EVERI HOLDINGS INC., 10-Q filed on 8/7/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2018
Aug. 01, 2018
Document And Entity Information [Abstract]    
Entity Registrant Name Everi Holdings Inc.  
Entity Central Index Key 0001318568  
Document Type 10-Q  
Document Period End Date Jun. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   69,545,760
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q2  
Trading Symbol EVRI  
v3.10.0.1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Revenues        
Revenues $ 118,682 $ 242,230 $ 229,683 $ 479,767
Costs and expenses        
Total cost of revenues 96,085   182,595  
Operating expenses 37,570 28,779 69,757 57,772
Research and development 4,595 4,618 8,906 9,161
Depreciation 13,701 11,396 26,526 22,226
Amortization 16,552 17,439 32,855 34,764
Total costs and expenses 96,085 220,938 182,595 435,872
Operating income 22,597 21,292 47,088 43,895
Other expenses        
Interest expense, net of interest income 22,122 23,881 42,429 48,938
Loss on extinguishment of debt 166 14,615 166 14,615
Total other expenses 22,288 38,496 42,595 63,553
Income (loss) before income tax 309 (17,204) 4,493 (19,658)
Income tax (benefit) provision (1,166) 1,853 (1,591) 2,907
Net income (loss) 1,475 (19,057) 6,084 (22,565)
Foreign currency translation (1,058) 836 (735) 1,108
Comprehensive income (loss) $ 417 $ (18,221) $ 5,349 $ (21,457)
Earnings (loss) per share        
Basic $ 0.02 $ (0.29) $ 0.09 $ (0.34)
Diluted $ 0.02 $ (0.29) $ 0.08 $ (0.34)
Weighted average common shares outstanding        
Basic 69,203 66,350 68,946 66,221
Diluted 73,440 66,350 73,323 66,221
Games        
Revenues        
Revenues $ 65,948 $ 55,104 $ 126,165 $ 110,380
Costs and expenses        
Total cost of revenues [1] 16,815 13,239 31,738 25,683
Operating expenses 16,210 10,588 28,217 21,197
Research and development 4,595 4,618 8,906 9,161
Depreciation 12,112 9,697 23,252 18,728
Amortization 13,907 14,241 27,392 28,098
Total costs and expenses 63,639 52,383 119,505 102,867
Operating income 2,309 2,721 6,660 7,513
Games | Gaming operations        
Revenues        
Revenues 43,022 36,869 83,078 73,400
Costs and expenses        
Total cost of revenues 4,211 3,963 8,393 7,171
Games | Gaming equipment and systems        
Revenues        
Revenues 22,278 17,557 42,431 36,281
Costs and expenses        
Total cost of revenues 12,045 8,740 22,786 17,976
Games | Gaming other        
Revenues        
Revenues 648 678 656 699
Costs and expenses        
Total cost of revenues 559 536 559 536
FinTech        
Revenues        
Revenues 52,734 187,126 103,518 369,387
Costs and expenses        
Total cost of revenues [1] 6,852 145,467 12,813 286,266
Operating expenses 21,360 18,191 41,540 36,575
Depreciation 1,589 1,699 3,274 3,498
Amortization 2,645 3,198 5,463 6,666
Total costs and expenses 32,446 168,555 63,090 333,005
Operating income 20,288 18,571 40,428 36,382
FinTech | Cash access services        
Revenues        
Revenues 39,739 175,442 77,958 347,175
Costs and expenses        
Total cost of revenues 2,446 142,445 4,676 281,106
FinTech | Equipment        
Revenues        
Revenues 4,765 3,697 9,183 5,997
Costs and expenses        
Total cost of revenues 3,426 2,212 5,940 3,631
FinTech | Information services and other        
Revenues        
Revenues 8,230 7,987 16,377 16,215
Costs and expenses        
Total cost of revenues $ 980 $ 810 $ 2,197 $ 1,529
[1] Exclusive of depreciation and amortization.
v3.10.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Current assets    
Cash and cash equivalents $ 110,164 $ 128,586
Settlement receivables 139,314 227,403
Trade and other receivables, net of allowances for doubtful accounts of $5,438 and $4,706 at June 30, 2018 and December 31, 2017, respectively 61,583 47,782
Inventory 23,527 23,967
Prepaid expenses and other assets 19,763 20,670
Total current assets 354,351 448,408
Non-current assets    
Property, equipment and leased assets, net 123,348 113,519
Goodwill 640,560 640,589
Other intangible assets, net 306,647 324,311
Other receivables 8,673 2,638
