x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 20-0723270 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
7250 S. TENAYA WAY, SUITE 100 | ||
LAS VEGAS, NEVADA | 89113 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.001 par value | EVRI | The New York Stock Exchange |
Page | ||||
PART I: FINANCIAL INFORMATION | ||||
Item 1: | Financial Statements | |||
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2019 and 2018 | ||||
Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 | ||||
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 | ||||
Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2019 and 2018 | ||||
Notes to Unaudited Condensed Consolidated Financial Statements | ||||
Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3: | Quantitative and Qualitative Disclosures about Market Risk | |||
Item 4: | Controls and Procedures | |||
PART II: OTHER INFORMATION | ||||
Item 1: | Legal Proceedings | |||
Item 1A: | Risk Factors | |||
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | |||
Item 3: | Defaults Upon Senior Securities | |||
Item 4: | Mine Safety Disclosures | |||
Item 5: | Other Information | |||
Item 6: | Exhibits | |||
Signatures |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues | |||||||
Games revenues | |||||||
Gaming operations | $ | 44,286 | $ | 40,056 | |||
Gaming equipment and systems | 23,087 | 20,154 | |||||
Gaming other | 54 | 7 | |||||
Games total revenues | 67,427 | 60,217 | |||||
FinTech revenues | |||||||
Cash access services | 40,832 | 38,218 | |||||
Equipment | 7,028 | 4,419 | |||||
Information services and other | 8,488 | 8,147 | |||||
FinTech total revenues | 56,348 | 50,784 | |||||
Total revenues | 123,775 | 111,001 | |||||
Costs and expenses | |||||||
Games cost of revenues(1) | |||||||
Gaming operations | 4,124 | 4,182 | |||||
Gaming equipment and systems | 12,529 | 10,741 | |||||
Gaming other | — | — | |||||
Games total cost of revenues | 16,653 | 14,923 | |||||
FinTech cost of revenues(1) | |||||||
Cash access services | 2,697 | 2,231 | |||||
Equipment | 4,330 | 2,514 | |||||
Information services and other | 958 | 1,216 | |||||
FinTech total cost of revenues | 7,985 | 5,961 | |||||
Operating expenses | 34,648 | 32,187 | |||||
Research and development | 7,531 | 4,311 | |||||
Depreciation | 14,789 | 12,825 | |||||
Amortization | 16,297 | 16,303 | |||||
Total costs and expenses | 97,903 | 86,510 | |||||
Operating income | 25,872 | 24,491 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Other expenses | |||||||
Interest expense, net of interest income | 20,400 | 20,307 | |||||
Total other expenses | 20,400 | 20,307 | |||||
Income before income tax | 5,472 | 4,184 | |||||
Income tax benefit | (388 | ) | (425 | ) | |||
Net income | 5,860 | 4,609 | |||||
Foreign currency translation | 504 | 323 | |||||
Comprehensive income | $ | 6,364 | $ | 4,932 | |||
Earnings per share | |||||||
Basic | $ | 0.08 | $ | 0.07 | |||
Diluted | $ | 0.08 | $ | 0.06 | |||
Weighted average common shares outstanding | |||||||
Basic | 70,334 | 68,686 | |||||
Diluted | 75,256 | 73,285 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 139,857 | $ | 297,532 | |||
Settlement receivables | 259,288 | 82,359 | |||||
Trade and other receivables, net of allowances for doubtful accounts of $6,281 and $6,425 at March 31, 2019 and December 31, 2018, respectively | 72,333 | 64,387 | |||||
Inventory | 24,797 | 24,403 | |||||
Prepaid expenses and other assets | 22,293 | 20,259 | |||||
Total current assets | 518,568 | 488,940 | |||||
Non-current assets | |||||||
Property, equipment and leased assets, net | 113,067 | 116,288 | |||||
Goodwill | 673,447 | 640,537 | |||||
Other intangible assets, net | 292,955 | 287,397 | |||||
Other receivables | 12,297 | 8,847 | |||||
Other assets | 21,670 | 6,252 | |||||
Total non-current assets | 1,113,436 | 1,059,321 | |||||
Total assets | $ | 1,632,004 | $ | 1,548,261 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities | |||||||
Settlement liabilities | $ | 354,402 | $ | 334,198 | |||
Accounts payable and accrued expenses | 152,716 | 129,238 | |||||
Current portion of long-term debt | 8,200 | 8,200 | |||||
Total current liabilities | 515,318 | 471,636 | |||||
Non-current liabilities | |||||||
Deferred tax liability | 27,354 | 27,867 | |||||
Long-term debt, less current portion | 1,153,807 | 1,155,016 | |||||
Other accrued expenses and liabilities | 31,327 | 2,637 | |||||
Total non-current liabilities | 1,212,488 | 1,185,520 | |||||
Total liabilities | 1,727,806 | 1,657,156 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ deficit | |||||||
Common stock, $0.001 par value, 500,000 shares authorized and 95,966 and 95,100 shares issued at March 31, 2019 and December 31, 2018, respectively | 96 | 95 | |||||
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at March 31, 2019 and December 31, 2018, respectively | — | — | |||||
Additional paid-in capital | 305,672 | 298,929 | |||||
Accumulated deficit | (223,597 | ) | (229,457 | ) | |||
Accumulated other comprehensive loss | (1,494 | ) | (1,998 | ) | |||
Treasury stock, at cost, 24,902 and 24,900 shares at March 31, 2019 and December 31, 2018, respectively | (176,479 | ) | (176,464 | ) | |||
Total stockholders’ deficit | (95,802 | ) | (108,895 | ) | |||
Total liabilities and stockholders’ deficit | $ | 1,632,004 | $ | 1,548,261 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 5,860 | $ | 4,609 | |||
Adjustments to reconcile net income to cash provided by (used in) operating activities: | |||||||
Depreciation | 14,789 | 12,825 | |||||
Amortization | 16,297 | 16,303 | |||||
Amortization of financing costs and discounts | 890 | 905 | |||||
Loss (gain) on sale or disposal of assets | 513 | (13 | ) | ||||
Accretion of contract rights | 2,122 | 2,057 | |||||
Provision for bad debts | 2,864 | 2,182 | |||||
Deferred income taxes | (513 | ) | (561 | ) | |||
Reserve for obsolescence | 441 | 305 | |||||
Stock-based compensation | 1,773 | 2,350 | |||||
Changes in operating assets and liabilities: | |||||||
Settlement receivables | (175,748 | ) | 73,571 | ||||
Trade and other receivables | (12,385 | ) | (9,715 | ) | |||
Inventory | 57 | (1,157 | ) | ||||
Other assets | (16,756 | ) | 1,251 | ||||
Settlement liabilities | 19,931 | (74,617 | ) | ||||
Other liabilities | 27,677 | 2,456 | |||||
Net cash (used in) provided by operating activities | (112,188 | ) | 32,751 | ||||
Cash flows from investing activities | |||||||
Capital expenditures | (22,194 | ) | (26,339 | ) | |||
Acquisition | (20,000 | ) | — | ||||
Proceeds from sale of fixed assets | 33 | 72 | |||||
Placement fee agreements | (5,329 | ) | (4,643 | ) | |||
Net cash used in investing activities | (47,490 | ) | (30,910 | ) | |||
Cash flows from financing activities | |||||||
Repayments of credit facilities | (2,050 | ) | (2,050 | ) | |||
Proceeds from exercise of stock options | 4,686 | 4,088 | |||||
Purchase of treasury stock | (15 | ) | (38 | ) | |||
Net cash provided by financing activities | 2,621 | 2,000 | |||||
Effect of exchange rates on cash | (343 | ) | 147 | ||||
Cash, cash equivalents and restricted cash | |||||||
Net (decrease) increase for the period | (157,400 | ) | 3,988 | ||||
Balance, beginning of the period | 299,181 | 129,604 | |||||
Balance, end of the period | $ | 141,781 | $ | 133,592 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Supplemental cash disclosures | |||||||
Cash paid for interest | $ | 12,470 | $ | 15,206 | |||
Cash paid for income tax, net of refunds | 92 | 66 | |||||
Supplemental non-cash disclosures | |||||||
Accrued and unpaid capital expenditures | $ | 3,209 | $ | 4,145 | |||
Accrued and unpaid placement fees added during the year | — | 363 | |||||
Transfer of leased gaming equipment to inventory | 4,673 | 1,897 | |||||
Operating lease ROU assets obtained in exchange for lease obligations | 15,132 | — | |||||
Fair value of assets acquired | 50,240 | — | |||||
Cash paid | 20,000 | — | |||||
Accrued and unpaid liability for loyalty acquisition | 27,556 | — | |||||
Liabilities assumed | 2,684 | — |
Common Stock— Series A | Additional | Retained Earnings | Accumulated Other | Total | |||||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | (Accumulated Deficit) | Comprehensive Income (Loss) | Treasury Stock | Deficit | |||||||||||||||||||||
Balance, January 1, 2018 | 93,120 | $ | 93 | $ | 282,070 | $ | (246,202 | ) | $ | (253 | ) | $ | (176,341 | ) | $ | (140,633 | ) | ||||||||||
Net income | — | — | — | 4,609 | — | — | 4,609 | ||||||||||||||||||||
Cumulative adjustment related to adoption of ASC 606 | — | — | — | 4,389 | — | — | 4,389 | ||||||||||||||||||||
Foreign currency translation | — | — | — | — | 324 | — | 324 | ||||||||||||||||||||
Stock-based compensation expense | — | — | 2,350 | — | — | — | 2,350 | ||||||||||||||||||||
Exercise of options | 712 | 1 | 4,298 | — | — | — | 4,299 | ||||||||||||||||||||
Restricted share vesting withholdings | — | — | — | — | — | (38 | ) | (38 | ) | ||||||||||||||||||
Balance, March 31, 2018 | 93,832 | $ | 94 | $ | 288,718 | $ | (237,204 | ) | $ | 71 | $ | (176,379 | ) | $ | (124,700 | ) | |||||||||||
Balance, January 1, 2019 | 95,100 | $ | 95 | $ | 298,929 | $ | (229,457 | ) | $ | (1,998 | ) | $ | (176,464 | ) | $ | (108,895 | ) | ||||||||||
Net income | — | — | — | 5,860 | — | — | 5,860 | ||||||||||||||||||||
Foreign currency translation | — | — | — | — | 504 | — | 504 | ||||||||||||||||||||
Stock-based compensation expense | — | — | 1,773 | — | — | — | 1,773 | ||||||||||||||||||||
Exercise of options | 864 | 1 | 4,970 | — | — | — | 4,971 | ||||||||||||||||||||
Restricted share vesting and withholding | 2 | — | — | — | — | (15 | ) | (15 | ) | ||||||||||||||||||
Balance, March 31, 2019 | 95,966 | $ | 96 | $ | 305,672 | $ | (223,597 | ) | $ | (1,494 | ) | $ | (176,479 | ) | $ | (95,802 | ) |
Three Months Ended | ||||
March 31, 2019 | ||||
Contract assets(1) | ||||
Balance at January 1 | $ | 11,310 | ||
Balance at March 31 | 14,098 | |||
Increase | $ | 2,788 | ||
Contract liabilities(2) | ||||
Balance at January 1 | $ | 15,470 | ||
Balance at March 31 | 24,350 | |||
Increase | $ | 8,880 |
(1) | Current portion of contract assets is included within trade and other receivables, net, and non-current portion is included within other receivables in our Balance Sheets. |
(2) | Current portion of contract liabilities is included within accounts payable and accrued expenses, and non-current portion is included within other accrued expenses and liabilities in our Balance Sheets. |
Level of Hierarchy | Fair Value | Outstanding Balance | |||||||
March 31, 2019 | |||||||||
Term loan | 2 | $ | 801,622 | $ | 805,650 | ||||
Senior unsecured notes | 1 | $ | 389,063 | $ | 375,000 | ||||
December 31, 2018 | |||||||||
Term loan | 2 | $ | 784,479 | $ | 807,700 | ||||
Senior unsecured notes | 1 | $ | 354,863 | $ | 375,000 |
Classification on our Balance Sheets | March 31, 2019 | |||||
Assets | ||||||
Operating lease ROU assets | Other assets, noncurrent | $ | 14,104 | |||
Liabilities | ||||||
Current operating lease liabilities | Accounts payable and accrued expenses | $ | 5,356 | |||
Non-current operating lease liabilities | Other accrued expenses and liabilities | $ | 12,604 |
Three Months Ended | ||||
March 31, 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 1,434 | ||
Operating lease ROU assets obtained in exchange for lease obligations(1) | $ | 15,132 |
(1) | The amount includes approximately $14.1 million of operating lease ROU assets obtained in exchange for existing lease obligations and approximately $1.0 million of operating lease ROU assets obtained in exchange for new lease obligations entered into during the three months ended March 31, 2019, excluding amortization for the period. |
March 31, 2019 | |||
Weighted average remaining lease term (in years) | 3.3 | ||
Weighted average discount rate | 5.25 | % |
Three Months Ended | ||||
March 31, 2019 | ||||
Lease Cost: | ||||
Operating lease cost | $ | 944 | ||
Variable lease cost | $ | 439 |
Year ending December 31, | Amount | |||
2019 (excluding the three months ended March 31, 2019) | $ | 4,613 | ||
2020 | 6,273 | |||
2021 | 4,953 | |||
2022 | 2,711 | |||
2023 | 1,011 | |||
Thereafter | — | |||
Total future minimum lease payments | $ | 19,561 | ||
Amount representing interest | 1,601 | |||
Present value of future minimum lease payments | $ | 17,960 | ||
Current operating lease obligations | 5,356 | |||
Long-term lease obligations | $ | 12,604 |
Year ending December 31, | Amount | |||
2019 | $ | 5,570 | ||
2020 | 5,680 | |||
2021 | 4,598 | |||
2022 | 2,799 | |||
2023 | 1,074 | |||
Thereafter | — | |||
Total future minimum lease payments | $ | 19,721 |
Amount | ||||
Purchase consideration | ||||
Cash consideration paid at closing | $ | 20,000 | ||
Cash consideration to be paid in subsequent periods | 18,528 | |||
Total cash consideration | 38,528 | |||
Contingent consideration | 9,028 | |||
Total purchase consideration | $ | 47,556 |
Amount | ||||
Current assets | $ | 2,896 | ||
Property, equipment and leased assets, net | 8 | |||
Operating lease ROU assets | 239 | |||
Goodwill | 32,897 | |||
Other intangible assets, net | 14,200 | |||
Total assets | 50,240 | |||
Contract liabilities | (2,445 | ) | ||
Current operating lease liabilities | (105 | ) | ||
Non-current operating lease liabilities | (134 | ) | ||
Total liabilities | (2,684 | ) | ||
Net assets acquired | $ | 47,556 |
Useful Life (Years) | Estimated Fair Value | |||||
Other Intangible Assets | ||||||
Developed technology | 3 | $ | 5,000 | |||
Customer contracts | 5 | 9,200 | ||||
Total other intangible assets | $ | 14,200 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Trade and other receivables, net | |||||||
Games trade and loans receivables | $ | 57,080 | $ | 53,011 | |||
FinTech trade and loans receivables | 24,138 | 18,890 | |||||
Other receivables | 3,412 | 1,333 | |||||
Total trade and other receivables, net | 84,630 | 73,234 | |||||
Non-current portion of receivables | |||||||
Games trade and loans receivables | (1,785 | ) | (2,922 | ) | |||
FinTech trade and loans receivables | (10,512 | ) | (5,925 | ) | |||
Total non-current portion of receivables | (12,297 | ) | (8,847 | ) | |||
Total trade and other receivables, current portion | $ | 72,333 | $ | 64,387 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Inventory | |||||||
Component parts, net of reserves of $1,695 and $1,468 at March 31, 2019 and December 31, 2018, respectively | $ | 20,886 | $ | 23,197 | |||
Work-in-progress | 1,309 | 280 | |||||
Finished goods | 2,602 | 926 | |||||
Total inventory | $ | 24,797 | $ | 24,403 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Prepaid expenses and other assets | |||||||
Prepaid expenses | $ | 10,810 | $ | 8,351 | |||
Deposits | 8,268 | 8,241 | |||||
Other | 3,215 | 3,667 | |||||
Total prepaid expenses and other assets | $ | 22,293 | $ | 20,259 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Other assets | |||||||
Operating lease ROU assets(1) | $ | 14,104 | $ | — | |||
Prepaid expenses and deposits | 6,683 | 5,289 | |||||
Debt issuance costs of revolving credit facility | 606 | 654 | |||||
Other | 277 | 309 | |||||
Total other assets | $ | 21,670 | $ | 6,252 |
(1) | Refer to “Note 3 — Leases” for discussion on operating lease ROU assets recorded on the Balance Sheets as a result of the implementation of ASC 842. |
At March 31, 2019 | At December 31, 2018 | ||||||||||||||||||||||||
Useful Life (Years) | Cost | Accumulated Depreciation | Net Book Value | Cost | Accumulated Depreciation | Net Book Value | |||||||||||||||||||
Property, equipment and leased assets | |||||||||||||||||||||||||
Rental pool - deployed | 2-4 | $ | 183,669 | $ | 106,488 | $ | 77,181 | $ | 183,309 | $ | 105,038 | $ | 78,271 | ||||||||||||
Rental pool - undeployed | 2-4 | 30,285 | 21,026 | 9,259 | 23,825 | 14,680 | 9,145 | ||||||||||||||||||
FinTech equipment | 3-5 | 27,417 | 21,731 | 5,686 | 27,285 | 21,000 | 6,285 | ||||||||||||||||||
Leasehold and building improvements | Lease Term | 11,870 | 7,374 | 4,496 | 11,857 | 6,938 | 4,919 | ||||||||||||||||||
Machinery, office and other equipment | 2-5 | 46,439 | 29,994 | 16,445 | 46,322 | 28,654 | 17,668 | ||||||||||||||||||
Total | $ | 299,680 | $ | 186,613 | $ | 113,067 | $ | 292,598 | $ | 176,310 | $ | 116,288 |
At March 31, 2019 | At December 31, 2018 | ||||||||||||||||||||||||
Weighted Average Remaining Life (Years) | Cost | Accumulated Amortization | Net Book Value | Cost | Accumulated Amortization | Net Book Value | |||||||||||||||||||
Other intangible assets | |||||||||||||||||||||||||
Contract rights under placement fee agreements | 4 | $ | 57,441 | $ | 14,300 | $ | 43,141 | $ | 57,440 | $ | 12,178 | $ | 45,262 | ||||||||||||
Customer contracts | 6 | 60,375 | 46,816 | 13,559 | 51,175 | 46,162 | 5,013 | ||||||||||||||||||
Customer relationships | 8 | 231,100 | 89,860 | 141,240 | 231,100 | 84,619 | 146,481 | ||||||||||||||||||
Developed technology and software | 2 | 289,352 | 198,262 | 91,090 | 277,243 | 190,886 | 86,357 | ||||||||||||||||||
Patents, trademarks and other | 4 | 29,046 | 25,121 | 3,925 | 29,168 | 24,884 | 4,284 | ||||||||||||||||||
Total | $ | 667,314 | $ | 374,359 | $ | 292,955 | $ | 646,126 | $ | 358,729 | $ | 287,397 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Accounts payable and accrued expenses | |||||||
Trade accounts payable | $ | 85,383 | $ | 70,796 | |||
Deferred and unearned revenues | 20,258 | 12,887 | |||||
Placement fees(1) | 11,164 | 16,746 | |||||
Accrued interest | 8,652 | 1,374 | |||||
Payroll and related expenses | 7,408 | 15,055 | |||||
Cash access processing and related expenses | 6,931 | 4,160 | |||||
Other | 5,773 | 6,303 | |||||
Operating lease liabilities(2) | 5,356 | — | |||||
Accrued taxes | 1,791 | 1,917 | |||||
Total accounts payable and accrued expenses | $ | 152,716 | $ | 129,238 |
(1) | The total outstanding balance of the placement fee liability was approximately $11.2 million and $16.7 million as of March 31, 2019 and December 31, 2018, respectively. The placement fee liability was considered current due to the remaining obligation being due within twelve months of March 31, 2019 and December 31, 2018. |
(2) | Refer to “Note 3 — Leases” for discussion on operating lease liabilities recorded on the Balance Sheets as a result of the implementation of ASC 842. |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Long-term debt | |||||||
Senior secured term loan | $ | 805,650 | $ | 807,700 | |||
Senior unsecured notes | 375,000 | 375,000 | |||||
Total debt | 1,180,650 | 1,182,700 | |||||
Debt issuance costs and discount | (18,643 | ) | (19,484 | ) | |||
Total debt after debt issuance costs and discount | 1,162,007 | 1,163,216 | |||||
Current portion of long-term debt | (8,200 | ) | (8,200 | ) | |||
Long-term debt, less current portion | $ | 1,153,807 | $ | 1,155,016 |
At March 31, | |||||
2019 | 2018 | ||||
Weighted average shares | |||||
Weighted average number of common shares outstanding - basic | 70,334 | 68,686 | |||
Potential dilution from equity awards(1) | 4,922 | 4,599 | |||
Weighted average number of common shares outstanding - diluted(1) | 75,256 | 73,285 |
(1) | The potential dilution excludes the weighted average effect of equity awards to purchase approximately 6.7 million and 7.0 million shares of common stock for the three months ended March 31, 2019 and 2018, respectively, as the application of the treasury stock method, as required, makes them anti-dilutive. |
Stock Options Granted | Restricted Stock Awards Granted | Restricted Stock Units Granted | ||||||
Outstanding, December 31, 2018 | 15,674 | 8 | 1,797 | |||||
Granted | — | — | 84 | |||||
Exercised options or vested shares | (864 | ) | (5 | ) | (2 | ) | ||
Canceled or forfeited | (56 | ) | — | (17 | ) | |||
Outstanding, March 31, 2019 | 14,754 | 3 | 1,862 |
Number of Options (in thousands) | Weighted Average Exercise Price (per Share) | Weighted Average Life Remaining (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding, December 31, 2018 | 15,674 | $ | 5.39 | 6.0 | $ | 17,733 | ||||||
Granted | — | |||||||||||
Exercised | (864 | ) | $ | 5.74 | ||||||||
Canceled or forfeited | (56 | ) | $ | 4.40 | ||||||||
Outstanding, March 31, 2019 | 14,754 | $ | 5.38 | 5.8 | $ | 75,894 | ||||||
Vested and expected to vest, March 31, 2019 | 14,302 | $ | 5.43 | 5.8 | $ | 72,739 | ||||||
Exercisable, March 31, 2019 | 9,738 | $ | 5.92 | 5.5 | $ | 44,777 |
Shares Outstanding (in thousands) | Weighted Average Grant Date Fair Value (per share) | |||||
Outstanding, December 31, 2018 | 8 | $ | 6.66 | |||
Granted | — | $ | — | |||
Vested | (5 | ) | $ | 6.66 | ||
Forfeited | — | $ | — | |||
Outstanding, March 31, 2019 | 3 | $ | 6.66 |
Shares Outstanding (in thousands) | Weighted Average Grant Date Fair Value (per share) | Weighted Average Life Remaining (years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding, December 31, 2018 | 1,797 | $ | 7.49 | 2.0 | $ | 9,254 | ||||||
Granted | 84 | $ | 7.16 | |||||||||
Vested | (2 | ) | $ | 6.79 | ||||||||
Forfeited | (17 | ) | $ | 7.45 | ||||||||
Outstanding, March 31, 2019 | 1,862 | $ | 7.47 | 1.8 | $ | 19,591 | ||||||
Vested and expected to vest, March 31, 2019 | 1,292 | $ | 7.46 | 1.6 | $ | 13,595 |
• | The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment- related experiences including: leased gaming equipment; sales of gaming equipment; gaming systems; interactive solutions; and ancillary products and services. |
• | The FinTech segment provides solutions directly to gaming establishments to offer their patrons cash access-related services and products, including: access to cash at gaming facilities via ATM cash withdrawals; credit card cash access transactions and POS debit card cash access transactions; check-related services; equipment, including self-service enrollment and loyalty card printing kiosks and a marketing platform that manages and delivers a gaming operator’s marketing programs, and related maintenance services; compliance, audit and data software; casino credit data and reporting services, and other ancillary offerings. |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Games | |||||||
Revenues | |||||||
Gaming operations | $ | 44,286 | $ | 40,056 | |||
Gaming equipment and systems | 23,087 | 20,154 | |||||
Gaming other | 54 | 7 | |||||
Total revenues | 67,427 | 60,217 | |||||
Costs and expenses | |||||||
Cost of revenues(1) | |||||||
Gaming operations | 4,124 | 4,182 | |||||
Gaming equipment and systems | 12,529 | 10,741 | |||||
Gaming other | — | — | |||||
Cost of revenues | 16,653 | 14,923 | |||||
Operating expenses | 14,667 | 12,007 | |||||
Research and development | 5,847 | 4,311 | |||||
Depreciation | 13,374 | 11,139 | |||||
Amortization | 13,782 | 13,484 | |||||
Total costs and expenses | 64,323 | 55,864 | |||||
Operating income | $ | 3,104 | $ | 4,353 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
FinTech | |||||||
Revenues | |||||||
Cash access services | $ | 40,832 | $ | 38,218 | |||
Equipment | 7,028 | 4,419 | |||||
Information services and other | 8,488 | 8,147 | |||||
Total revenues | 56,348 | 50,784 | |||||
Costs and expenses | |||||||
Cost of revenues(1) | |||||||
Cash access services | 2,697 | 2,231 | |||||
Equipment | 4,330 | 2,514 | |||||
Information services and other | 958 | 1,216 | |||||
Cost of revenues | 7,985 | 5,961 | |||||
Operating expenses | 19,981 | 20,180 | |||||
Research and development | 1,684 | — | |||||
Depreciation | 1,415 | 1,686 | |||||
Amortization | 2,515 | 2,819 | |||||
Total costs and expenses | 33,580 | 30,646 | |||||
Operating income | $ | 22,768 | $ | 20,138 |
For the Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Total Games and FinTech | |||||||
Revenues | $ | 123,775 | $ | 111,001 | |||
Costs and expenses | |||||||
Cost of revenues(1) | 24,638 | 20,884 | |||||
Operating expenses | 34,648 | 32,187 | |||||
Research and development | 7,531 | 4,311 | |||||
Depreciation | 14,789 | 12,825 | |||||
Amortization | 16,297 | 16,303 | |||||
Total costs and expenses | 97,903 | 86,510 | |||||
Operating income | $ | 25,872 | $ | 24,491 |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Total assets | |||||||
Games | $ | 912,747 | $ | 912,849 | |||
FinTech | 719,257 | 635,412 | |||||
Total assets | $ | 1,632,004 | $ | 1,548,261 |
Three Months Ended | ||||||||||||||||||||
March 31, 2019 | March 31, 2018 | 2019 vs 2018 | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
Revenues | ||||||||||||||||||||
Games revenues | ||||||||||||||||||||
Gaming operations | $ | 44,286 | 36 | % | $ | 40,056 | 36 | % | $ | 4,230 | 11 | % | ||||||||
Gaming equipment and systems | 23,087 | 18 | % | 20,154 | 18 | % | 2,933 | 15 | % | |||||||||||
Gaming other | 54 | — | % | 7 | — | % | 47 | 671 | % | |||||||||||
Games total revenues | 67,427 | 54 | % | 60,217 | 54 | % | 7,210 | 12 | % | |||||||||||
FinTech revenues | ||||||||||||||||||||
Cash access services | 40,832 | 33 | % | 38,218 | 34 | % | 2,614 | 7 | % | |||||||||||
Equipment | 7,028 | 6 | % | 4,419 | 5 | % | 2,609 | 59 | % | |||||||||||
Information services and other | 8,488 | 7 | % | 8,147 | 7 | % | 341 | 4 | % | |||||||||||
FinTech total revenues | 56,348 | 46 | % | 50,784 | 46 | % | 5,564 | 11 | % | |||||||||||
Total revenues | 123,775 | 100 | % | 111,001 | 100 | % | 12,774 | 12 | % | |||||||||||
Costs and expenses | ||||||||||||||||||||
Games cost of revenues(1) | ||||||||||||||||||||
Gaming operations | 4,124 | 3 | % | 4,182 | 4 | % | (58 | ) | (1 | )% | ||||||||||
Gaming equipment and systems | 12,529 | 10 | % | 10,741 | 9 | % | 1,788 | 17 | % | |||||||||||
Gaming other | — | — | % | — | — | % | — | — | % | |||||||||||
Games total cost of revenues | 16,653 | 13 | % | 14,923 | 13 | % | 1,730 | 12 | % | |||||||||||
FinTech cost of revenues(1) | ||||||||||||||||||||
Cash access services | 2,697 | 2 | % | 2,231 | 2 | % | 466 | 21 | % | |||||||||||
Equipment | 4,330 | 3 | % | 2,514 | 2 | % | 1,816 | 72 | % | |||||||||||
Information services and other | 958 | 1 | % | 1,216 | 1 | % | (258 | ) | (21 | )% | ||||||||||
FinTech total cost of revenues | 7,985 | 6 | % | 5,961 | 5 | % | 2,024 | 34 | % |
Three Months Ended | ||||||||||||||||||||
March 31, 2019 | March 31, 2018 | 2019 vs 2018 | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
Operating expenses | 34,648 | 29 | % | 32,187 | 29 | % | 2,461 | 8 | % | |||||||||||
Research and development | 7,531 | 6 | % | 4,311 | 4 | % | 3,220 | 75 | % | |||||||||||
Depreciation | 14,789 | 12 | % | 12,825 | 12 | % | 1,964 | 15 | % | |||||||||||
Amortization | 16,297 | 13 | % | 16,303 | 15 | % | (6 | ) | — | % | ||||||||||
Total costs and expenses | 97,903 | 79 | % | 86,510 | 78 | % | 11,393 | 13 | % | |||||||||||
