Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 10, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AP Gaming Holdco, Inc. | |
Entity Central Index Key | 1,593,548 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 15,041,461 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 22,752 | $ 17,977 |
Restricted cash | 100 | 100 |
Accounts receivable, net of allowance of $1,957 and $1,972, respectively | 25,171 | 24,035 |
Inventories | 13,054 | 10,729 |
Prepaid expenses | 3,131 | 2,609 |
Deposits and other | 3,670 | 3,052 |
Total current assets | 67,878 | 58,502 |
Property and equipment, net | 76,731 | 67,926 |
Goodwill | 253,510 | 251,024 |
Deferred tax asset | 9 | 9 |
Intangible assets | 211,653 | 232,877 |
Other assets | 23,185 | 23,754 |
Total assets | 632,966 | 634,092 |
Current liabilities | ||
Accounts Payable, Current | 8,329 | 8,790 |
Accrued Liabilities, Current | 18,157 | 17,702 |
Current maturities of long-term debt | 6,601 | 6,537 |
Total current liabilities | 33,087 | 33,029 |
Long-term debt | 574,044 | 547,238 |
Deferred tax liability - noncurrent | 8,984 | 6,957 |
Other long-term liabilities | 31,714 | 30,440 |
Total liabilities | 647,829 | 617,664 |
Commitments and contingencies (Note 12) | ||
Stockholders’ equity | ||
Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock at $0.01 par value; 30,000,100 shares authorized; 100 Class A Shares issued and outstanding at June 30, 2017 and December 31, 2016, and 14,931,529 Class B Shares issued and outstanding at June 30, 2017 and December 31, 2016. | 149 | 149 |
Additional paid-in capital | 177,276 | 177,276 |
Accumulated deficit | (188,947) | (156,451) |
Accumulated other comprehensive loss | (3,341) | (4,546) |
Total stockholders’ (deficit) equity | (14,863) | 16,428 |
Total liabilities and stockholders’ equity | $ 632,966 | $ 634,092 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Allowance for trade accounts | $ 1,957 | $ 1,972 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,100 | 30,000,100 |
Common Class A [Member] | ||
Common stock, shares issued | 100 | 100 |
Common stock, shares outstanding | 100 | 100 |
Common Class B [Member] | ||
Common stock, shares issued | 14,931,529 | 14,931,529 |
Common stock, shares outstanding | 14,931,529 | 14,931,529 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Revenues | |||||
Gaming operations | $ 41,758 | $ 39,578 | $ 82,191 | $ 78,216 | |
Equipment sales | 8,322 | 3,040 | 15,663 | 4,637 | |
Total revenues | 50,080 | 42,618 | 97,854 | 82,853 | |
Operating expenses | |||||
Cost of gaming operations | [1] | 6,979 | 6,643 | 14,450 | 12,916 |
Cost of equipment sales | [1] | 4,144 | 3,376 | 7,996 | 3,546 |
Selling, general and administrative | 10,345 | 11,001 | 20,626 | 23,684 | |
Research and development | 6,141 | 5,179 | 11,445 | 9,842 | |
Write downs and other charges | 1,933 | 191 | 2,165 | 301 | |
Depreciation and amortization | 18,216 | 20,566 | 36,667 | 41,108 | |
Total operating expenses | 47,758 | 46,956 | 93,349 | 91,397 | |
Income (loss) from operations | 2,322 | (4,338) | 4,505 | (8,544) | |
Other (income) expense | |||||
Interest expense | 14,554 | 14,632 | 29,714 | 29,248 | |
Interest income | (40) | (16) | (55) | (39) | |
Loss on extinguishment and modification of debt | 8,129 | 0 | 8,129 | 0 | |
Other (income) expense | (1,529) | 1,500 | (4,338) | 5,922 | |
Loss before income taxes | (18,792) | (20,454) | (28,945) | (43,675) | |
Income tax (expense) benefit | (1,318) | 1,615 | (3,551) | 3,770 | |
Net loss | (20,110) | (18,839) | (32,496) | (39,905) | |
Foreign currency translation adjustment | 330 | (2,010) | 1,205 | (1,929) | |
Total comprehensive loss | $ (19,780) | $ (20,849) | $ (31,291) | $ (41,834) | |
Basic and diluted loss per common share: | |||||
Basic (in dollars per share) | $ (1.35) | $ (1.26) | $ (2.18) | $ (2.67) | |
Diluted (in dollars per share) | $ (1.35) | $ (1.26) | $ (2.18) | $ (2.67) | |
Weighted average common shares outstanding: | |||||
Basic (in shares) | 14,932 | 14,932 | 14,932 | 14,932 | |
Diluted (in shares) | 14,932 | 14,932 | 14,932 | 14,932 | |
[1] | exclusive of depreciation and amortization |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (32,496) | $ (39,905) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 36,667 | 41,108 |
Accretion of contract rights under development agreements and placement fees | 2,365 | 2,348 |
Amortization of deferred loan costs and discount | 1,709 | 1,711 |
Payments-in-kind interest payments | (2,698) | 0 |
Write off of deferred loan cost and discount | 3,294 | 0 |
Payment-in-kind interest capitalized | 7,807 | 7,490 |
Provision for bad debts | 396 | 504 |
Loss on disposition of assets | 2,510 | 617 |
Impairment of assets | 285 | 0 |
Provision (benefit) for deferred income tax | 2,021 | (4,320) |
Changes in assets and liabilities that relate to operations: | ||
Accounts receivable | 192 | (1,555) |
Inventories | 3,035 | 1,989 |
Prepaid expenses | (699) | 854 |
Deposits and other | (466) | (125) |
Other assets, non-current | (2,221) | 4,298 |
Accounts payable and accrued liabilities | (3,803) | 536 |
Net cash provided by operating activities | 17,898 | 15,550 |
Cash flows from investing activities | ||
Purchase of intangible assets | (420) | (65) |
Software development and other expenditures | (4,208) | (3,957) |
Proceeds from disposition of assets | 93 | 87 |
Purchases of property and equipment | (27,729) | (12,415) |
Net cash used in investing activities | (32,264) | (16,350) |
Cash flows from financing activities | ||
Proceeds from issuance of first lien credit facilities | 448,725 | 0 |
Repayment of senior secured credit facilities | (410,655) | (2,117) |
Payment of financed placement fee obligations | (2,135) | (2,525) |
Payments of Debt Issuance Costs | (3,127) | 0 |
Payments on seller notes | (12,401) | 0 |
Payments on equipment long term note payable and capital leases | (1,295) | (1,279) |
Payment of previous acquisition obligation | 0 | (1,125) |
Proceeds from employees in advance of common stock issuance | 25 | 0 |
Net cash used in financing activities | 19,137 | (7,046) |
Effect of exchange rates on cash and cash equivalents | 4 | (26) |
Decrease in cash and cash equivalents | 4,775 | (7,872) |
Cash and cash equivalents, beginning of period | 17,977 | 35,722 |
Cash and cash equivalents, end of period | 22,752 | 27,850 |
Supplemental cash flow information: | ||
Cash paid during the period for interest | 16,869 | 19,519 |
Cash paid during the period for taxes | 574 | 628 |
Non-cash investing and financing activities: | ||
Financed purchase of property and equipment | $ 116 | $ 1,250 |
Description of the Business and
Description of the Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Description of the Business and Summary of Significant Accounting Policies | DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business AP Gaming Holdco, Inc. (the “Company,” “AP Gaming,” “we,” “us,” or “our”) is a leading designer and supplier of gaming products and services for the gaming industry. The Company is a leader in the Class II Native American and Mexican gaming jurisdictions and has expanded its product lines to include Class III Native American, commercial and charity jurisdictions. We supply electronic gaming machines (“EGMs”), server-based systems and back-office systems that are used by casinos and various gaming locations. Since mid-2014, the Company has significantly broadened and diversified its product portfolio through both organic development and strategic acquisitions. We launched a new table products division in mid-2014 to provide live felt table games to casino operators. Through the acquisition of Amaya Americas Corporation (“Cadillac Jack”) on May 29, 2015, we greatly expanded our games library and slot machine offerings. The Company also acquired online developer Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”) in June 2015, further expanding its offerings to include interactive products such as social casino games, available to play on mobile devices. The Company operates and reports in the following three segments: A. Electronic Gaming Machines Our EGM segment offers a selection of video slot titles developed for the global marketplace, as well as EGM cabinets such as ICON , Halo , Colossal Diamonds (“ Big Red ”), and Orion . In addition to providing complete EGM units, we offer conversion kits that allow existing game titles to be converted to other game titles offered within that operating platform. B. Table Products Our table products include live proprietary table games and side bets, as well as ancillary table products. Products include both internally developed and acquired proprietary table games, side bets, and table technology related to blackjack, poker, baccarat, craps and roulette. We have acquired a number of popular brands, including In-Bet, Buster Blackjack, Double Draw Poker and Criss Cross Poker that are based on traditional well-known public domain games such as blackjack and poker; however, these proprietary games provide intriguing betting options that offer more excitement and greater volatility to the player, ultimately enhancing our casino customers’ profitability. Our Tornado product is unique in that it allows players to control the spin of the roulette ball by pressing a remote ball activation device. We believe this mechanism enhances player interaction without altering traditional roulette rules and procedures; similarly, our Double Ball Roulette game creates a unique game experience by allowing players to use two balls instead of one. C. Interactive Our social gaming products are primarily delivered through our mobile apps, Lucky Play Casino and Vegas Fever . The apps contain several game titles available for consumers to play for fun and with coins that they purchase through the app. Some of our most popular social games include content that is also popular in land-based settings such as Colossal Diamonds , So Hot , and Monkey in the Bank . Basis of Presentation The accompanying condensed consolidated financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain disclosures required by generally accepted accounting principles (“GAAP”) are omitted or condensed in these condensed consolidated financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) that are necessary for a fair statement of the Company's financial position, results of operations and cash flows for the interim periods have been made. The interim results reflected in these condensed consolidated financial statements are not necessarily indicative of results to be expected for the full fiscal year. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 . Principles of Consolidation The accompanying condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated. Revenue Recognition Gaming Operations Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time, which typically ranges from one to three years and then the contract continues on a month-to-month basis thereafter. In some instances, the Company will enter arrangements for longer periods of time; however, the arrangements include the ability of the customer to cancel the contract and return the games to the Company, a provision which renders their contracts effectively month-to-month contracts. Primarily due to these factors, our participation arrangements are accounted for as operating leases. In some instances, we will offer a free trial period during which no revenue is recognized. If during or at the conclusion of the trial period the customer chooses to enter into a lease for the gaming equipment, we commence revenue recognition according to the terms of the agreement. Under participation arrangements, the Company retains ownership of the gaming equipment installed at the customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. Thus, in our condensed consolidated financial statements the Company records revenue monthly related to these arrangements and the gaming equipment is recorded in property and equipment, net on our balance sheet and depreciated over the expected life of the gaming equipment. The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, provides the customer with the right to return the gaming machines to the Company. This performance guarantee is considered a cancellation clause, a provision which renders their contracts effectively month-to-month contracts. Accordingly, the Company accounts for these contract in a similar manner with its other operating leases as described above. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the win per day to be retained by the customer to fund facility-specific marketing, advertising and promotions. These amounts retained by the customer reduce the monthly revenue recognized on each arrangement. Gaming operations revenue is also earned from the licensing of table product content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer. Equipment Sales Revenues from the stand-alone product sales or separate accounting units are recorded when: • Pervasive evidence of an arrangement exists; • The sales price is fixed or determinable; • Delivery has occurred and services have been rendered; and • Collectability is reasonably assured. Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance. The Company enters into revenue arrangements that may consist of multiple deliverables of its products. For example, gaming equipment arrangements may include the sale of gaming machines and game content conversion kits. Revenue associated with arrangements with multiple deliverables is allocated to separate units of accounting if (1) the deliverables have value to the customer on a stand-alone basis or (2) the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company. At the inception of a multiple element arrangement, fees under the arrangement are allocated to deliverables based on their relative selling price. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence (“VSOE”), then third-party evidence (“TPE”) and finally management’s estimate of the selling price (“ESP”). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met. Cash and Cash Equivalents Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less. Restricted Cash Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards. Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts related to accounts receivable deemed to have a high risk of collectability. The Company reviews the accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes, and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for accounts receivable. Inventories Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment. Inventories are stated at net realizable value. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value. Property and Equipment The cost of gaming equipment, consisting of gaming equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. The Company capitalizes costs incurred for the refurbishment of used gaming equipment that is typically incurred to refurbish a machine in order to return it to its customer location. The refurbishments extend the life of the gaming equipment beyond the original useful life. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows: Gaming equipment 3 to 6 years Other property and equipment 3 to 6 years The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company groups long-lived assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is typically at the individual gaming machine level or at the cabinet product line level. Impairment testing is performed and losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount. When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition. Intangible Assets The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount. When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount. Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required. Costs of Computer Software Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense. On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable. Goodwill The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value. As of June 30, 2017 , there were no indicators of impairment. Acquisition Accounting The Company applies the provisions of ASC 805, “ Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations. Fair Value of Financial Instruments The Company applies the provisions of ASC 820, “ Fair Value Measurements ” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows: • Level 1 - quoted prices in an active market for identical assets or liabilities; • Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and • Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement. The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs). The estimated fair value of our long-term debt as of June 30, 2017 and December 31, 2016 was $588.3 million and $557.8 million , respectively. Accounting for Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not, and a valuation allowance is established for deferred tax assets which do not meet this threshold. Contingencies The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred. Foreign Currency Translation The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of other accumulated comprehensive loss in stockholders’ equity. Recently Issued Accounting Pronouncements In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company will use the modified retrospective application approach and does not expect adoption of the new revenue standards to have a material impact on its consolidated financial statements as the majority of our revenue is recognized under lease accounting guidance. In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory . ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. This ASU did not have a material effect on our financial condition, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 intends to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is expected to result in a significant portion of our operating leases, where we are the lessee, to be recognized on our Consolidated Balance Sheets. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with earlier adoption permitted. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) . ASU 2016-15 intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2016-15 to have a material effect on our financial condition, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The new guidance clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of adopting this guidance. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the new amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. We adopted this guidance prospectively at the beginning of first quarter 2017, which will simplify our future goodwill impairment testing. We do not expect that any other recently issued accounting guidance will have a significant effect on our financial statements. |
Property and equipment
Property and equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands): June 30, December 31, Gaming equipment $ 121,907 $ 108,635 Other property and equipment 16,018 13,900 Less: Accumulated depreciation (61,194 ) (54,609 ) Total property and equipment, net $ 76,731 $ 67,926 Gaming equipment and other property and equipment are depreciated over the respective useful lives of the assets ranging from three to six years. Depreciation expense was $6.7 million and $7.3 million for the three months ended June 30, 2017 and 2016 , respectively. Depreciation expense was $12.8 million and $14.6 million for the six months ended June 30, 2017 and 2016 , respectively. |
Goodwill and Intangibles
