Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 06, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 001-36788 | |
Entity Registrant Name | Exela Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-1347291 | |
Entity Address, Address Line One | 2701 E. Grauwyler Rd. | |
Entity Address, City or Town | Irving | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75061 | |
City Area Code | 844 | |
Local Phone Number | 935-2832 | |
Title of 12(b) Security | Common Stock, Par Value $0.0001 per share | |
Trading Symbol | XELA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 147,511,430 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001620179 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 37,176 | $ 6,198 |
Restricted cash | 6,032 | 7,901 |
Accounts receivable, net of allowance for doubtful accounts of $5,444 and $4,975, respectively | 214,949 | 261,400 |
Related party receivables | 786 | 716 |
Inventories, net | 17,428 | 19,047 |
Prepaid expenses and other current assets | 33,359 | 23,663 |
Total current assets | 309,730 | 318,925 |
Property, plant and equipment, net of accumulated depreciation of $181,310 and $176,995, respectively | 91,846 | 113,637 |
Operating lease right-of-use assets, net | 67,522 | 93,627 |
Goodwill | 359,270 | 359,771 |
Intangible assets, net | 304,958 | 342,443 |
Deferred income tax assets | 12,192 | 12,032 |
Other noncurrent assets | 24,907 | 17,889 |
Total assets | 1,170,425 | 1,258,324 |
Current liabilities | ||
Accounts payable | 61,788 | 86,167 |
Related party payables | 162 | 1,740 |
Income tax payable | 1,695 | 352 |
Accrued liabilities | 109,336 | 121,553 |
Accrued compensation and benefits | 53,904 | 48,574 |
Accrued interest | 23,274 | 48,769 |
Customer deposits | 15,605 | 27,765 |
Deferred revenue | 18,071 | 16,282 |
Obligation for claim payment | 36,284 | 39,156 |
Current portion of finance lease liabilities | 12,599 | 13,788 |
Current portion of operating lease liabilities | 20,049 | 25,345 |
Current portion of long-term debts | 38,042 | 36,490 |
Total current liabilities | 390,809 | 465,981 |
Long-term debt, net of current maturities | 1,491,969 | 1,398,385 |
Finance lease liabilities, net of current portion | 13,448 | 20,272 |
Pension liabilities | 24,885 | 25,681 |
Deferred income tax liabilities | 7,682 | 7,996 |
Long-term income tax liabilities | 2,808 | 2,806 |
Operating lease liabilities, net of current portion | 50,085 | 73,282 |
Other long-term liabilities | 16,202 | 6,962 |
Total liabilities | 1,997,888 | 2,001,365 |
Commitments and Contingencies (Note 8) | ||
Stockholders' equity (deficit) | ||
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 154,866,550 shares issued and 147,511,430 shares outstanding at September 30, 2020 and 153,638,836 shares issued and 150,851,689 shares outstanding at December 31, 2019 | 15 | 15 |
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 3,290,050 shares issued and outstanding at September 30, 2020 and 4,294,233 shares issued and outstanding at December 31, 2019 | 1 | 1 |
Additional paid in capital | 446,739 | 445,452 |
Less: Common Stock held in treasury, at cost; 7,355,120 shares at September 30, 2020 and 2,787,147 shares at December 31, 2019 | (10,949) | (10,949) |
Equity-based compensation | 51,816 | 49,336 |
Accumulated deficit | (1,301,187) | (1,211,508) |
Accumulated other comprehensive loss: | ||
Foreign currency translation adjustment | (6,044) | (7,329) |
Unrealized pension actuarial losses, net of tax | (7,854) | (8,059) |
Total accumulated other comprehensive loss | (13,898) | (15,388) |
Total stockholders' deficit | (827,463) | (743,041) |
Total liabilities and stockholders' deficit | $ 1,170,425 | $ 1,258,324 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 5,444 | $ 4,975 |
Accumulated depreciation on property, plant and equipment | $ 181,310 | $ 176,995 |
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 | 154,866,550 | 153,638,836 |
Common stock, shares outstanding | 147,511,430 | 150,851,689 |
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 | 3,290,050 | 4,294,233 |
Preferred stock, shares outstanding | 3,290,050 | 4,294,233 |
Common stock held in treasury at cost (in shares) | 7,355,120 | 2,787,147 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Operations | ||||
Revenue | $ 305,280 | $ 373,545 | $ 978,453 | $ 1,168,751 |
Cost of revenue (exclusive of depreciation and amortization) | 234,222 | 295,445 | 768,548 | 909,877 |
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 42,837 | 48,347 | 140,224 | 149,186 |
Depreciation and amortization | 22,095 | 25,079 | 68,127 | 76,482 |
Impairment of goodwill and other intangible assets | 97,158 | 97,158 | ||
Related party expense | 1,360 | 1,430 | 4,058 | 7,759 |
Operating income (loss) | 4,766 | (93,914) | (2,504) | (71,711) |
Other expense (income), net: | ||||
Interest expense, net | 43,612 | 40,573 | 129,639 | 120,235 |
Debt modification and extinguishment costs | 1,404 | |||
Sundry expense (income), net | (434) | 165 | (251) | 1,569 |
Other expense (income), net | (10,414) | 406 | (45,655) | 4,424 |
Net loss before income taxes | (27,998) | (135,058) | (86,237) | (199,343) |
Income tax benefit (expense) | (320) | 3,769 | (3,440) | (5,689) |
Net loss | (28,318) | (131,289) | (89,677) | (205,032) |
Cumulative dividends for Series A Preferred Stock | (976) | (884) | (394) | (2,712) |
Net loss attributable to common stockholders | $ (29,294) | $ (132,173) | $ (90,071) | $ (207,744) |
Loss per share - Basic and diluted (in dollars per share) | $ (0.20) | $ (0.91) | $ (0.61) | $ (1.43) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (28,318) | $ (131,289) | $ (89,677) | $ (205,032) |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | 343 | (2,325) | 1,285 | (1,221) |
Unrealized pension actuarial gains (losses), net of tax | (332) | 291 | 205 | 323 |
Total other comprehensive loss, net of tax | $ (28,307) | $ (133,323) | $ (88,187) | $ (205,930) |
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, 2018 | $ 15 | $ 1 | $ (10,342) | $ 445,452 | $ 41,731 | $ (6,423) | $ (9,301) | $ (702,391) | $ (241,258) |
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 | (32,172) | (32,172) | |||||||
Equity-based compensation | 2,798 | 2,798 | |||||||
Foreign currency translation adjustment | 3,392 | 3,392 | |||||||
Net realized pension actuarial gains (loss), net of tax | (224) | (224) | |||||||
Ending balance at Mar. 31, 2019 | $ 15 | $ 1 | $ (10,342) | 445,452 | 44,529 | (3,031) | (9,525) | (734,563) | (267,464) |
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) | 445,452 | 41,731 | (6,423) | (9,301) | (702,391) | (241,258) |
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 | (205,032) | ||||||||
Foreign currency translation adjustment | (1,221) | ||||||||
Net realized pension actuarial gains (loss), net of tax | 323 | ||||||||
Ending balance at Sep. 30, 2019 | $ 15 | $ 1 | $ (10,949) | 445,452 | 48,411 | (7,644) | (8,978) | (907,423) | (441,115) |
Ending balance (in shares) at Sep. 30, 2019 | 150,698,864 | 4,419,233 | 2,787,147 | ||||||
Beginning balance at Dec. 31, 2018 | $ 15 | $ 1 | $ (10,342) | 445,452 | 41,731 | (6,423) | (9,301) | (702,391) | (241,258) |
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 | (509,100) | ||||||||
Ending balance at Dec. 31, 2019 | $ 15 | $ 1 | $ (10,949) | 445,452 | 49,336 | (7,329) | (8,059) | (1,211,508) | (743,041) |
Ending balance (in shares) at Dec. 31, 2019 | 150,851,689 | 4,294,233 | 2,787,147 | ||||||
Beginning balance at Mar. 31, 2019 | $ 15 | $ 1 | $ (10,342) | 445,452 | 44,529 | (3,031) | (9,525) | (734,563) | (267,464) |
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 | (41,571) | (41,571) | |||||||
Equity-based compensation | 2,661 | 2,661 | |||||||
Foreign currency translation adjustment | (2,288) | (2,288) | |||||||
Net realized pension actuarial gains (loss), 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) | 445,452 | 47,190 | (5,319) | (9,269) | (776,134) | (309,013) |
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 | (131,289) | (131,289) | |||||||
Equity-based compensation | 1,444 | 1,444 | |||||||
Foreign currency translation adjustment | (2,325) | (2,325) | |||||||
Net realized pension actuarial gains (loss), 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 shares (in shares) | 183,389 | (150,000) | |||||||
Ending balance at Sep. 30, 2019 | $ 15 | $ 1 | $ (10,949) | 445,452 | 48,411 | (7,644) | (8,978) | (907,423) | (441,115) |
Ending balance (in shares) at Sep. 30, 2019 | 150,698,864 | 4,419,233 | 2,787,147 | ||||||
Beginning balance at Dec. 31, 2019 | $ 15 | $ 1 | $ (10,949) | 445,452 | 49,336 | (7,329) | (8,059) | (1,211,508) | (743,041) |
Beginning balance (in shares) at Dec. 31, 2019 | 150,851,689 | 4,294,233 | 2,787,147 | ||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||
Net loss | (12,670) | (12,670) | |||||||
Equity-based compensation | 861 | 861 | |||||||
Foreign currency translation adjustment | 920 | 920 | |||||||
Net realized pension actuarial gains (loss), net of tax | 504 | $ 504 | |||||||
Shares returned in connection with the Appraisal Action following repayment of Margin Loan (in shares) | (4,570,734) | 4,570,734 | 4,570,734 | ||||||
Preferred shares converted to common shares (in shares) | 1,227,714 | (1,004,183) | |||||||
Ending balance at Mar. 31, 2020 | $ 15 | $ 1 | $ (10,949) | 445,452 | 50,197 | (6,409) | (7,555) | (1,224,178) | $ (753,426) |
Ending balance (in shares) at Mar. 31, 2020 | 147,508,669 | 3,290,050 | 7,357,881 | ||||||
Beginning balance at Dec. 31, 2019 | $ 15 | $ 1 | $ (10,949) | 445,452 | 49,336 | (7,329) | (8,059) | (1,211,508) | (743,041) |
Beginning balance (in shares) at Dec. 31, 2019 | 150,851,689 | 4,294,233 | 2,787,147 | ||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||
Net loss | (89,677) | ||||||||
Foreign currency translation adjustment | 1,285 | ||||||||
Net realized pension actuarial gains (loss), net of tax | $ 205 | ||||||||
Shares repurchased (in shares) | (2,787,147) | ||||||||
Settlement gain on related party payable to Ex-Sigma 2 | $ 1,287 | ||||||||
Ending balance at Sep. 30, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 51,816 | (6,044) | (7,854) | (1,301,187) | (827,463) |
Ending balance (in shares) at Sep. 30, 2020 | 147,511,430 | 3,290,050 | 7,355,120 | ||||||
Beginning balance at Mar. 31, 2020 | $ 15 | $ 1 | $ (10,949) | 445,452 | 50,197 | (6,409) | (7,555) | (1,224,178) | (753,426) |
Beginning balance (in shares) at Mar. 31, 2020 | 147,508,669 | 3,290,050 | 7,357,881 | ||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||
Net loss | (48,691) | (48,691) | |||||||
Equity-based compensation | 921 | 921 | |||||||
Foreign currency translation adjustment | 22 | 22 | |||||||
Net realized pension actuarial gains (loss), net of tax | 33 | 33 | |||||||
Settlement gain on related party payable to Ex-Sigma 2 | 1,287 | 1,287 | |||||||
Adjustment to number of shares withheld in lieu of tax obligation of RSU holders in the year 2018 | 2,761 | (2,761) | |||||||
Ending balance at Jun. 30, 2020 | $ 15 | $ 1 | $ (10,949) | 446,739 | 51,118 | (6,387) | (7,522) | (1,272,869) | (799,854) |
Ending balance (in shares) at Jun. 30, 2020 | 147,511,430 | 3,290,050 | 7,355,120 | ||||||
Increase (Decrease) in Stockholders' Equity (Deficit) | |||||||||
Net loss | (28,318) | (28,318) | |||||||
Equity-based compensation | 698 | 698 | |||||||
Foreign currency translation adjustment | 343 | 343 | |||||||
Net realized pension actuarial gains (loss), net of tax | (332) | (332) | |||||||
Ending balance at Sep. 30, 2020 | $ 15 | $ 1 | $ (10,949) | $ 446,739 | $ 51,816 | $ (6,044) | $ (7,854) | $ (1,301,187) | $ (827,463) |
Ending balance (in shares) at Sep. 30, 2020 | 147,511,430 | 3,290,050 | 7,355,120 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | ||||||
Net loss | $ (89,677) | $ (205,032) | ||||
Adjustments to reconcile net loss | ||||||
Depreciation and amortization | $ 22,095 | $ 25,079 | 68,127 | 76,482 | ||
Original issue discount and debt issuance cost amortization | 10,979 | 8,730 | ||||
Impairment of goodwill and other intangible assets | 97,158 | 97,158 | $ 349,600 | $ 48,100 | ||
Debt modification and extinguishment costs | 1,049 | |||||
Provision for doubtful accounts | 415 | 4,402 | ||||
Deferred income tax provision | (417) | 1,632 | ||||
Share-based compensation expense | 2,480 | 6,903 | ||||
Foreign currency remeasurement | (499) | (173) | ||||
Loss (gain) on sale of assets | (44,868) | 123 | ||||
Fair value adjustment for interest rate swap | 23 | 4,965 | ||||
Change in operating assets and liabilities, net effect from acquisitions: | ||||||
Accounts receivable | 44,197 | 3,501 | ||||
Prepaid expenses and other assets | (8,012) | 2,377 | ||||
Accounts payable and accrued liabilities | (48,257) | (41,146) | ||||
Related party balances | (362) | (5,198) | ||||
Additions to outsource contract costs | (289) | (3,130) | ||||
Net cash used in operating activities | (66,160) | (47,357) | (63,900) | 23,600 | ||
Cash flows from investing activities | ||||||
Purchases of property, plant, and equipment | (6,893) | (10,797) | ||||
Additions to internally developed software | (2,988) | (5,074) | ||||
Cash paid in acquisition, net of cash received | (12,500) | (5,000) | ||||
Proceeds from sale of assets | 50,126 | 360 | ||||
Net cash provided by (used in) investing activities | 27,745 | (20,511) | ||||
Cash flows from financing activities | ||||||
Repurchases of Common Stock | (3,480) | |||||
Borrowings from other loans | 28,626 | 21,530 | ||||
Borrowings under factoring arrangement and A/R Facility | 166,786 | 48,748 | ||||
Principal repayment on borrowings under factoring arrangement and A/R Facility | (84,121) | (49,243) | ||||
Cash paid for withholding taxes on vested RSUs | (223) | |||||
Proceeds from senior secured term loans | 29,850 | |||||
Lease terminations | (331) | (314) | ||||
Cash paid for debt issuance costs | (12,708) | (7) | ||||
Borrowings from senior secured revolving facility | 29,750 | 130,500 | ||||
Repayments on senior secured revolving facility | (14,200) | (91,500) | ||||
Principal payments on finance lease obligations | (9,614) | (13,598) | ||||
Principal repayments on senior secured term loans and other loans | (37,283) | (32,996) | ||||
Net cash provided by financing activities | 66,905 | 39,267 | ||||
Effect of exchange rates on cash | 619 | (29) | ||||
Net increase (decrease) in cash and cash equivalents | 29,109 | (28,630) | ||||
Cash, restricted cash, and cash equivalents | ||||||
Beginning of period | 14,099 | 43,854 | 43,854 | |||
End of period | $ 43,208 | $ 15,224 | 43,208 | 15,224 | $ 14,099 | $ 43,854 |
