 million of unrecognized tax benefits, all of which would impact our effective tax rate, if recognized. We do not anticipate that our unrecognized tax benefits will materially change within the next 12 months. The Company has not accrued any penalties and interest for its unrecognized tax benefits. Other than the unrecognized tax benefit recorded, we believe that our income tax filing positions and deductions will be sustained upon audit, and we do not anticipate any other adjustments that will result in a material change to our financial position. We may, from time to time, be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. Our policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax in our Statements of Loss. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 17. SEGMENT INFORMATION Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group in deciding how to allocate resources and in assessing performance. Our chief operating decision-making group consists of the Chief Executive Officer and the Chief Financial Officer. This group manages the business, allocates resources and measures profitability based on our operating segments. Our operating segments are managed and reviewed separately, as each represents products that can be sold separately to our customers. Our chief operating decision-making group has determined the following to be the operating segments for which we conduct business: (a) Games and (b) Payments. We have reported our financial performance based on our segments in both the current and prior periods. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting. • The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment-related experiences including: leased gaming equipment; sales and maintenance related services of gaming equipment; gaming systems; and ancillary products and services. • The Payments segment provides solutions directly to gaming establishments to offer their patrons cash access-related services and products, including: access to cash at gaming facilities via ATM cash withdrawals, credit card cash access transactions and POS debit card cash access transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings. Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we record depreciation and amortization expenses to the business segments. Our business is predominantly domestic with no specific regional concentrations and no significant assets in foreign locations. The accounting policies of the operating segments are generally the same as those described in the summary of significant accounting policies. The following tables present segment information (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2017 2016 2017 2016 Revenues Games $ 55,452 $ 56,218 $ 165,832 $ 158,660 Payments 191,870 165,959 561,257 483,286 Total revenues $ 247,322 $ 222,177 $ 727,089 $ 641,946 Operating income (loss) Games $ 1,787 $ (4,183 ) $ 9,301 $ (14,638 ) Payments 18,008 15,755 54,389 36,054 Total operating income $ 19,795 $ 11,572 $ 63,690 $ 21,416 At September 30, 2017 At December 31, 2016 Total assets Games $ 927,888 $ 894,213 Payments 497,717 513,950 Total assets $ 1,425,605 $ 1,408,163 Major Customers. For the three and nine months ended September 30, 2017 and 2016, no single customer accounted for more than 10% of our revenues. Our five largest customers accounted for approximately 25% and 26% for the three and nine months ended September 30, 2017, respectively, and 30% and 31% for the three and nine months ended September 30, 2016, respectively. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
Guarantees [Abstract] | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 18. CONDENSED CONSOLIDATING FINANCIAL INFORMATION We conduct substantially all of our business through our U.S. and foreign subsidiaries. Everi Payments’ (“Subsidiary Issuer”) obligations under the Unsecured Notes are fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several basis by Holdings (“Parent”) and substantially all of our 100%-owned U.S. subsidiaries other than Subsidiary Issuer (the “Guarantor Subsidiaries” and, together with Parent, the “Guarantors” and each a “Guarantor”). The guarantees of our Unsecured Notes will be released under the following customary circumstances: (i) the sale or disposition of all or substantially all of the assets of the Guarantor (by way of merger, consolidation, or otherwise) to a person that is not (either before or after giving effect to such transaction) Parent, Subsidiary Issuer or a restricted subsidiary; (ii) the sale or disposition of sufficient capital stock of the Guarantor to a person that is not (either before or after giving effect to such transaction) Parent, Subsidiary Issuer or a restricted subsidiary and the Guarantor ceases to be a restricted subsidiary of Subsidiary Issuer as a result of the sale or other disposition; (iii) the designation of the Guarantor as an unrestricted subsidiary in accordance with the indenture governing the Unsecured Notes; or (iv) the legal or covenant defeasance of the Unsecured Notes or the satisfaction and discharge of the indenture governing the Unsecured Notes. Presented below is condensed consolidating financial information for (a) Parent, (b) Subsidiary Issuer, (c) the Guarantor Subsidiaries and (d) our U.S. subsidiaries that are not Guarantor Subsidiaries and our foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016. The condensed consolidating financial information has been presented to show the nature of assets held and the results of operations and cash flows of Parent, Subsidiary Issuer, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming that the guarantee structure of the Unsecured Notes had been in effect at the beginning of the periods presented. Three Months Ended September 30, 2017 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Revenues Games $ — $ — $ 55,331 $ 1,739 $ (1,618 ) $ 55,452 Payments — 175,793 7,841 9,040 (804 ) 191,870 Total revenues — 175,793 63,172 10,779 (2,422 ) 247,322 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 13,857 1,106 (1,143 ) 13,820 Payments cost of revenue (exclusive of depreciation and amortization) — 140,299 2,478 7,061 — 149,838 Operating expenses — 18,519 10,365 1,858 (1,279 ) 29,463 Research and development — — 4,542 3 — 4,545 Depreciation — 1,615 10,740 184 — 12,539 Amortization — 2,260 14,579 483 — 17,322 Total costs and expenses — 162,693 56,561 10,695 (2,422 ) 227,527 Operating income — 13,100 6,611 84 — 19,795 Other expenses (income) Interest (income) expense, net — (292 ) 23,406 254 — 23,368 Income (loss) from subsidiaries 4,289 (2,898 ) (39 ) — (1,352 ) — Total other expenses (income) 4,289 (3,190 ) 23,367 254 (1,352 ) 23,368 (Loss) income before income tax (4,289 ) 16,290 (16,756 ) (170 ) 1,352 (3,573 ) Income tax (benefit) provision — (1,055 ) 1,708 63 — 716 Net (loss) income (4,289 ) 17,345 (18,464 ) (233 ) 1,352 (4,289 ) Foreign currency translation 602 — — 602 (602 ) 602 Comprehensive (loss) income $ (3,687 ) $ 17,345 $ (18,464 ) $ 369 $ 750 $ (3,687 ) Three Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Revenues Games $ — $ — $ 56,218 $ — $ — $ 56,218 Payments — 153,145 7,519 5,417 (122 ) 165,959 Total revenues — 153,145 63,737 5,417 (122 ) 222,177 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 15,467 — — 15,467 Payments cost of revenue (exclusive of depreciation and amortization) — 122,316 2,206 2,689 — 127,211 Operating expenses — 16,491 10,148 479 (122 ) 26,996 Research and development — — 4,460 — — 4,460 Depreciation — 1,892 10,447 28 — 12,367 Amortization — 3,128 20,439 537 — 24,104 Total costs and expenses — 143,827 63,167 3,733 (122 ) 210,605 Operating income — 9,318 570 1,684 — 11,572 Other expenses (income) Interest expense, net of interest income — 1,371 23,399 45 — 24,815 Loss (income) from subsidiaries 8,254 (4,306 ) — — (3,948 ) — Total other expenses (income) 8,254 (2,935 ) 23,399 45 (3,948 ) 24,815 (Loss) income before income tax (8,254 ) 12,253 (22,829 ) 1,639 3,948 (13,243 ) Income tax provision (benefit) — 3,849 (9,261 ) 423 — (4,989 ) Net (loss) income (8,254 ) 8,404 (13,568 ) 1,216 3,948 (8,254 ) Foreign currency translation (394 ) — — (394 ) 394 (394 ) Comprehensive (loss) income $ (8,648 ) $ 8,404 $ (13,568 ) $ 822 $ 4,342 $ (8,648 ) Nine Months Ended September 30, 2017 Non- Subsidiary Guarantor Guarantor Parent Issuer Subsidiaries Subsidiaries Eliminations Total Revenues Games $ — $ — $ 165,551 $ 5,445 $ (5,164 ) $ 165,832 Payments — 515,853 23,323 25,409 (3,328 ) 561,257 Total revenues — 515,853 188,874 30,854 (8,492 ) 727,089 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 39,659 2,945 (3,101 ) 39,503 Payments cost of revenue (exclusive of depreciation and amortization) — 410,038 7,167 18,899 — 436,104 Operating expenses — 53,413 32,463 6,750 (5,391 ) 87,235 Research and development — — 13,676 30 — 13,706 Depreciation — 5,057 29,292 416 — 34,765 Amortization — 7,756 42,885 1,445 — 52,086 Total costs and expenses — 476,264 165,142 30,485 (8,492 ) 663,399 Operating income — 39,589 23,732 369 — 63,690 Other expenses (income) Interest expense, net of interest income — 2,216 69,455 635 — 72,306 Loss (income) from subsidiaries 26,854 (8,884 ) (121 ) — (17,849 ) — Loss on extinguishment of debt — 14,615 — — — 14,615 Total other expenses (income) 26,854 7,947 69,334 635 (17,849 ) 86,921 (Loss) income before income tax (26,854 ) 31,642 (45,602 ) (266 ) 17,849 (23,231 ) Income tax (benefit) provision — (1,701 ) 5,108 216 — 3,623 Net (loss) income (26,854 ) 33,343 (50,710 ) (482 ) 17,849 (26,854 ) Foreign currency translation 1,710 — — 1,710 (1,710 ) 1,710 Comprehensive (loss) income $ (25,144 ) $ 33,343 $ (50,710 ) $ 1,228 $ 16,139 $ (25,144 ) Nine Months Ended September 30, 2016 Non- Subsidiary Guarantor Guarantor Parent Issuer Subsidiaries Subsidiaries Eliminations Total Revenues Games $ — $ — $ 158,660 $ — $ — 158,660 Payments — 447,762 22,622 13,769 (867 ) 483,286 Total revenues — 447,762 181,282 13,769 (867 ) 641,946 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 36,871 — — 36,871 Payments cost of revenue (exclusive of depreciation and amortization) — 359,265 6,754 7,347 — 373,366 Operating expenses — 53,912 33,230 1,460 (867 ) 87,735 Research and development — — 14,499 — — 14,499 Depreciation — 6,376 30,707 89 — 37,172 Amortization — 9,370 59,830 1,687 — 70,887 Total costs and expenses — 428,923 181,891 10,583 (867 ) 620,530 Operating income (loss) — 18,839 (609 ) 3,186 — 21,416 Other expenses (income) Interest expense, net of interest income — 4,880 69,500 168 — 74,548 Loss (income) from subsidiaries 32,202 (11,120 ) — — (21,082 ) — Total other expenses (income) 32,202 (6,240 ) 69,500 168 (21,082 ) 74,548 (Loss) income before income tax (32,202 ) 25,079 (70,109 ) 3,018 21,082 (53,132 ) Income tax provision (benefit) — 5,785 (27,642 ) 927 — (20,930 ) Net (loss) income (32,202 ) 19,294 (42,467 ) 2,091 21,082 (32,202 ) Foreign currency translation (1,314 ) — — (1,314 ) 1,314 (1,314 ) Comprehensive (loss) income $ (33,516 ) $ 19,294 $ (42,467 ) $ 777 $ 22,396 $ (33,516 ) At September 30, 2017 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total ASSETS Current assets Cash and cash equivalents $ — $ 85,633 $ 6,587 $ 16,251 $ — $ 108,471 Settlement receivables — 112,879 — 14,564 — 127,443 Trade and other receivables, net — 6,370 35,415 3,186 — 44,971 Inventory — 5,550 18,240 — — 23,790 Prepaid expenses and other assets — 6,078 6,691 9,769 — 22,538 Intercompany balances — 167,488 207,021 1,531 (376,040 ) — Total current assets — 383,998 273,954 45,301 (376,040 ) 327,213 Non-current assets Property, equipment and leased assets, net — 13,987 93,258 2,154 — 109,399 Goodwill — 151,417 488,511 665 — 640,593 Other intangible assets, net — 20,330 314,348 3,396 — 338,074 Other receivables — 1,220 1,656 — — 2,876 Investment in subsidiaries (123,760 ) 182,365 1,007 79 (59,691 ) — Deferred tax asset — 34,386 — — (34,386 ) — Other assets — 4,632 2,635 183 — 7,450 Intercompany balances — 1,148,223 — — (1,148,223 ) — Total non-current assets (123,760 ) 1,556,560 901,415 6,477 (1,242,300 ) 1,098,392 Total assets $ (123,760 ) $ 1,940,558 $ 1,175,369 $ 51,778 $ (1,618,340 ) $ 1,425,605 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EARNINGS Current liabilities Settlement liabilities $ — $ 189,738 $ 202 $ 7,554 $ — $ 197,494 Accounts payable and accrued expenses — 77,194 46,314 3,117 — 126,625 Current portion of long-term debt — 8,200 — — — 8,200 Intercompany balances — 204,387 154,489 17,164 (376,040 ) — Total current liabilities — 479,519 201,005 27,835 (376,040 ) 332,319 Non-current liabilities Deferred tax liability — — 95,171 — (34,386 ) 60,785 Long-term debt, less current portion — 1,130,671 — — — 1,130,671 Other accrued expenses and liabilities — 2,973 22,661 — — 25,634 Intercompany balances — — 1,148,223 — (1,148,223 ) — Total non-current liabilities — 1,133,644 1,266,055 — (1,182,609 ) 1,217,090 Total liabilities — 1,613,163 1,467,060 27,835 (1,558,649 ) 1,549,409 Stockholders’ (deficit) equity Common stock 92 — — — — 92 Additional paid-in capital 273,906 93,091 6,841 21,109 (121,041 ) 273,906 (Accumulated deficit) retained earnings (221,152 ) 234,659 (297,969 ) 4,279 59,031 (221,152 ) Accumulated other comprehensive loss (355 ) (355 ) (563 ) (1,445 ) 2,319 (399 ) Treasury stock, at cost (176,251 ) — — — — (176,251 ) Total stockholders’ (deficit) equity (123,760 ) 327,395 (291,691 ) 23,943 (59,691 ) (123,804 ) Total liabilities and stockholders’ (deficit) equity $ (123,760 ) $ 1,940,558 $ 1,175,369 $ 51,778 $ (1,618,340 ) $ 1,425,605 At December 31, 2016 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total ASSETS Current assets Cash and cash equivalents $ — $ 88,648 $ 9,103 $ 21,300 $ — $ 119,051 Settlement receivables — 122,222 — 6,599 — 128,821 Trade and other receivables, net — 9,001 41,743 5,907 — 56,651 Inventory — 6,009 13,059 — — 19,068 Prepaid expenses and other assets — 5,359 3,807 8,882 — 18,048 