Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2018 |
Mar. 01, 2019 |
Jun. 29, 2018 |
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Document And Entity Information [Abstract] | |||
Entity Registrant Name | Everi Holdings Inc. | ||
Entity Central Index Key | 0001318568 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 500.2 | ||
Entity Common Stock, Shares Outstanding | 70,320,028 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | EVRI |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands |
12 Months Ended | |||||
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Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Revenues | $ 469,515,000 | $ 974,948,000 | $ 859,456,000 | |||
Costs and expenses | ||||||
Cost of revenues | 94,437,000 | 638,545,000 | 549,014,000 | |||
Operating expenses | 142,298,000 | 118,935,000 | 118,709,000 | |||
Research and development | 20,497,000 | 18,862,000 | 19,356,000 | |||
Goodwill impairment | 0 | 0 | 146,299,000 | |||
Depreciation | 61,225,000 | 47,282,000 | 49,995,000 | |||
Amortization | 65,245,000 | 69,505,000 | 94,638,000 | |||
Total costs and expenses | 383,702,000 | 893,129,000 | 978,011,000 | |||
Operating income (expense) | 85,813,000 | 81,819,000 | (118,555,000) | |||
Other expenses | ||||||
Interest expense, net of interest income | 83,001,000 | 102,136,000 | 99,228,000 | |||
Loss on extinguishment of debt | 166,000 | 51,750,000 | 0 | |||
Total other expenses | 83,167,000 | 153,886,000 | 99,228,000 | |||
Income (loss) before income tax | 2,646,000 | (72,067,000) | (217,783,000) | |||
Income tax (benefit) provision | (9,710,000) | (20,164,000) | 31,696,000 | |||
Net income (loss) | 12,356,000 | (51,903,000) | (249,479,000) | |||
Foreign currency translation | (1,745,000) | 1,856,000 | (2,427,000) | |||
Comprehensive income (loss) | $ 10,611,000 | $ (50,047,000) | $ (251,906,000) | |||
Earnings (loss) per share | ||||||
Basic (in dollars per share) | $ 0.18 | $ (0.78) | $ (3.78) | |||
Diluted (in dollars per share) | $ 0.17 | $ (0.78) | $ (3.78) | |||
Weighted average common shares outstanding | ||||||
Basic (in shares) | 69,464 | 66,816 | 66,050 | |||
Diluted (in shares) | 73,796 | 66,816 | 66,050 | |||
Games | ||||||
Revenues | $ 258,978,000 | $ 222,777,000 | $ 213,253,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 68,009,000 | 54,695,000 | 50,308,000 | ||
Operating expenses | 57,244,000 | 42,780,000 | 42,561,000 | |||
Research and development | 20,497,000 | 18,862,000 | 19,356,000 | |||
Goodwill impairment | 0 | 0 | 146,299,000 | |||
Depreciation | 55,058,000 | 40,428,000 | 41,582,000 | |||
Amortization | 55,099,000 | 57,060,000 | 79,390,000 | |||
Total costs and expenses | 255,907,000 | 213,825,000 | 379,496,000 | |||
Operating income (expense) | 3,071,000 | 8,952,000 | (166,243,000) | |||
Games | Gaming operations | ||||||
Revenues | 168,146,000 | 148,654,000 | 152,514,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 17,603,000 | 15,741,000 | 15,265,000 | ||
Games | Gaming equipment and systems | ||||||
Revenues | 87,038,000 | 70,118,000 | 56,277,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 47,121,000 | 35,707,000 | 31,602,000 | ||
Games | Gaming other | ||||||
Revenues | 3,794,000 | 4,005,000 | 4,462,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 3,285,000 | 3,247,000 | 3,441,000 | ||
FinTech | ||||||
Revenues | 210,537,000 | 752,171,000 | 646,203,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 26,428,000 | 583,850,000 | 498,706,000 | ||
Operating expenses | 85,054,000 | 76,155,000 | 76,148,000 | |||
Depreciation | 6,167,000 | 6,854,000 | 8,413,000 | |||
Amortization | 10,146,000 | 12,445,000 | 15,248,000 | |||
Total costs and expenses | 127,795,000 | 679,304,000 | 598,515,000 | |||
Operating income (expense) | 82,742,000 | 72,867,000 | 47,688,000 | |||
FinTech | Cash access services | ||||||
Revenues | 156,806,000 | 707,222,000 | 601,874,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 9,717,000 | 572,880,000 | 485,061,000 | ||
FinTech | Equipment | ||||||
Revenues | 20,977,000 | 13,258,000 | 14,995,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | 12,601,000 | 7,717,000 | 9,889,000 | ||
FinTech | Information services and other | ||||||
Revenues | 32,754,000 | 31,691,000 | 29,334,000 | |||
Costs and expenses | ||||||
Cost of revenues | [1] | $ 4,110,000 | $ 3,253,000 | $ 3,756,000 | ||
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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets, Current [Abstract] | ||
Allowance for doubtful accounts | $ 6,425 | $ 4,706 |
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) | 95,099,532 | 93,119,988 |
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) | 24,900,000 | 24,883,000 |
BUSINESS |
12 Months Ended |
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Dec. 31, 2018 | |
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 payments solutions, critical intelligence offerings, and gaming operations efficiency technologies. 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® that allows operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) system software, licenses, ancillary equipment, and maintenance; 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) 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. |
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 Principles of Consolidation All intercompany transactions and balances have been eliminated in consolidation. Business Combinations We apply the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations,” in the accounting for acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are preliminary and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset over its estimated useful life. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. In addition, deferred tax assets, deferred tax liabilities, uncertain tax positions, and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date and any adjustments to its preliminary estimates are recorded to goodwill, in the period of identification, if identified within the measurement period. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Statements of Income (Loss). Cash and Cash Equivalents Cash and cash equivalents include cash and balances on deposit in banks and financial institutions. We consider highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Such balances generally exceed the federal insurance limits, however, we periodically evaluate the creditworthiness of these institutions to minimize risk. ATM Funding Agreements We obtain all of the cash required to operate our ATMs through various ATM Funding Agreements. Some gaming establishments provide the cash utilized within the ATM (“Site‑Funded”). The Site‑Funded receivables generated for the amount of cash dispensed from transactions performed at our ATMs are owned by us and we are liable to the gaming establishment for the face amount of the cash dispensed. In our Balance Sheets, the amount of the receivable for transactions processed on these ATM transactions is included within settlement receivables and the amount due to the gaming establishment for the face amount of dispensing transactions is included within settlement liabilities. For the non‑Site‑Funded locations, we enter into commercial arrangements with third party vendors to provide us the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay a cash usage fee based upon the target federal funds rate. Under these agreements, the currency supplied by the third party vendors remains the sole property of these suppliers until cash is dispensed, at which time the third party vendors obtain an interest in the corresponding settlement receivable. As the cash is an asset of these suppliers, it is therefore not reflected on our Balance Sheets. The usage fee for the cash supplied in these ATMs is included as interest expense in the Statements of Income (Loss). Our rationale to record cash usage fees as interest expense is primarily due to the similar operational characteristics to a revolving line of credit, the fact that the fees are calculated on a financial index, and the fees are paid for access to a capital resource. Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts related to our trade and other receivables and notes receivable that have been deemed to have a high risk of uncollectibility or for which uncertainty exists as to whether the account balance has become uncollectible. Management reviews its accounts and notes receivable on a quarterly basis to determine if any receivables will potentially be uncollectible. Management analyzes historical collection trends and changes in our customer payment patterns, concentration, and creditworthiness when evaluating the adequacy of our allowance for doubtful accounts. Based on the information available, management believes the allowance for doubtful accounts is adequate; however, actual write-offs may exceed the recorded allowance. Settlement Receivables and Settlement Liabilities We provide cash settlement services to gaming establishments related to our cash access services, which involve the movement of funds between various parties involved in these types of transactions. We receive reimbursement from the patron’s credit or debit card issuing financial institution for the amount owed to the gaming establishment plus the fee charged to the patron. These activities result in amounts due to us at the end of each business day that we generally recover over the next few business days, which are classified as settlement receivables on our Balance Sheets. In addition, cash settlement services result in amounts due to gaming establishments for the cash disbursed to patrons through the issuance of a negotiable instrument or through electronic settlement for the face amount provided to patrons that we generally remit over the next few business days, which are classified as settlement liabilities on our Balance Sheets. Warranty Receivables If a gaming establishment chooses to have a check warranted, it sends a request to our third-party check warranty service provider, asking whether it would be willing to accept the risk of cashing the check. If the check warranty provider accepts the risk and warrants the check, the gaming establishment negotiates the patron’s check by providing cash for the face amount of the check. If the check is dishonored by the patron’s bank upon presentment, the gaming establishment invokes the warranty, and the check warranty service provider purchases the check from the gaming establishment for the full check amount and then pursues collection activities on its own. In our Central Credit Check Warranty product under our agreement with the third-party service provider, we receive all of the check warranty revenue. We are exposed to risk for the losses associated with any warranted items that cannot be collected from patrons issuing the items. Warranty receivables are defined as any amounts paid by the third-party check warranty service provider to gaming establishments to purchase dishonored checks. Additionally, we pay a fee to the third-party check warranty service provider for its services. The warranty receivables amount is recorded in trade and other receivables, net on our Balance Sheets. On a monthly basis, the Company evaluates the collectability of the outstanding balances and establishes a reserve for the face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) on our Statements of Income (Loss). Inventory Our inventory primarily consists of component parts as well as finished goods and work-in-progress. 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 (“FIFO”). 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 $1.5 million, $0.9 million, and $0.3 million as of December 31, 2018, 2017, and 2016, respectively. The non-current portion of restricted cash, which is included in other assets, was approximately $0.1 million as of December 31, 2018, 2017, and 2016. Property, Equipment and Leased Assets Property, equipment and leased assets are stated at cost, less accumulated depreciation, and are computed using the straight-line method over the lesser of the estimated life of the related assets, generally two to five years, or the related lease term. Player terminals and related components and equipment are included in our rental pool. The rental pool can be further delineated as “rental pool – deployed,” which consists of assets deployed at customer sites under participation arrangements, and “rental pool – undeployed,” which consists of assets held by us that are available for customer use. Rental pool – undeployed consists of both new units awaiting deployment to a customer site and previously deployed units currently back with us to be refurbished awaiting re-deployment. Routine maintenance of property, equipment and leased gaming equipment is expensed in the period incurred, while major component upgrades are capitalized and depreciated over the estimated remaining useful life of the component. Sales and retirements of depreciable property are recorded by removing the related cost and accumulated depreciation from the accounts. Gains or losses on sales and retirements of property are reflected in our Statements of Income (Loss). Property, equipment and leased assets are reviewed for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated when future cash flows, on an undiscounted basis, do not exceed the carrying value of the asset. Placement Fee and Development Agreements We enter into placement fee and, to a certain extent, development agreements to provide financing for the expansion of existing facilities, or for new gaming facilities. Funds provided under placement fee agreements are not reimbursed, while funds provided under development agreements are reimbursed to us, in whole, or in part. In return, the facility dedicates a percentage of its floor space to placement of our player terminals, and we receive a fixed percentage of those player terminals’ hold amounts per day over the term of the agreement, which is generally from 12 to 83 months. Certain of the agreements contain player terminal performance standards that could allow the facility to reduce a portion of our guaranteed floor space. In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The agreements typically provide for a portion of the amounts retained by the gaming facility for their share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable. Goodwill Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. 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 both 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, in accordance with ASC 350, Intangibles - Goodwill and Other. Our reporting units are identified as operating segments or one level below. Reporting units must: (a) engage in business activities from which they earn revenues and incur expenses; (b) have operating results that are regularly reviewed by our segment management to ascertain the resources to be allocated to the segment and assess its performance; and (c) have discrete financial information available. As of December 31, 2018, our reporting units included: Games, Cash Access Services, Kiosk Sales and Service, Central Credit Services, and Compliance Sales and Services. Other Intangible Assets Other intangible assets are stated at cost, less accumulated amortization, and are computed primarily using the straight-line method. Other intangible assets consist primarily of: (i) customer contracts (rights to provide Games and FinTech services to gaming establishment customers), developed technology, trade names and trademarks, and contract rights acquired through business combinations; and (ii) capitalized software development costs. Customer contracts require us to make renewal assumptions, which impact the estimated useful lives of such assets. Capitalized software development costs require us to make certain judgments as to the stages of development and costs eligible for capitalization. Capitalized software costs placed in service are amortized over their useful lives, generally not to exceed five years. We review intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or market price of the asset, a significant adverse change in legal factors or business climate that could affect the value of an asset, or a current period operating or cash flow loss combined with a history of operating or cash flow losses. We group intangible assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of definite lived intangible assets is measured by a comparison of the carrying amount of the asset to future net cash flows expected to be generated by the asset, on an undiscounted basis and without interest or taxes. Any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Debt Issuance Costs Debt issuance costs incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. Debt issuance costs related to line-of-credit arrangements are included in other assets, non-current, on our Balance Sheets. All other debt issuance costs are included as contra-liabilities in long-term debt. Original Issue Discounts Original issue discounts incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. These amounts are recorded as contra-liabilities and included in long-term debt on our Balance Sheets. Revenue Recognition Overview 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. 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 (Loss). 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 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 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 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 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 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. Contract Balances Since our contracts may include multiple performance obligations, there is often a timing difference between the 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:
(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. We recognized approximately $11.4 million in revenue that was included in the beginning contract liability balance during 2018. 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, and other back office systems. We conduct our Games segment business based on results generated from the following major revenue streams: (i) Gaming Operations; (ii) Gaming Equipment and Systems; and (iii) 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® that allows 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 840. 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 840 are generally short-term in nature with payment terms ranging from 30 to 90 days. We recognized $136.6 million, $126.1 million, and $134.0 million in lease revenues for the years ended December 31, 2018, 2017, and 2016, 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 45 days. Such revenues are presented in the Statements of Income (Loss) 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 records it 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 social, mobile application. 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, or social 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. 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® that allows operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) game content; (c) license fees; (d) ancillary equipment; and (e) maintenance. 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. Our contracts with customers do not contain any financing components that have 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, maintenance, or various combinations thereof. Gaming equipment and systems 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. 