Goodwill and Intangibles | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangibles | GOODWILL AND INTANGIBLES There were no accumulated impairments of goodwill as of June 30, 2017 . Changes in the carrying amount of goodwill are as follows (in thousands): Gross Carrying Amount EGM Table Products Interactive Total Balance at December 31, 2016 $ 242,796 $ 3,400 $ 4,828 $ 251,024 Foreign currency adjustments 2,486 — — 2,486 Balance at June 30, 2017 $ 245,282 $ 3,400 $ 4,828 $ 253,510 Intangible assets consist of the following (in thousands): June 30, 2017 December 31, 2016 Useful Life (years) Gross Value Accumulated Amortization Net Carrying Value Gross Value Accumulated Amortization Net Carrying Value Indefinite lived trade names Indefinite $ 12,126 $ — $ 12,126 $ 12,126 $ — $ 12,126 Trade and brand names 3 - 5 13,600 (6,145 ) 7,455 13,600 (4,671 ) 8,929 Customer relationships 5 - 12 166,557 (59,704 ) 106,853 165,078 (49,528 ) 115,550 Contract rights under development and placement fees 1 - 7 16,558 (7,535 ) 9,023 16,488 (5,235 ) 11,253 Gaming software and technology platforms 2 - 7 126,420 (59,917 ) 66,503 123,596 (49,014 ) 74,582 Intellectual property 3 - 10 12,780 (3,087 ) 9,693 12,780 (2,343 ) 10,437 $ 348,041 $ (136,388 ) $ 211,653 $ 343,668 $ (110,791 ) $ 232,877 Intangible assets are amortized over their respective estimated useful lives ranging from one to twelve years. Amortization expense related to intangible assets was $11.5 million and $13.2 million for the three months ended June 30, 2017 and 2016 , respectively. Amortization expense related to intangible assets was $23.8 million and $26.5 million for the six months ended June 30, 2017 and 2016 , respectively. The Company enters into development agreements and placement fee agreements with certain customers to secure floor space under lease agreements for its gaming machines. Amounts paid in connection with the development agreements are repaid to the Company in accordance with the terms of the agreement, whereas placements fees are not reimbursed. For development agreements in the form of a loan, interest income is recognized on the repayment of the notes based on the stated rate or, if not stated explicitly in the development agreement, on an imputed interest rate. If the stated interest rate is deemed to be other than a market rate or zero, a discount is recorded on the note receivable as a result of the difference between the stated and market rate and a corresponding intangible asset is recorded. The intangible asset is recognized in the financial statements as a contract right under development agreement and amortized as a reduction in revenue over the term of the agreement. Placement fees can be in the form of cash paid upfront or free lease periods and are accreted over the life of the contract and the expense is recorded as a reduction of revenue. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $1.2 million and $1.2 million for the three months ended June 30, 2017 and 2016 , respectively. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $2.4 million and $2.3 million for the six months ended June 30, 2017 and 2016 , respectively. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | ACCRUED LIABILITIES Accrued liabilities consist of the following (in thousands): June 30, December 31, Salary and payroll tax accrual $ 5,297 $ 6,594 Taxes payable 2,739 2,128 Accrued interest 2,058 2 Placement fees payable 4,000 4,000 Accrued other 4,063 4,978 Total accounts payable and accrued liabilities $ 18,157 $ 17,702 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | LONG-TERM DEBT Long-term debt consists of the following (in thousands): June 30, December 31, First Lien Credit Facilities: Term loans, interest at LIBOR or base rate plus 5.50% (6.80% at June 30, 2017), net of unamortized discount and deferred loan costs of $14.2 million at June 30, 2017. $ 435,832 $ — Senior secured PIK notes, net of unamortized discount and deferred loan costs of $3.3 million and $3.5 million at June 30, 2017 and December 31, 2016, respectively. 141,199 133,286 Equipment long-term note payable and capital leases 3,614 4,792 Senior secured credit facilities: Term loans, interest at LIBOR or base rate plus 8.25% , net of unamortized discount and deferred loan costs of $15.1 million at December 31, 2016. — 395,581 Seller notes — 20,116 Total debt 580,645 553,775 Less: Current portion (6,601 ) (6,537 ) Long-term debt $ 574,044 $ 547,238 First Lien Credit Facilities On June 6, 2017 (the “Closing Date”), AP Gaming I, LLC (the “Borrower”), a wholly owned indirect subsidiary of the Company, entered into a first lien credit agreement, providing for $450.0 million in term loans and a $30.0 million revolving credit facility (the “First Lien Credit Facilities”). The proceeds of the term loans were used primarily to repay the Existing Credit Facilities (as defined below), the AGS Seller Notes (as defined below) and the Amaya Seller Note (as defined below), to pay for the fees and expenses incurred in connection with the foregoing and otherwise for general corporate purposes. The term loans will mature on February 15, 2024, and the revolving credit facility will mature on June 6, 2022. Starting with the first full quarter after the Closing Date, the term loans require scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. Borrowings under the term loans bear interest at a rate equal to, at the Borrower’s option, either LIBOR or the base rate, subject to an interest rate floor plus an applicable margin rate. Borrowings under the revolving credit facility bear interest at a rate equal to, at the Borrower’s option, either LIBOR or the base rate plus an applicable margin rate. In addition, on a quarterly basis, the Borrower is required to pay each lender under the revolving credit facility a commitment fee in respect of any unused commitments thereunder at a rate of 0.50% per annum. The First Lien Credit Facilities are guaranteed by AP Gaming Holdings, LLC, the Borrower’s material, wholly owned domestic subsidiaries (subject to certain exceptions), and are secured by a pledge by AP Gaming Holdings, LLC of the Borrower’s equity interest directly held by AP Gaming Holdings, LLC and a pledge of substantially all of the existing and future property and assets of the Borrower and the subsidiary guarantors, subject to certain exceptions. The First Lien Credit Facilities require that the Borrower maintain a maximum net first lien leverage ratio set at a maximum of 6.0% to 1.0 . The First Lien Credit Facilities also contain customary affirmative covenants and negative covenants that limit our ability to, among other things: (i) incur additional debt or issue certain preferred shares; (ii) create liens on certain assets; (iii) make certain loans or investments (including acquisitions); (iv) pay dividends on or make distributions in respect of our capital stock or make other restricted payments; (v) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vi) sell assets; (vii) enter into certain transactions with our affiliates; (viii) enter into sale-leaseback transactions; (ix) change our lines of business; (x) restrict dividends from our subsidiaries or restrict liens; (xi) change our fiscal year; and (xii) modify the terms of certain debt or organizational agreements. The new senior secured credit facilities also contain customary events of default included in similar financing transactions, including, among others, failure to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. Amended and Restated Senior Secured PIK Notes On May 30, 2017, the Company entered into an amended and restated note purchase agreement (the “A&R Note Purchase Agreement”) with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as holder (the “Holder”), and Deutsche Bank Trust Company Americas, as collateral agent, which amended and restated the note purchase agreement, dated as of May 29, 2015. The A&R Note Purchase Agreement governs the Company’s previously issued 11.25% senior secured PIK notes (the “Notes”), $115.0 million of which had been issued to the Holder at an issue price of 97% of the principal amount thereof to the Holder in a private placement exempt from registration under the Securities Act of 1933, as amended. The A&R Note Purchase Agreement extends the maturity of the Notes to May 28, 2024 and modifies the terms of the Notes to, among other things, account for the repayment of the AGS Seller Notes and the Amaya Seller Note. The Notes remain secured by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor. Interest on the Notes continues to accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes accrues from the date of issuance and is payable on the dates described in more detail in the A&R Note Purchase Agreement. The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined, some of which were modified in the A&R Note Purchase Agreement. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. Equipment Long Term Note Payable and Capital Leases The Company has entered into a financing agreement to purchase certain gaming devices, systems and related equipment and has entered into leases for servers and equipment that are accounted for as capital leases. Senior Secured Credit Facilities On June 6, 2017, the Borrower terminated its senior secured credit facilities (the “Existing Credit Facilities”), dated as of December 20, 2013 (as amended as of May 29, 2015 and as of June 1, 2015 and as amended, restated, supplemented or otherwise modified prior to June 6, 2017), by and among the Borrower, the lenders party thereto from time to time and Citicorp North America, Inc., as administrative agent. In connection with the termination, the Borrower repaid all of the outstanding obligations in respect of principal, interest and fees under the Existing Credit Facilities. On June 6, 2017, net deferred loan costs and discounts totaling $13.9 million related to the Existing Credit Facilities were capitalized and were being amortized over the term of the agreement. In conjunction with the refinancing, approximately $3.3 million of these deferred loan costs and discounts was written off as a portion of the loss on extinguishment and modification of debt and the remainder of these cost will be amortized over the term of the First Lien Credit Facilities. An additional $9.2 million in loan costs and discounts was incurred related to the issuance of the First Lien Credit Facilities. Given the composition of the lender group, certain lenders were accounted for as a debt modification and, as such, $4.8 million in debt issuance costs related to the First Lien Credit Facilities were expensed and included in the loss on extinguishment and modification of debt, the remaining amount was capitalized and will be amortized over the term of the agreement. Seller Notes On June 6, 2017, AP Gaming, Inc., a wholly owned subsidiary of the Company terminated two promissory notes issued by AP Gaming, Inc. to AGS Holdings, LLC, in the initial principal amounts of $2.2 million and $3.3 million , respectively (the “AGS Seller Notes”). The AGS Seller Notes had been issued to the previous owners of the Company’s primary operating company. In connection with the termination, the Company caused the repayment all of the outstanding obligations in respect of principal and interest under the AGS Seller Notes. On the June 6, 2017, the Company terminated a promissory note issued by the Company to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million . The Amaya Seller Note had been issued to satisfy the conditions set forth in the stock purchase agreement for Amaya Americas Corporation (“Cadillac Jack”). In connection with the termination, the Company repaid all outstanding obligations in respect of principal and interest under the Amaya Seller Note. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Common Stock The Company’s common stock consists of two classes: class A voting common stock (“Class A Shares”) and class B non-voting common stock (“Class B Shares”). The holders of the Class A Shares are entitled to one vote per share on all matters to be voted on by the stockholders of the Company. The holders of the Class A Shares have no economic rights or privileges, including rights in liquidation, and have no right to receive dividends or any other distributions. The holders of the Class B Shares have no right to vote on any matter to be voted on by the stockholders of the Company. Each holder of Class B Shares is entitled to share equally, share for share, dividends declared, as well as any distributions to the stockholders, and in the event of the Company’s liquidation, dissolution or winding up, is entitled to share ratably in any remaining assets after payment of or provision for liabilities and the liquidation on preferred stock, if any. As of June 30, 2017 , 109,832 Class B Shares issued to “Management Holder,” as defined in the Securityholders Agreement dated April 28, 2014 (the “Securityholders Agreement”), were outstanding. The Class B Shares were sold to the Management Holder and are not considered issued for accounting purposes as they contain a substantive performance condition, a “Qualified Public Offering”, as defined in the Securityholders Agreement, which must be probable for the Management Holder to benefit from the ownership of the shares. As a result, shares issued to the Management Holder are not considered issued for accounting purposes until such time that the performance condition is probable and the Company has recorded a liability in other long-term liabilities of $1.3 million for the proceeds from the sale of the Class B Shares. No share-based compensation expense for Class B Shares has been recognized and none will be recognized for these shares until the performance condition is considered to be probable. Class B Shares that are held by a Management Holder are subject to repurchase rights (the “Repurchase Rights”), as outlined in Section 6 of the Securityholders Agreement, that are contingent on the Management Holder’s termination. The Repurchase Rights enable the Company to recover the Class B Shares issued to Management Holders without transferring any appreciation of the fair value of the stock to the Management Holder upon certain terminations of the Management Holder’s employment prior to a “Qualified Public Offering”, as defined in the Securityholders Agreement. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering for “Cause”, as defined in the Securityholders Agreement, or is terminated by such Management Holder without “Good Reason”, as defined in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for the lesser of original cost and fair market value. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering other than as described above and in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for fair market value. |
Write Downs and Other Charges
Write Downs and Other Charges | 6 Months Ended |
Jun. 30, 2017 | |
Write Downs And Other Charges [Abstract] | |
Write Downs and Other Charges | WRITE DOWNS AND OTHER CHARGES The Condensed Consolidated Statements of Operations and Comprehensive Loss include various non-routine transactions or consulting and transaction-related fees that have been classified as write downs and other charges. During the three months ended June 30, 2017 , the Company recognized $1.9 million in write-downs and other charges driven by losses from the disposal of assets. During the six months ended June 30, 2017 , the Company recognized $2.2 million in write-downs and other charges driven by losses from the disposal of assets of $2.5 million , the full impairment of certain intangible assets of $0.3 million (level 3 fair value measurement based on projected cash flows for the specific game titles), offset by a fair value adjustment to an acquisition contingent receivable of $0.6 million (level 3 fair value measurements based on projected cash flows). The contingency was resolved in Q1 2017 as described in Note 5. During the three and six months ended June 30, 2016 , the Company recognized $0.2 million and $0.3 million in write-downs and other charges, respectively, driven by losses from the disposal of assets. |
Basic and Diluted Income (Loss)
Basic and Diluted Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Income (Loss) Per Share | BASIC AND DILUTED INCOME (LOSS) PER SHARE The Company computes net income (loss) per share in accordance with accounting guidance that requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss). Basic EPS is computed by dividing net income (loss) for the period by the weighted average number of shares outstanding during the period. Basic EPS excludes Class A shares and Class B Shares issued to Management Holders until the performance condition or termination event is considered probable (see Note 6). Until such time, the Class B Shares issued to Management Holders will be included in the calculation of diluted EPS using the treasury stock method and are treated as stock options. Diluted EPS is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, increased by potentially dilutive common shares that were outstanding during the period. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. Potentially dilutive common shares include stock options and restricted stock (see Note 10). There were no potentially dilutive securities for the three and six months ended June 30, 2017 . Excluded from the calculation of diluted EPS for the three months ended June 30, 2017 was 50,000 restricted shares and 0.2 million stock options, as such securities were anti-dilutive. Excluded from the calculation of diluted EPS for the six months ended June 30, 2017 was 50,000 restricted shares and 0.3 million stock options, as such securities were anti-dilutive. Excluded from the calculation of diluted EPS for the three and six months ended June 30, 2016 was 50,000 restricted shares and 0.3 million stock options, as such securities were anti-dilutive. |
Benefit Plans
Benefit Plans | 6 Months Ended |
Jun. 30, 2017 | |
Retirement Benefits [Abstract] | |
Benefit Plans | BENEFIT PLANS The Company has established a 401(k) defined contribution plan (the “401(k) Plan”) for its employees. The 401(k) Plan allows employees to contribute a portion of their earnings, and the Company may match a percentage of the contributions on a discretionary basis. The expense associated with the 401(k) Plan for the three months ended June 30, 2017 and 2016 , was $0.3 million and $0.2 million , respectively. The expense associated with the 401(k) Plan for the six months ended June 30, 2017 and 2016 , was $0.5 million and $0.5 million , respectively. On April 28, 2014, the board of directors of the Company approved the 2014 Long-Term Incentive Plan (“LTIP”). Under the LTIP, the Company is authorized to grant nonqualified stock options, rights to purchase Class B Shares, restricted stock, restricted stock units and other awards settleable in, or based upon, Class B Shares to persons who are directors and employees of and consultants to the Company or any of its subsidiaries on the date of the grant. The LTIP will terminate ten years after approval by the board. Subject to adjustments in connection with certain changes in capitalization, the maximum number of Class B Shares that may be delivered pursuant to awards under the LTIP is 1,450,000 . As of June 30, 2017 , approximately 0.2 million shares remain available for issuance. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION Stock Options The Company has granted stock awards to eligible participants under the LTIP. The stock awards include options to purchase the Company’s Class B Shares. These stock options include a combination of service and market conditions, as further described below. In addition, these stock options include a performance vesting condition, a Qualified Public Offering (see Note 6), which was not considered to be probable as of June 30, 2017 . As a result, no share-based compensation expense for stock options has been recognized and none will be recognized for these stock awards until the performance condition is considered to be probable. The amount of unrecognized compensation expense associated with stock options was $7.7 million and for restricted stock was $0.5 million at June 30, 2017 . When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service and market conditions. The Company calculated the grant date fair value of stock options that vest over a service period using the Black Scholes model. For stock options that contain a market condition related to the return on investment that the Company’s stockholders achieve, the options were valued using a lattice-based option valuation model. The assumptions used in these calculations are noted in the following table. Expected volatilities are based on implied volatilities from comparable companies. The expected time to liquidity is based on management’s estimate. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. Six Months Ended June 30, 2017 Six Months Ended June 30, 2016 Option valuation assumptions: Expected dividend yield —% —% Expected volatility 57% 55% Risk-free interest rate 1.82% 1.67% Expected term (in years) 6.3 6.3 Stock option awards represent options to purchase Class B Shares and are granted pursuant to the Company’s LTIP, and include options that the Company primarily classifies as Tranche A, Tranche B and Tranche C. Tranche A options are eligible to vest in equal installments of 20% on each of the first five anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries. In the event of a termination of employment without cause or as a result of death or disability, any such time based options which would have vested on the next applicable vesting date shall become vested, and the remaining unvested time based options shall be forfeited. In addition, upon a Change in Control (as defined in the Company’s 2014 Long-Term Incentive Plan), subject to continued employment through the date of the Change in Control, all outstanding unvested time based options shall immediately vest. All other option awards are eligible to vest upon the satisfaction of certain performance conditions (collectively, “Performance Options”). Tranche B options are eligible to vest based on achievement of an Investor IRR equal to or in excess of 20% , subject to a minimum cash-on-cash return of 2.5 times the Investor Investment (as such terms are defined in the Company’s 2014 Long-Term Incentive Plan). Tranche C options are eligible to vest based on achievement of an Investor IRR equal to or in excess of 25% , subject to a minimum cash-on-cash return of 3.0 times the Investor Investment. In the event of a termination of employment without cause or as a result of death or disability, any Performance Options which are outstanding and unvested will remain eligible to vest subject to achievement of such performance targets (without regard to the continued service requirement) until the first anniversary of the date of such termination. As of June 30, 2017 , the Company had 0.4 million Performance Options outstanding. A summary of the changes in stock options outstanding during the six months ended June 30, 2017 , is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (years) Aggregate Intrinsic Value Options outstanding as of December 31, 2016 895,100 $13.35 Granted 224,750 $15.91 Canceled (35,000) $16.98 Options outstanding as of June 30, 2017 1,084,850 $13.76 8.1 $ 2,479,475 Restricted Stock No restricted stock was granted, canceled or forfeited during the six months ended June 30, 2017 . There were no changes to outstanding restricted stock awards during the six months ended June 30, 2017 . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company's effective income tax rate for the three months ended June 30, 2017 , was an expense of 7.0% . The difference between the federal statutory rate of 35% and the Company's effective tax rate for the three months ended June 30, 2017 , was primarily due to changes in our valuation allowance on deferred tax assets. The Company's effective income tax rate for the three months ended June 30, 2016 , was a benefit of 7.9% . The difference between the federal statutory rate of 35% and the Company's effective tax rate for the three months ended June 30, 2016 , was primarily due to changes in our valuation allowance on deferred tax assets. The Company's effective income tax rate for the six months ended June 30, 2017 , was an expense of 12.3% . The difference between the federal statutory rate of 35% and the Company's effective tax rate for the six months ended June 30, 2017 , was primarily due to changes in our valuation allowance on deferred tax assets. The Company's effective income tax rate for the six months ended June 30, 2016 , was a benefit of 8.6% . The difference between the federal statutory rate of 35% and the Company's effective tax rate for the six months ended June 30, 2016 , was primarily due to changes in our valuation allowance on deferred tax assets. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES The Company is subject to federal, state and Native American laws and regulations that affect both its general commercial relationships with its Native American tribal customers, as well as the products and services provided to them. Periodically, the Company reviews the status of each significant matter and assesses the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. If a potential loss from any claim or legal proceeding is considered reasonably possible, the Company discloses an estimate of the possible loss or range of possible loss, or a statement that such an estimate cannot be made. There are no matters that meet the criteria for disclosure outlined above. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to their pending claims and litigation and may revise their estimates. Such revisions in the estimates of the potential liabilities could have a material impact on the results of operations and financial condition. |
Operating Segments
Operating Segments | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Operating Segments | OPERATING SEGMENTS We report our business segment results by segment in accordance with the “management approach.” The management approach designates the internal reporting used by our chief operating decision maker, who is our Chief Executive Officer, for making decisions and assessing performance of our reportable segments. See Note 1 for a detailed discussion of our three segments. Each segment’s activities include the design, development, acquisition, manufacturing, marketing, distribution, installation and servicing of its product lines. We evaluate the performance of our operating segments based on revenues and segment adjusted EBITDA. Segment revenues include leasing, licensing, or selling of products within each reportable segment. Segment adjusted EBITDA includes the revenues and operating expenses from each segment adjusted for depreciation, amortization, write downs and other charges, accretion of placement fees, non-cash stock compensation expense, as well as other costs such as certain acquisitions and integration related costs including restructuring and severance charges; legal and litigation expenses including settlement payments; new jurisdictions and regulatory licensing costs; non-cash charges on capitalized installation and delivery; contract cancellation fees; and other adjustments primarily composed of professional fees incurred by the Company for projects, corporate and public filing compliance and other costs deemed to be non-recurring in nature. Revenues in each segment are attributable to third parties and segment operating expenses are directly associated with the product lines included in each segment such as research and development, product approval costs, product-related litigation expenses, sales commissions and other directly-allocable sales expenses. Cost of gaming operations and cost of equipment sales primarily include the cost of products sold, service, manufacturing overhead, shipping and installation. Segment adjusted EBITDA excludes other income and expense, income taxes and certain expenses that are managed outside of the operating segments. The following provides financial information concerning our reportable segments for the three and six months ended June 30, : Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Revenues by segment EGM $ 47,404 $ 39,925 $ 92,416 $ 77,776 Table Products 711 612 1,343 1,331 Interactive 1,965 2,081 4,095 3,746 Total Revenues $ 50,080 $ 42,618 $ 97,854 $ 82,853 Adjusted EBITDA by segment EGM 26,495 24,001 51,696 47,761 Table Products (312 ) (561 ) (490 ) (1,015 ) Interactive (97 ) (1,415 ) (214 ) (3,464 ) Subtotal 26,086 22,025 50,992 43,282 Write downs and other: Loss on disposal of long lived assets 1,933 191 2,510 310 Impairment of long lived assets — — 285 2 Fair value adjustments to contingent consideration and other items — — (630 ) — Acquisition costs — — — (11 ) Depreciation and amortization 18,216 20,566 36,667 41,108 Accretion of placement fees (1) 1,151 1,178 2,300 2,348 Acquisitions & integration related costs including restructuring & severance 181 1,000 828 2,349 Legal & litigation expenses including settlement payments 186 478 585 1,134 New jurisdictions and regulatory licensing costs 502 67 737 115 Non-cash charge on capitalized installation and delivery 513 332 926 840 Non-cash charges and loss on disposition of assets 136 2,067 686 2,067 Other adjustments 946 484 1,593 1,564 Interest expense 14,554 14,632 29,714 29,248 Interest income (40 ) (16 ) (55 ) (39 ) Loss on extinguishment and modification of debt 8,129 — 8,129 — Other expense (income) (1,529 ) 1,500 (4,338 ) 5,922 Loss before income taxes $ (18,792 ) $ (20,454 ) $ (28,945 ) $ (43,675 ) (1) Non-cash expense related to the accretion of contract rights under development agreements and placement fees. The Company’s Chief Operating Decision Maker (“CODM”) does not receive a report with a measure of total assets or capital expenditures for each reportable segment as this information is not used or necessary for the evaluation of segment performance. The CODM assesses the performance of each segment based on adjusted EBITDA and not based on assets or capital expenditures. Therefore, the Company has not provided asset and capital expenditure information by reportable segment. |
Description of the Business a19
Description of the Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain disclosures required by generally accepted accounting principles (“GAAP”) are omitted or condensed in these condensed consolidated financial statements. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) that are necessary for a fair statement of the Company's financial position, results of operations and cash flows for the interim periods have been made. The interim results reflected in these condensed consolidated financial statements are not necessarily indicative of results to be expected for the full fiscal year. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 . |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated. |