Supplemental cash flow data: | ||||||
Income tax payments, net of refunds received | 2,767 | 6,981 | ||||
Interest paid | 140,751 | 131,744 | ||||
Noncash investing and financing activities: | ||||||
Assets acquired through right-of-use arrangements | 2,472 | 9,352 | ||||
Settlement gain on related party payable to Ex-Sigma 2 | 1,287 | |||||
Accrued capital expenditures | $ 1,699 | $ 2,388 |
General
General | 9 Months Ended |
Sep. 30, 2020 | |
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, 2019 included in the Exela Technologies, Inc. (the "Company," "Exela," "we," "our" or "us") annual report on Form 10-K for such period (the “2019 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. Certain amounts in condensed consolidated statements of cash flows have been reclassified for comparability purposes. Restatement As described in additional detail in the Explanatory Note to its 2019 Form 10-K, the Company restated its audited consolidated financial statements in the 2019 Form 10-K for the years ended December 31, 2018 and 2017 and its unaudited quarterly results for the first three fiscal quarters in the fiscal year ended December 31, 2019 and each fiscal quarter in the fiscal year ended December 31, 2018. Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q for the periods affected by the restatement have not been amended. See Note 20, Unaudited Quarterly Financial Data Going Concern Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern Substantial Doubt Raised In performing the first step of the evaluation, we concluded that the following conditions raised substantial doubt about our ability to continue as a going concern: ● history of net losses of $28.3 million and $89.7 million for the three and nine months ended September 30, 2020, respectively, and $509.1 million and $169.8 million for the years ended December 31, 2019 and December 31, 2018, respectively. This is after considering a gain of $35.3 million on the sale of SourceHOV Tax, LLC and a gain of $9.8 million on the sale of its physical record storage and logistics business each recognized during the nine months ended September 30, 2020, and including goodwill and other intangible asset impairment of $349.6 million, for the year ended December 31, 2019 and $48.1 million for the year ended December 31, 2018; ● net operating cash outflow of $66.2 million for the nine months ended September 30, 2020, $63.9 million in 2019 and inflow of $23.6 million in 2018 ; ● working capital deficits of $81.1 million as of September 30, 2020, $147.1 million as of December 31, 2019 and $123.5 million as of December 31, 2018 ; ● significant cash payments for interest on our long-term debt of $144.5 million in 2019 and a similar amount expected in 2020; ● a liability incurred of $59.6 million for the Appraisal Action (as described further in Note 8); ● a requirement that the Company maintain a minimum of $40.0 million and $35.0 million in liquidity , at all times, to not be in default of the A/R Facility (as defined below) and the First Lien Credit Agreement, dated as of July 12, 2017, as amended and restated as of July 13, 2018 and as further amended and restated as of April 16, 2019 (the “Prior Credit Agreement” and as further amended and restated as of May 18, 2020, the “Credit Agreement”), respectively; and ● an accumulated deficit of $1,301.2 million. Furthermore, under the terms of each of the Prior Credit Agreement, and the Indenture and First Supplemental Indenture (collectively, the “Indenture”), dated July 12, 2017, the Company was required to deliver to its lenders and bondholders the December 31, 2019 audited financial statements by April 14, 2020, which the Company failed to do. Such failure was an event of default under the Prior Credit Agreement if not cured within 30 days of receiving a notice of default. The Company received such notice on April 15, 2020. Additionally, under the terms of the A/R Facility (as described in Note 5), the Company was required to furnish to each lender the December 31, 2019 audited financial statements by May 11, 2020, which the Company failed to do. During the second quarter of 2020, both the Prior Credit Agreement and the A/R Facility were amended. Refer to Consideration of Management’s Plans section below. Consideration of Management’s Plans In performing the second step of this assessment, we are required to evaluate whether it is probable that our plans will be effectively implemented within one year after the financial statements are issued and whether it is probable those plans will alleviate the substantial doubt about our ability to continue as a going concern. As of November 6, 2020, the Company had $77.0 million of liquidity, comprised of available cash of $47.7 million and availability under borrowing facilities of $30.5 million, net of accounts payable greater than 90 days of $1.2 million, as required by the A/R Loan Agreement. The Company has undertaken the following plans to improve our available cash balances, liquidity and cash generated flows from operations, over the twelve month period from the date the financial statements are issued, as follows: ● On January 10, 2020, certain subsidiaries of the Company entered into a $160.0 million A/R Facility with a five-year term (as amended, the “A/R Facility”). The Company used the proceeds of the initial borrowings to repay outstanding revolving borrowings under the Company’s senior credit facility and to provide additional liquidity and funding for the ongoing business needs of the Company and its subsidiaries. As of November 6, 2020, the Company has the remaining availability of $4.0 million under the A/R Facility. Additionally, the A/R Facility agreement includes a requirement that the Company maintain a minimum of $40.0 million in liquidity, at all times, to not be considered in default. ● On March 16, 2020, the Company and its indirect wholly owned subsidiaries, Merco Holdings, LLC and SourceHOV Tax, LLC entered into a Membership Interest Purchase Agreement with Gainline Source Intermediate Holdings LLC at which time Gainline Source Intermediate Holdings LLC acquired all of the outstanding membership interests of SourceHov Tax for $40.0 million, subject to adjustment as set forth in the purchase agreement of approximately $2.0 million which can be used to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in our business or to make certain investments and acquisitions as permitted by the Credit Agreement. ● On March 23, 2020, in response to the potential impact of the COVID-19 pandemic, the Company implemented a temporary freeze on increases to base salaries and wages unless contractually mandated. Additionally, in connection with the incentive program administered by the Company for hourly, non-exempt employees, a new maximum was put in place to limit the amount of incentives that could be earned in any given two (2) week pay period. ● On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The refundable payroll tax credits and deferment of employer side social security payments provisions of the CARES Act will benefit Company’s liquidity by approximately $29.0 million. ● On May 18, 2020, the Company amended the Prior Credit Agreement to, among other things, extend the time for delivery of its audited financial statements for the year ended December 31, 2019 and its financial statements for the quarter ended March 31, 2020. Further, pursuant to the amendment, the borrower under the Credit Agreement is also required to maintain a minimum liquidity of $35.0 million. On May 21, 2020, the Company also amended the A/R Facility to, among other things, extend the time for delivery of its audited financial statements for the year ended December 31, 2019 and its financial statements for the quarter ended March 31, 2020. The Company has satisfied its delivery requirements with respect to its audited financial statements for the year ended December 31, 2019 on June 9, 2020 and its quarterly financial statement for the quarter ended March 31, 2020 on June 29, 2020. ● On July 22, 2020 the Company completed the sale of its physical records storage and logistics business for a purchase price of $12.3 million which can be used to acquire, maintain, develop, construct, improve, upgrade or repair assets useful in our business or to make certain investments and acquisitions as permitted by the Credit Agreement. Substantial Doubt Alleviated The Company has had a history of negative trends in its financial condition and operating results as well as recent noncompliance with covenants with certain of its lenders. However, despite these conditions, the Company believes management’s plans, as described fully above, will provide sufficient liquidity to meet its financial obligations and further, maintain levels of liquidity as specifically required under the Credit Agreement and the A/R Facility. Therefore, management concluded these plans alleviate the substantial doubt that was raised about our ability to continue as a going concern for at least twelve months from the date that the financial statements were issued. Future Plans and Other Considerations Our plans to further enhance liquidity, which were not considered for the purposes of our assessment of whether substantial doubt is alleviated, include the potential sale of certain non-core assets that are not central to the Company’s long-term strategic vision, and any potential action with respect to these operations would be intended to allow the Company to better focus on its core businesses. The Company has retained financial advisors to assist with the sale of select assets. The Company expects to use the potential net proceeds from this initiative for the paydown of debt. Additionally, as discussed in Note 8, the petitioners in the Appraisal Action have filed additional actions to recognize the judgment against SourceHOV, which is a subsidiary without assets to satisfy the judgement. The Company does not expect these actions to be resolved and a settlement of liability recorded for the Appraisal Action to be made within twelve months from the date the financial statements were issued. Our plans are subject to inherent risks and uncertainties, which become significantly magnified when the effects of the current pandemic and related financial uncertainty are included in the assessment. Accordingly, there can be no assurance that our future plans can be effectively implemented and, therefore, that the conditions can be effectively mitigated. 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 and if-converted method in periods of earnings. The two class method is an earnings allocation method that determines earnings per share (when there are earnings) for common stock and participating securities. The if-converted method assumes all convertible securities are converted into common stock. Diluted EPS excludes all dilutive potential shares of common stock if their effect is anti-dilutive. 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 using the if-converted method. As of September 30, 2020, the outstanding shares of the Company’s Series A Preferred Stock, if converted would have resulted in an additional 4,022,415 shares of Common Stock outstanding, however, they were not included in the computation of diluted loss per share as their effects were anti-dilutive. The Company was originally incorporated as a special purpose acquisition company under the name Quinpario Acquisition Corp 2 (“Quinpario”), which changed its name to Exela Technologies, Inc. in July 2017. The Company has not included the effect of 35,000,000 warrants sold in the Quinpario Initial Public Offering (“IPO”) or the effect of the aggregate number of shares issuable pursuant to outstanding restricted stock units and options of 5,175,747 and 5,403,055 as of September 30, 2020 and 2019, respectively, in the calculation of diluted loss per share for the three and nine months ended September 30, 2020 and 2019, because their effects were anti-dilutive (i.e. reduces the net loss per share). Three Months Ended September 30, Nine Months Ended September 30, 2019 2019 2020 (Restated) 2020 (Restated) Net loss attributable to common stockholders (A) $ (29,294) $ (132,173) $ (90,071) $ (207,744) Weighted average common shares outstanding - basic and diluted (B) 147,511,430 145,636,749 147,405,476 145,569,843 Loss Per Share: Basic and diluted (A/B) $ (0.20) $ (0.91) $ (0.61) $ (1.43) The weighted average common shares outstanding - basic and diluted, in the table above, exclude in each case the 4,570,734 shares returned to the Company in the first quarter of 2020 in connection with the Appraisal Action (as defined and described further in Note 8 below) which became treasury stock, but which were included in the number of shares of Common Stock outstanding as of September 30, 2019. Sale of Non-Core Assets On March 16, 2020, the Company and its indirect wholly owned subsidiaries, Merco Holdings, LLC and SourceHOV Tax, LLC entered into a Membership Interest Purchase Agreement with Gainline Source Intermediate Holdings LLC at which time Gainline Source Intermediate Holdings LLC acquired all of the outstanding membership interests of SourceHov Tax, LLC for $40.0 million subject to adjustment as set forth in the purchase agreement. The Company recognized a gain of $35.3 million on the sale of SourceHOV Tax, LLC during the first quarter of 2020, which takes into account approximately $2.0 million downwards adjustments to the purchase price in accordance with the purchase agreement. The gain on sale of SourceHOV Tax, LLC is included in Other expense (income), net in the condensed consolidated statements of operations for the nine months ended September 30, 2020. On July 22, 2020, the Company completed the sale of its physical records storage and logistics business for a purchase price of $12.3 million. The Company recognized a gain of $9.8 million on the sale of physical records storage and logistics business during the third quarter of 2020. The gain on sale of physical records storage and logistics business is included in Other expense (income), net in the condensed consolidated statements of operations for the three and nine months ended September 30, 2020. Impact of COVID-19 Our global operations continue to expose us to risks associated with the coronavirus pandemic (“COVID-19”), which continues to result in challenging operating environments and has affected almost all of the countries and territories in which we operate. Authorities across the world have implemented measures like travel bans, quarantines, curfews, restrictions on public gatherings, shelter in place orders, business shutdowns and closures to control the spread of COVID-19. These measures, alongside the virus itself, have impacted, and we expect will continue to impact, us, our customers, suppliers and other third parties with whom we do business, as well as the global economy, demand for our services and spending across many sectors, as a whole. While some jurisdictions have now started to implement plans for reopening, there are others which had to return to restrictions due to increased spread of COVID-19. The Company is dependent on its workforce to deliver its solutions and services. While we have developed and implemented health and safety protocols, business continuity plans and crisis management protocols in an effort to try to mitigate the negative impact of COVID-19, restrictions such as shutdowns, social distancing and stay-at-home orders in various jurisdictions have impacted and will continue to impact the Company’s ability to deploy its workforce effectively. A part of our workforce has now started to operate from offices and delivery centers, but many are still operating in a remote work environment. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report and the extent to which COVID-19 will ultimately impact the Company’s business depends upon various dynamic factors which are difficult to be predicted reliably. Management continues to actively monitor the global situation and its impact on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the continuous evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to fully estimate adverse effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for the remainder of fiscal year 2020 or the future. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 2. New Accounting Pronouncements Recently Adopted Accounting Pronouncements Effective March 12, 2020, the Company adopted Accounting Standards Update (“ASU”) no. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Effective March 9, 2020, the Company adopted ASU no. 2020-03, Codification Improvements to Financial Instruments Effective January 1, 2020, the Company adopted ASU no. 2018-13, Fair Value Measurement (Topic 82 Effective January 1, 2020, the Company adopted 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. Effective January 1, 2020, the Company adopted ASU no. 2019-08, Codification Improvements — Share-Based Consideration Payable to a Customer In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. The S-X Rule 3-04 requires the presentation of changes in stockholders’ equity in the form of a reconciliation of the beginning balance to the ending balance for each period for which a statement of income is required to be filed with all significant reconciling items. The Company presented changes in stockholders' equity as separate financial statements for the current and comparative year-to-date interim periods beginning on January 1, 2019. This guidance was effective immediately upon issuance. The additional elements of the ASU did not have a material impact on the Company's consolidated results of operations, cash flows, financial position or disclosures. Effective January 1, 2019, the Company adopted ASU no. 2016-02, Leases (ASC 842). under the modified retrospective transition method provided by ASU 2018-11 with the following practical expedients below: ● Not to record 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 statements of operations 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. 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, Financial Instruments—Credit Losses (Topic 326) Codification Improvements to Topic 326, Financial Instruments—Credit Losses In December 2019, the FASB issued ASU no. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Income Taxes, In August 2020, the FASB issued ASU no. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies | |
Significant accounting policies | 3. Significant Accounting Policies The information presented below supplements the Significant Accounting Policies information presented in our 2019 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 2019 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, Revenue from Contracts with Customers 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, 2020 and 2019: Three Months Ended September 30, 2019 2020 (Restated) ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 178,075 $ 54,209 $ 16,706 $ 248,990 $ 230,120 $ 62,132 $ 18,806 $ 311,058 EMEA 51,232 — — 51,232 55,836 — — 55,836 Other 5,058 — — 5,058 6,651 — — 6,651 Total $ 234,365 $ 54,209 $ 16,706 $ 305,280 $ 292,607 $ 62,132 $ 18,806 $ 373,545 Nine Months Ended September 30, 2019 2020 (Restated) ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 592,238 $ 167,424 $ 49,524 $ 809,186 $ 720,846 $ 186,915 $ 54,217 $ 961,978 EMEA 152,222 — — 152,222 186,337 — — 186,337 Other 17,045 — — 17,045 20,436 — — 20,436 Total $ 761,505 $ 167,424 $ 49,524 $ 978,453 $ 927,619 $ 186,915 $ 54,217 $ 1,168,751 Contract Balances The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 Accounts receivable, net $ 214,949 $ 261,400 Deferred revenues 18,623 16,621 Customer deposits 15,605 27,765 Costs to obtain and fulfill a contract 3,616 4,977 Accounts receivable, net includes $20.1 million and $34.1 million as of September 30, 2020 and December 31, 2019, 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 $14.2 million during the nine months ended September 30, 2020 that had been deferred as of December 31, 2019. Costs incurred to obtain and fulfill contracts are deferred and expensed on a straight-line basis over the estimated benefit period. We recognized $1.8 million of amortization for these costs in the first nine months of 2020 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 fulfillment and can be separated into two principal categories: contract commissions and fulfillment 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 amounts recorded as of December 31, 2019 were used to pay for postage with the corresponding postage revenue being recognized during the nine months ended September 30, 2020. Any residual balances may be retained and used in future periods. 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, 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 (a) contracts with an original expected length of one year or less, and (b) 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, 2020 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2020 $ 12,360 2021 42,714 2022 35,611 2023 28,944 2024 26,814 2025 and thereafter 27,144 Total $ 173,587 |
Intangibles Assets and Goodwill
Intangibles Assets and Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Intangibles Assets and Goodwill | |
Intangibles Assets and Goodwill | 4. 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, 2020 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,084 $ (267,917) $ 240,167 Developed technology 88,553 (86,985) 1,568 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,065 (12,449) 3,616 Internally developed software 46,184 (18,021) 28,163 Assembled workforce 4,473 (1,957) 2,516 Purchased software 26,749 (3,121) 23,628 Intangibles, net $ 698,508 $ (393,550) $ 304,958 December 31, 2019 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,074 $ (237,313) $ 270,761 Developed technology 89,053 (87,109) 1,944 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,726 (11,749) 4,977 Internally developed software 43,261 (12,129) 31,132 Trademarks 23,378 (23,370) 8 Assembled workforce 4,473 (1,118) 3,355 Purchased software 26,749 (1,783) 24,966 Intangibles, net $ 720,114 $ (377,671) $ 342,443 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for 2020 and 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in 2019. Carrying amount of $5.3 million as at September 30, 2020 represents indefinite-lived intangible asset. 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 13). Goodwill by reporting segment consists of the following: Balances as at January 1, 2019 (a) Additions Impairments Currency Translation Adjustments Balances as at December 31, 2019 (a) ITPS $ 571,575 $ — $ (317,525) $ 70 $ 254,120 HS 86,786 — — — 86,786 LLPS 49,897 — (31,032) — 18,865 Total $ 708,258 $ — $ (348,557) $ 70 $ 359,771 Balances as at January 1, 2020 (a) Additions Impairments Currency Translation Adjustments Balances as at September 30, 2020 (a) ITPS 254,120 — — (501) 253,619 HS 86,786 — — — 86,786 LLPS 18,865 — — — 18,865 Total $ 359,771 $ — $ — $ (501) $ 359,270 (a) The goodwill amount for all periods presented is net of accumulated impairment amount as at December 31, 2018. Accumulated impairment is $212.3 million and $560.9 million as at December 31, 2018 and September 30, 2020, respectively. |
Long-Term Debt and Credit Facil
Long-Term Debt and Credit Facilities | 9 Months Ended |
Sep. 30, 2020 | |
Long-Term Debt and Credit Facilities | |
Long-Term Debt and Credit Facilities | 5. 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 (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 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, (i) a $350.0 million senior secured term loan maturing July 12, 2023 with an original issue discount (“OID”) of $7.0 million, and (ii) a $100.0 million senior secured revolving facility maturing July 12, 2022. As of September 30, 2020 and December 31, 2019, the Company had outstanding irrevocable letters of credit totaling approximately $19.4 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 was 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 was 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 the 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, 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 “Incremental Term Loans”) under the First Amendment. The proceeds of the Incremental Term Loans may be 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 Incremental Term Loans (collectively, the “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 Repricing Term Loans and the Incremental Term Loans are consistent with the terms, conditions and covenants that were applicable to the existing senior secured loans under the Credit Agreement. The Repricing and issuance of the 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. 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 during the nine months ended September 30, 2019. Third Amendment On May 18, 2020, the Company amended the Prior Credit Agreement to, among other things, extend the time for delivery of its audited financial statements for the year ended December 31, 2019 and its financial statements for the quarter ended March 31, 2020. Upon the Company’s delivery of the annual and quarterly financial statements described above within the time frames stated therein (which the Company satisfied during the month of June 2020), the Company became in compliance with the Credit Agreement, with respect to the financial statement delivery requirements set forth therein. Pursuant to the amendment, the Company also amended the Prior Credit Agreement to, among other things: restrict the borrower and its subsidiaries’ ability to designate or invest in unrestricted subsidiaries; incur certain debt; create certain liens; make certain investments; pay certain dividends or other distributions on account of its equity interests; make certain asset sales or other dispositions (or utilize the proceeds of certain asset sales to reinvest in the business); or enter into certain affiliate transactions pursuant to the negative covenants under the Credit Agreement. Further, pursuant to the amendment, the borrower under the Credit Agreement is also required to maintain a minimum Liquidity (as defined in the amendment) of $35.0 million. In connection with this amendment, the Company paid a forbearance fee of $5 million to the consenting lenders. The Company concluded that the amendment represents modification of debt under ASC 470-50. Accordingly, the forbearance fee paid was added to unamortized debt issuance cost which shall be amortized using updated effective interest rate based on modified cash flows. Receivables Securitization On January 10, 2020, certain subsidiaries of the Company entered into a $160.0 million accounts receivable securitization facility (the “A/R Facility”) with a five year term. In the A/R Facility, (i) Exela Receivables 1, LLC (the “A/R Borrower”), a wholly-owned indirect subsidiary of the Company, entered into a Loan and Security Agreement (the “A/R Loan Agreement”), dated as of January 10, 2020, with TPG Specialty Lending, Inc., as administrative agent (the “A/R Administrative Agent”), PNC Bank National Association, as LC Bank (the “LC Bank”), the lenders (each, an “A/R Lender” and collectively the “A/R Lenders”) and the Company, as initial servicer, pursuant to which the A/R Lenders will make loans (the “Loan”) to the A/R Borrower to be used to purchase certain receivables and related assets from its sole member, Exela Receivables Holdco, LLC (the “Parent SPE”), a wholly-owned indirect subsidiary of the Company, (ii) sixteen other indirect, wholly-owned U.S. subsidiaries of the Company (collectively, the “Originators”) sold or contributed and will sell or contribute to the Parent SPE certain receivables and related assets in consideration for a combination of cash, equity in the Parent SPE and/or letters of credit issued by the LC Bank to the Originators; and (iii) the Parent SPE has sold or contributed and will sell or contribute to the Borrower certain receivables and related assets in consideration for a combination of cash, equity in the A/R Borrower and/or letters of credit issued by the LC Bank to the beneficiaries elected by Parent SPE. The Company, the Parent SPE, the A/R Borrower and the Originators provide customary representations and covenants pursuant to the agreements entered into in connection with the A/R Facility. The A/R Loan Agreement provides for certain events of default upon the occurrence of which the A/R Administrative Agent may declare the A/R Facility’s termination date to have occurred and declare the outstanding Loan and all other obligations of the A/R Borrower to be immediately due and payable. The Company used the proceeds of the initial borrowings to repay outstanding revolving borrowings under the Company’s senior credit facility and to provide additional liquidity and funding for the ongoing business needs of the Company and its subsidiaries. Pursuant to the A/R Loan Agreement, each of Company, the A/R Borrower, the Parent SPE