Operating income | 25,872 | 21 | % | 24,491 | 22 | % | 1,381 | 6 | % | |||||||||||
Other expenses | ||||||||||||||||||||
Interest expense, net of interest income | 20,400 | 16 | % | 20,307 | 18 | % | 93 | — | % | |||||||||||
Total other expenses | 20,400 | 16 | % | 20,307 | 18 | % | 93 | — | % | |||||||||||
Income before income tax | 5,472 | 4 | % | 4,184 | 4 | % | 1,288 | 31 | % | |||||||||||
Income tax benefit | (388 | ) | — | % | (425 | ) | — | % | 37 | (9 | )% | |||||||||
Net income | $ | 5,860 | 5 | % | $ | 4,609 | 4 | % | $ | 1,251 | 27 | % |
• | Determination of stand-alone selling price (“SSP”) - We are required to make a significant judgment as to whether there is a sufficient quantity of items sold or renewed on a stand-alone basis and those prices demonstrate an appropriate level of concentration to conclude that a SSP exists. The SSP of our goods and services are generally determined based on observable prices, an adjusted market assessment approach, or an expected cost plus margin approach. We utilize a residual approach only when the SSP for performance obligations with observable prices have been established and the |
• | Contract combinations with multiple promised goods or services - Our contracts may include various performance obligations for promises to transfer multiple goods and services to a customer, especially since our Games and FinTech businesses may enter into multiple agreements with the same customer that meet the criteria to be combined for accounting purposes under ASC 606. For such arrangements, we use our judgment to analyze the nature of the promises made and determine whether each is distinct or should be combined with other promises in the contract based on the level of integration and interdependency between the individual deliverables. |
At March 31, | At December 31, | ||||||
2019 | 2018 | ||||||
Balance sheet data | |||||||
Total assets | $ | 1,632,004 | $ | 1,548,261 | |||
Total borrowings | 1,162,007 | 1,163,216 | |||||
Total stockholders’ deficit | (95,802 | ) | (108,895 | ) | |||
Cash available | |||||||
Cash and cash equivalents | $ | 139,857 | $ | 297,532 | |||
Settlement receivables | 259,288 | 82,359 | |||||
Settlement liabilities | (354,402 | ) | (334,198 | ) | |||
Net cash position(1) | 44,743 | 45,693 | |||||
Undrawn revolving credit facility | 35,000 | 35,000 | |||||
Net cash available(1) | $ | 79,743 | $ | 80,693 |
(1) | Non-GAAP measure. In order to enhance investor understanding of our cash balance, we are providing in this Quarterly Report on Form 10-Q net cash position and net cash available, which are not measures of our financial performance or position under GAAP. Accordingly, these measures should not be considered in isolation or as a substitute for, and should be read in conjunction with, our cash and cash equivalents prepared in accordance with GAAP. We define (a) net cash position as cash and cash equivalents plus settlement receivables less settlement liabilities, and (b) net cash available as net cash position plus undrawn amounts available under our Revolving Credit Facility (defined herein). We present net cash position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present net cash available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements, both on a short-term and long-term basis. |
Three Months Ended March 31, | 2019 vs 2018 | ||||||||||
2019 | 2018 | Change | |||||||||
Cash flow activities | |||||||||||
Operating activities | $ | (112,188 | ) | $ | 32,751 | $ | (144,939 | ) | |||
Investing activities | (47,490 | ) | (30,910 | ) | (16,580 | ) | |||||
Financing activities | 2,621 | 2,000 | 621 | ||||||||
Effect of exchange rates on cash | (343 | ) | 147 | (490 | ) | ||||||
Cash, cash equivalents and restricted cash | |||||||||||
Net (decrease) increase for the period | (157,400 | ) | 3,988 | (161,388 | ) | ||||||
Balance, beginning of the period | 299,181 | 129,604 | 169,577 | ||||||||
Balance, end of the period | $ | 141,781 | $ | 133,592 | $ | 8,189 |
Total Number of Shares Purchased (1) (in thousands) | Average Price per Share (2) | |||||
Tax Withholdings | ||||||
1/1/19 - 1/31/19 | 0.5 | $ | 5.39 | |||
2/1/19 - 2/28/19 | 0.5 | $ | 6.83 | |||
3/1/19 - 3/31/19 | 1.1 | $ | 7.83 | |||
Total | 2.1 | $ | 7.02 |
(1) | Represents withholding of vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to the restricted stock vesting. There are no limitations on the number of shares of common stock that may be withheld from restricted stock awards to satisfy the minimum statutory withholding requirements applicable to the restricted stock vesting. |
(2) | Represents the average price per share of common stock withheld from restricted stock awards on the date of withholding. |
Exhibit Number | Description | |
†*10.1 | ||
†*10.2 | ||
†10.3 | ||
†10.4 | ||
†10.5 | ||
*31.1 | ||
*31.2 | ||
**32.1 | ||
*101.INS | XBRL Instance Document. | |
*101.SCH | XBRL Taxonomy Extension Schema Document. | |
*101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
*101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
*101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
*101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
* | Filed herewith. | |
** | Furnished herewith. | |
† | Management contracts or compensatory plans or arrangements. |
May 7, 2019 | EVERI HOLDINGS INC. | ||
(Date) | (Registrant) | ||
By: | /s/ Todd A. Valli | ||
Todd A. Valli | |||
Senior Vice President, Corporate Finance and Chief Accounting Officer | |||
(For the Registrant and as Principal Accounting Officer) |
1.1. | Position and Term. The Company hereby employs Executive to render services to the Company in the position of Executive Vice President, Chief Legal Officer – General Counsel, reporting directly to the Chief Executive Officer of the Company. The Company’s employment of Executive hereunder is contingent upon Executive successfully completing a background investigation. The duties of this position shall include such duties and responsibilities as are reasonably assigned to Executive by the Chief Executive Officer, including, but not limited to, directing all legal, regulatory compliance and product compliance matters for the Company (including authority to determine related vendors and personnel), managing business risk, protecting company assets, and providing legal advice on all business-related matters, as well as any other such duties and responsibilities as are customarily performed by persons holding similar positions at similarly situated corporations. Executive agrees to serve in a similar capacity for the benefit of Everi Holdings and any of Everi Holdings’ direct or indirect, wholly-owned or partially-owned subsidiaries or Everi Holdings’ affiliates. Additionally, Executive shall serve in such other capacity or capacities as the Chief Executive Officer may from time to time reasonably and lawfully prescribe. Executive shall be deemed an “Executive Officer” for purposes of indemnification by the Company pursuant to Article XI of the Company’s bylaws. |
1.2. | Best Efforts; Other Activities. Executive will expend Executive’s best efforts on behalf of the Company, Everi Holdings and their respective subsidiaries and affiliates, and will abide by all policies and decisions made by the Company and Everi Holdings, as well as all applicable federal, state and local laws, regulations or ordinances. Executive will act in the best interest of the Company, Everi Holdings and their respective subsidiaries and affiliates at all times. Executive shall devote Executive’s full business time and efforts to the performance of Executive’s assigned duties and responsibilities under this Agreement and, except upon the prior written consent of the Board of Directors of the Company (the “Board”), Executive will not (a) accept any other employment, or (b) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting position to that of, the Company, Everi Holdings and/or their respective subsidiaries and affiliates. Notwithstanding the foregoing, Executive shall be permitted to (i) provide necessary and appropriate transition services to Executive’s former employer, Bally Gaming, Inc. and its affiliated companies (“Prior Employer”) for a period of six months following the Effective Date as may be reasonably requested by Prior Employer), including up to two (2) weeks of full time transition services (i.e., Effective Date through January 14, 2018), (provided that such services shall relate to the transition of Executive’s duties and knowledge and shall not include providing legal advice), and (ii) engage in occasional charitable activities outside the scope of Executive's employment hereunder so long as such activities (A) do not conflict with the actual or proposed business of the Company, Everi Holdings and/or their respective subsidiaries and affiliates, and (B) do not affect the performance of Executive's duties hereunder. In addition, subject to the prior written consent of the Board and subject to the satisfaction of Executive’s fiduciary duties to the Company, Everi Holdings and/or their respective subsidiaries and affiliates, Executive may be permitted to serve as a director of other corporations provided that the businesses of such other corporations are not competitive with the actual or proposed business of the Company, Everi Holdings and/or their respective subsidiaries and affiliates and provided further that Executive’s service as a director of such other corporations does not interfere with Executive's performance of Executive's duties hereunder. In the sole discretion of the Board, any such prior written consent may be subsequently revoked in the event that the Chief Executive Officer or Board determines that Executive’s position as a director of any such other corporation has developed into a conflict of interest. |
1.3. | Location. Executive’s principal place of employment shall be the Company’s corporate headquarters, which is located in Las Vegas, Nevada. USA. |
1.4. | Proprietary Information. Executive recognizes that Executive’s employment with the Company will involve contact with information of substantial value to the Company, Everi Holdings and their respective subsidiaries and affiliates, which is not generally known in the trade, and which gives the Company, Everi Holdings and their respective subsidiaries and affiliates an advantage over their competitors who do not know or use it. As a condition precedent to Executive’s employment by the Company, Executive agrees to execute and deliver to the Company, concurrent with Executive's execution and delivery of this Agreement, a copy of the “Employee Proprietary Information and Inventions Agreement” attached hereto as Exhibit A. |
1.5. | No Inconsistent Obligations. Executive acknowledges and agrees that Executive is free to enter into this Agreement as of today and, as of the Effective Date, Executive reasonably believes that Executive will not be bound by any restrictive covenants, including but not limited to, covenants not to compete and will be permitted to be employed by the Company as contemplated hereby. Executive further agrees and covenants that Executive has not and will never use any confidential information or trade secrets belonging to any third party, including, but not limited to, Executive’s Prior Employer, to the extent Executive has any, |
1.6. | Regulatory Approval. Due to the nature of the business of the Company, Everi Holdings and their respective subsidiaries and affiliates and Executive’s position with the Company and Everi Holdings, and, in addition to normal employment-related credit, reference and background investigations, Executive may also be required to complete applications required by various regulatory, tribal, state, local or other international governmental authorities in and under whose jurisdiction the Company, Everi Holdings and their respective subsidiaries and affiliates conduct business, as well as other applications that may be required by regulatory authorities with jurisdiction over the Company, Everi Holdings and their respective subsidiaries and affiliates. Such applications may require complete disclosure of personal and financial information, criminal convictions or arrests (expunged or not) and business associations. As an ongoing condition of Executive’s employment, Executive must be able to satisfy all applicable requirements of such governmental and regulatory authorities and obtain all necessary regulatory approvals and licenses. |
2.1. | Base Salary. In consideration of the services to be rendered under this Agreement, while employed by the Company, the Company shall pay Executive an annual base salary (“Base Salary”), less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions, payable in regular periodic payments in accordance with Company payroll policy, as follows: (a) for the period from the Effective Date through December 31, 2018, a Base Salary at the rate of Three Hundred Fifty Thousand United States Dollars (US$350,000.00) per year, (b) for the period from January 1, 2019 through December 31, 2019, a Base Salary at the rate of Three Hundred Seventy-Five Thousand United States Dollars (US$375,000.00) per year, and (c) effective as of January 1, 2020, a Base Salary at the rate of Four Hundred Thousand United States Dollars (US$400,000.00) per year. Such Base Salary shall be prorated for any partial month of employment on the basis of a 30-day fiscal month. Such Base Salary shall be subject to |
2.2. | Bonus. For each full fiscal year of Executive’s employment with the Company, Executive shall be eligible for an annual discretionary bonus (the “Cash Bonus”) with a target amount equal to seventy-five percent (75%) of Executive’s then current base salary and a maximum amount equal to one-hundred fifty percent (150%) of Executive’s then current base salary. The actual amount of any such Cash Bonus is to be determined by the Compensation Committee based (a) twenty-five percent (25%) on Executive’s individual performance, and (b) seventy-five percent (75%) on the achievement of certain corporate performance criteria or goals, in each case as established for the applicable calendar year by the Compensation Committee prior to or as soon as practicable after the commencement of such calendar year, but in no event later than March 15 of the applicable calendar year, and set forth in a written plan. Except as provided otherwise in this Agreement, Executive shall only be eligible to receive a Cash Bonus for a calendar year if Executive is employed on the last day of such calendar year. Any Cash Bonus awarded for a calendar year, if any, shall be paid in cash when other senior executives of the Company are paid, and, in any event, on or before March 15th of the calendar year subsequent to the calendar year in which the Cash Bonus is earned. |
2.3. | Benefits. Executive shall be entitled to participate in any of the Company’s group medical, dental, life insurance, 401(k) or other benefit plans and programs on the same terms and conditions as other members of the Company’s senior executive management, based upon the eligibility dates described in the applicable benefit plan documents and subject to the terms and conditions of such plans. Executive shall be provided such perquisites of employment as are provided to all other members of the Company’s senior executive management. Executive understands that the Company has adopted an “unlimited” vacation policy pursuant to which the Company does not limit senior executive officers’ vacation time or sick days; accordingly, like the Company’s other senior executive officers, Executive will not “accrue” paid time off days and will not be compensated for “unused” paid time off upon termination. |
2.5. | Equity Awards. Executive will be eligible to receive restricted stock, restricted stock units, performance awards, stock options or other equity awards in a quantity and with a frequency substantially similar to those regularly awarded to other members of the Company’s senior executive management, other than the Chief Executive Officer, (each, an “Equity Award”) under the applicable equity incentive plan of Everi Holdings as then in effect (the “Plan”), as determined by the Compensation Committee. Any such Equity Award will be subject to and governed by the terms and conditions of the Plan and an applicable form of agreement for such Equity Award specified by the Compensation Committee, which Executive will be required to sign as a condition of retaining the Equity Award. |
2.6. | Other. In connection with the execution and delivery of this Agreement, the Company will (a) on or before the Effective Date, pay Executive a lump sum signing bonus of Fifty Thousand United States Dollars (US$50,000.00), less required withholdings and deductions, |
4.1. | Termination by Executive. During the Term, Executive may terminate Executive's employment upon written notice to the Company. In the event that, during the Term, Executive terminates Executive's employment for any reason other than for Good Reason (as defined below in Section 4.3), all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, only the following: all Base Salary earned by Executive through the last day of Executive’s employment but not yet paid, all reimbursable business expenses properly incurred by Executive pursuant to Section 2.4 through the last day of Executive’s employment but not yet reimbursed, and all benefits earned by Executive pursuant to Section 2.3 through the last day of Executive's employment (the “Accrued Amounts”); provided however, in the event the Company elects to enforce the Noncompete Term (as defined in Section 7.2) following a termination under this Section 4.1, the Company will continue to pay Executive’s then-current Base Salary in installments in accordance with the Company’s regular payroll procedures during the pendency of the Noncompete Term. |
4.2. | Termination by the Company for Cause. In the event that, during the Term, the Company terminates Executive’s employment for Cause (as defined below), all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, only the Accrued Amounts; provided however, in the event the Company elects to enforce the Noncompete Term following a termination under this Section 4.1, the Company will continue to pay Executive’s then-current Base Salary in installments in accordance with the Company’s regular payroll procedures during the pendency of the Non-Compete Term. For the purposes of this Agreement, termination shall be for “Cause” if (a) Executive refuses or fails to act in accordance with any lawful order or instruction of the Chief Executive Officer or Board, and such refusal or failure to act has not been cured within five (5) days following Executive's receipt of written notice from the Chief Executive Officer or Board, as applicable, of such failure, (b) Executive is determined by the Chief Executive Officer or Board to have failed to devote reasonable attention and time to the business affairs of the Company, Everi Holdings and their subsidiaries and affiliates, (c) Executive is reasonably determined by the Chief Executive Officer or Board to have been (i) unfit for service (i.e., denied any license, permit or qualification required by, or found unsuitable by, any gaming regulator or other governmental authority), (ii) unavailable for service (other than as a result of an Incapacity (as defined below)), or (iii) grossly negligent in connection with the performance of Executive's duties on behalf of the Company, Everi Holdings and their subsidiaries and affiliates, which unfitness, unavailability or gross negligence has not been cured within five (5) days following Executive's receipt of written notice from the Chief Executive Officer or Board of the same; (d) Executive is reasonably determined by the Chief Executive Officer or Board to have committed a material act of dishonesty or willful misconduct or to have acted in bad faith to the material detriment of the Company, Everi Holdings and/or their subsidiaries and affiliates in connection with the performance of Executive's duties hereunder; (e) Executive is convicted of a felony or other crime involving dishonesty, breach of trust, moral turpitude or physical harm to any person, or (f) Executive materially breaches any agreement with the Company or Everi Holdings which material breach has not been cured within five (5) days following Executive's receipt of written notice from the Chief Executive Officer or Board of the same. |
4.3. | Termination by the Company without Cause, or Termination by Executive for Good Reason. In the event that, during the Term, the Company terminates Executive’s employment without Cause (as defined below), or Executive terminates Executive’s employment for Good Reason (as defined below), all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, the Accrued Amounts. In addition, and subject to the conditions set forth in Section 4.8 below, the Company shall pay to Executive the severance payments and benefits set forth below in Sections 4.3.1- 4.3.4 in accordance with the terms thereof. For purposes of this Agreement, the term “without Cause” shall mean termination of Executive’s employment by the Company for reasons other than for “Cause” (and excluding any such termination resulting from Executive’s Incapacity or death). For the purposes of this Agreement, termination shall be for “Good Reason” if (a) there is a material diminution of Executive’s responsibilities or authority with the Company or Everi Holdings, or a material adverse change in the Executive’s reporting responsibilities or title, in each case as they existed prior to such diminution or change without Executive’s consent; (b) there is a material reduction by the Company in the Executive’s compensation as then in effect, without Executive’s consent; or (c) Executive’s principal work locations are relocated outside of the Las Vegas, Nevada, USA metropolitan area without Executive’s consent. Executive will be deemed not to have terminated Executive’s employment for Good Reason unless (i) Executive has delivered written notice to the Company of Executive's intent to exercise the rights pursuant to this Section within thirty (30) days following the first occurrence of a condition that would constitute Good Reason and identifying the facts constituting such condition, and (ii) the Company has failed to remedy such condition within thirty (30) days following its receipt of such written notice, and (iii) the Executive’s termination of employment for Good Reason is effective no later than one-hundred fifty (150) days following the first occurrence of such condition. Executive agrees that Executive may be required to travel from time to time as required by the Company’s business and that such travel shall not constitute grounds for Executive to terminate Executive's employment for Good Reason. |
4.4. | Termination by the Company for Incapacity. In the event that, during the Term, Executive suffers an “Incapacity” (defined below) as determined by the Company in its reasonable discretion, the Company may elect to terminate Executive’s employment pursuant to this Section 4.4. In such event, all of the Company’s duties and obligations under this Agreement shall cease as of the last day of Executive’s employment and the Company shall pay Executive, and Executive shall be entitled to receive, only the Accrued Amounts; provided, however, that nothing contained in this Agreement shall limit Executive’s rights to payments or other benefits under any long-term disability plans of the Company in which Executive participates, if any. For the purposes of this Agreement, Executive shall be deemed to have suffered an “Incapacity” if Executive, due to any mental or physical illness, injury or limitation, has been unable to perform the essential duties and responsibilities of Executive’s position for a period of at least one-hundred eighty (180) days in any rolling three hundred and sixty-five (365) day period. |
4.5. | Termination upon Death. In the event that, during the Term, Executive dies, Executive’s employment shall be deemed to have terminated upon the date of death and all of the Company’s duties and obligations under this Agreement shall cease. In such event, the Company shall pay Executive’s estate, and Executive’s estate shall be entitled to receive, only the Accrued Amounts; provided, however, that nothing contained in this Agreement shall limit Executive’s estate’s or Executive’s beneficiaries’ rights to payments or other benefits under any life insurance plan or policy in which Executive participated or with respect to which Executive has designated a beneficiary, if any. |
4.6. | Change in Control and Termination Payments. |
4.7. | No Other Compensation or Benefits/No Duty to Mitigate. Executive acknowledges that except as expressly provided in this Agreement, Executive shall not be entitled to any compensation, severance payments or benefits upon the termination of Executive’s employment. The Company acknowledges that Executive is under no duty to seek other employment or otherwise mitigate the obligations of the Company under this Agreement and the Company shall have no right of off-set against the amounts owed to Executive by the Company on account of any remuneration or other benefit earned or received by Executive after Executive’s termination by the Company. |
4.8. | Conditions to Severance. Executive will only be entitled to receive the severance payments and benefits set forth in Sections 4.3.1- 4.3.4 if, on or before the sixtieth (60th) day following the date of termination of Executive's employment (the “Release Deadline”), Executive executes a full general release of claims agreement in a form similar to Exhibit B hereto or the Company’s then-current version thereof, releasing all claims, known or unknown, that Executive may have against the Company, Everi Holdings and their respective subsidiaries and affiliates, and each of their respective officers, directors, and employees arising out of or in any way related to Executive’s employment or termination of employment with the Company, and the period for revocation, if any, of such release agreement has lapsed without the release having been revoked. In the event that Executive breaches any of the covenants contained in Sections 7 or 8, the Company shall have the right to (a) terminate further provision of any portion of the severance payments and benefits set forth in Sections 4.3.1-4.3.4 not yet paid or provided to Executive, (b) seek reimbursement in gross from Executive for any and all portions of the severance payments and benefits set forth in Sections 4.3.1-4.3.4 previously paid or provided to Executive, (c) recover from Executive all shares of Everi Holdings stock acquired by Executive pursuant to Equity Awards the vesting of which was accelerated by reason of Executive’s termination of employment (or the proceeds therefrom, reduced by any exercise or purchase price paid to acquire such shares), and (d) immediately cancel all portions of Equity Awards the vesting of which was accelerated by reason of Executive’s termination of employment. |
