Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 11, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity Registrant Name | Exela Technologies, Inc. | |
Entity Central Index Key | 0001620179 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 150,698,864 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 10,312 | $ 25,615 |
Restricted cash | 4,913 | 18,239 |
Accounts receivable, net of allowance for doubtful accounts of $7,021 and $4,359, respectively | 260,438 | 270,812 |
Related party receivables | 42 | 0 |
Inventories, net | 16,996 | 16,220 |
Prepaid expenses and other current assets | 22,695 | 25,015 |
Total current assets | 315,396 | 355,901 |
Property, plant and equipment, net of accumulated depreciation of $171,913 and $154,060, respectively | 119,469 | 132,986 |
Operating lease right-of-use assets, net | 93,352 | |
Goodwill | 609,458 | 708,258 |
Intangible assets, net | 374,445 | 407,021 |
Deferred income tax assets | 15,830 | 16,225 |
Other noncurrent assets | 13,557 | 19,391 |
Total assets | 1,541,507 | 1,639,782 |
Current liabilities | ||
Accounts payables | 93,815 | 99,853 |
Related party payables | 274 | 7,735 |
Income tax payable | 1,996 | |
Accrued liabilities | 60,994 | 66,008 |
Accrued compensation and benefits | 51,819 | 54,583 |
Accrued interest | 24,602 | 49,071 |
Customer deposits | 30,161 | 34,235 |
Deferred revenue | 17,368 | 16,504 |
Obligation for claim payment | 43,267 | 56,002 |
Current portion of finance lease liabilities | 15,172 | |
Current portion of finance lease liabilities, ASC 840 | 17,498 | |
Current portion of operating lease liabilities | 26,604 | |
Current portion of long-term debts | 37,237 | 29,237 |
Total current liabilities | 401,313 | 432,722 |
Long-term debt, net of current maturities | 1,367,583 | 1,306,423 |
Finance lease liabilities, net of current portion | 24,159 | |
Finance lease liabilities, net of current portion, ASC 840 | 26,738 | |
Pension liabilities | 26,667 | 25,269 |
Deferred income tax liabilities | 12,677 | 11,212 |
Long-term income tax liabilities | 2,892 | 3,024 |
Operating lease liabilities, net of current portion | 71,661 | |
Other long-term liabilities | 7,866 | 15,400 |
Total liabilities | 1,914,818 | 1,820,788 |
Commitments and Contingencies (Note 10) | ||
Stockholders' equity (deficit) | ||
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 153,486,011 shares issued and 150,698,864 shares outstanding at September 30, 2019 and 152,692,140 shares issued and 150,142,955 shares outstanding at December 31, 2018 | 15 | 15 |
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 4,419,233 shares issued and outstanding at September 30, 2019 and 4,569,233 shares issued and outstanding at December 31, 2018 | 1 | 1 |
Additional paid in capital | 482,018 | 482,018 |
Less: common stock held in treasury, at cost; 2,787,147 shares at September 30, 2019 and 2,549,185 shares December 31, 2018 | (10,949) | (10,342) |
Equity-based compensation | 48,411 | 41,731 |
Accumulated deficit | (876,043) | (678,563) |
Accumulated other comprehensive loss: | ||
Foreign currency translation adjustment | (7,786) | (6,565) |
Unrealized pension actuarial losses, net of tax | (8,978) | (9,301) |
Total accumulated other comprehensive loss | (16,764) | (15,866) |
Total stockholders’ deficit | (373,311) | (181,006) |
Total liabilities and stockholders’ deficit | $ 1,541,507 | $ 1,639,782 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 7,021 | $ 4,359 |
Accumulated depreciation on property, plant and equipment | $ 171,913 | $ 154,060 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 1,600,000,000 | 1,600,000,000 |
Common stock, shares issued | 153,486,011 | 152,692,140 |
Common stock, shares outstanding | 150,698,864 | 150,142,955 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 4,419,233 | 4,569,233 |
Preferred stock, shares outstanding | 4,419,233 | 4,569,233 |
Common stock held in treasury at cost (in shares) | 2,787,147 | 2,549,185 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Consolidated Statement of Operations | ||||
Revenue | $ 372,917 | $ 383,030 | $ 1,166,841 | $ 1,186,579 |
Cost of revenue (exclusive of depreciation and amortization) | 291,222 | 295,936 | 896,110 | 903,682 |
Selling, general and administrative expenses | 50,372 | 44,913 | 151,884 | 137,231 |
Depreciation and amortization | 27,114 | 35,041 | 82,326 | 109,428 |
Impairment of goodwill and other intangible assets | 99,682 | 99,682 | ||
Related party expense | 1,405 | 759 | 3,454 | 3,267 |
Operating income (loss) | (96,878) | 6,381 | (66,615) | 32,971 |
Other expense (income), net: | ||||
Interest expense, net | 39,747 | 38,339 | 117,778 | 114,883 |
Debt modification and extinguishment costs | 1,067 | 1,404 | 1,067 | |
Sundry expense (income), net | (10) | (2,571) | 1,028 | (4,961) |
Other expense (income), net | 581 | (781) | 4,965 | (4,813) |
Net loss before income taxes | (137,196) | (29,673) | (191,790) | (73,205) |
Income tax (expense) benefit | 3,769 | 733 | (5,689) | (4,911) |
Net loss | (133,427) | (28,940) | (197,479) | (78,116) |
Cumulative dividends for Series A Preferred Stock | (884) | (914) | (2,712) | (2,742) |
Net loss attributable to common stockholders | $ (134,311) | $ (29,854) | $ (200,191) | $ (80,858) |
Loss per share - basic and diluted (in dollars per share) | $ (0.89) | $ (0.20) | $ (1.33) | $ (0.53) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net Loss | $ (133,427) | $ (28,940) | $ (197,479) | $ (78,116) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | (2,325) | (2,492) | (1,221) | (3,639) |
Unrealized pension actuarial gains (losses), net of tax | 291 | 140 | 323 | 363 |
Total other comprehensive loss, net of tax | $ (135,461) | $ (31,292) | $ (198,377) | $ (81,392) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders’ Deficit - USD ($) $ in Thousands | Common Stock | Preferred Stock | Treasury Stock | Additional Paid in Capital | Equity-Based Compensation | Foreign Currency Translation Adjustment | Unrealized Pension Actuarial Losses, net of tax | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2017 | $ 15 | $ 1 | $ (249) | $ 482,018 | $ 34,085 | $ (194) | $ (11,054) | $ (514,628) | $ (10,006) |
Beginning balance (in shares) at Dec. 31, 2017 | 150,529,151 | 6,194,233 | 49,300 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Implementation of ASU | (1,418) | (1,418) | |||||||
Net Loss | (23,994) | (23,994) | |||||||
Equity-based compensation | 959 | 959 | |||||||
Foreign currency translation adjustment | (268) | (268) | |||||||
Net realized pension actuarial gains, net of tax | (403) | (403) | |||||||
Preferred shares converted to common | 1,986,767 | (1,625,000) | |||||||
Ending balance at Mar. 31, 2018 | $ 15 | $ 1 | $ (249) | 482,018 | 35,044 | (462) | (11,457) | (540,040) | (35,130) |
Ending balance (in shares) at Mar. 31, 2018 | 152,515,918 | 4,569,233 | 49,300 | ||||||
Beginning balance at Dec. 31, 2017 | $ 15 | $ 1 | $ (249) | 482,018 | 34,085 | (194) | (11,054) | (514,628) | (10,006) |
Beginning balance (in shares) at Dec. 31, 2017 | 150,529,151 | 6,194,233 | 49,300 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (78,116) | ||||||||
Foreign currency translation adjustment | (3,639) | ||||||||
Net realized pension actuarial gains, net of tax | 363 | ||||||||
Ending balance at Sep. 30, 2018 | $ 15 | $ 1 | $ (5,148) | 482,018 | 38,601 | (3,833) | (10,691) | (594,162) | (93,199) |
Ending balance (in shares) at Sep. 30, 2018 | 151,648,643 | 4,569,233 | 1,043,497 | ||||||
Beginning balance at Mar. 31, 2018 | $ 15 | $ 1 | $ (249) | 482,018 | 35,044 | (462) | (11,457) | (540,040) | (35,130) |
Beginning balance (in shares) at Mar. 31, 2018 | 152,515,918 | 4,569,233 | 49,300 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (25,182) | (25,182) | |||||||
Equity-based compensation | 1,936 | 1,936 | |||||||
Foreign currency translation adjustment | (879) | (879) | |||||||
Net realized pension actuarial gains, net of tax | 626 | 626 | |||||||
Shares repurchased | $ (3,479) | (3,479) | |||||||
Shares repurchased (in shares) | (768,693) | 768,693 | |||||||
Ending balance at Jun. 30, 2018 | $ 15 | $ 1 | $ (3,728) | 482,018 | 36,980 | (1,341) | (10,831) | (565,222) | (62,108) |
Ending balance (in shares) at Jun. 30, 2018 | 151,747,225 | 4,569,233 | 817,993 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (28,940) | (28,940) | |||||||
Equity-based compensation | 1,365 | 1,365 | |||||||
Foreign currency translation adjustment | (2,492) | (2,492) | |||||||
Net realized pension actuarial gains, net of tax | 140 | 140 | |||||||
Stock option exercised | 256 | 256 | |||||||
Stock option exercised (in shares) | 126,922 | ||||||||
Shares repurchased | $ (1,420) | (1,420) | |||||||
Shares repurchased (in shares) | (225,504) | 225,504 | |||||||
Ending balance at Sep. 30, 2018 | $ 15 | $ 1 | $ (5,148) | 482,018 | 38,601 | (3,833) | (10,691) | (594,162) | (93,199) |
Ending balance (in shares) at Sep. 30, 2018 | 151,648,643 | 4,569,233 | 1,043,497 | ||||||
Beginning balance at Dec. 31, 2018 | $ 15 | $ 1 | $ (10,342) | 482,018 | 41,731 | (6,565) | (9,301) | (678,563) | (181,006) |
Beginning balance (in shares) at Dec. 31, 2018 | 150,142,955 | 4,569,233 | 2,549,185 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (29,907) | (29,907) | |||||||
Equity-based compensation | 2,798 | 2,798 | |||||||
Foreign currency translation adjustment | 3,392 | 3,392 | |||||||
Net realized pension actuarial gains, net of tax | (224) | (224) | |||||||
Ending balance at Mar. 31, 2019 | $ 15 | $ 1 | $ (10,342) | 482,018 | 44,529 | (3,173) | (9,525) | (708,470) | (204,947) |
Ending balance (in shares) at Mar. 31, 2019 | 150,142,955 | 4,569,233 | 2,549,185 | ||||||
Beginning balance at Dec. 31, 2018 | $ 15 | $ 1 | $ (10,342) | 482,018 | 41,731 | (6,565) | (9,301) | (678,563) | (181,006) |
Beginning balance (in shares) at Dec. 31, 2018 | 150,142,955 | 4,569,233 | 2,549,185 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (197,479) | ||||||||
Foreign currency translation adjustment | (1,221) | ||||||||
Net realized pension actuarial gains, net of tax | 323 | ||||||||
Ending balance at Sep. 30, 2019 | $ 15 | $ 1 | $ (10,949) | 482,018 | 48,411 | (7,786) | (8,978) | (876,043) | (373,311) |
Ending balance (in shares) at Sep. 30, 2019 | 150,698,864 | 4,419,233 | 2,787,147 | ||||||
Beginning balance at Mar. 31, 2019 | $ 15 | $ 1 | $ (10,342) | 482,018 | 44,529 | (3,173) | (9,525) | (708,470) | (204,947) |
Beginning balance (in shares) at Mar. 31, 2019 | 150,142,955 | 4,569,233 | 2,549,185 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (34,146) | (34,146) | |||||||
Equity-based compensation | 2,661 | 2,661 | |||||||
Foreign currency translation adjustment | (2,288) | (2,288) | |||||||
Net realized pension actuarial gains, net of tax | 256 | 256 | |||||||
RSU's vested (in shares) | 102,092 | ||||||||
Shares repurchased | $ (607) | (607) | |||||||
Shares repurchased (in shares) | (237,962) | 237,962 | |||||||
Ending balance at Jun. 30, 2019 | $ 15 | $ 1 | $ (10,949) | 482,018 | 47,190 | (5,461) | (9,269) | (742,616) | (239,071) |
Ending balance (in shares) at Jun. 30, 2019 | 150,007,085 | 4,569,233 | 2,787,147 | ||||||
Increase (Decrease) in Stockholders’ Equity (Deficit) | |||||||||
Net Loss | (133,427) | (133,427) | |||||||
Equity-based compensation | 1,444 | 1,444 | |||||||
Foreign currency translation adjustment | (2,325) | (2,325) | |||||||
Net realized pension actuarial gains, net of tax | 291 | 291 | |||||||
RSU's vested (in shares) | 508,390 | ||||||||
Withholding of employee taxes on vested RSUs | (223) | $ (223) | |||||||
Preferred shares converted to common | (150,000) | ||||||||
Preferred shares converted to common | 183,389 | ||||||||
Shares repurchased (in shares) | 0 | ||||||||
Ending balance at Sep. 30, 2019 | $ 15 | $ 1 | $ (10,949) | $ 482,018 | $ 48,411 | $ (7,786) | $ (8,978) | $ (876,043) | $ (373,311) |
Ending balance (in shares) at Sep. 30, 2019 | 150,698,864 | 4,419,233 | 2,787,147 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (197,479) | $ (78,116) |
Adjustments to reconcile net loss | ||
Depreciation and amortization | 82,326 | 109,428 |
Original issue discount and debt issuance cost amortization | 8,730 | 8,062 |
Debt modification and extinguishment costs | 1,049 | |
Impairment of goodwill and other intangible assets | 99,682 | |
Provision for doubtful accounts | 4,402 | 2,470 |
Deferred income tax provision | 1,632 | (3,689) |
Share-based compensation expense | 6,903 | 4,516 |
Foreign currency remeasurement | (173) | (2,040) |
Loss (gain) on sale of assets | (191) | 1,835 |
Fair value adjustment for interest rate swap | 4,965 | (5,456) |
Change in operating assets and liabilities, net of effect from acquisitions | ||
Accounts receivable | 3,501 | (6,374) |
Prepaid expenses and other assets | 2,377 | (5,770) |
Accounts payable and accrued liabilities | (43,861) | (23,457) |
Related party payables | (7,502) | (3,689) |
Net cash used in operating activities | (33,639) | (2,280) |
Cash flows from investing activities | ||
Purchase of property, plant and equipment | (10,797) | (14,077) |
Additions to internally developed software | (5,074) | (3,080) |
Additions to outsourcing contract costs | (14,304) | (5,427) |
Cash paid in acquisition, net of cash received | (5,000) | (6,513) |
Proceeds from sale of assets | 360 | 1,095 |
Net cash used in investing activities | (34,815) | (28,002) |
Cash flows from financing activities | ||
Third party debt modification and extinguishment costs | 355 | 1,067 |
Repurchases of common stock | (3,480) | (4,899) |
Borrowings from other loans | 1,728 | 3,068 |
Cash paid for equity issuance costs | (7,500) | |
Net borrowings under factoring arrangement | (494) | |
Cash paid for withholding taxes on vested RSUs | (223) | |
Proceeds from senior secured term loans | 29,850 | 30,000 |
Cash paid for debt issuance costs | (362) | (1,094) |
Borrowings from senior secured revolving facility | 130,500 | 30,000 |
Repayments on senior secured revolving facility | (91,500) | (30,000) |
Principal payments on finance lease obligations | (13,598) | (12,594) |
Principal repayments on senior secured term loans and other loans | (12,922) | (9,053) |
Net cash provided by (used in) financing activities | 39,854 | (1,005) |
Effect of exchange rates on cash | (29) | (554) |
Net decrease in cash and cash equivalents | (28,629) | (31,842) |
Cash, restricted cash, and cash equivalents | ||
Beginning of period | 43,854 | 81,489 |
End of period | 15,225 | 49,647 |
Supplemental cash flow data: | ||
Income tax payments, net of refunds received | 6,981 | 5,296 |
Interest paid | 131,773 | 136,396 |
Noncash investing and financing activities: | ||
Assets acquired through right-of-use arrangements | 9,352 | 9,318 |
Leasehold improvements funded by lessor | 1,565 | |
Accrued capital expenditures | $ 1,083 | $ 1,994 |
General
General | 9 Months Ended |
Sep. 30, 2019 | |
General | |