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: (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, 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 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. Information Services and Other Information services and other revenues are accounted for under ASC 606 and 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, which are generally short-term in nature with payment terms ranging from 30 to 90 days, 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 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. Cost of Revenues (Exclusive of Depreciation and Amortization) The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The costs included within cost of revenues (exclusive of depreciation and amortization) are inventory and related costs associated with the sale of our fully integrated kiosks, electronic gaming machines and system sale, check cashing warranties, field service, and network operations personnel. Advertising, Marketing, and Promotional Costs We expense advertising, marketing, and promotional costs as incurred. Total advertising, marketing, and promotional costs, included in operating expenses in the Statements of Income (Loss), were $3.4 million, $1.1 million, and $1.2 million for the years ended December 31, 2018, 2017, and 2016, respectively. Research and Development Costs We conduct research and development activities primarily to develop gaming systems, game engines, casino data management systems, casino central monitoring systems, video lottery outcome determination systems, gaming platforms and gaming content, and to enhance our existing product lines. We believe our ability to deliver differentiated, appealing products and services to the marketplace is based on our research and development investments, and we expect to continue to make such investments in the future. Research and development costs consist primarily of salaries and benefits, consulting fees, and game lab testing fees. Once the technological feasibility of a project has been established, it is capitalized until it becomes available for general release. Research and development costs were $20.5 million, $18.9 million, and $19.4 million for the years ended December 31, 2018, 2017, and 2016, respectively. Income Taxes We are subject to income taxes in the United States as well as various states and foreign jurisdictions in which we operate. In accordance with accounting guidance, our income taxes include amounts from domestic and international jurisdictions. Due to the 2017 Tax Act, there is no U.S. federal tax on cash repatriation from foreign subsidiaries; however, we could be subject to foreign withholding tax and U.S. state income taxes. The 2017 Tax Act also subjects our foreign subsidiary earnings to the Global Intangible Low-Taxed Income (“GILTI”) tax provisions. Some items of income and expense are not reported in tax returns and our Financial Statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Our deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in our Financial Statements or income tax returns. Deferred tax assets and liabilities are determined based upon differences between financial statement carrying amounts of existing assets and their respective tax bases using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. The effect on the income tax provision or benefit and deferred tax assets and liabilities for a change in rates is recognized in the Statements of Income (Loss) in the period that includes the enactment date. When measuring deferred tax assets, certain estimates and assumptions are required to assess whether a valuation allowance should be established by evaluating both positive and negative factors in accordance with accounting guidance. This evaluation requires that we exercise judgment in determining the relative significance of each factor. The assessment of the valuation allowance involves significant estimates regarding future taxable income and when it is recognized, the amount and timing of taxable differences, the reversal of temporary differences and the implementation of tax-planning strategies. A valuation allowance is established based on the weight of available evidence, including both positive and negative indicators, if it is more likely than not that a portion, or all, of the deferred tax assets will not be realized. Greater weight is given to evidence that is objectively verifiable, most notably historical results. If we report a cumulative loss from continuing operations before income taxes for a reasonable period of time, this form of negative evidence is difficult to overcome. Therefore, we include certain aspects of our historical results in our forecasts of future taxable income, as we do not have the ability to solely rely on forecasted improvements in earnings to recover deferred tax assets. When we report a cumulative loss position, to the extent our results of operations improve, such that we have the ability to overcome the more likely than not accounting standard, we may be able to reverse the valuation allowance in the applicable period of determination. In addition, we rely on deferred tax liabilities in our assessment of the realizability of deferred tax assets if the temporary timing difference is anticipated to reverse in the same period and jurisdiction and the deferred tax liabilities are of the same character as the temporary differences giving rise to the deferred tax assets. We also follow accounting guidance to account for uncertainty in income taxes as recognized in our Financial Statements. The accounting standard creates a single model to address uncertainty in income tax positions and prescribes the minimum recognition threshold a tax position is required to meet before being recognized in our Financial Statements. The standard also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under this standard, we may recognize tax benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement. Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. Employee Benefits Plan The Company provides a 401(k) Plan that allows employees to defer up to the lesser of the Internal Revenue Code prescribed maximum amount or 100% of their income on a pre-tax basis through contributions to the plan. As a benefit to employees, the Company matches a percentage of these employee contributions (as defined in the plan document). Expenses related to the matching portion of the contributions to the 401(k) Plan were $2.2 million, $2.3 million, and $1.9 million for the years ended December 31, 2018, 2017, and 2016, respectively. 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 December 31, 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):
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 December 31, 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 December 31, 2018 and December 31, 2017. Foreign Currency Translation Foreign currency denominated assets and liabilities for those foreign entities for which the local currency is the functional currency are translated into U.S. dollars based on exchange rates prevailing at the end of each year. Revenues and expenses are translated at average exchange rates during the year. The effects of foreign exchange gains and losses arising from these translations are included as a component of other comprehensive income on the Statements of Income (Loss). Translation adjustments on intercompany balances of a long-term investment nature are recorded as a component of accumulated other comprehensive loss on our Balance Sheets. Use of Estimates We have made estimates and judgments affecting the amounts reported in these financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States. The actual results may differ from these estimates. Earnings Applicable to Common Stock Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the effect of potential common stock resulting from assumed stock option exercises and vesting of restricted stock unless it is anti-dilutive. To the extent we report a net loss from continuing operations in a particular period, no potential dilution from the application of the treasury stock method would be applicable in accordance with ASC 260, Earnings per Share. Share‑Based Compensation Share-based compensation is considered an equity award and results in a cost that is measured at fair value on the grant date of an award. Our time-based stock options were measured at fair value on the grant date using the Black Scholes model. Our restricted stock awards and restricted stock units, including the restricted stock units bound by certain performance-based metrics issued in 2018, were measured at fair value based on the stock price on the grant date. The compensation expense is recognized on a straight-line basis over the vesting period of the awards. Our market-based options granted in 2017 and 2016 under our 2014 Equity Incentive Plan (the “2014 Plan”) and 2012 Equity Incentive Plan (as amended, the “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 the Company’s 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. The market-based options were measured at fair value on the grant date using a lattice-based valuation model based on the median time horizon from the date of grant for these options to the vesting date for those paths that achieved the target threshold(s). The compensation expense is recognized on a straight-line basis over the median vesting periods calculated under such valuation model. Forfeitures are estimated at the grant date for our time-based, market-based and performance-based awards, with such estimates updated periodically; and with actual forfeitures recognized currently to the extent they differ from the estimates. Unless otherwise provided by the administrator of our equity incentive plans, stock options granted under our plans generally expire ten years from the date of grant. The exercise price of stock options is generally the closing market price of our common stock on the date of the stock option grant. Acquisition-Related Costs We recognize a liability for acquisition-related costs when the expense is incurred. Acquisition-related costs include, but are not limited to: financial advisory, legal and debt fees; accounting, consulting, and professional fees associated with due diligence, valuation, and integration; severance; and other related costs and adjustments. 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 were provisional and insignificant adjustments were made during 2018. As of December 22, 2018, we completed our analysis and our updated assessment is that the 2017 Tax Act has no further impact on our previously reported income tax provisions or our deferred tax assets or liabilities; therefore, these amounts are no longer considered provisional in nature. 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 2014-9 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 2014-9. 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. In January 2016, the FASB issued ASU No. 2016-01, which, among other things, requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 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 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 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. 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. We do not expect the adoption of this ASU to have a material impact on our Financial Statements. 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, and 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. In November 2018, the FASB issued ASU No. 2018-19 to mitigate transition complexity by requiring entities other than public business entities to implement ASU No. 2016-13 for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This aligns the implementation date for their annual financial statements with the implementation date for their interim financial statements. The guidance also clarified that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. 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 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 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 whereby leases that are 12 months or less that do not include an option to purchase the underlying assets will be accounted for similarly to our current operating leases; therefore, these arrangements will not be recorded on the balance sheet. For lessees, leases will be classified as either financing or operating with classification affecting the pattern of expense recognition in the income statement. For lessors, leases will be 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 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 also includes 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 addresses 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. With the optional transition relief methodology available, entities have an opportunity to adopt the new lease standard prospectively at the beginning of the period of adoption through a cumulative-effect adjustment, with certain practical expedients available. On January 1, 2019, the Company adopted the new leasing standard promulgated by the FASB using the adoption date method. While we are finalizing the adoption procedures, we expect that the standard will have a material impact on our Balance Sheets, however, we do not expect that the standard will have a material impact on our Statements of Income (Loss). Upon adoption, we will record a ROU asset and lease liability, representing our obligation to make lease payments for operating leases, measured on a discounted basis. We expect the ROU assets and lease liabilities of operating leases recorded to be within the range of approximately 1%-2% of total assets. We elected the practical expedients offered in the aforementioned guidance, including the transition practical expedient that states 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. Other expedients adopted include practical expedient that allows a Company, as an accounting policy election by class of underlying assets, choose not to separate non-lease components from lease components; and a short-term lease recognition exemption to not record short-term leases with an initial term of 12 months or less on the balance sheet. As we are finalizing the adoption procedures, we expect the following impact to our financial statements as summarized within the table below:
We do not anticipate that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS | 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 required us to evaluate whether any cumulative adjustment was required to be recorded to retained earnings (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. Revenues and costs related to certain contracts are recognized at a point in time under ASC 606 as the performance obligations related to certain types of sales are satisfied; whereas, previously these revenues and costs were recognized over a period of time under ASC 605. 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 the periods presented in our Financial Statements. Balance Sheets and Statements of Cash Flows The adoption of ASC 606 utilizing the modified retrospective transition method did not have a material impact to our Balance Sheets and Statements of Cash Flows as of and for the year ended December 31, 2018. Games revenues We previously reported certain costs incurred in connection with our WAP platform, consisting primarily of the jackpot expenses, as cost of revenues. Under ASC 606, such costs are reflected as reductions to gaming operations revenues on a net basis of presentation. 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 costs of revenues. As the result of our evaluation of the factors contained in ASC 605, we previously determined that the indicators requiring the gross reporting outweighed those for net reporting primarily due to the risk of loss. Under ASC 606, such costs are reflected as reductions to revenues on a net basis of presentation, since we determined that we do not control certain cash access services provided to a customer and, therefore, we are acting as an agent whose performance obligation is to arrange for the provision of these types of services. In addition, commission expenses payable to the gaming operators are determined to be consideration paid to customers under ASC 606. The following table presents the impact of the application of ASC 606 utilizing the modified retrospective transition method to certain line items on our Statements of Income (Loss) for the year ended December 31, 2018 (in thousands):
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BUSINESS COMBINATIONS |
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Dec. 31, 2018 | |
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. We had no material acquisitions for the years ended December 31, 2018, 2017, and 2016. In August 2015, we acquired certain assets of Resort Advantage, LLC (“Resort Advantage”), a supplier of comprehensive and integrated solutions for complete Financial Crimes Enforcement Network (“FinCEN”) and Internal Revenue Service regulatory compliance to the gaming industry, for an aggregate purchase price of approximately $13.3 million, of which we estimated that approximately $4.7 million (the “earn out liability”) would be paid under the provisions of the agreement over a period of 40 months (the “payout period”) based upon an evaluation over a period of 36 months (the “earn out period”) following the closing of the transaction. Upon expiration of the earn out period in August 2018, we analyzed the remaining earn out liability of approximately $0.8 million and determined that approximately $0.6 million would not be realized; therefore, we reversed that amount into income. We continued to record approximately $0.2 million in remaining earn out liability to potentially be paid under the provisions of the agreement during the first quarter of 2019. The Resort Advantage acquisition did not have a material impact on our results of operations or financial condition. |
FUNDING AGREEMENTS |
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Dec. 31, 2018 | |
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 (Loss), were $7.0 million, $4.9 million, and $3.1 million for the years ended December 31, 2018, 2017, and 2016, 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 approximately $224.7 million and $289.8 million as of December 31, 2018 and 2017, respectively. Our primary commercial arrangement, the Contract Cash Solutions Agreement, as amended, with 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 auto 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 years ended December 31, 2018, 2017, and 2016. 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 is included within settlement liabilities in the accompanying Balance Sheets and was $249.6 million and $210.8 million as of December 31, 2018 and 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 $4.8 million and $6.9 million of our cash for these ATMs at December 31, 2018 and 2017, respectively, which represents an outstanding balance under such agreements at the end of the period. Such amounts are reported within 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 $6.1 million and $8.4 million at December 31, 2018 and 2017, respectively, and is included in prepaid expenses and other assets in our Balance Sheets. |
TRADE AND OTHER RECEIVABLES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TRADE AND OTHER RECEIVABLES | TRADE AND OTHER RECEIVABLES Trade 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):
(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 approximately $6.4 million and $4.7 million as of December 31, 2018 and 2017, respectively, and included approximately $3.2 million and $2.7 million of check warranty reserves, respectively. The provision for doubtful customer accounts receivable is generally included within operating expenses in the Statements of Income (Loss). A summary activity of the reserve for check warranty losses is as follows (in thousands):
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INVENTORY |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 FIFO method. There was no material impairment of our inventory for the years ended December 31, 2018 and 2017. We recorded an immaterial impairment charge of approximately $1.8 million in our Games segment for the year ended December 31, 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):
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PREPAID AND OTHER ASSETS |
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Prepaid Expense and Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREPAID AND OTHER ASSETS | PREPAID AND OTHER ASSETS Prepaid and other assets include the balance of prepaid expenses, deposits, debt issuance costs on our New 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 our Balance Sheets. The balance of the current portion of prepaid 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 (in thousands):
Depreciation expense related to property, equipment and leased assets totaled approximately $61.2 million, $47.3 million, and $50.0 million for the years ended December 31, 2018, 2017, and 2016, respectively. There was no material impairment of our property, equipment and leased assets for the years ended December 31, 2018 and 2017. We recorded an immaterial impairment charge of approximately $0.8 million in our Games segment for the year ended December 31, 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). |
GOODWILL AND OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. In accordance with ASC 350, we test goodwill at the reporting unit level, which are identified as operating segments 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 both 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. Goodwill Testing In performing our annual goodwill impairment tests, we utilize the approach prescribed under ASC 350. The “Step 1” required a comparison of the carrying amount of each reporting unit to its estimated fair value. To estimate the fair value of our reporting units for “Step 1”, we used a combination of an income valuation approach and a market valuation approach. The income approach is based on a discounted cash flow (“DCF”) analysis. This method involves estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value, using a risk-adjusted discount rate. Assumptions used in the DCF require the exercise of significant judgment, including, but not limited to: appropriate discount rates and terminal values, growth rates and the amount and timing of expected future cash flows. The projected cash flows are based on our most recent annual budget and projected years beyond. Our budgets and projected cash flows are based on estimated future growth rates. We believe our assumptions are consistent with the plans and estimates used to manage the underlying businesses. The discount rates, which are intended to reflect the risks inherent in future cash flow projections, used in the DCF are based on estimates of the WACC of market participants relative to each respective reporting unit. The market approach considers comparable market data based on multiples of revenue or earnings before interest, taxes, depreciation and amortization (“EBITDA”). If the fair value of a reporting unit is less than its carrying amount, an impairment charge equal to the amount by which the carrying amount of goodwill for the reporting unit exceeds the fair value of that goodwill is recorded in accordance with ASC 350. We had approximately $640.5 million and $640.6 million of goodwill on our Balance Sheets as of December 31, 2018 and 2017, respectively, resulting from acquisitions of other businesses. In connection with our annual goodwill impairment testing process for 2018 and 2017, we determined that no impairment adjustments were necessary. The fair value exceeded the carrying amount for each of the Games, Cash Access Services, Kiosk Sales and Services, Central Credit Services and Compliance Sales and Services reporting units for 2018 and 2017. In connection with our annual goodwill impairment testing process 2016, we determined that impairment adjustments were necessary. The fair value exceeded the carrying amount for each of the Cash Access Services, Kiosk Sales and Services, Central Credit Services and Compliance Sales and Services reporting units, while Games reporting unit had a goodwill impairment of $146.3 million for 2016. The impairment recorded in 2016 was primarily based upon limited growth and capital expenditure constraints in the gaming industry, consolidation and increased competition in the gaming manufacturing space, stock market volatility, global and domestic economic uncertainty, and lower than forecasted operating profits and cash flows. Based on these indicators, we revised our estimates and assumptions for the Games reporting unit. Management performs its annual forecasting process, which, among other factors, includes reviewing recent historical results, company-specific variables and industry trends. This process is generally completed in the fourth quarter and considered in conjunction with the annual goodwill impairment evaluation. The annual evaluation of goodwill requires the use of estimates about future operating results of each reporting unit to determine its estimated fair value. Changes in forecasted operations can materially affect these estimates, which could materially affect our results of operations. The estimates of fair value require significant judgment and are based on assumptions we determined to be reasonable; however, that are unpredictable and inherently uncertain, including, estimates of future growth rates, operating margins, and assumptions about the overall economic climate as well as the competitive environment for our reporting units. There can be no assurance that our estimates and assumptions made for purposes of our goodwill testing as of the time of testing will prove to be accurate predictions of the future. If our assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, we may be required to record goodwill impairment charges in future periods, whether in connection with our next annual impairment testing, or earlier, if an indicator of an impairment is present prior to our next annual evaluation. Our reporting units are identified as operating segments or one level below. Reporting units must: (a) engage in business activities from which they earn revenues and incur expenses; (b) have operating results that are regularly reviewed by our segment management to ascertain the resources to be allocated to the segment and assess its performance; and (c) have discrete financial information available. Our reporting units included: Games, Cash Access Services, Kiosk Sales and Services, Central Credit Services, and Compliance Sales and Services. The changes in the carrying amount of goodwill are as follows (in thousands):