4.9. | Expiration of the Term. For the avoidance of doubt, the exercise by the Company of its right to not extend the Agreement, or the expiration of this Agreement by its terms at the end of the Term, shall constitute a termination at the election of the Company without Cause. |
5.1. | Return of Company’s Property. Without in any way limiting Executive’s obligations and the Company’s rights under the Employee Proprietary Information and Inventions Agreement described in Section 1.4, Executive hereby acknowledges and agrees that all books, manuals, records, reports, notes, contracts, lists, spreadsheets and other documents or materials, or copies thereof, and equipment furnished to or prepared by Executive in the course of or incident to Executive’s employment, belong to Company and shall be promptly returned to Company upon termination of Executive’s employment with the Company for any reason. |
5.2. | Cooperation in Pending Work. Following any termination of Executive’s employment with the Company for any reason, Executive shall, at the Company’s request, reasonably cooperate with the Company in all matters relating to the winding up of pending work on behalf of the Company, Everi Holdings and their respective subsidiaries and affiliates and the orderly transfer of work to other employees of the Company, Everi Holdings and their respective subsidiaries and affiliates. Executive shall also cooperate, at the Company’s request, in the defense of any action brought by any third party against the Company, Everi Holdings and/or their respective subsidiaries and affiliates that relates in any way to Executive’s acts or omissions while employed by the Company. |
5.3. | Resignation. Upon the termination of Executive’s employment with the Company for any reason, Executive shall be deemed to have resigned from all positions as an employee, officer, director or manager then held with the Company, Everi Holdings or any of their respective subsidiaries or affiliates. Executive agrees to execute and deliver such documents or instruments as are reasonably requested by the Company, Everi Holdings or any such subsidiary or affiliate to evidence such resignations. |
5.4. | Survival. The representations and warranties contained herein and Executive’s and the Company’s obligations under Sections 3, 4, 5, 6, 7, 8 and 9 and under the Employee Proprietary Information and Inventions Agreement shall survive termination of Executive’s employment with the Company for any reason and the expiration of this Agreement. |
6.2. | No amount payable pursuant to this Agreement on account of Executive’s termination of employment with the Company which constitutes a “deferral of compensation” within the meaning of Section 409A shall be paid unless and until Executive has incurred a “separation from service” within the meaning of Section 409A. Furthermore, to the extent that Executive is a “specified employee” within the meaning of Section 409A (determined using the identification methodology selected by Company from time to time, or if none, the default methodology) as of the date of Executive’s separation from service, no amount that constitutes a deferral of compensation which is payable on account of Executive’s separation from service shall paid to Executive before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of Executive’s separation from service or, if earlier, the date of Executive’s death following such separation from service. All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid in a lump sum on the Delayed Payment Date. Thereafter, any payments that remain outstanding as of the day immediately following the Delayed Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement. |
6.3. | Any right of Executive to receive installment payments under this Agreement shall, for all purposes of Section 409A, be treated as a right to a series of separate payments. |
7.1. | Reasons for Restrictions. Executive acknowledges that the nature of the business of the Company, Everi Holdings and/or their respective subsidiaries and affiliates is such that it would be extremely difficult for Executive to honor and comply with Executive's obligations under the Employee Proprietary Information and Inventions Agreement described in Section 1.4 to keep secret and confidential the trade secrets of the Company, Everi Holdings and/or their respective subsidiaries and affiliates if Executive were to become employed by or substantially interested in the business of a competitor of the Company, Everi Holdings and/or their respective subsidiaries and affiliates is such that soon following the termination of Executive's employment with the Company, and it would also be extremely difficult to determine in any reasonably available forum the extent to which Executive was or was not complying with Executive's obligations under such circumstances. |
7.2. | Duration of Restriction. In consideration for the Company’s and Everi Holdings’ undertakings and obligations under this Agreement, and in light of Executive’s unique position and substantial knowledge of the operations, plans and projects of the Company, Everi Holdings and their respective subsidiaries and affiliates, Executive agrees that, during the Noncompete Term (as defined below), Executive shall not directly or indirectly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business that engages in any line of business in which the Company, Everi Holdings and/or their respective subsidiaries and affiliates engages at the time of such termination, in the United States Canada, the United Kingdom or such other countries in which the Company, Everi Holdings and/or their respective subsidiaries and affiliates conducts business at the time of such termination (“Restricted Territory”). For the avoidance of doubt, the foregoing shall not prohibit Executive from engaging in, owning an interest in, or participating in any business that processes credit card, debit card or automated teller machine transactions originated from outside of gaming establishments, unless the Company has expanded its operations to encompass such activities at the time of |
7.3 | Assignment. Executive expressly understands and agrees that all restrictions on employment and solicitation as set for in Sections 7 and 8 are fair and reasonable, and are a material part of this Agreement which would not be entered into by the parties absent mutual agreement to the assignability of the same. Executive further expressly understands and agrees that Executive's duties and obligations as set forth in Sections 7 and 8 of this Agreement may be assigned by the Company upon a Change in Control at Company's discretion. Executive agrees that Executive has received separate valuable and sufficient consideration in exchange for Company's right to assign Executive's obligations and duties as set for in Sections 7 and 8, such consideration to be paid in the amount of $5,000 upon all parties executing this Agreement. |
9.1. | Agreement to Arbitrate Claims. The Company and Executive hereby agree that, to the fullest extent permitted by law, any and all claims or controversies between them (or between Executive and any present or former officer, director, agent, or employee of the Company or any parent, subsidiary, or other entity affiliated with the Company) relating in any manner to the employment or the termination of employment of Executive shall be resolved by final and binding arbitration pursuant to the terms and conditions set forth in that certain National Mutual Arbitration Agreement for Employees of the Company executed by Executive (the “Arbitration Agreement”) in the form attached hereto as Exhibit C Claims subject to the Arbitration Agreement shall include contract claims, tort claims, claims relating to |
9.2. | Enforcement Actions. Either the Company or Executive may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Except as otherwise provided in this Agreement, neither party shall initiate or prosecute any lawsuit in any way related to any arbitrable claim, including, without limitation, any claim as to the making, existence, validity, or enforceability of the agreement to arbitrate. All arbitration hearings under this Agreement shall be conducted in Las Vegas, Nevada. |
9.3. | Exceptions. Nothing in this Agreement precludes a party from filing an administrative charge before an agency that has jurisdiction over an arbitrable claim. In addition, either party may, at its option, seek injunctive relief in a court of competent jurisdiction for any claim or controversy arising out of or related to the matters described in Sections 7 and 8 above or the unauthorized use, disclosure, or misappropriation of the confidential and/or proprietary information of either party in contravention of the Employee Proprietary Information and Inventions Agreement or otherwise. By way of example, the Company may choose to use the court system to seek injunctive relief to prevent disclosure of its proprietary information or trade secrets; similarly, Executive may elect to use the court system to seek injunctive relief to protect Executive’s own inventions or trade secrets. |
9.4. | Attorneys’ Fees. Each party shall pay its own costs and attorney’s fees, unless a party prevails on a statutory claim, and the statute provides that the prevailing party is entitled to payment of its attorneys' fees. In that case, the arbitrator may award reasonable attorneys' fees and costs to the prevailing party as provided by law. The costs and fees of the arbitrator shall be borne equally by Executive and the Company. |
9.5. | Survival. The parties’ obligations under this Agreement, where applicable including Section 7 and 8, shall survive the termination of Executive’s employment with the Company for any reason and the expiration of this Agreement. |
9.6. | Acknowledgements. THE PARTIES UNDERSTAND AND AGREE THAT THIS SECTION 9 CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS SECTION 9. THE PARTIES AGREE THAT NONE OF THOSE CLAIMS OR CONTROVERSIES SHALL BE RESOLVED BY A JURY TRIAL. THE PARTIES FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS SECTION 9 WITH THEIR LEGAL COUNSEL AND HAVE AVAILED THEMSELVES OF THAT OPPORTUNITY TO THE EXTENT THEY WISH TO DO SO. |
If to Company: | Everi Payments Inc. Attn: CEO w/ copy to General Counsel 7250 S. Tenaya Way, Ste. 100 Las Vegas, NV 89113 |
If to Executive: | Harper Ko 10216 Hailey Lynne Road Las Vegas, Nevada 89183 |
EVERI PAYMENTS INC. | EXECUTIVE | ||
By: | /s/ Michael D. Rumbolz | /s/ Harper H. Ko | |
Michael D. Rumbolz | Harper H. Ko | ||
President and Chief Executive Officer |
EVERI HOLDINGS INC. | EXECUTIVE | ||
By: | /s/ Michael D. Rumbolz | /s/ Harper H. Ko | |
Michael D. Rumbolz | Harper H. Ko | ||
President and Chief Executive Officer |
1. | Prior Inventions. Except as set forth below, there are no ideas, processes, inventions, technology, writings, programs, designs, formulas, discoveries, patents, copyrights, or trademarks, or any claims, rights, or improvements to the foregoing, that I wish to exclude from the operation of this Agreement: |
2. | Prior Agreements. Except as set forth below, I am aware of no prior agreements between me and any other person or entity concerning proprietary information or inventions (attach copies of all agreements in your possession): |
Dated: | , 20__ | By: | ||
EVERI PAYMENTS INC. | ||||
Dated: | , 20__ | By: | ||
Indemnitee: | The Company: | ||
EVERI HOLDINGS INC. | |||
Address: | By: | ||
Name: | |||
Title: | |||
1. | I have reviewed this Quarterly Report on Form 10-Q of Everi Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: May 7, 2019 | By: | /s/ Michael D. Rumbolz | |
Michael D. Rumbolz | |||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Everi Holdings Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: May 7, 2019 | By: | /s/ Randy L. Taylor | |
Randy L. Taylor | |||
Chief Financial Officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated. |
Dated: | May 7, 2019 | By: | /s/ Michael D. Rumbolz | |||
Michael D. Rumbolz | ||||||
President and Chief Executive Officer | ||||||
Dated: | May 7, 2019 | /s/ Randy L. Taylor | ||||
Randy L. Taylor | ||||||
Chief Financial Officer |
DOCUMENT AND ENTITY INFORMATION - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 01, 2019 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Everi Holdings Inc. | |
Entity Central Index Key | 0001318568 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 71,112,733 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | EVRI |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Current assets | ||
Cash and cash equivalents | $ 139,857 | $ 297,532 |
Settlement receivables | 259,288 | 82,359 |
Trade and other receivables, net of allowances for doubtful accounts of $6,281 and $6,425 at March 31, 2019 and December 31, 2018, respectively | 72,333 | 64,387 |
Inventory | 24,797 | 24,403 |
Prepaid expenses and other assets | 22,293 | 20,259 |
Total current assets | 518,568 | 488,940 |
Non-current assets | ||
Property, equipment and leased assets, net | 113,067 | 116,288 |
Goodwill | 673,447 | 640,537 |
Other intangible assets, net | 292,955 | 287,397 |
Other receivables | 12,297 | 8,847 |
Other assets | 21,670 | 6,252 |
Total non-current assets | 1,113,436 | 1,059,321 |
Total assets | 1,632,004 | 1,548,261 |
Current liabilities | ||
Settlement liabilities | 354,402 | 334,198 |
Accounts payable and accrued expenses | 152,716 | 129,238 |
Current portion of long-term debt | 8,200 | 8,200 |
Total current liabilities | 515,318 | 471,636 |
Non-current liabilities | ||
Deferred tax liability | 27,354 | 27,867 |
Long-term debt, less current portion | 1,153,807 | 1,155,016 |
Other accrued expenses and liabilities | 31,327 | 2,637 |
Total non-current liabilities | 1,212,488 | 1,185,520 |
Total liabilities | 1,727,806 | 1,657,156 |
Commitments and contingencies (Note 13) | ||
Stockholders’ deficit | ||
Common stock, $0.001 par value, 500,000 shares authorized and 95,966 and 95,100 shares issued at March 31, 2019 and December 31, 2018, respectively | 96 | 95 |
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at March 31, 2019 and December 31, 2018, respectively | 0 | 0 |
Additional paid-in capital | 305,672 | 298,929 |
Accumulated deficit | (223,597) | (229,457) |
Accumulated other comprehensive loss | (1,494) | (1,998) |
Treasury stock, at cost, 24,902 and 24,900 shares at March 31, 2019 and December 31, 2018, respectively | (176,479) | (176,464) |
Total stockholders’ deficit | (95,802) | (108,895) |
Total liabilities and stockholders’ deficit | $ 1,632,004 | $ 1,548,261 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Current assets | ||
Allowances for doubtful accounts | $ 6,281 | $ 6,425 |
Stockholders’ deficit | ||
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 95,965,756 | 95,099,532 |
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock authorized (in shares) | 50,000,000 | 50,000,000 |
Convertible preferred stock outstanding (in shares) | 0 | 0 |
Treasury stock (in shares) | 24,902,000 | 24,900,000 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Cash flows from operating activities | ||
Net income | $ 5,860 | $ 4,609 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation | 14,789 | 12,825 |
Amortization | 16,297 | 16,303 |
Amortization of financing costs and discounts | 890 | 905 |
Loss (gain) on sale or disposal of assets | 513 | (13) |
Accretion of contract rights | 2,122 | 2,057 |
Provision for bad debts | 2,864 | 2,182 |
Deferred income taxes | (513) | (561) |
Reserve for obsolescence | 441 | 305 |
Stock-based compensation | 1,773 | 2,350 |
Changes in operating assets and liabilities: | ||
Settlement receivables | (175,748) | 73,571 |
Trade and other receivables | (12,385) | (9,715) |
Inventory | 57 | (1,157) |
Other assets | (16,756) | 1,251 |
Settlement liabilities | 19,931 | (74,617) |
Other liabilities | 27,677 | 2,456 |
Net cash (used in) provided by operating activities | (112,188) | 32,751 |
Cash flows from investing activities | ||
Capital expenditures | (22,194) | (26,339) |
Acquisition | (20,000) | 0 |
Proceeds from sale of fixed assets | 33 | 72 |
Placement fee agreements | (5,329) | (4,643) |
Net cash used in investing activities | (47,490) | (30,910) |
Cash flows from financing activities | ||
Repayments of credit facilities | (2,050) | (2,050) |
Proceeds from exercise of stock options | 4,686 | 4,088 |
Purchase of treasury stock | (15) | (38) |
Net cash provided by financing activities | 2,621 | 2,000 |
Effect of exchange rates on cash | (343) | 147 |
Cash, cash equivalents and restricted cash | ||
Net (decrease) increase for the period | (157,400) | 3,988 |
Balance, beginning of the period | 299,181 | 129,604 |
Balance, end of the period | 141,781 | 133,592 |
Supplemental cash disclosures | ||
Cash paid for interest | 12,470 | 15,206 |
Cash paid for income tax, net of refunds | 92 | 66 |
Supplemental non-cash disclosures | ||
Accrued and unpaid capital expenditures | 3,209 | 4,145 |
Accrued and unpaid placement fees added during the year | 0 | 363 |
Transfer of leased gaming equipment to inventory | 4,673 | 1,897 |
Operating lease ROU assets obtained in exchange for lease obligations | 15,132 | 0 |
Fair value of assets acquired | 50,240 | 0 |
Cash paid | 20,000 | 0 |
Accrued and unpaid liability for loyalty acquisition | 27,556 | 0 |
Liabilities assumed | $ 2,684 | $ 0 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - USD ($) shares in Thousands |
Total |
Common Stock— Series A |
Additional Paid-in Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
---|---|---|---|---|---|---|
Balance, beginning of period (in shares) at Dec. 31, 2017 | 93,120 | |||||
Balance, beginning of period at Dec. 31, 2017 | $ (140,633,000) | $ 93,000 | $ 282,070,000 | $ (246,202,000) | $ (253,000) | $ (176,341,000) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 4,609,000 | 4,609,000 | ||||
Foreign currency translation | 324,000 | 324,000 | ||||
Stock-based compensation expense | 2,350,000 | 2,350,000 | ||||
Exercise of options (in shares) | 712 | |||||
Exercise of options | 4,299,000 | $ 1,000 | 4,298,000 | |||
Restricted shares (in shares) | 0 | |||||
Restricted share vesting and withholding | (38,000) | (38,400) | ||||
Balance, end of period (in shares) at Mar. 31, 2018 | 93,832 | |||||
Balance, end of period at Mar. 31, 2018 | (124,700,000) | $ 94,000 | 288,718,000 | (237,204,000) | 71,000 | (176,379,000) |
Balance, beginning of period (in shares) at Dec. 31, 2018 | 95,100 | |||||
Balance, beginning of period at Dec. 31, 2018 | (108,895,000) | $ 95,000 | 298,929,000 | (229,457,000) | (1,998,000) | (176,464,000) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 5,860,000 | 5,860,000 | ||||
Foreign currency translation | 504,000 | 504,000 | ||||
Stock-based compensation expense | 1,773,000 | 1,773,000 | ||||
Exercise of options (in shares) | 864 | |||||
Exercise of options | 4,971,000 | $ 1,000 | 4,970,000 | |||
Restricted shares (in shares) | 2 | |||||
Restricted share vesting and withholding | (15,000) | (14,718.24) | ||||
Balance, end of period (in shares) at Mar. 31, 2019 | 95,966 | |||||
Balance, end of period at Mar. 31, 2019 | $ (95,802,000) | $ 96,000 | $ 305,672,000 | $ (223,597,000) | $ (1,494,000) | $ (176,479,000) |
BUSINESS |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | BUSINESS Everi Holdings Inc. (“Everi Holdings,” “Holdings,” or “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Games Holding Inc. (“Everi Games Holding”), which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (“Everi Games” or “Games”), and Everi Payments Inc. (“Everi Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us,” and “our” refer to Everi Holdings together with its consolidated subsidiaries. Everi is a leading supplier of technology solutions for the casino gaming industry. We provide casino operators with a diverse portfolio of products, including innovative gaming machines that power the casino floor, and casino operational and management systems that include comprehensive, end-to-end financial technology solutions, critical intelligence offerings, and gaming operations efficiency technology. Everi also provides tier one land-based game content to online social and real-money markets via its Remote Game Server and operates social play for fun casinos. Everi Holdings reports its results of operations based on two operating segments: Games and FinTech. Effective April 1, 2018, we changed the name of the operating segment previously referred to as “Payments” to “Financial Technology Solutions” (“Everi FinTech” or “FinTech”). We believe this reference more accurately reflects the focus of the business segment on delivering innovative and integrated solutions to enhance the efficiency of the casino operator, support the comprehensive regulatory and tax requirements of their gaming customers, and improve players’ gaming experience by providing easy access to their funds and payment of winnings. Everi Games provides gaming operators products and services, including: (a) gaming machines primarily comprised of Class II and Class III slot machines placed under participation or fixed fee lease arrangements or sold to casino customers, including TournEvent® terminals that allow operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) system software, licenses, and ancillary equipment; and (c) business-to-consumer and business-to-business interactive activities. In addition, Everi Games develops and manages the central determinant system for the video lottery terminals (“VLTs”) installed in the State of New York, and it also provides similar technology in certain tribal jurisdictions. Everi FinTech provides gaming operators cash access and related products and services, including: (a) access to cash at gaming facilities via Automated Teller Machine (“ATM”) cash withdrawals, credit card cash access transactions, point of sale (“POS”) debit card cash access transactions, and check verification and warranty services; (b) equipment that provides cash access and efficiency-related services; (c) self-service enrollment and loyalty card printing equipment; (d) products and services that improve credit decision making, automate cashier operations, and enhance patron marketing activities for gaming establishments; (e) compliance, audit, and data solutions; and (f) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. The results for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the full fiscal year. The Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Other than the adoption of the Financial Accounting Standard Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-02 (“Leases”) and all subsequent amendments (collectively, Accounting Standards Codification 842, or ASC 842), there have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Revenue Recognition Overview We evaluate the recognition of revenue based on the criteria set forth in ASC 606 (“Revenue from Contracts with Customers”) and ASC 842, as appropriate. We recognize revenue upon transferring control of goods or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts with customers that include various performance obligations consisting of goods, services, or combinations of goods and services. Timing of the transfer of control varies based on the nature of the contract. We recognize revenue net of any sales and other taxes collected from customers, which are subsequently remitted to governmental authorities and are not included in revenues or operating expenses. We measure revenue based on the consideration specified in a contract with a customer and adjusted, as necessary. We evaluate the composition of our revenues to ensure compliance with SEC Regulation S-X Section 210.5-3, which requires us to separately present certain categories of revenues that exceed the quantitative threshold on our Statements of Income. Significant Judgments We apply judgments or estimates to determine the performance obligations and the Stand-Alone Selling Price (“SSP”) of each identified performance obligation. The establishment of SSP requires judgment as to whether there is a sufficient quantity of items sold or renewed on a stand-alone basis and those prices demonstrate an appropriate level of concentration to conclude that a SSP exists. The SSP of our goods and services are generally determined based on observable prices, an adjusted market assessment approach or an expected cost plus margin approach. We utilize a residual approach only when the SSP for performance obligations with observable prices has been established and the remaining performance obligation in the contract with a customer does not have an observable price as it is uncertain or highly variable and, therefore, is not discernible. Collectability To assess collectability, we determine whether it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services transferred to the customer in accordance with the terms and conditions of the contract. In connection with these procedures, we evaluate the customer using internal and external information available, including, but not limited to, research and analysis of our credit history with the customer. Based on the nature of our transactions and historical trends, we determine whether our customers have the ability and intention to pay the amounts of consideration when they become due to identify potentially significant credit risk exposure. Contract Combinations — Multiple Promised Goods and Services Our contracts may include various performance obligations for promises to transfer multiple goods and services to a customer, especially since our Games and FinTech businesses may enter into multiple agreements with the same customer that meet the criteria to be combined for accounting purposes under ASC 606. When this occurs, a SSP will be determined for each performance obligation in the combined arrangement and the consideration allocated between the respective performance obligations. We use our judgment to analyze the nature of the promises made and determine whether each is distinct or should be combined with other promises in the contract based on the level of integration and interdependency between the individual deliverables. Disaggregation of Revenues We disaggregate revenues based on the nature and timing of the cash flows generated by such revenues as presented in “Note 18 — Segment Information.” Outbound Freight Costs Upon transferring control of goods to a customer, the shipping and handling costs in connection with sale transactions are accounted for as fulfillment costs and included in cost of revenues. Costs to Acquire a Contract with a Customer We typically incur incremental costs to acquire customer contracts in the form of sales commission expenses. We evaluate those acquisition costs for groups of contracts with similar characteristics, based on the nature of the transactions. The incremental costs to acquire customer contracts identified would be amortized within one year and, as a result, we elected to utilize the practical expedient set forth in ASC 340 (“Contract Costs - Incremental Costs of Obtaining a Contract”) to expense these amounts as incurred. Contract Balances Since our contracts may include multiple performance obligations, there is often a timing difference between cash collections and the satisfaction of such performance obligations and revenue recognition. Such arrangements are evaluated to determine whether contract assets and liabilities exist. We generally record contract assets when the timing of cash collections differs from when revenue is recognized due to contracts containing specific performance obligations that are required to be met prior to a customer being billed. We generally record contract liabilities when cash is collected in advance of us satisfying performance obligations, including those that are satisfied over a period of time. The following table summarizes our contract assets and contract liabilities arising from contracts with customers:
We recognized approximately $6.1 million in revenue that was included in the beginning contract liability balance during the three months ended March 31, 2019. Games Revenues Our Games products and services include commercial products, such as Native American Class II products and other bingo products, Class III products, video lottery terminals, accounting and central determinant systems, business-to-consumer and business-to-business interactive activities, and other back office systems. We conduct our Games segment business based on results generated from the following major revenue streams: (a) Gaming Operations; (b) Gaming Equipment and Systems; and (c) Gaming Other. Gaming Operations Games revenues are primarily generated by our gaming operations under placement, participation, and development arrangements, in which we provide our customers with player terminals, including TournEvent® terminals that allow operators to switch from in-revenue gaming to out-of-revenue tournaments, player terminal-content licenses, local-area progressive machines, and back-office equipment, collectively referred to herein as leased gaming equipment. We evaluate the recognition of lease revenues based on criteria set forth in ASC 842. Generally, under these arrangements, we retain ownership of the machines installed at customer facilities. We receive recurring revenue based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee. Revenues from lease participation or daily fee arrangements are considered both realizable and earned at the end of each gaming day. Gaming operations revenues generated by leased gaming equipment deployed at sites under development or placement fee agreements give rise to contract rights, which are amounts recorded to intangible assets for dedicated floor space resulting from such agreements. The gaming operations revenues generated by these arrangements are reduced by the accretion of contract rights, which represents the related amortization of the contract rights recorded in connection with those agreements. Gaming operations lease revenues accounted for under ASC 842 are generally short-term in nature with payment terms ranging from 30 to 90 days. We recognized $33.8 million and $33.3 million in lease revenues for the three months ended March 31, 2019 and 2018, respectively. Gaming operations revenues include amounts generated by Wide Area Progressive (“WAP”) systems, which are recognized under ASC 606. WAP consists of linked slot machines located in multiple casino properties that are connected to a central system. WAP-based gaming machines have a progressive jackpot we administer that increases with every wager until a player wins the top award combination. Casino operators pay us a percentage of the coin-in (the total amount wagered), a percentage of net win, or a combination of both for services related to the design, assembly, installation, operation, maintenance, administration, and marketing of the WAP systems. The gaming operations revenues with respect to WAP machines comprise a separate performance obligation and are recognized over time based on the amount expected to be received with any variability being resolved in the reporting period. These arrangements are generally short-term in nature with a majority of invoices payable within 30 to 90 days. Such revenues are presented in the Statements of Income net of the jackpot expense, which is comprised of incremental amounts funded by a portion of the coin-in from players. At the time a jackpot is won by a player, an additional jackpot expense is recorded with respect to the base seed amount required to fund the minimum level required by the respective WAP arrangement with the casino operator. Gaming operations revenues also include amounts received in connection with our relationship with the New York State Gaming Commission to provide an accounting and central determinant system for the VLTs in operation at licensed State of New York gaming facilities. Pursuant to our agreement with the New York State Gaming Commission, we receive a portion of the network-wide net win (generally, cash-in less prizes paid) per day in exchange for provision and maintenance of the central determinant system, and we record revenues in accordance with ASC 606. We also provide central determinant system technology to Native American tribes in other licensed jurisdictions for which we receive a portion of the revenue generated from the VLTs connected to the system. These arrangements are generally short-term in nature with payments due monthly. Gaming operations revenues also include amounts generated by our Interactive offering comprised of business-to-consumer (“B2C”) and business-to-business (“B2B”) activities. B2C relates to games offered directly to consumers to play with virtual currency which can be purchased through our web and mobile applications. Control transfers and we recognize revenues in accordance with ASC 606 from player purchases of virtual currency as it is consumed for game play, which is based on a historical data analysis. B2B relates to games offered to the online business partners, including social casinos and regulated real money casinos, who then offer the games to consumers. Our B2B arrangements primarily provide access to our game content and revenue is recognized in accordance with ASC 606 as the control transfers upon the online business partners’ daily access to such content based on either a flat fee or revenue share arrangements with the social casinos and regulated real money casinos. Gaming Equipment and Systems Gaming equipment and systems revenues are accounted for under ASC 606 and are derived from the sale of some combination of: (a) gaming equipment and player terminals, including TournEvent® terminals that allow operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) game content; (c) license fees; and (d) ancillary equipment. Such arrangements are predominately short-term in nature with payment terms ranging from 30 to 180 days with certain agreements providing for extended payment terms, ranging from 12 to 24 months. Each contract containing extended payment terms over 12 months is evaluated for the presence of a financing component, and for the arrangements in which the financing component is determined to be significant to the contact, the transaction price is adjusted for the time value of money. Generally, our contracts with customers do not contain a financing component that has been determined to be significant to the contract. Performance obligations for gaming equipment and systems arrangements include gaming equipment, player terminals, content, system software, license fees, ancillary equipment, or various combinations thereof. Gaming equipment and systems revenues are recognized at a point in time when control of the promised goods and services transfers to the customer, which is generally upon shipment or delivery pursuant to the terms of the contract. The performance obligations are generally satisfied at the same time or within a short period of time. Gaming Other Gaming other revenues consist of amounts generated by our TournEvent of Champions® national tournament that allows winners of local and regional tournaments throughout the year to participate in a national tournament that results in the determination of a final champion. Such revenues are accounted for under ASC 606. As the customer simultaneously receives and consumes the benefits of our performance as it occurs, revenues are recognized as earned over a period of time using an output method depicting the transfer of control to the customer. These arrangements are generally short-term in nature with payment terms ranging from 30 to 90 days. FinTech Revenues Cash Access Services Cash access services revenues are accounted for under ASC 606 and are generally comprised of the following distinct performance obligations: cash advance, ATM, and check services. We do not control the cash advance and ATM services provided to a customer and, therefore, we are acting as an agent whose performance obligation is to arrange for the provision of these services. Our cash access services involve the movement of funds between the various parties associated with cash access transactions and give rise to settlement receivables and settlement liabilities, both of which are settled in days following the transaction. Cash advance revenues are comprised of transaction fees assessed to gaming patrons in connection with credit card cash access and POS debit card cash access transactions. Such fees are primarily based on a combination of a fixed amount plus a percentage of the face amount of the credit card cash access or POS debit card cash access transaction amount. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis, which generally include: (a) commission expenses payable to casino operators; (b) interchange fees payable to the network associations; and (c) processing and related costs payable to other third party partners. ATM revenues are primarily comprised of transaction fees in the form of cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals at the time the transactions are authorized and reverse interchange fees paid to us by the patrons’ issuing banks. The cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals are currently a fixed dollar amount and not a percentage of the transaction amount. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis, which generally include: (a) commission expenses payable to casino operators; (b) interchange fees payable to the network associations; and (c) processing and related costs payable to other third party partners. Check services revenues are principally comprised of check warranty revenues and are generally based upon a percentage of the face amount of checks warranted. These fees are paid to us by gaming establishments. For cash access services arrangements, since the customer simultaneously receives and consumes the benefits as the performance obligations occur, we recognize revenues as earned over a period of time using an output method depicting the transfer of control to the customer based on variable consideration, such as volume of transactions processed with variability generally resolved in the reporting period. Equipment Equipment revenues are derived from the sale of our cash access kiosks and related equipment and are accounted for under ASC 606. Revenues are recognized at a point in time when control of the promised goods and services transfers to the customer generally upon shipment or delivery pursuant to the terms of the contract. These sales contracts are generally short-term in nature with payment terms ranging from 30 to 90 days. In addition, equipment revenues are derived from the sale of our loyalty kiosks and related equipment and are accounted for under ASC 606. Revenues are recognized at a point in time when control of the promised goods and services transfers to the customer generally upon installation and customer acceptance based on connectivity to a casino management system pursuant to the terms of the contract. These sales contracts are generally short-term in nature with payment terms ranging from 30 to 90 days. Information Services and Other Information services and other revenues are accounted for under ASC 606 and include amounts derived from our cash access, kiosk, compliance, and loyalty related revenue streams from the sale of: (a) software licenses, software subscriptions, professional services, and certain other ancillary fees; (b) service-related fees associated with the sale, installation, and maintenance of equipment directly to our customers under contracts, which are generally short-term in nature with payment terms ranging from 30 to 90 days, secured by the related equipment; (c) credit worthiness-related software subscription services that are based upon either a flat monthly unlimited usage fee or a variable fee structure driven by the volume of patron credit histories generated; and (d) ancillary marketing, database, and Internet-based gaming-related activities. Our software represents a functional right-to-use license, and the revenues are recognized as earned at a point in time. Subscription services are recognized over a period of time using an input method based on time elapsed as we transfer the control ratably by providing a stand-ready service. Professional and other services revenues are recognized over a period of time using an input method based on time elapsed as services are provided, thereby reflecting the transfer of control to the customer. Restricted Cash Our restricted cash primarily consists of: (a) deposits held in connection with a sponsorship agreement; (b) WAP-related restricted funds; and (c) Internet-related cash access activities. The current portion of restricted cash, which is included in prepaid expenses and other assets, was approximately $1.8 million and $1.5 million as of March 31, 2019 and December 31, 2018, respectively. The non-current portion of restricted cash, which is included in other assets, was approximately $0.1 million as of March 31, 2019 and December 31, 2018. The current portion of restricted cash was approximately $0.8 million and $0.9 million as of March 31, 2018 and December 31, 2017, respectively. The non-current portion of restricted cash was approximately $0.1 million as of March 31, 2018 and December 31, 2017. Fair Values of Financial Instruments The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. The carrying amount of cash and cash equivalents, settlement receivables, short-term trade and other receivables, settlement liabilities, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these instruments. The fair value of the long-term trade and loans receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of March 31, 2019 and December 31, 2018, the fair value of notes receivable, net approximated the carrying value due to contractual terms of trade and loans receivable generally being under 24 months. The fair value of our borrowings is estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity, and similar instruments trading in more active markets. The estimated fair value and outstanding balances of our borrowings are as follows (in thousands):
The term loan facility was reported at fair value using a Level 2 input as there were quoted prices in markets that were not considered active as of March 31, 2019 and December 31, 2018. The senior unsecured notes were reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of March 31, 2019 and December 31, 2018. Recent Accounting Guidance Recently Adopted Accounting Guidance In June 2018, the FASB issued ASU No. 2018-07, which expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The new standard became effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted this guidance in the quarter ended March 31, 2019. The adoption of this ASU did not have a material impact on our Financial Statements. In February 2018, the FASB issued ASU No. 2018-02, which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017 (or portion thereof) is recorded. The new standard became effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted this guidance in the quarter ended March 31, 2019. The adoption of this ASU did not have a material impact on our Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a lease ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. We made an accounting policy election where leases that are 12 months or less and do not include an option to purchase the underlying asset are treated similarly to the operating lease accounting under ASC 840 and are not recorded on the balance sheet. For lessees, leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For lessors, leases are classified as operating, sales-type, or direct financing with classification affecting the pattern of revenue and profit recognition in the income statement. In July 2018, the FASB issued ASU No. 2018-10 — Codification Improvements to Topic 842, Leases and ASU No. 2018-11 — Leases (Topic 842): Targeted Improvements. ASU No. 2018-10 affected narrow aspects of the guidance previously issued, and ASU No. 2018-11 provided a practical expedient for lessors on separating components of a contract and also included an additional optional transition relief methodology for adopting the new standard. In December 2018, the FASB issued ASU No. 2018-20 — Leases (Topic 842): Narrow-Scope Improvements for Lessors, which addressed the following issues facing lessors when applying the standard: sales taxes and other similar taxes collected from lessees, certain lessor costs paid directly by lessees, and recognition of variable payments for contracts with lease and non-lease components. The guidance requires an entity to adopt the new standard, as amended, under a modified retrospective application to each prior reporting period presented in the financial statements with the cumulative effect recognized at the beginning of the earliest comparative period. With the optional transition relief methodology available, entities had an opportunity to adopt the new lease standard retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment, with certain practical expedients available. Based on the guidance, we adopted the new standard effective January 1, 2019 and applied certain practical expedients offered in the aforementioned guidance, such as those that stated that the Company need not reassess: (a) whether expired or existing contracts contain leases, (b) the lease classification of expired or existing leases, or (c) initial direct costs for any existing leases. We have provided additional information with respect to the new guidance in “Note 3 — Leases.” Recent Accounting Guidance Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact of adopting this guidance on our Financial Statements; however, we do not expect the impact to be material. In June 2016, the FASB issued ASU No. 2016-13, which provides updated guidance on how an entity should measure credit losses on financial instruments. The new guidance replaces the current incurred loss measurement methodology with a lifetime expected loss measurement methodology. Subsequently, in November 2018 the FASB issued ASU No. 2018-19 which clarified that receivables arising from operating leases are not within the scope of Subtopic 326-20, but should rather be accounted for in accordance with Topic 842, Leases. The new standard and related amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach for the cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective and using a prospective approach for debt securities for which any other-than-temporary impairment had been recognized before the effective date. Early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact of adopting this guidance on our Financial Statements. We do not anticipate that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
LEASES |
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LEASES | LEASES Management determines if a contract is or contains a lease at the inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of an asset is predicated upon the notion that the lessee has both the right to (a) obtain substantially all of the economic benefits from the use of the asset, and (b) direct the use of the asset. Operating lease ROU assets and liabilities are recognized based on the present value of minimum lease payments over the expected lease term at commencement date. Lease expense is recognized on a straight-line basis over the expected lease term. The Company’s lease arrangements have lease and non-lease components. For leases in which the Company is the lessee, the Company accounts for the lease components and non-lease components as a single lease component for the classes of underlying assets, primarily real estate that consists of buildings for office space and warehouses for manufacturing space. For leases in which the Company is the lessor, the Company accounts for the lease components and non-lease components as a single lease component (primarily electronic gaming machines (“EGMs”)). Certain of our leases contain options to renew the agreements with terms that have the ability to extend the lease term from a range of approximately 1 to 15 years. The exercise of lease renewal options is generally at our sole discretion. The depreciable life of leased assets and leasehold improvements are limited by the expected term of such assets, unless there is a transfer of title or purchase option reasonably certain to be exercised. Lessee We enter into operating lease agreements for real estate purposes that generally consist of buildings for office space and warehouses for manufacturing space. Certain of our lease agreements consist of rental payments that are periodically adjusted for inflation. Our lease agreements do not contain material residual value guarantees or material restrictive covenants. Our lease agreements do not generally provide explicit rates of interest; therefore, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term. Supplemental balance sheet information related to our operating leases is as follows (in thousands):
Supplemental cash flow information related to leases was as follows (in thousands):
Other information related to lease terms and discount rates is as follows:
Components of lease expense are as follows (in thousands):
Maturities of lease liabilities are summarized as follows as of March 31, 2019 (in thousands):
As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, maturities of lease liabilities were as follows as of December 31, 2018 (in thousands):
Lessor The Company generates lease revenues primarily from its gaming operations activities. Under these arrangements, we retain ownership of the machines installed at customer facilities. We receive recurring revenue based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee. Revenues from lease participation or daily fee arrangements are considered both realizable and earned at the end of each gaming day. Certain or our leases have terms and conditions of options for a lessee to purchase the underlying asset. The cost of property and equipment the Company is leasing to third parties as of March 31, 2019 is $183.7 million which includes accumulated depreciation of $106.5 million. |
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LEASES | LEASES Management determines if a contract is or contains a lease at the inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of an asset is predicated upon the notion that the lessee has both the right to (a) obtain substantially all of the economic benefits from the use of the asset, and (b) direct the use of the asset. Operating lease ROU assets and liabilities are recognized based on the present value of minimum lease payments over the expected lease term at commencement date. Lease expense is recognized on a straight-line basis over the expected lease term. The Company’s lease arrangements have lease and non-lease components. For leases in which the Company is the lessee, the Company accounts for the lease components and non-lease components as a single lease component for the classes of underlying assets, primarily real estate that consists of buildings for office space and warehouses for manufacturing space. For leases in which the Company is the lessor, the Company accounts for the lease components and non-lease components as a single lease component (primarily electronic gaming machines (“EGMs”)). Certain of our leases contain options to renew the agreements with terms that have the ability to extend the lease term from a range of approximately 1 to 15 years. The exercise of lease renewal options is generally at our sole discretion. The depreciable life of leased assets and leasehold improvements are limited by the expected term of such assets, unless there is a transfer of title or purchase option reasonably certain to be exercised. Lessee We enter into operating lease agreements for real estate purposes that generally consist of buildings for office space and warehouses for manufacturing space. Certain of our lease agreements consist of rental payments that are periodically adjusted for inflation. Our lease agreements do not contain material residual value guarantees or material restrictive covenants. Our lease agreements do not generally provide explicit rates of interest; therefore, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term. Supplemental balance sheet information related to our operating leases is as follows (in thousands):
Supplemental cash flow information related to leases was as follows (in thousands):
Other information related to lease terms and discount rates is as follows:
Components of lease expense are as follows (in thousands):