and the Originators (the “Exela Parties”) is prohibited from amending or modifying any Existing Secured Debt Documents (as defined in the A/R Loan Agreement) if such amendment or modification could: (i) by its terms cause any Exela Party to be unable to perform its obligations under Transaction Documents (as defined in the A/R Loan Agreement), (ii) cause any inaccuracy or breach of any representation, warranty, or covenant of any Exela Party, (iii) could subject any existing or subsequently arising Collateral to an Adverse Claim (each as defined in the A/R Loan Agreement), or (iv) adversely affect any rights or remedies of the Lenders, the LC Bank and the A/R Administrative Agent under the A/R Facility. The A/R Borrower and Parent SPE were formed in December 2019, and are consolidated into the Company’s financial statements even though they had no material assets or operations during the year end December 31, 2019. The A/R Borrower and Parent SPE are bankruptcy remote entities and as such their assets are not available to creditors of the Company or any of its subsidiaries. Since January 10, 2020, the parties have amended and waived the A/R Facility several times to address contractually, the occurrence of certain events, including among other things, the delay in delivery of annual financial statements for the fiscal year ended 2019, financial statements for the quarter ended March 31, 2020, and the Initial Servicer’s Liquidity (as defined in the A/R Facility) falling below $60.0 million. In connection with these amendments a forbearance fee of $4.8 million was due and added to the outstanding principal balance of the loans. The Company concluded that the amendment represents modification of debt under ASC 470-50. Accordingly, the forbearance fee paid was added to unamortized debt issuance cost which shall be amortized ratably over the remaining term of the A/R facility. Each loan under the A/R Facility originally bore interest on the unpaid principal amount as follows: (1) if a Base Rate Loan, at 3.75% plus a rate equal to the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50%, (c) the Adjusted LIBOR Rate (which rate shall be calculated based upon an Interest Period of one month and determined on a daily basis) plus 1.00%, and (d) 4.50% per annum and (2) if a LIBOR Rate Loan, 4.75% plus a floating LIBOR Rate with a 1.00% LIBOR floor. In connection with the above described amendments to the A/R Facility, the applicable margin of the Base Rate Loans was increased to 5.75% and the LIBOR Rate Loans was increased to 6.75%. As of September 30, 2020, there were $83.0 million borrowings under the Receivables Securitization Facility. Long-Term Debt Outstanding As of September 30, 2020 and December 31, 2019, the following long-term debt instruments were outstanding: September 30, December 31, 2020 2019 Other (a) $ 36,897 $ 30,232 First lien credit agreement (b) 346,697 360,583 Senior secured notes (c) 982,867 979,060 Secured borrowings under A/R Facility 83,000 — Revolver 80,550 65,000 Total debt 1,530,011 1,434,875 Less: Current portion of long-term debt (38,042) (36,490) Long-term debt, net of current maturities $ 1,491,969 $ 1,398,385 (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 $ 5.2 million and $18.7 million as of September 30, 2020 and $6.5 million and $18.9 million as of December 31, 2019. (c) Net of unamortized debt discount and debt issuance costs of $ 12.2 million and $4.9 million as of September 30, 2020 and $14.9 million and $6.0 million as of December 31, 2019 . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Income Taxes | 6. 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 expense of $0.3 million and income tax benefit of $3.8 million for the three months ended September 30, 2020 and 2019, respectively. The Company recorded an income tax expense of $3.4 million and $5.7 million for the nine months ended September 30, 2020 and 2019, respectively. The Company's ETR of (1.1%) and (4.0%) for the three and nine months ended September 30, 2020 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 carryforwards created by the provisions of The Tax Cuts and Jobs Act (“TCJA”). For the three and nine months ended September 30, 2019, the Company’s ETR of 2.8% and (2.9%) 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 carryforwards created by the provisions of the TCJA. As of September 30, 2020, 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, 2019. The Company's valuation allowances have increased by approximately $25.8 million from December 31, 2019 to September 30, 2020 due largely to effects of TCJA relating to interest expense. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2020 | |
Employee Benefit Plans | |
Employee Benefit Plans | 7. 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. No new employees are registered under this plan and the participants who are already eligible to receive benefits under this plan are no longer employees of the Company. 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. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or December 31, 2015. 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. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or April 30, 2018. Asterion Pension Plan In April 2018 through its acquisition of Asterion International Group the Company became obligated to provide pension benefits to eligible retirees and eligible dependents of Asterion. 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. The Company uses a December 31 measurement date for this plan. No new employees are registered under this plan and the pension obligation for the existing participants of the plan is calculated based on actual salary of the participants as at the earlier of two dates, the participants leaving the Company or April 10, 2018. Tax Effect on Accumulated Other Comprehensive Loss As of September 30, 2020 and December 31, 2019 the Company recorded actuarial losses of $7.9 million and $8.1 million in accumulated other comprehensive loss on the condensed consolidated balance sheets, respectively, which are net of a deferred tax benefit of $2.0 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 2019 2020 (Restated) 2020 (Restated) Service cost $ 19 $ 23 $ 57 $ 68 Interest cost 494 592 1,482 1,777 Expected return on plan assets (639) (612) (1,917) (1,837) Amortization: Amortization of prior service cost 25 25 75 76 Amortization of net (gain) loss 430 406 1,290 1,218 Net periodic benefit cost $ 329 $ 434 $ 987 $ 1,302 The Company 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 $1.8 million and $1.7 million to its pension plans during the nine months ended September 30, 2020 and 2019 (as restated), respectively. The Company has funded the pension plans with the required contributions for 2020 based on current plan provisions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Appraisal Action On September 21, 2017, former stockholders of SourceHOV Holdings, Inc. (“SourceHOV”), who owned 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 arose out of a preliminary transaction in connection with the acquisition of SourceHOV and Novitex Holdings, Inc., by Quinpario in July 2017 (“Novitex Business Combination”), and the petitioners sought, among other things, a determination of the fair value of their SourceHOV shares at the time of the Novitex Business Combination; an order that SourceHOV pay that value to the petitioners, together with interest at the statutory rate; and an award of costs, attorneys’ fees, and other expenses. During the trial the parties and their experts offered competing valuations of the SourceHOV shares as of the date of the Novitex Business Combination. SourceHOV argued the value was no more than per share. On January 30, 2020, the Court issued its post-trial Memorandum Opinion in the Appraisal Action, in which it found that the fair value of SourceHOV as of the date of the Novitex Business Combination was On May 7, 2020, SourceHOV filed a motion for new trial in relation to share count. On June 11, 2020 the Court denied SourceHOV’s motion for new trial. SourceHOV appealed the judgment in the Appraisal Action to the Supreme Court of the State of Delaware on June 30, 2020. The appeal is pending and at this time, we cannot determine whether the appeal will be successful. At present, SourceHOV has not posted a bond to stay the judgment in the Appraisal Action, and to date, the petitioners have not been successful in their attempts to collect on the judgment against SourceHOV. The petitioners have filed additional actions to recognize the judgment against SourceHOV, an action alleging unjust enrichment and seeking restitution and to pierce the corporate veil and seek alter ego liability against Exela Technologies, Inc. and over 50 alleged subsidiaries and/or affiliates in an attempt to collect the award in the Appraisal Action from entities other than SourceHOV, and an action against SourceHOV and certain of its directors and officers alleging creditor derivative claims. Although the Company believes that it has valid defenses to these ancillary proceedings, the ancillary proceedings are in the preliminary stages and there can be no assurance that the Company will be successful. As a result of the Appraisal Action and following repayment of the Margin Loan by Ex-Sigma 2 LLC (“Ex-Sigma 2”), 4,570,734 shares of our Common Stock issued to Ex-Sigma 2, our largest shareholder following the Novitex Business Combination, were returned to the Company during the first quarter of 2020. As of September 30, 2020, the Company accrued a liability of $59.6 million for the Appraisal Action based on the judgment received on January 30, 2020 plus accrued interest, which is management’s best estimate of the total payment. Contract-Related Contingencies The Company has certain contingent obligations that arise in the ordinary course of providing services to its customers. These contingencies are generally the result of contracts that require the Company to comply with certain performance measurements or the delivery of certain services to customers by a specified deadline. The Company believes the adjustments to the transaction price, if any, under these contract provisions will not result in a significant revenue reversal or have a material adverse effect on the Company’s consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurement | |
Fair Value Measurement | 9. Fair Value Measurement Assets and Liabilities Measured at Fair Value The carrying amount of assets and liabilities including cash and cash equivalents, accounts receivable, accounts payable and current portion of long-term debt approximated their fair value as of September 30, 2020, and December 31, 2019, due to the relative short maturity of these instruments. Management estimates the fair values of the secured term loan and secured notes at approximately 32.0% and 30.0% respectively, of the respective principal balance outstanding as of September 30, 2020. 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, 2020, and December 31, 2019: Carrying Fair Fair Value Measurements As of September 30, 2020 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,491,969 $ 580,987 $ — $ 580,987 $ — Interest rate swap liability 524 524 — 524 — Acquisition contingent liability 1,000 1,000 1,000 Nonrecurring assets and liabilities: Goodwill 359,270 359,270 — — 359,270 Carrying Fair Fair Value Measurements As of December 31, 2019 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,398,385 $ 632,796 $ — $ 632,796 $ — Interest rate swap liability 501 501 — 501 — Acquisition contingent liability 721 721 721 Nonrecurring assets and liabilities: Goodwill 359,771 359,771 — — 359,771 The significant unobservable inputs used in the fair value of the Company’s acquisition contingent liabilities 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, 2020 2019 Balance as of Beginning of Period $ 721 $ 721 Earn-out Adjustment 279 — Balance as of End of Period $ 1,000 $ 721 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation SourceHOV had 24,535 restricted stock units (“RSUs”) outstanding under its 2013 Long Term Incentive Plan (“2013 Plan”) at the closing of the Novitex Business Combination. Simultaneous with the closing, the 2013 Plan, as well as all vested and unvested RSUs under the 2013 Plan, were assumed by Ex-Sigma LLC (“Ex-Sigma”), the sole equityholder of Ex-Sigma 2, an entity formed by the former SourceHOV equity holders. In accordance with GAAP, the Company incurred compensation expenses 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 under the 2013 Plan were employees of the Company. All unvested RSUs under the 2013 Plan were vested by April 2019. As of September 30, 2020, there were no outstanding obligations under 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 A summary of the status of restricted stock units related to the 2018 Plan as of September 30, 2020 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, 2019 309,305 $ 1.99 1.19 $ 616 Granted — — Forfeited — — Vested (190,258) 2.50 Balance as of September 30, 2020 119,047 $ 1.70 1.67 $ 150 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 Weighted Weighted Average Remaining Average Grant Average Vesting Period Aggregate Outstanding Date Fair Value Exercise Price (Years) Intrinsic Value (2) Balance as of December 31, 2019 4,937,700 $ 1.97 $ 4.14 2.27 $ — Granted 210,000 0.25 Exercised — — Forfeited (91,000) 2.69 Expired — — Balance as of September 30, 2020 (1) 5,056,700 $ 1.88 $ 3.94 1.61 $ — (1) 1,138,440 of the outstanding options are exercisable as of September 30, 2020. (2) Exercise prices of all of the outstanding options are higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value is zero. As of September 30, 2020, there was approximately $3.5 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 $0.7 million and $2.5 million related to plan awards for the three and nine months ended September 30, 2020, respectively, and $1.4 million and $6.9 million related to plan awards for the three and nine months ended September 30, 2019, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 11. 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 or as provided for in the Director Nomination Agreements, the holders of our Common Stock possess all voting power for the election of our board of 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 our Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of our 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 first quarter of 2020, 1,004,183 shares of Series A Preferred Stock were converted into 1,227,714 shares of Common Stock. As of September 30, 2020 and December 31, 2019, there were 147,511,430 and 150,851,689 shares outstanding, respectively (the outstanding shares of Common Stock as of December 31, 2019 includes the 4,570,734 shares returned to the Company in the first quarter of 2020 in connection with the Appraisal Action which became treasury stock). 