General | 1. General These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2018 included in the Exela Technologies, Inc. (the "Company," "Exela," "we," "our" or "us") annual report on Form 10-K for such period (the “2018 Form 10-K”). The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates. The condensed consolidated financial statements are unaudited, but in our opinion include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year. Net Loss per Share Earnings per share ("EPS") is computed by dividing net loss available to holders of the Company's common stock, par value $0.0001 per share (“Common Stock”) by the weighted average number of shares of Common Stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock, using the more dilutive of the two-class method or if-converted method in periods of earnings. The two-class method is an earnings allocation method that determines earnings per share for Common Stock and participating securities. As the Company experienced net losses for the periods presented, the impact of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) was calculated based on the if-converted method. Diluted EPS excludes all dilutive potential of shares of Common Stock if their effect is anti-dilutive. For the nine months ended September 30, 2019 outstanding shares of the Series A Preferred Stock, if converted would have resulted in an additional 5,402,954 shares of Common Stock outstanding, but were not included in the computation of diluted loss per share as their effects were anti-dilutive. The Company was originally incorporated July 12, 2017 as a special purpose acquisition company under the name Quinpario Acquisition Corp 2 (“Quinpario”). The Company has not included the effect of 35,000,000 warrants sold in the Quinpario Initial Public Offering (“IPO”) in the calculation of net income (loss) per share. Warrants are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s Common Stock price during the applicable period. Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net loss attributable to common stockholders (A) $ (134,311) $ (29,854) $ (200,191) $ (80,858) Weighted average common shares outstanding - basic and diluted (B) 150,207,483 151,663,670 150,140,577 152,010,290 Loss Per Share: Basic and diluted (A/B) $ (0.89) $ (0.20) $ (1.33) $ (0.53) |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 2. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) no. 2016-02, Leases (ASC 842). This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted this guidance effective January 1, 2019, under the modified retrospective transition method provided by ASU 2018-11 with the following practical expedients below · Not to record the leases with an initial term of 12 months or less on the balance sheet; and · Not to reassess the (1) definition of a lease, (2) lease classification, and (3) initial direct costs for existing leases during transition. The adoption had a material impact on the Company's unaudited consolidated balance sheets, but did not have a material impact on the Company's unaudited consolidated income statements and unaudited consolidated statements of cash flows. The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases, while the Company's accounting for finance leases remained substantially unchanged. See Note 5 for relevant disclosures. Effective January 1, 2019, the Company adopted ASU no. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this ASU addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019. Effective January 1, 2019, the Company adopted ASU no. 2017-12, Derivatives and Hedging (Topic 815); Targeted Improvements to Accounting for Hedging Activities. The amendments in this ASU better align the risk management activities and financial reporting for these hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019. Effective January 1, 2019, the Company adopted ASU no. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The amendments in this ASU address a narrow-scope financial reporting issue related to the tax effects that may become “stranded” in accumulated other comprehensive income (“AOCI”) as a result of the Tax Cuts and Jobs Act (“TCJA”). A n entity may elect to reclassify the income tax effects of the TCJA on items within AOCI to retained earnings. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019. Effective January 1, 2019, the Company adopted ASU no. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting to amend the accounting for share-based payment awards issued to nonemployees. Under the revised guidance, the accounting for awards issued to nonemployees will be similar to the model for employee awards, except the ASU allows an entity to elect on an award-by-award basis to use the contractual term as the expected term assumption in the option pricing model, and the cost of the grant is recognized in the same period(s) and in the same manner as if the grantor had paid cash. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU no. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently in the early stages of evaluating the impact that adopting this standard will have on the consolidated financial statements. In August 2018, the FASB issued ASU no. 2018-13, Fair Value Measurement (Topic 82 0); which changes the fair value measurement disclosure requirements of ASC 820. The amendments in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting. The FASB used the guidance in the Concepts Statement to improve the effectiveness of ASC 820’s disclosure requirements. The objective of the disclosure requirements in this subtopic is to provide users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements. The ASU includes but is not limited to the valuation techniques and inputs that a reporting entity uses to arrive at its measures of fair value, including judgments and assumptions that the entity makes, the uncertainty in the fair value measurements as of the reporting date, and how changes in fair value measurements affect an entity’s performance and cash flows. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. The Company is currently in the early stages of evaluating the impact that adopting this standard will have on the consolidated financial statements. In August 2018, the FASB issued ASU no. 2018-15, Intangibles, Goodwill, and Other - Internal Use Software (Subtopic 350-40): Customer's accounting for implementation costs incurred in a Cloud Computing Arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently in the early stages of evaluating the impact that adopting this standard will have on the consolidated financial statements. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations | |
Business Combinations | 3. Business Combinations Asterion On April 10, 2018, Exela completed the acquisition of Asterion International Group (“Asterion,” the “Asterion Business Combination”), a well-established provider of technology driven business process outsourcing, document management and business process automation across Europe. The purchase price was approximately $19.5 million. The acquisition comes with minimal customer overlap and is strategic to expanding Exela’s European business. The acquired assets and assumed liabilities of Asterion were recorded at their estimated fair values. The following table summarizes the consideration paid for Asterion and the fair value of the assets acquired and liabilities assumed at the acquisition date on April 10, 2018: Assets Acquired: Cash and cash equivalents $ 5,595 Accounts receivable 25,740 Other current assets 2,282 Inventories, net 1,137 Property, plant, and equipment, net 4,747 Deferred income tax assets 6,316 Other noncurrent assets 522 Intangible assets, net 3,525 Goodwill 1,493 Total identifiable assets acquired $ 51,357 Liabilities Assumed: Accounts payable $ (5,596) Income tax payable (5) Accrued liabilities (6,593) Accrued compensation and benefits (7,079) Deferred revenue (880) Current portion of long term debt (994) Customer deposits (462) Pension liabilities (7,135) Other long-term liabilities (1,324) Deferred income tax liabilities (1,171) Capital lease obligations, net of current maturities (650) Total liabilities assumed $ (31,889) Total Consideration $ 19,468 The majority of identifiable intangible assets consisted of customer relationships. Customer relationships were valued using the Income Approach, specifically the Multi-Period Excess Earnings method. This intangible acquired represents a Level 3 measurement as it is based on unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset at fair value. Weighted Average Useful Life (in years) Fair Value Customer Relationships 9.5 $ 3,516 Through the acquisition of Asterion, the Company expects to leverage brand awareness, strengthen margins, and expand the existing Asterion sales channels. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Asterion’s identifiable net assets assumed, and as a result, the Company has recorded goodwill in connection with this acquisition. For the three and nine months ended September 30, 2019 the Company recognized $17.0 million and $56.8 million in revenue related to Asterion in the Consolidated Statement of Operations. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Significant accounting policies | 4. Significant Accounting Policies The information presented below supplements the Significant Accounting Policies information presented in our 2018 Form 10-K, including Revenue Recognition for the adoption of ASC 606 (ASU 2014-09: Revenue from Contracts with Customers), which became effective January 1, 2018. See our 2018 Form 10-K for a description of our significant accounting policies in effect prior to the adoption of the new accounting standard. Revenue Recognition We account for revenue in accordance with ASC 606. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of our material sources of revenue are derived from contracts with customers, primarily related to the provision of business and transaction processing services within each of our segments. We do not have any significant extended payment terms, as payment is received shortly after goods are delivered or services are provided. Nature of Services Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services that are substantially the same and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate the variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract. Disaggregation of Revenues The following tables disaggregate revenue from contracts by geographic region and by segment for the three and nine months ended September 30, 2019 and 2018: Three Months Ended September 30, 2019 2018 ITPS HS LLPS ITPS HS LLPS United States $ 229,492 $ 62,132 $ 18,806 $ 248,055 $ 56,776 $ 18,941 Europe 55,836 — — 52,602 — — Other 6,651 — — 6,656 — — Total $ 291,979 $ 62,132 $ 18,806 $ 307,313 $ 56,776 $ 18,941 Nine Months Ended September 30, 2019 2018 ITPS HS LLPS ITPS HS LLPS United States $ 718,936 $ 186,915 $ 54,217 $ 782,870 $ 171,722 $ 65,476 Europe 186,337 — — 146,242 — — Other 20,436 — — 20,269 — — Total $ 925,709 $ 186,915 $ 54,217 $ 949,381 $ 171,722 $ 65,476 Contract Balances The following table presents contract assets and contract liabilities recognized at September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 Accounts receivable, net $ 260,438 $ 270,812 Deferred revenues 17,782 16,940 Costs to obtain and fulfill a contract 24,212 18,624 Customer deposits 30,161 34,235 Accounts receivable, net includes $37.6 million and $39.5 million as of September 30, 2019 and December 31, 2018, respectively, representing amounts not billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers. Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $12.8 million during the nine months ended September 30, 2019 that had been deferred as of December 31, 2018. Costs incurred to obtain and fulfill contracts are deferred and expensed on a straight-line basis over the estimated benefit period. We recognized $8.4 million of amortization for these costs in the first nine months of 2019 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or transition activities and can be separated into two principal categories: contract commissions and transition/set-up costs. Examples of such capitalized costs include hourly labor and related fringe benefits and travel costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in Selling, general and administrative expenses. The effect of applying this practical expedient was not material. Customer deposits consist primarily of amounts received from customers in advance for postage. The majority of the amounts recorded as of December 31, 2018 were used to pay for postage with the corresponding postage revenue being recognized during the nine months ended September 30, 2019. Performance Obligations At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes. Certain of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained. When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts give rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration. We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue. Transaction Price Allocated to the Remaining Performance Obligations In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less, and (2) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2019 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2019 $ 17,335 2020 52,951 2021 42,443 2022 31,951 2023 27,775 2024 and thereafter 54,159 Total $ 226,614 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | 5. Leases The following table summarizes the impact of the changes made to the January 1, 2019 consolidated balance sheet for the adoption of the new accounting standard pertaining to leases. The prior periods have not been restated and have been reported under the accounting standard in effect for those periods. Balance at Balance at December 31, Impact of January 1, 2018 Lease Standard 2019 Total assets $ 1,639,782 $ 102,651 $ 1,742,433 Total current liabilities 432,722 25,304 458,026 Total long-term liabilities 1,820,788 79,703 1,900,491 The increase in total assets and total liabilities at September 30, 2019 from December 31, 2018 was primarily due to the impact from the adoption of the new accounting standard pertaining to lease arrangements. See Note 2 for additional information on the impact of the adoption of this standard. The Company determines if a contract is, or contains, a lease at contract inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion in the Company's unaudited consolidated balance sheets. Finance leases are included in property and equipment, current portion of finance lease obligations and finance lease obligations, net of current portion in the Company's unaudited consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date, and exclude lease incentives. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of one year or less are generally not included in ROU assets and liabilities. Operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheet as follows: September 30, 2019 Balance sheet location: Operating Lease Operating lease right-of-use assets, net $ 93,352 Current portion of operating lease liabilities 26,604 Operating lease liabilities, net of current portion 71,661 Finance Lease Finance lease right-of-use assets, net (included in property, plant and equipment, net) 28,394 Current portion of finance lease liabilities 15,172 Finance lease liabilities, net of current portion 24,159 As of September 30, 2019, weighted-average remaining lease term of operating leases and finance leases was 4.89 years and 3.41 years, respectively. The weighted-average discount rate for operating leases and finance leases was 10.39% and 8.84%, respectively. The interest on financing lease liabilities for the three and nine months ended September 30, 2019 was $0.9 million and $2.5 million, respectively. The amortization expense on finance lease right-of-use assets for the three and nine months ended September 30, 2019 was $3.7 and $10.7 million, respectively. The following table summarizes maturities of finance and operating lease liabilities based on lease term as of September 30, 2019: Finance Operating Leases Leases Remainder of 2019 $ 6,554 $ 8,469 2020 14,931 24,803 2021 11,587 19,707 2022 5,470 15,651 2023 2,847 11,721 2024 and thereafter 4,120 23,244 Total lease payments 45,509 103,595 Less: Imputed interest 6,178 5,380 Present value of lease liabilities $ 39,331 $ 98,265 At December 31, 2018, the Company had the following future minimum payments due under non-cancelable leases: Finance Operating Leases Leases 2019 $ 20,080 $ 38,057 2020 11,851 29,346 2021 9,018 22,239 2022 4,169 16,782 2023 2,244 12,302 2024 and thereafter 3,617 18,874 Total minimum lease payments $ 50,979 $ 137,600 Less: imputed interest 6,743 Total net minimum lease payments 44,236 Less: Current portion of obligations under finance leases 17,498 Long-term portion of obligations under finance leases $ 26,738 Consolidated rental expense for all operating leases was $83.8 million for the year ended December 31, 2018. Consolidated rental expense for all operating leases was $19.0 million and $56.4 million for the three and nine months ended September 30, 2019, respectively. The following table summarizes the cash paid and related right-of-use operating finance or operating lease recognized for the nine months ended September 30, 2019. Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 28,831 Financing cash flows from finance leases 13,598 Right-of-use lease assets obtained in the exchange for lease liabilities: Operating leases 3,894 Finance leases 9,352 |