Intercompany balances — 106,729 188,028 1,461 (296,218 ) — Total current assets — 337,968 255,740 44,149 (296,218 ) 341,639 Non-current assets Property, equipment and leased assets, net — 15,144 81,993 1,302 — 98,439 Goodwill — 151,417 488,512 617 — 640,546 Other intangible assets, net — 23,901 289,338 4,758 — 317,997 Other receivables — 2,019 — 1 — 2,020 Investment in subsidiaries (107,751 ) 171,979 1,293 86 (65,607 ) — Deferred tax asset — 37,578 — — (37,578 ) — Other assets — 4,940 2,286 296 — 7,522 Intercompany balances — 1,143,115 7,851 — (1,150,966 ) — Total non-current assets (107,751 ) 1,550,093 871,273 7,060 (1,254,151 ) 1,066,524 Total assets $ (107,751 ) $ 1,888,061 $ 1,127,013 $ 51,209 $ (1,550,369 ) $ 1,408,163 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current liabilities Settlement liabilities $ — $ 225,170 $ 268 $ 13,685 $ — $ 239,123 Accounts payable and accrued expenses — 64,192 28,970 1,229 — 94,391 Current portion of long-term debt — 10,000 — — — 10,000 Intercompany balances — 189,488 101,387 5,343 (296,218 ) — Total current liabilities — 488,850 130,625 20,257 (296,218 ) 343,514 Non-current liabilities Deferred tax liability — — 95,189 — (37,578 ) 57,611 Long-term debt, less current portion — 1,111,880 — — — 1,111,880 Other accrued expenses and liabilities — 2,583 368 — — 2,951 Intercompany balances — — 1,143,116 7,850 (1,150,966 ) — Total non-current liabilities — 1,114,463 1,238,673 7,850 (1,188,544 ) 1,172,442 Total liabilities — 1,603,313 1,369,298 28,107 (1,484,762 ) 1,515,956 Stockholders’ (deficit) equity Common stock 91 — — — — 91 Additional paid-in capital 264,755 85,499 5,314 21,093 (111,906 ) 264,755 (Accumulated deficit) retained earnings (194,299 ) 201,316 (247,273 ) 5,168 40,789 (194,299 ) Accumulated other comprehensive loss (2,067 ) (2,067 ) (326 ) (3,159 ) 5,510 (2,109 ) Treasury stock, at cost (176,231 ) — — — — (176,231 ) Total stockholders’ (deficit) equity (107,751 ) 284,748 (242,285 ) 23,102 (65,607 ) (107,793 ) Total liabilities and stockholders’ (deficit) equity $ (107,751 ) $ 1,888,061 $ 1,127,013 $ 51,209 $ (1,550,369 ) $ 1,408,163 Nine Months Ended September 30, 2017 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Cash flows from operating activities Net (loss) income $ (26,854 ) $ 33,343 $ (50,710 ) $ (482 ) $ 17,849 $ (26,854 ) Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: Depreciation and amortization — 12,813 72,177 1,861 — 86,851 Amortization of financing costs — 4,567 — — — 4,567 Loss on sale or disposal of assets — 347 1,233 — — 1,580 Accretion of contract rights — — 5,845 — — 5,845 Provision for bad debts — (136 ) 8,082 — — 7,946 Deferred income taxes — 3,193 (19 ) — — 3,174 Reserve for obsolescence — 265 (219 ) — — 46 Loss on extinguishment of debt — 14,615 — — — 14,615 Equity in loss (income) of subsidiaries 26,854 (8,884 ) (121 ) — (17,849 ) — Stock-based compensation — 3,684 1,441 — — 5,125 Changes in operating assets and liabilities: Net settlement receivables and liabilities — (26,089 ) (66 ) (14,075 ) — (40,230 ) Other changes in operating assets and liabilities — (35,336 ) 34,422 8,011 — 7,097 Net cash provided by (used in) operating activities — 2,382 72,065 (4,685 ) — 69,762 Cash flows from investing activities Capital expenditures — (7,191 ) (61,474 ) (1,392 ) — (70,057 ) Proceeds from sale of fixed assets — 4 — — — 4 Placement fee agreements — — (13,132 ) — — (13,132 ) Changes in restricted cash — 96 (245 ) — — (149 ) Intercompany investing activities (4,025 ) 3,996 270 (76 ) (165 ) — Net cash used in investing activities (4,025 ) (3,095 ) (74,581 ) (1,468 ) (165 ) (83,334 ) Cash flows from financing activities Repayments of new credit facility — (2,050 ) — — — (2,050 ) Repayments of prior credit facility — (465,600 ) — — — (465,600 ) Repayments of secured notes — (335,000 ) — — — (335,000 ) Proceeds from current credit facility — 820,000 — — — 820,000 Debt issuance costs and discounts — (19,748 ) — — — (19,748 ) Proceeds from exercise of stock options 4,046 — — — — 4,046 Purchase of treasury stock (21 ) — — — — (21 ) Intercompany financing activities — 96 — (261 ) 165 — Net cash provided by (used in) financing activities 4,025 (2,302 ) — (261 ) 165 1,627 Effect of exchange rates on cash — — — 1,365 — 1,365 Cash and cash equivalents Net decrease for the period — (3,015 ) (2,516 ) (5,049 ) — (10,580 ) Balance, beginning of the period — 88,648 9,103 21,300 — 119,051 Balance, end of the period $ — $ 85,633 $ 6,587 $ 16,251 $ — $ 108,471 Nine Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Cash flows from operating activities Net (loss) income $ (32,202 ) $ 19,294 $ (42,467 ) $ 2,091 $ 21,082 $ (32,202 ) Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization — 15,746 90,537 1,776 — 108,059 Amortization of financing costs — 5,023 — — — 5,023 Loss on sale or disposal of assets — 1,349 1,205 — — 2,554 Accretion of contract rights — — 6,521 — — 6,521 Provision for bad debts — 18 7,174 — — 7,192 Deferred income taxes — 10,546 (32,805 ) — — (22,259 ) Write-down of assets — — 4,289 — — 4,289 Reserve for obsolescence — 484 458 — — 942 Equity in loss (income) of subsidiaries 32,202 (11,120 ) — — (21,082 ) — Stock-based compensation — 2,910 1,236 — — 4,146 Other non-cash items — — — — — — Changes in operating assets and liabilities: Net settlement receivables and liabilities — (16,538 ) 6 3,690 — (12,842 ) Other changes in operating assets and liabilities 1 (27,155 ) 41,544 (5 ) — 14,385 Net cash provided by operating activities 1 557 77,698 7,552 — 85,808 Cash flows from investing activities Capital expenditures — (7,330 ) (59,622 ) (73 ) — (67,025 ) Acquisitions, net of cash acquired — (694 ) — — — (694 ) Proceeds from sale of fixed assets — 4,608 — — — 4,608 Placement fee agreements — — (11,187 ) — — (11,187 ) Changes in restricted cash — 88 — — — 88 Intercompany investing activities 10 499 175 (67 ) (617 ) — Net cash provided by (used in) investing activities 10 (2,829 ) (70,634 ) (140 ) (617 ) (74,210 ) Cash flows from financing activities Repayments of prior credit facility — (21,900 ) — — — (21,900 ) Debt issuance costs and discounts — (480 ) — — — (480 ) Purchase of treasury stock (17 ) — — — — (17 ) Intercompany financing activities — 68 — (685 ) 617 — Net cash (used in) provided by financing activities (17 ) (22,312 ) — (685 ) 617 (22,397 ) Effect of exchange rates on cash — — — (743 ) — (743 ) Cash and cash equivalents Net (decrease) increase for the period (6 ) (24,584 ) 7,064 5,984 — (11,542 ) Balance, beginning of the period 6 87,078 3,900 11,046 — 102,030 Balance, end of the period $ — $ 62,494 $ 10,964 $ 17,030 $ — $ 90,488 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS As of the filing date, we had not identified, and were not aware of, any subsequent event for the period. |
BASIS OF PRESENTATION AND SUM25
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of results to be expected for the full fiscal year. The Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. There have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. The carrying amount of cash and cash equivalents, settlement receivables, trade receivables, other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of our borrowings are estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity and similar instruments trading in more active markets. The estimated fair value and outstanding balances of our borrowings are as follows (in thousands). Level of Hierarchy Fair Value Outstanding Balance September 30, 2017 Term loan 2 $ 826,130 $ 817,950 Senior unsecured notes 1 $ 378,875 $ 350,000 December 31, 2016 Term loan 1 $ 451,632 $ 465,600 Senior secured notes 3 $ 324,950 $ 335,000 Senior unsecured notes 1 $ 350,000 $ 350,000 The term loan facility was reported at fair value using a Level 2 input as there were quoted prices in markets that were not considered active as of September 30, 2017. The senior unsecured notes were reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of September 30, 2017. The term loan was reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of December 31, 2016. The senior secured notes were reported at fair value using a Level 3 input as there was no market activity or observable inputs as of December 31, 2016. The senior unsecured notes were reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of December 31, 2016. |
Reclassification of Prior Year Balances | Reclassification of Prior Year Balances Reclassifications were made to the prior-period Financial Statements to conform to the current period presentation. |
Recent Accounting Guidance | Recent Accounting Guidance Recently Adopted Accounting Guidance In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, which provides updated guidance on the goodwill impairment test and the method by which an entity recognizes an impairment charge. These amendments eliminate Step 2 from the current goodwill impairment process and require that an entity recognize an impairment charge equal to the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, a company should also take into consideration income tax effects from tax deductible goodwill on the carrying amount of a reporting unit when recording an impairment loss. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a prospective approach. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted this guidance in the current period. As no indicators of impairment were identified for our goodwill during the three and nine months ended September 30, 2017, this ASU did not impact our Financial Statements. In March 2016, the FASB issued ASU No. 2016-09, which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. This guidance will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. Early adoption is permitted. We adopted this guidance in the current period on a prospective basis. As of September 30, 2017, the adoption of ASU No. 2016-09 has not materially impacted our Financial Statements. With respect to forfeitures, the Company will continue to estimate the number of awards expected to be forfeited in accordance with our existing accounting policy. In addition, our Cash Flows present excess tax benefits as operating activities in the current period, as the prior period was not adjusted. In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value. The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory method. The amendments do not apply to inventory that is measured using LIFO or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (“FIFO”) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We adopted this guidance in the current period. This ASU did not have a material impact on our Financial Statements. Recent Accounting Guidance Not Yet Adopted In May 2017, the FASB issued ASU No. 2017-09 to clarify which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. An entity is required to account for the effects of a modification unless all of the following conditions are met: (i) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted in the first period of the year this guidance is adopted. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In January 2017, the FASB issued ASU No. 2017-01, which clarifies the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a prospective approach as of the beginning of the first period of adoption. Early adoption is permitted for acquisitions, or disposals that occur before the issuance date or effectiveness date of the amendments when the transaction has not been reported in financial statements that have been issued or made available for issuance. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In October 2016, the FASB issued ASU No. 2016-18, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a retrospective approach to each period presented. Early adoption is permitted and adoption in an interim period should reflect adjustments as of the beginning of the fiscal year that includes that interim period. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In October 2016, the FASB issued ASU No. 2016-16, which provides updated guidance on the recognition of the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs, and this eliminates the exception for an intra-entity transfer of such assets. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach through a cumulative-effective adjustment directly to retained earnings as of the beginning of the period of adoption. Early adoption is permitted during the first interim period of the year this guidance is adopted. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In August 2016, the FASB issued ASU No. 2016-15, which provides updated guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance will be applied using a retrospective approach. If it is impracticable to apply the amendments retrospectively for some of the issues within this ASU, the amendments for those issues would be applied prospectively as of the earliest date practicable. Early adoption is permitted including adoption in an interim period. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In June 2016, the FASB issued ASU No. 2016-13, which provides updated guidance on credit losses for financial assets measured at amortized cost basis and available-for sale debt securities. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach for the cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective and using a prospective approach for debt securities for which any other-than-temporary impairment had been recognized before the effective date. Early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact of adopting this guidance on our Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, which provides guidance on the accounting treatment of leases. The ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. While we are currently assessing the impact of this ASU on our Financial Statements, we expect the primary impact to our consolidated financial position upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases on our Balance Sheets, which will result in the recording of right of use assets and lease obligations and are currently discussed in “Note 12 — Commitments and Contingencies.” In May 2014, the FASB issued ASU No. 2014-09, which creates FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. The guidance in ASU 2014-09 was further updated by ASU 2016-08 in March 2016, which provides clarification on the implementation of the principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, which provides clarification on the implementation of performance obligations and licensing in ASU 2014-09. In May 2016, the FASB issued ASU 2016-11, which amends guidance provided in two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force meeting over various topics relating to ASU 606. In May 2016, the FASB issued ASU 2016-12, which clarified various topics in ASU 606. In December 2016, the FASB issued ASU 2016-20, which clarified additional topics in ASU 606. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016. However, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2015, including interim reporting periods within that reporting period. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We have performed a review of the requirements of the standard and identified our major revenue streams and the anticipated impact to each of them: Major Revenue Stream Preliminary Expected Impact Upon Adoption Games Segment: Game Sales We expect revenue recognition to be consistent with our current practices, however, there may be some differences as we continue to evaluate the implications. Game Operations We expect revenue recognition to be consistent with our current practices, however, with respect to our WAP offering(s), for which we initiated this year, we will be required to net the direct costs with Games revenues as opposed to our existing practice of recording those amounts to Games cost of revenues. WAP jackpot expense was approximately $0.1 million and $0.3 million for the three and nine months ended September 30, 2017, respectively. Payments Segment: Cash Advance, ATM and Check Services We generally expect revenue recognition to be consistent with our current practices, however, there may potentially be significant differences as we continue to evaluate the implications specifically related to our reporting these revenues on a gross versus net basis. As such, there will be no effect on operating income, net loss, cash flows or the timing of revenues recognized and costs incurred. In addition, there may be changes to the Kiosk Sales and Services and Compliance Sales and Services offerings that impact cash advance, ATM and check services revenue streams as we continue to evaluate the revenue recognition standard. Central Credit We expect revenue recognition to be consistent with our current practices, however, there may be differences as we continue to evaluate the implications. Kiosk Sales and Services We expect to encounter some level of change to our revenue recognition practices for these revenue streams under the new guidance, however, the amounts are not anticipated to be material as we continue to evaluate the implications. Compliance Sales and Services We expect to encounter some level of change to our revenue recognition practices for these revenue streams under the new guidance, however, the amounts are not anticipated to be material as we continue to evaluate the implications. Currently, we do not expect our Games or certain of our Payments revenues to be materially impacted by the implementation of this guidance; however, we continue to evaluate certain of our other Payments-related revenue streams as there may be a potentially significant impact, depending on our final interpretation of the accounting guidance. More specifically, based on the transition guidance related to the new revenue recognition standard, we are in the process of determining if our cash advance, ATM and check services revenue streams will be required to be reported “net of transaction price” rather than our current gross revenue presentation basis. Under the existing Topic 605, certain factors that supported our gross reporting position have been eliminated in the new Topic 606. In addition, our understanding of the new transition guidance, as it specifically pertains to payments from customers, may further require us to report certain of these Payments-related revenue streams on a net presentation basis. If our conclusions, in accordance with GAAP, support a net reporting of these specific revenue streams, this will have a significant impact on our revenues, cost of revenues and margins for the affected revenue streams, however, there will be no effect on operating income, net loss, cash flows or the timing of revenues recognized and costs incurred. As we continue to take the necessary measures of preparedness in connection with the adoption of the new revenue recognition standard, we continue to do the following: • Evaluate our revenue streams to determine the extent, if any, of the changes to the timing and amount of revenue recorded in each reporting period. • Review our existing accounting policies, procedures and internal controls to further determine the impact of the new standard on our Financial Statements. • Prepare the enhanced disclosures and updates to our revenue recognition policies to identify performance obligations to customers and that will require significant judgment in both measurement and recognition. • Review in detail our sales contract terms and conditions to determine the necessary adjustments, if any. • Monitor the activity of the FASB and the transition resource group as it relates to specific interpretive guidance that may impact us. We may identify other impacts from the implementation of this guidance as we continue our assessment. We expect to adopt this guidance using the modified retrospective method beginning in the first quarter of 2018. |
BASIS OF PRESENTATION AND SUM26
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of estimated fair value and outstanding balances of borrowings | The estimated fair value and outstanding balances of our borrowings are as follows (in thousands). Level of Hierarchy Fair Value Outstanding Balance September 30, 2017 Term loan 2 $ 826,130 $ 817,950 Senior unsecured notes 1 $ 378,875 $ 350,000 December 31, 2016 Term loan 1 $ 451,632 $ 465,600 Senior secured notes 3 $ 324,950 $ 335,000 Senior unsecured notes 1 $ 350,000 $ 350,000 |
TRADE AND OTHER RECEIVABLES (Ta
TRADE AND OTHER RECEIVABLES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Schedule of components of trade and other receivables | The balance of trade and other receivables consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Trade and other receivables, net Games trade and loans receivables $ 36,837 $ 44,410 Payments trade and loans receivables 10,214 12,337 Other receivables 796 1,924 Total trade and other receivables, net $ 47,847 $ 58,671 Less: non-current portion of receivables 2,876 2,020 Total trade and other receivables, current portion $ 44,971 $ 56,651 |
PREPAID AND OTHER ASSETS (Table
PREPAID AND OTHER ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Prepaid Expense And Other Assets [Abstract] | |
Schedule of components of current portion of prepaid and other assets | The balance of the current portion of prepaid and other assets consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Prepaid expenses and other assets Deposits $ 9,971 $ 8,622 Prepaid expenses 7,870 5,937 Other 4,697 3,489 Total prepaid expenses and other assets $ 22,538 $ 18,048 |
Schedule of components of non-current portion of prepaid and other assets | The balance of the non-current portion of other assets consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Other assets Prepaid expenses and deposits $ 3,464 $ 3,399 Debt issuance costs of revolving credit facility 898 689 Other 3,088 3,434 Total other assets $ 7,450 $ 7,522 |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventory | Inventory consisted of the following (in thousands): At September 30, At December 31, 2017 2016 Inventory Raw materials and component parts, net of reserves of $1,523 and $2,155 at September 30, 2017 and December 31, 2016, respectively $ 15,974 $ 12,570 Work-in-progress 3,516 1,502 Finished goods 4,300 4,996 Total inventory $ 23,790 $ 19,068 |
PROPERTY, EQUIPMENT AND LEASE30
PROPERTY, EQUIPMENT AND LEASED ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Schedule of components of property, equipment and leased assets | Property, equipment and leased assets consist of the following (in thousands): At September 30, 2017 At December 31, 2016 Useful Life Accumulated Net Book Accumulated Net Book (Years) Cost Depreciation Value Cost Depreciation Value Property, equipment and leased assets Rental pool - deployed 2-4 $ 149,895 $ 73,623 $ 76,272 $ 123,812 $ 59,188 $ 64,624 Rental pool - undeployed 2-4 19,829 10,874 8,955 13,456 5,721 7,735 ATM equipment 5 17,154 11,992 5,162 16,537 11,189 5,348 Leasehold and building improvements Lease Term 10,723 4,820 5,903 10,023 3,698 6,325 Cash advance equipment 3 8,492 5,544 2,948 8,590 4,499 4,091 Machinery, office and other equipment 2-5 33,217 23,058 10,159 30,424 20,108 10,316 Total $ 239,310 $ 129,911 $ 109,399 $ 202,842 $ 104,403 $ 98,439 |
GOODWILL AND OTHER INTANGIBLE31
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of components of other intangible assets | Other intangible assets consist of the following (in thousands): At September 30, 2017 At December 31, 2016 Useful Life Accumulated Net Book Accumulated Net Book (years) Cost Amortization Value Cost Amortization Value Other intangible assets Contract rights under placement fee agreements 1-7 $ 59,605 $ 1,782 $ 57,823 $ 17,742 $ 6,281 $ 11,461 Customer contracts 7-14 50,975 42,768 8,207 50,975 40,419 10,556 Customer relationships 8-12 231,100 58,412 172,688 231,100 42,688 188,412 Developed technology and software 1-6 244,151 152,706 91,445 224,265 126,721 97,544 Patents, trademarks and other 1-17 28,834 20,923 7,911 27,771 17,747 10,024 Total $ 614,665 $ 276,591 $ 338,074 $ 551,853 $ 233,856 $ 317,997 |
ACCOUNTS PAYABLE AND ACCRUED 32
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables And Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | The following table presents our accounts payable and accrued expenses (in thousands): At September 30, At December 31, 2017 2016 Accounts payable and accrued expenses Trade accounts payable $ 62,422 $ 55,352 Placement fees (1) 16,746 — Accrued interest 7,650 82 Payroll and related expenses 10,207 12,305 Deferred and unearned revenues 9,981 9,222 Cash access processing and related expenses 7,682 7,001 Accrued taxes 2,734 2,587 Other 9,203 7,842 Total accounts payable and accrued expenses $ 126,625 $ 94,391 (1) The total outstanding balance of the placement fees was $39.1 million. The remaining $22.3 million of non-current placement fees was included in other accrued expenses and liabilities in our Balance Sheets as of September 30, 2017. |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding indebtedness | The following table summarizes our outstanding indebtedness (in thousands): At September 30, At December 31, 2017 2016 Long-term debt Senior secured term loan $ 817,950 $ 465,600 Senior secured notes — 335,000 Senior unsecured notes 350,000 350,000 Total debt 1,167,950 1,150,600 Less: debt issuance costs and discount (29,079 ) (28,720 ) Total debt after debt issuance costs and discount 1,138,871 1,121,880 Less: current portion of long-term debt (8,200 ) (10,000 ) Long-term debt, less current portion $ 1,130,671 $ 1,111,880 |
WEIGHTED AVERAGE COMMON SHARES
WEIGHTED AVERAGE COMMON SHARES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average number of common shares outstanding used in computation of basic and diluted earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average shares Weighted average number of common shares outstanding - basic 66,897 66,049 66,449 66,041 Potential dilution from equity awards (1) — — — — Weighted average number of common shares outstanding - diluted 66,897 66,049 66,449 66,041 (1) The Company was in a net loss position for the three and nine months ended September 30, 2017 and 2016; therefore, potentially dilutive common shares were excluded as their effects would be antidilutive under the application of the treasury method. Equity awards to purchase approximately 8.0 million and 12.0 million shares of common stock for the three and nine months ended September 30, 2017, respectively, and 18.5 million and 15.9 million shares of common stock for the three and nine months ended September 30, 2016, respectively, were excluded from the diluted net loss per share results. |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Summary of award activity | A summary of award activity is as follows (in thousands): Stock Options Restricted Stock Granted Granted Outstanding, December 31, 2016 18,233 80 Granted 4,107 40 Exercised options or vested shares (950 ) (16 ) Cancelled or forfeited (358 ) — Outstanding, September 30, 2017 21,032 104 |
Summary of options activity | For the market-based options granted during the third quarter of 2016, the assumptions were: (a) risk-free interest rate of 2%; (b) expected term of ten years; (c) expected volatility of 69% and (d) no expected dividend yield. The following tables present the options activity: Weighted Number of Weighted Average Average Life Aggregate Common Shares Exercise Price Remaining Intrinsic Value (in thousands) (per share) (years) (in thousands) Outstanding, December 31, 2016 18,233 $ 6.02 6.4 $ 2,387 Granted 4,107 3.38 Exercised (950 ) 4.29 Canceled or forfeited (358 ) 5.99 Outstanding, September 30, 2017 21,032 $ 5.58 6.5 $ 48,106 Vested and expected to vest, September 30, 2017 18,401 $ 5.71 6.3 $ 40,291 Exercisable, September 30, 2017 10,539 $ 6.85 4.8 $ 13,298 |