Other Intangible Assets Other intangible assets consist of the following (in thousands):
Amortization expense related to other intangible assets totaled approximately $65.2 million, $69.5 million, and $94.6 million for the years ended December 31, 2018, 2017, and 2016, respectively. We capitalized $33.3 million, $29.4 million, and $24.2 million of internal software development costs for the years ended December 31, 2018, 2017, and 2016, respectively. On a quarterly basis, we evaluate our other intangible assets for potential impairment as part of our quarterly review process. There was no material impairment identified for any of our other intangible assets for the years ended December 31, 2018, 2017, and 2016. The anticipated amortization expense related to other intangible assets, assuming no subsequent impairment of the underlying assets, is as follows (in thousands):
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. 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 electronic gaming machines (“EGMs”) over the term of the agreement, generally from 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. In July 2017, we entered into a placement fee agreement with a customer for certain of its locations for approximately $49.1 million, net of $10.1 million of unamortized fees related to superseded contracts. We paid approximately $22.7 million and $13.3 million in placement fees to this customer for the years ended December 31, 2018 and 2017, respectively. The payments made in 2018 included approximately $2.1 million of imputed interest. |
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 (amounts in thousands):
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LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | LONG-TERM DEBT The following table summarizes our indebtedness (in thousands):
Refinancings 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 “New Credit Agreement”). The New Credit Agreement provides for: (i) a $35.0 million, five-year senior secured revolving credit facility (the “New Revolving Credit Facility”); and (ii) an $820.0 million, seven-year senior secured term loan facility (the “New Term Loan Facility,” and together with the New Revolving Credit Facility, the “New Credit Facilities”). The fees associated with the New Credit Facilities included discounts of approximately $4.1 million and debt issuance costs of approximately $15.5 million. All borrowings under the New 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 New Term Loan Facility incurred on the Closing Date were used to: (i) refinance: (a) 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 (b) Everi Payments’ 7.25% Senior Secured Notes due 2021 in the aggregate original principal amount of $335.0 million (the “Refinanced Secured Notes”); and (ii) 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 New Credit Agreement (the “First Amendment”) which, among other things, reduced the interest rate on the approximately $818.0 million then-outstanding balance of the New Term Loan Facility; however, it did not change the maturity dates for the New Term Loan Facility or the New Revolving Credit Facility or the financial covenants or other debt repayments terms set forth in the New Credit Agreement. We incurred approximately $3.0 million of debt issuance costs and fees associated with the repricing of the New Term Loan Facility. On May 17, 2018, we entered into a Second Amendment (the “Second Amendment”) to the New 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 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 New Term Loan Facility. New Credit Facilities The New Term Loan Facility matures seven years after the Closing Date and the New Revolving Credit Facility matures five years after the Closing Date. The New 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 New Revolving Credit Facility is, at Everi Payments’ option, the base rate or the Eurodollar Rate (defined to be the London Interbank Offered Rate or a comparable or successor rate) (the “Eurodollar Rate”) plus, in each case, an applicable margin. The interest rate per annum applicable to the New 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: (i) the prime lending rate announced by the administrative agent; (ii) the federal funds effective rate from time to time plus 0.50%; and (iii) 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 New Revolving Credit Facility and the New Term Loan Facility were: (i) 4.50% in respect of Eurodollar Rate loans and (ii) 3.50% in respect of base rate loans. The applicable margins for the New 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: (i) 3.50% in respect of Eurodollar Rate loans and (ii) 2.50% in respect of base rate loans. The applicable margins for the New Term Loan Facility from and after the effectiveness of the Second Amendment are: (i) 3.00% in respect of Eurodollar Rate loans and (ii) 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 New Credit Agreement governing the New Credit Facilities, with prior notice, however, without premium or penalty, except that certain refinancings of the term loans within six months after the Repricing Closing Date will be subject to a prepayment premium of 1.00% of the principal amount repaid. Subject to certain exceptions, the obligations under the New 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: (i) 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 (ii) 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 New Credit Facilities are unconditionally guaranteed by Holdings and such subsidiary guarantors. The New Credit Agreement governing the New 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 New Credit Agreement governing the New Credit Facilities also requires Holdings, together with its subsidiaries, to comply with a consolidated secured leverage ratio. At December 31, 2018, our consolidated secured leverage ratio was 3.28 to 1.00, with a maximum allowable ratio of 4.75 to 1.00. Our maximum consolidated secured leverage will be 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 New Credit Facilities as of December 31, 2018. Events of default under the New Credit Agreement governing the New 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 New 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 New 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 year ended December 31, 2018, the New Term Loan Facility had an applicable weighted average interest rate of 5.17%. At December 31, 2018, we had approximately $807.7 million of borrowings outstanding under the New Term Loan Facility and no borrowings outstanding under the New Revolving Credit Facility. We had $35.0 million of additional borrowing availability under the New Revolving Credit Facility as of December 31, 2018. Refinanced Senior Secured Notes In connection with entering into the New 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 plus accrued and unpaid interest. As a result of the redemption, the Company 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, which were included in the total $14.6 million non-cash charge. 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. In December 2017, we issued $375.0 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 refinancing of our 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, 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 December 31, 2018. Principal Repayments The maturities of our borrowings at December 31, 2018 are as follows (in thousands):
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Placement Fee Arrangements In July 2017, we extended the term of our then-existing placement fee agreement to 6 years and 11 months with our largest customer in Oklahoma. Under the terms of the agreement, we will pay approximately $5.6 million per quarter in placement fees, inclusive of imputed interest, beginning in January 2018 and ending in July 2019. We paid approximately $22.7 million and $13.3 million in placement fees to this customer for the years ended December 31, 2018 and 2017, respectively. The payments made in 2018 included approximately $2.1 million of imputed interest. Lease Obligations We lease office facilities and operating equipment under cancelable and non-cancelable agreements. Total rent expense was approximately $7.8 million, $6.8 million, and $6.8 million for the years ended December 31, 2018, 2017, and 2016, respectively. We have a long‑term lease agreement related to office space for our corporate headquarters located in Las Vegas, Nevada that expires in April 2023. In September 2014, the long-term lease agreement for office space in Austin, Texas was extended through June 2021. We also have leased facilities in Chicago, Illinois and Reno, Nevada, which support the design, production and expansion of our gaming content. The long-term lease agreement for our Chicago facilities commenced in November 2015 and expires in June 2023. The long-term lease agreement for our Reno facilities commenced in February 2016 and expires in May 2021. As of December 31, 2018, the minimum aggregate rental commitment under all non‑cancelable operating leases were as follows (in thousands):
Litigation Claims and Assessments We are subject to claims and suits that arise from time to time in the ordinary course of business. 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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Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ 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 December 31, 2018 and 2017, 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 December 31, 2018 and 2017, we had 95,099,532 and 93,119,988 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 17,552 and 15,457 shares of common stock at an aggregate purchase price of $0.1 million for the years ended December 31, 2018 and 2017 to satisfy the minimum applicable tax withholding obligations related to the vesting of such restricted stock awards. |
WEIGHTED AVERAGE SHARES OF COMMON STOCK |
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WEIGHTED AVERAGE COMMON SHARES | WEIGHTED AVERAGE SHARES OF COMMON STOCK The weighted average number 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 23, 2017, 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 were 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 December 31, 2018. 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 the Company’s 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. There were no market-based option awards granted during the year ended December 31, 2018. The fair values of our standard time-based options were determined as of the date of grant using the Black-Scholes option pricing model with the following assumptions:
The fair values of our market-based options were determined as of the date of grant using a lattice-based option valuation model with the following assumptions:
The following table presents the options activity:
The following table presents the options outstanding and exercisable by price range:
There were 20,000, 4.3 million, and 4.4 million options granted for the years ended December 31, 2018, 2017, and 2016, respectively. The weighted average grant date fair value per share of the options granted was $4.15, $1.98, and $0.83 for the years ended December 31, 2018, 2017, and 2016, respectively. The total intrinsic value of options exercised was $6.5 million and $5.3 million for the years ended December 31, 2018 and 2017. There were no options exercised in 2016. There was approximately $3.4 million in unrecognized compensation expense related to options expected to vest as of December 31, 2018. This cost was expected to be recognized on a straight‑line basis over a weighted average period of 2.8 years. We recorded approximately $5.1 million in non‑cash compensation expense related to options granted that were expected to vest as of December 31, 2018. We received approximately $9.6 million in cash proceeds from the exercise of options during 2018. There was approximately $7.9 million and $11.7 million in unrecognized compensation expense related to options expected to vest as of December 31, 2017 and 2016, respectively. This cost was expected to be recognized on a straight-line basis over a weighted average period of 3.5 years and 2.1 years for the years ended December 31, 2017 and 2016, respectively. We recorded approximately $6.0 million and $6.3 million in non‑cash compensation expense related to options granted that were expected to vest as of December 31, 2017 and 2016, respectively. We received approximately $10.9 million in cash proceeds from the exercise of options during 2017 and there was no exercise of options during 2016, as no exercises occurred during the period. Restricted Stock Awards The following is a summary of non‑vested share awards for our time‑based restricted shares:
There were no shares of restricted stock granted for the year ended December 31, 2018. The total fair value of restricted stock vested was approximately $0.5 million for the year ended December 31, 2018. There was $31,952 in unrecognized compensation expense related to shares of restricted stock expected to vest as of December 31, 2018, which was expected to be recognized on a straight‑line basis over a weighted average period of 0.3 years. There were 65,501 shares of restricted stock that vested during 2018, and we recorded approximately $0.4 million in non-cash compensation expense related to the restricted stock granted that was expected to vest during 2018. There were 50,000 shares of restricted stock granted for the year ended December 31, 2017 and no shares of restricted stock granted for the year ended December 31, 2016. The total fair value of restricted stock vested was approximately $0.4 million and approximately $0.2 million for the years ended December 31, 2017 and 2016, respectively. There was approximately $0.5 million and approximately $1.0 million in unrecognized compensation expense related to shares of time‑based restricted awards expected to vest as of December 31, 2017 and 2016, respectively, and is expected to be recognized on a straight‑line basis over a weighted average period of 1.1 years and 1.7 years, respectively. There were 56,578 shares and 74,919 shares of restricted stock that vested during 2017 and 2016, respectively, and we recorded approximately $0.4 million and approximately $0.5 million in non‑cash compensation expense related to the restricted stock granted that was expected to vest during 2017 and 2016, respectively. Restricted Stock Units The following is a summary of non-vested RSU awards:
The time-based RSUs granted during 2018 vest at a rate of 25% per year on each of the first four anniversaries of the grant dates. The performance-based RSUs granted during 2018 will be evaluated by our Compensation Committee of our Board of Directors after a performance period, beginning on the date of grant through December 31, 2020, based on certain revenue and Adjusted EBITDA growth rate metrics, with achievement of each measure to be determined independently of one another. If the performance criteria of the metrics are approved, the eligible awards will become vested on the third anniversary of the grant dates. The time-based RSUs granted during the first quarter of 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: (i) March 7, 2028; (ii) death; (iii) the occurrence of a Change in Control (as defined in the Amended and Restated 2014 Plan), subject to qualifying conditions; or (iv) the date that is six months following the separation from service, subject to qualifying conditions. There were approximately 1.9 million shares of RSU awards granted for the year ended December 31, 2018 and no RSUs granted for the years ended December 31, 2017 and 2016. There were zero RSUs that vested during the years ended December 31, 2018, 2017 and 2016. There was approximately $6.7 million in unrecognized compensation expense related to RSU awards expected to vest as of December 31, 2018. This cost is expected to be recognized on a straight-line basis over a weighted average period of 3.0 years. We recorded approximately $1.8 million in non-cash compensation expense related to RSU awards for the year ended December 31, 2018. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The following presents consolidated loss before tax for domestic and foreign operations (in thousands):
The income tax (benefit) provision attributable to loss from operations before tax consists of the following components (in thousands):
A reconciliation of the federal statutory rate and the effective income tax rate is as follows:
The major tax‑effected components of the deferred tax assets and liabilities are as follows (in thousands):
The 2017 Tax Act was enacted on December 22, 2017. The 2017 Tax Act made significant changes to the federal tax law, including a reduction in the federal income tax rate from 35% to 21% effective January 1, 2018, stricter limits on deduction of interest, an 80% taxable income limitation on the use of post-2017 net operating loss (“NOL”), and a one-time transition tax on previously deferred earnings of certain foreign subsidiaries. As a result of our initial analysis of the 2017 Tax Act and existing implementation guidance, we remeasured our deferred tax assets and liabilities, which resulted in a $22.5 million reduction in our income tax expense in 2017. We computed our transition tax liability of $1.3 million due to the 2017 Tax Act, net of associated foreign tax credits, which was completely offset by additional foreign tax credits carried forward. Any remaining foreign tax credits not utilized by the transition tax were fully offset by a valuation allowance. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provided guidance on accounting for the tax effects of the 2017 Tax Act. In accordance with the SAB 118 guidance, some of the income tax effects recorded in 2017 and through December 22, 2018 were provisional, including the one-time transition tax, the effect on our valuation allowance including the stricter limits on interest deductions, the GILTI provisions of the 2017 Tax Act, and the remeasurement of our deferred tax assets and liabilities. During 2018, we recognized insignificant adjustments to the provisional amounts recorded at December 31, 2017 and included these adjustments as a component of income tax expense from continuing operations. Unrepatriated earnings were approximately $19.7 million as of December 31, 2018. Almost all of these earnings are considered permanently reinvested, as it is management’s intention to reinvest foreign earnings in foreign operations. We project sufficient cash flow, or borrowings available under our New Credit Facilities in the U.S.; therefore, we do not need to repatriate our foreign earnings to finance U.S. operations at this time. Due to the 2017 Tax Act, there is no U.S. federal tax on cash repatriation from foreign subsidiaries, however, it could be subject to foreign withholding tax and U.S. state income taxes. The 2017 Tax Act subjects a U.S. corporation to current tax on the GILTI earned by certain foreign subsidiaries and a base erosion anti-avoidance tax (“BEAT”). Our foreign subsidiaries’ earnings for the year-ended December 31, 2018 have been subject to U.S. federal income tax via the newly enacted GILTI provision. We have elected to recognize the taxes on GILTI and BEAT as a period expense in the period the taxes are incurred. Deferred tax assets arise primarily because expenses have been recorded in historical financial statement periods that will not become deductible for income taxes until future tax years. We record valuation allowances to reduce the book value of our deferred tax assets to amounts that are estimated on a more likely than not basis to be realized. This assessment requires judgment and is performed on the basis of the weight of all available evidence, both positive and negative, with greater weight placed on information that is objectively verifiable such as historical performance. We evaluated negative evidence noting that we reported cumulative net losses for the three-year periods ended as of December 31, 2016, 2017, and 2018. Pursuant to accounting guidance, a cumulative loss in recent years is a significant piece of negative evidence that must be considered and is difficult to overcome without sufficient objectively verifiable, positive evidence. As such, certain aspects of our historical results were included in our forecasted taxable income. Although our forecast of future taxable income was a positive indicator, since this form of evidence was not objectively verifiable, its weight was not sufficient to overcome the negative evidence. However, based on our current year activity and the changes in the 2017 Tax Act, we decreased our valuation allowance for deferred tax assets by $10.1 million during 2018. The decrease in our valuation allowance is primarily due to the net operating loss during the year and the interest deduction limitation (deferred tax assets) which can be offset against our indefinite lived deferred tax liabilities. The ultimate realization of deferred tax assets depends on having sufficient taxable income in the future years when the tax deductions associated with the deferred tax assets become deductible. The establishment of a valuation allowance does not impact cash, nor does it preclude us from using our tax credits, loss carry-forwards and other deferred tax assets in the future. The following is a tabular reconciliation of the total amounts of deferred tax asset valuation allowance (in thousands):