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, 2020 and December 31, 2019, the Company had 3,290,050 shares and 4,294,233 shares of Series A Preferred Stock outstanding, respectively. The par value of the 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 into the number of shares of Common Stock determined as of the date of conversion using a certain conversion formula that takes into account the amount of Liquidation Preference per share as adjusted for accrued but unpaid dividends, as described below. As of September 30, 2020, each outstanding Series A Preferred Stock was convertible into 1.2492 shares of Exela Common Stocks using this conversion formula. Holders of the Series A Preferred Stock are entitled to receive cumulative dividends at a rate per annum of 10% of the dollar amount of per share liquidation preference (plus accumulated but unpaid dividends, the “Liquidation Preference") per share of Series A Preferred Stock, paid or accrued quarterly in arrears. From the issue date through September 30, 2020 the amount of all accrued but unpaid dividends on the Series A Preferred Stock have been added to the Liquidation Preference. The Company shall accrue each dividend payable on the Series A Preferred Stock by adding the amount of all accrued but unpaid dividends on the dividend payment date to the Liquidation Preference, except to the extent the Company elects to make all or any portion of such payment in cash on or prior to the applicable dividend payment date, in which case, the amount of the accrued but unpaid dividends that is added to the Liquidation Preference shall be reduced on a dollar-for-dollar basis by the amount of any such cash payment. The Company is not required to make any payment or allowance for unpaid dividends, whether or not in arrears, on converted shares of Series A Preferred Stock or for dividends on the shares of Common Stock issued upon conversion of such shares. The dividend accumulation for the three months ended September 30, 2020 was $1.0 million, as reflected on the Consolidated Statement of Operations, however, as a result of 1,004,183 shares of Series A Preferred Stock being converted into 1,227,714 shares of Common Stock during the first quarter of 2020, accumulated dividend of $2.3 million was reversed, resulting in a net dividend accumulation of $0.4 million for the nine months ended September 30, 2020. The dividend accumulation for the three and nine months ended September 30, 2019 was $0.9 million and $2.7 million, respectively. As of September 30, 2020, the total accumulated but unpaid dividends on the Series A Preferred Stock since inception on July 12, 2017 is $9.8 million. The per share average of cumulative preferred dividends for the three and nine months ended September 30, 2020 is $0.3 and $0.1 , respectively. The per share average of cumulative preferred dividends for the three and nine months ended September 30, 2019 is $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 permitted to purchase up to 5,000,000 shares of its Common Stock. The Share Buyback Program has expired. As of September 30, 2020, 2,787,147 shares had been repurchased under the Share Buyback Program and they are held in treasury stock. The Company records treasury stock using the cost method. During the first quarter of 2020, 4,570,734 shares of Common stock were returned to the Company by Ex-Sigma 2 in connection with the Appraisal Action. These shares are also included in treasury stock. Warrants At September 30, 2020, there were a total of 34,986,302 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 34,986,302 have been separated from the original unit and 13,698 warrants remain an unseparated part of the originally issued units which are included in the number of shares of common stock outstanding referred to above. The warrants are traded on the OTC bulletin board as of September 30, 2020. Each warrant entitles the holder to purchase one-half 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 the 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 the Company sends 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, 2020 | |
Related-Party Transactions | |
Related-Party Transactions | 12. Related-Party Transactions Relationship with HandsOn Global Management The Company incurred reimbursable travel expenses to HOVS LLC and HandsOn Fund 4 I, LLC (collectively, “HGM”) of less than $0.1 million and $0.3 million for the three months ended September 30, 2020 and 2019, respectively and $0.1 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, and following a distribution of all the shares held by Ex-Sigma 2, HGM beneficially owned approximately 50% of the Company’s common stock, including shares controlled, pursuant to a voting agreement. 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 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 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 Company incurred fees relating to these agreements of $0.5 million and less than $0.2 million for the three months ended September 30, 2020 and 2019, respectively. The Company incurred fees relating to these agreements of $1.4 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively Certain operating companies lease their operating facilities from HOV RE, LLC and HOV Services Limited, which are affiliates under common control with HGM. The rental expense for these operating leases was $0.1 million for each of the three months ended September 30, 2020 and 2019, and $0.2 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively. In addition, HOV Services, Ltd. provides the Company data capture and technology services. The expense recognized for these services was approximately $0.3 million and $0.4 million for the three months ended September 30, 2020 and 2019, respectively and $1.0 million and $1.1 million for the nine months ended September 30, 2020 and 2019. These expenses are included in cost of revenue in the consolidated statements of operations. The Company determined it is obligated to reimburse certain reimbursable expenses incurred by Ex-Sigma 2 under the terms of the Consent, Waiver and Amendment dated June 15, 2017, by and among the Company, Quinpario Merger Sub I, Inc., Quinpario Merger Sub II, Inc., SourceHOV, Novitex, Novitex Parent, L.P., Ex Sigma LLC, HOVS LLC and HandsOn Fund 4 I, LLC, amending the Novitex Business Combination agreement (the “Consent, Waiver and Amendment”). The Company recorded related party expenses of less than $0.1 million for the three months ended September 30, 2019, and $0.2 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively, for reimbursable legal expenses of Ex-Sigma 2. The Company recorded related party expenses of $1.7 million for the nine months ended September 30, 2019 related to the Company’s obligation to reimburse Ex-Sigma 2 for premium payments on the Margin Loan. The Company recorded related party expenses of $2.1 million for the nine months ended September 30, 2019 for reimbursable expenses related to secondary offerings of shares by Ex-Sigma 2, the proceeds of which were used to repay the Margin Loan. “Margin Loan” means the additional PIPE financing in the form of a $55.8 million loan obtained by Ex-Sigma 2 as borrower (and secured by shares of the Company held by Ex-Sigma 2) that was used by Ex-Sigma 2 to purchase additional common and preferred shares from the Company to help meet the minimum cash requirements needed to close the Novitex Business Combination. Separately, the Company determined it was obligated to reimburse premium payments of $6.9 million made by Ex-Sigma 2 on the Margin Loan under the terms of the Consent, Waiver and Amendment. Pursuant to a written settlement agreement entered into in June 2020, Ex-Sigma, SourceHOV and the Company agreed that the $5.6 million of payments made during the fourth quarter of 2019 would be accepted to fully discharge the Company’s obligation to reimburse Ex-Sigma 2 for the $6.9 million of premium payments. The Company recorded the difference of $1.3 million between the obligation amount and the settlement amount as an increase to additional paid in capital in the condensed consolidated statements of stockholders’ deficit during the nine months ended September 30, 2020. 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 less than $0.1 million for each of the three months ended September 30, 2020 and 2019, respectively, and $0.1 million for each of the nine months ended September 30, 2020 and 2019, respectively. Relationship with Apollo Global Management, LLC The Company provides services to and receives services from certain Apollo Global Management, Inc. (“Apollo”) affiliated companies. Funds managed by Apollo held the second largest position in our Common Stock following the Novitex Business Combination and had the right to designate two of the Company’s directors pursuant to a director nomination agreement. Apollo has announced that its affiliated funds ceased being shareholders on March 11, 2020. The Company excluded disclosure of transactions related to Apollo after March 31, 2020 as the related party relationship with Apollo ceased during the first quarter of 2020. 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 and $0.4 million under this agreement for the three months and nine months ended September 30, 2019, respectively, in its consolidated statements of operations. The Company recognized revenue of less than $0.1 million for the nine months ended September 30, 2020. 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 $1.1 million and $3.3 million for the three months and nine months ended September 30, 2019, respectively, in its consolidated statements of operations. The Company recognized revenue of $0.9 million for the nine months ended September 30, 2020. 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 $0.9 million for the three months and nine months ended September 30, 2019, from ADT LLC under this master services agreement in its consolidated statements of operations. The Company recognized revenue of $0.3 million for the nine months ended September 30, 2020. 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 $4.0 million for the three months and nine months ended September 30, 2019, respectively, and cost of revenue of $0.1 million for the nine months ended September 30, 2019 from Diamond Resorts Centralized Services Company under this master services agreement. The Company recognized revenue of $0.9 million and cost of revenue of less than $0.1 million for the nine months ended September 30, 2020. 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 and nine months ended September 30, 2019 there were related party expenses of $0.4 million and $0.7 million for this service. For the nine months ended September 30, 2020 there were related party expenses of $0.2 million. In June 2002, one of the Company’s subsidiaries entered into a systems purchase and license agreement with Evertec Group LLC (“Evertec”). Evertec is controlled by investment funds affiliated with Apollo. Pursuant to the agreement, the Company provided system and ongoing maintenance services as detailed in the agreement. In August, 2016, another subsidiary of the Company entered into an equipment maintenance agreement with Evertec. Pursuant to the equipment maintenance agreement, the Company provides preventive and corrective maintenance service to selected equipment listed in the agreement. The Company recognized revenue of less than Payable and Receivable Balances with Affiliates Payable and receivable balances with affiliates as of September 30, 2020 and December 31, 2019 are as follows below. September 30, December 31, 2020 2019 Receivable Payable Receivable Payable HOV Services, Ltd $ 729 $ — $ 601 $ — Rule 14 — 162 — 250 HGM 57 — 115 — Apollo affiliated company — — — 202 Oakana — — — 1 Ex-Sigma 2 — — — 1,287 $ 786 $ 162 $ 716 $ 1,740 |
Segment and Geographic Area Inf
Segment and Geographic Area Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment and Geographic Area Information | |