Revenue Recognition | Revenue Recognition Gaming Operations Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time, which typically ranges from one to three years and then the contract continues on a month-to-month basis thereafter. In some instances, the Company will enter arrangements for longer periods of time; however, the arrangements include the ability of the customer to cancel the contract and return the games to the Company, a provision which renders their contracts effectively month-to-month contracts. Primarily due to these factors, our participation arrangements are accounted for as operating leases. In some instances, we will offer a free trial period during which no revenue is recognized. If during or at the conclusion of the trial period the customer chooses to enter into a lease for the gaming equipment, we commence revenue recognition according to the terms of the agreement. Under participation arrangements, the Company retains ownership of the gaming equipment installed at the customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. Thus, in our condensed consolidated financial statements the Company records revenue monthly related to these arrangements and the gaming equipment is recorded in property and equipment, net on our balance sheet and depreciated over the expected life of the gaming equipment. The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, provides the customer with the right to return the gaming machines to the Company. This performance guarantee is considered a cancellation clause, a provision which renders their contracts effectively month-to-month contracts. Accordingly, the Company accounts for these contract in a similar manner with its other operating leases as described above. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the win per day to be retained by the customer to fund facility-specific marketing, advertising and promotions. These amounts retained by the customer reduce the monthly revenue recognized on each arrangement. Gaming operations revenue is also earned from the licensing of table product content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer. Equipment Sales Revenues from the stand-alone product sales or separate accounting units are recorded when: • Pervasive evidence of an arrangement exists; • The sales price is fixed or determinable; • Delivery has occurred and services have been rendered; and • Collectability is reasonably assured. Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under general revenue recognition guidance. The Company enters into revenue arrangements that may consist of multiple deliverables of its products. For example, gaming equipment arrangements may include the sale of gaming machines and game content conversion kits. Revenue associated with arrangements with multiple deliverables is allocated to separate units of accounting if (1) the deliverables have value to the customer on a stand-alone basis or (2) the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company. At the inception of a multiple element arrangement, fees under the arrangement are allocated to deliverables based on their relative selling price. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence (“VSOE”), then third-party evidence (“TPE”) and finally management’s estimate of the selling price (“ESP”). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less. |
Restricted Cash | Restricted Cash Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts related to accounts receivable deemed to have a high risk of collectability. The Company reviews the accounts receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes, and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for accounts receivable. |
Inventories | Inventories Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment. Inventories are stated at net realizable value. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value. |
Property and Equipment | Property and Equipment The cost of gaming equipment, consisting of gaming equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. The Company capitalizes costs incurred for the refurbishment of used gaming equipment that is typically incurred to refurbish a machine in order to return it to its customer location. The refurbishments extend the life of the gaming equipment beyond the original useful life. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows: Gaming equipment 3 to 6 years Other property and equipment 3 to 6 years The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company groups long-lived assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is typically at the individual gaming machine level or at the cabinet product line level. Impairment testing is performed and losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount. When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition. |
Intangible Assets | Intangible Assets The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount. When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount. Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required. |
Costs of Computer Software | Costs of Computer Software Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense. On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable. |
Goodwill | Goodwill The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value. |
Acquisition Accounting | Acquisition Accounting The Company applies the provisions of ASC 805, “ Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies the provisions of ASC 820, “ Fair Value Measurements ” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows: • Level 1 - quoted prices in an active market for identical assets or liabilities; • Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and • Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement. The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs). |
Accounting for Income Taxes | Accounting for Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that included the enactment date. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not, and a valuation allowance is established for deferred tax assets which do not meet this threshold. |
Contingencies | Contingencies The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred. |
Foreign Currency Translation | Foreign Currency Translation The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of other accumulated comprehensive loss in stockholders’ equity. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company will use the modified retrospective application approach and does not expect adoption of the new revenue standards to have a material impact on its consolidated financial statements as the majority of our revenue is recognized under lease accounting guidance. In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory . ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. This ASU did not have a material effect on our financial condition, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 intends to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is expected to result in a significant portion of our operating leases, where we are the lessee, to be recognized on our Consolidated Balance Sheets. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with earlier adoption permitted. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) . ASU 2016-15 intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2016-15 to have a material effect on our financial condition, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The new guidance clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of adopting this guidance. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the new amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. We adopted this guidance prospectively at the beginning of first quarter 2017, which will simplify our future goodwill impairment testing. We do not expect that any other recently issued accounting guidance will have a significant effect on our financial statements. |
Description of the Business a20
Description of the Business and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Property, Plant and Equipment | The estimated useful lives are as follows: Gaming equipment 3 to 6 years Other property and equipment 3 to 6 years Property and equipment consist of the following (in thousands): June 30, December 31, Gaming equipment $ 121,907 $ 108,635 Other property and equipment 16,018 13,900 Less: Accumulated depreciation (61,194 ) (54,609 ) Total property and equipment, net $ 76,731 $ 67,926 |
Property and equipment (Tables)
Property and equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | The estimated useful lives are as follows: Gaming equipment 3 to 6 years Other property and equipment 3 to 6 years Property and equipment consist of the following (in thousands): June 30, December 31, Gaming equipment $ 121,907 $ 108,635 Other property and equipment 16,018 13,900 Less: Accumulated depreciation (61,194 ) (54,609 ) Total property and equipment, net $ 76,731 $ 67,926 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill are as follows (in thousands): Gross Carrying Amount EGM Table Products Interactive Total Balance at December 31, 2016 $ 242,796 $ 3,400 $ 4,828 $ 251,024 Foreign currency adjustments 2,486 — — 2,486 Balance at June 30, 2017 $ 245,282 $ 3,400 $ 4,828 $ 253,510 |