Summary of non-vested share awards for time-based restricted shares | The following is a summary of non-vested share awards for our time-based restricted stock: Weighted Shares Average Grant Outstanding Date Fair Value (in thousands) (per share) Outstanding, December 31, 2016 80 $ 7.12 Granted 40 6.66 Vested (16 ) 6.91 Forfeited — — Outstanding, September 30, 2017 104 $ 6.97 |
Time Based Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Schedule assumptions used to determine fair value | The fair values of our standard time-based options were determined as of the date of grant using the Black-Scholes option pricing model with the following assumptions: Nine months ended September 30, 2017 2016 Risk-free interest rate 2 % 1 % Expected life of options (in years) 6 5 Expected volatility 54 % 51 % Expected dividend yield — % — % |
Market Performance Based Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Schedule assumptions used to determine fair value | The fair values of our market-based options were determined as of the date of grant using a lattice-based option valuation model with the following assumptions: Nine months ended September 30, 2017 2016 Risk-free interest rate 3 % 2 % Measurement period (in years) 10 10 Expected volatility 70 % 68 % Expected dividend yield — % — % |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of segment information | The following tables present segment information (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2017 2016 2017 2016 Revenues Games $ 55,452 $ 56,218 $ 165,832 $ 158,660 Payments 191,870 165,959 561,257 483,286 Total revenues $ 247,322 $ 222,177 $ 727,089 $ 641,946 Operating income (loss) Games $ 1,787 $ (4,183 ) $ 9,301 $ (14,638 ) Payments 18,008 15,755 54,389 36,054 Total operating income $ 19,795 $ 11,572 $ 63,690 $ 21,416 At September 30, 2017 At December 31, 2016 Total assets Games $ 927,888 $ 894,213 Payments 497,717 513,950 Total assets $ 1,425,605 $ 1,408,163 |
CONDENSED CONSOLIDATING FINAN37
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Guarantees [Abstract] | |
Schedule of condensed consolidating statements of income and comprehensive income | Three Months Ended September 30, 2017 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Revenues Games $ — $ — $ 55,331 $ 1,739 $ (1,618 ) $ 55,452 Payments — 175,793 7,841 9,040 (804 ) 191,870 Total revenues — 175,793 63,172 10,779 (2,422 ) 247,322 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 13,857 1,106 (1,143 ) 13,820 Payments cost of revenue (exclusive of depreciation and amortization) — 140,299 2,478 7,061 — 149,838 Operating expenses — 18,519 10,365 1,858 (1,279 ) 29,463 Research and development — — 4,542 3 — 4,545 Depreciation — 1,615 10,740 184 — 12,539 Amortization — 2,260 14,579 483 — 17,322 Total costs and expenses — 162,693 56,561 10,695 (2,422 ) 227,527 Operating income — 13,100 6,611 84 — 19,795 Other expenses (income) Interest (income) expense, net — (292 ) 23,406 254 — 23,368 Income (loss) from subsidiaries 4,289 (2,898 ) (39 ) — (1,352 ) — Total other expenses (income) 4,289 (3,190 ) 23,367 254 (1,352 ) 23,368 (Loss) income before income tax (4,289 ) 16,290 (16,756 ) (170 ) 1,352 (3,573 ) Income tax (benefit) provision — (1,055 ) 1,708 63 — 716 Net (loss) income (4,289 ) 17,345 (18,464 ) (233 ) 1,352 (4,289 ) Foreign currency translation 602 — — 602 (602 ) 602 Comprehensive (loss) income $ (3,687 ) $ 17,345 $ (18,464 ) $ 369 $ 750 $ (3,687 ) Three Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Revenues Games $ — $ — $ 56,218 $ — $ — $ 56,218 Payments — 153,145 7,519 5,417 (122 ) 165,959 Total revenues — 153,145 63,737 5,417 (122 ) 222,177 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 15,467 — — 15,467 Payments cost of revenue (exclusive of depreciation and amortization) — 122,316 2,206 2,689 — 127,211 Operating expenses — 16,491 10,148 479 (122 ) 26,996 Research and development — — 4,460 — — 4,460 Depreciation — 1,892 10,447 28 — 12,367 Amortization — 3,128 20,439 537 — 24,104 Total costs and expenses — 143,827 63,167 3,733 (122 ) 210,605 Operating income — 9,318 570 1,684 — 11,572 Other expenses (income) Interest expense, net of interest income — 1,371 23,399 45 — 24,815 Loss (income) from subsidiaries 8,254 (4,306 ) — — (3,948 ) — Total other expenses (income) 8,254 (2,935 ) 23,399 45 (3,948 ) 24,815 (Loss) income before income tax (8,254 ) 12,253 (22,829 ) 1,639 3,948 (13,243 ) Income tax provision (benefit) — 3,849 (9,261 ) 423 — (4,989 ) Net (loss) income (8,254 ) 8,404 (13,568 ) 1,216 3,948 (8,254 ) Foreign currency translation (394 ) — — (394 ) 394 (394 ) Comprehensive (loss) income $ (8,648 ) $ 8,404 $ (13,568 ) $ 822 $ 4,342 $ (8,648 ) Nine Months Ended September 30, 2017 Non- Subsidiary Guarantor Guarantor Parent Issuer Subsidiaries Subsidiaries Eliminations Total Revenues Games $ — $ — $ 165,551 $ 5,445 $ (5,164 ) $ 165,832 Payments — 515,853 23,323 25,409 (3,328 ) 561,257 Total revenues — 515,853 188,874 30,854 (8,492 ) 727,089 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 39,659 2,945 (3,101 ) 39,503 Payments cost of revenue (exclusive of depreciation and amortization) — 410,038 7,167 18,899 — 436,104 Operating expenses — 53,413 32,463 6,750 (5,391 ) 87,235 Research and development — — 13,676 30 — 13,706 Depreciation — 5,057 29,292 416 — 34,765 Amortization — 7,756 42,885 1,445 — 52,086 Total costs and expenses — 476,264 165,142 30,485 (8,492 ) 663,399 Operating income — 39,589 23,732 369 — 63,690 Other expenses (income) Interest expense, net of interest income — 2,216 69,455 635 — 72,306 Loss (income) from subsidiaries 26,854 (8,884 ) (121 ) — (17,849 ) — Loss on extinguishment of debt — 14,615 — — — 14,615 Total other expenses (income) 26,854 7,947 69,334 635 (17,849 ) 86,921 (Loss) income before income tax (26,854 ) 31,642 (45,602 ) (266 ) 17,849 (23,231 ) Income tax (benefit) provision — (1,701 ) 5,108 216 — 3,623 Net (loss) income (26,854 ) 33,343 (50,710 ) (482 ) 17,849 (26,854 ) Foreign currency translation 1,710 — — 1,710 (1,710 ) 1,710 Comprehensive (loss) income $ (25,144 ) $ 33,343 $ (50,710 ) $ 1,228 $ 16,139 $ (25,144 ) Nine Months Ended September 30, 2016 Non- Subsidiary Guarantor Guarantor Parent Issuer Subsidiaries Subsidiaries Eliminations Total Revenues Games $ — $ — $ 158,660 $ — $ — 158,660 Payments — 447,762 22,622 13,769 (867 ) 483,286 Total revenues — 447,762 181,282 13,769 (867 ) 641,946 Costs and expenses Games cost of revenue (exclusive of depreciation and amortization) — — 36,871 — — 36,871 Payments cost of revenue (exclusive of depreciation and amortization) — 359,265 6,754 7,347 — 373,366 Operating expenses — 53,912 33,230 1,460 (867 ) 87,735 Research and development — — 14,499 — — 14,499 Depreciation — 6,376 30,707 89 — 37,172 Amortization — 9,370 59,830 1,687 — 70,887 Total costs and expenses — 428,923 181,891 10,583 (867 ) 620,530 Operating income (loss) — 18,839 (609 ) 3,186 — 21,416 Other expenses (income) Interest expense, net of interest income — 4,880 69,500 168 — 74,548 Loss (income) from subsidiaries 32,202 (11,120 ) — — (21,082 ) — Total other expenses (income) 32,202 (6,240 ) 69,500 168 (21,082 ) 74,548 (Loss) income before income tax (32,202 ) 25,079 (70,109 ) 3,018 21,082 (53,132 ) Income tax provision (benefit) — 5,785 (27,642 ) 927 — (20,930 ) Net (loss) income (32,202 ) 19,294 (42,467 ) 2,091 21,082 (32,202 ) Foreign currency translation (1,314 ) — — (1,314 ) 1,314 (1,314 ) Comprehensive (loss) income $ (33,516 ) $ 19,294 $ (42,467 ) $ 777 $ 22,396 $ (33,516 ) |
Schedule of condensed consolidating balance sheets | At September 30, 2017 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total ASSETS Current assets Cash and cash equivalents $ — $ 85,633 $ 6,587 $ 16,251 $ — $ 108,471 Settlement receivables — 112,879 — 14,564 — 127,443 Trade and other receivables, net — 6,370 35,415 3,186 — 44,971 Inventory — 5,550 18,240 — — 23,790 Prepaid expenses and other assets — 6,078 6,691 9,769 — 22,538 Intercompany balances — 167,488 207,021 1,531 (376,040 ) — Total current assets — 383,998 273,954 45,301 (376,040 ) 327,213 Non-current assets Property, equipment and leased assets, net — 13,987 93,258 2,154 — 109,399 Goodwill — 151,417 488,511 665 — 640,593 Other intangible assets, net — 20,330 314,348 3,396 — 338,074 Other receivables — 1,220 1,656 — — 2,876 Investment in subsidiaries (123,760 ) 182,365 1,007 79 (59,691 ) — Deferred tax asset — 34,386 — — (34,386 ) — Other assets — 4,632 2,635 183 — 7,450 Intercompany balances — 1,148,223 — — (1,148,223 ) — Total non-current assets (123,760 ) 1,556,560 901,415 6,477 (1,242,300 ) 1,098,392 Total assets $ (123,760 ) $ 1,940,558 $ 1,175,369 $ 51,778 $ (1,618,340 ) $ 1,425,605 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EARNINGS Current liabilities Settlement liabilities $ — $ 189,738 $ 202 $ 7,554 $ — $ 197,494 Accounts payable and accrued expenses — 77,194 46,314 3,117 — 126,625 Current portion of long-term debt — 8,200 — — — 8,200 Intercompany balances — 204,387 154,489 17,164 (376,040 ) — Total current liabilities — 479,519 201,005 27,835 (376,040 ) 332,319 Non-current liabilities Deferred tax liability — — 95,171 — (34,386 ) 60,785 Long-term debt, less current portion — 1,130,671 — — — 1,130,671 Other accrued expenses and liabilities — 2,973 22,661 — — 25,634 Intercompany balances — — 1,148,223 — (1,148,223 ) — Total non-current liabilities — 1,133,644 1,266,055 — (1,182,609 ) 1,217,090 Total liabilities — 1,613,163 1,467,060 27,835 (1,558,649 ) 1,549,409 Stockholders’ (deficit) equity Common stock 92 — — — — 92 Additional paid-in capital 273,906 93,091 6,841 21,109 (121,041 ) 273,906 (Accumulated deficit) retained earnings (221,152 ) 234,659 (297,969 ) 4,279 59,031 (221,152 ) Accumulated other comprehensive loss (355 ) (355 ) (563 ) (1,445 ) 2,319 (399 ) Treasury stock, at cost (176,251 ) — — — — (176,251 ) Total stockholders’ (deficit) equity (123,760 ) 327,395 (291,691 ) 23,943 (59,691 ) (123,804 ) Total liabilities and stockholders’ (deficit) equity $ (123,760 ) $ 1,940,558 $ 1,175,369 $ 51,778 $ (1,618,340 ) $ 1,425,605 At December 31, 2016 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total ASSETS Current assets Cash and cash equivalents $ — $ 88,648 $ 9,103 $ 21,300 $ — $ 119,051 Settlement receivables — 122,222 — 6,599 — 128,821 Trade and other receivables, net — 9,001 41,743 5,907 — 56,651 Inventory — 6,009 13,059 — — 19,068 Prepaid expenses and other assets — 5,359 3,807 8,882 — 18,048 Intercompany balances — 106,729 188,028 1,461 (296,218 ) — Total current assets — 337,968 255,740 44,149 (296,218 ) 341,639 Non-current assets Property, equipment and leased assets, net — 15,144 81,993 1,302 — 98,439 Goodwill — 151,417 488,512 617 — 640,546 Other intangible assets, net — 23,901 289,338 4,758 — 317,997 Other receivables — 2,019 — 1 — 2,020 Investment in subsidiaries (107,751 ) 171,979 1,293 86 (65,607 ) — Deferred tax asset — 37,578 — — (37,578 ) — Other assets — 4,940 2,286 296 — 7,522 Intercompany balances — 1,143,115 7,851 — (1,150,966 ) — Total non-current assets (107,751 ) 1,550,093 871,273 7,060 (1,254,151 ) 1,066,524 Total assets $ (107,751 ) $ 1,888,061 $ 1,127,013 $ 51,209 $ (1,550,369 ) $ 1,408,163 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current liabilities Settlement liabilities $ — $ 225,170 $ 268 $ 13,685 $ — $ 239,123 Accounts payable and accrued expenses — 64,192 28,970 1,229 — 94,391 Current portion of long-term debt — 10,000 — — — 10,000 Intercompany balances — 189,488 101,387 5,343 (296,218 ) — Total current liabilities — 488,850 130,625 20,257 (296,218 ) 343,514 Non-current liabilities Deferred tax liability — — 95,189 — (37,578 ) 57,611 Long-term debt, less current portion — 1,111,880 — — — 1,111,880 Other accrued expenses and liabilities — 2,583 368 — — 2,951 Intercompany balances — — 1,143,116 7,850 (1,150,966 ) — Total non-current liabilities — 1,114,463 1,238,673 7,850 (1,188,544 ) 1,172,442 Total liabilities — 1,603,313 1,369,298 28,107 (1,484,762 ) 1,515,956 Stockholders’ (deficit) equity Common stock 91 — — — — 91 Additional paid-in capital 264,755 85,499 5,314 21,093 (111,906 ) 264,755 (Accumulated deficit) retained earnings (194,299 ) 201,316 (247,273 ) 5,168 40,789 (194,299 ) Accumulated other comprehensive loss (2,067 ) (2,067 ) (326 ) (3,159 ) 5,510 (2,109 ) Treasury stock, at cost (176,231 ) — — — — (176,231 ) Total stockholders’ (deficit) equity (107,751 ) 284,748 (242,285 ) 23,102 (65,607 ) (107,793 ) Total liabilities and stockholders’ (deficit) equity $ (107,751 ) $ 1,888,061 $ 1,127,013 $ 51,209 $ (1,550,369 ) $ 1,408,163 |