Segment and Geographic Area Information | 13. 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, approaches the markets and interacts with its clients. The Company is organized into three segments: ITPS, HS, and LLPS. ITPS: HS: LLPS: The chief operating decision maker reviews segment profit to evaluate operating segment performance and determine how to allocate resources to operating segments. “Segment profit” is defined as revenue less cost of revenue (exclusive of depreciation and amortization). 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. A reconciliation of segment profit to net loss before income taxes is presented below. Three months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 234,365 $ 54,209 $ 16,706 $ 305,280 Cost of revenue (exclusive of depreciation and amortization) 183,671 39,444 11,107 234,222 Segment profit 50,694 14,765 5,599 71,058 Selling, general and administrative expenses (exclusive of depreciation and amortization) 42,837 Depreciation and amortization 22,095 Related party expense 1,360 Interest expense, net 43,612 Sundry income, net (434) Other income, net (10,414) Net loss before income taxes $ (27,998) Three months ended September 30, 2019 (Restated) ITPS HS LLPS Total Revenue $ 292,607 $ 62,132 $ 18,806 $ 373,545 Cost of revenue (exclusive of depreciation and amortization) 241,867 42,717 10,861 295,445 Segment profit 50,740 19,415 7,945 78,100 Selling, general and administrative expenses (exclusive of depreciation and amortization) 48,347 Depreciation and amortization 25,079 Impairment of goodwill and other intangible assets 97,158 Related party expense 1,430 Interest expense, net 40,573 Sundry expense, net 165 Other expense, net 406 Net loss before income taxes $ (135,058) Nine months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 761,505 $ 167,424 $ 49,524 $ 978,453 Cost of revenue (exclusive of depreciation and amortization) 614,625 120,522 33,401 768,548 Segment profit 146,880 46,902 16,123 209,905 Selling, general and administrative expenses (exclusive of depreciation and amortization) 140,224 Depreciation and amortization 68,127 Related party expense 4,058 Interest expense, net 129,639 Sundry income, net (251) Other income, net (45,655) Net loss before income taxes $ (86,237) Nine months ended September 30, 2019 (Restated) ITPS HS LLPS Total Revenue $ 927,619 $ 186,915 $ 54,217 $ 1,168,751 Cost of revenue (exclusive of depreciation and amortization) 750,728 126,411 32,738 909,877 Segment profit 176,891 60,504 21,479 258,874 Selling, general and administrative expenses (exclusive of depreciation and amortization) 149,186 Depreciation and amortization 76,482 Impairment of goodwill and other intangible assets 97,158 Related party expense 7,759 Interest expense, net 120,235 Debt modification and extinguishment costs 1,404 Sundry expense, net 1,569 Other expense, net 4,424 Net loss before income taxes $ (199,343) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Events The Company has evaluated all events that occur after the balance sheet date through the date when these condensed consolidated financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent event(s) to be disclosed. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers 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, 2020 and 2019: Three Months Ended September 30, 2019 2020 (Restated) ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 178,075 $ 54,209 $ 16,706 $ 248,990 $ 230,120 $ 62,132 $ 18,806 $ 311,058 EMEA 51,232 — — 51,232 55,836 — — 55,836 Other 5,058 — — 5,058 6,651 — — 6,651 Total $ 234,365 $ 54,209 $ 16,706 $ 305,280 $ 292,607 $ 62,132 $ 18,806 $ 373,545 Nine Months Ended September 30, 2019 2020 (Restated) ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 592,238 $ 167,424 $ 49,524 $ 809,186 $ 720,846 $ 186,915 $ 54,217 $ 961,978 EMEA 152,222 — — 152,222 186,337 — — 186,337 Other 17,045 — — 17,045 20,436 — — 20,436 Total $ 761,505 $ 167,424 $ 49,524 $ 978,453 $ 927,619 $ 186,915 $ 54,217 $ 1,168,751 Contract Balances The following table presents contract assets, contract liabilities and contract costs recognized at September 30, 2020 and December 31, 2019: September 30, December 31, 2020 2019 Accounts receivable, net $ 214,949 $ 261,400 Deferred revenues 18,623 16,621 Customer deposits 15,605 27,765 Costs to obtain and fulfill a contract 3,616 4,977 Accounts receivable, net includes $20.1 million and $34.1 million as of September 30, 2020 and December 31, 2019, 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 $14.2 million during the nine months ended September 30, 2020 that had been deferred as of December 31, 2019. Costs incurred to obtain and fulfill contracts are deferred and expensed on a straight-line basis over the estimated benefit period. We recognized $1.8 million of amortization for these costs in the first nine months of 2020 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 fulfillment and can be separated into two principal categories: contract commissions and fulfillment 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 amounts recorded as of December 31, 2019 were used to pay for postage with the corresponding postage revenue being recognized during the nine months ended September 30, 2020. Any residual balances may be retained and used in future periods. 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, 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 (a) contracts with an original expected length of one year or less, and (b) 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, 2020 in each of the future periods below: Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2020 $ 12,360 2021 42,714 2022 35,611 2023 28,944 2024 26,814 2025 and thereafter 27,144 Total $ 173,587 |
General (Tables)
General (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
General | |
Schedule of components of basic and diluted EPS | Three Months Ended September 30, Nine Months Ended September 30, 2019 2019 2020 (Restated) 2020 (Restated) Net loss attributable to common stockholders (A) $ (29,294) $ (132,173) $ (90,071) $ (207,744) Weighted average common shares outstanding - basic and diluted (B) 147,511,430 145,636,749 147,405,476 145,569,843 Loss Per Share: Basic and diluted (A/B) $ (0.20) $ (0.91) $ (0.61) $ (1.43) |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies | |
Schedule of disaggregated revenue from contracts by geographic region and by segment | Three Months Ended September 30, 2019 2020 (Restated) ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 178,075 $ 54,209 $ 16,706 $ 248,990 $ 230,120 $ 62,132 $ 18,806 $ 311,058 EMEA 51,232 — — 51,232 55,836 — — 55,836 Other 5,058 — — 5,058 6,651 — — 6,651 Total $ 234,365 $ 54,209 $ 16,706 $ 305,280 $ 292,607 $ 62,132 $ 18,806 $ 373,545 Nine Months Ended September 30, 2019 2020 (Restated) ITPS HS LLPS Total ITPS HS LLPS Total U.S.A. $ 592,238 $ 167,424 $ 49,524 $ 809,186 $ 720,846 $ 186,915 $ 54,217 $ 961,978 EMEA 152,222 — — 152,222 186,337 — — 186,337 Other 17,045 — — 17,045 20,436 — — 20,436 Total $ 761,505 $ 167,424 $ 49,524 $ 978,453 $ 927,619 $ 186,915 $ 54,217 $ 1,168,751 |
Schedule of contract balances | September 30, December 31, 2020 2019 Accounts receivable, net $ 214,949 $ 261,400 Deferred revenues 18,623 16,621 Customer deposits 15,605 27,765 Costs to obtain and fulfill a contract 3,616 4,977 |
Schedule of estimated remaining fixed consideration for unsatisfied performance obligations | Estimated Remaining Fixed Consideration for Unsatisfied Remainder of 2020 $ 12,360 2021 42,714 2022 35,611 2023 28,944 2024 26,814 2025 and thereafter 27,144 Total $ 173,587 |
Intangibles Assets and Goodwi_2
Intangibles Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Intangibles Assets and Goodwill | |
Schedule of intangible assets | September 30, 2020 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,084 $ (267,917) $ 240,167 Developed technology 88,553 (86,985) 1,568 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,065 (12,449) 3,616 Internally developed software 46,184 (18,021) 28,163 Assembled workforce 4,473 (1,957) 2,516 Purchased software 26,749 (3,121) 23,628 Intangibles, net $ 698,508 $ (393,550) $ 304,958 December 31, 2019 Gross Carrying Intangible Amount (a) Amortization Asset, net Customer relationships $ 508,074 $ (237,313) $ 270,761 Developed technology 89,053 (87,109) 1,944 Trade names (b) 8,400 (3,100) 5,300 Outsource contract costs 16,726 (11,749) 4,977 Internally developed software 43,261 (12,129) 31,132 Trademarks 23,378 (23,370) 8 Assembled workforce 4,473 (1,118) 3,355 Purchased software 26,749 (1,783) 24,966 Intangibles, net $ 720,114 $ (377,671) $ 342,443 (a) Amounts include intangible assets acquired in business combinations and asset acquisitions. (b) The carrying amount of trade names for 2020 and 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in 2019. Carrying amount of $5.3 million as at September 30, 2020 represents indefinite-lived intangible asset. |
Schedule of goodwill by reporting segment | Balances as at January 1, 2019 (a) Additions Impairments Currency Translation Adjustments Balances as at December 31, 2019 (a) ITPS $ 571,575 $ — $ (317,525) $ 70 $ 254,120 HS 86,786 — — — 86,786 LLPS 49,897 — (31,032) — 18,865 Total $ 708,258 $ — $ (348,557) $ 70 $ 359,771 Balances as at January 1, 2020 (a) Additions Impairments Currency Translation Adjustments Balances as at September 30, 2020 (a) ITPS 254,120 — — (501) 253,619 HS 86,786 — — — 86,786 LLPS 18,865 — — — 18,865 Total $ 359,771 $ — $ — $ (501) $ 359,270 (a) The goodwill amount for all periods presented is net of accumulated impairment amount as at December 31, 2018. Accumulated impairment is $212.3 million and $560.9 million as at December 31, 2018 and September 30, 2020, respectively. |
Long-Term Debt and Credit Fac_2
Long-Term Debt and Credit Facilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Long-Term Debt and Credit Facilities | |
Schedule of outstanding long-term debt instruments | September 30, December 31, 2020 2019 Other (a) $ 36,897 $ 30,232 First lien credit agreement (b) 346,697 360,583 Senior secured notes (c) 982,867 979,060 Secured borrowings under A/R Facility 83,000 — Revolver 80,550 65,000 Total debt 1,530,011 1,434,875 Less: Current portion of long-term debt (38,042) (36,490) Long-term debt, net of current maturities $ 1,491,969 $ 1,398,385 (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 $ 5.2 million and $18.7 million as of September 30, 2020 and $6.5 million and $18.9 million as of December 31, 2019. (c) Net of unamortized debt discount and debt issuance costs of $ 12.2 million and $4.9 million as of September 30, 2020 and $14.9 million and $6.0 million as of December 31, 2019 . |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Employee Benefit Plans | |
Schedule of components of the net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, 2019 2019 2020 (Restated) 2020 (Restated) Service cost $ 19 $ 23 $ 57 $ 68 Interest cost 494 592 1,482 1,777 Expected return on plan assets (639) (612) (1,917) (1,837) Amortization: Amortization of prior service cost 25 25 75 76 Amortization of net (gain) loss 430 406 1,290 1,218 Net periodic benefit cost $ 329 $ 434 $ 987 $ 1,302 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurement | |
Schedule of fair value of financial instruments | Carrying Fair Fair Value Measurements As of September 30, 2020 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,491,969 $ 580,987 $ — $ 580,987 $ — Interest rate swap liability 524 524 — 524 — Acquisition contingent liability 1,000 1,000 1,000 Nonrecurring assets and liabilities: Goodwill 359,270 359,270 — — 359,270 Carrying Fair Fair Value Measurements As of December 31, 2019 Amount Value Level 1 Level 2 Level 3 Recurring assets and liabilities: Long-term debt $ 1,398,385 $ 632,796 $ — $ 632,796 $ — Interest rate swap liability 501 501 — 501 — Acquisition contingent liability 721 721 721 Nonrecurring assets and liabilities: Goodwill 359,771 359,771 — — 359,771 |
Schedule of net assets and liabilities classified as Level 3 for reconciliation | September 30, December 31, 2020 2019 Balance as of Beginning of Period $ 721 $ 721 Earn-out Adjustment 279 — Balance as of End of Period $ 1,000 $ 721 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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, 2019 309,305 $ 1.99 1.19 $ 616 Granted — — Forfeited — — Vested (190,258) 2.50 Balance as of September 30, 2020 119,047 $ 1.70 1.67 $ 150 |
Schedule of stock option activity | Weighted Weighted Average Remaining Average Grant Average Vesting Period Aggregate Outstanding Date Fair Value Exercise Price (Years) Intrinsic Value (2) Balance as of December 31, 2019 4,937,700 $ 1.97 $ 4.14 2.27 $ — Granted 210,000 0.25 Exercised — — Forfeited (91,000) 2.69 Expired — — Balance as of September 30, 2020 (1) 5,056,700 $ 1.88 $ 3.94 1.61 $ — (1) 1,138,440 of the outstanding options are exercisable as of September 30, 2020. (2) Exercise prices of all of the outstanding options are higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value is zero. |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related-Party Transactions | |
Schedule of payable and receivable balances with affiliates | September 30, December 31, 2020 2019 Receivable Payable Receivable Payable HOV Services, Ltd $ 729 $ — $ 601 $ — Rule 14 — 162 — 250 HGM 57 — 115 — Apollo affiliated company — — — 202 Oakana — — — 1 Ex-Sigma 2 — — — 1,287 $ 786 $ 162 $ 716 $ 1,740 |
Segment and Geographic Area I_2
Segment and Geographic Area Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment and Geographic Area Information | |
Schedule of reconciliation of segment profit to net loss before income taxes by segment information | Three months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 234,365 $ 54,209 $ 16,706 $ 305,280 Cost of revenue (exclusive of depreciation and amortization) 183,671 39,444 11,107 234,222 Segment profit 50,694 14,765 5,599 71,058 Selling, general and administrative expenses (exclusive of depreciation and amortization) 42,837 Depreciation and amortization 22,095 Related party expense 1,360 Interest expense, net 43,612 Sundry income, net (434) Other income, net (10,414) Net loss before income taxes $ (27,998) Three months ended September 30, 2019 (Restated) ITPS HS LLPS Total Revenue $ 292,607 $ 62,132 $ 18,806 $ 373,545 Cost of revenue (exclusive of depreciation and amortization) 241,867 42,717 10,861 295,445 Segment profit 50,740 19,415 7,945 78,100 Selling, general and administrative expenses (exclusive of depreciation and amortization) 48,347 Depreciation and amortization 25,079 Impairment of goodwill and other intangible assets 97,158 Related party expense 1,430 Interest expense, net 40,573 Sundry expense, net 165 Other expense, net 406 Net loss before income taxes $ (135,058) Nine months ended September 30, 2020 ITPS HS LLPS Total Revenue $ 761,505 $ 167,424 $ 49,524 $ 978,453 Cost of revenue (exclusive of depreciation and amortization) 614,625 120,522 33,401 768,548 Segment profit 146,880 46,902 16,123 209,905 Selling, general and administrative expenses (exclusive of depreciation and amortization) 140,224 Depreciation and amortization 68,127 Related party expense 4,058 Interest expense, net 129,639 Sundry income, net (251) Other income, net (45,655) Net loss before income taxes $ (86,237) Nine months ended September 30, 2019 (Restated) ITPS HS LLPS Total Revenue $ 927,619 $ 186,915 $ 54,217 $ 1,168,751 Cost of revenue (exclusive of depreciation and amortization) 750,728 126,411 32,738 909,877 Segment profit 176,891 60,504 21,479 258,874 Selling, general and administrative expenses (exclusive of depreciation and amortization) 149,186 Depreciation and amortization 76,482 Impairment of goodwill and other intangible assets 97,158 Related party expense 7,759 Interest expense, net 120,235 Debt modification and extinguishment costs 1,404 Sundry expense, net 1,569 Other expense, net 4,424 Net loss before income taxes $ (199,343) |
General - Going Concern (Detail
General - Going Concern (Details) - USD ($) $ in Thousands | Jul. 22, 2020 | Mar. 27, 2020 | Mar. 16, 2020 | Jan. 10, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 06, 2020 | May 18, 2020 |
Net loss | $ 28,318 | $ 48,691 | $ 12,670 | $ 131,289 | $ 41,571 | $ 32,172 | $ 89,677 | $ 205,032 | $ 509,100 | $ 169,800 | |||||||
Impairment of goodwill and other intangible assets | $ 97,158 | 97,158 | 349,600 | 48,100 | |||||||||||||
Net cash used in operating activities | (66,160) | $ (47,357) | (63,900) | 23,600 | |||||||||||||
Working Capital Deficit | 81,100 | 81,100 | 147,100 | $ 123,500 | |||||||||||||
Interest Paid on Long Term Debt | 144,500 | ||||||||||||||||
Accrued liability | 59,600 | 59,600 | |||||||||||||||