Intangibles Assets and Goodwill
Intangibles Assets and Goodwill | 9 Months Ended |
Sep. 30, 2019 | |
Intangibles Assets and Goodwill | |
Intangibles Assets and Goodwill | 6. Intangibles Assets and Goodwill Intangible Assets Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following: September 30, 2019 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,901 $ (226,123) $ 281,778 Developed technology 89,053 (86,966) 2,087 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 60,514 (36,303) 24,212 Internally developed software 41,971 (9,956) 32,015 Trademarks 23,378 (23,370) 8 Non compete agreements 1,350 (1,350) — Assembled workforce 4,473 (839) 3,634 Purchased software 26,749 (1,337) 25,412 Intangibles, net $ 763,789 $ (389,344) $ 374,445 December 31, 2018 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,905 $ (190,666) $ 317,239 Developed technology 89,053 (85,967) 3,086 Trade names (c) 9,400 (3,100) 6,300 Outsource contract costs 46,342 (27,719) 18,623 Internally developed software 36,820 (6,278) 30,542 Trademarks 23,379 (23,370) 9 Non compete agreements 1,350 (1,350) — Assembled workforce 4,473 — 4,473 Purchased software 26,749 — 26,749 Intangibles, net $ 745,471 $ (338,450) $ 407,021 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for September 30, 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in the nine months ended September 30, 2019. (c) The carrying amount of trade names for 2018 is net of accumulated impairment losses of $43.1 million, of which $3.7 million was recognized in 2018. Goodwill and other indefinite-lived assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We conduct our annual goodwill and indefinite-lived assets impairment tests on October 1st of each year, or more frequently if indicators of impairment exist. The Company utilizes the Income Approach, specifically the Relief-from-Royalty method, to determine the fair value of the indefinite-lived assets. The Company uses a combination of the Guideline Public Company Method of the Market Approach and the Discounted Cash Flow Method of the Income Approach to determine the reporting unit fair value for goodwill impairment. During the three months ended September 30, 2019, the Company made an evaluation based on factors such as changes in the Company’s growth rate and recent trends in the Company’s market capitalization, and concluded that a triggering event for an interim impairment analysis had occurred in the third quarter of 2019. As part of the assessment, it was determined that the increase in the discount rate applied in the valuation was required to reflect current market dynamics and company-specific risk. This higher discount rate, in conjunction with revised long-term projections, resulted in lower than previously projected long-term future cash flows for the reporting units which reduced the estimated fair value to below carrying value. As a result of the interim impairment assessment, the Company recorded an impairment charge to goodwill and trade names of $98.7 million, including taxes, and $1.0 million, respectively. The impairment charges are included within Impairment of goodwill and other intangible assets in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019. Goodwill The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approach the markets and interacts with its clients. The Company is organized into three segments: ITPS, HS, and LLPS (See Note 15). Goodwill by reporting segment consists of the following: Currency Translation Goodwill Additions Reductions Adjustments Goodwill (a) ITPS $ 566,215 $ 5,580 (c) $ — $ (220) $ 571,575 HS 86,786 — — — 86,786 LLPS 94,324 — (44,427) (b) — 49,897 Balance as of December 31, 2018 $ 747,325 $ 5,580 $ (44,427) $ (220) $ 708,258 ITPS 571,575 — (90,361) (d) (118) 481,096 HS 86,786 — — — 86,786 LLPS 49,897 — (8,321) (e) — 41,576 Balance as of September 30, 2019 $ 708,258 $ — $ (98,682) $ (118) $ 609,458 (a) The goodwill amount for all periods presented is net of accumulated impairment losses of $167.9 million. (b) The reduction in goodwill is due to $44.4 million, including taxes, for impairment recorded in the fourth quarter of 2018. (c) Addition to goodwill due to the acquisition of Asterion and immaterial acquisitions in the third and fourth quarters of 2018. (d) The reduction in goodwill is due to $90.4 million, including taxes, for impairment recorded in the third quarter of 2019. (e) The reduction in goodwill is due to $8.3 million, including taxes, for impairment recorded in the third quarter of 2019. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facilities | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt and Credit Facilities | |
Long-Term Debt and Credit Facilities | 7. Long-Term Debt and Credit Facilities Senior Secured Notes On July 12, 2017, the Company issued $1.0 billion in aggregate principal amount of 10.0% First Priority Senior Secured Notes due 2023 with an original issue discount (“OID”) of $22.5 million (the “Notes”). The Notes are guaranteed by certain subsidiaries of the Company. The Notes bear interest at a rate of 10.0% per year. The Company pays interest on the Notes on January 15 and July 15 of each year, commencing on January 15, 2018. The Notes will mature on July 15, 2023. Senior Credit Facilities On July 12, 2017, the Company entered into a First Lien Credit Agreement with Royal Bank of Canada, Credit Suisse AG, Cayman Islands Branch, Natixis, New York Branch and KKR Corporate Lending LLC (the “Credit Agreement”) providing Exela Intermediate LLC, a wholly owned subsidiary of the Company, upon the terms and subject to the conditions set forth in the Credit Agreement, a (i) $350.0 million senior secured term loan maturing July 12, 2023 with an OID of $7.0 million, and (ii) a $100.0 million senior secured revolving facility maturing July 12, 2022. As of September 30, 2019 and December 31, 2018, the Company had outstanding irrevocable letters of credit totaling approximately $21 million and $20.6 million, respectively, under the senior secured revolving facility. The Credit Agreement provided for the following interest rates for borrowings under the senior secured term facility and senior secured revolving facility: at the Company’s option, either (1) an adjusted LIBOR, subject to a 1.0% floor in the case of term loans, or (2) a base rate, in each case plus an applicable margin. The initial applicable margin for the senior secured term facility is 7.5% with respect to LIBOR borrowings and 6.5% with respect to base rate borrowings. The initial applicable margin for the senior secured revolving facility is 7.0% with respect to LIBOR borrowings and 6.0% with respect to base rate borrowings. The applicable margin for borrowings under the senior secured revolving facility is subject to step-downs based on leverage ratios. The senior secured term loan is subject to amortization payments, commencing on the last day of the first full fiscal quarter of the Company following the closing date, of 0.6% of the aggregate principal amount for each of the first eight payments and 1.3% of the aggregate principal amount for payments thereafter, with any balance due at maturity. Term Loan Repricing On July 13, 2018, Exela successfully repriced the $343.4 million of term loans outstanding under its senior secured credit facilities (the “Repricing”). The Repricing was accomplished pursuant to a First Amendment to First Lien Credit Agreement (the “First Amendment”), dated as of July 13, 2018, by and among the Company’s subsidiaries Exela Intermediate Holdings LLC, Exela Intermediate, LLC, each “Subsidiary Loan Party” listed on the signature pages thereto, Royal Bank of Canada, as administrative agent, and each of the lenders party thereto, whereby the Company borrowed $343.4 million of refinancing term loans (the “Repricing Term Loans”) to refinance the Company’s existing senior secured term loans. In accordance with ASC 470 -- Debt -- Modifications and Extinguishments , as a result of certain lenders that participated in Exela's debt structure prior to the Repricing and Exela's debt structure after the Repricing, it was determined that a portion of the refinancing of Exela's senior secured credit facilities would be accounted for as a debt modification, and the remaining would be accounted for as an extinguishment. The Company incurred $1.0 million in new debt issuance costs related to the refinancing, of which $1.0 million was expensed pursuant to modification accounting. The proportion of debt that was extinguished resulted in a write off of previously recognized debt issue costs of $0.1 million. Additionally, for the new lenders who exceeded the 10% test, less than $0.1 million was recorded as additional debt issue costs. All unamortized costs and discounts will be amortized over the life of the new term loan using the effective interest rate of the term loan. The Repricing Term Loans will bear interest at a rate per annum of, at the Company’s option, either (a) a LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.0% floor, or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.5%, (ii) the prime rate and (iii) the one-month adjusted LIBOR plus 1.0%, in each case plus an applicable margin of 6.5% for LIBOR loans and 5.5% for base rate loans. The interest rates applicable to the Repricing Term Loans are 100 basis points lower than the interest rates applicable to the existing senior secured term loans that were incurred on July 12, 2017 pursuant to the Credit Agreement. The Repricing Term Loans will mature on July 12, 2023, the same maturity date as the prior senior secured term loans. 2018 Incremental Term Loans On July 13, 2018, the Company successfully borrowed an additional $30.0 million pursuant to incremental term loans (the “2018 Incremental Term Loans”) under the First Amendment. The proceeds of the 2018 Incremental Term Loans were used by the Company for general corporate purposes and to pay fees and expenses in connection with the First Amendment. The interest rates applicable to the Incremental Term Loans are the same as those for the Repricing Term Loans. The Company may voluntarily repay the Repricing Term Loans and the 2018 Incremental Term Loans (collectively, the “Term Loans”) at any time, without prepayment premium or penalty, except in connection with a repricing event as described in the following sentence, subject to customary “breakage” costs with respect to LIBOR rate loans. Any refinancing of the Term Loans through the issuance of certain debt or any repricing amendment, in either case, that constitutes a “repricing event” applicable to the Term Loans resulting in a lower yield occurring at any time during the first six months after July 13, 2018 will be accompanied by a 1.00% prepayment premium or fee, as applicable. Other than as described above, the terms, conditions and covenants applicable to the Repricing Term Loans and the 2018 Incremental Term Loans are consistent with the terms, conditions and covenants that were applicable to the existing senior secured term loans under the Credit Agreement. The Repricing and issuance of the 2018 Incremental Term Loans resulted in a partial debt extinguishment, for which Exela recognized $1.1 million in debt extinguishment costs in the third quarter of 2018. 2019 Incremental Term Loan On April 16, 2019, the Company successfully borrowed an additional $30.0 million pursuant to incremental term loans (the “2019 Incremental Term Loans”) under the Second Amendment to First Lien Credit Agreement (the “Second Amendment”). The proceeds of the 2019 Incremental Term Loans were used to replace the cash spent for acquisitions, pay related fees, expenses and related borrowings and for general corporate purposes. The 2019 Incremental Term Loans will bear interest at a rate per annum that is the same as the Company’s Repricing Term Loans under the senior credit facility. The 2019 Incremental Term Loans will mature on July 12, 2023, the same maturity date as the Term Loans. The Company may voluntarily repay the 2019 Incremental Term Loans at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to LIBOR rate loans. Other than as described above, the terms, conditions and covenants applicable to the 2019 Incremental Term Loans are consistent with the terms, conditions and covenants that are applicable to the Repricing Term Loans and 2018 Incremental Term Loans under the Credit Agreement and which are described in the registrant’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on July 18, 2017 and July 17, 2018. The Repricing and issuance of the 2018 and 2019 Incremental Term Loans resulted in a partial debt extinguishment, for which Exela recognized $1.4 million in debt extinguishment costs in the second quarter of 2019. Long-Term Debt Outstanding As of September 30, 2019 and December 31, 2018, the following long-term debt instruments were outstanding: September 30, December 31, 2019 2018 Other (a) $ 23,904 $ 25,321 First lien credit agreement (b) 364,068 335,896 Senior secured notes (c) 977,848 974,443 Revolver 39,000 — Total debt 1,404,820 1,335,660 Less: Current portion of long-term debt (37,237) (29,237) Long-term debt, net of current maturities $ 1,367,583 $ 1,306,423 (a) Other debt represents the Company’s outstanding loan balances associated with various hardware and software purchases along with loans entered into by subsidiaries of the Company. (b) Net of unamortized original issue discount and debt issuance costs of $ 6.9 million and $20.1 million as of September 30, 2019 and $8.3 million and $24.5 million as of December 31, 2018. (c) Net of unamortized debt discount and debt issuance costs of $ 15.8 million and $6.3 million as of September 30, 2019 and $18.2 million and $7.3 million as of December 31, 2018. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | 8. Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods, as required under GAAP. The Company recorded an income tax benefit of $3.8 million and $0.7 million for the three months ended September 30, 2019 and 2018, respectively. The Company recorded an income tax expense of $5.7 million and $4.9 million for the nine months ended September 30, 2019 and 2018, respectively. The Company's ETR of (2.7%) and (3.0%) for the three and nine months ended September 30, 2019 differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforward’s created by the provisions of The Tax Cuts and Jobs Act (“TCJA”). For the three and nine months ended September 30, 2018, the Company’s ETR of 2.5% and (6.7%) differed from the expected U.S. statutory tax rate of 21.0%, and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s U.S. disallowed interest expense carryforward’s created by the provisions of the TCJA. As of September 30, 2019, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2018. The Company's valuation allowances have increased by approximately $28.8 million from December 31, 2018 to September 30, 2019 due largely to effects of TCJA relating to interest expense. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2019 | |
Employee Benefit Plans | |