Schedule of condensed consolidating cash flows | Nine Months Ended September 30, 2017 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Cash flows from operating activities Net (loss) income $ (26,854 ) $ 33,343 $ (50,710 ) $ (482 ) $ 17,849 $ (26,854 ) Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: Depreciation and amortization — 12,813 72,177 1,861 — 86,851 Amortization of financing costs — 4,567 — — — 4,567 Loss on sale or disposal of assets — 347 1,233 — — 1,580 Accretion of contract rights — — 5,845 — — 5,845 Provision for bad debts — (136 ) 8,082 — — 7,946 Deferred income taxes — 3,193 (19 ) — — 3,174 Reserve for obsolescence — 265 (219 ) — — 46 Loss on extinguishment of debt — 14,615 — — — 14,615 Equity in loss (income) of subsidiaries 26,854 (8,884 ) (121 ) — (17,849 ) — Stock-based compensation — 3,684 1,441 — — 5,125 Changes in operating assets and liabilities: Net settlement receivables and liabilities — (26,089 ) (66 ) (14,075 ) — (40,230 ) Other changes in operating assets and liabilities — (35,336 ) 34,422 8,011 — 7,097 Net cash provided by (used in) operating activities — 2,382 72,065 (4,685 ) — 69,762 Cash flows from investing activities Capital expenditures — (7,191 ) (61,474 ) (1,392 ) — (70,057 ) Proceeds from sale of fixed assets — 4 — — — 4 Placement fee agreements — — (13,132 ) — — (13,132 ) Changes in restricted cash — 96 (245 ) — — (149 ) Intercompany investing activities (4,025 ) 3,996 270 (76 ) (165 ) — Net cash used in investing activities (4,025 ) (3,095 ) (74,581 ) (1,468 ) (165 ) (83,334 ) Cash flows from financing activities Repayments of new credit facility — (2,050 ) — — — (2,050 ) Repayments of prior credit facility — (465,600 ) — — — (465,600 ) Repayments of secured notes — (335,000 ) — — — (335,000 ) Proceeds from current credit facility — 820,000 — — — 820,000 Debt issuance costs and discounts — (19,748 ) — — — (19,748 ) Proceeds from exercise of stock options 4,046 — — — — 4,046 Purchase of treasury stock (21 ) — — — — (21 ) Intercompany financing activities — 96 — (261 ) 165 — Net cash provided by (used in) financing activities 4,025 (2,302 ) — (261 ) 165 1,627 Effect of exchange rates on cash — — — 1,365 — 1,365 Cash and cash equivalents Net decrease for the period — (3,015 ) (2,516 ) (5,049 ) — (10,580 ) Balance, beginning of the period — 88,648 9,103 21,300 — 119,051 Balance, end of the period $ — $ 85,633 $ 6,587 $ 16,251 $ — $ 108,471 Nine Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Eliminations Total Cash flows from operating activities Net (loss) income $ (32,202 ) $ 19,294 $ (42,467 ) $ 2,091 $ 21,082 $ (32,202 ) Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization — 15,746 90,537 1,776 — 108,059 Amortization of financing costs — 5,023 — — — 5,023 Loss on sale or disposal of assets — 1,349 1,205 — — 2,554 Accretion of contract rights — — 6,521 — — 6,521 Provision for bad debts — 18 7,174 — — 7,192 Deferred income taxes — 10,546 (32,805 ) — — (22,259 ) Write-down of assets — — 4,289 — — 4,289 Reserve for obsolescence — 484 458 — — 942 Equity in loss (income) of subsidiaries 32,202 (11,120 ) — — (21,082 ) — Stock-based compensation — 2,910 1,236 — — 4,146 Other non-cash items — — — — — — Changes in operating assets and liabilities: Net settlement receivables and liabilities — (16,538 ) 6 3,690 — (12,842 ) Other changes in operating assets and liabilities 1 (27,155 ) 41,544 (5 ) — 14,385 Net cash provided by operating activities 1 557 77,698 7,552 — 85,808 Cash flows from investing activities Capital expenditures — (7,330 ) (59,622 ) (73 ) — (67,025 ) Acquisitions, net of cash acquired — (694 ) — — — (694 ) Proceeds from sale of fixed assets — 4,608 — — — 4,608 Placement fee agreements — — (11,187 ) — — (11,187 ) Changes in restricted cash — 88 — — — 88 Intercompany investing activities 10 499 175 (67 ) (617 ) — Net cash provided by (used in) investing activities 10 (2,829 ) (70,634 ) (140 ) (617 ) (74,210 ) Cash flows from financing activities Repayments of prior credit facility — (21,900 ) — — — (21,900 ) Debt issuance costs and discounts — (480 ) — — — (480 ) Purchase of treasury stock (17 ) — — — — (17 ) Intercompany financing activities — 68 — (685 ) 617 — Net cash (used in) provided by financing activities (17 ) (22,312 ) — (685 ) 617 (22,397 ) Effect of exchange rates on cash — — — (743 ) — (743 ) Cash and cash equivalents Net (decrease) increase for the period (6 ) (24,584 ) 7,064 5,984 — (11,542 ) Balance, beginning of the period 6 87,078 3,900 11,046 — 102,030 Balance, end of the period $ — $ 62,494 $ 10,964 $ 17,030 $ — $ 90,488 |
BASIS OF PRESENTATION AND SUM38
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Fair Value and Outstanding Balances of Borrowings (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value | Level 2 | Senior secured term loan | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 826,130 | |
Fair Value | Level 1 | Senior secured term loan | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 451,632 | |
Fair Value | Level 1 | Senior unsecured notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 378,875 | 350,000 |
Fair Value | Level 3 | Senior secured notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 324,950 | |
Outstanding Balance | Senior secured term loan | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | 817,950 | 465,600 |
Outstanding Balance | Senior unsecured notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 350,000 | 350,000 |
Outstanding Balance | Senior secured notes | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Long-term debt | $ 335,000 |
BASIS OF PRESENTATION AND SUM39
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Games | Cost of revenues | ||
Recent Accounting Guidance Not Yet Adopted | ||
WAP jackpot expense | $ 0.1 | $ 0.3 |
FUNDING AGREEMENTS (Details)
FUNDING AGREEMENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Funding Agreements | |||||
Site-funded ATM liability | $ 134,100,000 | $ 134,100,000 | $ 151,000,000 | ||
Contract Cash Solutions Agreement | Indemnification Guarantee | Cash | |||||
Funding Agreements | |||||
Outstanding balance | 226,600,000 | 226,600,000 | 285,400,000 | ||
Contract Cash Solutions Agreement | Indemnification Guarantee | Cash | Interest expense | |||||
Funding Agreements | |||||
Cash usage fees incurred | 1,200,000 | $ 700,000 | 3,500,000 | $ 2,300,000 | |
Contract Cash Solutions Agreement, as amended | Indemnification Guarantee | Cash | |||||
Funding Agreements | |||||
Maximum amount | 425,000,000 | $ 425,000,000 | |||
Expiration date | Jun. 30, 2019 | ||||
Prefunded Cash Access Agreements | Prepaid expenses and other assets | |||||
Funding Agreements | |||||
Prefunded cash | $ 9,300,000 | $ 9,300,000 | $ 8,500,000 |
TRADE AND OTHER RECEIVABLES (De
TRADE AND OTHER RECEIVABLES (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Trade and other receivables, net | ||
Other receivables | $ 796 | $ 1,924 |
Total trade and other receivables, net | 47,847 | 58,671 |
Less: non-current portion of receivables | 2,876 | 2,020 |
Total trade and other receivables, current portion | 44,971 | 56,651 |
Allowance for doubtful accounts | 5,427 | 4,701 |
Check Warranty Reserves | ||
Trade and other receivables, net | ||
Allowance for doubtful accounts | 3,000 | 2,700 |
General Reserves | ||
Trade and other receivables, net | ||
Allowance for doubtful accounts | 2,400 | 2,000 |
Games | ||
Trade and other receivables, net | ||
Trade receivables, net | 36,837 | 44,410 |
Payments | ||
Trade and other receivables, net | ||
Trade receivables, net | $ 10,214 | $ 12,337 |
PREPAID AND OTHER ASSETS (Detai
PREPAID AND OTHER ASSETS (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid expenses and other assets | ||
Deposits | $ 9,971 | $ 8,622 |
Prepaid expenses | 7,870 | 5,937 |
Other | 4,697 | 3,489 |
Total prepaid expenses and other assets | 22,538 | 18,048 |
Other assets | ||
Prepaid expenses and deposits | 3,464 | 3,399 |
Debt issuance costs of revolving credit facility | 898 | 689 |
Other | 3,088 | 3,434 |
Total other assets | $ 7,450 | $ 7,522 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials and component parts, net of reserves of $1,523 and $2,155 at September 30, 2017 and December 31, 2016, respectively | $ 15,974 | $ 12,570 |
Work-in-progress | 3,516 | 1,502 |
Finished goods | 4,300 | 4,996 |
Total inventory | 23,790 | 19,068 |
Raw materials and component parts, reserves | $ 1,523 | $ 2,155 |
PROPERTY, EQUIPMENT AND LEASE44
PROPERTY, EQUIPMENT AND LEASED ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Cost | $ 239,310 | $ 239,310 | $ 202,842 | ||
Accumulated Depreciation | 129,911 | 129,911 | 104,403 | ||
Net Book Value | 109,399 | 109,399 | 98,439 | ||
Depreciation | 12,539 | $ 12,367 | 34,765 | $ 37,172 | |
Rental pool - deployed | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Cost | 149,895 | 149,895 | 123,812 | ||
Accumulated Depreciation | 73,623 | 73,623 | 59,188 | ||
Net Book Value | 76,272 | $ 76,272 | 64,624 | ||
Rental pool - deployed | Minimum | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 2 years | ||||
Rental pool - deployed | Maximum | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 4 years | ||||
Rental pool - undeployed | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Cost | 19,829 | $ 19,829 | 13,456 | ||
Accumulated Depreciation | 10,874 | 10,874 | 5,721 | ||
Net Book Value | 8,955 | $ 8,955 | 7,735 | ||
Rental pool - undeployed | Minimum | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 2 years | ||||
Rental pool - undeployed | Maximum | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 4 years | ||||
ATM equipment | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 5 years | ||||
Cost | 17,154 | $ 17,154 | 16,537 | ||
Accumulated Depreciation | 11,992 | 11,992 | 11,189 | ||
Net Book Value | 5,162 | 5,162 | 5,348 | ||
Leasehold and building improvements | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Cost | 10,723 | 10,723 | 10,023 | ||
Accumulated Depreciation | 4,820 | 4,820 | 3,698 | ||
Net Book Value | 5,903 | $ 5,903 | 6,325 | ||
Cash advance equipment | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 3 years | ||||
Cost | 8,492 | $ 8,492 | 8,590 | ||
Accumulated Depreciation | 5,544 | 5,544 | 4,499 | ||
Net Book Value | 2,948 | 2,948 | 4,091 | ||
Machinery, office and other equipment | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Cost | 33,217 | 33,217 | 30,424 | ||
Accumulated Depreciation | 23,058 | 23,058 | 20,108 | ||
Net Book Value | $ 10,159 | $ 10,159 | $ 10,316 | ||
Machinery, office and other equipment | Minimum | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 2 years | ||||
Machinery, office and other equipment | Maximum | |||||
PROPERTY, EQUIPMENT AND LEASED ASSETS | |||||
Useful Life (years) | 5 years |
GOODWILL AND OTHER INTANGIBLE45
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 640,593 | $ 640,593 | $ 640,546 | ||
Impairment of goodwill | $ 0 | $ 0 | $ 0 | $ 0 |
GOODWILL AND OTHER INTANGIBLE46
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Other Intangible Assets | |||||
Cost | $ 614,665 | $ 614,665 | $ 551,853 | ||
Accumulated Amortization | 276,591 | 276,591 | 233,856 | ||
Net Book Value | 338,074 | 338,074 | 317,997 | ||
Amortization of expense | 17,300 | $ 24,100 | 52,100 | $ 70,900 | |
Contract rights under placement fee agreements | |||||
Other Intangible Assets | |||||
Cost | 59,605 | 59,605 | 17,742 | ||
Accumulated Amortization | 1,782 | 1,782 | 6,281 | ||
Net Book Value | 57,823 | $ 57,823 | 11,461 | ||
Contract rights under placement fee agreements | Minimum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 1 year | ||||
Contract rights under placement fee agreements | Maximum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 7 years | ||||
Customer contracts | |||||
Other Intangible Assets | |||||
Cost | 50,975 | $ 50,975 | 50,975 | ||
Accumulated Amortization | 42,768 | 42,768 | 40,419 | ||
Net Book Value | 8,207 | $ 8,207 | 10,556 | ||
Customer contracts | Minimum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 7 years | ||||
Customer contracts | Maximum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 14 years | ||||
Customer relationships | |||||
Other Intangible Assets | |||||
Cost | 231,100 | $ 231,100 | 231,100 | ||
Accumulated Amortization | 58,412 | 58,412 | 42,688 | ||
Net Book Value | 172,688 | $ 172,688 | 188,412 | ||
Customer relationships | Minimum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 8 years | ||||
Customer relationships | Maximum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 12 years | ||||
Developed technology and software | |||||
Other Intangible Assets | |||||
Cost | 244,151 | $ 244,151 | 224,265 | ||
Accumulated Amortization | 152,706 | 152,706 | 126,721 | ||
Net Book Value | 91,445 | $ 91,445 | 97,544 | ||
Developed technology and software | Minimum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 1 year | ||||
Developed technology and software | Maximum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 6 years | ||||
Patents, trademarks and other | |||||
Other Intangible Assets | |||||
Cost | 28,834 | $ 28,834 | 27,771 | ||
Accumulated Amortization | 20,923 | 20,923 | 17,747 | ||
Net Book Value | $ 7,911 | $ 7,911 | $ 10,024 | ||
Patents, trademarks and other | Minimum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 1 year | ||||
Patents, trademarks and other | Maximum | |||||
Other Intangible Assets | |||||
Useful Life (years) | 17 years |
GOODWILL AND OTHER INTANGIBLE47
GOODWILL AND OTHER INTANGIBLE ASSETS - Placement Fee Agreements (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)Agreement | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)Agreement | |
Funding Agreements | |||||
Placement fees agreement amount | $ 49,100 | $ 0 | |||
Unamortized fees related to superseded contract | $ 10,100 | ||||
Cash payment made | $ 10,100 | $ 13,132 | $ 11,187 | ||
Number of placement fee agreements entered | Agreement | 0 | 0 | |||
Contract rights under placement fee agreements | |||||
Funding Agreements | |||||
Payment advances made under placement fee agreements | $ 11,200 | $ 11,200 | |||
Contract rights under placement fee agreements | Minimum | |||||
Funding Agreements | |||||
General term of the agreement | 12 months | ||||
Contract rights under placement fee agreements | Maximum | |||||
Funding Agreements | |||||
General term of the agreement | 83 months |
ACCOUNTS PAYABLE AND ACCRUED 48
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables And Accruals [Abstract] | ||
Trade accounts payable | $ 62,422 | $ 55,352 |
Placement fees | 16,746 | |
Accrued interest | 7,650 | 82 |
Payroll and related expenses | 10,207 | 12,305 |
Deferred and unearned revenues | 9,981 | 9,222 |
Cash access processing and related expenses | 7,682 | 7,001 |
Accrued taxes | 2,734 | 2,587 |
Other | 9,203 | 7,842 |
Total accounts payable and accrued expenses | $ 126,625 | $ 94,391 |
ACCOUNTS PAYABLE AND ACCRUED 49
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Parenthetical) (Details) $ in Millions | Sep. 30, 2017USD ($) |
Payables And Accruals [Abstract] | |
Total outstanding balance of placement fees | $ 39.1 |
Non-current placement fees | $ 22.3 |
LONG-TERM DEBT - Summary of Ind
LONG-TERM DEBT - Summary of Indebtedness (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Long-term debt | ||
Total debt | $ 1,167,950 | $ 1,150,600 |