(1) For 2017, the amount was recorded as a result of our adoption of ASU No. 2016-09 effective January 1, 2017. For 2018, the amount was recorded as a result of our adoption of ASC 606 effective January 1, 2018. We had $395.2 million, or $83.0 million, tax effected, of accumulated federal net operating losses as of December 31, 2018. The net operating losses can be carried forward and applied to offset taxable income for 20 years and will expire starting in 2022 (for losses incurred before 2018). Losses incurred in 2018 of approximately $38.9 million, or $8.2 million, tax effected, can be carried forward indefinitely to offset taxable income. We had $8.5 million, tax effected, of federal research and development credit carry- forwards and $0.5 million, tax effected, of foreign tax credit carry-forwards as of December 31, 2018. The research and development credits are limited to a 20 years carry-forward period and will expire starting in 2029. The foreign tax credits can be carried forward 10 years and will expire in 2020, if not utilized. Our $0.3 million balance of alternative minimum tax credits at December 31, 2018 will be refunded over the next four years in accordance with the 2017 Tax Act. We also have a receivable for $0.6 million related to alternative minimum tax credits for which a refund was requested on our December 31, 2017 federal tax return. As of December 31, 2018, $46.6 million of our valuation allowance relates to federal net operating loss carry-forwards and credits that we estimate are not more likely than not to be realized. We had tax effected state net operating loss carry-forwards of approximately $14.1 million as of December 31, 2018. The state net operating loss carry-forwards will expire between 2019 and 2039. The determination and utilization of these state net operating loss carry-forwards are dependent upon apportionment percentages and other respective state laws, which can change from year to year. As of December 31, 2018, $6.5 million of our valuation allowance relates to certain state net operating loss carry-forwards that we estimate are not more likely than not to be realized. The remaining valuation allowance of $0.1 million relates to foreign net operating losses. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
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 December 31, 2018, the Company 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. The Company has not accrued any penalties and interest for its 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 (Loss). We are subject to taxation in the U.S. and various states and foreign jurisdictions. We have a number of federal and state income tax years still open for examination as a result of our net operating loss carry-forwards. Accordingly, we are subject to examination for both U.S. federal and some of the state tax returns for the years 2004 to present. For the remaining state, local and foreign jurisdictions, with some exceptions, we are no longer subject to examination by tax authorities for years before 2015. |
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 represent 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 accounting policies of the operating segments are generally the same as those described in the summary of significant accounting policies. Since we adopted ASC 606 utilizing the modified retrospective method, the prior year comparative amounts shown in the tables below have not been restated. Refer to “Note 2 — Basis of Presentation and Summary of Significant Accounting Policies” and “Note 3 — Adoption of ASC 606, Revenue from Contracts with Customers” for more information. The following tables present segment information (in thousands):
(1) Exclusive of depreciation and amortization.
Major customers. For the years ended December 31, 2018, 2017, and 2016, no single customer accounted for more than 10% of our revenues. Our five largest customers accounted for approximately 22%, 31%, and 31% of our total revenue in 2018, 2017, and 2016, respectively. |
SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) |
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SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) | SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The unaudited selected quarterly results of operations are as follows (in thousands, except for per share amounts)*. Since we adopted ASC 606 utilizing the modified retrospective method, the prior year comparative amounts shown in the table below have not been restated.
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SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On March 8, 2019, we entered into an agreement to acquire certain assets from a privately held company that develops and distributes hardware and software applications to gaming operators to enhance gaming patron loyalty. 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 will expand 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 after closing and another $10 million two years following after 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. We have not completed the purchase price accounting analysis, however, we do not expect that the acquisition will have a material impact on our results of operations or financial condition. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | All intercompany transactions and balances have been eliminated in consolidation. |
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Business Combinations | We apply the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations,” in the accounting for acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are preliminary and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset over its estimated useful life. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. In addition, deferred tax assets, deferred tax liabilities, uncertain tax positions, and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date and any adjustments to its preliminary estimates are recorded to goodwill, in the period of identification, if identified within the measurement period. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Statements of Income (Loss). |
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Cash and Cash Equivalents | Cash and cash equivalents include cash and balances on deposit in banks and financial institutions. We consider highly liquid investments with maturities of three months or less at the time of purchase to be cash and cash equivalents. Such balances generally exceed the federal insurance limits, however, we periodically evaluate the creditworthiness of these institutions to minimize risk. |
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ATM Funding Agreements | We obtain all of the cash required to operate our ATMs through various ATM Funding Agreements. Some gaming establishments provide the cash utilized within the ATM (“Site‑Funded”). The Site‑Funded receivables generated for the amount of cash dispensed from transactions performed at our ATMs are owned by us and we are liable to the gaming establishment for the face amount of the cash dispensed. In our Balance Sheets, the amount of the receivable for transactions processed on these ATM transactions is included within settlement receivables and the amount due to the gaming establishment for the face amount of dispensing transactions is included within settlement liabilities. For the non‑Site‑Funded locations, we enter into commercial arrangements with third party vendors to provide us the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay a cash usage fee based upon the target federal funds rate. Under these agreements, the currency supplied by the third party vendors remains the sole property of these suppliers until cash is dispensed, at which time the third party vendors obtain an interest in the corresponding settlement receivable. As the cash is an asset of these suppliers, it is therefore not reflected on our Balance Sheets. The usage fee for the cash supplied in these ATMs is included as interest expense in the Statements of Income (Loss). Our rationale to record cash usage fees as interest expense is primarily due to the similar operational characteristics to a revolving line of credit, the fact that the fees are calculated on a financial index, and the fees are paid for access to a capital resource. |
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Allowance for Doubtful Accounts | We maintain an allowance for doubtful accounts related to our trade and other receivables and notes receivable that have been deemed to have a high risk of uncollectibility or for which uncertainty exists as to whether the account balance has become uncollectible. Management reviews its accounts and notes receivable on a quarterly basis to determine if any receivables will potentially be uncollectible. Management analyzes historical collection trends and changes in our customer payment patterns, concentration, and creditworthiness when evaluating the adequacy of our allowance for doubtful accounts. Based on the information available, management believes the allowance for doubtful accounts is adequate; however, actual write-offs may exceed the recorded allowance. |
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Settlement Receivables and Settlement Liabilities | We receive reimbursement from the patron’s credit or debit card issuing financial institution for the amount owed to the gaming establishment plus the fee charged to the patron. These activities result in amounts due to us at the end of each business day that we generally recover over the next few business days, which are classified as settlement receivables on our Balance Sheets. In addition, cash settlement services result in amounts due to gaming establishments for the cash disbursed to patrons through the issuance of a negotiable instrument or through electronic settlement for the face amount provided to patrons that we generally remit over the next few business days, which are classified as settlement liabilities on our Balance Sheets. |
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Warranty Receivables | If a gaming establishment chooses to have a check warranted, it sends a request to our third-party check warranty service provider, asking whether it would be willing to accept the risk of cashing the check. If the check warranty provider accepts the risk and warrants the check, the gaming establishment negotiates the patron’s check by providing cash for the face amount of the check. If the check is dishonored by the patron’s bank upon presentment, the gaming establishment invokes the warranty, and the check warranty service provider purchases the check from the gaming establishment for the full check amount and then pursues collection activities on its own. In our Central Credit Check Warranty product under our agreement with the third-party service provider, we receive all of the check warranty revenue. We are exposed to risk for the losses associated with any warranted items that cannot be collected from patrons issuing the items. Warranty receivables are defined as any amounts paid by the third-party check warranty service provider to gaming establishments to purchase dishonored checks. Additionally, we pay a fee to the third-party check warranty service provider for its services. The warranty receivables amount is recorded in trade and other receivables, net on our Balance Sheets. On a monthly basis, the Company evaluates the collectability of the outstanding balances and establishes a reserve for the face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) on our Statements of Income (Loss). |
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Inventory | Our inventory primarily consists of component parts as well as finished goods and work-in-progress. 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 (“FIFO”). |
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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. |
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Property, Equipment and Leased Assets | Property, equipment and leased assets are stated at cost, less accumulated depreciation, and are computed using the straight-line method over the lesser of the estimated life of the related assets, generally two to five years, or the related lease term. Player terminals and related components and equipment are included in our rental pool. The rental pool can be further delineated as “rental pool – deployed,” which consists of assets deployed at customer sites under participation arrangements, and “rental pool – undeployed,” which consists of assets held by us that are available for customer use. Rental pool – undeployed consists of both new units awaiting deployment to a customer site and previously deployed units currently back with us to be refurbished awaiting re-deployment. Routine maintenance of property, equipment and leased gaming equipment is expensed in the period incurred, while major component upgrades are capitalized and depreciated over the estimated remaining useful life of the component. Sales and retirements of depreciable property are recorded by removing the related cost and accumulated depreciation from the accounts. Gains or losses on sales and retirements of property are reflected in our Statements of Income (Loss). Property, equipment and leased assets are reviewed for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated when future cash flows, on an undiscounted basis, do not exceed the carrying value of the asset. |
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Placement Fee and Development Agreements | We enter into placement fee and, to a certain extent, development agreements to provide financing for the expansion of existing facilities, or for new gaming facilities. Funds provided under placement fee agreements are not reimbursed, while funds provided under development agreements are reimbursed to us, in whole, or in part. In return, the facility dedicates a percentage of its floor space to placement of our player terminals, and we receive a fixed percentage of those player terminals’ hold amounts per day over the term of the agreement, which is generally from 12 to 83 months. Certain of the agreements contain player terminal performance standards that could allow the facility to reduce a portion of our guaranteed floor space. In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The agreements typically provide for a portion of the amounts retained by the gaming facility for their share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable. |
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Goodwill | Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. 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 both 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, in accordance with ASC 350, Intangibles - Goodwill and Other. Our reporting units are identified as operating segments or one level below. Reporting units must: (a) engage in business activities from which they earn revenues and incur expenses; (b) have operating results that are regularly reviewed by our segment management to ascertain the resources to be allocated to the segment and assess its performance; and (c) have discrete financial information available. As of December 31, 2018, our reporting units included: Games, Cash Access Services, Kiosk Sales and Service, Central Credit Services, and Compliance Sales and Services. |
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Other Intangible Assets | Other intangible assets are stated at cost, less accumulated amortization, and are computed primarily using the straight-line method. Other intangible assets consist primarily of: (i) customer contracts (rights to provide Games and FinTech services to gaming establishment customers), developed technology, trade names and trademarks, and contract rights acquired through business combinations; and (ii) capitalized software development costs. Customer contracts require us to make renewal assumptions, which impact the estimated useful lives of such assets. Capitalized software development costs require us to make certain judgments as to the stages of development and costs eligible for capitalization. Capitalized software costs placed in service are amortized over their useful lives, generally not to exceed five years. We review intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business or market price of the asset, a significant adverse change in legal factors or business climate that could affect the value of an asset, or a current period operating or cash flow loss combined with a history of operating or cash flow losses. We group intangible assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of definite lived intangible assets is measured by a comparison of the carrying amount of the asset to future net cash flows expected to be generated by the asset, on an undiscounted basis and without interest or taxes. Any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. |
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Debt Issuance Costs | Debt issuance costs incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. Debt issuance costs related to line-of-credit arrangements are included in other assets, non-current, on our Balance Sheets. All other debt issuance costs are included as contra-liabilities in long-term debt. |
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Original Issue Discounts | Original issue discounts incurred in connection with long-term borrowings are capitalized and amortized to interest expense based upon the related debt agreements using the straight-line method, which approximates the effective interest method. These amounts are recorded as contra-liabilities and included in long-term debt on our Balance Sheets. |
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Revenue Recognition | Overview 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. 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 (Loss). 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 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 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 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 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 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. Contract Balances Since our contracts may include multiple performance obligations, there is often a timing difference between the 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:
(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. We recognized approximately $11.4 million in revenue that was included in the beginning contract liability balance during 2018. 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, and other back office systems. We conduct our Games segment business based on results generated from the following major revenue streams: (i) Gaming Operations; (ii) Gaming Equipment and Systems; and (iii) 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® that allows 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 840. 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 840 are generally short-term in nature with payment terms ranging from 30 to 90 days. We recognized $136.6 million, $126.1 million, and $134.0 million in lease revenues for the years ended December 31, 2018, 2017, and 2016, 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 45 days. Such revenues are presented in the Statements of Income (Loss) 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 records it 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 social, mobile application. 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, or social 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. 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® that allows operators to switch from in-revenue gaming to out-of-revenue tournaments; (b) game content; (c) license fees; (d) ancillary equipment; and (e) maintenance. 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. Our contracts with customers do not contain any financing components that have 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, maintenance, or various combinations thereof. Gaming equipment and systems 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. 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: (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, 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 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. Information Services and Other Information services and other revenues are accounted for under ASC 606 and 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, which are generally short-term in nature with payment terms ranging from 30 to 90 days, 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 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. Cost of Revenues (Exclusive of Depreciation and Amortization) The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The costs included within cost of revenues (exclusive of depreciation and amortization) are inventory and related costs associated with the sale of our fully integrated kiosks, electronic gaming machines and system sale, check cashing warranties, field service, and network operations personnel. |