Employee Benefit Plans | 9. Employee Benefit Plans German Pension Plan The Company’s subsidiary in Germany provides pension benefits to certain retirees. Employees eligible for participation include all employees who started working for the Company or its predecessors prior to September 30, 1987 and have finished a qualifying period of at least 10 years. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. The German pension plan is an unfunded plan and therefore has no plan assets. U.K. Pension Plan The Company’s subsidiary in the United Kingdom provides pension benefits to certain retirees and eligible dependents. Employees eligible for participation included all full-time regular employees who were more than three years from retirement prior to October 2001. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. Norway Pension Plan The Company’s subsidiary in Norway provides pension benefits to eligible retirees and eligible dependents. Employees eligible for participation include all employees who were more than three years from retirement prior to March 2018. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. Asterion Pension Plan The Company acquired certain pension benefit obligations to eligible retirees and eligible dependents in 2018 pursuant to the Asterion Business Combination. Employees eligible for participation included all full-time regular employees who were more than three years from retirement prior to July 2003. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. As there are no active employees for this plan there are no earned pension entitlements and actuarial assumptions are only measured when assumptions are changed. Tax Effect on Accumulated Other Comprehensive Loss As of September 30, 2019 and December 31, 2018 the Company recorded actuarial losses of $8.9 million and $9.3 million in accumulated other comprehensive loss on the condensed consolidated balance sheets, respectively, which are net of a deferred tax benefit of $1.7 million. Pension Expense The components of the net periodic benefit cost are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Service cost $ 23 $ 27 $ 68 $ 56 Interest cost 592 569 1,777 1,686 Expected return on plan assets (612) (701) (1,837) (2,076) Amortization: Amortization of prior service cost 25 (34) 76 (102) Amortization of net (gain) loss 406 433 1,218 1,294 Net periodic benefit cost $ 434 $ 294 $ 1,302 $ 858 Upon adopting ASU no. 2017-07 as described in Note 2, the Company now records pension interest cost within Interest expense, net. Expected return on plan assets, amortization of prior service costs, and amortization of net losses are recorded within Other income, net. Service cost is recorded within Cost of revenue. Employer Contributions The Company’s funding of employer contributions is based on governmental requirements and differs from those methods used to recognize pension expense. The Company made contributions of $2.2 million and $2.3 million to its pension plans during the nine months ended September 30, 2019 and 2018, respectively. The Company has funded the pension plans with the required contributions for 2019 based on current plan provisions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Appraisal Demand On September 21, 2017, former stockholders of SourceHOV Holdings, Inc. (“SourceHOV”), who allege combined ownership of 10,304 shares of SourceHOV common stock, filed a petition for appraisal pursuant to 8 Del. C. § 262 in the Delaware Court of Chancery, captioned Manichaean Capital, LLC, et al. v. SourceHOV Holdings, Inc., C.A. No. 2017-0673-JRS (the "Appraisal Action"). The Appraisal Action arises out of the acquisition of SourceHOV and Novitex Holdings, Inc., by Quinpario in July 2017 (“Novitex Business Combination”), which gave rise to appraisal rights pursuant to 8 Del. C. § 262. In the Appraisal Action, the petitioners seek, among other things, a determination of the fair value of their SourceHOV shares at the time of the Novitex Business Combination. On October 12, 2017, SourceHOV filed its answer to the petition and a verified list pursuant to 8 Del. C. § 262(f). The Court conducted a trial in June 2019, the parties submitted post-trial briefs in August 2019, and final arguments were held in October 2019. The Court’s decision remains pending, but is expected by the end of January 2020. The parties and their experts have offered competing valuations of the SourceHOV shares as of the date of the Novitex Business Combination. SourceHOV argues the value was no more than $1,633.85 per share and the petitioners argue the value was at least $5,079.28 per share. Interest accrues on the value of the shares from the date of the Business Combination, resulting in a potential range of values based on the respective proposals of approximately $19.6 million to $61.0 million as of September 30, 2019. The Company believes the petitioners’ claims of value of the SourceHOV shares are without merit and will continue to defend its position vigorously. The Court may determine a fair value that is above or below the values indicated by the parties and their experts. At this stage of the litigation, the Company is unable to predict the outcome of the Appraisal Action or estimate what the Court will determine the fair value of SourceHOV common stock to be as of the date of the Novitex Business Combination. As a result of the Appraisal Action, 4,570,734 shares of our Common Stock issued to Ex-Sigma 2 LLC, our principal stockholder, will be forfeited at such time as the PIPE Financing (as defined in and pursuant to the terms of the Consent, Waiver and Amendment, dated June 15, 2017) is repaid. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurement | |
Fair Value Measurement | 11. Fair Value Measurement Assets and Liabilities Measured at Fair Value The carrying amount of assets and liabilities including cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of September 30, 2019, and December 31, 2018, due to the relative short maturity of these instruments. Management estimates the fair values of the secured term loan and secured notes at approximately 59.5% and 55.0% respectively, of the respective principal balance outstanding as of September 30, 2019. The fair value is substantially less than the carrying value for the long-term debt. Other debt represents the Company's outstanding loan balances associated with various hardware and software purchases along with loans entered into by subsidiaries of the Company and as such, the cost incurred would approximate fair value. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value. The Company determined the fair value of its long-term debt using Level 2 inputs including the recent issue of the debt, the Company’s credit rating, and the current risk-free rate. The Company’s contingent liabilities related to prior acquisitions are re-measured each period and represent a Level 2 measurement as it is based on using an earn out method based on the agreement terms. The Company determined the fair value of the interest rate swap using Level 2 inputs. The Company uses closing prices as provided by a third party institution. The following table provides the carrying amounts and estimated fair values of the Company’s financial instruments as of September 30, 2019, and December 31, 2018: Carrying Fair Fair Value Measurements As of September 30, 2019 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,367,583 $ 769,403 $ — $ 769,403 $ — Interest rate swap liability 1,128 1,128 — 1,128 — Acquisition contingent liability $ 721 $ 721 $ — $ — $ 721 Nonrecurring assets and liabilities: Goodwill 609,458 609,458 — — 609,458 Carrying Fair Fair Value Measurements As of December 31, 2018 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,306,423 $ 1,316,306 $ — $ 1,316,306 $ — Interest rate swap asset 3,836 3,836 — 3,836 — Acquisition contingent liability $ 721 $ 721 $ — $ — $ 721 Nonrecurring assets and liabilities: Goodwill 708,258 708,258 — — 708,258 The significant unobservable inputs used in the fair value of the Company’s acquisition contingent liability are the discount rate, growth assumptions, and revenue thresholds. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement. For all significant unobservable inputs used in the fair value measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the other based on the current level of billings. The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3 for which a reconciliation is required: September 30, December 31, 2019 2018 Balance as of Beginning of Period $ 721 $ 721 Payments/Reductions — — Balance as of End of Period $ 721 $ 721 During the three months ended September 30, 2019, goodwill impairment charges totaling $98.7 million, including taxes, were recognized within our ITPS and LLPS segments (See Note 6). |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 12. Stock-Based Compensation At closing of the Novitex Business Combination, SourceHOV had 24,535 restricted stock units (“RSUs”) outstanding under its 2013 Long Term Incentive Plan ("2013 Plan"). Simultaneous with the closing of the Novitex Business Combination, the 2013 Plan, as well as all vested and unvested RSUs under the 2013 Plan, were assumed by Ex-Sigma LLC (“Ex-Sigma”), an entity formed by the former SourceHOV equity holders, which is also indirectly the Company's principal stockholder. In accordance with GAAP, the Company continues to incur compensation expense related to the 9,880 unvested RSUs as of July 12, 2017 on a straight-line basis until fully vested, as the recipients of the RSUs are employees of the Company. Subject to continuous employment and other terms of the 2013 Plan, all remaining unvested RSUs with an initial vesting period of three or four years vested in April 2019. As of September 30, 2019, because all shares vested in April 2019, there are no nonvested shares related to the 2013 Plan. Exela 2018 Stock Incentive Plan On January 17, 2018, Exela’s 2018 Stock Incentive Plan (the “2018 Plan”) became effective. The 2018 Plan provides for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other stock-based compensation to eligible participants. The Company is authorized to issue up to 8,323,764 shares of Common Stock under the 2018 Plan. Restricted Stock Unit Grants Restricted stock unit awards generally vest ratably over a one to two year period. Restricted stock units are subject to forfeiture if employment terminates prior to vesting and are expensed ratably over the vesting period. A summary of the status of restricted stock units related to the 2018 Plan as of September 30, 2019 is presented as follows: Average Weighted Remaining Number Average Grant Contractual Life Aggregate of Shares Date Fair Value (Years) Intrinsic Value Balance as of December 31, 2018 893,297 $ 5.86 0.76 $ 5,239 Shares granted 268,607 Shares forfeited (151,067) Shares vested (610,482) Balance as of September 30, 2019 400,355 $ 2.12 1.43 $ 849 The majority of the RSUs that vested in the three months ended September 30, 2019 were net-share settled such that the Company withheld shares with value equivalent to the employee’s minimum statutory obligation for applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were 194,010 shares and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payment for the employee’s tax obligations to taxing authorities were $0.2 million and is reflected as a financing activity within the Condensed Consolidated Statements of Cash flows. Options Under the 2018 Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire 10 years from the grant date. Options granted under the 2018 Plan generally require no less than a two or four year ratable vesting period. Stock option activity in the first nine months of 2019 is summarized in the following table: Weighted Average Remaining Average Vesting Period Aggregate Outstanding Exercise Price (Years) Intrinsic Value Balance as of December 31, 2018 3,570,300 $ 6.06 2.92 $ 9,590 Granted 2,050,600 Exercised — Forfeited (618,200) Expired — Balance as of September 30, 2019 5,002,700 $ 4.13 2.74 $ 9,864 As of September 30, 2019, there was approximately $7.5 million of total unrecognized compensation expense related to non-vested awards for the 2018 Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within Selling, general, and administrative expenses. The Company incurred total compensation expense of $1.4 million and $6.9 million related to plan awards for the three and nine months ended September 30, 2019 and $1.6 million and $4.5 million related to plan awards for the three and nine months ended September 30, 2018. |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders’ Equity | |
Stockholders’ Equity | 13. Stockholders’ Equity The following description summarizes the material terms and provisions of the securities that the Company has authorized. Common Stock The Company is authorized to issue 1,600,000,000 shares of Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of Common Stock possess all voting power for the election of Exela's directors and all other matters requiring stockholder action and will at all times vote together as one class on all matters submitted to a vote of Exela stockholders. Holders of Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of Common Stock will be entitled to receive such dividends and other distributions, if any, as may be declared from time to time by the board of directors in its discretion out of funds legally available therefor and shall share equally on a per share basis in such dividends and distributions. The holders of the Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock. In August 2019, 150,000 shares of Series A Preferred Stock were converted into 183,389 shares of Common Stock. As of September 30, 2019 and December 31, 2018, there were 153,486,011 and 152,692,140 shares of Common Stock issued, respectively. As of September 30, 2019 and December 31, 2018, there were 150,698,864 and 150,142,955 shares outstanding, respectively. Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. At September 30, 2019 and December 31, 2018, the Company had 4,419,233 shares and 4,569,233 shares of Series A Preferred Stock outstanding, respectively. The par value of Series A Preferred Stock is $0.0001 per share. Each share of Series A Preferred Stock will be convertible at the holder's option, at any time after the six-month anniversary and prior to the third anniversary of the issue date, initially into 1.2226 shares of Common Stock. Holders of the Series A Preferred Stock will be entitled to receive cumulative dividends at a rate per annum of 10% of the Liquidation Preference per share of Series A Preferred Stock, paid or accrued quarterly in arrears. From the issue date until the third anniversary of the issue date, the amount of all accrued but unpaid dividends on the Series A Preferred Stock will be added to the Liquidation Preference without any action by the Company’s board of directors. For the three months ended September 30, 2019 and 2018 this amount was $0.9 million as reflected on the Consolidated Statement of Operations. For the nine months ended September 30, 2019 and 2018 this amount was $2.7 million as reflected on the Consolidated Statement of Operations. The cumulative accrued but unpaid dividends of the Series A Preferred Stock since their inception on July 12, 2017 is $8.9 million. The per share averages of cumulative preferred dividends for the three and nine months ended September 30, 2019 and 2018 are $0.2. Following the third anniversary of the issue date, dividends on the Series A Preferred Stock will be accrued by adding to the Liquidation Preference or paid in cash, or a combination thereof. In addition, holders of the Series A Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Certificate of Designations), as if all shares of Series A Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Treasury Stock On November 8, 2017, the Company's board of directors authorized a share buyback program (the "Share Buyback Program"), pursuant to which the Company was authorized to purchase, from time to time, up to 5,000,000 shares of its Common Stock through various means, including, open market transactions and privately negotiated transactions. The decision as to whether to purchase any shares and the timing of purchases was based on the price of the Company's Common Stock, general business and market conditions and other investment considerations and factors. The Share Buyback Program did not obligate the Company to purchase any shares and has expired. The Company purchased 237,962 shares during the nine months ended September 30, 2019 under the Share Buyback Program. No shares were repurchased during the three months ended September 30, 2019. As of September 30, 2019, a total of 2,787,147 shares had been repurchased under the Share Buyback Program and are held in treasury stock. The Company records treasury stock using the cost method. Warrants At September 30, 2019 there were 34,988,302 warrants outstanding. As part of its IPO, Quinpario had issued 35,000,000 units including one share of common stock and one warrant of which 34,988,302 have been separated from the original unit and 11,698 warrants remain an unseparated part of the originally issued units. The warrants are traded on the OTC Bulletin Board as of September 30, 2019. Each warrant entitles the holder to purchase one-half of one share of Common Stock at a price of $5.75 per half share ($11.50 per whole share). Warrants may be exercised only for a whole number of shares of Common Stock. No fractional shares will be issued upon exercise of the warrants. Each warrant is currently exercisable and will expire July 12, 2022 (five years after the completion of the Novitex Business Combination), or earlier upon redemption. The Company may call the warrants for redemption at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if, and only if, the last sales price of shares of Common Stock equals or exceeds $24.00 per share for any 20 trading days within a 30 trading day period (the “30-day trading period”) ending three business days before we send the notice of redemption, and if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related-Party Transactions | |