Other assets 6,237 7,609
Total non-current assets 1,085,465 1,088,666
Total assets 1,439,816 1,537,074
Current liabilities    
Settlement liabilities 217,473 317,744
Accounts payable and accrued expenses 132,496 134,504
Current portion of long-term debt 8,200 8,200
Total current liabilities 358,169 460,448
Non-current liabilities    
Deferred tax liability 36,297 38,207
Long-term debt, less current portion 1,157,397 1,159,643
Other accrued expenses and liabilities 8,227 19,409
Total non-current liabilities 1,201,921 1,217,259
Total liabilities 1,560,090 1,677,707
Commitments and contingencies (Note 13)
Stockholders’ deficit    
Common stock, $0.001 par value, 500,000 shares authorized and 94,408 and 93,120 shares issued at June 30, 2018 and December 31, 2017, respectively 94 93
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at June 30, 2018 and December 31, 2017, respectively
Additional paid-in capital 292,750 282,070
Accumulated deficit (235,741) (246,202)
Accumulated other comprehensive loss (988) (253)
Treasury stock, at cost, 24,889 and 24,883 shares at June 30, 2018 and December 31, 2017, respectively (176,389) (176,341)
Total stockholders’ deficit (120,274) (140,633)
Total liabilities and stockholders’ deficit $ 1,439,816 $ 1,537,074
v3.10.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Statement Of Financial Position [Abstract]    
Allowances for doubtful accounts $ 5,438 $ 4,706
Common stock par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 500,000,000 500,000,000
Common stock, shares issued 94,408,000 93,120,000
Convertible preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Convertible preferred stock, shares authorized 50,000,000 50,000,000
Convertible preferred stock, shares outstanding 0 0
Treasury stock, shares 24,889,000 24,883,000
v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Cash flows from operating activities    
Net income (loss) $ 6,084 $ (22,565)
Adjustments to reconcile net income (loss) to cash provided by operating activities:    
Depreciation and amortization 59,381 56,990
Amortization of financing costs and discounts 3,061 3,186
Loss on sale or disposal of assets 215 1,399
Accretion of contract rights 4,178 3,909
Provision for bad debts 5,114 5,170
Deferred income taxes (1,909) 2,565
Write-down of inventory and fixed assets 2,575  
Reserve for obsolescence 1,053 266
Loss on extinguishment of debt 166 14,615
Stock-based compensation 4,305 3,480
Changes in operating assets and liabilities:    
Settlement receivables 87,336 81,590
Trade and other receivables (20,230) 5,283
Inventory (2,359) (2,890)
Prepaid and other assets 1,977 (1,957)
Settlement liabilities (99,859) (93,479)
Accounts payable and accrued expenses (1,857) 16,530
Net cash provided by operating activities 49,231 74,092
Cash flows from investing activities    
Capital expenditures (57,936) (43,696)
Proceeds from sale of fixed assets 79 2
Placement fee agreements (10,117) (3,044)
Net cash used in investing activities (67,974) (46,738)
Cash flows from financing activities    
Proceeds from current credit facility   820,000
Repayments of prior credit facility   (465,600)
Repayments of secured notes   (335,000)
Repayments of credit facilities (4,100)  
Debt issuance costs and discounts (1,276) (19,663)
Proceeds from exercise of stock options 6,373 1,799
Purchase of treasury stock (47) (11)
Net cash provided by financing activities 950 1,525
Effect of exchange rates on cash (620) 882
Cash, cash equivalents and restricted cash    
Net (decrease) increase for the period (18,413) 29,761
Balance, beginning of the period 129,604 119,438
Balance, end of the period 111,191 149,199
Supplemental cash disclosures    
Cash paid for interest 42,844 29,485
Cash paid for income tax 223 669
Cash refunded for income tax 1 200
Supplemental non-cash disclosures    
Accrued and unpaid capital expenditures 2,650 3,822
Transfer of leased gaming equipment to inventory $ 4,519 $ 4,237
v3.10.0.1
BUSINESS
6 Months Ended
Jun. 30, 2018
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
BUSINESS