Schedule of intangible assets (indefinite-lived) | Intangible assets consist of the following (in thousands): June 30, 2017 December 31, 2016 Useful Life (years) Gross Value Accumulated Amortization Net Carrying Value Gross Value Accumulated Amortization Net Carrying Value Indefinite lived trade names Indefinite $ 12,126 $ — $ 12,126 $ 12,126 $ — $ 12,126 Trade and brand names 3 - 5 13,600 (6,145 ) 7,455 13,600 (4,671 ) 8,929 Customer relationships 5 - 12 166,557 (59,704 ) 106,853 165,078 (49,528 ) 115,550 Contract rights under development and placement fees 1 - 7 16,558 (7,535 ) 9,023 16,488 (5,235 ) 11,253 Gaming software and technology platforms 2 - 7 126,420 (59,917 ) 66,503 123,596 (49,014 ) 74,582 Intellectual property 3 - 10 12,780 (3,087 ) 9,693 12,780 (2,343 ) 10,437 $ 348,041 $ (136,388 ) $ 211,653 $ 343,668 $ (110,791 ) $ 232,877 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued liabilities | Accrued liabilities consist of the following (in thousands): June 30, December 31, Salary and payroll tax accrual $ 5,297 $ 6,594 Taxes payable 2,739 2,128 Accrued interest 2,058 2 Placement fees payable 4,000 4,000 Accrued other 4,063 4,978 Total accounts payable and accrued liabilities $ 18,157 $ 17,702 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): June 30, December 31, First Lien Credit Facilities: Term loans, interest at LIBOR or base rate plus 5.50% (6.80% at June 30, 2017), net of unamortized discount and deferred loan costs of $14.2 million at June 30, 2017. $ 435,832 $ — Senior secured PIK notes, net of unamortized discount and deferred loan costs of $3.3 million and $3.5 million at June 30, 2017 and December 31, 2016, respectively. 141,199 133,286 Equipment long-term note payable and capital leases 3,614 4,792 Senior secured credit facilities: Term loans, interest at LIBOR or base rate plus 8.25% , net of unamortized discount and deferred loan costs of $15.1 million at December 31, 2016. — 395,581 Seller notes — 20,116 Total debt 580,645 553,775 Less: Current portion (6,601 ) (6,537 ) Long-term debt $ 574,044 $ 547,238 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of grant date fair value and related assumptions of Options granted | The assumptions used in these calculations are noted in the following table. Expected volatilities are based on implied volatilities from comparable companies. The expected time to liquidity is based on management’s estimate. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. Six Months Ended June 30, 2017 Six Months Ended June 30, 2016 Option valuation assumptions: Expected dividend yield —% —% Expected volatility 57% 55% Risk-free interest rate 1.82% 1.67% Expected term (in years) 6.3 6.3 |
Schedule of Share-based Compensation, Stock Options, Activity | A summary of the changes in stock options outstanding during the six months ended June 30, 2017 , is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contract Term (years) Aggregate Intrinsic Value Options outstanding as of December 31, 2016 895,100 $13.35 Granted 224,750 $15.91 Canceled (35,000) $16.98 Options outstanding as of June 30, 2017 1,084,850 $13.76 8.1 $ 2,479,475 |
Operating Segments (Tables)
Operating Segments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following provides financial information concerning our reportable segments for the three and six months ended June 30, : Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Revenues by segment EGM $ 47,404 $ 39,925 $ 92,416 $ 77,776 Table Products 711 612 1,343 1,331 Interactive 1,965 2,081 4,095 3,746 Total Revenues $ 50,080 $ 42,618 $ 97,854 $ 82,853 Adjusted EBITDA by segment EGM 26,495 24,001 51,696 47,761 Table Products (312 ) (561 ) (490 ) (1,015 ) Interactive (97 ) (1,415 ) (214 ) (3,464 ) Subtotal 26,086 22,025 50,992 43,282 Write downs and other: Loss on disposal of long lived assets 1,933 191 2,510 310 Impairment of long lived assets — — 285 2 Fair value adjustments to contingent consideration and other items — — (630 ) — Acquisition costs — — — (11 ) Depreciation and amortization 18,216 20,566 36,667 41,108 Accretion of placement fees (1) 1,151 1,178 2,300 2,348 Acquisitions & integration related costs including restructuring & severance 181 1,000 828 2,349 Legal & litigation expenses including settlement payments 186 478 585 1,134 New jurisdictions and regulatory licensing costs 502 67 737 115 Non-cash charge on capitalized installation and delivery 513 332 926 840 Non-cash charges and loss on disposition of assets 136 2,067 686 2,067 Other adjustments 946 484 1,593 1,564 Interest expense 14,554 14,632 29,714 29,248 Interest income (40 ) (16 ) (55 ) (39 ) Loss on extinguishment and modification of debt 8,129 — 8,129 — Other expense (income) (1,529 ) 1,500 (4,338 ) 5,922 Loss before income taxes $ (18,792 ) $ (20,454 ) $ (28,945 ) $ (43,675 ) (1) Non-cash expense related to the accretion of contract rights under development agreements and placement fees. |
Description of the Business a27
Description of the Business and Summary of Significant Accounting Policies - Property and Equipment (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 6 years |
Gaming Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Gaming Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 6 years |
Other Property and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Other Property and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 6 years |
Description of the Business a28
Description of the Business and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||
Fair value of long-term debt | $ 588.3 | $ 557.8 |
Property and equipment (Details
Property and equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Less: Accumulated depreciation | $ (61,194) | $ (54,609) |
Total property and equipment, net | 76,731 | 67,926 |
Gaming Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 121,907 | 108,635 |
Other Property and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 16,018 | $ 13,900 |
Property and equipment - Narra
Property and equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 6.7 | $ 7.3 | $ 12.8 | $ 14.6 |
Minimum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful lives of gaming equipment and other equipment | 3 years | |||
Maximum [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful lives of gaming equipment and other equipment | 6 years |
Goodwill and Intangibles - Cha
Goodwill and Intangibles - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Changes in carrying amount of goodwill | |
Balance at December 31, 2016 | $ 251,024 |
Foreign currency adjustments | 2,486 |
Balance at June 30, 2017 | 253,510 |
EGM | |
Changes in carrying amount of goodwill | |
Balance at December 31, 2016 | 242,796 |
Foreign currency adjustments | 2,486 |
Balance at June 30, 2017 | 245,282 |
Table Games | |
Changes in carrying amount of goodwill | |
Balance at December 31, 2016 | 3,400 |
Foreign currency adjustments | 0 |
Balance at June 30, 2017 | 3,400 |
Interactive | |
Changes in carrying amount of goodwill | |
Balance at December 31, 2016 | 4,828 |
Foreign currency adjustments | 0 |
Balance at June 30, 2017 | $ 4,828 |
Goodwill and Intangibles - Sch
Goodwill and Intangibles - Schedule of Intangibles Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, accumulated amortization | $ (136,388) | $ (110,791) |
Intangible assets, gross value | 348,041 | 343,668 |
Intangible assets, net carrying value | $ 211,653 | 232,877 |
Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 1 year | |
Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 12 years | |
Trade Names [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 12,126 | 12,126 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross value | 13,600 | 13,600 |
Finite-lived intangible assets, accumulated amortization | (6,145) | (4,671) |
Finite-lived intangible assets, net carrying value | $ 7,455 | 8,929 |
Trade Names [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 3 years | |
Trade Names [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 5 years | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross value | $ 166,557 | 165,078 |
Finite-lived intangible assets, accumulated amortization | (59,704) | (49,528) |
Finite-lived intangible assets, net carrying value | $ 106,853 | 115,550 |
Customer Relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 5 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 12 years | |
Contract Rights Under Development and Placement Fees [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross value | $ 16,558 | 16,488 |
Finite-lived intangible assets, accumulated amortization | (7,535) | (5,235) |
Finite-lived intangible assets, net carrying value | $ 9,023 | 11,253 |
Contract Rights Under Development and Placement Fees [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 1 year | |
Contract Rights Under Development and Placement Fees [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 7 years | |
Gaming Software and Technology Platforms [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross value | $ 126,420 | 123,596 |
Finite-lived intangible assets, accumulated amortization | (59,917) | (49,014) |
Finite-lived intangible assets, net carrying value | $ 66,503 | 74,582 |
Gaming Software and Technology Platforms [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 2 years | |
Gaming Software and Technology Platforms [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 7 years | |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross value | $ 12,780 | 12,780 |
Finite-lived intangible assets, accumulated amortization | (3,087) | (2,343) |
Finite-lived intangible assets, net carrying value | $ 9,693 | $ 10,437 |
Intellectual Property [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 3 years | |
Intellectual Property [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, useful life (years) | 10 years |
Goodwill and Intangibles - Nar
Goodwill and Intangibles - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense related to intangible assets | $ 11,500 | $ 13,200 | $ 23,800 | $ 26,500 |
Accretion of contract rights under development agreements and placement fees | $ 1,151 | $ 1,178 | $ 2,365 | $ 2,348 |
Minimum [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, useful life (years) | 1 year | |||
Maximum [Member] | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, useful life (years) | 12 years |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of accrued liabilities | ||
Salary and payroll tax accrual | $ 5,297 | $ 6,594 |
Taxes payable | 2,739 | 2,128 |
Accrued interest | 2,058 | 2 |
Placement fees payable | 4,000 | 4,000 |
Accrued other | 4,063 | 4,978 |
Total accounts payable and accrued liabilities | $ 18,157 | $ 17,702 |
Long-Term Debt - Schedule of L
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | Jun. 06, 2017 | May 29, 2015 | |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 580,645 | $ 553,775 | ||
Less: Current portion | (6,601) | (6,537) | ||
Long-term debt | 574,044 | 547,238 | ||
Payment in Kind (PIK) Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 141,199 | 133,286 | $ 115,000 | |
Unamortized discount and deferred loan costs | 3,300 | 3,500 | ||
First Lien Credit Facilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount and deferred loan costs | $ 9,200 | |||
First Lien Credit Facilities [Member] | Term Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 435,832 | 0 | ||
Unamortized discount and deferred loan costs | 14,200 | |||