Related-Party Transactions | 14. Related-Party Transactions Operating Facility Leases Certain operating companies lease their operating facilities from HOV RE, LLC and HOV Services Limited, which are affiliates under common control with Ex-Sigma. The rental expense for these operating leases was $0.1 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively, and $0.3 million and $0.5 million for the nine months ended September 30, 2019 and 2018, respectively. Consulting Agreement The Company receives services from Oakana Holdings, Inc. The Company and Oakana Holdings, Inc. are related through a family relationship between certain shareholders and the president of Oakana Holdings, Inc. The expense recognized for these services was $0.1 million for the three months ended September 30, 2019 and 2018, respectively. The expense recognized for these services was $0.1 million for the nine months ended September 30, 2019 and 2018, respectively. The Company received consulting services from Shadow Pond, LLC. Shadow Pond, LLC is wholly owned and controlled by Vik Negi, our Executive Vice President Treasury and Business Affairs. The consulting arrangement was established to compensate Mr. Negi for his services to the Company prior to becoming an employee. The expense recognized for these services was $0.1 million for the nine months ended September 30, 2018. This consulting arrangement with Shadow Pond, LLC terminated on April 1, 2018 and Mr. Negi continues to provide services as an employee of the Company. As such, there were no additional expenses for the three months ended September 30, 2018 and for the three and nine months ended September 30, 2019. Relationship with HandsOn Global Management Pursuant to a master agreement dated January 1, 2015 between Rule 14, LLC and a subsidiary of the Company, the Company incurs marketing fees to Rule 14, LLC, a portfolio company of HandsOn Fund 4 I, LLC (“HGM”). Similarly, the Company is party to ten master agreements with entities affiliated with HGM's managed funds, each of which were entered into during 2015 and 2016. Each master agreement provides the Company with free use of certain technology and includes a reseller arrangement pursuant to which the Company is entitled to sell these services to third parties. Any revenue earned by the Company in such third-party sale is shared 75%/25% with each of HGM's venture affiliates in favor of the Company. The brands Zuma, Athena, Peri, BancMate, Spring, Jet, Teletype, CourtQ and Rewardio are part of the HGM managed funds. The Company has the license to use and resell such brands, as described therein. The fee relating to these agreements was $0.2 million for the three months ended September 30, 2019 and 2018, respectively. The Company incurred fees relating to these agreements of $0.3 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively. Relationship with HOV Services, Ltd. HOV Services, Ltd. provides the Company data capture and technology services. HOV Services, Ltd is an indirect equity holder of Ex-Sigma. The expense recognized for these services was $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively. These expenses are included in cost of revenue in the consolidated statements of operations. Relationship with Apollo Global Management, LLC The Company provides services to and receives services from certain Apollo Global Management, LLC (“Apollo”) affiliated companies. Funds managed by Apollo have the right to designate two of the Company’s directors. On November 18, 2014, one of the Company's subsidiaries entered into a master services agreement with an indirect wholly owned subsidiary of Apollo. Pursuant to this master services agreement, the Company provides printer supplies and maintenance services, including toner maintenance, training, quarterly business review and printer procurement. The Company recognized revenue of $0.1 million in our consolidated statements of operations from Apollo affiliated companies under this agreement for the three months ended September 30, 2019 and 2018, respectively. The company recognized revenue of $0.4 million and $0.5 million for the nine months ended September 30, 2019 and 2018, respectively, in our consolidated statements of operations from Apollo affiliated companies under this agreement. On January 18, 2017, one of the Company’s subsidiaries entered into a master purchase and professional services agreement with Caesars Enterprise Services, LLC ("Caesars"). Caesars is controlled by investment funds affiliated with Apollo. Pursuant to this master purchase and professional services agreement, the Company provides managed print services to Caesars, including general equipment operation, supply management, support services and technical support. The Company recognized revenue of approximately $1.1 million in our consolidated statements of operations from Caesars under this master purchase and professional services agreement for the three months ended September, 2019 and 2018, respectively. The Company recognized revenue of approximately $3.3 million and $3.1 million in our consolidated statements of operations from Caesars under this master purchase and professional services agreement for the nine months ended September 30, 2019 and 2018, respectively. On May 5, 2017, one of the Company’s subsidiaries entered into a master services agreement with ADT LLC. ADT LLC is controlled by investment funds affiliated with Apollo. Pursuant to this master services agreement, the Company provides ADT LLC with mailroom and onsite mail delivery services at an ADT LLC office location and managed print services, including supply management, equipment maintenance and technical support services. The Company recognized revenue of $0.3 million and $0.2 million in our consolidated statements of operations from ADT LLC under this master services agreement for the three months ended September 30, 2019 and 2018, respectively. The Company recognized revenue of $0.9 million and $0.4 million in our consolidated statements of operations from ADT LLC under this master services agreement for the nine months ended September 30, 2019 and 2018, respectively. On July 20, 2017, one of the Company’s subsidiaries entered into a master services agreement with Diamond Resorts Centralized Services Company. Diamond Resorts Centralized Services Company is controlled by investment funds affiliated with Apollo. Pursuant to this master services agreement, the Company provides commercial print and promotional product procurement services to Diamond Resorts Centralized Services Company, including sourcing, inventory management and fulfillment services. The Company recognized revenue of $1.4 million and $0.7 million for the three months ended September 30, 2019 and 2018, respectively, from Diamond Resorts Centralized Services Company under this master services agreement. The Company recognized revenue of $4.0 million and $4.9 million for the nine months ended September 30, 2019 and 2018, respectively, and related party expense of $0.1 million for the nine months ended September 30, 2019 and 2018, respectively, from Diamond Resorts Centralized Services Company under this master services agreement. In April 2016, one of the Company’s subsidiaries entered into a master services agreement with Presidio Networked Solutions Group, LLC ("Presidio Group"), a wholly owned subsidiary of Presidio, Inc., a portion of which is owned by affiliates of Apollo. Pursuant to this master services agreement, Presidio Group provides the Company with employees, subcontractors, and/or goods and services. For the three months ended September 30, 2019 and 2018 there were related party expenses of $0.4 million and $0.2 million, respectively, for this service. For the nine months ended September 30, 2019 and 2018 there were related party expenses of $0.7 million and $0. 5 million, respectively, for this service. In June 2019, one of the Company’s subsidiaries entered into a master lease agreement with Presidio Technology Capital, LLC ("Presidio Capital"), a wholly owned subsidiary of Presidio, Inc., a portion of which is owned by affiliates of Apollo. Pursuant to this master lease agreement, Presidio Capital provides the Company certain equipment on finance lease. The Company recorded a finance lease liability of $1.0 million for this lease. As of September 30, 2019 total finance lease liability of the Company included $1.0 million pertaining to this lease. Payable and Receivable Balances with Affiliates Payable and receivable balances with affiliates as of September 30, 2019 and December 31, 2018 are as follows below. As of December 31, 2018 there were no related party receivables. September 30, December 31, 2019 2018 Receivable Payable Payable HOV Services, Ltd $ — $ 23 $ 405 Rule 14 — 198 127 HGM 42 — 6,998 Apollo affiliated company — 53 205 $ 42 $ 274 $ 7,735 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Information | |
Segment Information | 15. Segment and Geographic Area Information The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approach the markets and interacts with its clients. The Company is organized into three segments: ITPS, HS, and LLPS. ITPS: The ITPS segment provides a wide range of solutions and services designed to aid businesses in information capture, processing, decisioning and distribution to customers primarily in the financial services, commercial, public sector and legal industries. HS: The HS segment operates and maintains a consulting and outsourcing business specializing in both the healthcare provider and payer markets. LLPS: The LLPS segment provides a broad and active array of legal services in connection with class action, bankruptcy labor, claims adjudication and employment and other legal matters. The chief operating decision maker reviews operating segment revenue and cost of revenue. The Company does not allocate Selling, general, and administrative expenses, depreciation and amortization, interest expense and sundry, net. The Company manages assets on a total company basis, not by operating segment, and therefore asset information and capital expenditures by operating segments are not presented. Three months ended September 30, 2019 ITPS HS LLPS Total Revenue $ 291,979 $ 62,132 $ 18,806 $ 372,917 Cost of revenue 239,388 40,973 10,861 291,222 Selling, general and administrative expenses 50,372 Depreciation and amortization 27,114 Impairment of goodwill and other intangible assets 99,682 Related party expense 1,405 Interest expense, net 39,747 Debt modification and extinguishment costs — Sundry income, net (10) Other expense, net 581 Net loss before income taxes $ (137,196) Three months ended September 30, 2018 ITPS HS LLPS Total Revenue $ 307,313 $ 56,776 $ 18,941 $ 383,030 Cost of revenue 246,492 36,919 12,525 295,936 Selling, general and administrative expenses 44,913 Depreciation and amortization 35,041 Related party expense 759 Interest expense, net 38,339 Debt modification and extinguishment costs 1,067 Sundry income, net (2,571) Other income, net (781) Net loss before income taxes $ (29,673) Nine months ended September 30, 2019 ITPS HS LLPS Total Revenue $ 925,709 $ 186,915 $ 54,217 $ 1,166,841 Cost of revenue 743,557 119,816 32,737 896,110 Selling, general and administrative expenses 151,884 Depreciation and amortization 82,326 Impairment of goodwill and other intangible assets 99,682 Related party expense 3,454 Interest expense, net 117,778 Debt modification and extinguishment costs 1,404 Sundry expense, net 1,028 Other expense, net 4,965 Net loss before income taxes $ (191,790) Nine months ended September 30, 2018 ITPS HS LLPS Total Revenue $ 949,381 $ 171,722 $ 65,476 $ 1,186,579 Cost of revenue 752,796 111,135 39,751 903,682 Selling, general and administrative expenses 137,231 Depreciation and amortization 109,428 Related party expense 3,267 Interest expense, net 114,883 Debt modification and extinguishment costs 1,067 Sundry income, net (4,961) Other income, net (4,813) Net loss before income taxes $ (73,205) |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with ASC 606. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of our material sources of revenue are derived from contracts with customers, primarily related to the provision of business and transaction processing services within each of our segments. We do not have any significant extended payment terms, as payment is received shortly after goods are delivered or services are provided. Nature of Services Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services that are substantially the same and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate the variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract. Disaggregation of Revenues The following tables disaggregate revenue from contracts by geographic region and by segment for the three and nine months ended September 30, 2019 and 2018: Three Months Ended September 30, 2019 2018 ITPS HS LLPS ITPS HS LLPS United States $ 229,492 $ 62,132 $ 18,806 $ 248,055 $ 56,776 $ 18,941 Europe 55,836 — — 52,602 — — Other 6,651 — — 6,656 — — Total $ 291,979 $ 62,132 $ 18,806 $ 307,313 $ 56,776 $ 18,941 Nine Months Ended September 30, 2019 2018 ITPS HS LLPS ITPS HS LLPS United States $ 718,936 $ 186,915 $ 54,217 $ 782,870 $ 171,722 $ 65,476 Europe 186,337 — — 146,242 — — Other 20,436 — — 20,269 — — Total $ 925,709 $ 186,915 $ 54,217 $ 949,381 $ 171,722 $ 65,476 Contract Balances The following table presents contract assets and contract liabilities recognized at September 30, 2019 and December 31, 2018: September 30, December 31, 2019 2018 Accounts receivable, net $ 260,438 $ 270,812 Deferred revenues 17,782 16,940 Costs to obtain and fulfill a contract 24,212 18,624 Customer deposits 30,161 34,235 Accounts receivable, net includes $37.6 million and $39.5 million as of September 30, 2019 and December 31, 2018, respectively, representing amounts not billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers. Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $12.8 million during the nine months ended September 30, 2019 that had been deferred as of December 31, 2018. Costs incurred to obtain and fulfill contracts are deferred and expensed on a straight-line basis over the estimated benefit period. We recognized $8.4 million of amortization for these costs in the first nine months of 2019 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or transition activities and can be separated into two principal categories: contract commissions and transition/set-up costs. Examples of such capitalized costs include hourly labor and related fringe benefits and travel costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in Selling, general and administrative expenses. The effect of applying this practical expedient was not material. Customer deposits consist primarily of amounts received from customers in advance for postage. The majority of the amounts recorded as of December 31, 2018 were used to pay for postage with the corresponding postage revenue being recognized during the nine months ended September 30, 2019. Performance Obligations At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes. Certain of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained. When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts give rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration. We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue. Transaction Price Allocated to the Remaining Performance Obligations In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less, and (2) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2019 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2019 $ 17,335 2020 52,951 2021 42,443 2022 31,951 2023 27,775 2024 and thereafter 54,159 Total $ 226,614 |