1.

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” or “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries. Everi Holdings reports results of its operations based on the two operating segments: Games and Payments. 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. Everi’s FinTech solutions provide actionable information 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 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 payments solutions, critical intelligence offerings, and gaming operations efficiency technology.

Everi Games provides a number of products and services for casinos, including (a) gaming machines comprised primarily of Class II and Class III slot machines placed under participation or fixed fee lease arrangements or sold to casino customers, including the award-winning TournEvent®; and (b) system software, licenses, ancillary equipment and maintenance to its casino customers. Everi Games also develops and manages the central determinant system for the video lottery terminals installed in the State of New York.

Everi FinTech provides its casino customers 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 transactions and check verification and warranty services; (b) equipment that provides cash access and efficiency related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, internet-based gaming and lottery activities.

v3.10.0.1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. The results for the three and six months ended June 30, 2018 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, 2017.

 

Other than the adoption of ASU 2014-09 and all subsequent amendments (collectively, ASC 606) and Accounting Standards Update (“ASU”) No. 2016-18, 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, 2017.

Overall – Revenue Recognition

We evaluate the recognition of revenue based on the criteria set forth in ASC 606 and ASC 840, 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 in accordance with ASC 606. We enter into contracts with customers that may include various 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, in accordance with ASC 606.

 

We evaluate the composition of our revenues to ensure compliance with SEC Regulation S-X Section 210.5-03, which requires us to separately present certain categories of revenues that exceed the quantitative threshold on our Statements of Income (Loss).

 

Significant Judgments

 

ASC 606 requires that 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 only utilize a residual approach when the SSP for performance obligations with observable prices have 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 discernable.

 

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 the 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 promises to transfer multiple goods and services to a customer. 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 a good 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 340-40, Contract Costs – Incremental Costs of Obtaining a Contract to expense these amounts as incurred.

Asset Balances

In connection with the adoption of ASC 606 utilizing the modified retrospective transition method, we recorded an immaterial cumulative adjustment with respect to certain amounts that had been previously deferred under the then existing revenue recognition guidance as of December 31, 2017 that required recognition under ASC 606 as of the effective date of adoption in accumulated deficit.

Games Revenues

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, player terminal-content licenses, central determinant systems for devices placed in service in licensed jurisdictions 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 840. Generally, under these arrangements, we retain ownership of the leased gaming equipment installed at customer facilities and we receive revenues based on a percentage of the net win per day generated by the leased gaming equipment or a fixed daily fee based on the number of player terminals installed at the facility. 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 revenues include revenues generated by Wide Area Progressive (“WAP”) systems, which consist 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) 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-based gaming machines are presented in the Statements of Income (Loss) net of the jackpot expense, which is comprised of incremental amount funded by a portion of the coin-in from players. At such 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 Equipment and Systems

 

Gaming equipment and systems revenues are derived from the sale of gaming equipment to our customers under contracts on standard credit terms, which are generally short-term in nature, and 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.

 

Gaming Other

 

Gaming other revenues primarily consist of our TournEvent of Champions® national tournament and are recognized over a period of time as the customer simultaneously receives and consumes the benefits.

 

FinTech Revenues

 

Cash Access Services

 

Cash access services revenues are comprised of cash advance, ATM and check services revenue streams. 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.

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: (i) commission expenses payable to casino operators; (ii) interchange fees payable to the network associations; and (iii) 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: (i) commission expenses payable to casino operators; (ii) interchange fees payable to the network associations; and (iii) 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, we recognize revenues 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 equipment under contracts with standard credit terms, which are generally short-term in nature, and 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.

 

Information Services and Other

 

Information services and other revenues include amounts derived from the sale of: (i) software licenses, software subscriptions, professional services and certain other ancillary fees; (ii) service related fees associated with the sale, installation and maintenance of equipment directly to our customers under contracts on standard credit terms, which are generally short-term in nature, secured by the related equipment, (iii) 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 (iv) ancillary marketing, database and internet-based gaming related activities.