Maturities of lease liabilities are summarized as follows as of March 31, 2019 (in thousands):
As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, maturities of lease liabilities were as follows as of December 31, 2018 (in thousands):
Lessor The Company generates lease revenues primarily from its gaming operations activities. Under these arrangements, we retain ownership of the machines installed at customer facilities. We receive recurring revenue based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee. Revenues from lease participation or daily fee arrangements are considered both realizable and earned at the end of each gaming day. Certain or our leases have terms and conditions of options for a lessee to purchase the underlying asset. The cost of property and equipment the Company is leasing to third parties as of March 31, 2019 is $183.7 million which includes accumulated depreciation of $106.5 million. |
BUSINESS COMBINATIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS We account for business combinations in accordance with ASC 805, which requires that the identifiable assets acquired and liabilities assumed be recorded at their estimated fair values on the acquisition date separately from goodwill, which is the excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities. We include the results of operations of an acquired business as of the acquisition date. Atrient, Inc. On March 8, 2019, we acquired certain assets of Atrient, Inc. (“Atrient,” the “Seller”), a privately held company that develops and distributes hardware and software applications to gaming operators to enhance gaming patron loyalty, pursuant to an asset purchase agreement. This acquisition includes existing contracts with gaming operators, technology, and intellectual property that allow us to provide gaming operators a self-service enrollment and loyalty card printing kiosk, a mobile application to offer a gaming operator’s patrons additional flexibility in accessing casino promotions, and a marketing platform that manages and delivers a gaming operator’s marketing programs through these patron interfaces. This acquisition expands our financial technology solutions offerings within our FinTech segment. Under the terms of the asset purchase agreement, we paid the Seller $20 million at the closing of the transaction and will pay an additional $10 million one year following the closing and another $10 million two years following the date of closing. In addition, we expect that an additional $10 million in contingent consideration will be earned by the Seller based upon the achievement of certain revenue targets over the first two years post-closing. We expect the total purchase price for this acquisition, inclusive of the contingent consideration, to be approximately $50 million. The acquisition did not have a significant impact on our results of operations or financial condition. The total purchase consideration for Atrient was as follows (in thousands, at fair value):
The transaction was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, which will be amortized over a period of 15 years for tax purposes. The goodwill recognized is attributable primarily to the income potential from the expansion of our footprint in the gaming space by enhancing our existing financial technology solution portfolio to add new touch-points for gaming patrons at customer locations and a new player loyalty and marketing-focused business line, assembled workforce, and other strategic benefits. The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as the Company finalizes its purchase price accounting. The significant items for which a final fair value has not been determined include, but are not limited to: the valuation and estimated useful lives of intangible assets, deferred and unearned revenues, and deferred income taxes. We do not expect our fair value determinations to materially change; however, there may be differences between the amounts recorded at March 31, 2019 and the final fair value analysis, which we expect to complete no later than the first quarter of 2020. The information below reflects the preliminary amounts of identifiable assets acquired and liabilities assumed as of the closing date of the transaction (in thousands):
Trade receivables acquired of approximately $1.8 million were short-term in nature and considered to be collectible, and therefore, the carrying amounts of these assets represented their fair values. Inventory acquired of approximately $1.0 million consisted of raw materials and finished goods and was fair valued based on the estimated net realizable value of these assets. Property, equipment, and leased assets acquired were not material in size or scope, and the carrying amounts of these assets represented their fair values. The operating lease ROU assets of approximately $0.2 million were recorded at their fair values based on the present value of future lease payments discounted by utilizing our incremental borrowing rate. Other intangible assets acquired of approximately $14.2 million were comprised of customer contracts and developed technology. The fair value of customer contracts of approximately $9.2 million was determined by applying the income approach utilizing the excess earnings methodology with a discount rate utilized of 17%. The fair value of developed technology of approximately $5.0 million was determined by applying the income approach utilizing the relief from royalty methodology with a royalty rate of 15% and a discount rate utilized of 18%. The following table summarizes acquired intangible assets (dollars in thousands):
The selected financial data with respect to the revenue and earnings on a pro forma consolidated basis as if the acquisition of Atrient occurred on January 1, 2018 has been omitted as it was impracticable to make the necessary adjustments to prepare the acquired entity’s financial statements in accordance with GAAP for the year ended December 31, 2018 in a timely manner as the acquired entity was a privately held organization for which financial statements were prepared under a cash basis of accounting. The financial results included in our Statements of Income since the acquisition date and through March 31, 2019 reflected revenues of approximately $0.5 million and net income of approximately $0.2 million, including acquisition-related costs of approximately $0.1 million. |
FUNDING AGREEMENTS |
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A T M Funding Agreement Disclosure [Abstract] | |
FUNDING AGREEMENTS | FUNDING AGREEMENTS Commercial Cash Arrangements We have commercial arrangements with third party vendors to provide cash for certain of our ATMs. For the use of these funds, we pay a cash usage fee on either the average daily balance of funds utilized multiplied by a contractually defined cash usage rate or the amounts supplied multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Statements of Income, were approximately $1.7 million for the three months ended March 31, 2019 and March 31, 2018, respectively. We are exposed to interest rate risk to the extent that the applicable rates increase. Under these agreements, the currency supplied by third party vendors remains their sole property until the funds are dispensed. As these funds are not our assets, supplied cash is not reflected in our Balance Sheets. The outstanding balances of ATM cash utilized by us from the third parties were approximately $267.0 million and $224.7 million as of March 31, 2019 and December 31, 2018, respectively. Our primary commercial arrangement, the Contract Cash Solutions Agreement, as amended, is with Wells Fargo, N.A. (“Wells Fargo”). Wells Fargo provides us with cash in the maximum amount of $300 million with the ability to increase the amount by $75 million over a 5-day period for holidays, such as the period around New Year’s Day. The term of the agreement expires on June 30, 2021 and will automatically renew for additional one-year periods unless either party provides a 90-day written notice of its intent not to renew. We are responsible for any losses of cash in the ATMs under this agreement, and we self‑insure for this risk. We incurred no material losses related to this self‑insurance for the three months ended March 31, 2019 and 2018. Site-Funded ATMs We operate ATMs at certain customers’ gaming establishments where the gaming establishment provides the cash required for the ATM’s operational needs. We are required to reimburse the customer for the amount of cash dispensed from these site-funded ATMs. The site-funded ATM liability included within settlement liabilities in the accompanying Balance Sheets was approximately $245.1 million and $249.6 million as of March 31, 2019 and December 31, 2018, respectively. Everi-Funded ATMs We enter into agreements with customers for certain of our Canadian ATMs whereby we provide the cash required to operate the ATMs. We had supplied approximately $2.4 million and $4.8 million of our cash for these ATMs as of March 31, 2019 and December 31, 2018, respectively, which represents an outstanding balance under such agreements at the end of the period. Such amounts are reported within the settlement receivables line of our Balance Sheets. Prefunded Cash Access Agreements Due to certain regulatory requirements, some international gaming establishments require prefunding of cash to cover all outstanding settlement amounts in order for us to provide cash access services to their properties. We enter into agreements with these operators for which we supply our cash access services for their properties. Under these agreements, we maintain sole discretion to either continue or cease operations as well as discretion over the amounts prefunded to the properties and may request amounts to be refunded to us, with appropriate notice to the operator, at any time. The initial prefunded amounts and subsequent amounts from the settlement of transactions are deposited into a bank account that is to be used exclusively for cash access services, and we maintain the right to monitor all transaction activity in that account. The total amount of prefunded cash outstanding was approximately $6.2 million and $6.1 million at March 31, 2019 and December 31, 2018, respectively, and is included in the prepaid expenses and other assets line on our Balance Sheets. |
TRADE AND OTHER RECEIVABLES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TRADE AND OTHER RECEIVABLES | TRADE AND OTHER RECEIVABLES Trade and loans receivables represent short-term credit granted to customers as well as long-term loans receivable on our games, equipment, and compliance products. Trade and loans receivables generally do not require collateral. The balance of trade and loans receivables consists of outstanding balances owed to us by gaming establishments. Other receivables include income tax receivables and other miscellaneous receivables. The balance of trade and other receivables consisted of the following (in thousands):
At least quarterly, we evaluate the collectability of outstanding balances and establish a reserve for the amount of the expected losses on our receivables. The allowance for doubtful accounts for trade receivables was approximately $6.3 million as of March 31, 2019 and $6.4 million as of December 31, 2018, respectively, and included approximately $3.3 million and $3.2 million of check warranty reserves, respectively. The provision for doubtful customer accounts receivable is generally included within operating expenses in the Statements of Income. |
INVENTORY |
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INVENTORY | INVENTORY Our inventory primarily consists of component parts as well as work-in-progress and finished goods. The cost of inventory includes cost of materials, labor, overhead, and freight. The inventory is stated at the lower of cost or net realizable value and accounted for using the first in, first out method. Inventory consisted of the following (in thousands):
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PREPAID EXPENSES AND OTHER ASSETS |
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PREPAID EXPENSES AND OTHER ASSETS | PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets include the balance of prepaid expenses, deposits, debt issuance costs on our Revolving Credit Facility (defined herein), restricted cash and other assets. The current portion of these assets is included in prepaid expenses and other assets and the non-current portion is included in other assets, both of which are contained within the Balance Sheets. The balance of the current portion of prepaid expenses and other assets consisted of the following (in thousands):
The balance of the non-current portion of other assets consisted of the following (in thousands):
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PROPERTY, EQUIPMENT AND LEASED ASSETS |
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PROPERTY, EQUIPMENT AND LEASED ASSETS | PROPERTY, EQUIPMENT AND LEASED ASSETS Property, equipment and leased assets consist of the following (dollars in thousands):
Depreciation expense related to property, equipment and leased assets totaled approximately $14.8 million and $12.8 million for the three months ended March 31, 2019 and 2018, respectively. |
GOODWILL AND OTHER INTANGIBLE ASSETS |
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GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. The balance of goodwill was approximately $673.4 million at March 31, 2019 and $640.5 million at December 31, 2018. Change in the goodwill amount of approximately $32.9 million was attributable to the acquisition of Atrient. In accordance with ASC 350 (“Intangibles-Goodwill and Other”), we test goodwill at the reporting unit level, which is identified as an operating segment or one level below, for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. We test for impairment annually on a reporting unit basis at the beginning of our fourth fiscal quarter, or more often under certain circumstances. The annual impairment test is completed using either: a qualitative Step 0 assessment based on reviewing relevant events and circumstances; or a quantitative Step 1 assessment, which determines the fair value of the reporting unit using an income approach that discounts future cash flows based on the estimated future results of our reporting units and a market approach that compares market multiples of comparable companies to determine whether or not any impairment exists. If the fair value of a reporting unit is less than its carrying amount, we will use the Step 1 assessment to determine the impairment. There was no impairment identified for our goodwill for the three months ended March 31, 2019 and 2018. Other Intangible Assets Other intangible assets consist of the following (dollars in thousands):
Amortization expense related to other intangible assets was approximately $16.3 million for the three months ended March 31, 2019 and 2018, respectively. We evaluate our other intangible assets for potential impairment in connection with our quarterly review process. We enter into placement fee agreements to secure a long-term revenue share percentage and a fixed number of player terminal placements in a gaming facility, for which the funding under placement fee agreements is not reimbursed. In return for the fees under these agreements, each facility dedicates a percentage of its floor space, or an agreed upon unit count, for the placement of our EGMs over the term of the agreement, generally 12 to 83 months, and we receive a fixed percentage or flat fee of those machines’ hold per day. Certain of the agreements contain EGM performance standards that could allow the respective facility to reduce a portion of our guaranteed floor space. Placement fees and amounts advanced in excess of those to be reimbursed by the customer for real property and land improvements are allocated to intangible assets and are generally amortized over the term of the contract, which is recorded as a reduction of revenue generated from the facility. In the past we have, and in the future, we may, by mutual agreement, amend these agreements to reduce our floor space at the facilities. Any proceeds received for the reduction of floor space are first applied against the intangible asset for that particular placement fee agreement, if any, and the remaining net book value of the intangible asset is prospectively amortized on a straight-line method over the remaining estimated useful life. We paid approximately $5.6 million in placement fees, including $0.3 million of imputed interest, to a customer for the three months ended March 31, 2019, and approximately $5.6 million in placement fees, including $1.0 million of imputed interest, to a customer for the three months ended March 31, 2018. |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES |
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ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ACCOUNTS PAYABLE AND ACCRUED EXPENSES The following table presents our accounts payable and accrued expenses (in thousands):
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LONG-TERM DEBT |
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LONG-TERM DEBT | LONG-TERM DEBT The following table summarizes our outstanding indebtedness (in thousands):
Refinancing On May 9, 2017 (the “Closing Date”), Everi Payments, as borrower, and Holdings entered into a credit agreement with the lenders party thereto and Jefferies Finance LLC, as administrative agent, collateral agent, swing line lender, letter of credit issuer, sole lead arranger and sole book manager (amended as described below, the “Credit Agreement”). The Credit Agreement provides for: (a) a $35.0 million, five-year senior secured revolving credit facility (the “Revolving Credit Facility”); and (b) an $820.0 million, seven-year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Credit Facilities”). The fees associated with the Credit Facilities included discounts of approximately $4.1 million and debt issuance costs of approximately $15.5 million. All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including the absence of defaults and the accuracy of representations and warranties. The proceeds from the Term Loan Facility incurred on the Closing Date were used to: (a) refinance: (i) Everi Payments’ existing credit facility with an outstanding balance of approximately $462.3 million with Bank of America, N.A., as administrative agent, collateral agent, swing line lender and letter of credit issuer, Deutsche Bank Securities Inc., as syndication agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc., as joint lead arrangers and joint book managers (the “Prior Credit Facility”); and (ii) Everi Payments’ 7.25% Senior Secured Notes due 2021 in the aggregate original principal amount of $335.0 million (the “Refinanced Secured Notes”); and (b) pay related transaction fees and expenses. In connection with the refinancing, we recorded a non-cash charge of approximately $14.6 million during the second quarter of 2017 related to the unamortized deferred financing fees and discounts related to the extinguished term loan under the Prior Credit Facility and the redeemed Refinanced Secured Notes. No prepayment penalties were incurred. On November 13, 2017 (the “Repricing Closing Date”), we entered into an amendment to the Credit Agreement (the “First Amendment”) which, among other things, reduced the interest rate on the approximately $818.0 million then outstanding balance of the Term Loan Facility, but did not change the maturity dates for the Term Loan Facility or the Revolving Credit Facility or the financial covenants or other debt repayments terms set forth in the Credit Agreement. We incurred approximately $3.0 million of debt issuance costs and fees associated with the repricing of the Term Loan Facility. On May 17, 2018, we entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement, which reduced the interest rate on the $813.9 million outstanding balance of the senior secured term loan under the Credit Agreement by 50 basis points to the London Interbank Offered Rate (“LIBOR”) + 3.00% from LIBOR + 3.50% with the LIBOR floor unchanged at 1.00%. The senior secured term loan under the Credit Agreement will be subject to a prepayment premium of 1.00% of the principal amount repaid for any voluntary prepayment or mandatory prepayment with proceeds of debt that has a lower effective yield than the repriced term loan or any amendment to the repriced term loan that reduces the interest rate thereon, in each case, to the extent occurring within six months of the effective date of the Second Amendment. The maturity date for the Credit Agreement remains May 9, 2024, and no changes were made to the financial covenants or other debt repayment terms. We incurred approximately $1.3 million of debt issuance costs and fees associated with the repricing of the Term Loan Facility. Credit Facilities The Term Loan Facility matures seven years after the Closing Date and the Revolving Credit Facility matures five years after the Closing Date. The Revolving Credit Facility is available for general corporate purposes, including permitted acquisitions, working capital and the issuance of letters of credit. The interest rate per annum applicable to loans under the Revolving Credit Facility is, at Everi Payments’ option, the base rate or the Eurodollar Rate (defined to be LIBOR or a comparable or successor rate) (the “Eurodollar Rate”) plus, in each case, an applicable margin. The interest rate per annum applicable to the Term Loan Facility also is, at Everi Payments’ option, the base rate or the Eurodollar Rate plus, in each case, an applicable margin. The Eurodollar Rate is reset at the beginning of each selected interest period based on the Eurodollar Rate then in effect; provided that, if the Eurodollar Rate is below zero, then such rate will be equal to zero plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of: (a) the prime lending rate announced by the administrative agent; (b) the federal funds effective rate from time to time plus 0.50%; and (c) the Eurodollar Rate (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%. Prior to the effectiveness of the First Amendment on the Repricing Closing Date, the applicable margins for both the Revolving Credit Facility and the Term Loan Facility were: (a) 4.50% in respect of Eurodollar Rate loans, and (b) 3.50% in respect of base rate loans. The applicable margins for the Term Loan Facility from and after the effectiveness of the First Amendment on the Repricing Closing Date through the effectiveness of the Second Amendment were: (a) 3.50% in respect of Eurodollar Rate loans, and (b) 2.50% in respect of base rate loans. The applicable margins for the Term Loan Facility from and after the effectiveness of the Second Amendment are: (a) 3.00% in respect of Eurodollar Rate loans, and (b) 2.00% in respect of base rate loans. Voluntary prepayments of the term loan and the revolving loans and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the Credit Agreement governing the Credit Facilities, with prior notice but without premium or penalty. Subject to certain exceptions, the obligations under the Credit Facilities are secured by substantially all of the present and subsequently acquired assets of each of Everi Payments, Holdings and the subsidiary guarantors party thereto, including: (a) a perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned material restricted subsidiary held by Holdings, Everi Payments or any such subsidiary guarantor; and (b) a perfected first priority security interest in substantially all other tangible and intangible assets of Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the Credit Facilities are unconditionally guaranteed by Holdings and such subsidiary guarantors. The Credit Agreement governing the Credit Facilities contains certain covenants that, among other things, limit Holdings’ ability, and the ability of certain of its subsidiaries, to incur additional indebtedness, sell assets or consolidate or merge with or into other companies, pay dividends or repurchase or redeem capital stock, make certain investments, issue capital stock of subsidiaries, incur liens, prepay, redeem or repurchase subordinated debt, and enter into certain types of transactions with its affiliates. The Credit Agreement governing the Credit Facilities also requires Holdings, together with its subsidiaries, to comply with a consolidated secured leverage ratio. At March 31, 2019, our consolidated secured leverage ratio was 3.22 to 1.00, with a maximum allowable ratio of 4.75 to 1.00 (which maximum allowable ratio is reduced to 4.50 to 1.00 as of December 31, 2019, 4.25 to 1.00 as of December 31, 2020, and 4.00 to 1.00 as of December 31, 2021 and each December 31 thereafter). We were in compliance with the covenants and terms of the Credit Facilities as of March 31, 2019. Events of default under the Credit Agreement governing the Credit Facilities include customary events such as a cross-default provision with respect to other material debt. In addition, an event of default will occur if Holdings undergoes a change of control. This is defined to include the case where Holdings ceases to own 100% of the equity interests of Everi Payments, or where any person or group acquires a percentage of the economic or voting interests of Holdings’ capital stock of 35% or more (determined on a fully diluted basis). We are required to repay the Term Loan Facility in an amount equal to 0.25% per quarter of the initial aggregate principal, with the final principal repayment installment on the maturity date. Interest is due in arrears on each interest payment date applicable thereto and at such other times as may be specified in the Credit Agreement. As to any loan other than a base rate loan, the interest payment dates shall be the last day of each interest period applicable to such loan and the maturity date (provided, however, that if any interest period for a Eurodollar Rate loan exceeds three months, the respective dates that fall every three months after the beginning of such interest period shall also be interest payment dates). As to any base rate loan, the interest payment dates shall be last business day of each March, June, September and December and the maturity date. For the three months ended March 31, 2019, the Term Loan Facility had an applicable weighted average interest rate of 5.50%. At March 31, 2019, we had $805.7 million of borrowings outstanding under the Term Loan Facility and no borrowings outstanding