General (Tables)
General (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
General | |
Schedule of components of basic and diluted EPS | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Net loss attributable to common stockholders (A) $ (134,311) $ (29,854) $ (200,191) $ (80,858) Weighted average common shares outstanding - basic and diluted (B) 150,207,483 151,663,670 150,140,577 152,010,290 Loss Per Share: Basic and diluted (A/B) $ (0.89) $ (0.20) $ (1.33) $ (0.53) |
Business Combinations (Tables)
Business Combinations (Tables) - Asterion | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations and Acquisitions | |
Schedule of consideration paid and the preliminary fair value of the assets acquired and liabilities assumed | Assets Acquired: Cash and cash equivalents $ 5,595 Accounts receivable 25,740 Other current assets 2,282 Inventories, net 1,137 Property, plant, and equipment, net 4,747 Deferred income tax assets 6,316 Other noncurrent assets 522 Intangible assets, net 3,525 Goodwill 1,493 Total identifiable assets acquired $ 51,357 Liabilities Assumed: Accounts payable $ (5,596) Income tax payable (5) Accrued liabilities (6,593) Accrued compensation and benefits (7,079) Deferred revenue (880) Current portion of long term debt (994) Customer deposits (462) Pension liabilities (7,135) Other long-term liabilities (1,324) Deferred income tax liabilities (1,171) Capital lease obligations, net of current maturities (650) Total liabilities assumed $ (31,889) Total Consideration $ 19,468 |
Schedule of identifiable intangible assets | Weighted Average Useful Life (in years) Fair Value Customer Relationships 9.5 $ 3,516 |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Schedule of disaggregates revenue from contracts by geographic region and by segment | Three Months Ended September 30, 2019 2018 ITPS HS LLPS ITPS HS LLPS United States $ 229,492 $ 62,132 $ 18,806 $ 248,055 $ 56,776 $ 18,941 Europe 55,836 — — 52,602 — — Other 6,651 — — 6,656 — — Total $ 291,979 $ 62,132 $ 18,806 $ 307,313 $ 56,776 $ 18,941 Nine Months Ended September 30, 2019 2018 ITPS HS LLPS ITPS HS LLPS United States $ 718,936 $ 186,915 $ 54,217 $ 782,870 $ 171,722 $ 65,476 Europe 186,337 — — 146,242 — — Other 20,436 — — 20,269 — — Total $ 925,709 $ 186,915 $ 54,217 $ 949,381 $ 171,722 $ 65,476 |
Schedule of contract balances | September 30, December 31, 2019 2018 Accounts receivable, net $ 260,438 $ 270,812 Deferred revenues 17,782 16,940 Costs to obtain and fulfill a contract 24,212 18,624 Customer deposits 30,161 34,235 |
Schedule of estimated remaining fixed consideration for unsatisfied performance obligations | Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2019 $ 17,335 2020 52,951 2021 42,443 2022 31,951 2023 27,775 2024 and thereafter 54,159 Total $ 226,614 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Lessee, Lease, Description [Line Items] | |
Schedule of balance sheet location | September 30, 2019 Balance sheet location: Operating Lease Operating lease right-of-use assets, net $ 93,352 Current portion of operating lease liabilities 26,604 Operating lease liabilities, net of current portion 71,661 Finance Lease Finance lease right-of-use assets, net (included in property, plant and equipment, net) 28,394 Current portion of finance lease liabilities 15,172 Finance lease liabilities, net of current portion 24,159 |
Schedule of maturities of operating lease liabilities | Finance Operating Leases Leases Remainder of 2019 $ 6,554 $ 8,469 2020 14,931 24,803 2021 11,587 19,707 2022 5,470 15,651 2023 2,847 11,721 2024 and thereafter 4,120 23,244 Total lease payments 45,509 103,595 Less: Imputed interest 6,178 5,380 Present value of lease liabilities $ 39,331 $ 98,265 |
Schedule of maturities of finance lease liabilities | The following table summarizes maturities of finance and operating lease liabilities based on lease term as of September 30, 2019: Finance Operating Leases Leases Remainder of 2019 $ 6,554 $ 8,469 2020 14,931 24,803 2021 11,587 19,707 2022 5,470 15,651 2023 2,847 11,721 2024 and thereafter 4,120 23,244 Total lease payments 45,509 103,595 Less: Imputed interest 6,178 5,380 Present value of lease liabilities $ 39,331 $ 98,265 |
Schedule of future minimum payments due under non‐cancelable leases under ASC 840 | Finance Operating Leases Leases 2019 $ 20,080 $ 38,057 2020 11,851 29,346 2021 9,018 22,239 2022 4,169 16,782 2023 2,244 12,302 2024 and thereafter 3,617 18,874 Total minimum lease payments $ 50,979 $ 137,600 Less: imputed interest 6,743 Total net minimum lease payments 44,236 Less: Current portion of obligations under finance leases 17,498 Long-term portion of obligations under finance leases $ 26,738 |
Schedule of cash paid and lease recognition | Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 28,831 Financing cash flows from finance leases 13,598 Right-of-use lease assets obtained in the exchange for lease liabilities: Operating leases 3,894 Finance leases 9,352 |
ASU 2016-02 | |
Lessee, Lease, Description [Line Items] | |
Schedule of new accounting standard adoption | Balance at Balance at December 31, Impact of January 1, 2018 Lease Standard 2019 Total assets $ 1,639,782 $ 102,651 $ 1,742,433 Total current liabilities 432,722 25,304 458,026 Total long-term liabilities 1,820,788 79,703 1,900,491 |
Intangibles Assets and Goodwi_2
Intangibles Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Intangibles Assets and Goodwill | |
Schedule of intangible assets | September 30, 2019 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,901 $ (226,123) $ 281,778 Developed technology 89,053 (86,966) 2,087 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 60,514 (36,303) 24,212 Internally developed software 41,971 (9,956) 32,015 Trademarks 23,378 (23,370) 8 Non compete agreements 1,350 (1,350) — Assembled workforce 4,473 (839) 3,634 Purchased software 26,749 (1,337) 25,412 Intangibles, net $ 763,789 $ (389,344) $ 374,445 December 31, 2018 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 507,905 $ (190,666) $ 317,239 Developed technology 89,053 (85,967) 3,086 Trade names (c) 9,400 (3,100) 6,300 Outsource contract costs 46,342 (27,719) 18,623 Internally developed software 36,820 (6,278) 30,542 Trademarks 23,379 (23,370) 9 Non compete agreements 1,350 (1,350) — Assembled workforce 4,473 — 4,473 Purchased software 26,749 — 26,749 Intangibles, net $ 745,471 $ (338,450) $ 407,021 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for September 30, 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in the nine months ended September 30, 2019. (c) The carrying amount of trade names for 2018 is net of accumulated impairment losses of $43.1 million, of which $3.7 million was recognized in 2018. |
Schedule of goodwill by reporting segment | Currency Translation Goodwill Additions Reductions Adjustments Goodwill (a) ITPS $ 566,215 $ 5,580 (c) $ — $ (220) $ 571,575 HS 86,786 — — — 86,786 LLPS 94,324 — (44,427) (b) — 49,897 Balance as of December 31, 2018 $ 747,325 $ 5,580 $ (44,427) $ (220) $ 708,258 ITPS 571,575 — (90,361) (d) (118) 481,096 HS 86,786 — — — 86,786 LLPS 49,897 — (8,321) (e) — 41,576 Balance as of September 30, 2019 $ 708,258 $ — $ (98,682) $ (118) $ 609,458 (a) The goodwill amount for all periods presented is net of accumulated impairment losses of $167.9 million. (b) The reduction in goodwill is due to $44.4 million, including taxes, for impairment recorded in the fourth quarter of 2018. (c) Addition to goodwill due to the acquisition of Asterion and immaterial acquisitions in the third and fourth quarters of 2018. (d) The reduction in goodwill is due to $90.4 million, including taxes, for impairment recorded in the third quarter of 2019. (e) The reduction in goodwill is due to $8.3 million, including taxes, for impairment recorded in the third quarter of 2019. |
Long-Term Debt and Credit Fac_2
Long-Term Debt and Credit Facilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Long-Term Debt and Credit Facilities | |
Schedule of outstanding long-term debt instruments | September 30, December 31, 2019 2018 Other (a) $ 23,904 $ 25,321 First lien credit agreement (b) 364,068 335,896 Senior secured notes (c) 977,848 974,443 Revolver 39,000 — Total debt 1,404,820 1,335,660 Less: Current portion of long-term debt (37,237) (29,237) Long-term debt, net of current maturities $ 1,367,583 $ 1,306,423 (a) Other debt represents the Company’s outstanding loan balances associated with various hardware and software purchases along with loans entered into by subsidiaries of the Company. (b) Net of unamortized original issue discount and debt issuance costs of $ 6.9 million and $20.1 million as of September 30, 2019 and $8.3 million and $24.5 million as of December 31, 2018. (c) Net of unamortized debt discount and debt issuance costs of $ 15.8 million and $6.3 million as of September 30, 2019 and $18.2 million and $7.3 million as of December 31, 2018. |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Employee Benefit Plans | |
Schedule of components of the net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Service cost $ 23 $ 27 $ 68 $ 56 Interest cost 592 569 1,777 1,686 Expected return on plan assets (612) (701) (1,837) (2,076) Amortization: Amortization of prior service cost 25 (34) 76 (102) Amortization of net (gain) loss 406 433 1,218 1,294 Net periodic benefit cost $ 434 $ 294 $ 1,302 $ 858 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurement | |
Schedule of fair value of financial instruments | Carrying Fair Fair Value Measurements As of September 30, 2019 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,367,583 $ 769,403 $ — $ 769,403 $ — Interest rate swap liability 1,128 1,128 — 1,128 — Acquisition contingent liability $ 721 $ 721 $ — $ — $ 721 Nonrecurring assets and liabilities: Goodwill 609,458 609,458 — — 609,458 Carrying Fair Fair Value Measurements As of December 31, 2018 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,306,423 $ 1,316,306 $ — $ 1,316,306 $ — Interest rate swap asset 3,836 3,836 — 3,836 — Acquisition contingent liability $ 721 $ 721 $ — $ — $ 721 Nonrecurring assets and liabilities: Goodwill 708,258 708,258 — — 708,258 |
Schedule of net assets and liabilities classified as Level 3 for reconciliation | September 30, December 31, 2019 2018 Balance as of Beginning of Period $ 721 $ 721 Payments/Reductions — — Balance as of End of Period $ 721 $ 721 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Stock-Based Compensation | |
Summary of the status of restricted stock units | Average Weighted Remaining Number Average Grant Contractual Life Aggregate of Shares Date Fair Value (Years) Intrinsic Value Balance as of December 31, 2018 893,297 $ 5.86 0.76 $ 5,239 Shares granted 268,607 Shares forfeited (151,067) Shares vested (610,482) Balance as of September 30, 2019 400,355 $ 2.12 1.43 $ 849 |
Schedule of stock option activity | Weighted Average Remaining Average Vesting Period Aggregate Outstanding Exercise Price (Years) Intrinsic Value Balance as of December 31, 2018 3,570,300 $ 6.06 2.92 $ 9,590 Granted 2,050,600 Exercised — Forfeited (618,200) Expired — Balance as of September 30, 2019 5,002,700 $ 4.13 2.74 $ 9,864 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Related-Party Transactions | |
Schedule of payable and receivable balances with affiliates | September 30, December 31, 2019 2018 Receivable Payable Payable HOV Services, Ltd $ — $ 23 $ 405 Rule 14 — 198 127 HGM 42 — 6,998 Apollo affiliated company — 53 205 $ 42 $ 274 $ 7,735 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Information | |
Schedule of revenue by segment information | Three months ended September 30, 2019 ITPS HS LLPS Total Revenue $ 291,979 $ 62,132 $ 18,806 $ 372,917 Cost of revenue 239,388 40,973 10,861 291,222 Selling, general and administrative expenses 50,372 Depreciation and amortization 27,114 Impairment of goodwill and other intangible assets 99,682 Related party expense 1,405 Interest expense, net 39,747 Debt modification and extinguishment costs — Sundry income, net (10) Other expense, net 581 Net loss before income taxes $ (137,196) Three months ended September 30, 2018 ITPS HS LLPS Total Revenue $ 307,313 $ 56,776 $ 18,941 $ 383,030 Cost of revenue 246,492 36,919 12,525 295,936 Selling, general and administrative expenses 44,913 Depreciation and amortization 35,041 Related party expense 759 Interest expense, net 38,339 Debt modification and extinguishment costs 1,067 Sundry income, net (2,571) Other income, net (781) Net loss before income taxes $ (29,673) Nine months ended September 30, 2019 ITPS HS LLPS Total Revenue $ 925,709 $ 186,915 $ 54,217 $ 1,166,841 Cost of revenue 743,557 119,816 32,737 896,110 Selling, general and administrative expenses 151,884 Depreciation and amortization 82,326 Impairment of goodwill and other intangible assets 99,682 Related party expense 3,454 Interest expense, net 117,778 Debt modification and extinguishment costs 1,404 Sundry expense, net 1,028 Other expense, net 4,965 Net loss before income taxes $ (191,790) Nine months ended September 30, 2018 ITPS HS LLPS Total Revenue $ 949,381 $ 171,722 $ 65,476 $ 1,186,579 Cost of revenue 752,796 111,135 39,751 903,682 Selling, general and administrative expenses 137,231 Depreciation and amortization 109,428 Related party expense 3,267 Interest expense, net 114,883 Debt modification and extinguishment costs 1,067 Sundry income, net (4,961) Other income, net (4,813) Net loss before income taxes $ (73,205) |
General - Net loss per share (D
General - Net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 12, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Net loss per share | ||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Net loss attributable to common stockholders | $ (134,311) | $ (29,854) | $ (200,191) | $ (80,858) | ||
Weighted average common shares outstanding - basic and diluted | 150,207,483 | 151,663,670 | 150,140,577 | 152,010,290 | ||
Loss per share - Basic and diluted | $ (0.89) | $ (0.20) | $ (1.33) | $ (0.53) | ||
Series A Preferred Stock | ||||||
Net loss per share | ||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 5,402,954 | |||||
Warrants | ||||||
Net loss per share | ||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 35,000,000 |
New Accounting Pronouncements -
New Accounting Pronouncements - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Sep. 30, 2019 | Sep. 30, 2019 |
ASU 2016-02 | |||
Recently Adopted Accounting Pronouncements | |||
Accounting Standards Update adopted | true | ||
ASU transition method | Modified Retrospective | ||
ASU adoption, prior periods not restated | true | true | |
Lease, Practical Expedients, Package [true false] | true | ||
ASU 2017-11 | |||
Recently Adopted Accounting Pronouncements | |||
Accounting Standards Update adopted | true | ||
Impact of adoption on financial statements | $ 0 | $ 0 | |
ASU 2017-12 | |||