 

Our software represents a functional right-to-use license and the revenues are recognized at a point in time. Subscription services represent a stand-ready performance obligation and the revenues are recognized over a period of time using an input method based on time elapsed. 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: (i) deposits held in connection with a sponsorship agreement; (ii) WAP-related restricted funds; and (iii) Internet related cash access activities. The current portion of restricted cash, which is included in prepaid expenses and other assets, was approximately $0.9 million as of June 30, 2018 and December 31, 2017. The non-current portion of restricted cash, which is included in other assets, was approximately $0.1 million as of June 30, 2018 and December 31, 2017. The current portion of restricted cash was approximately $0.5 million and $0.3 million as of June 30, 2017 and December 31, 2016, respectively. The non-current portion of restricted cash was approximately $0.1 million as of June 30, 2017 and December 31, 2016.

Fair Values of Financial Instruments

The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument.

The carrying amount of cash and cash equivalents, settlement receivables, short-term trade and other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of 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 June 30, 2018 and December 31, 2017, 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).

 

 

 

Level of

Hierarchy

 

Fair Value

 

 

Outstanding

Balance

 

June 30, 2018

 

 

 

 

 

 

 

 

 

 

Term loan

 

2

 

$

815,372

 

 

$

811,800

 

Senior unsecured notes

 

1

 

$

375,938

 

 

$

375,000

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

Term loan

 

2

 

$

826,099

 

 

$

815,900

 

Senior unsecured notes

 

1

 

$

372,656

 

 

$

375,000

 

 

The term loan facility was reported at fair value using a Level 2 input as there were quoted prices in markets that were not considered active as of June 30, 2018 and December 31, 2017. The senior unsecured notes were reported at fair value using a Level 1 input as there were quoted prices in markets that were considered active as of June 30, 2018 and December 31, 2017.

Reclassification of Prior Year Balances

Reclassifications were made to the prior-period Financial Statements to conform to the current period presentation, except for the adoption impact of the application of ASC 606 utilizing the modified retrospective transition method.

Recent Accounting Guidance

Recently Adopted Accounting Guidance

In March 2018, the FASB issued ASU No. 2018-05, which provides guidance on accounting for the tax effects of the 2017 Tax Act (pursuant to SEC Staff Accounting Bulletin No. 118). The new standard is effective March 13, 2018. We have adopted this guidance in the quarter ended March 31, 2018. In accordance with this guidance, some of the income tax effects recorded in 2017 are provisional and they may be adjusted during 2018.

In May 2014, the FASB issued ASU No. 2014-09, which creates ASC 606 and supersedes ASC Topic 605, “Revenue Recognition.” The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. The guidance in ASU 2014-09 was further updated by ASU 2016-08 in March 2016, which provided clarification on the implementation of the principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, which provides clarification on the implementation of performance obligations and licensing in ASU 2014-09. In May 2016, the FASB issued ASU 2016-11, which amended guidance provided in two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force meeting over various topics relating to ASU 606. In May 2016, the FASB issued ASU 2016-12, which clarified various topics in ASC 606. In December 2016, the FASB issued ASU 2016-20, which clarified additional topics in ASC 606. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We adopted this guidance effective January 1, 2018 and have provided additional information with respect to the new revenue recognition topic elsewhere in this Note 2 disclosure and also in “Note 3 Adoption of ASC 606, Revenue from Contracts with Customers.”

In May 2017, the FASB issued ASU No. 2017-09 to clarify which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. An entity is required to account for the effects of a modification unless all of the following conditions are met: (i) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or value using an alternative measurement method) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. We adopted this guidance in the quarter ended March 31, 2018. The adoption of this ASU did not have a material impact on our Financial Statements.

In January 2017, the FASB issued ASU No. 2017-01, which clarifies the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This guidance is to be applied using a prospective approach as of the beginning of the first period of adoption. We adopted this guidance in the quarter ended March 31, 2018. The adoption of this ASU did not have a material impact on our Financial Statements.

In October 2016, the FASB issued ASU No. 2016-18, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. We adopted this guidance in the quarter ended March 31, 2018 using a retrospective approach to each period presented. The adoption of this ASU did not have a material impact on our Financial Statements.

In October 2016, the FASB issued ASU No. 2016-16, which provides updated guidance on the recognition of the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs, and this eliminates the exception for an intra-entity transfer of such assets. This guidance will be applied using a modified retrospective approach through a cumulative-effective adjustment directly to retained earnings as of the beginning of the period of adoption. We adopted this guidance in the quarter ended March 31, 2018. The adoption of this ASU did not have a material impact on our Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, which provides updated guidance on the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is to be applied using a retrospective approach. If it is impracticable to apply the amendments retrospectively for some of the issues within this ASU, the amendments for those issues would be applied prospectively as of the earliest date practicable. We adopted this guidance in the quarter ended March 31, 2018. The adoption of this ASU did not have a material impact on our Financial Statements.