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Advertising, Marketing and Promotional Costs | We expense advertising, marketing, and promotional costs as incurred. |
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Research and Development Costs | We conduct research and development activities primarily to develop gaming systems, game engines, casino data management systems, casino central monitoring systems, video lottery outcome determination systems, gaming platforms and gaming content, and to enhance our existing product lines. We believe our ability to deliver differentiated, appealing products and services to the marketplace is based on our research and development investments, and we expect to continue to make such investments in the future. Research and development costs consist primarily of salaries and benefits, consulting fees, and game lab testing fees. Once the technological feasibility of a project has been established, it is capitalized until it becomes available for general release. |
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Income Taxes | We are subject to income taxes in the United States as well as various states and foreign jurisdictions in which we operate. In accordance with accounting guidance, our income taxes include amounts from domestic and international jurisdictions. Due to the 2017 Tax Act, there is no U.S. federal tax on cash repatriation from foreign subsidiaries; however, we could be subject to foreign withholding tax and U.S. state income taxes. The 2017 Tax Act also subjects our foreign subsidiary earnings to the Global Intangible Low-Taxed Income (“GILTI”) tax provisions. Some items of income and expense are not reported in tax returns and our Financial Statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Our deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in our Financial Statements or income tax returns. Deferred tax assets and liabilities are determined based upon differences between financial statement carrying amounts of existing assets and their respective tax bases using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. The effect on the income tax provision or benefit and deferred tax assets and liabilities for a change in rates is recognized in the Statements of Income (Loss) in the period that includes the enactment date. When measuring deferred tax assets, certain estimates and assumptions are required to assess whether a valuation allowance should be established by evaluating both positive and negative factors in accordance with accounting guidance. This evaluation requires that we exercise judgment in determining the relative significance of each factor. The assessment of the valuation allowance involves significant estimates regarding future taxable income and when it is recognized, the amount and timing of taxable differences, the reversal of temporary differences and the implementation of tax-planning strategies. A valuation allowance is established based on the weight of available evidence, including both positive and negative indicators, if it is more likely than not that a portion, or all, of the deferred tax assets will not be realized. Greater weight is given to evidence that is objectively verifiable, most notably historical results. If we report a cumulative loss from continuing operations before income taxes for a reasonable period of time, this form of negative evidence is difficult to overcome. Therefore, we include certain aspects of our historical results in our forecasts of future taxable income, as we do not have the ability to solely rely on forecasted improvements in earnings to recover deferred tax assets. When we report a cumulative loss position, to the extent our results of operations improve, such that we have the ability to overcome the more likely than not accounting standard, we may be able to reverse the valuation allowance in the applicable period of determination. In addition, we rely on deferred tax liabilities in our assessment of the realizability of deferred tax assets if the temporary timing difference is anticipated to reverse in the same period and jurisdiction and the deferred tax liabilities are of the same character as the temporary differences giving rise to the deferred tax assets. We also follow accounting guidance to account for uncertainty in income taxes as recognized in our Financial Statements. The accounting standard creates a single model to address uncertainty in income tax positions and prescribes the minimum recognition threshold a tax position is required to meet before being recognized in our Financial Statements. The standard also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Under this standard, we may recognize tax benefits from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement. Actual income taxes paid may vary from estimates depending upon changes in income tax laws, actual results of operations, and the final audit of tax returns by taxing authorities. Tax assessments may arise several years after tax returns have been filed. |
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Employee Benefits Plan | The Company provides a 401(k) Plan that allows employees to defer up to the lesser of the Internal Revenue Code prescribed maximum amount or 100% of their income on a pre-tax basis through contributions to the plan. As a benefit to employees, the Company matches a percentage of these employee contributions (as defined in the plan document). |
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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 December 31, 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. |
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Foreign Currency Translation | Foreign currency denominated assets and liabilities for those foreign entities for which the local currency is the functional currency are translated into U.S. dollars based on exchange rates prevailing at the end of each year. Revenues and expenses are translated at average exchange rates during the year. The effects of foreign exchange gains and losses arising from these translations are included as a component of other comprehensive income on the Statements of Income (Loss). Translation adjustments on intercompany balances of a long-term investment nature are recorded as a component of accumulated other comprehensive loss on our Balance Sheets. |
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Use of Estimates | We have made estimates and judgments affecting the amounts reported in these financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States. The actual results may differ from these estimates. |
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Earnings Applicable to Common Stock | Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the effect of potential common stock resulting from assumed stock option exercises and vesting of restricted stock unless it is anti-dilutive. To the extent we report a net loss from continuing operations in a particular period, no potential dilution from the application of the treasury stock method would be applicable in accordance with ASC 260, Earnings per Share. |
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Share-Based Compensation | Share-based compensation is considered an equity award and results in a cost that is measured at fair value on the grant date of an award. Our time-based stock options were measured at fair value on the grant date using the Black Scholes model. Our restricted stock awards and restricted stock units, including the restricted stock units bound by certain performance-based metrics issued in 2018, were measured at fair value based on the stock price on the grant date. The compensation expense is recognized on a straight-line basis over the vesting period of the awards. Our market-based options granted in 2017 and 2016 under our 2014 Equity Incentive Plan (the “2014 Plan”) and 2012 Equity Incentive Plan (as amended, the “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 the Company’s 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. The market-based options were measured at fair value on the grant date using a lattice-based valuation model based on the median time horizon from the date of grant for these options to the vesting date for those paths that achieved the target threshold(s). The compensation expense is recognized on a straight-line basis over the median vesting periods calculated under such valuation model. Forfeitures are estimated at the grant date for our time-based, market-based and performance-based awards, with such estimates updated periodically; and with actual forfeitures recognized currently to the extent they differ from the estimates. Unless otherwise provided by the administrator of our equity incentive plans, stock options granted under our plans generally expire ten years from the date of grant. The exercise price of stock options is generally the closing market price of our common stock on the date of the stock option grant. |
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Acquisition-related Costs | We recognize a liability for acquisition-related costs when the expense is incurred. Acquisition-related costs include, but are not limited to: financial advisory, legal and debt fees; accounting, consulting, and professional fees associated with due diligence, valuation, and integration; severance; and other related costs and adjustments. |
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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. |
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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 were provisional and insignificant adjustments were made during 2018. As of December 22, 2018, we completed our analysis and our updated assessment is that the 2017 Tax Act has no further impact on our previously reported income tax provisions or our deferred tax assets or liabilities; therefore, these amounts are no longer considered provisional in nature. 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 2014-9 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 2014-9. 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. In January 2016, the FASB issued ASU No. 2016-01, which, among other things, requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. 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 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 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. 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. We do not expect the adoption of this ASU to have a material impact on our Financial Statements. 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, and 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. In November 2018, the FASB issued ASU No. 2018-19 to mitigate transition complexity by requiring entities other than public business entities to implement ASU No. 2016-13 for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This aligns the implementation date for their annual financial statements with the implementation date for their interim financial statements. The guidance also clarified that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. 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 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 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 whereby leases that are 12 months or less that do not include an option to purchase the underlying assets will be accounted for similarly to our current operating leases; therefore, these arrangements will not be recorded on the balance sheet. For lessees, leases will be classified as either financing or operating with classification affecting the pattern of expense recognition in the income statement. For lessors, leases will be 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 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 also includes 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 addresses 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. With the optional transition relief methodology available, entities have an opportunity to adopt the new lease standard prospectively at the beginning of the period of adoption through a cumulative-effect adjustment, with certain practical expedients available. On January 1, 2019, the Company adopted the new leasing standard promulgated by the FASB using the adoption date method. While we are finalizing the adoption procedures, we expect that the standard will have a material impact on our Balance Sheets, however, we do not expect that the standard will have a material impact on our Statements of Income (Loss). Upon adoption, we will record a ROU asset and lease liability, representing our obligation to make lease payments for operating leases, measured on a discounted basis. We expect the ROU assets and lease liabilities of operating leases recorded to be within the range of approximately 1%-2% of total assets. We elected the practical expedients offered in the aforementioned guidance, including the transition practical expedient that states 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. Other expedients adopted include practical expedient that allows a Company, as an accounting policy election by class of underlying assets, choose not to separate non-lease components from lease components; and a short-term lease recognition exemption to not record short-term leases with an initial term of 12 months or less on the balance sheet. As we are finalizing the adoption procedures, we expect the following impact to our financial statements as summarized within the table below:
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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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract assets and liabilities | The following table summarizes our contract assets and contract liabilities arising from contracts with customers:
(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. |
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Schedule of borrowings | The estimated fair value and outstanding balances of our borrowings are as follows (in thousands):
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Schedule of new accounting pronouncements | As we are finalizing the adoption procedures, we expect the following impact to our financial statements as summarized within the table below:
The following table presents the impact of the application of ASC 606 utilizing the modified retrospective transition method to certain line items on our Statements of Income (Loss) for the year ended December 31, 2018 (in thousands):
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ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of adopting ASC 606 on financial statements | As we are finalizing the adoption procedures, we expect the following impact to our financial statements as summarized within the table below:
The following table presents the impact of the application of ASC 606 utilizing the modified retrospective transition method to certain line items on our Statements of Income (Loss) for the year ended December 31, 2018 (in thousands):
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TRADE AND OTHER RECEIVABLES (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of trade and other receivables | The balance of trade and other receivables consisted of the following (in thousands):
(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. |
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Schedule of the activity for the warranty reserve | A summary activity of the reserve for check warranty losses is as follows (in thousands):
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INVENTORY (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of inventory | Inventory consisted of the following (in thousands):
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PREPAID AND OTHER ASSETS (Tables) |
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Prepaid Expense and Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of current portion of prepaid and other assets | The balance of the current portion of prepaid 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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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of property, equipment and leased assets | Property, equipment and leased assets consist of the following (in thousands):
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill are as follows (in thousands):
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Schedule of other intangible assets | Other intangible assets consist of the following (in thousands):
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Schedule of anticipated amortization expense | The anticipated amortization expense related to other intangible assets, assuming no subsequent impairment of the underlying assets, is as follows (in thousands):
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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) |
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Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts payable and accrued expenses | The following table presents our accounts payable and accrued expenses (amounts in thousands):
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LONG-TERM DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding indebtedness | The following table summarizes our indebtedness (in thousands):
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Schedule of principal repayments | The maturities of our borrowings at December 31, 2018 are as follows (in thousands):
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of minimum aggregate rental commitment under all non-cancelable operating leases | As of December 31, 2018, the minimum aggregate rental commitment under all non‑cancelable operating leases were as follows (in thousands):
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WEIGHTED AVERAGE SHARES OF COMMON STOCK (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average shares of common stock | The weighted average number 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) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Schedule assumptions used to determine fair value | The fair values of our standard time-based options were determined as of the date of grant using the Black-Scholes option pricing model with the following assumptions:
The fair values of our market-based options were determined as of the date of grant using a lattice-based option valuation model with the following assumptions:
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Summary of option activity | The following table presents the options activity:
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Schedule of information about stock options outstanding and exercisable | The following table presents the options outstanding and exercisable by price range:
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Summary of non-vested share awards for time-based restricted shares | The following is a summary of non‑vested share awards for our time‑based restricted shares:
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of consolidated loss before tax for domestic and foreign operations | The following presents consolidated loss before tax for domestic and foreign operations (in thousands):
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Income tax (benefit) provision attributable to loss from operations before tax | The income tax (benefit) provision attributable to loss from operations before tax consists of the following components (in thousands):
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Reconciliation of federal statutory rate and effective income tax rate | A reconciliation of the federal statutory rate and the effective income tax rate is as follows:
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Schedule of major tax-effected components of deferred tax assets and liabilities | The major tax‑effected components of the deferred tax assets and liabilities are as follows (in thousands):
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Reconciliation of total amounts of deferred tax asset valuation allowance | The following is a tabular reconciliation of the total amounts of deferred tax asset valuation allowance (in thousands):
(1) For 2017, the amount was recorded as a result of our adoption of ASU No. 2016-09 effective January 1, 2017. For 2018, the amount was recorded as a result of our adoption of ASC 606 effective January 1, 2018. |
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Reconciliation of total amounts of unrecognized tax benefits | The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
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SEGMENT INFORMATION (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information | The following tables present segment information (in thousands):
(1) Exclusive of depreciation and amortization.
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SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly results of operations | The unaudited selected quarterly results of operations are as follows (in thousands, except for per share amounts)*. Since we adopted ASC 606 utilizing the modified retrospective method, the prior year comparative amounts shown in the table below have not been restated.