Less: debt issuance costs and discount | (29,079) | (28,720) |
Total debt after debt issuance costs and discount | 1,138,871 | 1,121,880 |
Less: current portion of long-term debt | (8,200) | (10,000) |
Long-term debt, less current portion | 1,130,671 | 1,111,880 |
Senior secured term loan | ||
Long-term debt | ||
Total debt | 817,950 | 465,600 |
Senior secured notes | ||
Long-term debt | ||
Total debt | 335,000 | |
Senior unsecured notes | ||
Long-term debt | ||
Total debt | $ 350,000 | $ 350,000 |
LONG-TERM DEBT - Refinancing an
LONG-TERM DEBT - Refinancing and New Credit Facilities (Details) - USD ($) | May 09, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2014 |
Credit Facilities | |||||
Write-off of unamortized deferred financing fees and discounts related to the extinguished debt | $ 14,600,000 | ||||
Prepayment penalties incurred | 0 | ||||
Senior unsecured notes | |||||
Credit Facilities | |||||
Principal amount of debt | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | ||
Debt issuance discount | 3,800,000 | ||||
Debt issuance costs | $ 14,000,000 | ||||
Interest rate (as a percent) | 10.00% | 10.00% | 10.00% | ||
New Credit Agreement, dated May 9, 2017 | |||||
Credit Facilities | |||||
Debt issuance discount | 4,100,000 | ||||
Debt issuance costs | 15,500,000 | ||||
Actual consolidated leverage ratio (as a percent) | 363.00% | ||||
Maximum allowable consolidated secured leverage ratio as of September 30 and December 31, 2017 (as a percent) | 500.00% | ||||
Maximum allowable consolidated secured leverage ratio as of December 31, 2018 (as a percent) | 475.00% | ||||
Maximum allowable consolidated secured leverage ratio as of December 31, 2019 (as a percent) | 450.00% | ||||
New Credit Agreement, dated May 9, 2017 | Everi Payments Inc. | |||||
Credit Facilities | |||||
Ownership of equity interests (as a percent) | 100.00% | ||||
New Credit Agreement, dated May 9, 2017 | Variable rate below threshold | Eurodollar | |||||
Credit Facilities | |||||
Variable reference rate threshold (as a percent) | 1.00% | ||||
Variable reference rate (as a percent) | 1.00% | ||||
New Credit Agreement, dated May 9, 2017 | Event of default | |||||
Credit Facilities | |||||
Threshold for change of control of parent company (as a percent) | 35.00% | ||||
7.25% Notes due 2021 (Refinanced Secured Notes) | Senior secured notes | |||||
Credit Facilities | |||||
Interest rate (as a percent) | 7.25% | ||||
Outstanding amount redeemed | 335,000,000 | ||||
Revolving credit facility | New Credit Agreement, dated May 9, 2017 | |||||
Credit Facilities | |||||
Maximum borrowing capacity | $ 35,000,000 | $ 35,000,000 | $ 35,000,000 | ||
Term of facility | 5 years | 5 years | |||
Borrowings outstanding | 0 | $ 0 | |||
Additional borrowing availability | 35,000,000 | $ 35,000,000 | |||
Revolving credit facility | New Credit Agreement, dated May 9, 2017 | Unsecured Notes remain outstanding and Unsecured Notes Maturity Date not extended | |||||
Credit Facilities | |||||
Period prior to maturity date of any unsecured debt outstanding which may require earlier maturity date | 121 days | ||||
Period of extended Unsecured Notes Maturity Date to not require earlier maturity date | 6 months | ||||
Required period of maturity date before Unsecured Notes Maturity Date | 121 days | ||||
Senior secured term loan facility | |||||
Credit Facilities | |||||
Weighted average interest rate during period (as a percent) | 5.87% | ||||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | |||||
Credit Facilities | |||||
Term of facility | 7 years | 7 years | |||
Principal amount of debt | $ 820,000,000 | $ 820,000,000 | $ 820,000,000 | ||
Required quarterly principal payment, as a percentage of original principal | 0.25% | ||||
Weighted average interest rate during period (as a percent) | 5.74% | 5.71% | |||
Outstanding borrowings | $ 818,000,000 | $ 818,000,000 | |||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | Unsecured Notes remain outstanding and Unsecured Notes Maturity Date not extended | |||||
Credit Facilities | |||||
Period prior to maturity date of any unsecured debt outstanding which may require earlier maturity date | 91 days | ||||
Period of extended Unsecured Notes Maturity Date to not require earlier maturity date | 6 months | ||||
Required period of maturity date before Unsecured Notes Maturity Date | 91 days | ||||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | Refinancing of debt | |||||
Credit Facilities | |||||
Prepayment premium applied to principal amount (as a percent) | 1.00% | ||||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | Refinancing of debt | Maximum | |||||
Credit Facilities | |||||
Period after Closing Date prepayment is subject to a prepayment premium | 6 months | ||||
Senior secured term loan facility | Prior Credit Agreement, December 2014 | |||||
Credit Facilities | |||||
Prepayment of outstanding balances | $ 462,300,000 | ||||
Weighted average interest rate during period (as a percent) | 6.29% | ||||
Base rate borrowings | New Credit Agreement, dated May 9, 2017 | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 3.50% | ||||
Base rate borrowings | New Credit Agreement, dated May 9, 2017 | Eurodollar | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 1.00% | ||||
Variable reference rate period | 1 month | ||||
Base rate borrowings | New Credit Agreement, dated May 9, 2017 | Federal funds effective rate | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 0.50% | ||||
Eurodollar borrowings | New Credit Agreement, dated May 9, 2017 | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 4.50% | ||||
Eurodollar Borrowings, Interest Period Greater than Three Months [Member] | New Credit Agreement, dated May 9, 2017 | |||||
Credit Facilities | |||||
Interest period term | 3 months | ||||
Eurodollar Borrowings, Interest Period Greater than Three Months [Member] | New Credit Agreement, dated May 9, 2017 | Minimum | |||||
Credit Facilities | |||||
Interest remittance period | 3 months |
LONG-TERM DEBT - Senior Secured
LONG-TERM DEBT - Senior Secured Notes (Details) - USD ($) | May 09, 2017 | Sep. 30, 2017 |
Long-term debt | ||
Loss on extinguishment of debt | $ 14,615,000 | |
Senior secured notes | 7.25% Notes due 2021 (Refinanced Secured Notes) | ||
Long-term debt | ||
Outstanding amount redeemed | $ 335,000,000 | |
Loss on extinguishment of debt | 1,700,000 | |
Debt issuance costs and fees expensed on extinguishment of debt | 200,000 | |
Debt discounts expensed on extinguishment of debt | $ 1,500,000 |
LONG-TERM DEBT - Senior Unsecur
LONG-TERM DEBT - Senior Unsecured Notes (Details) - Senior unsecured notes - USD ($) | 1 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2017 | |
Long-term debt | ||
Principal amount of debt | $ 350,000,000 | $ 350,000,000 |
Interest rate (as a percent) | 10.00% | 10.00% |
Debt issuance discount | $ 3,800,000 | |
Debt issuance costs | $ 14,000,000 | |
Agreed upon time commercially reasonable efforts are to be made to aid purchasers in the resale of Notes | 1 year |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | May 09, 2017 | |
Agreement | |||||
Cash payment made | $ 10,100,000 | $ 13,132,000 | $ 11,187,000 | ||
Placement fee agreements | |||||
Agreement | |||||
Extended term | 6 years 11 months | ||||
Cash payment made | $ 10,000,000 | ||||
Quarterly periodic payment | $ 5,600,000 | ||||
New Credit Agreement, dated May 9, 2017 | Revolving credit facility | |||||
Commitments under contractual obligations | |||||
Maximum borrowing capacity | 35,000,000 | 35,000,000 | $ 35,000,000 | ||
New Credit Agreement, dated May 9, 2017 | Senior secured term loan facility | |||||
Commitments under contractual obligations | |||||
Principal amount of debt | $ 820,000,000 | $ 820,000,000 | $ 820,000,000 | ||
Required annual principal payment, as a percentage of original principal | 1.00% | ||||
Weighted average interest rate (as a percent) | 5.74% | 5.74% | |||
Principal payments required | |||||
Remainder of 2017 | $ 2,000,000 | $ 2,000,000 | |||
2,018 | 8,200,000 | 8,200,000 | |||
2,019 | 8,200,000 | 8,200,000 | |||
2,020 | 8,200,000 | 8,200,000 | |||
2,021 | 8,200,000 | 8,200,000 | |||
Thereafter | 783,100,000 | 783,100,000 | |||
New Credit Agreement, dated May 9, 2017 | Senior secured term loan facility | Interest on debt | |||||
Payments required | |||||
2,017 | 12,000,000 | 12,000,000 | |||
2,018 | 46,600,000 | 46,600,000 | |||
2,019 | 46,100,000 | 46,100,000 | |||
2,020 | 45,700,000 | 45,700,000 | |||
2,021 | 45,300,000 | 45,300,000 | |||
Thereafter | $ 104,500,000 | $ 104,500,000 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)Voteshares | Sep. 30, 2016USD ($)shares | Sep. 30, 2017USD ($)_SeriesVotefundshares | Sep. 30, 2016USD ($)shares | Dec. 31, 2016shares | |
Class Of Stock [Line Items] | |||||
Convertible preferred stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | ||
Convertible preferred stock, shares outstanding | 0 | 0 | 0 | ||
Number of votes for a share of common stock | Vote | 1 | 1 | |||
Number of sinking fund provisions applicable to common stock | fund | 0 | ||||
Common stock, shares issued | 91,918,086 | 91,918,086 | 90,952,185 | ||
Treasury Stock | |||||
Total Number of Shares Purchased or Withheld | |||||
Shares withheld from restricted stock awards | 1,365 | 2,223 | 4,394 | 7,135 | |
Aggregate purchase price of shares repurchased or withheld from restricted stock awards | $ | $ 10,115 | $ 3,879 | $ 20,706 | $ 16,894 | |
Maximum | |||||
Class Of Stock [Line Items] | |||||
Convertible preferred stock, shares authorized | 50,000,000 | 50,000,000 | |||
Minimum | |||||
Class Of Stock [Line Items] | |||||
Number of series of preferred stock that may be issued | _Series | 1 |
WEIGHTED AVERAGE COMMON SHARE56
WEIGHTED AVERAGE COMMON SHARES (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted average common shares outstanding | ||||
Weighted average number of common shares outstanding - basic | 66,897 | 66,049 | 66,449 | 66,041 |
Weighted average number of common shares outstanding - diluted | 66,897 | 66,049 | 66,449 | 66,041 |
Anti-dilutive equity awards excluded from computation of earnings per share (in shares) | 8,000 | 18,500 | 12,000 | 15,900 |
SHARE-BASED COMPENSATION - Awar
SHARE-BASED COMPENSATION - Award Activity (Details) - shares | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
2014 Equity Incentive Plan | ||||||
Equity Awards Available for Grant | ||||||
Number of shares available for grant | 4,600,000 | 4,600,000 | ||||
2012 Equity Incentive Plan | ||||||
Equity Awards Available for Grant | ||||||
Number of shares available for grant | 4,600,000 | 4,600,000 | ||||
2005 Stock Incentive Plan | ||||||
Equity Awards Available for Grant | ||||||
Number of shares available for grant | 0 | 0 | ||||
Time Based Options | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Vesting rate per year (as a percent) | 25.00% | |||||
Vesting period | 4 years | |||||
Expiration period | 10 years | |||||
Market Performance Based Options | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Vesting rate per year (as a percent) | 25.00% | 25.00% | ||||
Vesting period | 4 years | 4 years | ||||
Expiration period | 10 years | 10 years | ||||
Vesting price hurdle, percent of premium to closing stock price on grant date | 25.00% | 50.00% | ||||
Number of consecutive trading days the Company's average stock price meets certain target prices, which satisfy vesting requirements | 30 days | 30 days | ||||
Stock Options | ||||||
Stock Options Granted | ||||||
Outstanding (in shares) | 18,233,000 | |||||
Granted (in shares) | 45,750 | 200,000 | 4,107,000 | 4,200,000 | ||
Exercised options (in shares) | 0 | (950,000) | 0 | |||
Canceled or forfeited (in shares) | (358,000) | |||||
Outstanding (in shares) | 21,032,000 | 21,032,000 | 18,233,000 | |||
Restricted Stock | ||||||
Restricted Stock Granted | ||||||
Outstanding (in shares) | 80,000 | |||||
Granted (in shares) | 0 | 0 | 0 | 40,000 | ||
Vested (in shares) | (16,071) | (30,000) | ||||
Outstanding (in shares) | 104,000 | 104,000 | 80,000 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Options, Fair Value Assumptions (Details) | Feb. 25, 2016 | Feb. 13, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Time Based Options | |||||
Weighted-average assumptions used in estimating fair value | |||||
Risk-free interest rate | 2.00% | 1.00% | |||
Expected life of options (in years) | 6 years | 5 years | |||
Expected volatility | 54.00% | 51.00% | |||
Time Based Options | Executives and directors | |||||
Weighted-average assumptions used in estimating fair value | |||||
Risk-free interest rate | 1.00% | 1.00% | |||
Expected life of options (in years) | 5 years | 6 years | |||
Expected volatility | 49.00% | 49.00% | |||
Expected dividend yield | 0.00% | 0.00% | |||
Market Performance Based Options | |||||
Weighted-average assumptions used in estimating fair value | |||||
Risk-free interest rate | 2.00% | 3.00% | 2.00% | ||
Expected life of options (in years) | 10 years | 10 years | 10 years | ||
Expected volatility | 69.00% | 70.00% | 68.00% | ||
Expected dividend yield | 0.00% |
SHARE-BASED COMPENSATION - St59
SHARE-BASED COMPENSATION - Stock Options, Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Stock options | |||||
Proceeds from exercise of stock options | $ 4,046,000 | ||||
Stock Options | |||||
Stock Options Granted | |||||
Outstanding (in shares) | 18,233,000 | ||||
Granted (in shares) | 45,750 | 200,000 | 4,107,000 | 4,200,000 | |
Exercised options (in shares) | 0 | (950,000) | 0 | ||
Canceled or forfeited (in shares) | (358,000) | ||||
Outstanding (in shares) | 21,032,000 | 21,032,000 | 18,233,000 | ||
Vested and expected to vest (in shares) | 18,401,000 | 18,401,000 | |||
Exercisable (in shares) | 10,539,000 | 10,539,000 | |||
Weighted Average Exercise Price | |||||
Outstanding (in dollars per share) | $ 6.02 | ||||
Granted (in dollars per share) | 3.38 | ||||
Exercised options (in dollars per share) | 4.29 | ||||