Recent Accounting Guidance Not Yet Adopted

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 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this ASU to have a material impact on our Financial Statements. We are currently evaluating the impact of adopting this guidance 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 AOCI 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 (or portion thereof) is recorded. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this ASU to have a material impact on our Financial Statements. We are currently evaluating the impact of adopting this guidance on our Financial Statements.

In June 2016, the FASB issued ASU No. 2016-13, which provides updated guidance on credit losses for financial assets measured at amortized cost basis and available-for sale debt securities. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. This guidance will be applied using a modified retrospective approach for the cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective and using a prospective approach for debt securities for which any other-than-temporary impairment had been recognized before the effective date. Early adoption is permitted for fiscal years beginning after December 15, 2018. We are currently evaluating the impact of adopting this guidance on our Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, 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 ASU establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. For lessees, leases will be classified as either financing or operating, with classification affecting the pattern of expense 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 affects narrow aspects of the guidance previously issued and ASU No. 2018-11 provides a practical expedient for lessors on separating components of a contract and includes an additional transition method for adopting the new standard. We plan to adopt the new standard on January 1, 2019. The guidance requires an entity to adopt the new standard, as amended, either retrospectively to each prior reporting period presented in the financial statements with the cumulative effect recognized at the beginning of the earliest comparative period or retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment, with certain practical expedients available. While we are currently assessing the impact of this ASU on our financial statements, including selecting the transition method, we expect the primary impact to our consolidated balance sheet will be the recognition of our operating leases on our balance sheets and providing disclosures as required by the new standard.

We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.

v3.10.0.1
ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS
6 Months Ended
Jun. 30, 2018
Revenue From Contract With Customer [Abstract]  
ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS

3.ADOPTION OF ASC 606, “REVENUE FROM CONTRACTS WITH CUSTOMERS”

 

Change in accounting policies

On January 1, 2018, we adopted ASC 606 using the modified retrospective method, which requires us to evaluate whether any cumulative adjustment is required to be recorded to retained earnings (or accumulated deficit) as a result of applying the provisions set forth under ASC 606 for any existing arrangements not yet completed as of the adoption date of January 1, 2018. We determined that there was an immaterial cumulative adjustment in the amount of approximately $4.4 million, which we recorded to accumulated deficit as of the adoption date as a result of applying the modified retrospective transition method. In addition, under the modified retrospective method, our prior period results were not recast to reflect the new revenue recognition standard. Except for the changes discussed with respect to revenue recognition, the impact of which is summarized in the tables below, we have consistently applied our accounting policies to all periods presented in our Financial Statements.

Games revenues

 

We previously reported certain costs incurred in connection with our WAP platform, consisting primarily of the WAP jackpot expenses, as cost of revenues. Under ASC 606, such costs are reflected as reductions to gaming operations revenues on a net basis.

FinTech revenues

 

We previously reported costs and expenses related to our cash access services, which include commission expenses payable to casino operators, interchange fees payable to the network associations and processing and related costs payable to other third party partners, as a cost of revenues. Under ASC 606, such costs are reflected as reductions to cash access services revenues on a net basis.

The following table presents the impact of the application of ASC 606 utilizing the modified retrospective transition method to certain line items on our Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2018 (in thousands):

 

 

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

Without Adoption

 

 

 

As reported

 

 

Adjustments

 

 

of ASC 606

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Games revenues

 

 

 

 

 

 

 

 

 

 

 

 

Gaming operations

 

$

43,022

 

 

$

619

 

 

$

43,641

 

Games total revenues

 

 

65,948

 

 

 

619

 

 

 

66,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinTech revenues

 

 

 

 

 

 

 

 

 

 

 

 

Cash access services

 

 

39,739

 

 

 

155,000

 

 

 

194,739

 

Equipment

 

 

4,765

 

 

 

(2,261

)

 

 

2,504

 

FinTech total revenues

 

 

52,734

 

 

 

152,739

 

 

 

205,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

118,682

 

 

 

153,358

 

 

 

272,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Games cost of revenues(1)

 

 

 

 

 

 

 

 

 

 

 

 