under the Revolving Credit Facility. We had $35.0 million of additional borrowing availability under the Revolving Credit Facility as of March 31, 2019. Refinanced Senior Secured Notes In connection with entering into the Credit Agreement, on May 9, 2017, Everi Payments redeemed in full all outstanding Refinanced Secured Notes in the aggregate principal amount of $335.0 million face value (plus accrued interest) of the Refinanced Secured Notes. As a result of the redemption, we recorded non-cash charges in the amount of approximately $1.7 million, which consisted of unamortized deferred financing fees of $0.2 million and discounts of $1.5 million. These fees were included in the total $14.6 million non-cash charge referred to above. Senior Unsecured Notes In December 2014, we issued $350.0 million in aggregate principal amount of 10.0% Senior Unsecured Notes due 2022 (the “2014 Unsecured Notes”) under an indenture (as supplemented, the “2014 Notes Indenture”), dated December 19, 2014, between Everi Payments (as successor issuer) and Deutsche Bank Trust Company Americas, as trustee. The fees associated with the 2014 Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million. In December 2015, we completed an exchange offer in which all of the unregistered 2014 Unsecured Notes were exchanged for a like amount of 2014 Unsecured Notes that had been registered under the Securities Act of 1933. In December 2017, we issued $375 million in aggregate principal amount of 7.50% Senior Unsecured Notes due 2025 (the “2017 Unsecured Notes”) under an indenture (the “2017 Notes Indenture”), dated December 5, 2017, among Everi Payments (as issuer), Holdings and certain of its direct and indirect domestic subsidiaries as guarantors, and Deutsche Bank Trust Company Americas, as trustee. Interest on the 2017 Unsecured Notes accrues at a rate of 7.50% per annum and is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2018. The 2017 Unsecured Notes will mature on December 15, 2025. We incurred approximately $6.1 million of debt issuance costs and fees associated with the issuance of the 2017 Unsecured Notes. On December 5, 2017, together with the issuance of the 2017 Unsecured Notes, Everi Payments satisfied and discharged the 2014 Notes Indenture relating to the 2014 Unsecured Notes. To effect the satisfaction and discharge, Everi Payments issued an unconditional notice of redemption to Deutsche Bank Trust Company Americas, as trustee, of the redemption in full on January 15, 2018 (the “Redemption Date”) of all outstanding 2014 Unsecured Notes under the terms of the 2014 Notes Indenture. In addition, using the proceeds from the sale of the 2017 Unsecured Notes and cash on hand, Everi Payments irrevocably deposited with the trustee funds sufficient to pay the redemption price of the 2014 Unsecured Notes of 107.5% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the Redemption Date (the “Redemption Price”), and irrevocably instructed the trustee to apply the deposited money toward payment of the Redemption Price for the 2014 Unsecured Notes on the Redemption Date. Upon the trustee’s receipt of such funds and instructions, along with an officer’s certificate of Everi Payments and an opinion of counsel certifying and opining that all conditions under the 2014 Notes Indenture to the satisfaction and discharge of the 2014 Notes Indenture had been satisfied, the 2014 Notes Indenture was satisfied and discharged, and all of the obligations of Everi Payments and the guarantors under the 2014 Notes Indenture ceased to be of further effect, as of December 5, 2017 (subject to certain exceptions). The 2014 Unsecured Notes were thereafter redeemed on the Redemption Date. In connection with the issuance of the 2017 Unsecured Notes and the redemption of the 2014 Unsecured Notes, in December 2017 we incurred a $37.2 million loss on extinguishment of debt consisting of a $26.3 million make-whole premium related to the satisfaction and redemption of the 2014 Unsecured Notes and approximately $10.9 million for the write-off of related unamortized debt issuance costs and fees. We were in compliance with the terms of the 2017 Unsecured Notes as of March 31, 2019. |
COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES There were no material changes in our commitments under contractual obligations as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, aside from the cash consideration and contingent consideration payable to Atrient as discussed in “Note 4 — Business Combinations.” We are involved in various investigations, claims and lawsuits in the ordinary course of our business. In addition, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries. Although the outcome of our legal proceedings cannot be predicted with certainty and no assurances can be provided, based upon current information, we do not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on our financial position, liquidity, or results of operations. |
SHAREHOLDERS' EQUITY |
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Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | EQUITY Preferred Stock. Our amended and restated certificate of incorporation, as amended, allows our Board of Directors, without further action by stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences. As of March 31, 2019 and December 31, 2018, we had no shares of preferred stock outstanding. Common Stock. Subject to the preferences that may apply to shares of preferred stock that may be outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as our Board of Directors may from time to time determine. All dividends are non-cumulative. In the event of the liquidation, dissolution or winding up of Everi, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. There are no sinking fund provisions applicable to the common stock. Each outstanding share of common stock is fully paid and non-assessable. As of March 31, 2019 and December 31, 2018, we had 95,965,756 and 95,099,532 shares of common stock issued, respectively. Treasury Stock. Employees may direct us to withhold vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to their restricted stock vesting. We repurchased or withheld from restricted stock awards 2,096 and 5,001 shares of common stock for the three months ended March 31, 2019 and 2018, respectively, at an aggregate purchase price of $14,718 and $38,400, respectively, to satisfy the minimum applicable tax withholding obligations related to the vesting of such restricted stock awards. |
WEIGHTED AVERAGE COMMON SHARES |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES | WEIGHTED AVERAGE COMMON SHARES The weighted average number of shares of common stock outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):
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SHARE-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Equity Incentive Awards Our 2014 Equity Incentive Plan (as amended and restated effective May 22, 2018, the “Amended and Restated 2014 Plan”) and our 2012 Equity Incentive Plan (as amended, the “2012 Plan”) are used to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business. Our equity incentive plans are administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive equity incentive awards and to specify the terms and conditions of grants of such awards, including, but not limited to the vesting provisions and exercise prices. Generally, we grant the following award types: (a) time-based options; (b) market-based options; (c) time-based restricted stock; and (d) restricted stock units (“RSUs”) with either time- or performance-based criteria. A summary of award activity is as follows (in thousands):
There are approximately 3.6 million awards of our common stock available for future equity grants, both under the Amended and Restated 2014 Plan and the 2012 Plan as of March 31, 2019. Stock Options Our time-based stock options granted under our equity plans generally vest at a rate of 25% per year on each of the first four anniversaries of the option grant dates, and the options expire after a ten-year period. We estimate forfeiture amounts based on historical patterns. Our market-based options granted in 2017 and 2016 under our 2014 Plan and 2012 Plan vest at a rate of 25% per year on each of the first four anniversaries of the grant date, provided that as of the vesting date for each vesting tranche, the closing price of our shares on the New York Stock Exchange is at least a specified price hurdle, defined as a 25% and 50% premium for 2017 and 2016, respectively, to the closing stock price on the grant date. If the price hurdle is not met as of the vesting date for a vesting tranche, then the vested tranche shall vest and become vested shares on the last day of a period of 30 consecutive trading days during which the closing price is at least the price hurdle. These options expire after a ten-year period. The following table presents the options activity for the three months ended March 31, 2019:
There were no time-based or market-based option awards granted during the three months ended March 31, 2019, and 2018, respectively. The total intrinsic value of options exercised was $3.3 million and $1.3 million for the three months ended March 31, 2019 and 2018, respectively. There was approximately $2.7 million in unrecognized compensation expense related to options expected to vest as of March 31, 2019. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.3 years. We recorded approximately $1.0 million in non-cash compensation expense related to options granted that were expected to vest as of March 31, 2019. We received approximately $4.7 million in cash from the exercise of options for the three months ended March 31, 2019. There was $6.4 million in unrecognized compensation expense related to options expected to vest as of March 31, 2018. This cost was expected to be recognized on a straight-line basis over a weighted average period of 3.1 years. We recorded approximately $2.1 million in non-cash compensation expense related to options granted that were expected to vest as of March 31, 2018. We received approximately $4.2 million in cash from the exercise of options for the three months ended March 31, 2018. Restricted Stock Awards The following is a summary of non-vested share awards for our time-based restricted stock:
There were no shares of restricted stock granted for the three months ended March 31, 2019 and 2018. The total fair value of restricted stock vested was $33,287 and $118,747 for the three months ended March 31, 2019 and 2018, respectively. There was approximately $8,744 in unrecognized compensation expense related to shares of restricted stock expected to vest as of March 31, 2019. This cost is expected to be recognized on a straight-line basis over a weighted average period of 0.1 years. During the three months ended March 31, 2019, there were 4,998 shares of restricted stock that vested, and we recorded approximately $32,523 in non-cash compensation expense related to restricted stock expected to vest. There was approximately $0.3 million in unrecognized compensation expense related to shares of restricted stock expected to vest as of March 31, 2018. This cost was expected to be recognized on a straight-line basis over a weighted average period of 0.8 years. During the three months ended March 31, 2018, there were 17,001 shares of restricted stock that vested, and we recorded $0.2 million in non-cash compensation expense related to the restricted stock expected to vest. Restricted Stock Units The following is a summary of non-vested RSU awards:
There were approximately 84,100 shares of time-based RSUs granted during the three months ended March 31, 2019 that vest at a rate of 25% per year on each of the first four anniversaries of the grant dates. There were approximately 116,326 shares RSU awards granted for the three months ended March 31, 2018, respectively. The time-based RSUs granted during the three months ended March 31, 2018 to independent members of our Board of Directors vest in equal installments on each of the first three anniversary dates of the grant date and settle on the earliest of the following events: (a) March 7, 2028; (b) death; (c) the occurrence of a Change in Control (as defined in the Amended and Restated 2014 Plan), subject to qualifying conditions; or (d) the date that is six months following the separation from service, subject to qualifying conditions. There were 2,084 RSU awards that vested during the three months ended March 31, 2019 and no shares that vested during the three months ended March 31, 2018. There was approximately $6.4 million and $0.7 million in unrecognized compensation expense related to RSU awards expected to vest as of March 31, 2019 and 2018, respectively. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.8 years and 2.9 years as of March 31, 2019 and 2018, respectively. We recorded approximately $0.8 million and $17,359 in non-cash compensation expense related to RSU awards during the three months ended March 31, 2019 and 2018, respectively. |
INCOME TAXES |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The income tax benefit reflected an effective income tax rate of negative 7.1% for the three months ended March 31, 2019, which was less than the statutory federal rate of 21.0%, primarily due to a decrease in our valuation allowance for deferred tax assets, the benefit from stock option exercises and the benefit from a research credit. The decrease in our valuation allowance is primarily due to the book income during the year and certain indefinite lived deferred tax assets which can be offset against our indefinite lived deferred tax liabilities. The income tax provision reflected an effective income tax rate of negative 10.2% for the three months ended March 31, 2018, which was less than the statutory federal rate of 21.0%, primarily due to a decrease in our valuation allowance for deferred tax assets, and the benefit from a research credit. We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. As of March 31, 2019, we recorded $1.1 million of unrecognized tax benefits, all of which would impact our effective tax rate, if recognized. We do not anticipate that our unrecognized tax benefits will materially change within the next 12 months. We have not accrued any penalties and interest for our unrecognized tax benefits. Other than the unrecognized tax benefit recorded, we believe that our income tax filing positions and deductions will be sustained upon audit, and we do not anticipate any other adjustments that will result in a material change to our financial position. We may, from time to time, be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. Our policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax in our Statements of Income. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group (the “CODM”). Our CODM consists of the Chief Executive Officer and the Chief Financial Officer. Our CODM allocates resources and measures profitability based on our operating segments, which are managed and reviewed separately, as each represents products and services that can be sold separately to our customers. Our segments are monitored by management for performance against our internal forecasts. We have reported our financial performance based on our segments in both the current and prior periods. Our CODM determined that our operating segments for conducting business are: (a) Games, and (b) FinTech:
Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we record depreciation and amortization expenses to the business segments. Our business is predominantly domestic with no specific regional concentrations and no significant assets in foreign locations. The following tables present segment information (in thousands):
Major Customers. For the three months ended March 31, 2019 and 2018, no single customer accounted for more than 10% of our revenues. Our five largest customers accounted for approximately 16% and 21% of our revenues for the three months ended March 31, 2019, and 2018, respectively. |
SUBSEQUENT EVENTS |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS As of the filing date, we had not identified, and were not aware of, any subsequent event for the period. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. The results for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the full fiscal year. The Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Other than the adoption of the Financial Accounting Standard Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-02 (“Leases”) and all subsequent amendments (collectively, Accounting Standards Codification 842, or ASC 842), there have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. |
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Overall - Revenue Recognition | Revenue Recognition Overview We evaluate the recognition of revenue based on the criteria set forth in ASC 606 (“Revenue from Contracts with Customers”) and ASC 842, as appropriate. We recognize revenue upon transferring control of goods or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We enter into contracts with customers that include various performance obligations consisting of goods, services, or combinations of goods and services. Timing of the transfer of control varies based on the nature of the contract. We recognize revenue net of any sales and other taxes collected from customers, which are subsequently remitted to governmental authorities and are not included in revenues or operating expenses. We measure revenue based on the consideration specified in a contract with a customer and adjusted, as necessary. We evaluate the composition of our revenues to ensure compliance with SEC Regulation S-X Section 210.5-3, which requires us to separately present certain categories of revenues that exceed the quantitative threshold on our Statements of Income. Significant Judgments We apply judgments or estimates to determine the performance obligations and the Stand-Alone Selling Price (“SSP”) of each identified performance obligation. The establishment of SSP requires judgment as to whether there is a sufficient quantity of items sold or renewed on a stand-alone basis and those prices demonstrate an appropriate level of concentration to conclude that a SSP exists. The SSP of our goods and services are generally determined based on observable prices, an adjusted market assessment approach or an expected cost plus margin approach. We utilize a residual approach only when the SSP for performance obligations with observable prices has been established and the remaining performance obligation in the contract with a customer does not have an observable price as it is uncertain or highly variable and, therefore, is not discernible. Collectability To assess collectability, we determine whether it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services transferred to the customer in accordance with the terms and conditions of the contract. In connection with these procedures, we evaluate the customer using internal and external information available, including, but not limited to, research and analysis of our credit history with the customer. Based on the nature of our transactions and historical trends, we determine whether our customers have the ability and intention to pay the amounts of consideration when they become due to identify potentially significant credit risk exposure. Contract Combinations — Multiple Promised Goods and Services Our contracts may include various performance obligations for promises to transfer multiple goods and services to a customer, especially since our Games and FinTech businesses may enter into multiple agreements with the same customer that meet the criteria to be combined for accounting purposes under ASC 606. When this occurs, a SSP will be determined for each performance obligation in the combined arrangement and the consideration allocated between the respective performance obligations. We use our judgment to analyze the nature of the promises made and determine whether each is distinct or should be combined with other promises in the contract based on the level of integration and interdependency between the individual deliverables. Disaggregation of Revenues We disaggregate revenues based on the nature and timing of the cash flows generated by such revenues as presented in “Note 18 — Segment Information.” Outbound Freight Costs Upon transferring control of goods to a customer, the shipping and handling costs in connection with sale transactions are accounted for as fulfillment costs and included in cost of revenues. Costs to Acquire a Contract with a Customer We typically incur incremental costs to acquire customer contracts in the form of sales commission expenses. We evaluate those acquisition costs for groups of contracts with similar characteristics, based on the nature of the transactions. The incremental costs to acquire customer contracts identified would be amortized within one year and, as a result, we elected to utilize the practical expedient set forth in ASC 340 (“Contract Costs - Incremental Costs of Obtaining a Contract”) to expense these amounts as incurred. Contract Balances Since our contracts may include multiple performance obligations, there is often a timing difference between cash collections and the satisfaction of such performance obligations and revenue recognition. Such arrangements are evaluated to determine whether contract assets and liabilities exist. We generally record contract assets when the timing of cash collections differs from when revenue is recognized due to contracts containing specific performance obligations that are required to be met prior to a customer being billed. We generally record contract liabilities when cash is collected in advance of us satisfying performance obligations, including those that are satisfied over a period of time. The following table summarizes our contract assets and contract liabilities arising from contracts with customers:
We recognized approximately $6.1 million in revenue that was included in the beginning contract liability balance during the three months ended March 31, 2019. Games Revenues Our Games products and services include commercial products, such as Native American Class II products and other bingo products, Class III products, video lottery terminals, accounting and central determinant systems, business-to-consumer and business-to-business interactive activities, and other back office systems. We conduct our Games segment business based on results generated from the following major revenue streams: (a) Gaming Operations; (b) Gaming Equipment and Systems; and (c) Gaming Other. Gaming Operations Games revenues are primarily generated by our gaming operations under placement, participation, and development arrangements, in which we provide our customers with player terminals, including TournEvent® terminals that allow operators to switch from in-revenue gaming to out-of-revenue tournaments, player terminal-content licenses, local-area progressive machines, and back-office equipment, collectively referred to herein as leased gaming equipment. We evaluate the recognition of lease revenues based on criteria set forth in ASC 842. Generally, under these arrangements, we retain ownership of the machines installed at customer facilities. We receive recurring revenue based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee. Revenues from lease participation or daily fee arrangements are considered both realizable and earned at the end of each gaming day. Gaming operations revenues generated by leased gaming equipment deployed at sites under development or placement fee agreements give rise to contract rights, which are amounts recorded to intangible assets for dedicated floor space resulting from such agreements. The gaming operations revenues generated by these arrangements are reduced by the accretion of contract rights, which represents the related amortization of the contract rights recorded in connection with those agreements. Gaming operations lease revenues accounted for under ASC 842 are generally short-term in nature with payment terms ranging from 30 to 90 days. We recognized $33.8 million and $33.3 million in lease revenues for the three months ended March 31, 2019 and 2018, respectively. Gaming operations revenues include amounts generated by Wide Area Progressive (“WAP”) systems, which are recognized under ASC 606. WAP consists of linked slot machines located in multiple casino properties that are connected to a central system. WAP-based gaming machines have a progressive jackpot we administer that increases with every wager until a player wins the top award combination. Casino operators pay us a percentage of the coin-in (the total amount wagered), a percentage of net win, or a combination of both for services related to the design, assembly, installation, operation, maintenance, administration, and marketing of the WAP systems. The gaming operations revenues with respect to WAP machines comprise a separate performance obligation and are recognized over time based on the amount expected to be received with any variability being resolved in the reporting period. These arrangements are generally short-term in nature with a majority of invoices payable within 30 to 90 days. Such revenues are presented in the Statements of Income net of the jackpot expense, which is comprised of incremental amounts funded by a portion of the coin-in from players. At the time a jackpot is won by a player, an additional jackpot expense is recorded with respect to the base seed amount required to fund the minimum level required by the respective WAP arrangement with the casino operator. Gaming operations revenues also include amounts received in connection with our relationship with the New York State Gaming Commission to provide an accounting and central determinant system for the VLTs in operation at licensed State of New York gaming facilities. Pursuant to our agreement with the New York State Gaming Commission, we receive a portion of the network-wide net win (generally, cash-in less prizes paid) per day in exchange for provision and maintenance of the central determinant system, and we record revenues in accordance with ASC 606. We also provide central determinant system technology to Native American tribes in other licensed jurisdictions for which we receive a portion of the revenue generated from the VLTs connected to the system. These arrangements are generally short-term in nature with payments due monthly. Gaming operations revenues also include amounts generated by our