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BUSINESS (Details) |
12 Months Ended |
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Dec. 31, 2018
segment
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 2 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restricted Cash (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Accounting Policies [Abstract] | |||
Restricted cash, current | $ 1.5 | $ 0.9 | $ 0.3 |
Restricted cash, noncurrent | $ 0.1 | $ 0.1 | $ 0.1 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Equipment, Leased Assets, and Placement Fee and Development Agreements (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 2 years |
Development and Placement Fee Agreements | |
General term of the agreement | 12 months |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated life | 5 years |
Development and Placement Fee Agreements | |
General term of the agreement | 83 months |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
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Contract assets | ||
Balance | $ 11,310 | $ 8,433 |
Increase (decrease) | 2,877 | |
Contract liabilities | ||
Balance | 15,470 | $ 12,397 |
Increase (decrease) | 3,073 | |
Contract liability, revenue recognized | $ 11,400 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising, Marketing and Promotional Costs, Research and Development Costs, and Employee Benefits Plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Advertising, Marketing and Promotional Costs | |||
Total advertising, marketing and promotional costs | $ 3,400 | $ 1,100 | $ 1,200 |
Research and development costs | |||
Research and development | $ 20,497 | 18,862 | 19,356 |
Employee Benefits Plan | |||
Maximum contribution by employees of pre-tax earnings (as a percent) | 100.00% | ||
Matching contribution made by the entity | $ 2,200 | $ 2,300 | $ 1,900 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term of loans and receivables | 24 months | |
Fair Value | Level 2 | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 784,479 | $ 826,099 |
Fair Value | Level 1 | Senior unsecured notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 354,863 | 372,656 |
Outstanding Balance | Level 2 | Term loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 807,700 | 815,900 |
Outstanding Balance | Level 1 | Senior unsecured notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 375,000 | $ 375,000 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Guidance (Details) - Subsequent Event - Accounting Standards Update 2016-02 - Forecast |
Jan. 01, 2019 |
---|---|
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Right-of-use assets as a percent of total assets | 1.00% |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Right-of-use assets as a percent of total assets | 2.00% |
ADOPTION OF ASC 606, REVENUE FROM CONTRACTS WITH CUSTOMERS - Additional Information (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Cumulative adjustment to accumulated deficit upon adoption of ASC 606 | $ (229,457) | $ (246,202) | |
Adjustments | Adoption of ASC Topic 606 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Cumulative adjustment to accumulated deficit upon adoption of ASC 606 | $ (4,400) |
BUSINESS COMBINATIONS (Details) - Resort Advantage, LLC and Financial Crimes Enforcement Network - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Aug. 31, 2018 |
Aug. 31, 2015 |
Dec. 31, 2018 |
|
Business Acquisition [Line Items] | |||
Payments to acquire businesses | $ 13.3 | ||
Contingent consideration, liability | $ 4.7 | ||
Contingent consideration, payment period | 40 months | ||
Contingent consideration, evaluation period | 36 months | ||
Contingent consideration arrangement, high range of outcome | $ 0.8 | ||
Contingent consideration arrangement, change in liability | $ (0.6) | ||
Contingent consideration arrangement, low range of outcome | $ 0.2 |
FUNDING AGREEMENTS (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Funding Agreements | |||
Site-funded ATMs | $ 249,600,000 | $ 210,800,000 | |
Prefunded cash | 6,100,000 | 8,400,000 | |
Contract Cash Solutions Agreement | Indemnification Guarantee | |||
Funding Agreements | |||
Cash usage fees incurred | 7,000,000 | 4,900,000 | $ 3,100,000 |
Outstanding balance | 224,700,000 | 289,800,000 | |
Contract Cash Solutions Agreement, as amended | Indemnification Guarantee | |||
Funding Agreements | |||
Maximum amount | 300,000,000 | ||
Ability to increase maximum amount | $ 75,000,000 | ||
Increase period | 5 days | ||
Renewal period | 1 year | ||
Non-renewal notice period | 90 days | ||
Prefunded Cash Access Agreements | |||
Funding Agreements | |||
Everi-funded ATMs | $ 4,800,000 | $ 6,900,000 |
TRADE AND OTHER RECEIVABLES - Additional Information (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for doubtful accounts | $ 6,425 | $ 4,706 |
Check Warranty Reserves | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for doubtful accounts | $ 3,200 | $ 2,700 |
TRADE AND OTHER RECEIVABLES - Schedule of Trade and Other Receivables (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Other receivables | $ 1,333 | $ 1,570 |
Total trade and other receivables, net | 73,234 | 50,420 |
Total non-current portion of receivables | (8,847) | (2,638) |
Total trade and other receivables, current portion | 64,387 | 47,782 |
Games | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables, net | 53,011 | 38,070 |
Total non-current portion of receivables | (2,922) | (1,267) |
FinTech | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables, net | 18,890 | 10,780 |
Total non-current portion of receivables | $ (5,925) | $ (1,371) |
TRADE AND OTHER RECEIVABLES - Activity Summary of Reserve for Check Warranty Losses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Warranty expense provision | $ 11,459 | $ 9,737 | $ 9,908 |
Check Warranty Reserves | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Beginning Balance | 2,709 | 2,695 | 2,973 |
Warranty expense provision | 9,819 | 9,418 | 8,694 |
Charge-offs against reserve | (9,366) | (9,404) | (8,972) |
Ending Balance | $ 3,162 | $ 2,709 | $ 2,695 |
INVENTORY (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Inventory [Line Items] | ||
Component parts, net of reserves of $1,468 and $1,327 at December 31, 2018 and December 31, 2017, respectively | $ 23,197 | $ 18,782 |
Work-in-progress | 280 | 985 |
Finished goods | 926 | 4,200 |
Total inventory | 24,403 | 23,967 |
Inventory valuation reserves | 1,468 | $ 1,327 |
Games | ||
Inventory [Line Items] | ||
Tangible asset impairment | $ 1,800 |
PREPAID AND OTHER ASSETS (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Prepaid expenses and other assets | ||
Deposits | $ 8,241 | $ 9,003 |
Prepaid expenses | 8,351 | 6,426 |
Other | 3,667 | 5,241 |
Total prepaid expenses and other assets | 20,259 | 20,670 |
Other assets | ||
Prepaid expenses and deposits | 5,289 | 4,103 |
Debt issuance costs of revolving credit facility | 654 | 849 |
Other | 309 | 2,657 |
Total other assets | $ 6,252 | $ 7,609 |
PROPERTY, EQUIPMENT AND LEASED ASSETS - Schedule (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | ||
Cost | $ 292,598 | $ 251,740 |
Accumulated Depreciation | 176,310 | 138,221 |
Net Book Value | $ 116,288 | 113,519 |
Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (Years) | 2 years | |
Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (Years) | 5 years | |
Rental pool - deployed | ||
Property, Plant and Equipment [Line Items] | ||
Cost | $ 183,309 | 162,319 |
Accumulated Depreciation | 105,038 | 80,895 |
Net Book Value | $ 78,271 | 81,424 |
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 | $ 23,825 | 17,366 |
Accumulated Depreciation | 14,680 | 9,374 |
Net Book Value | $ 9,145 | 7,992 |
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 | $ 11,857 | 10,981 |
Accumulated Depreciation | 6,938 | 5,211 |
Net Book Value | 4,919 | 5,770 |
Machinery, office and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 46,322 | 35,167 |
Accumulated Depreciation | 28,654 | 24,087 |
Net Book Value | $ 17,668 | 11,080 |
Machinery, office and other equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (Years) | 2 years | |
Machinery, office and other equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (Years) | 5 years | |
FinTech | Machinery, office and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Cost | $ 27,285 | 25,907 |
Accumulated Depreciation | 21,000 | 18,654 |
Net Book Value | $ 6,285 | $ 7,253 |
FinTech | Machinery, office and other equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (Years) | 3 years | |
FinTech | Machinery, office and other equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful Life (Years) | 5 years |
PROPERTY, EQUIPMENT AND LEASED ASSETS - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 61,225 | $ 47,282 | $ 49,995 |
Impairment of property, equipment and leased assets | 0 | 0 | |
Games | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation | 55,058 | $ 40,428 | $ 41,582 |
Tangible asset impairment | 1,800 | ||
Games | Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Tangible asset impairment | $ 800 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill Testing (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 640,537,000 | $ 640,589,000 | $ 640,546,000 |
Goodwill impairment | $ 0 | $ 0 | $ 146,299,000 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | $ 640,589 | $ 640,546 |
Foreign translation adjustment | (52) | 43 |
Balance at the end of the period | 640,537 | 640,589 |
Games | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 449,041 | 449,041 |
Foreign translation adjustment | 0 | 0 |
Balance at the end of the period | 449,041 | 449,041 |
Cash Access Services | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 157,098 | 157,055 |
Foreign translation adjustment | (52) | 43 |
Balance at the end of the period | 157,046 | 157,098 |
Kiosk Sales and Services | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 5,745 | 5,745 |
Foreign translation adjustment | 0 | 0 |
Balance at the end of the period | 5,745 | 5,745 |
Central Credit Services | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 17,127 | 17,127 |
Foreign translation adjustment | 0 | 0 |
Balance at the end of the period | 17,127 | 17,127 |
Compliance Sales and Services | ||
Changes in the carrying amount of goodwill | ||
Balance at the beginning of the period | 11,578 | 11,578 |
Foreign translation adjustment | 0 | 0 |
Balance at the end of the period | $ 11,578 | $ 11,578 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Other Intangible Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 646,126 | $ 617,616 |
Accumulated Amortization | 358,729 | 293,305 |
Net Book Value | $ 287,397 | 324,311 |
Contract rights under placement fee agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 4 years | |
Cost | $ 57,440 | 57,231 |
Accumulated Amortization | 12,178 | 3,910 |
Net Book Value | $ 45,262 | 53,321 |
Customer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 6 years | |
Cost | $ 51,175 | 51,175 |
Accumulated Amortization | 46,162 | 43,638 |
Net Book Value | $ 5,013 | 7,537 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 8 years | |
Cost | $ 231,100 | 231,100 |
Accumulated Amortization | 84,619 | 63,653 |
Net Book Value | $ 146,481 | 167,447 |
Developed technology and software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 2 years | |
Cost | $ 277,243 | 249,064 |
Accumulated Amortization | 190,886 | 158,919 |
Net Book Value | $ 86,357 | 90,145 |
Patents, trademarks and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Life (Years) | 4 years | |
Cost | $ 29,168 | 29,046 |
Accumulated Amortization | 24,884 | 23,185 |
Net Book Value | $ 4,284 | $ 5,861 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets, Additional Information (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 65.2 | $ 69.5 | $ 94.6 | |
Placement fees agreement amount | $ 49.1 | |||
Unamortized fees related to superseded contract | $ 10.1 | |||
Placement fees and placement fee agreements | 13.3 | |||
Imputed interest in placement fees | $ 2.1 | |||
Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
General term of the agreement | 12 months | |||
Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
General term of the agreement | 83 months | |||
Developed technology and software | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Development costs capitalized | $ 33.3 | $ 29.4 | $ 24.2 | |
Contract rights under placement fee agreements | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
General term of the agreement | 12 months | |||
Contract rights under placement fee agreements | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
General term of the agreement | 83 months |
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Anticipated Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Net Book Value | $ 287,397 | $ 324,311 |
Finite-Lived Intangible Assets, Placed into Service | ||
Finite-Lived Intangible Assets [Line Items] | ||
2019 | 64,380 | |
2020 | 52,168 | |
2021 | 41,440 | |
2022 | 33,473 | |
2023 | 20,241 | |
Thereafter | 50,316 | |
Net Book Value | 262,018 | |
Finite Lived Intangible Assets Not Yet Placed Into Service | ||
Finite-Lived Intangible Assets [Line Items] | ||
Net Book Value | $ 25,400 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Trade accounts payable | $ 70,796 | $ 59,435 |
Placement fees | 16,746 | 22,328 |
Payroll and related expenses | 15,055 | 14,178 |
Deferred and unearned revenues | 12,887 | 10,450 |
Other | 6,303 | 11,303 |
Cash access processing and related expenses | 4,160 | 8,932 |
Accrued taxes | 1,917 | 2,112 |
Accrued interest | 1,374 | 5,766 |
Total accounts payable and accrued expenses | 129,238 | 134,504 |
Total placement fees liability | $ 16,700 | 39,100 |
Non-current placement fees | $ 16,800 |
LONG-TERM DEBT - Summary of Indebtedness (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 1,182,700 | $ 1,190,900 |
Debt issuance costs and discount | (19,484) | (23,057) |
Total debt after debt issuance costs and discount | 1,163,216 | 1,167,843 |
Current portion of long-term debt | (8,200) | (8,200) |
Long-term debt, less current portion | 1,155,016 | 1,159,643 |
Senior secured term loan | ||
Debt Instrument [Line Items] | ||
Total debt | 807,700 | 815,900 |
Senior unsecured notes | ||
Debt Instrument [Line Items] | ||
Total debt | $ 375,000 | $ 375,000 |
LONG-TERM DEBT - Refinancings (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
May 17, 2018 |
May 16, 2018 |
May 09, 2017 |
May 09, 2017 |
Jun. 30, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Nov. 13, 2017 |
|
Debt Instrument [Line Items] | |||||||||
Loss on extinguishment of debt | $ (14,600,000) | $ 166,000 | $ 51,750,000 | $ 0 | |||||
Prepayment penalties incurred | $ 0 | ||||||||
Credit Agreement, dated May 9, 2017 | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance discount | 4,100,000 | $ 4,100,000 | |||||||
Debt issuance costs | $ 15,500,000 | $ 15,500,000 | |||||||
Credit Agreement, dated May 9, 2017 | Federal funds effective rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate margin (as a percent) | 0.50% | ||||||||
Credit Agreement, dated November 13, 2017 | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | $ 3,000,000 | ||||||||
Borrowings outstanding | $ 818,000,000 | ||||||||
Credit Agreement, May17, 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | $ 1,300,000 | ||||||||
Borrowings outstanding | $ 813,900,000 | ||||||||
Credit Agreement, May17, 2018 | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate margin (as a percent) | 3.00% | 3.50% | |||||||
Floor interest 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 | 7.25% | 7.25% | |||||||