Equipment Long-Term Note Payable and Capital Leases [Member] | Notes Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 3,614 | 4,792 | ||
Senior Secured Credit Facilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount and deferred loan costs | $ 13,900 | |||
Senior Secured Credit Facilities [Member] | Term Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 0 | 395,581 | ||
Unamortized discount and deferred loan costs | 15,100 | |||
Seller Notes [Member] | Notes Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 0 | $ 20,116 | ||
LIBOR Variable Rate [Member] | First Lien Credit Facilities [Member] | Term Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 5.50% | |||
LIBOR Variable Rate [Member] | Senior Secured Credit Facilities [Member] | Term Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 8.25% | |||
Base Rate [Member] | First Lien Credit Facilities [Member] | Term Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 5.50% | |||
Effective interest rate at end of period (as a percent) | 6.80% | |||
Base Rate [Member] | Senior Secured Credit Facilities [Member] | Term Loans [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 8.25% |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) $ in Thousands | Jun. 06, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | May 29, 2015USD ($) | Dec. 20, 2013USD ($)note |
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 580,645 | $ 553,775 | ||||
Write off of deferred loan cost and discount | $ 3,294 | $ 0 | ||||
First Lien Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum net first lien leverage ratio | 6.00% | |||||
Unamortized discount and deferred loan costs | $ 9,200 | |||||
Debt modification, debt issuance costs expensed | 4,800 | |||||
Senior Secured Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Unamortized discount and deferred loan costs | 13,900 | |||||
Write off of deferred loan cost and discount | 3,300 | |||||
Term Loans [Member] | First Lien Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 450,000 | |||||
Periodic payment, percent of outstanding principal balance | 0.25% | |||||
Long-term debt | $ 435,832 | 0 | ||||
Unamortized discount and deferred loan costs | 14,200 | |||||
Term Loans [Member] | Senior Secured Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 0 | 395,581 | ||||
Unamortized discount and deferred loan costs | 15,100 | |||||
Payment in Kind (PIK) Note [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 141,199 | 133,286 | $ 115,000 | |||
Debt instrument, stated interest rate (as a percent) | 11.25% | |||||
Unamortized discount and deferred loan costs | $ 3,300 | $ 3,500 | ||||
Debt instrument, issue price (as a percentage of principle amount) | 97.00% | |||||
Notes Payable, Other Payables [Member] | AGS Seller Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of promissory notes issued | note | 2 | |||||
Notes Payable, Other Payables [Member] | Promissory Note 2.2 Million [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 2,200 | |||||
Notes Payable, Other Payables [Member] | Promissory Note 3.3 Million [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 3,300 | |||||
Notes Payable, Other Payables [Member] | Promissory Note 12.0 Million Amaya [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 12,000 | |||||
Revolving Credit Facility [Member] | Line of Credit [Member] | First Lien Credit Facilities [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility, maximum borrowing capacity | $ 30,000 | |||||
Commitment fee (as a percent) | 0.50% |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ in Millions | Jun. 30, 2017USD ($)classvoteshares |
Class of Stock [Line Items] | |
Number of classes of common stock | class | 2 |
Number of votes per share of common stock | vote | 1 |
Long-term liability from the proceeds from the sale of the Class B Shares | $ | $ 1.3 |
Class B common stock issued to management holders [Member] | |
Class of Stock [Line Items] | |
Common stock, shares issued | shares | 109,832 |
Write Downs and Other Charges -
Write Downs and Other Charges - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Write Downs And Other Charges [Abstract] | ||||
Write downs and other charges | $ 1,933 | $ 191 | $ 2,165 | $ 301 |
Loss on disposal of assets | $ 200 | 2,500 | $ 300 | |
Impairment of intangible assets | 300 | |||
Contingent consideration | $ 600 |
Basic and Diluted Income (Los39
Basic and Diluted Income (Loss) Per Share - Narrative (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Potentially dilutive securities (in shares) | 0 | 0 | ||
Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 50,000 | 50,000 | 50,000 | 50,000 |
Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 200,000 | 300,000 | 300,000 | 300,000 |
Benefit Plans (Details)
Benefit Plans (Details) - USD ($) $ in Millions | Apr. 28, 2014 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
401(k) defined contribution plan expense | $ 0.3 | $ 0.2 | $ 0.5 | $ 0.5 | |
Long-Term Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Incentive plan period | 10 years | ||||
Long-Term Incentive Plan [Member] | Common Class B [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares authorized under incentive plan | 1,450,000 | ||||
Shares available for issuance | 200,000 | 200,000 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding (in shares) | 1,084,850 | 895,100 |
Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 7,700,000 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 500,000 | |
Granted during period (in shares) | 0 | |
Forfeited during period (in shares) | 0 | |
Canceled during period (in shares) | 0 | |
Long-Term Incentive Plan [Member] | Stock Option [Member] | Common Class B [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 0 | |
Long-Term Incentive Plan [Member] | Performance Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding (in shares) | 449,499 | |
Tranche A [Member] | Long-Term Incentive Plan [Member] | Stock Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting percentage | 20.00% | |
Tranche B [Member] | Long-Term Incentive Plan [Member] | Performance Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Investor IRR, equal to or in excess (as a percent) | 20.00% | |
Minimum cash-on-cash return on investor investments | 2.5 | |
Tranche C [Member] | Long-Term Incentive Plan [Member] | Performance Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Investor IRR, equal to or in excess (as a percent) | 25.00% | |
Minimum cash-on-cash return on investor investments | 3 |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions (Details) - Class B common stock issued to management holders [Member] - Stock Option [Member] | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Expected volatility (as a percent) | 57.00% | 55.00% |
Risk-free interest rate (as a percent) | 1.82% | 1.67% |
Expected term | 6 years 3 months 18 days | 6 years 3 months 18 days |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Activity (Details) | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Number of Options | |
Options outstanding at beginning of period (in shares) | shares | 895,100 |
Granted (in shares) | shares | 224,750 |
Canceled (in shares) | shares | (35,000) |
Options outstanding at end of period (in shares) | shares | 1,084,850 |
Weighted Average Exercise Price | |
Options outstanding at beginning of period (in dollars per share) | $ / shares | $ 13.35 |
Granted (in dollars per share) | $ / shares | 15.91 |
Canceled (in dollars per share) | $ / shares | 16.98 |
Options outstanding at end of period (in dollars per share) | $ / shares | $ 13.76 |
Weighted Average Remaining Contract Term | 8 years 1 month |
Aggregate Intrinsic Value | $ | $ 2,479,475 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 7.00% | (7.90%) | 12.30% | (8.60%) |
Federal statutory income tax rate | 35.00% | 35.00% | 35.00% | 35.00% |
Operating Segments (Details)
Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Total Revenues | $ 50,080 | $ 42,618 | $ 97,854 | $ 82,853 |
Loss on disposal of long lived assets | 2,510 | 617 | ||
Depreciation and amortization | 18,216 | 20,566 | 36,667 | 41,108 |
Accretion of placement fees | 1,151 | 1,178 | 2,365 | 2,348 |
Non-cash charges and loss on disposition of assets | 285 | 0 | ||
Interest expense | 14,554 | 14,632 | 29,714 | 29,248 |
Interest income | (40) | (16) | (55) | (39) |
Loss on extinguishment and modification of debt | 8,129 | 0 | 8,129 | 0 |
Other (income) expense | (1,529) | 1,500 | (4,338) | 5,922 |
Loss before income taxes | (18,792) | (20,454) | (28,945) | (43,675) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues | 50,080 | 42,618 | 97,854 | 82,853 |
Adjusted EBITDA by segment | 26,086 | 22,025 | 50,992 | 43,282 |
Operating Segments | EGM | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues | 47,404 | 39,925 | 92,416 | 77,776 |
Adjusted EBITDA by segment | 26,495 | 24,001 | 51,696 | 47,761 |
Operating Segments | Table Games | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues | 711 | 612 | 1,343 | 1,331 |
Adjusted EBITDA by segment | (312) | (561) | (490) | (1,015) |
Operating Segments | Interactive | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues | 1,965 | 2,081 | 4,095 | 3,746 |
Adjusted EBITDA by segment | (97) | (1,415) | (214) | (3,464) |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Loss on disposal of long lived assets | 1,933 | 191 | 2,510 | 310 |
Impairment of long-lived assets | 0 | 0 | 285 | 2 |
Fair value adjustments to contingent consideration and other items | 0 | 0 | (630) | 0 |
Acquisition costs | 0 | 0 | 0 | (11) |
Depreciation and amortization | 18,216 | 20,566 | 36,667 | 41,108 |
Accretion of placement fees | 1,151 | 1,178 | 2,300 | 2,348 |
Acquisitions & integration related costs including restructuring & severance | 181 | 1,000 | 828 | 2,349 |
Legal & litigation expenses including settlement payments | 186 | 478 | 585 | 1,134 |
New jurisdictions and regulatory licensing costs | 502 | 67 | 737 | 115 |
Non-cash charge on capitalized installation and delivery | 513 | 332 | 926 | 840 |
Non-cash charges and loss on disposition of assets | 136 | 2,067 | 686 | 2,067 |
Other adjustments | $ 946 | $ 484 | $ 1,593 | $ 1,564 |