Interactive offering comprised of business-to-consumer (“B2C”) and business-to-business (“B2B”) activities. B2C relates to games offered directly to consumers to play with virtual currency which can be purchased through our web and mobile applications. Control transfers and we recognize revenues in accordance with ASC 606 from player purchases of virtual currency as it is consumed for game play, which is based on a historical data analysis. B2B relates to games offered to the online business partners, including social casinos and regulated real money casinos, who then offer the games to consumers. Our B2B arrangements primarily provide access to our game content and revenue is recognized in accordance with ASC 606 as the control transfers upon the online business partners’ daily access to such content based on either a flat fee or revenue share arrangements with the social casinos and regulated real money casinos. Gaming Equipment and Systems Gaming equipment and systems revenues are accounted for under ASC 606 and are derived from the sale of some combination of: (a) gaming equipment and player terminals, including TournEvent® terminals that allow operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) game content; (c) license fees; and (d) ancillary equipment. Such arrangements are predominately short-term in nature with payment terms ranging from 30 to 180 days with certain agreements providing for extended payment terms, ranging from 12 to 24 months. Each contract containing extended payment terms over 12 months is evaluated for the presence of a financing component, and for the arrangements in which the financing component is determined to be significant to the contact, the transaction price is adjusted for the time value of money. Generally, our contracts with customers do not contain a financing component that has been determined to be significant to the contract. Performance obligations for gaming equipment and systems arrangements include gaming equipment, player terminals, content, system software, license fees, ancillary equipment, or various combinations thereof. Gaming equipment and systems revenues are recognized at a point in time when control of the promised goods and services transfers to the customer, which is generally upon shipment or delivery pursuant to the terms of the contract. The performance obligations are generally satisfied at the same time or within a short period of time. Gaming Other Gaming other revenues consist of amounts generated by our TournEvent of Champions® national tournament that allows winners of local and regional tournaments throughout the year to participate in a national tournament that results in the determination of a final champion. Such revenues are accounted for under ASC 606. As the customer simultaneously receives and consumes the benefits of our performance as it occurs, revenues are recognized as earned over a period of time using an output method depicting the transfer of control to the customer. These arrangements are generally short-term in nature with payment terms ranging from 30 to 90 days. FinTech Revenues Cash Access Services Cash access services revenues are accounted for under ASC 606 and are generally comprised of the following distinct performance obligations: cash advance, ATM, and check services. We do not control the cash advance and ATM services provided to a customer and, therefore, we are acting as an agent whose performance obligation is to arrange for the provision of these services. Our cash access services involve the movement of funds between the various parties associated with cash access transactions and give rise to settlement receivables and settlement liabilities, both of which are settled in days following the transaction. Cash advance revenues are comprised of transaction fees assessed to gaming patrons in connection with credit card cash access and POS debit card cash access transactions. Such fees are primarily based on a combination of a fixed amount plus a percentage of the face amount of the credit card cash access or POS debit card cash access transaction amount. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis, which generally include: (a) commission expenses payable to casino operators; (b) interchange fees payable to the network associations; and (c) processing and related costs payable to other third party partners. ATM revenues are primarily comprised of transaction fees in the form of cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals at the time the transactions are authorized and reverse interchange fees paid to us by the patrons’ issuing banks. The cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals are currently a fixed dollar amount and not a percentage of the transaction amount. In connection with these types of transactions, we report certain direct costs incurred as reductions to revenues on a net basis, which generally include: (a) commission expenses payable to casino operators; (b) interchange fees payable to the network associations; and (c) processing and related costs payable to other third party partners. Check services revenues are principally comprised of check warranty revenues and are generally based upon a percentage of the face amount of checks warranted. These fees are paid to us by gaming establishments. For cash access services arrangements, since the customer simultaneously receives and consumes the benefits as the performance obligations occur, we recognize revenues as earned over a period of time using an output method depicting the transfer of control to the customer based on variable consideration, such as volume of transactions processed with variability generally resolved in the reporting period. Equipment Equipment revenues are derived from the sale of our cash access kiosks and related equipment and are accounted for under ASC 606. Revenues are recognized at a point in time when control of the promised goods and services transfers to the customer generally upon shipment or delivery pursuant to the terms of the contract. These sales contracts are generally short-term in nature with payment terms ranging from 30 to 90 days. In addition, equipment revenues are derived from the sale of our loyalty kiosks and related equipment and are accounted for under ASC 606. Revenues are recognized at a point in time when control of the promised goods and services transfers to the customer generally upon installation and customer acceptance based on connectivity to a casino management system pursuant to the terms of the contract. These sales contracts are generally short-term in nature with payment terms ranging from 30 to 90 days. Information Services and Other Information services and other revenues are accounted for under ASC 606 and include amounts derived from our cash access, kiosk, compliance, and loyalty related revenue streams from the sale of: (a) software licenses, software subscriptions, professional services, and certain other ancillary fees; (b) service-related fees associated with the sale, installation, and maintenance of equipment directly to our customers under contracts, which are generally short-term in nature with payment terms ranging from 30 to 90 days, secured by the related equipment; (c) credit worthiness-related software subscription services that are based upon either a flat monthly unlimited usage fee or a variable fee structure driven by the volume of patron credit histories generated; and (d) ancillary marketing, database, and Internet-based gaming-related activities. Our software represents a functional right-to-use license, and the revenues are recognized as earned at a point in time. Subscription services are recognized over a period of time using an input method based on time elapsed as we transfer the control ratably by providing a stand-ready service. Professional and other services revenues are recognized over a period of time using an input method based on time elapsed as services are provided, thereby reflecting the transfer of control to the customer. |
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Restricted Cash | Our restricted cash primarily consists of: (a) deposits held in connection with a sponsorship agreement; (b) WAP-related restricted funds; and (c) Internet-related cash access activities. |
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Fair Values of Financial Instruments | The fair value of the long-term trade and loans receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of March 31, 2019 and December 31, 2018, the fair value of notes receivable, net approximated the carrying value due to contractual terms of trade and loans receivable generally being under 24 months. The fair value of our borrowings is estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity, and similar instruments trading in more active markets. |
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Recent Accounting Guidance | Recently Adopted Accounting Guidance In June 2018, the FASB issued ASU No. 2018-07, which expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The new standard became effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted this guidance in the quarter ended March 31, 2019. The adoption of this ASU did not have a material impact on our Financial Statements. In February 2018, the FASB issued ASU No. 2018-02, which provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act of 2017 (or portion thereof) is recorded. The new standard became effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted this guidance in the quarter ended March 31, 2019. The adoption of this ASU did not have a material impact on our Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The guidance establishes a right-of-use (“ROU”) model that requires a lessee to record a lease ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. We made an accounting policy election where leases that are 12 months or less and do not include an option to purchase the underlying asset are treated similarly to the operating lease accounting under ASC 840 and are not recorded on the balance sheet. For lessees, leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For lessors, leases are classified as operating, sales-type, or direct financing with classification affecting the pattern of revenue and profit recognition in the income statement. In July 2018, the FASB issued ASU No. 2018-10 — Codification Improvements to Topic 842, Leases and ASU No. 2018-11 — Leases (Topic 842): Targeted Improvements. ASU No. 2018-10 affected narrow aspects of the guidance previously issued, and ASU No. 2018-11 provided a practical expedient for lessors on separating components of a contract and also included an additional optional transition relief methodology for adopting the new standard. In December 2018, the FASB issued ASU No. 2018-20 — Leases (Topic 842): Narrow-Scope Improvements for Lessors, which addressed the following issues facing lessors when applying the standard: sales taxes and other similar taxes collected from lessees, certain lessor costs paid directly by lessees, and recognition of variable payments for contracts with lease and non-lease components. The guidance requires an entity to adopt the new standard, as amended, under a modified retrospective application to each prior reporting period presented in the financial statements with the cumulative effect recognized at the beginning of the earliest comparative period. With the optional transition relief methodology available, entities had an opportunity to adopt the new lease standard retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment, with certain practical expedients available. Based on the guidance, we adopted the new standard effective January 1, 2019 and applied certain practical expedients offered in the aforementioned guidance, such as those that stated that the Company need not reassess: (a) whether expired or existing contracts contain leases, (b) the lease classification of expired or existing leases, or (c) initial direct costs for any existing leases. We have provided additional information with respect to the new guidance in “Note 3 — Leases.” Recent Accounting Guidance Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-15, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. We are currently evaluating the impact of adopting this guidance on our Financial Statements; however, we do not expect the impact to be material. In June 2016, the FASB issued ASU No. 2016-13, which provides updated guidance on how an entity should measure credit losses on financial instruments. The new guidance replaces the current incurred loss measurement methodology with a lifetime expected loss measurement methodology. Subsequently, in November 2018 the FASB issued ASU No. 2018-19 which clarified that receivables arising from operating leases are not within the scope of Subtopic 326-20, but should rather be accounted for in accordance with Topic 842, Leases. The new standard and related amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach for the cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective and using a prospective approach for debt securities for which any other-than-temporary impairment had been recognized before the effective date. Early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact of adopting this guidance on our Financial Statements. We do not anticipate that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Contract Asset and Liability | The following table summarizes our contract assets and contract liabilities arising from contracts with customers:
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Estimated fair value and outstanding balances of borrowings | The estimated fair value and outstanding balances of our borrowings are as follows (in thousands):
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LEASES (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information | Supplemental balance sheet information related to our operating leases is as follows (in thousands):
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Cash Flow Information | Supplemental cash flow information related to leases was as follows (in thousands):
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Lease Costs | Other information related to lease terms and discount rates is as follows:
Components of lease expense are as follows (in thousands):
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Payments Due | Maturities of lease liabilities are summarized as follows as of March 31, 2019 (in thousands):
As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting, maturities of lease liabilities were as follows as of December 31, 2018 (in thousands):
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BUSINESS COMBINATIONS - (Tables) |
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Contingent Consideration | The total purchase consideration for Atrient was as follows (in thousands, at fair value):
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Business Acquisitions Assets and Liabilities | The information below reflects the preliminary amounts of identifiable assets acquired and liabilities assumed as of the closing date of the transaction (in thousands):
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Finite-Lived Intangible Assets Acquired | The following table summarizes acquired intangible assets (dollars in thousands):
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TRADE AND OTHER RECEIVABLES (Tables) |
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Schedule of components of trade and other receivables | The balance of trade and other receivables consisted of the following (in thousands):
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INVENTORY (Tables) |
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Schedule of components of inventory | Inventory consisted of the following (in thousands):
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PREPAID EXPENSES AND OTHER ASSETS (Tables) |
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Schedule of components of current portion of prepaid and other assets | The balance of the current portion of prepaid expenses and other assets consisted of the following (in thousands):
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Schedule of components of non-current portion of prepaid and other assets | The balance of the non-current portion of other assets consisted of the following (in thousands):
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PROPERTY, EQUIPMENT AND LEASED ASSETS (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of property, equipment and leased assets | Property, equipment and leased assets consist of the following (dollars in thousands):
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other intangible assets | Other intangible assets consist of the following (dollars in thousands):
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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts payable and accrued expenses | The following table presents our accounts payable and accrued expenses (in thousands):
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LONG-TERM DEBT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding indebtedness | The following table summarizes our outstanding indebtedness (in thousands):
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WEIGHTED AVERAGE COMMON SHARES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average number of common shares outstanding used in computation of basic and diluted earnings per share | The weighted average number of shares of common stock outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):
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SHARE-BASED COMPENSATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of award activity | A summary of award activity is as follows (in thousands):
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Summary of options activity | he following table presents the options activity for the three months ended March 31, 2019:
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Summary of non-vested share awards for time-based restricted stock | The following is a summary of non-vested RSU awards:
The following is a summary of non-vested share awards for our time-based restricted stock:
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SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information | The following tables present segment information (in thousands):
|
BUSINESS (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
segment
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 2 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Contract with customer liability | $ 6,100 | |||
Total revenues | 123,775 | $ 111,001 | ||
Current restricted cash | 1,800 | 800 | $ 1,500 | $ 900 |
Non-current restricted cash | $ 100 | 100 | $ 100 | $ 100 |
Contractual terms of trade and loans receivable | 24 months | |||
Games | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 67,427 | 60,217 | ||
Games | Gaming Operations, Leased Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 33,800 | 33,300 | ||
Games | Gaming equipment and systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 23,087 | $ 20,154 | ||
Minimum | Games | Gaming Operations, Leased Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment Terms ( In Days) | 30 days | |||
Minimum | Games | Gaming equipment and systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Term Of Contract ( In Days ) | 30 days | |||
Payment Terms ( In Days) | 12 months | |||
Minimum | FinTech Segment | Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment Terms ( In Days) | 30 days | |||
Minimum | FinTech Segment | Information services and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment Terms ( In Days) | 30 days | |||
Maximum | Games | Gaming Operations, Leased Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment Terms ( In Days) | 90 days | |||
Maximum | Games | Gaming equipment and systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Term Of Contract ( In Days ) | 180 days | |||
Payment Terms ( In Days) | 24 months | |||
Maximum | FinTech Segment | Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment Terms ( In Days) | 90 days | |||
Maximum | FinTech Segment | Information services and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment Terms ( In Days) | 90 days |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Contract Asset and Liability (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Contract assets | ||
Balance | $ 14,098 | $ 11,310 |
Increase | 2,788 | |
Contract liabilities | ||
Balance | 24,350 | $ 15,470 |
Increase | $ 8,880 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Fair Value and Outstanding Balances of Borrowings (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value | Level 2 | Term Loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 801,622 | $ 784,479 |
Fair Value | Level 1 | Senior unsecured notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 389,063 | 354,863 |
Outstanding Balance | Level 2 | Term Loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 805,650 | 807,700 |
Outstanding Balance | Level 1 | Senior unsecured notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 375,000 | $ 375,000 |
LEASES Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Lessee, Lease, Description [Line Items] | ||
Cost | $ 299,680 | $ 292,598 |
Accumulated Depreciation | $ 186,613 | $ 176,310 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, renewal term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, renewal term | 15 years | |
Assets leased to others | ||
Lessee, Lease, Description [Line Items] | ||
Cost | $ 183,669 | |
Accumulated Depreciation | $ 106,488 |
LEASES Balance Sheet Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Leases [Abstract] | ||
Operating lease ROU assets | $ 14,104 | |
Current operating lease liabilities | 5,356 | $ 0 |
Non-current operating lease liabilities | $ 12,604 |
LEASES Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 1,434 | |
Operating lease ROU assets obtained in exchange for lease obligations | 15,132 | $ 0 |
Operating lease ROU assets obtained in exchange for existing lease obligations | 14,100 | |
Operating lease ROU assets obtained in exchange for new lease obligations | $ 1,000 |
LEASES Lease Costs (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Weighted average remaining lease term | 3 years 4 months |
Weighted average discount rate | 5.25% |
Operating lease cost | $ 944 |
Variable lease cost | $ 439 |
LEASES Payments Due (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Leases [Abstract] | ||
2019 | $ 4,613 | $ 5,570 |
2020 | 6,273 | 5,680 |
2021 | 4,953 | 4,598 |
2022 | 2,711 | 2,799 |
2023 | 1,011 | 1,074 |
Thereafter | 0 | 0 |
Total future minimum lease payments | 19,561 | 19,721 |
Amount representing interest | 1,601 | |
Present value of future minimum lease payments | 17,960 | |
Current operating lease liabilities | 5,356 | $ 0 |
Long-term lease obligations | $ 12,604 |
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Mar. 08, 2019 |
Mar. 31, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Mar. 08, 2021 |
Mar. 08, 2020 |
|
Business Acquisition [Line Items] | ||||||
Cash paid | $ 20,000 | $ 0 | ||||
Payments to Acquire Businesses, Net of Cash Acquired | 20,000 | $ 0 | ||||
Estimated Fair Value | 14,200 | |||||
Atrient | ||||||
Business Acquisition [Line Items] | ||||||
Revenues | $ 500 | |||||
Proceeds from (Payments for) Trading Securities, Short-term | 1,800 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | $ 1,000 | $ 1,000 | ||||
Operating lease ROU assets | $ 239 | |||||
Short-Duration Contracts, Discounted Liabilities, Discount Rate | 17.00% | 17.00% | ||||
Operating Income (Loss) | $ 200 | |||||
Business Acquisition, Transaction Costs | $ 100 | |||||
FinTech Segment | Atrient | ||||||
Business Acquisition [Line Items] | ||||||
Cash consideration paid at closing | 20,000 | |||||
Contingent consideration | 10,000 | |||||
Total cash consideration | $ 50,000 | |||||
FinTech Segment | Forecast | Atrient | ||||||
Business Acquisition [Line Items] | ||||||
Cash consideration paid at closing | $ 10,000 | $ 10,000 | ||||
Customer contracts | ||||||
Business Acquisition [Line Items] | ||||||
Estimated Fair Value | $ 9,200 | |||||
Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Estimated Fair Value | $ 5,000 | |||||
Developed technology | Atrient | ||||||
Business Acquisition [Line Items] | ||||||
Royalty Rate | 15.00% | |||||
Short-Duration Contracts, Discounted Liabilities, Discount Rate | 18.00% | 18.00% |
BUSINESS COMBINATIONS Contingent Consideration (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 08, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Cash paid | $ 20,000 | $ 0 | |
Payments to Acquire Businesses, Net of Cash Acquired | $ 20,000 | $ 0 | |
FinTech Segment | Asset Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Cash consideration to be paid in subsequent periods | $ 18,528 | ||
Total cash consideration | 38,528 | ||
Contingent consideration | 9,028 | ||
Total purchase consideration | $ 47,556 |
BUSINESS COMBINATIONS Business Acquisitions Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 08, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 673,447 | $ 640,537 | |
Atrient | |||
Business Acquisition [Line Items] | |||
Current assets | $ 2,896 | ||
Property, equipment and leased assets, net | 8 | ||
Operating lease ROU assets | 239 | ||
Goodwill | 32,897 | ||
Other intangible assets, net | 14,200 | ||
Total assets | 50,240 | ||
Contract liabilities | (2,445) | ||
Current operating lease liabilities | (105) | ||
Non-current operating lease liabilities | (134) | ||
Total liabilities | (2,684) | ||
Net assets acquired | $ 47,556 |
BUSINESS COMBINATIONS Finite-Lived Intangible Assets Acquired (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Estimated Fair Value | $ 14,200 |
Developed technology | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Useful Life (Years) | 3 years |
Estimated Fair Value | $ 5,000 |
Customer contracts | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Useful Life (Years) | 5 years |
Estimated Fair Value | $ 9,200 |
FUNDING AGREEMENTS (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Funding Agreements | ||
Cash supplied for Canadian ATMs | $ 245,100,000 | $ 249,600,000 |
Site-funded ATM liability | 6,200,000 | 6,100,000 |
Contract Cash Solutions Agreement | Indemnification Guarantee | ||
Funding Agreements | ||
Cash usage fees incurred | 1,700,000 | |
Outstanding balance | 267,000,000 | 224,700,000 |