Gaming operations

 

 

4,211

 

 

 

619

 

 

 

4,830

 

Games total cost of revenues

 

 

16,815

 

 

 

619

 

 

 

17,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinTech cost of revenues(1)

 

 

 

 

 

 

 

 

 

 

 

 

Cash access services

 

 

2,446

 

 

 

155,000

 

 

 

157,446

 

Equipment

 

 

3,426

 

 

 

 

 

 

3,426

 

FinTech total cost of revenues

 

 

6,852

 

 

 

155,000

 

 

 

161,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

 

96,085

 

 

 

155,619

 

 

 

251,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

22,597

 

 

 

(2,261

)

 

 

20,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

309

 

 

 

(2,261

)

 

 

(1,952

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(1,166

)

 

 

 

 

 

(1,166

)

Net income

 

 

1,475

 

 

 

(2,261

)

 

 

(786

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

417

 

 

 

(2,261

)

 

 

(1,844

)

 

(1)

Exclusive of depreciation and amortization.

 

The adoption of ASC 606 utilizing the modified retrospective transition method did not have a material impact to our Balance Sheets and Cash Flows as of and for the three months ended June 30, 2018.

 

 

 

Six Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

Without Adoption

 

 

 

As reported

 

 

Adjustments

 

 

of ASC 606

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Games revenues

 

 

 

 

 

 

 

 

 

 

 

 

Gaming operations

 

$

83,078

 

 

$

1,081

 

 

$

84,159

 

Games total revenues

 

 

126,165

 

 

 

1,081

 

 

 

127,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinTech revenues

 

 

 

 

 

 

 

 

 

 

 

 

Cash access services

 

 

77,958

 

 

 

310,448

 

 

 

388,406

 

Equipment

 

 

9,183

 

 

 

(2,472

)

 

 

6,711

 

FinTech total revenues

 

 

103,518

 

 

 

307,976

 

 

 

411,494

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

229,683

 

 

 

309,057

 

 

 

538,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Games cost of revenues(1)

 

 

 

 

 

 

 

 

 

 

 

 

Gaming operations

 

 

8,393

 

 

 

1,081

 

 

 

9,474

 

Games total cost of revenues

 

 

31,738

 

 

 

1,081

 

 

 

32,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinTech cost of revenues(1)

 

 

 

 

 

 

 

 

 

 

 

 

Cash access services

 

 

4,676

 

 

 

309,899

 

 

 

314,575

 

Equipment

 

 

5,940

 

 

 

(85

)

 

 

5,855

 

FinTech total cost of revenues

 

 

12,813

 

 

 

309,814

 

 

 

322,627

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

 

182,595

 

 

 

310,895

 

 

 

493,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

47,088

 

 

 

(1,838

)

 

 

45,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax

 

 

4,493

 

 

 

(1,838

)

 

 

2,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(1,591

)

 

 

 

 

 

(1,591

)

Net income

 

 

6,084

 

 

 

(1,838

)

 

 

4,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

5,349

 

 

 

(1,838

)

 

 

3,511

 

 

(1)

Exclusive of depreciation and amortization.

 

The adoption of ASC 606 utilizing the modified retrospective transition method did not have a material impact to our Balance Sheets and Cash Flows as of and for the six months ended June 30, 2018.

v3.10.0.1
BUSINESS COMBINATIONS
6 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
BUSINESS COMBINATIONS

4.

BUSINESS COMBINATIONS

 

We account for business combinations in accordance with ASC 805, which requires that the identifiable assets acquired and liabilities assumed be recorded at their estimated fair values on the acquisition date separately from goodwill, which is the excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities. We include the results of operations of an acquired business as of the acquisition date. We had no material acquisitions for the three and six months ended June 30, 2018 and 2017.

v3.10.0.1
FUNDING AGREEMENTS
6 Months Ended
Jun. 30, 2018
A T M Funding Agreement Disclosure [Abstract]  
FUNDING AGREEMENTS

5.

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 (Loss), were $2.0 million and $3.7 million for the three and six months ended June 30, 2018, respectively, and $1.2 million and $2.4 million for the three and six months ended June 30, 2017, 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 remain 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 $225.3 million and $289.8 million as of June 30, 2018 and December 31, 2017, respectively.