Accumulated deficit | 1,301,187 | 1,301,187 | 1,211,508 | ||||||||||||||
Liquidity | $ 77,000 | ||||||||||||||||
Cash and cash equivalents | 37,176 | 37,176 | $ 6,198 | 47,700 | |||||||||||||
Borrowing facility | 30,500 | ||||||||||||||||
Accounts payable greater than 90 days | 1,200 | ||||||||||||||||
Cash Saving Due To Refund Of Tax Relating To Aid Relief | $ 29,000 | ||||||||||||||||
Forecast | |||||||||||||||||
Interest Paid on Long Term Debt | $ 144,500 | ||||||||||||||||
A/R Facility | |||||||||||||||||
Minimum Liquidity | 40,000 | 40,000 | |||||||||||||||
Amount of facility | $ 160,000 | ||||||||||||||||
Facility term (years) | 5 years | ||||||||||||||||
Available facility amount | $ 4,000 | ||||||||||||||||
Credit Agreement | |||||||||||||||||
Minimum Liquidity | 35,000 | 35,000 | $ 35,000 | ||||||||||||||
SourceHOV | |||||||||||||||||
Gain on sale of investments | 35,300 | 35,300 | |||||||||||||||
Membership interests | $ 40,000 | ||||||||||||||||
Adjustment of purchase consideration | $ 2,000 | $ 2,000 | |||||||||||||||
Disposed of by sale not discontinued operations | Physical Records Storage Business | |||||||||||||||||
Gain on sale of investments | $ 9,800 | $ 9,800 | |||||||||||||||
Proceeds from sale of business | $ 12,300 |
General - Net loss per share (D
General - Net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Net loss per share | |||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Anti dilutive shares | 5,175,747 | 5,403,055 | |||||
Net loss attributable to common stockholders | $ (29,294) | $ (132,173) | $ (90,071) | $ (207,744) | |||
Weighted average common shares outstanding - basic and diluted | 147,511,430 | 145,636,749 | 147,405,476 | 145,569,843 | |||
Loss per share - Basic and diluted (in dollars per share) | $ (0.20) | $ (0.91) | $ (0.61) | $ (1.43) | |||
Common stock, shares returned | 4,570,734 | ||||||
Series A Preferred Stock | |||||||
Net loss per share | |||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 4,022,415 | ||||||
Warrants | |||||||
Net loss per share | |||||||
Number of anti-dilutive shares excluded from computation of diluted loss per share | 35,000,000 |
General - Sale of Non-Core Asse
General - Sale of Non-Core Assets (Details) - USD ($) $ in Millions | Jul. 22, 2020 | Mar. 16, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 |
SourceHOV | |||||
Membership interests | $ 40 | ||||
Gain on sale of investments | $ 35.3 | $ 35.3 | |||
Adjustment of purchase consideration | $ 2 | $ 2 | |||
Physical Records Storage Business | Disposed of by sale not discontinued operations | |||||
Gain on sale of investments | $ 9.8 | $ 9.8 | |||
Proceeds from sale of business | $ 12.3 |
Significant Accounting Polici_4
Significant Accounting Policies - Disaggregation of Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenues | ||||
Revenue | $ 305,280 | $ 373,545 | $ 978,453 | $ 1,168,751 |
United States | ||||
Disaggregation of Revenues | ||||
Revenue | 248,990 | 311,058 | 809,186 | 961,978 |
EMEA | ||||
Disaggregation of Revenues | ||||
Revenue | 51,232 | 55,836 | 152,222 | 186,337 |
Other | ||||
Disaggregation of Revenues | ||||
Revenue | 5,058 | 6,651 | 17,045 | 20,436 |
ITPS | ||||
Disaggregation of Revenues | ||||
Revenue | 234,365 | 292,607 | 761,505 | 927,619 |
ITPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 178,075 | 230,120 | 592,238 | 720,846 |
ITPS | EMEA | ||||
Disaggregation of Revenues | ||||
Revenue | 51,232 | 55,836 | 152,222 | 186,337 |
ITPS | Other | ||||
Disaggregation of Revenues | ||||
Revenue | 5,058 | 6,651 | 17,045 | 20,436 |
HS | ||||
Disaggregation of Revenues | ||||
Revenue | 54,209 | 62,132 | 167,424 | 186,915 |
HS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | 54,209 | 62,132 | 167,424 | 186,915 |
LLPS | ||||
Disaggregation of Revenues | ||||
Revenue | 16,706 | 18,806 | 49,524 | 54,217 |
LLPS | United States | ||||
Disaggregation of Revenues | ||||
Revenue | $ 16,706 | $ 18,806 | $ 49,524 | $ 54,217 |
Significant Accounting Polici_5
Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies | ||
Accounts receivable, net | $ 214,949 | $ 261,400 |
Deferred revenues | 18,623 | 16,621 |
Customer deposits | 15,605 | 27,765 |
Costs to obtain and fulfill a contract | 3,616 | 4,977 |
Unbilled receivables, net | 20,100 | $ 34,100 |
Revenue recognized from deferred revenue | 14,200 | |
Amortization of contract costs | $ 1,800 | |
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, 2020USD ($) | |
Significant Accounting Policies | |
Contracts with an original expected length | true |
Remainder of 2020 | $ 12,360 |
2021 | 42,714 |
2022 | 35,611 |
2023 | 28,944 |
2024 | 26,814 |
2025 and thereafter | 27,144 |
Total | $ 173,587 |
Intangibles Assets and Goodwi_3
Intangibles Assets and Goodwill - Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Sep. 30, 2020 | |
Intangibles | ||
Gross Carrying Amount | $ 720,114 | $ 698,508 |
Amortization | (377,671) | (393,550) |
Intangible Asset, net | 342,443 | 304,958 |
Impairment of goodwill | 348,557 | |
Carrying amount of indefinite-lived trade names which are not amortizable | 5,300 | |
Customer relationships | ||
Intangibles | ||
Gross Carrying Amount | 508,074 | 508,084 |
Amortization | (237,313) | (267,917) |
Intangible Asset, net | 270,761 | 240,167 |
Developed technology | ||
Intangibles | ||
Gross Carrying Amount | 89,053 | 88,553 |
Amortization | (87,109) | (86,985) |
Intangible Asset, net | 1,944 | 1,568 |
Trade names | ||
Intangibles | ||
Gross Carrying Amount | 8,400 | 8,400 |
Amortization | (3,100) | (3,100) |
Intangible Asset, net | 5,300 | 5,300 |
Additional impairment charge | 1,000 | |
Accumulated impairment losses | 44,100 | |
Outsource contract costs | ||
Intangibles | ||
Gross Carrying Amount | 16,726 | 16,065 |
Amortization | (11,749) | (12,449) |
Intangible Asset, net | 4,977 | 3,616 |
Internally developed software | ||
Intangibles | ||
Gross Carrying Amount | 43,261 | 46,184 |
Amortization | (12,129) | (18,021) |
Intangible Asset, net | 31,132 | 28,163 |
Trademarks | ||
Intangibles | ||
Gross Carrying Amount | 23,378 | |
Amortization | (23,370) | |
Intangible Asset, net | 8 | |
Assembled workforce | ||
Intangibles | ||
Gross Carrying Amount | 4,473 | 4,473 |
Amortization | (1,118) | (1,957) |
Intangible Asset, net | 3,355 | 2,516 |
Purchased software | ||
Intangibles | ||
Gross Carrying Amount | 26,749 | 26,749 |
Amortization | (1,783) | (3,121) |
Intangible Asset, net | $ 24,966 | $ 23,628 |
Intangibles Assets and Goodwi_4
Intangibles Assets and Goodwill - Goodwill (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020USD ($)segment | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Goodwill | |||
Number of segments | segment | 3 | ||
Beginning of Year Balance | $ 359,771 | $ 708,258 | |
Impairments | (348,557) | ||
Currency Translation Adjustments | (501) | 70 | |
End of Year Balance | 359,270 | 359,771 | |
Accumulated impairment losses | 560,900 | $ 212,300 | |
ITPS | |||
Goodwill | |||
Beginning of Year Balance | 254,120 | 571,575 | |
Impairments | (317,525) | ||
Currency Translation Adjustments | (501) | 70 | |
End of Year Balance | 253,619 | 254,120 | |
HS | |||
Goodwill | |||
Beginning of Year Balance | 86,786 | 86,786 | |
End of Year Balance | 86,786 | 86,786 | |
LLPS | |||
Goodwill | |||
Beginning of Year Balance | 18,865 | 49,897 | |
Impairments | (31,032) | ||
End of Year Balance | $ 18,865 | $ 18,865 |
Long-Term Debt and Credit Fac_3
Long-Term Debt and Credit Facilities - Senior Secured Notes (Details) - Senior secured notes $ in Billions | Jul. 12, 2017USD ($) |
Debt instruments | |
Principal amount | $ 1 |
Interest rate (in percent) | 10.00% |
Long-Term Debt and Credit Fac_4
Long-Term Debt and Credit Facilities - Debt Refinancing (Details) - USD ($) $ in Millions | Jul. 12, 2017 | Sep. 30, 2020 | Dec. 31, 2019 |
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 term loan | LIBOR | |||
Debt instruments | |||
Applicable margin rate | 7.50% | ||
Floor interest rate | 1.00% | ||
Senior secured term loan | Base rate | |||
Debt instruments | |||
Principal percentage of each payment thereafter (as a percent) | 6.50% | ||
Senior secured revolving facility | |||
Debt instruments | |||
Maximum borrowing capacity | $ 100 | ||
Letters of credit outstanding | $ 19.4 | $ 20.6 | |
Senior secured revolving facility | LIBOR | |||
Debt instruments | |||
Principal percentage of each payment thereafter (as a percent) | 7.00% | ||
Senior secured revolving facility | Base rate | |||
Debt instruments | |||
Principal percentage of each payment thereafter (as a percent) | 6.00% |
Long-Term Debt and Credit Fac_5
Long-Term Debt and Credit Facilities - Term Loan Repricing (Details) - USD ($) $ in Thousands | Apr. 16, 2019 | Jul. 13, 2018 | Sep. 30, 2020 | Dec. 31, 2019 |
Debt instruments | ||||
Outstanding amount of term loans | $ 1,530,011 | $ 1,434,875 | ||
Proceeds from refinancing term loans | $ 30,000 | $ 30,000 | ||
First Amendment | ||||
Debt instruments | ||||
Proceeds from refinancing term loans | $ 343,400 | |||
Reduction in interest rate (in percentage) | 100.00% | |||
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 | |||
Maximum debt issuance costs for new lenders exceeded 10% test | 100 | |||
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 |
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 | Sep. 30, 2018 | Sep. 30, 2019 |
Debt instruments | ||||
Proceeds from incremental term loans | $ 30 | $ 30 | ||
Repricing Term Loan | ||||
Debt instruments | ||||
Debt extinguishment costs | $ 1.1 | $ 1.4 |
Long-Term Debt and Credit Fac_7
Long-Term Debt and Credit Facilities - Receivables Securitization (Details) - USD ($) $ in Millions | May 21, 2020 | Jan. 10, 2020 | Sep. 30, 2020 | May 18, 2020 |
Outstanding borrowings under the facility | $ 83 | |||
A/R Facility | ||||
Accounts Receivable from Securitization | $ 160 | |||
Accounts Receivable, Securitization, Term | 5 years | |||
Minimum liquidity for A/R facility | $ 60 | $ 35 | ||
Forbearance fee | $ 5 | |||
Forbearance fee payable | $ 4.8 | |||
Variable interest rate (as a percent) | 4.50% | |||
A/R Facility | Base rate | ||||
Variable interest rate (as a percent) | 5.75% | 3.75% | ||
A/R Facility | Federal funds rate | ||||
Variable interest rate (as a percent) | 0.50% | |||
A/R Facility | One-month adjusted LIBOR | ||||
Variable interest rate (as a percent) | 1.00% | |||
A/R Facility | LIBOR | ||||
Variable interest rate (as a percent) | 6.75% | 4.75% | ||
Floor interest rate | 1.00% |
Long-Term Debt and Credit Fac_8
Long-Term Debt and Credit Facilities - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt instruments | ||
Total debt | $ 1,530,011 | $ 1,434,875 |
Less: Current portion of long-term debt | (38,042) | (36,490) |
Long-term debt, net of current maturities | 1,491,969 | 1,398,385 |
Senior secured notes | ||
Debt instruments | ||
Total debt | 982,867 | 979,060 |
Other | ||
Debt instruments | ||
Total debt | 36,897 | 30,232 |
First lien credit agreement | ||
Debt instruments | ||
Total debt | 346,697 | 360,583 |
Debt discount | 5,200 | 6,500 |
Unamortized debt issuance costs | 18,700 | 18,900 |
Senior secured notes | ||
Debt instruments | ||
Debt discount | 12,200 | 14,900 |
Unamortized debt issuance costs | 4,900 | 6,000 |
A/R Facility | ||
Debt instruments | ||
Total debt | 83,000 | |
Revolver | ||
Debt instruments | ||
Total debt | $ 80,550 | $ 65,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Taxes | ||||
Income tax expense | $ 320 | $ (3,769) | $ 3,440 | $ 5,689 |
Actual effective tax rate | (1.10%) | 2.80% | (4.00%) | (2.90%) |
Statutory tax rate | 21.00% | 21.00% | ||
Increase (decrease) in valuation allowance | $ 25,800 |
Employee Benefit Plans - German
Employee Benefit Plans - Germany & UK (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
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, 2020 | Dec. 31, 2019 | |
Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized in Net Periodic Benefit Costs | ||
Net actuarial loss | $ 7.9 | $ 8.1 |
Deferred tax benefit | $ 2 |
Employee Benefit Plans - Pensio
Employee Benefit Plans - Pension Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net periodic benefit cost | ||||
Employer contributions | $ 1,800 | $ 1,700 | ||
Pension [Member] | ||||
Net periodic benefit cost | ||||
Service cost | $ 19 | $ 23 | 57 | 68 |
Interest cost | 494 | 592 | 1,482 | 1,777 |
Expected return on plan assets | (639) | (612) | (1,917) | (1,837) |
Amortization of prior service cost | 25 | 25 | 75 | 76 |
Amortization of net (gain) loss | 430 | 406 | 1,290 | 1,218 |
Net periodic benefit cost | $ 329 | $ 434 | $ 987 | $ 1,302 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Mar. 26, 2020 | Jan. 30, 2020 | Sep. 21, 2017 | Sep. 30, 2020 | Mar. 31, 2020 |
Commitments and Contingencies | |||||
Shares returned to company | 4,570,734 | ||||
Accrued liability | $ 59,600,000 | ||||
SourceHOV | Petitioners | |||||
Commitments and Contingencies | |||||
Court determined fair value of stock at time of business combination (per share) | $ 4,591 | ||||
Amount awarded to petitioners | $ 57,698,426 | ||||
SourceHOV | Minimum | Petitioners | |||||
Commitments and Contingencies | |||||
Argued fair value per share | $ 1,633.85 | ||||
SourceHOV | Maximum | Petitioners | |||||
Commitments and Contingencies | |||||
Argued fair value per share | $ 5,079.28 | ||||
SourceHOV | Fair value guarantee | Common Stock | |||||
Commitments and Contingencies | |||||
Number of shares owned | 10,304 | ||||
Ex-Sigma 2, LLC | Petitioners | |||||
Commitments and Contingencies | |||||
Shares returned to company | 4,570,734 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | $ 359,270 | $ 359,771 | $ 708,258 |
Senior secured term loan | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 32.00% | ||
Senior secured notes | |||
Assets and liabilities measured at fair value | |||
Fair value percentage | 30.00% | ||
Level 3 | |||
Reconciliation of net assets and liabilities | |||
Balance as of Beginning of Period | $ 721 | 721 | |
Payments | 279 | ||
Balance as of End of Period | 1,000 | 721 | |
Carrying Amount | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 1,491,969 | 1,398,385 | |
Interest rate swap liability | 524 | 501 | |
Acquisition contingent liability | 1,000 | 721 | |
Carrying Amount | Nonrecurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | 359,270 | 359,771 | |
Fair Value | Recurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 580,987 | 632,796 | |
Interest rate swap liability | 524 | 501 | |
Acquisition contingent liability | 1,000 | 721 | |