Contract Cash Solutions Agreement, as amended | Indemnification Guarantee | ||
Funding Agreements | ||
Maximum amount | 300,000,000 | |
Ability to increase maximum amount | $ 75,000,000 | |
Guarantor obligations, increase period | 5 days | |
Guarantor Obligations, Non-Renewal Notice Period | 90 days | |
Prefunded Cash Access Agreements | ||
Funding Agreements | ||
Prefunded cash | $ 2,400,000 | $ 4,800,000 |
TRADE AND OTHER RECEIVABLES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Trade and other receivables, net | ||
Other receivables | $ 3,412 | $ 1,333 |
Total trade and other receivables, net | 84,630 | 73,234 |
Non-current portion of receivables | (12,297) | (8,847) |
Total trade and other receivables, current portion | 72,333 | 64,387 |
Allowances for doubtful accounts | 6,281 | 6,425 |
Check Warranty Reserves | ||
Trade and other receivables, net | ||
Allowances for doubtful accounts | 3,300 | 3,200 |
Gaming operations | ||
Trade and other receivables, net | ||
Trade receivables, net | 57,080 | 53,011 |
Non-current portion of receivables | (1,785) | (2,922) |
FinTech | ||
Trade and other receivables, net | ||
Trade receivables, net | 24,138 | 18,890 |
Non-current portion of receivables | $ (10,512) | $ (5,925) |
INVENTORY (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory | ||
Component parts, net of reserves of $1,695 and $1,468 at March 31, 2019 and December 31, 2018, respectively | $ 20,886 | $ 23,197 |
Work-in-progress | 1,309 | 280 |
Finished goods | 2,602 | 926 |
Total inventory | 24,797 | 24,403 |
Component parts, reserves | $ 1,695 | $ 1,468 |
PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Prepaid expenses and other assets | ||
Prepaid expenses | $ 10,810 | $ 8,351 |
Deposits | 8,268 | 8,241 |
Other | 3,215 | 3,667 |
Total prepaid expenses and other assets | 22,293 | 20,259 |
Other assets | ||
Right Of Use Assets Noncurrent | 0 | |
Prepaid expenses and deposits | 6,683 | 5,289 |
Debt issuance costs of revolving credit facility | 606 | 654 |
Other | 277 | 309 |
Total other assets | $ 21,670 | $ 6,252 |
PROPERTY, EQUIPMENT AND LEASED ASSETS (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | |||
Cost | $ 299,680 | $ 292,598 | |
Accumulated Depreciation | 186,613 | 176,310 | |
Net Book Value | 113,067 | 116,288 | |
Depreciation | 14,789 | $ 12,825 | |
Impairment of property, equipment and leased assets | 0 | 0 | |
FinTech | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | 1,415 | 1,686 | |
Games | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | 13,374 | $ 11,139 | |
Rental pool - deployed | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 183,309 | ||
Accumulated Depreciation | 105,038 | ||
Net Book Value | $ 77,181 | 78,271 | |
Rental pool - deployed | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 2 years | ||
Rental pool - deployed | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 4 years | ||
Rental pool - undeployed | |||
Property, Plant and Equipment [Line Items] | |||
Cost | $ 30,285 | 23,825 | |
Accumulated Depreciation | 21,026 | 14,680 | |
Net Book Value | $ 9,259 | 9,145 | |
Rental pool - undeployed | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 2 years | ||
Rental pool - undeployed | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 4 years | ||
Leasehold and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Cost | $ 11,870 | 11,857 | |
Accumulated Depreciation | 7,374 | 6,938 | |
Net Book Value | 4,496 | 4,919 | |
Machinery, office and other equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 46,439 | 46,322 | |
Accumulated Depreciation | 29,994 | 28,654 | |
Net Book Value | 16,445 | 17,668 | |
Machinery, office and other equipment | FinTech | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 27,417 | 27,285 | |
Accumulated Depreciation | 21,731 | 21,000 | |
Net Book Value | $ 5,686 | $ 6,285 | |
Machinery, office and other equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 2 years | ||
Machinery, office and other equipment | Minimum | FinTech | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 3 years | ||
Machinery, office and other equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 5 years | ||
Machinery, office and other equipment | Maximum | FinTech | |||
Property, Plant and Equipment [Line Items] | |||
Useful Life (Years) | 5 years |
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 673,447 | $ 640,537 |
Goodwill Acquired | $ 32,900 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 667,314 | $ 646,126 |
Accumulated Amortization | 374,359 | 358,729 |
Net Book Value | $ 292,955 | 287,397 |
Contract rights under placement fee agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 4 years | |
Cost | $ 57,441 | 57,440 |
Accumulated Amortization | 14,300 | 12,178 |
Net Book Value | $ 43,141 | 45,262 |
Customer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 6 years | |
Cost | $ 60,375 | 51,175 |
Accumulated Amortization | 46,816 | 46,162 |
Net Book Value | $ 13,559 | 5,013 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 8 years | |
Cost | $ 231,100 | 231,100 |
Accumulated Amortization | 89,860 | 84,619 |
Net Book Value | $ 141,240 | 146,481 |
Developed technology and software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 2 years | |
Cost | $ 289,352 | 277,243 |
Accumulated Amortization | 198,262 | 190,886 |
Net Book Value | $ 91,090 | 86,357 |
Patents, trademarks and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 4 years | |
Cost | $ 29,046 | 29,168 |
Accumulated Amortization | 25,121 | 24,884 |
Net Book Value | $ 3,925 | $ 4,284 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Placement Fee Agreements (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Funding Agreements | ||
Cash payment made | $ 16.3 | |
Imputed interest in placement fees | 0.3 | $ 1.0 |
Placement fees | $ 5.6 | $ 5.6 |
Contract rights under development and placement fee agreements | Minimum | ||
Funding Agreements | ||
General term of the agreement | 12 months | |
Contract rights under development and placement fee agreements | Maximum | ||
Funding Agreements | ||
General term of the agreement | 83 months |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Payables and Accruals [Abstract] | ||
Trade accounts payable | $ 85,383 | $ 70,796 |
Deferred and unearned revenues | 20,258 | 12,887 |
Accrued interest | 8,652 | 1,374 |
Payroll and related expenses | 7,408 | 15,055 |
Cash access processing and related expenses | 6,931 | 4,160 |
Other | 5,773 | 6,303 |
Operating lease liabilities(2) | 5,356 | 0 |
Accrued taxes | 1,791 | 1,917 |
Total accounts payable and accrued expenses | 152,716 | 129,238 |
Total outstanding balance of placement fee liability | $ 11,164 | $ 16,746 |
LONG-TERM DEBT - Summary of Indebtedness (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 1,180,650 | $ 1,182,700 |
Debt issuance costs and discount | (18,643) | (19,484) |
Total debt after debt issuance costs and discount | 1,162,007 | 1,163,216 |
Current portion of long-term debt | (8,200) | (8,200) |
Long-term debt, less current portion | 1,153,807 | 1,155,016 |
Senior secured term loan | ||
Debt Instrument [Line Items] | ||
Total debt | 805,650 | 807,700 |
Senior unsecured notes | ||
Debt Instrument [Line Items] | ||
Total debt | $ 375,000 | $ 375,000 |
LONG-TERM DEBT - Refinancing (Details) - USD ($) |
3 Months Ended | ||||
---|---|---|---|---|---|
May 17, 2018 |
May 09, 2017 |
Mar. 31, 2019 |
Jun. 30, 2017 |
Nov. 13, 2017 |
|
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 14,600,000 | ||||
Prepayment penalties incurred | $ 0 | ||||
New Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Debt issuance discount | 4,100,000 | ||||
Debt issuance costs | $ 15,500,000 | ||||
New Credit Agreement, dated May 9, 2017 | Federal Funds Effective Swap Rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 0.50% | ||||
New Credit Agreement, dated November 13, 2017 | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 3,000,000 | ||||
Borrowings outstanding | $ 818,000,000 | ||||
New Credit Agreement, dated May 17, 2018 | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 1,300,000 | ||||
Borrowings outstanding | $ 813,900,000 | ||||
New Credit Agreement, dated May 17, 2018 | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 3.00% | 3.50% | |||
LIBOR floor rate | 1.00% | ||||
Senior secured notes | |||||
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 14,600,000 | ||||
Senior secured notes | 7.25% Notes due 2021 (Refinanced Secured Notes) | |||||
Debt Instrument [Line Items] | |||||
Interest rate (as a percent) | 7.25% | ||||
Outstanding amount redeemed | $ 335,000,000 | ||||
Loss on extinguishment of debt | 1,700,000 | ||||
Senior secured term loan | New Credit Agreement, dated May 17, 2018 | |||||
Debt Instrument [Line Items] | |||||
Percentage of prepayment premium of principal amount of term loan | 1.00% | ||||
Revolving credit facility | New Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 35,000,000 | ||||
Debt term | 5 years | 5 years | |||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Debt term | 7 years | 7 years | |||
Principal amount of debt | $ 820,000,000 | ||||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | Maximum | |||||
Debt Instrument [Line Items] | |||||
Period from issuance to prepayment subject to prepayment premium | 6 months | ||||
Senior secured term loan facility | Prior Credit Agreement, December 2014 | |||||
Debt Instrument [Line Items] | |||||
Prepayment of outstanding balances | $ 462,300,000 |
LONG-TERM DEBT - New Credit Facilities (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
May 17, 2018 |
May 09, 2017 |
Mar. 31, 2019 |
Nov. 13, 2017 |
|
New Credit Agreement, dated May 9, 2017 | ||||
Debt Instrument [Line Items] | ||||
Actual consolidated leverage ratio (as a percent) | 3.00% | |||
Maximum allowable consolidated secured leverage ratio two | 4.75% | |||
Maximum allowable consolidated secured leverage ratio three | 4.50% | |||
Maximum allowable consolidated secured leverage ratio four | 4.25% | |||
Maximum allowable consolidated secured leverage ratio five | 4.00% | |||
Threshold for change of control of parent company (as a percent) | 35.00% | |||
New Credit Agreement, dated May 9, 2017 | Everi Payments Inc. | ||||
Debt Instrument [Line Items] | ||||
Ownership of equity interests (as a percent) | 100.00% | |||
New Credit Agreement, dated May 9, 2017 | Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Variable reference rate threshold (as a percent) | 0.00% | |||
Variable reference rate (as a percent) | 0.00% | |||
New Credit Agreement, dated May 17, 2018 | ||||
Debt Instrument [Line Items] | ||||
Basis points on variable rate | 0.50% | |||
Borrowings outstanding | $ 813.9 | |||
New Credit Agreement, dated November 13, 2017 | ||||
Debt Instrument [Line Items] | ||||
Borrowings outstanding | $ 818.0 | |||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | ||||
Debt Instrument [Line Items] | ||||
Debt term | 7 years | 7 years | ||
Required quarterly principal payment, as a percentage of original principal | 0.25% | |||
Weighted average interest rate during period (as a percent) | 5.50% | |||
Outstanding borrowings | $ 805.7 | |||
Senior secured term loan facility | New Credit Agreement, dated May 9, 2017 | Maximum | ||||
Debt Instrument [Line Items] | ||||
Period from issuance to prepayment subject to prepayment premium | 6 months | |||
Revolving credit facility | New Credit Agreement, dated May 9, 2017 | ||||
Debt Instrument [Line Items] | ||||
Debt term | 5 years | 5 years | ||
Additional borrowing availability | $ 35.0 | |||
Base rate borrowings | New Credit Agreement, dated May 9, 2017 | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 3.50% | |||
Base rate borrowings | New Credit Agreement, dated May 9, 2017 | Eurodollar | ||||
Debt Instrument [Line Items] | ||||
Variable reference rate period | 1 month | |||
Interest rate margin (as a percent) | 1.00% | |||
Base rate borrowings | New Credit Agreement, dated May 17, 2018 | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 2.00% | |||
Base rate borrowings | New Credit Agreement, dated November 13, 2017 | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 2.50% | |||
Eurodollar Borrowings | New Credit Agreement, dated May 9, 2017 | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 4.50% | |||
Eurodollar Borrowings | New Credit Agreement, dated May 17, 2018 | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 3.00% | |||
Eurodollar Borrowings | New Credit Agreement, dated November 13, 2017 | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 3.50% | |||
Eurodollar Borrowings Interest Period Greater Than 3 Months | New Credit Agreement, dated May 9, 2017 | ||||
Debt Instrument [Line Items] | ||||
Interest period term | 3 months | |||
Eurodollar Borrowings Interest Period Greater Than 3 Months | New Credit Agreement, dated May 9, 2017 | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest remittance period | 3 months |
LONG-TERM DEBT - Senior Secured Notes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 09, 2017 |
Jun. 30, 2017 |
|
Debt Instrument [Line Items] | ||
Loss on extinguishment of debt | $ 14.6 | |
Senior secured notes | ||
Debt Instrument [Line Items] | ||
Loss on extinguishment of debt | $ 14.6 | |
Senior secured notes | 7.25% Notes due 2021 (Refinanced Secured Notes) | ||
Debt Instrument [Line Items] | ||
Outstanding amount redeemed | 335.0 | |
Loss on extinguishment of debt | 1.7 | |
Debt issuance costs and fees expensed on extinguishment of debt | 0.2 | |
Debt discounts expensed on extinguishment of debt | $ 1.5 |
LONG-TERM DEBT - Senior Unsecured Notes (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Dec. 05, 2017 |
Jun. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2014 |
|
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt | $ 14,600,000 | |||
Senior unsecured notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of debt | $ 375,000,000 | $ 350,000,000 | ||
Interest rate (as a percent) | 7.50% | 10.00% | ||
Debt issuance discount | $ 3,800,000 | |||
Debt issuance costs | $ 6,100,000 | $ 14,000,000 | ||
Loss on extinguishment of debt | $ 37,200,000 | |||
Make whole premium | 26,300,000 | |||
Debt issuance costs and fees expensed on extinguishment of debt | $ 10,900,000 | |||
Senior unsecured notes | Prior Credit Agreement, December 2014 | ||||
Debt Instrument [Line Items] | ||||
Redemption price percentage | 107.50% |
SHAREHOLDERS' EQUITY (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Stockholders' Equity Note [Abstract] | |||
Convertible preferred stock authorized (in shares) | 50,000,000 | 50,000,000 | |
Common stock issued (in shares) | 95,965,756 | 95,099,532 | |
Class of Stock [Line Items] | |||
Aggregate purchase price of shares repurchased or withheld from restricted stock awards | $ 15,000 | $ 38,000 | |
Treasury Stock | |||
Class of Stock [Line Items] | |||
Shares withheld from restricted stock awards (in shares) | 2,096 | 5,001 | |
Aggregate purchase price of shares repurchased or withheld from restricted stock awards | $ 14,718.24 | $ 38,400 |
WEIGHTED AVERAGE COMMON SHARES (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Weighted average common shares outstanding | ||
Weighted average number of common shares outstanding - basic (in shares) | 70,334 | 68,686 |
Potential dilution from equity awards (in shares) | 4,922 | 4,599 |
Weighted average number of common shares outstanding - diluted (in shares) | 75,256 | 73,285 |
Anti-dilutive equity awards excluded from computation of earnings per share (in shares) | 6,700 | 7,000 |
SHARE-BASED COMPENSATION - Award Activity (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Common Stock | ||
Restricted Stock Granted | ||
Number of shares available for grant | 3,600,000 | |
Stock Options | ||
Stock Options Granted | ||
Outstanding (in shares) | 15,674,000 | |
Granted (in shares) | 0 | |
Exercised options (in shares) | (864,000) | |
Canceled or forfeited (in shares) | (56,000) | |
Outstanding (in shares) | 14,754,000 | |
Restricted Stock Awards | ||
Restricted Stock Granted | ||
Outstanding (in shares) | 8,000 | |
Granted (in shares) | 0 | |
Vested (in shares) | (5,000) | (17,001) |
Canceled or forfeited (in shares) | 0 | |
Outstanding (in shares) | 3,000 | |
Restricted Stock Units | ||
Restricted Stock Granted | ||
Outstanding (in shares) | 1,797,000 | |
Granted (in shares) | 84,000 | 116,326 |
Vested (in shares) | (2,000) | |
Canceled or forfeited (in shares) | (17,000) | |
Outstanding (in shares) | 1,862,000 |
SHARE-BASED COMPENSATION - Stock Options, Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stock options | ||||
Proceeds from exercise of stock options | $ 4,686 | $ 4,088 | ||
Time Based Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Expiration period | 10 years | |||
Time Based Options | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Time Based Options | Tranche 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Time Based Options | Tranche 3 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Time Based Options | Tranche 4 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Market Performance Based Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Expiration period | 10 years | |||
Vesting price hurdle, percent of premium to closing stock price on grant date | 25.00% | 50.00% | ||
Number of consecutive trading days the average stock price meets certain target prices, which satisfy vesting requirements | 30 days | |||
Market Performance Based Options | Tranche 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Market Performance Based Options | Tranche 2 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Market Performance Based Options | Tranche 3 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Market Performance Based Options | Tranche 4 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting rate per year (as a percent) | 25.00% | |||
Stock Options | ||||
Stock options | ||||
Granted (in shares) | 0 | |||
Options exercised, intrinsic value | $ 3,300 | 1,300 | ||
Unrecognized compensation expense | $ 2,700 | $ 6,400 | ||
Weighted-average period for recognition of unrecognized compensation expense | 2 years 4 months | 3 years 1 month 24 days | ||
Non-cash compensation expense | $ 1,000 | $ 2,100 | ||
Proceeds from exercise of stock options | $ 4,700 | $ 4,200 |
SHARE-BASED COMPENSATION - Schedule of Stock Options Activity (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Stock Options Granted | ||
Outstanding (in shares) | 15,674,000 | |
Granted (in shares) | 0 | |
Exercised options (in shares) | (864,000) | |
Canceled or forfeited (in shares) | (56,000) | |
Outstanding (in shares) | 14,754,000 | 15,674,000 |
Vested and expected to vest (in shares) | 14,302,000 | |
Exercisable (in shares) | 9,738,000 | |
Weighted Average Exercise Price | ||
Outstanding (in dollars per share) | $ 5.39 | |
Granted (in dollars per share) | ||
Exercised options (in dollars per share) | 5.74 | |
Canceled or forfeited (in dollars per share) | 4.40 | |
Outstanding (in dollars per share) | 5.38 | $ 5.39 |
Vested and expected to vest (in dollars per share) | 5.43 | |
Exercisable (in dollars per share) | $ 5.92 | |
Weighted Average Life Remaining | ||
Outstanding | 5 years 9 months | 6 years |
Vested and expected to vest | 5 years 9 months | |
Exercisable | 5 years 6 months | |
Aggregate Intrinsic Value | ||
Outstanding (in dollars) | $ 75,894 | $ 17,733 |
Vested and expected to vest (in dollars) | 72,739 | |
Exercisable (in dollars) | $ 44,777 |
SHARE-BASED COMPENSATION - Schedule of Restricted Stock Awards (Details) - Restricted Stock Awards - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Restricted Stock Granted | ||
Outstanding (in shares) | 8,000 | |
Granted (in shares) | 0 | |
Vested (in shares) | (5,000) | (17,001) |
Forfeited (in shares) | 0 | |
Outstanding (in shares) | 3,000 | |
Weighted Average Grant Date Fair Value | ||
Outstanding (in dollars per share) | $ 6.66 | |
Granted (in dollars per share) | 0.00 | |
Vested (in dollars per share) | 6.66 | |
Forfeited (in dollars per share) | 0.00 | |
Outstanding (in dollars per share) | $ 6.66 |
SHARE-BASED COMPENSATION - Restricted Stock Awards, Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2017 |
|
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 0 | ||
Total fair value of shares vested | $ 33,287 | $ 118,747 | |
Unrecognized compensation expense | $ 8,744 | $ 300,000 | |
Weighted-average period for recognition of unrecognized compensation expense | 1 month | 9 months | |
Vested (in shares) | 5,000 | 17,001 | |
Non-cash compensation expense | $ 0 | $ 200,000 | |
Restricted Stock Units (RSU)'s, Time-Based [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vested (in shares) | 4,998 |
SHARE-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted Stock Units and Performance Based Restricted Stock Units - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Restricted Stock Granted | |||
Outstanding (in shares) | 1,797,000 | ||
Granted (in shares) | 84,000 | ||
Vested (in shares) | (2,084) | ||
Forfeited (in shares) | (17,000) | ||
Outstanding (in shares) | 1,862,000 | 1,797,000 | |
Vested and expected to vest (in shares) | 1,292,000 | ||
Weighted Average Grant Date Fair Value | |||
Outstanding (in dollars per share) | $ 7.49 | ||
Granted (in dollars per share) | 7.16 | ||
Vested (in dollars per share) | 6.79 | ||
Forfeited (in dollars per share) | 7.45 | ||
Outstanding (in dollars per share) | 7.47 | $ 7.49 | |
Vested and expected to vest (in dollars per share) | $ 7.46 | ||
Weighted Average Life Remaining | |||
Outstanding | 1 year 10 months | 2 years | |
Vested and expected to vest | 1 year 7 months | ||
Aggregate Intrinsic Value | |||
Outstanding (in dollars) | $ 19,591 | $ 9,254 | |
Vested and expected to vest (in dollars) | $ 13,595 | ||
Restricted stock | |||
Granted (in shares) | 84,000 | ||
Vested (in shares) | (2,084) | ||
Unrecognized compensation expense | $ 6,400 | $ 700 | |
Weighted-average period for recognition of unrecognized compensation expense | 2 years 10 months | 2 years 11 months |
SHARE-BASED COMPENSATION - Restricted Stock Units, Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2017 |
|
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 0 | ||
Total fair value of shares vested | $ 33,287 | $ 118,747 | |
Vested (in shares) | 5,000 | 17,001 | |
Unrecognized compensation expense | $ 8,744 | $ 300,000 | |
Weighted-average period for recognition of unrecognized compensation expense | 1 month | 9 months | |
Non-cash compensation expense | $ 0 | $ 200,000 | |
Restricted Stock Units and Performance Based Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 84,000 | ||
Vested (in shares) | 2,084 | ||
Unrecognized compensation expense | $ 6,400,000 | $ 700,000 | |
Weighted-average period for recognition of unrecognized compensation expense | 2 years 10 months | 2 years 11 months | |
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Options granted (in shares) | 84,000 | 116,326 | |
Vested (in shares) | 2,000 | ||
Non-cash compensation expense | $ 800,000 | $ 0 | |
Restricted Stock Units | Tranche 1 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting rate per year (as a percent) | 25.00% | ||
Restricted Stock Units | Tranche 2 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting rate per year (as a percent) | 25.00% | ||
Restricted Stock Units | Tranche 3 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting rate per year (as a percent) | 25.00% | ||
Restricted Stock Units | Tranche 4 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting rate per year (as a percent) | 25.00% |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | (7.10%) | (10.20%) |
Statutory federal rate (as a percent) | 21.00% | 21.00% |
Unrecognized tax benefits | $ 1.1 |
SEGMENT INFORMATION - Revenues, Operating Income, and Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
||||
Revenues | ||||||
Total revenues | $ 123,775 | $ 111,001 | ||||
Costs and expenses | ||||||
Cost of revenues | 24,638 | 20,884 | ||||
Operating expenses | 34,648 | 32,187 | ||||
Research and development | 7,531 | 4,311 | ||||
Depreciation | 14,789 | 12,825 | ||||
Amortization | 16,297 | 16,303 | ||||
Costs and Expenses | 97,903 | 86,510 | ||||
Operating income | 25,872 | 24,491 | ||||
Total assets | ||||||
Total assets | 1,632,004 | $ 1,548,261 | ||||
Games | ||||||
Revenues | ||||||
Total revenues | 67,427 | 60,217 | ||||
Costs and expenses | ||||||
Cost of revenues | 16,653 | 14,923 | ||||
Operating expenses | 14,667 | 12,007 | ||||
Research and development | 5,847 | 4,311 | ||||
Depreciation | 13,374 | 11,139 | ||||
Amortization | 13,782 | 13,484 | ||||
Costs and Expenses | 64,323 | 55,864 | ||||
Operating income | 3,104 | 4,353 | ||||
Total assets | ||||||
Total assets | 912,747 | 912,849 | ||||
Games | Gaming operations | ||||||
Revenues | ||||||
Total revenues | 44,286 | 40,056 | ||||
Costs and expenses | ||||||
Cost of revenues | [1] | 4,124 | 4,182 | |||
Games | Gaming equipment and systems | ||||||
Revenues | ||||||
Total revenues | 23,087 | 20,154 | ||||
Costs and expenses | ||||||
Cost of revenues | [1] | 12,529 | 10,741 | |||
Games | Gaming other | ||||||
Revenues | ||||||
Total revenues | 54 | 7 | ||||
Costs and expenses | ||||||
Cost of revenues | 0 | 0 | ||||
FinTech | ||||||
Revenues | ||||||
Total revenues | 56,348 | 50,784 | ||||
Costs and expenses | ||||||
Cost of revenues | 7,985 | 5,961 | ||||
Operating expenses | 19,981 | 20,180 | ||||
Research and development | 1,684 | 0 | ||||
Depreciation | 1,415 | 1,686 | ||||
Amortization | 2,515 | 2,819 | ||||
Costs and Expenses | 33,580 | 30,646 | ||||
Operating income | 22,768 | 20,138 | ||||
Total assets | ||||||
Total assets | 719,257 | $ 635,412 | ||||
FinTech | Cash access services | ||||||
Revenues | ||||||
Total revenues | 40,832 | 38,218 | ||||
Costs and expenses | ||||||
Cost of revenues | 2,697 | 2,231 | ||||
FinTech | Equipment | ||||||
Revenues | ||||||
Total revenues | 7,028 | 4,419 | ||||
Costs and expenses | ||||||
Cost of revenues | 4,330 | 2,514 | ||||
FinTech | Information services and other | ||||||
Revenues | ||||||
Total revenues | 8,488 | 8,147 | ||||
Costs and expenses | ||||||
Cost of revenues | $ 958 | $ 1,216 | ||||
|
SEGMENT INFORMATION - Major Customers (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Five largest customers | Customer risk | Revenue from Contract with Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk (as a percent) | 16.00% | 21.00% |
Label | Element | Value |
---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,389,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 4,389,000 |
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