Recently Adopted Accounting Pronouncements | |||
Accounting Standards Update adopted | true | ||
Impact of adoption on financial statements | 0 | 0 | |
ASU 2018-02 | |||
Recently Adopted Accounting Pronouncements | |||
Accounting Standards Update adopted | true | ||
Impact of adoption on financial statements | 0 | 0 | |
ASU 2018-07 | |||
Recently Adopted Accounting Pronouncements | |||
Accounting Standards Update adopted | true | ||
Impact of adoption on financial statements | $ 0 | $ 0 |
Business Combinations - Asterio
Business Combinations - Asterion (Details) - USD ($) $ in Thousands | Apr. 10, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Assets Acquired: | ||||
Goodwill | $ 609,458 | $ 708,258 | $ 747,325 | |
Asterion | ||||
Business Combinations and Acquisitions | ||||
Purchase price | $ 19,500 | |||
Assets Acquired: | ||||
Cash and cash equivalents | 5,595 | |||
Accounts receivable | 25,740 | |||
Other current assets | 2,282 | |||
Inventories, net | 1,137 | |||
Property, plant, and equipment, net | 4,747 | |||
Deferred income tax assets | 6,316 | |||
Other noncurrent assets | 522 | |||
Intangible assets, net | 3,525 | |||
Goodwill | 1,493 | |||
Total identifiable assets acquired | 51,357 | |||
Liabilities Assumed: | ||||
Accounts payable | (5,596) | |||
Income tax payable | (5) | |||
Accrued liabilities | (6,593) | |||
Accrued compensation and benefits | (7,079) | |||
Deferred revenue | (880) | |||
Current portion of long term debt | (994) | |||
Customer deposits | (462) | |||
Pension liabilities | (7,135) | |||
Other long-term liabilities | (1,324) | |||
Deferred income tax liabilities | (1,171) | |||
Capital lease obligations, net of current maturities | (650) | |||
Total liabilities assumed | (31,889) | |||
Total Consideration | $ 19,468 |
Business Combinations - Intangi
Business Combinations - Intangible Assets - Asterion (Details) - Asterion - USD ($) $ in Thousands | Apr. 10, 2018 | Sep. 30, 2019 | Sep. 30, 2019 |
Intangible Assets | |||
Revenue since acquisition date | $ 17,000 | $ 56,800 | |
Customer relationships | |||
Intangible Assets | |||
Weighted Average Useful Life (in years) | 9 years 6 months | ||
Fair value | $ 3,516 |
Significant Accounting Polici_4
Significant Accounting Policies - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenues | ||||
Revenue | $ 372,917 | $ 383,030 | $ 1,166,841 | $ 1,186,579 |
ITPS | ||||
Disaggregation of Revenues | ||||
Revenue | 291,979 | 307,313 | 925,709 | 949,381 |
ITPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 229,492 | 248,055 | 718,936 | 782,870 |
ITPS | Europe | ||||
Disaggregation of Revenues | ||||
Revenue | 55,836 | 52,602 | 186,337 | 146,242 |
ITPS | Other | ||||
Disaggregation of Revenues | ||||
Revenue | 6,651 | 6,656 | 20,436 | 20,269 |
HS | ||||
Disaggregation of Revenues | ||||
Revenue | 62,132 | 56,776 | 186,915 | 171,722 |
HS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 62,132 | 56,776 | 186,915 | 171,722 |
LLPS | ||||
Disaggregation of Revenues | ||||
Revenue | 18,806 | 18,941 | 54,217 | 65,476 |
LLPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | $ 18,806 | $ 18,941 | $ 54,217 | $ 65,476 |
Significant Accounting Polici_5
Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies | ||
Accounts receivable, net | $ 260,438 | $ 270,812 |
Deferred revenues | 17,782 | 16,940 |
Costs to obtain and fulfill a contract | 24,212 | 18,624 |
Customer deposits | 30,161 | 34,235 |
Unbilled receivables, net | 37,600 | $ 39,500 |
Revenue recognized from deferred revenue | 12,800 | |
Amortization of contract costs | $ 8,400 | |
Practical expedient on incremental costs of obtaining contracts | true |
Significant Accounting Polici_6
Significant Accounting Policies - Performance Obligations (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Significant Accounting Policies | |
Contracts with an original expected length | true |
Remainder of 2019 | $ 17,335 |
2020 | 52,951 |
2021 | 42,443 |
2022 | 31,951 |
2023 | 27,775 |
2024 and thereafter | 54,159 |
Total | $ 226,614 |
Leases - Restated (Details)
Leases - Restated (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | ||||
Total assets | $ 1,541,507 | $ 1,541,507 | $ 1,742,433 | $ 1,639,782 |
Total current liabilities | 401,313 | 401,313 | 458,026 | 432,722 |
Total long-term liabilities | $ 1,914,818 | $ 1,914,818 | 1,900,491 | $ 1,820,788 |
ASU 2016-02 | ||||
Lessee, Lease, Description [Line Items] | ||||
ASU adoption, prior periods not restated | true | true | ||
ASU 2016-02 | Adjustment | ||||
Lessee, Lease, Description [Line Items] | ||||
Total assets | 102,651 | |||
Total current liabilities | 25,304 | |||
Total long-term liabilities | $ 79,703 |
Leases - Option to Extend or Te
Leases - Option to Extend or Terminate (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Options to extend - operating lease | true |
Options to extend - finance lease | true |
Options to terminate - operating lease | true |
Options to terminate - finance lease | true |
Leases - Balance Sheet Location
Leases - Balance Sheet Location (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases | |
Operating lease right-of-use assets, net | $ 93,352 |
Current portion of operating lease liabilities | 26,604 |
Operating lease liabilities, net of current portion | 71,661 |
Finance Lease | |
Finance lease right-of-use asset, net | $ 28,394 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us_gaap:PropertyPlantAndEquipment |
Current portion of finance lease liabilities | $ 15,172 |
Finance lease liabilities, net of current portion | $ 24,159 |
Leases - Other Information (Det
Leases - Other Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Leases | ||
Weighted-average remaining lease term of operating leases | 4 years 10 months 21 days | 4 years 10 months 21 days |
Weighted-average remaining lease term of finance leases | 3 years 4 months 28 days | 3 years 4 months 28 days |
Weighted-average discount rate for operating leases | 10.39% | 10.39% |
Weighted-average discount rate for finance leases | 8.84% | 8.84% |
Interest on financing lease liabilities | $ 0.9 | $ 2.5 |
Amortization expense on finance lease right-of-use assets | $ 3.7 | $ 10.7 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities - ASC 842 (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Maturities of operating lease liabilities: | |
Remainder of 2019 | $ 8,469 |
2020 | 24,803 |
2021 | 19,707 |
2022 | 15,651 |
2023 | 11,721 |
Thereafter | 23,244 |
Total operating lease payments | 103,595 |
Less: Imputed interest | 5,380 |
Present value of lease liabilities | 98,265 |
Maturities of finance lease liabilities | |
Remainder of 2019 | 6,554 |
2020 | 14,931 |
2021 | 11,587 |
2022 | 5,470 |
2023 | 2,847 |
2024 and thereafter | 4,120 |
Total finance lease payments | 45,509 |
Less: imputed interest | 6,178 |
Present value of finance lease liabilities | $ 39,331 |
Leases - Future Minimum Payment
Leases - Future Minimum Payments Due Under Non‐Cancelable Leases - ASC 840 (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future minimum payments due under Operating Leases: | |
2019 | $ 38,057 |
2020 | 29,346 |
2021 | 22,239 |
2022 | 16,782 |
2023 | 12,302 |
Thereafter | 18,874 |
Total lease payments | 137,600 |
Future minimum payments due under Finance Leases | |
2019 | 20,080 |
2020 | 11,851 |
2021 | 9,018 |
2022 | 4,169 |
2023 | 2,244 |
2024 and thereafter | 3,617 |
Total minimum lease payments | 50,979 |
Less: imputed interest | 6,743 |
Total net minimum lease payments | 44,236 |
Less: Current portion of obligations under finance leases | 17,498 |
Long-term portion of obligations under finance leases | $ 26,738 |
Leases - Rental Expenses (Detai
Leases - Rental Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Rental expenses - ASC 840 | |||
Rental expenses | $ 83.8 | ||
Rental expenses - ASC 842 | |||
Rental expenses | $ 19 | $ 56.4 |
Leases - Cash Paid and Lease Re
Leases - Cash Paid and Lease Recognition (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 28,831 | |
Financing cash flows from finance leases | 13,598 | $ 12,594 |
Right-of-use lease assets obtained in the exchange for lease liabilities: | ||
Operating leases | 3,894 | |
Finance leases | $ 9,352 |
Intangibles Assets and Goodwi_3
Intangibles Assets and Goodwill - Intangibles (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Intangibles | ||
Gross Carrying Amount | $ 763,789 | $ 745,471 |
Amortization | (389,344) | (338,450) |
Intangible Asset, net | 374,445 | 407,021 |
Customer relationships | ||
Intangibles | ||
Gross Carrying Amount | 507,901 | 507,905 |
Amortization | (226,123) | (190,666) |
Intangible Asset, net | 281,778 | 317,239 |
Developed technology | ||
Intangibles | ||
Gross Carrying Amount | 89,053 | 89,053 |
Amortization | (86,966) | (85,967) |
Intangible Asset, net | 2,087 | 3,086 |
Trade names | ||
Intangibles | ||
Gross Carrying Amount | 8,400 | 9,400 |
Amortization | (3,100) | (3,100) |
Intangible Asset, net | 5,300 | 6,300 |
Impairment charge | 1,000 | 3,700 |
Accumulated impairment losses | 44,100 | 43,100 |
Outsource contract costs | ||
Intangibles | ||
Gross Carrying Amount | 60,514 | 46,342 |
Amortization | (36,303) | (27,719) |
Intangible Asset, net | 24,212 | 18,623 |
Internally developed software | ||
Intangibles | ||
Gross Carrying Amount | 41,971 | 36,820 |
Amortization | (9,956) | (6,278) |
Intangible Asset, net | 32,015 | 30,542 |
Trademarks | ||
Intangibles | ||
Gross Carrying Amount | 23,378 | 23,379 |
Amortization | (23,370) | (23,370) |
Intangible Asset, net | 8 | 9 |
Non compete agreements | ||
Intangibles | ||
Gross Carrying Amount | 1,350 | 1,350 |
Amortization | (1,350) | (1,350) |
Assembled workforce | ||
Intangibles | ||
Gross Carrying Amount | 4,473 | 4,473 |
Amortization | (839) | |
Intangible Asset, net | 3,634 | 4,473 |
Purchased software | ||
Intangibles | ||
Gross Carrying Amount | 26,749 | 26,749 |
Amortization | (1,337) | |
Intangible Asset, net | 25,412 | $ 26,749 |
Goodwill. | ||
Intangibles | ||
Impairment charge | $ 98,700 |
Intangibles Assets and Goodwi_4
Intangibles Assets and Goodwill - Goodwill (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($)segment | Dec. 31, 2018USD ($) | |
Goodwill | |||
Number of Operating Segments | segment | 3 | ||
Goodwill | |||
Goodwill, beginning of the period | $ 708,258 | $ 747,325 | |
Additions | 5,580 | ||
Reductions | 98,682 | 44,427 | |
Currency translation adjustments | (118) | (220) | |
Goodwill, end of the period | $ 609,458 | 609,458 | 708,258 |
Accumulated impairment losses | 167,900 | 167,900 | 167,900 |
Impairment of goodwill and other intangible assets | 99,682 | 99,682 | |
ITPS | |||
Goodwill | |||
Goodwill, beginning of the period | 571,575 | 566,215 | |
Additions | 5,580 | ||
Reductions | 90,361 | ||
Currency translation adjustments | (118) | (220) | |
Goodwill, end of the period | 481,096 | 481,096 | 571,575 |
HS | |||
Goodwill | |||
Goodwill, beginning of the period | 86,786 | 86,786 | |
Goodwill, end of the period | 86,786 | 86,786 | 86,786 |
LLPS | |||
Goodwill | |||
Goodwill, beginning of the period | 49,897 | 94,324 | |
Reductions | 8,321 | 44,427 | |
Goodwill, end of the period | $ 41,576 | $ 41,576 | $ 49,897 |
Long-Term Debt and Credit Fac_3
Long-Term Debt and Credit Facilities - Senior Secured Notes (Details) - Senior secured notes $ in Millions | Jul. 12, 2017USD ($) |
Debt instruments | |
Debt instrument face amount | $ 1,000 |
Interest rate (in percent) | 10.00% |
Original issue discount | $ 22.5 |
Long-Term Debt and Credit Fac_4
Long-Term Debt and Credit Facilities - Senior Credit Facilities (Details) - First lien credit agreement - USD ($) $ in Millions | Jul. 12, 2017 | Sep. 30, 2019 | Dec. 31, 2018 |
Debt instruments | |||
Original issue discount | $ 6.9 | $ 8.3 | |
Senior secured term loan | |||
Debt instruments | |||
Debt instrument face amount | $ 350 | ||
Original issue discount | $ 7 | ||
Principal percentage of each of first eight payments (as a percent) | 0.60% | ||
Principal percentage of each payment thereafter (as a percent) | 1.30% | ||
Senior secured revolving facility | |||
Debt instruments | |||
Maximum borrowing capacity | $ 100 | ||
Outstanding credit facility | $ 21 | $ 20.6 | |
LIBOR | Senior secured term loan | |||
Debt instruments | |||
Applicable margin rate | 7.50% | ||
Floor interest rate | 1.00% | ||
LIBOR | Senior secured revolving facility | |||
Debt instruments | |||
Applicable margin rate | 7.00% | ||
Base rate | Senior secured term loan | |||
Debt instruments | |||
Applicable margin rate | 6.50% | ||
Base rate | Senior secured revolving facility | |||
Debt instruments | |||
Applicable margin rate | 6.00% |
Long-Term Debt and Credit Fac_5
Long-Term Debt and Credit Facilities - Term Loan Repricing (Details) - USD ($) $ in Thousands | Jul. 13, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Debt instruments | |||
Outstanding amount of term loans | $ 1,404,820 | $ 1,335,660 | |
First Amendment | |||
Debt instruments | |||
Proceeds from refinancing term loans | $ 343,400 | ||
Reduction in interest rate (in percentage) | 1.00% | ||
First Amendment | Federal funds rate | |||
Debt instruments | |||
Variable interest rate (as a percent) | 0.50% | ||
First Amendment | LIBOR | |||
Debt instruments | |||
Floor interest rate | 1.00% | ||
Variable interest rate (as a percent) | 6.50% | ||
First Amendment | One-month adjusted LIBOR | |||
Debt instruments | |||
Variable interest rate (as a percent) | 1.00% | ||
First Amendment | Base rate | |||
Debt instruments | |||
Variable interest rate (as a percent) | 5.50% | ||
Senior secured revolving facility | |||
Debt instruments | |||
Outstanding amount of term loans | $ 343,400 | ||
Senior secured revolving facility | First Amendment | |||
Debt instruments | |||
Debt issuance costs | 1,000 | ||
Amortization expense of debt issuance costs | 1,000 | ||
Write off of previously recognized debt issuance costs | 100 | ||
Maximum debt issuance costs for new lenders exceeded 10% test | $ 100 |
Long-Term Debt and Credit Fac_6
Long-Term Debt and Credit Facilities - Incremental Term Loan (Details) - USD ($) $ in Millions | Apr. 16, 2019 | Jul. 13, 2018 | Jun. 30, 2019 | Sep. 30, 2018 |
Incremental Term Loan | ||||
Debt instruments | ||||
Proceeds from refinancing term loans | $ 30 | |||
Percent of prepayment premium or fee | 1.00% | |||
Repricing and incremental of term loan | ||||
Debt instruments | ||||
Debt extinguishment costs | $ 1.4 | $ 1.1 | ||
Incremental term loan | ||||
Debt instruments | ||||
Proceeds from refinancing term loans | $ 30 |
Long-Term Debt and Credit Fac_7
Long-Term Debt and Credit Facilities - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Jul. 12, 2017 |
Debt instruments | |||
Total debt | $ 1,404,820 | $ 1,335,660 | |
Less: Current portion of long-term debt | (37,237) | (29,237) | |
Long-term debt, net of current maturities | 1,367,583 | 1,306,423 | |
Senior secured notes | |||
Debt instruments | |||
Total debt | 977,848 | 974,443 | |
Debt discount | $ 22,500 | ||
Other | |||
Debt instruments | |||
Total debt | 23,904 | 25,321 | |
First lien credit agreement | |||
Debt instruments | |||
Total debt | 364,068 | 335,896 | |
Debt discount | 6,900 | 8,300 | |
Unamortized debt issuance costs | 20,100 | 24,500 | |
Senior secured notes | |||
Debt instruments | |||
Debt discount | 15,800 | 18,200 | |
Unamortized debt issuance costs | 6,300 | $ 7,300 | |
Revolver | |||
Debt instruments | |||
Total debt | $ 39,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Taxes | ||||
Income tax (expense) benefit | $ 3,769 | $ 733 | $ (5,689) | $ (4,911) |
Actual effective tax rate | (2.70%) | 2.50% | (3.00%) | (6.70%) |
Statutory tax rate | 21.00% | 21.00% | ||
Increase (decrease) in valuation allowance | $ 28,800 |
Employee Benefit Plans - German
Employee Benefit Plans - Germany & UK (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
German Pension Plan | Unfunded Plan | |
Pension plans | |
Plan assets | $ 0 |
German Pension Plan | Unfunded Plan | Minimum | |
Pension plans | |
Qualifying period | 10 years |