Fair Value | Recurring assets and liabilities | Level 2 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Long-term debt | 580,987 | 632,796 | |
Interest rate swap liability | 524 | 501 | |
Fair Value | Recurring assets and liabilities | Level 3 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Acquisition contingent liability | 1,000 | 721 | |
Fair Value | Nonrecurring assets and liabilities | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | 359,270 | 359,771 | |
Fair Value | Nonrecurring assets and liabilities | Level 3 | |||
Carrying amounts and estimated fair values of financial instruments | |||
Goodwill | $ 359,270 | $ 359,771 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - RSU's - 2013 Plan - shares | Sep. 30, 2020 | Jul. 12, 2017 |
Stock-based compensation | ||
Unvested RSU's | 0 | 9,880 |
SourceHOV | ||
Stock-based compensation | ||
Restricted stock units outstanding | 24,535 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Incentive Plan (Details) - shares | Sep. 30, 2020 | Dec. 31, 2019 | 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) - RSU's - 2018 Plan - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Number of Shares | ||
Balance at the beginning of the period (in shares) | 309,305 | |
Shares vested | (190,258) | |
Balance at the end of the period (in shares) | 119,047 | 309,305 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period | $ 1.99 | |
Shares vested | 2.50 | |
Balance at the end of the period | $ 1.70 | $ 1.99 |
Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (in years) | 1 year 8 months 1 day | 1 year 2 months 8 days |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value outstanding | $ 150 | $ 616 |
Minimum | ||
Stock-Based Compensation | ||
Vesting period | 1 year | |
Maximum | ||
Stock-Based Compensation | ||
Vesting period | 2 years |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 17, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
2018 Plan | ||||||
Unrecognized compensation expense | ||||||
Unrecognized compensation expense | $ 3.5 | $ 3.5 | ||||
2018 Plan | Selling, general and administrative expense | ||||||
Unrecognized compensation expense | ||||||
Total compensation expense | $ 0.7 | $ 1.4 | $ 2.5 | $ 6.9 | ||
Stock options | ||||||
Outstanding | ||||||
Exercised (in shares) | 1,138,440 | |||||
Stock options | 2018 Plan | ||||||
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 | ||||||
Outstanding Balance at beginning of the year (in shares) | 4,937,700 | |||||
Granted (in shares) | 210,000 | |||||
Forfeited (in shares) | (91,000) | |||||
Outstanding Balance at the end of the year (in shares) | 5,056,700 | 5,056,700 | 4,937,700 | |||
Weighted Average Exercise Price | ||||||
Outstanding Balance at the beginning of the year | $ 4.14 | |||||
Outstanding Balance at the end of the year (in shares) | $ 3.94 | 3.94 | $ 4.14 | |||
Weighted average Grant Date fair Value | ||||||
Outstanding balance at the beginning of the period | 1.97 | |||||
Granted | 0.25 | |||||
Forfeited | 2.69 | |||||
Outstanding balance at the end of the period | $ 1.88 | $ 1.88 | $ 1.97 | |||
Additional information | ||||||
Average Remaining Vesting Period | 1 year 7 months 9 days | 2 years 3 months 7 days | ||||
Aggregate Intrinsic Value | $ 0 | $ 0 | ||||
Stock options | 2018 Plan | Minimum | ||||||
Stock-based compensation | ||||||
Vesting period | 2 years | |||||
Stock options | 2018 Plan | Maximum | ||||||
Stock-based compensation | ||||||
Vesting period | 4 years |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020shares | Sep. 30, 2019shares | Sep. 30, 2020Voteshares | Dec. 31, 2019shares | |
Common Stock | ||||
Common Stock, shares authorized | 1,600,000,000 | 1,600,000,000 | ||
Number of voting rights entitled for each share of Common Stock held | Vote | 1 | |||
Common Stock, shares, outstanding | 147,511,430 | 150,851,689 | ||
Common stock, shares returned | 4,570,734 | |||
Shares repurchased held in treasury (in shares) | 4,570,734 | |||
Series A Preferred Stock | ||||
Common Stock | ||||
Preferred shares converted to common shares (in shares) | 1,004,183 | |||
Common Stock | ||||
Common Stock | ||||
Preferred shares converted to common shares (in shares) | 1,227,714 | 183,389 | ||
Shares repurchased held in treasury (in shares) | (4,570,734) |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jul. 12, 2017 | |
Preferred Stock | |||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||||
Preferred stock, shares outstanding | 3,290,050 | 3,290,050 | 4,294,233 | ||||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Series A Preferred Stock | |||||||
Preferred Stock | |||||||
Preferred stock, shares outstanding | 3,290,050 | 3,290,050 | 4,294,233 | ||||
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Conversion ratio to Common Stock | 1.2492 | 1.2492 | |||||
Preferred Stock, cumulative dividends rate (in percentage) | 10.00% | ||||||
Accumulated preferred stock, Dividends | $ 1 | ||||||
Conversion of Series A Preferred stock to common shares | 1,004,183 | ||||||
Cumulative accrued but unpaid dividends | $ 9.8 | ||||||
Per share average of cumulative preferred dividends (in dollars per share) | $ 0.3 | $ 0.2 | $ 0.1 | $ 0.2 | |||
Common Stock | |||||||
Preferred Stock | |||||||
Accumulated preferred stock, Dividends | $ 0.9 | $ 2.7 | |||||
Conversion of shares (in shares) | 1,227,714 | ||||||
Common Stock | |||||||
Preferred Stock | |||||||
Conversion of Series A Preferred stock to common shares | 1,227,714 | 183,389 | |||||
Common Stock | Series A Preferred Stock | |||||||
Preferred Stock | |||||||
Accumulated preferred stock, Dividends | $ (2.3) | ||||||
Common Stock | Common Stock | |||||||
Preferred Stock | |||||||
Accumulated preferred stock, Dividends | $ 0.4 |
Stockholders' Equity - Treasury
Stockholders' Equity - Treasury Stock (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Nov. 08, 2017 | |
Stockholders' Equity | ||||
Treasury stock, shares authorized | 5,000,000 | |||
Treasury shares | 7,355,120 | 2,787,147 | ||
Share Repurchased (in shares) | 2,787,147 | |||
Shares returned in connection with the Appraisal Action following repayment of Margin Loan (in shares) | 4,570,734 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants (Details) | 9 Months Ended |
Sep. 30, 2020item$ / 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 | 34,986,302 |
Number of warrants separated from the original unit | 34,986,302 |
Number of warrants not separated from the original unit | 13,698 |
Warrants | IPO | |
Warrants | |
Units issued | 35,000,000 |
Common stock included in units | 1 |
Warrants included in units | 1 |
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, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)agreement | Sep. 30, 2019USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | |
Related-Party Transactions | ||||||
Amount of related party transaction | $ 1,360 | $ 1,430 | $ 4,058 | $ 7,759 | ||
Related party expense | 1,360 | 1,430 | 4,058 | 7,759 | ||
HGM | Travel Expense | ||||||
Related-Party Transactions | ||||||
Amount of related party transaction | 300 | $ 100 | 500 | |||
HGM | Travel Expense | Maximum | ||||||
Related-Party Transactions | ||||||
Amount of related party transaction | 100 | |||||
HGM | Master Service Agreement | ||||||
Related-Party Transactions | ||||||
Number of master agreements | agreement | 10 | |||||
Entities affiliated with HGM managed funds | Master Service Agreement | ||||||
Related-Party Transactions | ||||||
Revenue share percentage | 25.00% | 25.00% | ||||
SourceHOV | Master Service Agreement | ||||||
Related-Party Transactions | ||||||
Revenue share percentage | 75.00% | 75.00% | ||||
SourceHOV | Entities affiliated with HGM managed funds | Master Service Agreement | ||||||
Related-Party Transactions | ||||||
Related party expense | $ 500 | $ 1,400 | $ 300 | |||
SourceHOV | Entities affiliated with HGM managed funds | Master Service Agreement | Maximum | ||||||
Related-Party Transactions | ||||||
Related party expense | $ 200 |
Related-Party Transactions - Le
Related-Party Transactions - Leasing Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Affiliate of largest stockholder | ||||
Related-Party Transactions | ||||
Rental expense on operating leases under ASC 842 | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.3 |
Related-Party Transactions - _2
Related-Party Transactions - Relationship with HOV Services, Ltd (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related-Party Transactions | ||||
Amount of related party transaction | $ 1,360 | $ 1,430 | $ 4,058 | $ 7,759 |
HOV Services, Ltd | Data Capture And Technology Services | Cost of revenue | ||||
Related-Party Transactions | ||||
Amount of related party transaction | $ 300 | $ 400 | $ 1,000 | $ 1,100 |
Related Party Transactions - Re
Related Party Transactions - Relationship with Ex-Sigma and Ex-Sigma 2 (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related Party Transaction [Line Items] | ||||||
Related party expense | $ 1,360 | $ 1,430 | $ 4,058 | $ 7,759 | ||
Related party payables | 162 | $ 1,740 | 162 | |||
Settlement gain on related party payable to Ex-Sigma 2 | $ 1,287 | 1,287 | ||||
Ex-Sigma 2, LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Cash reimbursed to related parties | $ 5,600 | |||||
Margin Loan | Ex-Sigma 2, LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expense | 1,700 | |||||
Related party payables | $ 6,900 | 6,900 | ||||
Repayment of loan | 55,800 | |||||
Settlement gain on related party payable to Ex-Sigma 2 | 1,300 | |||||
Secondary Offering | Ex-Sigma 2, LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expense | 2,100 | |||||
Legal Expenses | Ex-Sigma 2, LLC | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expense | $ 200 | $ 500 | ||||
Legal Expenses | Ex-Sigma 2, LLC | Maximum | ||||||
Related Party Transaction [Line Items] | ||||||
Related party expense | $ 100 |
Related-Party Transactions - Co
Related-Party Transactions - Consulting Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related-Party Transactions | ||||
Related party expense | $ 1,360 | $ 1,430 | $ 4,058 | $ 7,759 |
Consulting Services | Oakana Holdings Inc | ||||
Related-Party Transactions | ||||
Related party expense | $ 100 | $ 100 | ||
Consulting Services | Oakana Holdings Inc | Maximum | ||||
Related-Party Transactions | ||||
Related party expense | $ 100 | $ 100 |
Related Party Transactions - _2
Related Party Transactions - Relationship with Apollo Global Management, LLC (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Related-Party Transactions | ||||
Related party expense | $ 1,360 | $ 1,430 | $ 4,058 | $ 7,759 |
Management Holdings | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 100 | 400 | ||
Management Holdings | Master Service Agreement | Maximum | ||||
Related-Party Transactions | ||||
Revenue from related parties | 100 | |||
Caesars | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 1,100 | 900 | 3,300 | |
ADT LLC | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 300 | 300 | 900 | |
Diamond Resorts Centralized Services | Master Service Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | 1,400 | 900 | 4,000 | |
Related party cost of revenue | 100 | |||
Diamond Resorts Centralized Services | Master Service Agreement | Maximum | ||||
Related-Party Transactions | ||||
Related party cost of revenue | 100 | |||
Presidio Group | Master Service Agreement | ||||
Related-Party Transactions | ||||
Related party expense | 400 | 200 | 700 | |
Evertec | Equipment Maintenance Agreement | ||||
Related-Party Transactions | ||||
Revenue from related parties | $ 200 | |||
Evertec | Equipment Maintenance Agreement | Maximum | ||||
Related-Party Transactions | ||||
Revenue from related parties | $ 100 | $ 100 |
Related-Party Transactions - _3
Related-Party Transactions - Receivable and Payable Balance with Affiliates (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivable and Payable Balances with Affiliates | ||
Receivable balances with affiliates | $ 786 | $ 716 |
Related party payables | 162 | 1,740 |
HOV Services, Ltd | ||
Receivable and Payable Balances with Affiliates | ||
Receivable balances with affiliates | 729 | 601 |
Rule 14, LLC | ||
Receivable and Payable Balances with Affiliates | ||
Related party payables | 162 | 250 |
HGM | ||
Receivable and Payable Balances with Affiliates | ||
Receivable balances with affiliates | $ 57 | 115 |
Apollo | ||
Receivable and Payable Balances with Affiliates | ||
Related party payables | 202 | |
Oakana Holdings Inc | ||
Receivable and Payable Balances with Affiliates | ||
Related party payables | 1 | |
Ex-Sigma | ||
Receivable and Payable Balances with Affiliates | ||
Related party payables | $ 1,287 |
Segment and Geographic Area I_3
Segment and Geographic Area Information - Revenue by segment information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment information | ||||||
Number of segments | segment | 3 | |||||
Revenue | $ 305,280 | $ 373,545 | $ 978,453 | $ 1,168,751 | ||
Cost of revenue (exclusive of depreciation and amortization) | 234,222 | 295,445 | 768,548 | 909,877 | ||
Segment profit | 71,058 | 78,100 | 209,905 | 258,874 | ||
Selling, general and administrative expenses (exclusive of depreciation and amortization) | 42,837 | 48,347 | 140,224 | 149,186 | ||
Depreciation and amortization | 22,095 | 25,079 | 68,127 | 76,482 | ||
Impairment of goodwill and other intangible assets | 97,158 | 97,158 | $ 349,600 | $ 48,100 | ||
Related party expense | 1,360 | 1,430 | 4,058 | 7,759 | ||
Interest expense, net | 43,612 | 40,573 | 129,639 | 120,235 | ||
Debt modification and extinguishment costs | 1,404 | |||||
Sundry expense (income), net | (434) | 165 | (251) | 1,569 | ||
Other expense (income), net | (10,414) | 406 | (45,655) | 4,424 | ||
Net loss before income taxes | (27,998) | (135,058) | (86,237) | (199,343) | ||
ITPS | ||||||
Segment information | ||||||
Revenue | 234,365 | 292,607 | 761,505 | 927,619 | ||
Cost of revenue (exclusive of depreciation and amortization) | 183,671 | 241,867 | 614,625 | 750,728 | ||
Segment profit | 50,694 | 50,740 | 146,880 | 176,891 | ||
HS | ||||||
Segment information | ||||||
Revenue | 54,209 | 62,132 | 167,424 | 186,915 | ||
Cost of revenue (exclusive of depreciation and amortization) | 39,444 | 42,717 | 120,522 | 126,411 | ||
Segment profit | 14,765 | 19,415 | 46,902 | 60,504 | ||
LLPS | ||||||
Segment information | ||||||
Revenue | 16,706 | 18,806 | 49,524 | 54,217 | ||
Cost of revenue (exclusive of depreciation and amortization) | 11,107 | 10,861 | 33,401 | 32,738 | ||
Segment profit | $ 5,599 | $ 7,945 | $ 16,123 | $ 21,479 |