Outstanding amount redeemed | $ 335,000,000.0 | ||||||||
Loss on extinguishment of debt | $ 1,700,000 | ||||||||
Senior secured term loan | Credit Agreement, May17, 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of prepayment premium of principal amount of term loan | 1.00% | ||||||||
Revolving credit facility | Credit Agreement, dated May 9, 2017 | |||||||||
Debt Instrument [Line Items] | |||||||||
Borrowing capacity | $ 35,000,000.0 | ||||||||
Term of facility | 5 years | 5 years | |||||||
Borrowings outstanding | $ 0 | ||||||||
Senior secured term loan facility | Credit Agreement, dated May 9, 2017 | |||||||||
Debt Instrument [Line Items] | |||||||||
Term of facility | 7 years | 7 years | |||||||
Principal amount of debt | $ 820,000,000.0 | $ 820,000,000.0 | |||||||
Senior secured term loan facility | Credit Agreement, dated May 9, 2017 | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Period after closing date prepayment is subject to a 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 | ||||||||
Senior secured term loan facility | Credit Agreement, dated November 13, 2017 | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Period after closing date prepayment is subject to a prepayment premium | 6 months |
LONG-TERM DEBT - New Credit Facilities (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
May 17, 2018 |
May 09, 2017 |
May 09, 2017 |
Dec. 31, 2018 |
Nov. 13, 2017 |
|
Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Actual consolidated leverage ratio (as a percent) | 3.28% | ||||
Maximum allowable consolidated secured leverage ratio one | 475.00% | ||||
Maximum allowable consolidated secured leverage ratio two | 450.00% | ||||
Maximum allowable consolidated secured leverage ratio three | 425.00% | ||||
Maximum allowable consolidated secured leverage ratio four | 400.00% | ||||
Threshold for change of control of parent company (as a percent) | 35.00% | ||||
Credit Agreement, dated May 9, 2017 | Everi Payments Inc. | |||||
Debt Instrument [Line Items] | |||||
Ownership of equity interests (as a percent) | 100.00% | ||||
Credit Agreement, dated May 9, 2017 | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Variable rate reference rate below threshold | 0.00% | ||||
Variable reference rate (as a percent) | 0.00% | ||||
Credit Agreement, dated May 9, 2017 | Federal funds effective rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 0.50% | ||||
Credit Agreement, dated November 13, 2017 | |||||
Debt Instrument [Line Items] | |||||
Borrowings outstanding | $ 818,000,000 | ||||
Credit Agreement, May17, 2018 | |||||
Debt Instrument [Line Items] | |||||
Borrowings outstanding | $ 813,900,000 | ||||
Senior secured term loan facility | Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Term of facility | 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) | 5.17% | ||||
Outstanding borrowings | $ 807,700,000 | ||||
Senior secured term loan facility | Credit Agreement, dated May 9, 2017 | Maximum | |||||
Debt Instrument [Line Items] | |||||
Period after closing date prepayment is subject to a prepayment premium | 6 months | ||||
Senior secured term loan facility | Credit Agreement, dated November 13, 2017 | |||||
Debt Instrument [Line Items] | |||||
Prepayment premium applied to principal amount (as a percent) | 1.00% | ||||
Senior secured term loan facility | Credit Agreement, dated November 13, 2017 | Maximum | |||||
Debt Instrument [Line Items] | |||||
Period after closing date prepayment is subject to a prepayment premium | 6 months | ||||
Revolving credit facility | Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Term of facility | 5 years | 5 years | |||
Borrowings outstanding | $ 0 | ||||
Remaining borrowing capacity | $ 35,000,000 | ||||
Base rate borrowings | Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 3.50% | ||||
Base rate borrowings | Credit Agreement, dated May 9, 2017 | Eurodollar | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 1.00% | ||||
Base rate borrowings | Credit Agreement, dated May 9, 2017 | Federal funds effective rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 0.50% | ||||
Base rate borrowings | Credit Agreement, dated November 13, 2017 | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 2.50% | ||||
Base rate borrowings | Credit Agreement, May17, 2018 | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 2.00% | ||||
Eurodollar Borrowings | Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 4.50% | ||||
Eurodollar Borrowings | Credit Agreement, dated November 13, 2017 | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 3.50% | ||||
Eurodollar Borrowings | Credit Agreement, May17, 2018 | |||||
Debt Instrument [Line Items] | |||||
Interest rate margin (as a percent) | 3.00% | ||||
Eurodollar Borrowings Interest Period Greater Than Three Months | Credit Agreement, dated May 9, 2017 | |||||
Debt Instrument [Line Items] | |||||
Interest remittance period | 3 months | ||||
Eurodollar Borrowings Interest Period Greater Than Three Months | Credit Agreement, dated May 9, 2017 | Minimum | |||||
Debt Instrument [Line Items] | |||||
Interest period term | 3 months |
LONG-TERM DEBT - Refinanced Senior Secured Notes (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
May 09, 2017 |
Jun. 30, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ (14,600,000) | $ 166,000 | $ 51,750,000 | $ 0 | |
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] | |||||
Outstanding amount redeemed | $ 335,000,000.0 | ||||
Loss on extinguishment of debt | 1,700,000 | ||||
Unamortized debt issuance write-off | 200,000 | ||||
Debt discounts expensed on extinguishment of debt | $ 1,500,000 |
LONG-TERM DEBT - Senior Unsecured Notes (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 05, 2017 |
Jun. 30, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2014 |
|
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ (14,600,000) | $ 166,000 | $ 51,750,000 | $ 0 | ||
Senior unsecured notes | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount of debt | $ 350,000,000.0 | |||||
Interest rate | 10.00% | |||||
Debt issuance discount | $ 3,800,000 | |||||
Debt issuance costs | $ 14,000,000 | |||||
Loss on extinguishment of debt | 37,200,000 | |||||
Make whole premium | 26,300,000 | |||||
Unamortized debt issuance write-off | 10,900,000 | |||||
Senior unsecured notes | 7.50% Senior Unsecured Notes Due 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount of debt | $ 375,000,000.0 | |||||
Interest rate | 7.50% | |||||
Debt issuance costs | $ 6,100,000 | |||||
Senior unsecured notes | Prior Credit Agreement, December 2014 | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price percentage | 107.50% |
LONG-TERM DEBT - Maturities of Borrowings (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Maturities of borrowings | ||
2019 | $ 8,200 | |
2020 | 8,200 | |
2021 | 8,200 | |
2022 | 8,200 | |
2023 | 8,200 | |
Thereafter | 1,141,700 | |
Total | $ 1,182,700 | $ 1,190,900 |
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Litigation Settlement Awards | ||||
Placement fees and placement fee agreements | $ 13.3 | |||
Imputed interest in placement fees | $ 2.1 | |||
Total rent expense | 7.8 | 6.8 | $ 6.8 | |
Placement Fee Agreements | ||||
Litigation Settlement Awards | ||||
General term of the agreement | 6 years 11 months | |||
Quarterly periodic payment | $ 5.6 | |||
Placement fees and placement fee agreements | $ 22.7 | $ 13.3 |
COMMITMENTS AND CONTINGENCIES - Minimum Aggregate Rental Commitments (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 5,570 |
2020 | 5,680 |
2021 | 4,598 |
2022 | 2,799 |
2023 | 1,074 |
Thereafter | 0 |
Total | $ 19,721 |
SHAREHOLDERS' EQUITY (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
vote
shares
|
Dec. 31, 2017
USD ($)
shares
|
Dec. 31, 2016
USD ($)
|
|
Class of Stock [Line Items] | |||
Convertible preferred stock authorized (in shares) | 50,000,000 | 50,000,000 | |
Convertible preferred stock outstanding (in shares) | 0 | 0 | |
Number of votes for a share of common stock | vote | 1 | ||
Common stock issued (in shares) | 95,099,532 | 93,119,988 | |
Aggregate purchase price of shares repurchased or withheld from restricted stock awards | $ | $ 123 | $ 110 | $ 42 |
Treasury Stock | |||
Class of Stock [Line Items] | |||
Shares withheld from restricted stock awards (in shares) | 17,552 | 15,457 | |
Aggregate purchase price of shares repurchased or withheld from restricted stock awards | $ | $ 123 | $ 110 | $ 42 |
WEIGHTED AVERAGE SHARES OF COMMON STOCK (Details) - shares shares in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Weighted average shares | |||||||||||
Weighted average number of common shares outstanding - basic (in shares) | 70,196 | 69,750 | 69,203 | 68,686 | 67,755 | 66,897 | 66,350 | 66,090 | 69,464 | 66,816 | 66,050 |
Potential dilution of equity awards (in shares) | 4,332 | 0 | 0 | ||||||||
Weighted average number of common shares outstanding - diluted (in shares) | 74,024 | 74,594 | 73,440 | 73,285 | 67,755 | 66,897 | 66,350 | 66,090 | 73,796 | 66,816 | 66,050 |
Anti-dilutive equity awards excluded from computation of earnings per share (in shares) | 7,500 | 16,000 | 15,700 |
SHARE-BASED COMPENSATION - Equity Incentive Awards Schedule (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stock Options | |||
Stock Options Granted | |||
Outstanding, beginning of period (in shares) | 19,131,000 | ||
Granted (in shares) | 20,000 | 4,300,000 | 4,400,000 |
Exercised (in shares) | (1,980,000) | 0 | |
Canceled or forfeited (in shares) | (1,497,000) | ||
Outstanding, end of period (in shares) | 15,674,000 | 19,131,000 | |
Restricted Stock | |||
Shares Outstanding | |||
Outstanding, beginning of period (in shares) | 74,000 | ||
Granted (in shares) | 0 | 50,000 | 0 |
Vested (in shares) | (65,501) | (56,578) | (74,919) |
Canceled or forfeited (in shares) | 0 | ||
Outstanding, end of period (in shares) | 8,000 | 74,000 | |
Restricted Stock Units (RSUs) | |||
Shares Outstanding | |||
Outstanding, beginning of period (in shares) | 0 | ||
Granted (in shares) | 1,877,000 | 0 | 0 |
Vested (in shares) | 0 | 0 | |
Canceled or forfeited (in shares) | (80,000) | ||
Outstanding, end of period (in shares) | 1,797,000 | 0 |
SHARE-BASED COMPENSATION - Equity Incentive Awards, Additional Information (Details) shares in Millions |
Dec. 31, 2018
shares
|
---|---|
2014 Plan and 2012 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for grant (in shares) | 3.6 |
SHARE-BASED COMPENSATION - Stock Options, Narrative and Fair Value Assumptions (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Time Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Expiration period | 10 years | ||
Weighted-average assumptions used in estimating fair value | |||
Risk-free interest rate | 3.00% | 2.00% | 1.00% |
Expected life of options/Measurement Period (in years) | 6 years | 6 years | 5 years |
Expected volatility | 53.00% | 54.00% | 51.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
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 | 30 days | ||
Granted (in shares) | 0 | ||
Weighted-average assumptions used in estimating fair value | |||
Risk-free interest rate | 3.00% | 2.00% | |
Expected life of options/Measurement Period (in years) | 10 years | 10 years | |
Expected volatility | 70.00% | 68.00% | |
Expected dividend yield | 0.00% | 0.00% | |
Tranche 1 | Time Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 1 | Market Performance Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 2 | Time Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 2 | Market Performance Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 3 | Time Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 3 | Market Performance Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 4 | Time Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Tranche 4 | Market Performance Based Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% |
SHARE-BASED COMPENSATION - Stock Option, Activity (Details) - Stock Options - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stock Options Granted | |||
Outstanding, beginning of period (in shares) | 19,131,000 | ||
Granted (in shares) | 20,000 | 4,300,000 | 4,400,000 |
Exercised (in shares) | (1,980,000) | 0 | |
Canceled or forfeited (in shares) | (1,497,000) | ||
Outstanding, end of period (in shares) | 15,674,000 | 19,131,000 | |
Vested and expected to vest (in shares) | 14,947,000 | ||
Exercisable (in shares) | 9,728,000 | ||
Weighted Average Exercise Price | |||
Outstanding (in dollars per share) | $ 5.34 | ||
Granted (in dollars per share) | 7.88 | ||
Exercised options (in dollars per share) | 4.84 | ||
Canceled or forfeited (in dollars per share) | 5.51 | ||
Outstanding (in dollars per share) | 5.39 | $ 5.34 | |
Vested and expected to vest (in dollars per share) | 5.44 | ||
Exercisable (in dollars per share) | $ 6.15 | ||
Weighted Average Life Remaining | |||
Outstanding | 6 years | 6 years 4 months 25 days | |
Vested and expected to vest | 5 years 11 months | ||
Exercisable | 5 years 4 months | ||
Aggregate Intrinsic Value | |||
Outstanding (in dollars) | $ 17,733 | $ 45,887 | |
Vested and expected to vest (in dollars) | 16,559 | ||
Exercisable (in dollars) | $ 7,284 |
SHARE-BASED COMPENSATION - Stock Options by Exercise Price (Details) shares in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Options Outstanding | |
Number Outstanding (in shares) | shares | 15,674 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 9,728 |
$1.46 - $1.46 | |
Range of Exercise Prices | |
Low (in dollars per share) | $ 1.46 |
High (in dollars per share) | $ 2.4 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 2,630 |
Weighted Average Remaining Contract Life (Years) | 7 years 4 months |
Weighted Average Exercise Prices (in dollars per share) | $ 1.54 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 1,110 |
Weighted Average Exercise Price (in dollars per share) | $ 1.55 |
$1.57 - $2.78 | |
Range of Exercise Prices | |
Low (in dollars per share) | 2.7 |
High (in dollars per share) | $ 2.78 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 565 |
Weighted Average Remaining Contract Life (Years) | 7 years 1 month |
Weighted Average Exercise Prices (in dollars per share) | $ 2.77 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 515 |
Weighted Average Exercise Price (in dollars per share) | $ 2.77 |
$3.29 - $3.29 | |
Range of Exercise Prices | |
Low (in dollars per share) | 3.29 |
High (in dollars per share) | $ 3.29 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 3,326 |
Weighted Average Remaining Contract Life (Years) | 8 years 2 months |
Weighted Average Exercise Prices (in dollars per share) | $ 3.29 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 741 |
Weighted Average Exercise Price (in dollars per share) | $ 3.29 |
$3.41 - $6.59 | |
Range of Exercise Prices | |
Low (in dollars per share) | 3.41 |
High (in dollars per share) | $ 7.05 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 2,611 |
Weighted Average Remaining Contract Life (Years) | 4 years 1 month |
Weighted Average Exercise Prices (in dollars per share) | $ 5.81 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 2,545 |
Weighted Average Exercise Price (in dollars per share) | $ 5.79 |
$6.72 - $7.61 | |
Range of Exercise Prices | |
Low (in dollars per share) | 7.09 |
High (in dollars per share) | $ 7.61 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 929 |
Weighted Average Remaining Contract Life (Years) | 5 years 6 months |
Weighted Average Exercise Prices (in dollars per share) | $ 7.34 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 810 |