Canceled or forfeited (in dollars per share) | 5.99 | ||||
Outstanding (in dollars per share) | $ 5.58 | 5.58 | $ 6.02 | ||
Vested and expected to vest (in dollars per share) | 5.71 | 5.71 | |||
Exercisable (in dollars per share) | $ 6.85 | $ 6.85 | |||
Weighted Average Life Remaining | |||||
Outstanding | 6 years 6 months | 6 years 4 months 25 days | |||
Vested and expected to vest | 6 years 3 months 18 days | ||||
Exercisable | 4 years 9 months 18 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding (in dollars) | $ 48,106,000 | $ 48,106,000 | $ 2,387,000 | ||
Vested and expected to vest (in dollars) | 40,291,000 | 40,291,000 | |||
Exercisable (in dollars) | $ 13,298,000 | $ 13,298,000 | |||
Stock options | |||||
Granted (in shares) | 45,750 | 200,000 | 4,107,000 | 4,200,000 | |
Weighted average grant date fair value (in dollars per share) | $ 3.85 | $ 0.89 | $ 1.86 | $ 0.81 | |
Total intrinsic value of options exercised | $ 800,000 | $ 2,800,000 | |||
Exercised options (in shares) | 0 | (950,000) | 0 | ||
Unrecognized compensation expense | 11,700,000 | $ 13,500,000 | $ 11,700,000 | $ 13,500,000 | |
Weighted-average period for recognition of unrecognized compensation expense | 2 years 3 months 18 days | 2 years 3 months 18 days | |||
Non-cash compensation expense | $ 4,800,000 | $ 3,800,000 | |||
Proceeds from exercise of stock options | $ 2,200,000 | $ 4,000,000 | $ 0 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock (Details) - Restricted Stock - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restricted Stock Granted | |||||
Outstanding (in shares) | 80,000 | ||||
Granted (in shares) | 0 | 0 | 0 | 40,000 | |
Vested (in shares) | (16,071) | (30,000) | |||
Outstanding (in shares) | 104,000 | 104,000 | |||
Weighted Average Grant Date Fair Value | |||||
Outstanding (in dollars per share) | $ 7.12 | ||||
Granted (in dollars per share) | 6.66 | ||||
Vested (in dollars per share) | 6.91 | ||||
Outstanding (in dollars per share) | $ 6.97 | $ 6.97 | |||
Restricted stock | |||||
Granted (in shares) | 0 | 0 | 0 | 40,000 | |
Total fair value of shares vested | $ 37,958 | $ 23,393 | $ 121,979 | $ 74,100 | |
Unrecognized compensation expense | $ 700,000 | $ 1,300,000 | $ 1,300,000 | $ 700,000 | $ 1,300,000 |
Weighted-average period for recognition of unrecognized compensation expense | 1 year 2 months 12 days | 1 year 10 months 24 days | |||
Vested (in shares) | 16,071 | 30,000 | |||
Non-cash compensation expense | $ 300,000 | $ 300,000 |
INCOME TAXES - Effective Income
INCOME TAXES - Effective Income Tax Rate (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate (as a percent) | (20.00%) | 37.70% | (15.60%) | 39.40% |
Statutory federal rate (as a percent) | 35.00% | 35.00% | 35.00% | 35.00% |
Increase in valuation allowance | $ 2.4 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) $ in Millions | Sep. 30, 2017USD ($) |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits | $ 0.8 |
Penalties and interest accrued for unrecognized tax benefits | $ 0 |
SEGMENT INFORMATION - Revenues,
SEGMENT INFORMATION - Revenues, Operating Income, and Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Total revenues | $ 247,322 | $ 222,177 | $ 727,089 | $ 641,946 | |
Total operating income | 19,795 | 11,572 | 63,690 | 21,416 | |
Total assets | 1,425,605 | 1,425,605 | $ 1,408,163 | ||
Games | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 55,452 | 56,218 | 165,832 | 158,660 | |
Total operating income | 1,787 | (4,183) | 9,301 | (14,638) | |
Total assets | 927,888 | 927,888 | 894,213 | ||
Payments | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 191,870 | 165,959 | 561,257 | 483,286 | |
Total operating income | 18,008 | $ 15,755 | 54,389 | $ 36,054 | |
Total assets | $ 497,717 | $ 497,717 | $ 513,950 |
SEGMENT INFORMATION - Major Cus
SEGMENT INFORMATION - Major Customers (Details) - Five largest customers - Customer risk - Revenues - Customer | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Entity Wide Revenue Major Customer [Line Items] | ||||
Number of major customers | 5 | 5 | 5 | 5 |
Concentration risk (as a percent) | 25.00% | 30.00% | 26.00% | 31.00% |
CONDENSED CONSOLIDATING FINAN65
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Guarantors (Details) | Sep. 30, 2017 |
U.S. subsidiaries other than Subsidiary Issuer | |
Condensed Financial Statements Captions [Line Items] | |
Subsidiary ownership (as a percent) | 100.00% |
CONDENSED CONSOLIDATING FINAN66
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - STATEMENTS OF LOSS AND COMPREHENSIVE LOSS - (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Income Statements Captions [Line Items] | ||||
Revenues | $ 247,322 | $ 222,177 | $ 727,089 | $ 641,946 |
Costs and expenses | ||||
Operating expenses | 29,463 | 26,996 | 87,235 | 87,735 |
Research and development | 4,545 | 4,460 | 13,706 | 14,499 |
Depreciation | 12,539 | 12,367 | 34,765 | 37,172 |
Amortization | 17,322 | 24,104 | 52,086 | 70,887 |
Total costs and expenses | 227,527 | 210,605 | 663,399 | 620,530 |
Operating income | 19,795 | 11,572 | 63,690 | 21,416 |
Other expenses (income) | ||||
Interest (income) expense, net | 23,368 | 24,815 | 72,306 | 74,548 |
Loss on extinguishment of debt | 14,615 | |||
Total other expenses | 23,368 | 24,815 | 86,921 | 74,548 |
Loss before income tax | (3,573) | (13,243) | (23,231) | (53,132) |
Income tax provision (benefit) | 716 | (4,989) | 3,623 | (20,930) |
Net loss | (4,289) | (8,254) | (26,854) | (32,202) |
Foreign currency translation | 602 | (394) | 1,710 | (1,314) |
Comprehensive loss | (3,687) | (8,648) | (25,144) | (33,516) |
Eliminations | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | (2,422) | (122) | (8,492) | (867) |
Costs and expenses | ||||
Operating expenses | (1,279) | (122) | (5,391) | (867) |
Total costs and expenses | (2,422) | (122) | (8,492) | (867) |
Other expenses (income) | ||||
Loss (income) from subsidiaries | (1,352) | (3,948) | (17,849) | (21,082) |
Total other expenses | (1,352) | (3,948) | (17,849) | (21,082) |
Loss before income tax | 1,352 | 3,948 | 17,849 | 21,082 |
Net loss | 1,352 | 3,948 | 17,849 | 21,082 |
Foreign currency translation | (602) | 394 | (1,710) | 1,314 |
Comprehensive loss | 750 | 4,342 | 16,139 | 22,396 |
Parent | Reportable Legal Entities | ||||
Other expenses (income) | ||||
Loss (income) from subsidiaries | 4,289 | 8,254 | 26,854 | 32,202 |
Total other expenses | 4,289 | 8,254 | 26,854 | 32,202 |
Loss before income tax | (4,289) | (8,254) | (26,854) | (32,202) |
Net loss | (4,289) | (8,254) | (26,854) | (32,202) |
Foreign currency translation | 602 | (394) | 1,710 | (1,314) |
Comprehensive loss | (3,687) | (8,648) | (25,144) | (33,516) |
Subsidiary Issuer | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 175,793 | 153,145 | 515,853 | 447,762 |
Costs and expenses | ||||
Operating expenses | 18,519 | 16,491 | 53,413 | 53,912 |
Depreciation | 1,615 | 1,892 | 5,057 | 6,376 |
Amortization | 2,260 | 3,128 | 7,756 | 9,370 |
Total costs and expenses | 162,693 | 143,827 | 476,264 | 428,923 |
Operating income | 13,100 | 9,318 | 39,589 | 18,839 |
Other expenses (income) | ||||
Interest (income) expense, net | (292) | 1,371 | 2,216 | 4,880 |
Loss (income) from subsidiaries | (2,898) | (4,306) | (8,884) | (11,120) |
Loss on extinguishment of debt | 14,615 | |||
Total other expenses | (3,190) | (2,935) | 7,947 | (6,240) |
Loss before income tax | 16,290 | 12,253 | 31,642 | 25,079 |
Income tax provision (benefit) | (1,055) | 3,849 | (1,701) | 5,785 |
Net loss | 17,345 | 8,404 | 33,343 | 19,294 |
Comprehensive loss | 17,345 | 8,404 | 33,343 | 19,294 |
Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 63,172 | 63,737 | 188,874 | 181,282 |
Costs and expenses | ||||
Operating expenses | 10,365 | 10,148 | 32,463 | 33,230 |
Research and development | 4,542 | 4,460 | 13,676 | 14,499 |
Depreciation | 10,740 | 10,447 | 29,292 | 30,707 |
Amortization | 14,579 | 20,439 | 42,885 | 59,830 |
Total costs and expenses | 56,561 | 63,167 | 165,142 | 181,891 |
Operating income | 6,611 | 570 | 23,732 | (609) |
Other expenses (income) | ||||
Interest (income) expense, net | 23,406 | 23,399 | 69,455 | 69,500 |
Loss (income) from subsidiaries | (39) | (121) | ||
Total other expenses | 23,367 | 23,399 | 69,334 | 69,500 |
Loss before income tax | (16,756) | (22,829) | (45,602) | (70,109) |
Income tax provision (benefit) | 1,708 | (9,261) | 5,108 | (27,642) |
Net loss | (18,464) | (13,568) | (50,710) | (42,467) |
Comprehensive loss | (18,464) | (13,568) | (50,710) | (42,467) |
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 10,779 | 5,417 | 30,854 | 13,769 |
Costs and expenses | ||||
Operating expenses | 1,858 | 479 | 6,750 | 1,460 |
Research and development | 3 | 30 | ||
Depreciation | 184 | 28 | 416 | 89 |
Amortization | 483 | 537 | 1,445 | 1,687 |
Total costs and expenses | 10,695 | 3,733 | 30,485 | 10,583 |
Operating income | 84 | 1,684 | 369 | 3,186 |
Other expenses (income) | ||||
Interest (income) expense, net | 254 | 45 | 635 | 168 |
Total other expenses | 254 | 45 | 635 | 168 |
Loss before income tax | (170) | 1,639 | (266) | 3,018 |
Income tax provision (benefit) | 63 | 423 | 216 | 927 |
Net loss | (233) | 1,216 | (482) | 2,091 |
Foreign currency translation | 602 | (394) | 1,710 | (1,314) |
Comprehensive loss | 369 | 822 | 1,228 | 777 |
Games | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 55,452 | 56,218 | 165,832 | 158,660 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 13,820 | 15,467 | 39,503 | 36,871 |
Operating income | 1,787 | (4,183) | 9,301 | (14,638) |
Games | Eliminations | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | (1,618) | (5,164) | ||
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | (1,143) | (3,101) | ||
Games | Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 55,331 | 56,218 | 165,551 | 158,660 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 13,857 | 15,467 | 39,659 | 36,871 |
Games | Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 1,739 | 5,445 | ||
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 1,106 | 2,945 | ||
Payments | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 191,870 | 165,959 | 561,257 | 483,286 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 149,838 | 127,211 | 436,104 | 373,366 |
Operating income | 18,008 | 15,755 | 54,389 | 36,054 |
Payments | Eliminations | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | (804) | (122) | (3,328) | (867) |
Payments | Subsidiary Issuer | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 175,793 | 153,145 | 515,853 | 447,762 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 140,299 | 122,316 | 410,038 | 359,265 |
Payments | Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 7,841 | 7,519 | 23,323 | 22,622 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | 2,478 | 2,206 | 7,167 | 6,754 |
Payments | Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
Condensed Income Statements Captions [Line Items] | ||||
Revenues | 9,040 | 5,417 | 25,409 | 13,769 |
Costs and expenses | ||||
Cost of revenue (exclusive of depreciation and amortization) | $ 7,061 | $ 2,689 | $ 18,899 | $ 7,347 |
CONDENSED CONSOLIDATING FINAN67
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - BALANCE SHEETS (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets | ||||
Cash and cash equivalents | $ 108,471 | $ 119,051 | $ 90,488 | $ 102,030 |
Settlement receivables | 127,443 | 128,821 | ||
Total trade and other receivables, current portion | 44,971 | 56,651 | ||
Inventory | 23,790 | 19,068 | ||
Prepaid expenses and other assets | 22,538 | 18,048 | ||
Total current assets | 327,213 | 341,639 | ||
Non-current assets | ||||
Property, equipment and leased assets, net | 109,399 | 98,439 | ||
Goodwill | 640,593 | 640,546 | ||
Other intangible assets, net | 338,074 | 317,997 | ||
Other receivables | 2,876 | 2,020 | ||
Other assets | 7,450 | 7,522 | ||
Total non-current assets | 1,098,392 | 1,066,524 | ||
Total assets | 1,425,605 | 1,408,163 | ||
Current liabilities | ||||
Settlement liabilities | 197,494 | 239,123 | ||
Accounts payable and accrued expenses | 126,625 | 94,391 | ||
Current portion of long-term debt | 8,200 | 10,000 | ||
Total current liabilities | 332,319 | 343,514 | ||
Non-current liabilities | ||||
Deferred tax liability | 60,785 | 57,611 | ||
Long-term debt, less current portion | 1,130,671 | 1,111,880 | ||
Other accrued expenses and liabilities | 25,634 | 2,951 | ||
Total non-current liabilities | 1,217,090 | 1,172,442 | ||
Total liabilities | 1,549,409 | 1,515,956 | ||
Stockholders’ (deficit) equity | ||||
Common stock | 92 | 91 | ||
Additional paid-in capital | 273,906 | 264,755 | ||
(Accumulated deficit) retained earnings | (221,152) | (194,299) | ||
Accumulated other comprehensive (loss) income | (399) | (2,109) | ||
Treasury stock, at cost | (176,251) | (176,231) | ||
Total stockholders’ deficit | (123,804) | (107,793) | ||
Total liabilities and stockholders’ deficit | 1,425,605 | 1,408,163 | ||
Reportable Legal Entities | Parent | ||||
Current assets | ||||
Cash and cash equivalents | 6 | |||
Non-current assets | ||||
Investment in subsidiaries | (123,760) | (107,751) | ||
Total non-current assets | (123,760) | (107,751) | ||
Total assets | (123,760) | (107,751) | ||
Stockholders’ (deficit) equity | ||||
Common stock | 92 | 91 | ||
Additional paid-in capital | 273,906 | 264,755 | ||
(Accumulated deficit) retained earnings | (221,152) | (194,299) | ||
Accumulated other comprehensive (loss) income | (355) | (2,067) | ||
Treasury stock, at cost | (176,251) | (176,231) | ||
Total stockholders’ deficit | (123,760) | (107,751) | ||
Total liabilities and stockholders’ deficit | (123,760) | (107,751) | ||
Reportable Legal Entities | Subsidiary Issuer | ||||
Current assets | ||||
Cash and cash equivalents | 85,633 | 88,648 | 62,494 | 87,078 |
Settlement receivables | 112,879 | 122,222 | ||
Total trade and other receivables, current portion | 6,370 | 9,001 | ||
Inventory | 5,550 | 6,009 | ||