U.K. Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Asterion Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Norway Pension Plan | Minimum | |
Pension plans | |
Minimum required years prior to retirement for eligibility | 3 years |
Employee Benefit Plans - Tax Ef
Employee Benefit Plans - Tax Effect on Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized in Net Periodic Benefit Costs | ||
Net actuarial loss | $ 8.9 | $ 9.3 |
Deferred tax benefit | $ 1.7 |
Employee Benefit Plans - Pensio
Employee Benefit Plans - Pension Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Net periodic benefit cost | ||||
Employer contributions | $ 2,200 | $ 2,300 | ||
Pension [Member] | ||||
Net periodic benefit cost | ||||
Service cost | $ 23 | $ 27 | 68 | 56 |
Interest cost | 592 | 569 | 1,777 | 1,686 |
Expected return on plan assets | (612) | (701) | (1,837) | (2,076) |
Amortization of prior service cost | 25 | (34) | 76 | (102) |
Amortization of net (gain) loss | 406 | 433 | 1,218 | 1,294 |
Net periodic benefit cost | $ 434 | $ 294 | $ 1,302 | $ 858 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 21, 2017 | Jun. 30, 2019 | Sep. 30, 2019 | Jul. 12, 2017 |
Minimum | SourceHOV | ||||
Commitments and Contingencies | ||||
Argued fair value per share | $ 1,633.85 | |||
Interest accrues | $ 19.6 | |||
Maximum | SourceHOV | ||||
Commitments and Contingencies | ||||
Interest accrues | $ 61 | |||
Maximum | Petitioners | ||||
Commitments and Contingencies | ||||
Argued fair value per share | $ 5,079.28 | |||
Fair value guarantee | Common Stock | SourceHOV | ||||
Commitments and Contingencies | ||||
Number of shares owned | 10,304 | |||
Fair value guarantee | Common Stock | Ex-Sigma 2, LLC | ||||
Commitments and Contingencies | ||||
Shares to be forfeited | 4,570,734 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | $ 609,458 | $ 708,258 | $ 747,325 |
Reconciliation of net assets and liabilities | |||
Impairment of goodwill | $ 98,682 | 44,427 | |
Senior secured term loan | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 59.50% | ||
Senior secured notes | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 55.00% | ||
Level 3 | |||
Reconciliation of net assets and liabilities | |||
Balance as of Beginning of Period | $ 721 | 721 | |
Balance as of End of Period | 721 | 721 | |
Carrying Amount | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 1,367,583 | 1,306,423 | |
Interest rate swap | 1,128 | 3,836 | |
Goodwill | 609,458 | 708,258 | |
Carrying Amount | Nonrecurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Acquisition contingent liability | 721 | 721 | |
Fair Value | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 769,403 | 1,316,306 | |
Interest rate swap | 1,128 | 3,836 | |
Goodwill | 609,458 | 708,258 | |
Fair Value | Recurring assets and liabilities | Level 2 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 769,403 | 1,316,306 | |
Interest rate swap | 1,128 | 3,836 | |
Fair Value | Recurring assets and liabilities | Level 3 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | 609,458 | 708,258 | |
Fair Value | Nonrecurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Acquisition contingent liability | 721 | 721 | |
Fair Value | Nonrecurring assets and liabilities | Level 3 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Acquisition contingent liability | $ 721 | $ 721 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - RSU's - 2013 Plan - shares | 9 Months Ended | |
Sep. 30, 2019 | Jul. 12, 2017 | |
Stock-based compensation | ||
Unvested RSU's | 0 | 9,880 |
Minimum | ||
Stock-based compensation | ||
Initial vesting period of remaining RSU's vesting in April 2019 | 3 years | |
Maximum | ||
Stock-based compensation | ||
Initial vesting period of remaining RSU's vesting in April 2019 | 4 years | |
SourceHOV | ||
Stock-based compensation | ||
Restricted stock units outstanding | 24,535 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Incentive Plan (Details) - shares | Sep. 30, 2019 | Dec. 31, 2018 | Jan. 17, 2018 |
Exela 2018 Stock Incentive Plan | |||
Common stock shares authorized | 1,600,000,000 | 1,600,000,000 | |
2018 Plan | |||
Exela 2018 Stock Incentive Plan | |||
Common stock shares authorized | 8,323,764 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Grants (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Dividend Share-based Payment Arrangement | ||
Cash paid for withholding taxes | $ 223 | |
RSU's | ||
Dividend Share-based Payment Arrangement | ||
Shares Paid for Tax Withholding for Share Based Compensation | 194,010 | |
Cash paid for withholding taxes | $ 200 | |
RSU's | 2018 Plan | ||
Number of Shares | ||
Balance at the beginning of the period (in shares) | 893,297 | |
Shares granted | 268,607 | |
Shares forfeited | (151,067) | |
Shares vested | (610,482) | |
Balance at the end of the period (in shares) | 400,355 | 893,297 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period | $ 5.86 | |
Balance at the end of the period | $ 2.12 | $ 5.86 |
Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (in years) | 1 year 5 months 5 days | 9 months 4 days |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value outstanding | $ 849 | $ 5,239 |
RSU's | 2018 Plan | Minimum | ||
Stock-Based Compensation | ||
Vesting period | 1 year | |
RSU's | 2018 Plan | Maximum | ||
Stock-Based Compensation | ||
Vesting period | 2 years |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options (Details) - 2018 Plan - USD ($) $ / shares in Units, $ in Thousands | Jan. 17, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Unrecognized compensation expense | ||||||
Unrecognized compensation expense | $ 7,500 | $ 7,500 | ||||
Selling, general and administrative expense | ||||||
Unrecognized compensation expense | ||||||
Total compensation expense | $ 1,400 | $ 1,600 | $ 6,900 | $ 4,500 | ||
Stock options | ||||||
Stock-based compensation | ||||||
Minimum fair market value per share of underlying stock used to determine option grant price, as a percent | 100.00% | |||||
Expiration of stock options | 10 years | |||||
Outstanding | ||||||
Balance at beginning of period (in shares) | 3,570,300 | |||||
Granted (in shares) | 2,050,600 | |||||
Forfeited (in shares) | (618,200) | |||||
Balance at the end of period (in shares) | 5,002,700 | 5,002,700 | 3,570,300 | |||
Weighted Average Exercise Price | ||||||
Balance at the beginning of period | $ 6.06 | |||||
Balance at the end of period (in shares) | $ 4.13 | $ 4.13 | $ 6.06 | |||
Additional information | ||||||
Average Remaining Vesting Period | 2 years 8 months 27 days | 2 years 11 months 1 day | ||||
Aggregate Intrinsic Value | $ 9,864 | $ 9,864 | $ 9,590 | |||
Stock options | Minimum | ||||||
Stock-based compensation | ||||||
Vesting period | 2 years | |||||
Stock options | Maximum | ||||||
Stock-based compensation | ||||||
Vesting period | 4 years |
Stockholders_ Equity - Common S
Stockholders’ Equity - Common Stock (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019shares | Sep. 30, 2019shares | Mar. 31, 2018shares | Sep. 30, 2019Voteshares | Dec. 31, 2018shares | |
Common Stock | |||||
Common Stock, shares authorized | 1,600,000,000 | 1,600,000,000 | 1,600,000,000 | ||
Common stock, shares issued | 153,486,011 | 153,486,011 | 152,692,140 | ||
Common Stock, shares, outstanding | 150,698,864 | 150,698,864 | 150,142,955 | ||
Number of voting rights entitled for each share of Common Stock held | Vote | 1 | ||||
Series A Preferred Stock | |||||
Common Stock | |||||
Preferred shares converted to common | 150,000 | ||||
Common Stock | |||||
Common Stock | |||||
Common stock, shares issued | 153,486,011 | 153,486,011 | 152,692,140 | ||
Common Stock, shares, outstanding | 150,698,864 | 150,698,864 | 150,142,955 | ||
Preferred shares converted to common | 183,389 | 183,389 | 1,986,767 |
Stockholders_ Equity - Preferre
Stockholders’ Equity - Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jul. 12, 2017 | |
Preferred Stock | ||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | |||
Preferred stock, shares outstanding | 4,419,233 | 4,419,233 | 4,569,233 | |||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Conversion ratio to Common Stock | 1.2226 | 1.2226 | ||||
Preferred Stock, cumulative dividends rate (in percentage) | 10.00% | |||||
Cumulative dividends for Series A Preferred Stock | $ 884 | $ 914 | $ 2,712 | $ 2,742 | ||
Series A Preferred Stock | ||||||
Preferred Stock | ||||||
Preferred stock, shares outstanding | 4,419,233 | 4,419,233 | 4,569,233 | |||
Cumulative accrued but unpaid dividends | $ 8,900 | |||||
Cumulative preferred dividends (in dollars per share) | $ 0.2 | $ 0.2 | $ 0.2 | $ 0.2 |
Stockholders_ Equity - Treasury
Stockholders’ Equity - Treasury Stock (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Nov. 08, 2017 | |
Stockholders’ Equity | ||||
Treasury stock, shares authorized | 5,000,000 | |||
Treasury stock purchases (in shares) | 237,962 | |||
Share Repurchased (in shares) | 0 | |||
Treasury shares | 2,787,147 | 2,787,147 | 2,549,185 |
Stockholders_ Equity - Warrants
Stockholders’ Equity - Warrants (Details) | 9 Months Ended |
Sep. 30, 2019item$ / sharesshares | |
Warrants | |
Number of Common Stock each warrant may purchase | 0.5 |
Exercise price of warrant per half of Common Stock | $ / shares | $ 5.75 |
Exercise price of warrant per one Common Stock (in US$ per share) | $ / shares | $ 11.50 |
Expiration of warrants from business acquisition date | 5 years |
Warrant redemption price (in US$ per share) | $ / shares | $ 0.01 |
Minimum written notice period of redemption | 30 days |
Minimum common stock sales price for exercise of redemption right (in US$ per share) | $ / shares | $ 24 |
Minimum trading days within 30-day period at $24 per share for exercise of redemption right | item | 20 |
Trading day period for exercise of redemption right | 30 days |
Period of the 30-day period prior to notice of redemption | 3 days |
Period of current registration effectivity prior to 30-day trading period | 5 days |
Warrants | |
Warrants | |
Warrants outstanding | 34,988,302 |
Number of warrants separated from the original unit | 34,988,302 |
Number of warrants not separated from the original unit | 11,698 |
Warrants | IPO | |
Warrants | |
Units issued | 35,000,000 |
Common stock included in units | 1 |
Warrants included in units | 1 |
Related-Party Transactions - Le
Related-Party Transactions - Leasing Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related-Party Transactions | ||||
Rental expense on operating leases | $ 19 | $ 56.4 | ||
Affiliate of largest stockholder | ||||
Related-Party Transactions | ||||
Rental expense on operating leases | $ 0.1 | $ 0.2 | $ 0.3 | $ 0.5 |
Related-Party Transactions - Co
Related-Party Transactions - Consulting Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related-Party Transactions | ||||
Related party expense | $ 1,405 | $ 759 | $ 3,454 | $ 3,267 |
Oakana Holdings Inc | ||||
Related-Party Transactions | ||||
Related party expense | 100 | 100 | 100 | 100 |
Consulting Services | Shadow Pond LLC | ||||
Related-Party Transactions | ||||
Related party expense | $ 0 | $ 0 | $ 0 | $ 100 |
Related-Party Transactions - Re
Related-Party Transactions - Relationship with HandsOn Global Management (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2016agreement | Dec. 31, 2015agreement | |
Related-Party Transactions | ||||||
Related party expense | $ 1,405 | $ 759 | $ 3,454 | $ 3,267 | ||
Amount of related party transaction | 1,405 | 759 | $ 3,454 | 3,267 | ||
Entities affiliated with HGM managed funds | Master Agreement | ||||||
Related-Party Transactions | ||||||
Revenue share percentage | 25.00% | |||||
SourceHOV | Master Agreement | ||||||
Related-Party Transactions | ||||||
Revenue share percentage | 75.00% | |||||
SourceHOV | Entities affiliated with HGM managed funds | Master Agreement | ||||||
Related-Party Transactions | ||||||
Related party expense | $ 200 | $ 200 | $ 300 | $ 600 | ||
Number of master agreements | agreement | 10 | 10 |
Related-Party Transactions - _2
Related-Party Transactions - Relationship with HOV Services, Ltd (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related-Party Transactions | ||||
Related party expense | $ 1,405 | $ 759 | $ 3,454 | $ 3,267 |
Amount of related party transaction | 1,405 | 759 | 3,454 | 3,267 |
HOV Services, Ltd | Data Capture And Technology Services | Cost of revenue | ||||
Related-Party Transactions | ||||
Related party expense | $ 400 | $ 400 | $ 1,100 | $ 1,200 |
Related Party Transactions - Re
Related Party Transactions - Relationship with Apollo Global Management, LLC (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)director | Sep. 30, 2018USD ($) | Jun. 30, 2019USD ($) | |
Related-Party Transactions | |||||
Related party expense | $ 1,405 | $ 759 | $ 3,454 | $ 3,267 | |
Finance lease liability | 39,331 | $ 39,331 | |||
Apollo | |||||
Related-Party Transactions | |||||
Number of directors right to designate | director | 2 | ||||
Management Holdings | Master Service Agreement | |||||
Related-Party Transactions | |||||
Revenue from related parties | 100 | 100 | $ 400 | 500 | |
Caesars | Master Service Agreement | |||||
Related-Party Transactions | |||||
Revenue from related parties | 1,100 | 1,100 | 3,300 | 3,100 | |
ADT LLC | Master Service Agreement | |||||
Related-Party Transactions | |||||
Revenue from related parties | 300 | 200 | 900 | 400 | |
Diamond Resorts Centralized Services | Master Service Agreement | |||||
Related-Party Transactions | |||||
Revenue from related parties | 1,400 | 700 | 4,000 | 4,900 | |
Related party cost of revenue | 100 | 100 | |||
Presidio Capital | Master Lease Agreement | |||||
Related-Party Transactions | |||||
Finance lease liability | 1,000 | 1,000 | $ 1,000 | ||
Novitex Solutions | Presidio Group | Master Service Agreement | |||||
Related-Party Transactions | |||||
Related party expense | $ 400 | $ 200 | $ 700 | $ 500 |
Related-Party Transactions - _3
Related-Party Transactions - Receivable and Payable Balance with Affiliates (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Receivable and Payable Balances with Affiliates | ||
Receivable balances with affiliates | $ 42 | $ 0 |
Payable balances with affiliates | 274 | 7,735 |
HOV Services, Ltd | ||
Receivable and Payable Balances with Affiliates | ||
Payable balances with affiliates | 23 | 405 |
Rule 14, LLC | ||
Receivable and Payable Balances with Affiliates | ||
Payable balances with affiliates | 198 | 127 |
HGM | ||
Receivable and Payable Balances with Affiliates | ||
Receivable balances with affiliates | 42 | |
Payable balances with affiliates | 6,998 | |
Apollo | ||
Receivable and Payable Balances with Affiliates | ||
Payable balances with affiliates | $ 53 | $ 205 |
Segment Information - Revenue b
Segment Information - Revenue by segment information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | |
Segment information | ||||
Number of segments | segment | 3 | |||
Revenue | $ 372,917 | $ 383,030 | $ 1,166,841 | $ 1,186,579 |
Cost of revenue | 291,222 | 295,936 | 896,110 | 903,682 |
Selling, general and administrative expenses | 50,372 | 44,913 | 151,884 | 137,231 |
Depreciation and amortization | 27,114 | 35,041 | 82,326 | 109,428 |
Impairment of goodwill and other intangible assets | 99,682 | 99,682 | ||
Related party expense | 1,405 | 759 | 3,454 | 3,267 |
Interest expense, net | 39,747 | 38,339 | 117,778 | 114,883 |
Loss on extinguishment of debt | 1,067 | 1,067 | ||
Debt modification and extinguishment costs | 1,067 | 1,404 | 1,067 | |
Sundry expense (income), net | (10) | (2,571) | 1,028 | (4,961) |
Other expense (income), net | 581 | (781) | 4,965 | (4,813) |
Net loss before income taxes | (137,196) | (29,673) | (191,790) | (73,205) |
ITPS | ||||
Segment information | ||||
Revenue | 291,979 | 307,313 | 925,709 | 949,381 |
Cost of revenue | 239,388 | 246,492 | 743,557 | 752,796 |
HS | ||||
Segment information | ||||
Revenue | 62,132 | 56,776 | 186,915 | 171,722 |
Cost of revenue | 40,973 | 36,919 | 119,816 | 111,135 |
LLPS | ||||
Segment information | ||||
Revenue | 18,806 | 18,941 | 54,217 | 65,476 |
Cost of revenue | $ 10,861 | $ 12,525 | $ 32,737 | $ 39,751 |