Weighted Average Exercise Price (in dollars per share) | $ 7.32 |
$7.74 - $7.74 | |
Range of Exercise Prices | |
Low (in dollars per share) | 7.74 |
High (in dollars per share) | $ 9.74 |
Options Outstanding | |
Number Outstanding (in shares) | shares | 5,613 |
Weighted Average Remaining Contract Life (Years) | 4 years 11 months |
Weighted Average Exercise Prices (in dollars per share) | $ 8.19 |
Options Exercisable | |
Number Exercisable (in shares) | shares | 4,007 |
Weighted Average Exercise Price (in dollars per share) | $ 8.36 |
SHARE-BASED COMPENSATION - Stock Options, Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stock options | |||
Proceeds from exercise of stock options | $ 9,610,000 | $ 10,906,000 | $ 0 |
Stock Options | |||
Stock options | |||
Granted (in shares) | 20,000 | 4,300,000 | 4,400,000 |
Weighted average grant date fair value (in dollars per share) | $ 4.15 | $ 1.98 | $ 0.83 |
Total intrinsic value of options exercised | $ 6,500,000 | $ 5,300,000 | $ 0 |
Exercised (in shares) | (1,980,000) | 0 | |
Unrecognized compensation expense | $ 3,400,000 | $ 7,900,000 | $ 11,700,000 |
Weighted-average period for recognition of unrecognized compensation expense | 2 years 9 months | 3 years 6 months | 2 years 1 month 6 days |
Non-cash compensation expense | $ 5,100,000 | $ 6,000,000 | $ 6,300,000 |
Proceeds from exercise of stock options | $ 9,600,000 | $ 10,900,000 | $ 0 |
SHARE-BASED COMPENSATION - Restricted Stock Awards (Details) - Restricted Stock - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Shares Outstanding | |||
Outstanding, beginning of period (in shares) | 74,000 | ||
Granted (in shares) | 0 | 50,000 | 0 |
Vested (in shares) | (65,501) | (56,578) | (74,919) |
Forfeited (in shares) | 0 | ||
Outstanding, end of period (in shares) | 8,000 | 74,000 | |
Weighted Average Grant Date Fair Value (per Share) | |||
Outstanding (in dollars per share) | $ 7.00 | ||
Granted (in dollars per share) | 0.00 | ||
Vested (in dollars per share) | 7.04 | ||
Forfeited (in dollars per share) | 0.00 | ||
Outstanding (in dollars per share) | $ 6.66 | $ 7.00 | |
Restricted stock | |||
Granted (in shares) | 0 | 50,000 | 0 |
Total fair value of shares vested | $ 500,000 | $ 400,000 | $ 200,000 |
Unrecognized compensation expense | $ 31,952 | $ 500,000 | $ 1,000,000 |
Weighted-average period for recognition of unrecognized compensation expense | 3 months | 1 year 1 month 12 days | 1 year 8 months 24 days |
Vested (in shares) | (65,501) | (56,578) | (74,919) |
Non-cash compensation expense | $ 400,000 | $ 400,000 | $ 500,000 |
SHARE-BASED COMPENSATION - Restricted Stock Awards, Additional Information (Details) - Restricted Stock - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total fair value of shares vested | $ 500,000 | $ 400,000 | $ 200,000 |
Unrecognized compensation expense | $ 31,952 | $ 500,000 | $ 1,000,000 |
Weighted-average period for recognition of unrecognized compensation expense | 3 months | 1 year 1 month 12 days | 1 year 8 months 24 days |
Vested (in shares) | (65,501) | (56,578) | (74,919) |
Non-cash compensation expense | $ 400,000 | $ 400,000 | $ 500,000 |
Granted (in shares) | 0 | 50,000 | 0 |
SHARE-BASED COMPENSATION - Restricted Stock Units, Activity (Details) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Shares Outstanding | |||
Outstanding, beginning of period (in shares) | 0 | ||
Granted (in shares) | 1,877,000 | 0 | 0 |
Vested (in shares) | 0 | 0 | |
Forfeited (in shares) | (80,000) | ||
Outstanding, end of period (in shares) | 1,797,000 | 0 | |
Vested and expected to vest (in shares) | 1,219,000 | ||
Weighted Average Grant Date Fair Value (per Share) | |||
Outstanding (in dollars per share) | $ 0.00 | ||
Granted (in dollars per share) | 7.49 | ||
Vested (in dollars per share) | 0.00 | ||
Forfeited (in dollars per share) | 7.46 | ||
Outstanding (in dollars per share) | 7.49 | $ 0.00 | |
Vested and expected to vest (in dollars per share) | $ 7.49 | ||
Weighted Average Life Remaining (Years) | |||
Outstanding, December 31, 2018 | 2 years | ||
Vested and expected to vest, December 31, 2018 | 1 year 10 months | ||
Aggregate Intrinsic Value (in thousands) | |||
Outstanding, December 31, 2018 | $ 9,254 | ||
Vested and expected to vest, December 31, 2018 | $ 6,278 |
SHARE-BASED COMPENSATION - Restricted Stock Units, Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Granted (in shares) | 1,877,000 | 0 | 0 |
Vested (in shares) | 0 | 0 | |
Unrecognized compensation expense | $ 6.7 | ||
Weighted-average period for recognition of unrecognized compensation expense | 3 years | ||
Non-cash compensation expense | $ 1.8 | ||
Restricted Stock Units (RSUs) | Tranche 1 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 25.00% | ||
Performance-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Performance-based RSUs | Tranche 1 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 100.00% | ||
Time-based RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Vesting period after separation from service | 6 months | ||
Time-based RSUs | Tranche 1 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Time-based RSUs | Tranche 2 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% | ||
Time-based RSUs | Tranche 3 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting percentage | 33.33% |
INCOME TAXES - Consolidated Loss Before Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Consolidated income (loss) before tax | |||
Domestic | $ 1,227 | $ (73,445) | $ (225,538) |
Foreign | 1,419 | 1,378 | 7,755 |
Total | $ 2,646 | $ (72,067) | $ (217,783) |
INCOME TAXES - Income Tax (Benefit) Provision (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income tax (benefit) provision | |||
Domestic | $ (10,166) | $ (20,507) | $ 30,400 |
Foreign | 456 | 343 | 1,296 |
Total income tax (benefit) provision | (9,710) | (20,164) | 31,696 |
Income tax (benefit) provision | |||
Current | 633 | 461 | 1,756 |
Deferred | (10,343) | (20,625) | 29,940 |
Total income tax (benefit) provision | $ (9,710) | $ (20,164) | $ 31,696 |
INCOME TAXES - Federal Statutory Rate and Effective Income Tax Rate Reconciliation (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income tax reconciliation | |||
Federal statutory rate | 21.00% | 35.00% | 35.00% |
Foreign provision | 6.80% | 0.30% | 0.50% |
State/province income tax | 12.40% | 2.40% | 0.80% |
Non-deductible compensation cost | (7.70%) | (2.00%) | (0.50%) |
Adjustment to carrying value | 6.20% | 31.20% | 0.20% |
Research credit | (76.30%) | 1.90% | 0.20% |
Valuation allowance | (344.90%) | (39.60%) | (27.40%) |
Goodwill impairment | 0.00% | 0.00% | (23.50%) |
Global intangible low-taxed income | 9.10% | 0.00% | 0.00% |
Non-deductible expenses - other | 7.20% | (0.50%) | (0.10%) |
Other | (0.80%) | (0.70%) | 0.20% |
Effective tax rate | (367.00%) | 28.00% | (14.60%) |
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Deferred income tax assets related to: | ||||
Net operating losses | $ 97,190 | $ 87,250 | $ 98,664 | |
Stock compensation expense | 7,264 | 6,601 | 11,559 | |
Accounts receivable allowances | 1,582 | 1,117 | 1,745 | |
Accrued and prepaid expenses | 3,639 | 3,953 | 6,276 | |
Long-term debt | 0 | 0 | 493 | |
Other | 1,319 | 479 | 1,399 | |
Tax credits | 9,244 | 6,822 | 6,394 | |
Interest Limitation | 2,738 | 0 | 0 | |
Valuation allowance | (53,156) | (63,303) | (61,012) | $ (1,442) |
Total deferred income tax assets | 69,820 | 42,919 | 65,518 | |
Deferred income tax liabilities related to: | ||||
Property, equipment and leased assets | 3,855 | 3,129 | 13,216 | |
Intangibles | 89,865 | 73,597 | 106,307 | |
Long-term debt | 3,614 | 3,292 | 0 | |
Other | 353 | 1,108 | 3,606 | |
Total deferred income tax liabilities | 97,687 | 81,126 | 123,129 | |
Deferred income taxes, net | $ (27,867) | $ (38,207) | $ (57,611) |
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Reduction in income tax expense | $ 22.5 | |
Transition tax liability, net of associated foreign tax credit | $ 1.3 | |
Unrepatriated earnings in foreign subsidiaries | $ 19.7 | |
Decrease in valuation allowance | $ 10.1 |
INCOME TAXES - Reconciliation of Deferred Tax Asset Valuation Allowance (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Deferred Tax Assets, Valuation Allowance [Roll Forward] | |||
Balance at beginning of period | $ 63,303 | $ 61,012 | $ 1,442 |
Charged to provision for income taxes | (9,125) | (2,263) | 59,570 |
Other | (1,022) | 4,554 | 0 |
Balance at end of period | $ 53,156 | $ 63,303 | $ 61,012 |
INCOME TAXES - Operating Loss Carryforwards (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Operating Loss Carryforwards [Line Items] | |||
Accumulated net operating losses, tax effect | $ 97,190 | $ 87,250 | $ 98,664 |
Foreign credit carryforward | 500 | ||
Alternative minimum tax credit carryforwards | 300 | ||
Valuation allowance related to net operating loss carry forwards | 46,600 | ||
Tax Year 2018 | |||
Operating Loss Carryforwards [Line Items] | |||
Accumulated net operating losses | 38,900 | ||
Accumulated net operating losses, tax effect | 8,200 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Accumulated net operating losses | 395,200 | ||
Accumulated net operating losses, tax effect | 83,000 | ||
Research and development credit carryforward | 8,500 | ||
Income tax receivable | 600 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Accumulated net operating losses, tax effect | 14,100 | ||
Valuation allowance related to net operating loss carry forwards | 6,500 | ||
Foreign | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance related to net operating loss carry forwards | $ 100 |
INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Unrecognized tax benefit | |||
Unrecognized tax benefit at the beginning of the period | $ 937 | $ 834 | $ 729 |
Gross increases - tax positions in prior period | 125 | 103 | 105 |
Unrecognized tax benefit at the end of the period | $ 1,062 | $ 937 | $ 834 |
SEGMENT INFORMATION - Revenues, Operating Income, and Assets (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | $ 119,502,000 | $ 120,330,000 | $ 118,682,000 | $ 111,001,000 | $ 247,859,000 | $ 247,322,000 | $ 242,230,000 | $ 237,537,000 | $ 469,515,000 | $ 974,948,000 | $ 859,456,000 | |||
Costs and expenses | ||||||||||||||
Cost of revenues | 94,437,000 | 638,545,000 | 549,014,000 | |||||||||||
Operating expenses | 142,298,000 | 118,935,000 | 118,709,000 | |||||||||||
Research and development | 20,497,000 | 18,862,000 | 19,356,000 | |||||||||||
Goodwill impairment | 0 | 0 | 146,299,000 | |||||||||||
Depreciation | 61,225,000 | 47,282,000 | 49,995,000 | |||||||||||
Amortization | 65,245,000 | 69,505,000 | 94,638,000 | |||||||||||
Total costs and expenses | 383,702,000 | 893,129,000 | 978,011,000 | |||||||||||
Operating income (expense) | 17,215,000 | $ 21,510,000 | $ 22,597,000 | $ 24,491,000 | 18,129,000 | $ 19,795,000 | $ 21,292,000 | $ 22,603,000 | 85,813,000 | 81,819,000 | (118,555,000) | |||
Total assets | 1,548,261,000 | 1,537,074,000 | 1,548,261,000 | 1,537,074,000 | ||||||||||
Games | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 258,978,000 | 222,777,000 | 213,253,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 68,009,000 | 54,695,000 | 50,308,000 | ||||||||||
Operating expenses | 57,244,000 | 42,780,000 | 42,561,000 | |||||||||||
Research and development | 20,497,000 | 18,862,000 | 19,356,000 | |||||||||||
Goodwill impairment | 0 | 0 | 146,299,000 | |||||||||||
Depreciation | 55,058,000 | 40,428,000 | 41,582,000 | |||||||||||
Amortization | 55,099,000 | 57,060,000 | 79,390,000 | |||||||||||
Total costs and expenses | 255,907,000 | 213,825,000 | 379,496,000 | |||||||||||
Operating income (expense) | 3,071,000 | 8,952,000 | (166,243,000) | |||||||||||
Total assets | 912,849,000 | 925,186,000 | 912,849,000 | 925,186,000 | ||||||||||
FinTech | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 210,537,000 | 752,171,000 | 646,203,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 26,428,000 | 583,850,000 | 498,706,000 | ||||||||||
Operating expenses | 85,054,000 | 76,155,000 | 76,148,000 | |||||||||||
Depreciation | 6,167,000 | 6,854,000 | 8,413,000 | |||||||||||
Amortization | 10,146,000 | 12,445,000 | 15,248,000 | |||||||||||
Total costs and expenses | 127,795,000 | 679,304,000 | 598,515,000 | |||||||||||
Operating income (expense) | 82,742,000 | 72,867,000 | 47,688,000 | |||||||||||
Total assets | $ 635,412,000 | $ 611,888,000 | 635,412,000 | 611,888,000 | ||||||||||
Gaming operations | Games | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 168,146,000 | 148,654,000 | 152,514,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 17,603,000 | 15,741,000 | 15,265,000 | ||||||||||
Gaming equipment and systems | Games | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 87,038,000 | 70,118,000 | 56,277,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 47,121,000 | 35,707,000 | 31,602,000 | ||||||||||
Gaming other | Games | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 3,794,000 | 4,005,000 | 4,462,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 3,285,000 | 3,247,000 | 3,441,000 | ||||||||||
Cash access services | FinTech | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 156,806,000 | 707,222,000 | 601,874,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 9,717,000 | 572,880,000 | 485,061,000 | ||||||||||
Equipment | FinTech | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 20,977,000 | 13,258,000 | 14,995,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | 12,601,000 | 7,717,000 | 9,889,000 | ||||||||||
Information services and other | FinTech | ||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||
Total revenues | 32,754,000 | 31,691,000 | 29,334,000 | |||||||||||
Costs and expenses | ||||||||||||||
Cost of revenues | [1] | $ 4,110,000 | $ 3,253,000 | $ 3,756,000 | ||||||||||
|
SEGMENT INFORMATION - Major Customers (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Five largest customers | Customer risk | Revenues | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 22.00% | 31.00% | 31.00% |
SELECTED QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 119,502 | $ 120,330 | $ 118,682 | $ 111,001 | $ 247,859 | $ 247,322 | $ 242,230 | $ 237,537 | $ 469,515 | $ 974,948 | $ 859,456 |
Operating income (loss) | 17,215 | 21,510 | 22,597 | 24,491 | 18,129 | 19,795 | 21,292 | 22,603 | 85,813 | 81,819 | (118,555) |
Net loss | $ 4,203 | $ 2,069 | $ 1,475 | $ 4,609 | $ (25,049) | $ (4,289) | $ (19,057) | $ (3,508) | $ 12,356 | $ (51,903) | $ (249,479) |
Basic loss per share (in dollars per share) | $ 0.06 | $ 0.03 | $ 0.02 | $ 0.07 | $ (0.37) | $ (0.06) | $ (0.29) | $ (0.05) | $ 0.18 | $ (0.78) | $ (3.78) |
Diluted loss per share (in dollars per share) | $ 0.06 | $ 0.03 | $ 0.02 | $ 0.06 | $ (0.37) | $ (0.06) | $ (0.29) | $ (0.05) | $ 0.17 | $ (0.78) | $ (3.78) |
Weighted average common shares outstanding | |||||||||||
Basic (in shares) | 70,196 | 69,750 | 69,203 | 68,686 | 67,755 | 66,897 | 66,350 | 66,090 | 69,464 | 66,816 | 66,050 |
Diluted (in shares) | 74,024 | 74,594 | 73,440 | 73,285 | 67,755 | 66,897 | 66,350 | 66,090 | 73,796 | 66,816 | 66,050 |
SUBSEQUENT EVENTS (Details) - Forecast - Asset Acquisition Agreement - FinTech - USD ($) $ in Millions |
12 Months Ended | 24 Months Ended | ||
---|---|---|---|---|
Mar. 08, 2019 |
Mar. 08, 2021 |
Mar. 08, 2020 |
Mar. 08, 2021 |
|
Subsequent Event [Line Items] | ||||
Payments to acquire businesses | $ 10 | $ 10 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Payments to acquire businesses | $ 20 | $ 50 | ||
Contingent consideration liability, expected increase upon target achievements | $ 10 |
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 |