Prepaid expenses and other assets | 6,078 | 5,359 | ||
Intercompany balances | 167,488 | 106,729 | ||
Total current assets | 383,998 | 337,968 | ||
Non-current assets | ||||
Property, equipment and leased assets, net | 13,987 | 15,144 | ||
Goodwill | 151,417 | 151,417 | ||
Other intangible assets, net | 20,330 | 23,901 | ||
Other receivables | 1,220 | 2,019 | ||
Investment in subsidiaries | 182,365 | 171,979 | ||
Deferred tax asset | 34,386 | 37,578 | ||
Other assets | 4,632 | 4,940 | ||
Intercompany balances | 1,148,223 | 1,143,115 | ||
Total non-current assets | 1,556,560 | 1,550,093 | ||
Total assets | 1,940,558 | 1,888,061 | ||
Current liabilities | ||||
Settlement liabilities | 189,738 | 225,170 | ||
Accounts payable and accrued expenses | 77,194 | 64,192 | ||
Current portion of long-term debt | 8,200 | 10,000 | ||
Intercompany balances | 204,387 | 189,488 | ||
Total current liabilities | 479,519 | 488,850 | ||
Non-current liabilities | ||||
Long-term debt, less current portion | 1,130,671 | 1,111,880 | ||
Other accrued expenses and liabilities | 2,973 | 2,583 | ||
Total non-current liabilities | 1,133,644 | 1,114,463 | ||
Total liabilities | 1,613,163 | 1,603,313 | ||
Stockholders’ (deficit) equity | ||||
Additional paid-in capital | 93,091 | 85,499 | ||
(Accumulated deficit) retained earnings | 234,659 | 201,316 | ||
Accumulated other comprehensive (loss) income | (355) | (2,067) | ||
Total stockholders’ deficit | 327,395 | 284,748 | ||
Total liabilities and stockholders’ deficit | 1,940,558 | 1,888,061 | ||
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Current assets | ||||
Cash and cash equivalents | 6,587 | 9,103 | 10,964 | 3,900 |
Total trade and other receivables, current portion | 35,415 | 41,743 | ||
Inventory | 18,240 | 13,059 | ||
Prepaid expenses and other assets | 6,691 | 3,807 | ||
Intercompany balances | 207,021 | 188,028 | ||
Total current assets | 273,954 | 255,740 | ||
Non-current assets | ||||
Property, equipment and leased assets, net | 93,258 | 81,993 | ||
Goodwill | 488,511 | 488,512 | ||
Other intangible assets, net | 314,348 | 289,338 | ||
Other receivables | 1,656 | |||
Investment in subsidiaries | 1,007 | 1,293 | ||
Other assets | 2,635 | 2,286 | ||
Intercompany balances | 7,851 | |||
Total non-current assets | 901,415 | 871,273 | ||
Total assets | 1,175,369 | 1,127,013 | ||
Current liabilities | ||||
Settlement liabilities | 202 | 268 | ||
Accounts payable and accrued expenses | 46,314 | 28,970 | ||
Intercompany balances | 154,489 | 101,387 | ||
Total current liabilities | 201,005 | 130,625 | ||
Non-current liabilities | ||||
Deferred tax liability | 95,171 | 95,189 | ||
Other accrued expenses and liabilities | 22,661 | 368 | ||
Intercompany balances | 1,148,223 | 1,143,116 | ||
Total non-current liabilities | 1,266,055 | 1,238,673 | ||
Total liabilities | 1,467,060 | 1,369,298 | ||
Stockholders’ (deficit) equity | ||||
Additional paid-in capital | 6,841 | 5,314 | ||
(Accumulated deficit) retained earnings | (297,969) | (247,273) | ||
Accumulated other comprehensive (loss) income | (563) | (326) | ||
Total stockholders’ deficit | (291,691) | (242,285) | ||
Total liabilities and stockholders’ deficit | 1,175,369 | 1,127,013 | ||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Current assets | ||||
Cash and cash equivalents | 16,251 | 21,300 | $ 17,030 | $ 11,046 |
Settlement receivables | 14,564 | 6,599 | ||
Total trade and other receivables, current portion | 3,186 | 5,907 | ||
Prepaid expenses and other assets | 9,769 | 8,882 | ||
Intercompany balances | 1,531 | 1,461 | ||
Total current assets | 45,301 | 44,149 | ||
Non-current assets | ||||
Property, equipment and leased assets, net | 2,154 | 1,302 | ||
Goodwill | 665 | 617 | ||
Other intangible assets, net | 3,396 | 4,758 | ||
Other receivables | 1 | |||
Investment in subsidiaries | 79 | 86 | ||
Other assets | 183 | 296 | ||
Total non-current assets | 6,477 | 7,060 | ||
Total assets | 51,778 | 51,209 | ||
Current liabilities | ||||
Settlement liabilities | 7,554 | 13,685 | ||
Accounts payable and accrued expenses | 3,117 | 1,229 | ||
Intercompany balances | 17,164 | 5,343 | ||
Total current liabilities | 27,835 | 20,257 | ||
Non-current liabilities | ||||
Intercompany balances | 7,850 | |||
Total non-current liabilities | 7,850 | |||
Total liabilities | 27,835 | 28,107 | ||
Stockholders’ (deficit) equity | ||||
Additional paid-in capital | 21,109 | 21,093 | ||
(Accumulated deficit) retained earnings | 4,279 | 5,168 | ||
Accumulated other comprehensive (loss) income | (1,445) | (3,159) | ||
Total stockholders’ deficit | 23,943 | 23,102 | ||
Total liabilities and stockholders’ deficit | 51,778 | 51,209 | ||
Eliminations | ||||
Current assets | ||||
Intercompany balances | (376,040) | (296,218) | ||
Total current assets | (376,040) | (296,218) | ||
Non-current assets | ||||
Investment in subsidiaries | (59,691) | (65,607) | ||
Deferred tax asset | (34,386) | (37,578) | ||
Intercompany balances | (1,148,223) | (1,150,966) | ||
Total non-current assets | (1,242,300) | (1,254,151) | ||
Total assets | (1,618,340) | (1,550,369) | ||
Current liabilities | ||||
Intercompany balances | (376,040) | (296,218) | ||
Total current liabilities | (376,040) | (296,218) | ||
Non-current liabilities | ||||
Deferred tax liability | (34,386) | (37,578) | ||
Intercompany balances | (1,148,223) | (1,150,966) | ||
Total non-current liabilities | (1,182,609) | (1,188,544) | ||
Total liabilities | (1,558,649) | (1,484,762) | ||
Stockholders’ (deficit) equity | ||||
Additional paid-in capital | (121,041) | (111,906) | ||
(Accumulated deficit) retained earnings | 59,031 | 40,789 | ||
Accumulated other comprehensive (loss) income | 2,319 | 5,510 | ||
Total stockholders’ deficit | (59,691) | (65,607) | ||
Total liabilities and stockholders’ deficit | $ (1,618,340) | $ (1,550,369) |
CONDENSED CONSOLIDATING FINAN68
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||||
Net (loss) income | $ (4,289) | $ (8,254) | $ (26,854) | $ (32,202) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||||
Depreciation and amortization | 86,851 | 108,059 | ||
Amortization of financing costs | 4,567 | 5,023 | ||
Loss on sale or disposal of assets | 1,580 | 2,554 | ||
Accretion of contract rights | 5,845 | 6,521 | ||
Provision for bad debts | 7,946 | 7,192 | ||
Write-down of assets | 4,289 | |||
Deferred income taxes | 3,174 | (22,259) | ||
Reserve for obsolescence | 46 | 942 | ||
Loss on extinguishment of debt | 14,615 | |||
Stock-based compensation | 5,125 | 4,146 | ||
Changes in operating assets and liabilities: | ||||
Net settlement receivables and liabilities | (40,230) | (12,842) | ||
Other changes in operating assets and liabilities | 7,097 | 14,385 | ||
Net cash provided by operating activities | 69,762 | 85,808 | ||
Cash flows from investing activities | ||||
Capital expenditures | (70,057) | (67,025) | ||
Proceeds from sale of fixed assets | 4 | 4,608 | ||
Acquisitions, net of cash acquired | (694) | |||
Placement fee agreements | (10,100) | (13,132) | (11,187) | |
Changes in restricted cash | (149) | 88 | ||
Net cash used in investing activities | (83,334) | (74,210) | ||
Cash flows from financing activities | ||||
Repayments of new credit facility | (2,050) | |||
Repayments of prior credit facility | (465,600) | (21,900) | ||
Repayments of secured notes | (335,000) | |||
Proceeds from current credit facility | 820,000 | |||
Debt issuance costs and discounts | (19,748) | (480) | ||
Proceeds from exercise of stock options | 4,046 | |||
Purchase of treasury stock | (21) | (17) | ||
Net cash provided by (used in) financing activities | 1,627 | (22,397) | ||
Effect of exchange rates on cash | 1,365 | (743) | ||
Cash and cash equivalents | ||||
Net decrease for the period | (10,580) | (11,542) | ||
Balance, beginning of the period | 119,051 | 102,030 | ||
Balance, end of the period | 108,471 | 90,488 | 108,471 | 90,488 |
Reportable Legal Entities | Parent | ||||
Cash flows from operating activities | ||||
Net (loss) income | (4,289) | (8,254) | (26,854) | (32,202) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||||
Equity in loss (income) of subsidiaries | 4,289 | 8,254 | 26,854 | 32,202 |
Changes in operating assets and liabilities: | ||||
Other changes in operating assets and liabilities | 1 | |||
Net cash provided by operating activities | 1 | |||
Cash flows from investing activities | ||||
Intercompany investing activities | (4,025) | 10 | ||
Net cash used in investing activities | (4,025) | 10 | ||
Cash flows from financing activities | ||||
Proceeds from exercise of stock options | 4,046 | |||
Purchase of treasury stock | (21) | (17) | ||
Net cash provided by (used in) financing activities | 4,025 | (17) | ||
Cash and cash equivalents | ||||
Net decrease for the period | (6) | |||
Balance, beginning of the period | 6 | |||
Reportable Legal Entities | Subsidiary Issuer | ||||
Cash flows from operating activities | ||||
Net (loss) income | 17,345 | 8,404 | 33,343 | 19,294 |
Adjustments to reconcile net loss to cash provided by operating activities: | ||||
Depreciation and amortization | 12,813 | 15,746 | ||
Amortization of financing costs | 4,567 | 5,023 | ||
Loss on sale or disposal of assets | 347 | 1,349 | ||
Provision for bad debts | (136) | 18 | ||
Deferred income taxes | 3,193 | 10,546 | ||
Reserve for obsolescence | 265 | 484 | ||
Loss on extinguishment of debt | 14,615 | |||
Equity in loss (income) of subsidiaries | (2,898) | (4,306) | (8,884) | (11,120) |
Stock-based compensation | 3,684 | 2,910 | ||
Changes in operating assets and liabilities: | ||||
Net settlement receivables and liabilities | (26,089) | (16,538) | ||
Other changes in operating assets and liabilities | (35,336) | (27,155) | ||
Net cash provided by operating activities | 2,382 | 557 | ||
Cash flows from investing activities | ||||
Capital expenditures | (7,191) | (7,330) | ||
Proceeds from sale of fixed assets | 4 | 4,608 | ||
Acquisitions, net of cash acquired | (694) | |||
Changes in restricted cash | 96 | 88 | ||
Intercompany investing activities | 3,996 | 499 | ||
Net cash used in investing activities | (3,095) | (2,829) | ||
Cash flows from financing activities | ||||
Repayments of new credit facility | (2,050) | |||
Repayments of prior credit facility | (465,600) | (21,900) | ||
Repayments of secured notes | (335,000) | |||
Proceeds from current credit facility | 820,000 | |||
Debt issuance costs and discounts | (19,748) | (480) | ||
Intercompany financing activities | 96 | 68 | ||
Net cash provided by (used in) financing activities | (2,302) | (22,312) | ||
Cash and cash equivalents | ||||
Net decrease for the period | (3,015) | (24,584) | ||
Balance, beginning of the period | 88,648 | 87,078 | ||
Balance, end of the period | 85,633 | 62,494 | 85,633 | 62,494 |
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Cash flows from operating activities | ||||
Net (loss) income | (18,464) | (13,568) | (50,710) | (42,467) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||||
Depreciation and amortization | 72,177 | 90,537 | ||
Loss on sale or disposal of assets | 1,233 | 1,205 | ||
Accretion of contract rights | 5,845 | 6,521 | ||
Provision for bad debts | 8,082 | 7,174 | ||
Write-down of assets | 4,289 | |||
Deferred income taxes | (19) | (32,805) | ||
Reserve for obsolescence | (219) | 458 | ||
Equity in loss (income) of subsidiaries | (39) | (121) | ||
Stock-based compensation | 1,441 | 1,236 | ||
Changes in operating assets and liabilities: | ||||
Net settlement receivables and liabilities | (66) | 6 | ||
Other changes in operating assets and liabilities | 34,422 | 41,544 | ||
Net cash provided by operating activities | 72,065 | 77,698 | ||
Cash flows from investing activities | ||||
Capital expenditures | (61,474) | (59,622) | ||
Placement fee agreements | (13,132) | (11,187) | ||
Changes in restricted cash | (245) | |||
Intercompany investing activities | 270 | 175 | ||
Net cash used in investing activities | (74,581) | (70,634) | ||
Cash and cash equivalents | ||||
Net decrease for the period | (2,516) | 7,064 | ||
Balance, beginning of the period | 9,103 | 3,900 | ||
Balance, end of the period | 6,587 | 10,964 | 6,587 | 10,964 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Cash flows from operating activities | ||||
Net (loss) income | (233) | 1,216 | (482) | 2,091 |
Adjustments to reconcile net loss to cash provided by operating activities: | ||||
Depreciation and amortization | 1,861 | 1,776 | ||
Changes in operating assets and liabilities: | ||||
Net settlement receivables and liabilities | (14,075) | 3,690 | ||
Other changes in operating assets and liabilities | 8,011 | (5) | ||
Net cash provided by operating activities | (4,685) | 7,552 | ||
Cash flows from investing activities | ||||
Capital expenditures | (1,392) | (73) | ||
Intercompany investing activities | (76) | (67) | ||
Net cash used in investing activities | (1,468) | (140) | ||
Cash flows from financing activities | ||||
Intercompany financing activities | (261) | (685) | ||
Net cash provided by (used in) financing activities | (261) | (685) | ||
Effect of exchange rates on cash | 1,365 | (743) | ||
Cash and cash equivalents | ||||
Net decrease for the period | (5,049) | 5,984 | ||
Balance, beginning of the period | 21,300 | 11,046 | ||
Balance, end of the period | 16,251 | 17,030 | 16,251 | 17,030 |
Eliminations | ||||
Cash flows from operating activities | ||||
Net (loss) income | 1,352 | 3,948 | 17,849 | 21,082 |
Adjustments to reconcile net loss to cash provided by operating activities: | ||||
Equity in loss (income) of subsidiaries | $ (1,352) | $ (3,948) | (17,849) | (21,082) |
Cash flows from investing activities | ||||
Intercompany investing activities | (165) | (617) | ||
Net cash used in investing activities | (165) | (617) | ||
Cash flows from financing activities | ||||
Intercompany financing activities | 165 | 617 | ||
Net cash provided by (used in) financing activities | $ 165 | $ 617 |