Our primary commercial arrangement, the Contract Cash Solutions Agreement, as amended, with Wells Fargo, N.A. Wells Fargo, provides us with cash in the maximum amount of $300.0 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 agreement currently expires on June 30, 2020. We are responsible for any losses of cash in the ATMs under this agreement, and we self‑insure for this risk. We incurred no material losses related to this self‑insurance for the three and six months ended June 30, 2018 and 2017.

Site-Funded ATMs

We operate ATMs at certain customer gaming establishments where the gaming establishment provides the cash required for the ATM operational needs. We are required to reimburse the customer for the amount of cash dispensed from these site-funded ATMs. The site-funded ATM liability included within settlement liabilities in the accompanying Balance Sheets was $150.9 million and $210.8 million as of June 30, 2018 and December 31, 2017, 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 supplied approximately $6.9 million of our cash for these ATMs at June 30, 2018 and December 31, 2017.

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 $6.0 million and $8.4 million at June 30, 2018 and December 31, 2017, respectively, and is included in prepaid expenses and other assets on our Balance Sheets.

v3.10.0.1
TRADE AND OTHER RECEIVABLES
6 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
TRADE AND OTHER RECEIVABLES

6.

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 taxes receivables and other miscellaneous receivables. The balance of trade and other receivables consisted of the following (in thousands):

 

 

 

At June 30,

 

 

At December 31,

 

 

 

2018

 

 

2017

 

Trade and other receivables, net

 

 

 

 

 

 

 

 

Games trade and loans receivables

 

$

47,815

 

 

$

38,070

 

FinTech trade and loans receivables(1)

 

 

21,139

 

 

 

10,780

 

Other receivables

 

 

1,302

 

 

 

1,570

 

Total trade and other receivables, net

 

 

70,256

 

 

 

50,420

 

Less: non-current portion of receivables

 

 

 

 

 

 

 

 

Games trade and loans receivables

 

 

(2,515

)

 

 

(1,267

)

FinTech trade and loans receivables(1)

 

 

(6,158

)

 

 

(1,371

)

Total non-current portion of receivables

 

 

(8,673

)

 

 

(2,638

)

Total trade and other receivables, current portion

 

$

61,583

 

 

$

47,782

 

 

(1)

In connection with the adoption of ASC 606 utilizing the modified retrospective transition method, we recorded an immaterial cumulative adjustment with respect to certain amounts that had been previously deferred under the then existing revenue recognition guidance as of December 31, 2017 that required recognition under ASC 606 as of the effective date of adoption in accumulated deficit.

At least quarterly, we evaluate the collectability of the 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 $5.4 million as of June 30, 2018 and $4.7 million as of December 31, 2017 and includes reserves for both Games and FinTech receivables. The provision for doubtful customer accounts receivable is generally included within operating expenses in the Statements of Income (Loss). We also have a provision for doubtful accounts specifically associated with our check warranty service, whereby we collect a fee and undertake responsibility for collecting the receivables, which is included within FinTech cost of revenues in the Statements of Income (Loss). The outstanding balances of the check warranty and general reserves were $2.8 million and $2.6 million, respectively, as of June 30, 2018 and $2.7 million and $2.0 million, respectively, as of December 31, 2017.

v3.10.0.1
INVENTORY
6 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
INVENTORY

7.

INVENTORY

 

Our inventory primarily consists of component parts as well as work-in-progress and finished goods. The cost of inventory includes cost of materials, labor, overhead and freight. The inventory is stated at the lower of cost or net realizable value and accounted for using the FIFO method.

 

There was no material impairment of our inventory for the three and six months ended June 30, 2018 and 2017.

 

We recorded an immaterial impairment charge of approximately $1.8 million in our Games segment for the three and six months ended June 30, 2018 to reduce the carrying value of certain component parts to their fair values. The adjustment was included in operating expenses in our Statements of Income (Loss).  

Inventory consisted of the following (in thousands):

 

 

 

At June 30,

 

 

At December 31,

 

 

 

2018

 

 

2017

 

Inventory

 

 

 

 

 

 

 

 

Component parts, net of reserves of $1,563 and $1,327 at

   June 30, 2018 and December 31, 2017, respectively

 

$

18,598

 

 

$

18,782

 

Work-in-progress

 

 

1,389

 

 

 

985

 

Finished goods

 

 

3,540

 

 

 

4,200

 

Total inventory

 

$

23,527

 

 

$

23,967

 

 

v3.10.0.1
PREPAID AND OTHER ASSETS
6 Months Ended
Jun. 30, 2018
Prepaid Expense And Other Assets [Abstract]  
PREPAID AND OTHER ASSETS

8.

PREPAID AND OTHER ASSETS

Prepaid and other assets include the balance of prepaid expenses, deposits, debt issuance costs on our Revolving Credit Facility (defined herein), restricted cash and other assets. The current portion of these assets is included in prepaid and other assets and the non-current portion is included in other assets, both of which are contained within the Balance Sheets.

The balance of the current portion of prepaid and other assets consisted of the following (in thousands):

 

 

 

At June 30,

 

 

At December 31,

 

 

 

2018

 

 

2017

 

Prepaid expenses and other assets

 

 

 

 

 

 

 

 

Deposits

 

$

7,093

 

 

$

9,003

 

Prepaid expenses

 

 

10,065

 

 

 

6,426

 

Other

 

 

2,605

 

 

 

5,241

 

Total prepaid expenses and other assets

 

$

19,763

 

 

$

20,670

 

 

The balance of the non-current portion of other assets consisted of the following (in thousands):

 

 

 

At June 30,

 

 

At December 31,

 

 

 

2018

 

 

2017

 

Other assets

 

 

 

 

 

 

 

 

Prepaid expenses and deposits

 

$

5,144

 

 

$

4,103

 

Debt issuance costs of revolving credit facility

 

 

752

 

 

 

849

 

Other

 

 

341

 

 

 

2,657

 

Total other assets

 

$

6,237

 

 

$

7,609

 

 

v3.10.0.1
PROPERTY, EQUIPMENT AND LEASED ASSETS
6 Months Ended
Jun. 30, 2018
Property Plant And Equipment [Abstract]  
PROPERTY, EQUIPMENT AND LEASED ASSETS

9.

PROPERTY, EQUIPMENT AND LEASED ASSETS

Property, equipment and leased assets consist of the following (in thousands):

 

 

 

 

 

At June 30, 2018

 

 

At December 31, 2017

 

 

 

Useful Life

 

 

 

 

 

Accumulated

 

 

Net Book

 

 

 

 

 

 

Accumulated

 

 

Net Book

 

 

 

(Years)

 

Cost

 

 

Depreciation

 

 

Value

 

 

Cost

 

 

Depreciation

 

 

Value

 

Property, equipment and

   leased assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental pool - deployed

 

2-4

 

$

180,323

 

 

$

92,065

 

 

$

88,258

 

 

$

162,319

 

 

$

80,895

 

 

$

81,424

 

Rental pool - undeployed

 

2-4

 

 

30,418

 

 

 

21,424

 

 

 

8,994

 

 

 

17,366

 

 

 

9,374

 

 

 

7,992

 

FinTech equipment

 

3-5

 

 

27,142

 

 

 

20,583

 

 

 

6,559

 

 

 

25,907

 

 

 

18,654

 

 

 

7,253

 

Leasehold and building

   improvements

 

Lease

Term

 

 

11,339

 

 

 

6,103

 

 

 

5,236

 

 

 

10,981

 

 

 

5,211

 

 

 

5,770

 

Machinery, office and other

   equipment

 

2-5

 

 

41,082

 

 

 

26,781

 

 

 

14,301

 

 

 

35,167

 

 

 

24,087

 

 

 

11,080

 

Total

 

 

 

$

290,304

 

 

$

166,956

 

 

$

123,348

 

 

$

251,740

 

 

$

138,221

 

 

$

113,519

 

Depreciation expense related to property, equipment and leased assets totaled approximately $13.7 million and $26.5 million for the three and six months ended June 30, 2018 and $11.4 million and $22.2 million for the three and six months ended June 30, 2017, respectively.

There was no material impairment of our property, equipment and leased assets for the three and six months ended June 30, 2018 and 2017.

We recorded an immaterial impairment charge of approximately $0.8 million in our Games segment for the three and six months ended June 30, 2018 to reduce the carrying value of certain leased assets to their fair values. The adjustment was included in operating expenses in our Statements of Income (Loss).

v3.10.0.1
GOODWILL AND OTHER INTANGIBLE ASSETS
6 Months Ended
Jun. 30, 2018
Goodwill And Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS