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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20‑0723270
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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7250 S. Tenaya Way, Suite 100, Las Vegas, Nevada
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89113
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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New York Stock Exchange
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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•
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our history of net losses and our ability to generate profits in the future;
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•
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our substantial leverage, restrictions under our indebtedness, and our ability to raise additional cash to fund operations, working capital, and capital expenditures, and to service all of our indebtedness;
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•
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our ability to compete in the gaming industry, manage competitive pressures, navigate gaming market contractions, and continue operating in Native American gaming markets;
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•
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our ability to protect our intellectual property rights;
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•
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the impact of changes in U.S. federal corporate tax laws;
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•
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our ability to maintain our current customers, replace revenue associated with terminated contracts, and address margin degradation from contract renewals;
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•
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our ability to prevent, mitigate, or timely recover from cybersecurity breaches, attacks, and compromises;
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•
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our ability to execute on mergers, acquisitions, or strategic alliances, including our ability to integrate and operate such acquisitions consistent with our forecasts;
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•
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expectations regarding our existing and future installed base and win per day, our product portfolio, and development and placement fee arrangements;
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•
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expectations regarding customers’, gaming establishments’, and patrons’ preferences and demands for future gaming offerings;
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•
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national and international economic conditions, including the overall growth of the gaming industry, if any;
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•
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our ability to comply with the Europay, MasterCard, and Visa global standard for cards equipped with security chip technology (“EMV”);
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•
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technological obsolescence, expenditures, and product development, and our ability to introduce new products and services, including third-party licensed content;
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•
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anticipated sales performance;
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•
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employee turnover;
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•
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changes in gaming regulatory, card association, and statutory requirements, as well as regulatory and licensing difficulties;
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•
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operational limitations;
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•
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uncertainty of litigation outcomes;
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•
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business prospects;
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•
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unanticipated expenses or capital needs, interest rate fluctuations, or inaccuracies in underlying operating assumptions; and
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•
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those other risks and uncertainties discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors” of this Annual Report on Form 10-K.
|
•
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JackpotXchange
family of kiosks,
JXC 4.0
,
and
JXC-L,
enable casino personnel to efficiently access funds to pay out jackpots for their guests. These kiosks are integrated with all major slot systems to offer jackpot processing and pay-out in a combination of cash or slot tickets. These kiosks offer gaming operators the ability to reduce workload at the cage and for slot personnel.
|
•
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JackpotXpress
is a full-featured jackpot and tax form management platform that allows casino personnel to work through the complex jackpot process using a mobile tablet or kiosk.
JackpotXpress
allows gaming operators to reduce jackpot wait times, eliminate cumbersome paper documents, and perform “know your customer” checks. It is fully integrated with our Everi Compliance (defined below),
CageXchange
, and
JackpotXchange
products.
|
•
|
CageXchange
is a cash dispensing device that helps streamline casino cage operations. With
CageXchange
, cash is securely vaulted, creating increased security while also reducing cash shrinkage and helping to improve cashier accuracy. Additional efficiencies are achieved from accelerating the process of cage cashiers obtaining money from the vault.
CageXchange
is integrated with
CashClub
®
to create an efficient transaction for casino guests.
|
•
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Our
Cash Recycling Solutions
allow casinos to fully automate the check in and check out process of money, saving time and expense. As gaming establishments vary in size and complexity, these
Cash Recycling Solutions
support a number of diverse resort operations such as retail, food and beverage, entertainment, and gaming operations.
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Class
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Type of Games
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Regulatory Oversight
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I
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Social gaming for minimal prizes and traditional Indian gaming.
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Exclusive regulation and oversight by tribal governments.
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II
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Bingo (both in traditional and electronic form).
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Regulation by tribal governments with NIGC oversight.
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III
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Casino style games (including slot machines, blackjack, craps, and roulette).
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Must be permitted by the state in which the tribe is located. The state and the tribe must have negotiated a compact approved by NIGC, and the tribe must have adopted a gaming ordinance approved by the NIGC.
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•
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establish strategic business relationships with new and existing customers;
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•
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sell our products and services into new markets and to new customers in existing markets and retain our existing customers;
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•
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develop new games or license third-party content in our Games business and develop new products and services in our FinTech business;
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•
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effectively manage a larger and more diversified workforce and business;
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•
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react to changes, including technological and regulatory changes, in the markets we target or operate in;
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•
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respond to competitive developments and challenges;
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•
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continue to comply with the EMV global standard for cards equipped with security chip technology; and
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•
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attract and retain experienced and talented personnel.
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•
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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore, reducing our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities;
|
•
|
making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the New Credit Facilities and the indentures governing the 2017 Unsecured Notes;
|
•
|
increasing our vulnerability to adverse economic, industry, or competitive developments;
|
•
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
|
•
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limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged or may have more resources than us and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting, including pursuit and execution of potential future acquisitions.
|
•
|
incur additional indebtedness;
|
•
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sell assets or consolidate or merge with or into other companies;
|
•
|
pay dividends or repurchase or redeem capital stock;
|
•
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make certain investments;
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•
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issue capital stock of our subsidiaries;
|
•
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incur liens;
|
•
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prepay, redeem, or repurchase subordinated debt; and
|
•
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enter into certain types of transactions with our affiliates.
|
•
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if, in addition to our current indebtedness, we incur significant debt to finance a future acquisition and our combined business does not perform as expected, we may have difficulty complying with debt covenants;
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•
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we may be unable to make a future acquisition which is in our best interest due to our current level of indebtedness;
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•
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if we use our stock to make a future acquisition, it will dilute existing stockholders;
|
•
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we may have difficulty assimilating the operations and personnel of any acquired company;
|
•
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the challenge and additional investment involved with integrating new products and technologies into our sales and marketing process;
|
•
|
we may have difficulty effectively integrating any acquired technologies or products with our current products and technologies, particularly where such products reside on different technology platforms or overlap with our products;
|
•
|
our ongoing business may be disrupted by transition and integration issues;
|
•
|
the costs and complexity of integrating the internal information technology infrastructure of each acquired business with ours may be greater than expected and may require additional capital investments;
|
•
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we may not be able to retain key technical and managerial personnel from an acquired business;
|
•
|
we may be unable to achieve the financial and strategic goals for any acquired and combined businesses;
|
•
|
we may have difficulty in maintaining controls, procedures, and policies during the transition and integration period following a future acquisition;
|
•
|
our relationships with partner companies or third-party providers of technology or products could be adversely affected;
|
•
|
our relationships with employees and customers could be impaired;
|
•
|
our due diligence process may fail to identify significant issues with product quality, product architecture, legal, or tax contingencies, customer obligations, and product development, among other things;
|
•
|
as successor we may be subject to certain liabilities of our acquisition targets;
|
•
|
we may face new intellectual property challenges; and
|
•
|
we may be required to sustain significant exit or impairment charges if products acquired in business combinations are unsuccessful.
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•
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our failure to maintain our current customers, including because of consolidation in the gaming industry;
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•
|
increases in commissions paid to gaming establishments as a result of competition;
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•
|
increases in interchange rates, processing fees, or other fees paid by us;
|
•
|
decreases in reverse interchange rates paid to us;
|
•
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actual or anticipated fluctuations in our or our competitors’ revenue, operating results, or growth rate;
|
•
|
our inability to adequately protect or enforce our intellectual property rights;
|
•
|
any adverse results in litigation initiated by us or by others against us;
|
•
|
our inability to make payments on our outstanding indebtedness as they become due or our inability to undertake actions that might otherwise benefit us based on the financial and other restrictive covenants contained in the New Credit Facilities and the indenture governing the 2017 Unsecured Notes;
|
•
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the loss, or failure, of a significant supplier or strategic partner to provide the goods or services that we require from them;
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•
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our inability to introduce successful, new products and services in a timely manner or the introduction of new products or services by our competitors that reduce the demand for our products and services;
|
•
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our failure to successfully enter new markets or the failure of new markets to develop in the time and manner that we anticipate;
|
•
|
announcements by our competitors of significant new contracts or contract renewals or of new products or services;
|
•
|
changes in general economic conditions, financial markets, the gaming industry, or the payments processing industry;
|
•
|
the trading volume of our common stock;
|
•
|
sales of common stock or other actions by our current officers, directors, and stockholders;
|
•
|
acquisitions, strategic alliances, or joint ventures involving us or our competitors;
|
•
|
future sales of our common stock or other securities;
|
•
|
the failure of securities analysts to cover our common stock or changes in financial estimates or recommendations by analysts;
|
•
|
our failure to meet the revenue, net income, or earnings per share estimates of securities analysts or investors;
|
•
|
departures of key personnel or our inability to attract or retain key personnel;
|
•
|
our ability to prevent, mitigate, or timely recover from cybersecurity breaches, attacks, and compromises with respect to our infrastructure, systems, and information technology environment;
|
•
|
terrorist acts, theft, vandalism, fires, floods, or other natural disasters; and
|
•
|
rumors or speculation as to any of the above which we may be unable to confirm or deny due to disclosure restrictions imposed on us by law or which we otherwise deem imprudent to comment upon.
|
•
|
divide our Board of Directors into three separate classes serving staggered three-year terms, which will have the effect of requiring at least two annual stockholder meetings instead of one, to replace a majority of our directors, which could have the effect of delaying or preventing a change in our control or management;
|
•
|
provide that special meetings of stockholders can only be called by our Board of Directors, Chairman of the Board, or Chief Executive Officer. In addition, the business permitted to be conducted at any special meeting of stockholders is limited to the business specified in the notice of such meeting to the stockholders;
|
•
|
provide for an advance notice procedure with regard to business to be brought before a meeting of stockholders which may delay or preclude stockholders from bringing matters before a meeting of stockholders or from making nominations for directors at a meeting of stockholders, which could delay or deter takeover attempts or changes in management;
|
•
|
eliminate the right of stockholders to act by written consent so that all stockholder actions must be effected at a duly called meeting;
|
•
|
provide that directors may only be removed for cause with the approval of stockholders holding a majority of our outstanding voting stock;
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•
|
provide that vacancies on our Board of Directors may be filled by a majority, although less than a quorum, of directors in office and that our Board of Directors may fix the number of directors by resolution;
|
•
|
allow our Board of Directors to issue shares of preferred stock with rights senior to those of the common stock and that otherwise could adversely affect the rights and powers, including voting rights and the right to approve or not to approve an acquisition or other change in control, of the holders of common stock, without any further vote or action by the stockholders; and
|
•
|
do not provide for cumulative voting for our directors, which may make it more difficult for stockholders owning less than a majority of our stock to elect any directors to our Board of Directors. In addition, we are also subject to Section 203 of the Delaware General Corporation Law, which provides, subject to enumerated exceptions, that if a person acquires 15% or more of our voting stock, the person is an “interested stockholder” and may not engage in “business combinations” with us for a period of three years from the time the person acquired 15% or more of our voting stock.
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Location
|
Sq. Ft
|
Purpose
|
Segment
|
Austin, Texas
|
204,256
|
Games Headquarters and Operations
|
Games
|
Las Vegas, Nevada
|
106,873
|
Corporate Headquarters; FinTech Headquarters and Operations
|
FinTech; Games
|
Reno, Nevada
|
17,138
|
Game Design Studio
|
Games
|
Chicago, Illinois
|
17,124
|
Game Design Studio
|
Games
|
|
|
Total Number of
Shares Purchased
(1)
(in thousands)
|
|
Average Price per
Share
(2)
|
|||
|
|
|
|
|
|||
Tax Withholdings
|
|
|
|
|
|
|
|
10/1/18 - 10/31/18
|
|
6.4
|
|
|
$
|
7.04
|
|
11/1/18 - 11/30/18
|
|
0.6
|
|
|
$
|
7.41
|
|
12/1/18 - 12/31/18
|
|
3.1
|
|
|
$
|
5.26
|
|
Total
|
|
10.1
|
|
|
$
|
6.52
|
|
|
(1)
|
Represents the shares of common stock that were withheld from restricted stock awards to satisfy the minimum applicable tax withholding obligations incident to the vesting of such restricted stock awards. There are no limitations on the number of shares of common stock that may be withheld from restricted stock awards to satisfy the minimum tax withholding obligations incident to the vesting of restricted stock awards.
|
(2)
|
Represents the average price per share of common stock withheld from restricted stock awards on the date of withholding.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
(1)
|
|
2017
(2)
|
|
2016
(3)
|
|
2015
(4)(5)
|
|
2014
(6)
|
||||||||||
Income Statement Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues
|
|
$
|
469,515
|
|
|
$
|
974,948
|
|
|
$
|
859,456
|
|
|
$
|
826,999
|
|
|
$
|
593,053
|
|
Operating income (loss)
|
|
85,813
|
|
|
81,819
|
|
|
(118,555
|
)
|
|
(9,730
|
)
|
|
33,782
|
|
|||||
Net income (loss)
|
|
12,356
|
|
|
(51,903
|
)
|
|
(249,479
|
)
|
|
(104,972
|
)
|
|
12,140
|
|
|||||
Basic earnings (loss) per share
|
|
0.18
|
|
|
(0.78
|
)
|
|
(3.78
|
)
|
|
(1.59
|
)
|
|
0.18
|
|
|||||
Diluted earnings (loss) per share
|
|
0.17
|
|
|
(0.78
|
)
|
|
(3.78
|
)
|
|
(1.59
|
)
|
|
0.18
|
|
|||||
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
69,464
|
|
|
66,816
|
|
|
66,050
|
|
|
65,854
|
|
|
65,780
|
|
|||||
Diluted
|
|
73,796
|
|
|
66,816
|
|
|
66,050
|
|
|
65,854
|
|
|
66,863
|
|
|
|
At and For the Year Ended December 31,
|
||||||||||||||||||
|
|
2018
(1)
|
|
2017
(2)
|
|
2016
(3)
|
|
2015
(4)(5)(6)
|
|
2014
(7)
|
||||||||||
Balance sheet data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
297,532
|
|
|
$
|
128,586
|
|
|
$
|
119,051
|
|
|
$
|
102,030
|
|
|
$
|
89,095
|
|
Working capital
|
|
17,304
|
|
|
(12,040
|
)
|
|
(1,875
|
)
|
|
2,452
|
|
|
12,550
|
|
|||||
Total assets
|
|
1,548,261
|
|
|
1,537,074
|
|
|
1,408,163
|
|
|
1,550,385
|
|
|
1,707,285
|
|
|||||
Total borrowings
|
|
1,163,216
|
|
|
1,167,843
|
|
|
1,121,880
|
|
|
1,139,899
|
|
|
1,188,787
|
|
|||||
Stockholders’ (deficit) equity
|
|
(108,895
|
)
|
|
(140,633
|
)
|
|
(107,793
|
)
|
|
137,420
|
|
|
231,473
|
|
|||||
Cash flow data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
294,286
|
|
|
$
|
95,828
|
|
|
$
|
131,711
|
|
|
$
|
124,587
|
|
|
$
|
24,531
|
|
Net cash used in investing activities
|
|
(123,350
|
)
|
|
(109,979
|
)
|
|
(88,054
|
)
|
|
(85,549
|
)
|
|
(1,085,847
|
)
|
|||||
Net cash provided by (used in) financing
activities
|
|
11
|
|
|
22,394
|
|
|
(24,922
|
)
|
|
(24,551
|
)
|
|
1,037,423
|
|
|
(1)
|
On January 1, 2018, we adopted ASC 606 using the modified retrospective method, which resulted in the recording of an immaterial cumulative adjustment in the amount of approximately $4.4 million to accumulated deficit as of the adoption date. Our prior period results were not recast to reflect the new revenue recognition standard under the modified retrospective method.
|
(2)
|
During 2017, we refinanced our senior secured term loan, senior secured notes and senior unsecured notes, which resulted in approximately $51.8 million of loss on extinguishment of debt.
|
(3)
|
During 2016, the Games reporting unit had a goodwill impairment of $146.3 million.
|
(4)
|
2015 amounts include a full year of financial results for Everi Games.
|
(5)
|
During 2015, the Games reporting unit had a goodwill impairment of $75.0 million.
|
(6)
|
We reclassified $23.7 million of debt issuance costs related to our outstanding debt from the non-current portion of other assets to contra-liabilities included in long-term debt as of December 31, 2015 in connection with our retrospective adoption of Accounting Standards Update (“ASU”) No. 2015-03 in 2016. This reclassification decreased the December 31, 2015 balance of both total assets and total borrowings.
|
(7)
|
2014 amounts affected by the Merger for which total merger consideration of $1.1 billion on December 19, 2014 was paid and results of operations were recorded from the date of acquisition through December 31, 2014.
|
•
|
On January 1, 2018, we adopted ASC 606 using the modified retrospective method, which requires us to evaluate whether any cumulative adjustment is required to be recorded to retained earnings (or accumulated deficit) as a result of applying the provisions set forth under ASC 606 for any existing arrangements not yet completed as of the adoption date of January 1, 2018. As a result, we recorded an immaterial cumulative adjustment in the amount of approximately $4.4 million to accumulated deficit as of the adoption date. 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.
|
•
|
During the fourth quarter of 2017, we recorded 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 (defined herein) and approximately $10.9 million for the write-off of related unamortized debt issuance costs and fees. An additional $14.6 million loss on extinguishment of debt was incurred in the second quarter of 2017 for the unamortized deferred financing fees and discounts related to the extinguished term loan under the Prior Credit Facility and the redeemed Refinanced Secured Notes (both defined herein). Repricing of the New Term Loan Facility (defined herein) during the second quarter of 2018 did not result in a material loss on extinguishment of debt.
|
•
|
In October of each year, we conduct our annual impairment test for our reporting units. Based on the results of our testing, there was no goodwill impairment for 2018 and 2017. We recorded goodwill impairment of approximately $146.3 million related to our Games segment in 2016.
|
•
|
The income tax benefit was
$9.7 million
for the year ended December 31, 2018, as compared to an income tax benefit of
$20.2 million
in the prior year period. The income tax benefit for the year ended December 31, 2018 reflected an effective income tax rate of negative
367.0%
, which was less than the statutory federal rate of 21.0% primarily due to a decrease in the valuation allowance for deferred tax assets and an increase in a federal research credit. The income tax benefit for the year ended December 31, 2017 reflected an effective income tax rate of
28.0%
, which was less than the statutory federal rate of 35.0%, primarily due to a decrease in the carrying value of our deferred tax liabilities as a result of the enactment of the 2017 Tax Act, offset by an increase in our valuation allowance for deferred tax assets.
|
•
|
Casino gaming is dependent upon discretionary consumer spending, which is typically the first type of spending that is restrained by consumers when they are uncertain about their jobs and income. Global economic uncertainty in the marketplace may have an impact on casino gaming and ultimately the demand for new gaming equipment, which impacts both of our segments.
|
•
|
The total North American installed slot base was slightly higher in 2018 when compared to 2017 and 2016. We expect flat to moderate growth in the forward replacement cycle for EGMs, which has a direct impact on the operations of our Games segment.
|
•
|
The volume of sales and installations to new casino openings and new market expansions along with replacements to the existing gaming operators in North America is expected to continue to trend slightly upward in 2019. This could
|
•
|
We face continued competition from smaller competitors in the gaming cash access market and face additional competition from larger gaming equipment manufacturers and systems providers. This increased competition has resulted in pricing pressure for both our Games and FinTech businesses.
|
•
|
Governmental oversight related to the cost of transaction processing and related fees to the consumer has increased in recent years. We expect the financial services and payments industry to respond to these legislative acts by changing other fees and costs, which may negatively impact our FinTech business in the future.
|
•
|
Casino operators continue to try to broaden their appeal by focusing on investments in the addition of non-gaming amenities to their facilities, which could impact casino operator’s capital allocation for games and payment solution products and impact both of our operating segments.
|
|
|
Year Ended
|
|
2018 As Reported vs
|
||||||||||||||||||||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
2017 As Adjusted
|
||||||||||||||||||||||||||
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||||
|
|
As Reported
|
|
As Reported
|
Adjustments
|
As Adjusted
|
|
|
|
|
||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Games revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gaming operations
|
|
$
|
168,146
|
|
|
36
|
%
|
|
$
|
148,654
|
|
|
15
|
%
|
|
$
|
(565
|
)
|
|
$
|
148,089
|
|
|
36
|
%
|
|
$
|
20,057
|
|
|
14
|
%
|
Gaming equipment and systems
|
|
87,038
|
|
|
18
|
%
|
|
70,118
|
|
|
7
|
%
|
|
—
|
|
|
70,118
|
|
|
17
|
%
|
|
16,920
|
|
|
24
|
%
|
|||||
Gaming other
|
|
3,794
|
|
|
1
|
%
|
|
4,005
|
|
|
1
|
%
|
|
—
|
|
|
4,005
|
|
|
1
|
%
|
|
(211
|
)
|
|
(5
|
)%
|
|||||
Games total revenues
|
|
258,978
|
|
|
55
|
%
|
|
222,777
|
|
|
23
|
%
|
|
(565
|
)
|
|
222,212
|
|
|
54
|
%
|
|
36,766
|
|
|
17
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
FinTech revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash access services
|
|
156,806
|
|
|
34
|
%
|
|
707,222
|
|
|
73
|
%
|
|
(563,637
|
)
|
|
143,585
|
|
|
35
|
%
|
|
13,221
|
|
|
9
|
%
|
|||||
Equipment
|
|
20,977
|
|
|
4
|
%
|
|
13,258
|
|
|
1
|
%
|
|
—
|
|
|
13,258
|
|
|
3
|
%
|
|
7,719
|
|
|
58
|
%
|
|||||
Information services and other
|
|
32,754
|
|
|
7
|
%
|
|
31,691
|
|
|
3
|
%
|
|
—
|
|
|
31,691
|
|
|
8
|
%
|
|
1,063
|
|
|
3
|
%
|
|||||
FinTech total revenues
|
|
210,537
|
|
|
45
|
%
|
|
752,171
|
|
|
77
|
%
|
|
(563,637
|
)
|
|
188,534
|
|
|
46
|
%
|
|
22,003
|
|
|
12
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total revenues
|
|
469,515
|
|
|
100
|
%
|
|
974,948
|
|
|
100
|
%
|
|
(564,202
|
)
|
|
410,746
|
|
|
100
|
%
|
|
58,769
|
|
|
14
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Games cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gaming operations
|
|
17,603
|
|
|
4
|
%
|
|
15,741
|
|
|
2
|
%
|
|
(565
|
)
|
|
15,176
|
|
|
4
|
%
|
|
2,427
|
|
|
16
|
%
|
|||||
Gaming equipment and systems
|
|
47,121
|
|
|
9
|
%
|
|
35,707
|
|
|
3
|
%
|
|
—
|
|
|
35,707
|
|
|
8
|
%
|
|
11,414
|
|
|
32
|
%
|
|||||
Gaming other
|
|
3,285
|
|
|
1
|
%
|
|
3,247
|
|
|
1
|
%
|
|
—
|
|
|
3,247
|
|
|
1
|
%
|
|
38
|
|
|
1
|
%
|
|||||
Games total cost of revenues
|
|
68,009
|
|
|
14
|
%
|
|
54,695
|
|
|
6
|
%
|
|
(565
|
)
|
|
54,130
|
|
|
13
|
%
|
|
13,879
|
|
|
26
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash access services
|
|
9,717
|
|
|
2
|
%
|
|
572,880
|
|
|
59
|
%
|
|
(563,637
|
)
|
|
9,243
|
|
|
2
|
%
|
|
474
|
|
|
5
|
%
|
|||||
Equipment
|
|
12,601
|
|
|
3
|
%
|
|
7,717
|
|
|
1
|
%
|
|
—
|
|
|
7,717
|
|
|
2
|
%
|
|
4,884
|
|
|
63
|
%
|
|||||
Information services and other
|
|
4,110
|
|
|
1
|
%
|
|
3,253
|
|
|
—
|
%
|
|
—
|
|
|
3,253
|
|
|
1
|
%
|
|
857
|
|
|
26
|
%
|
|||||
FinTech total cost of revenues
|
|
26,428
|
|
|
6
|
%
|
|
583,850
|
|
|
60
|
%
|
|
(563,637
|
)
|
|
20,213
|
|
|
5
|
%
|
|
6,215
|
|
|
31
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating expenses
|
|
142,298
|
|
|
30
|
%
|
|
118,935
|
|
|
12
|
%
|
|
—
|
|
|
118,935
|
|
|
29
|
%
|
|
23,363
|
|
|
20
|
%
|
|||||
Research and development
|
|
20,497
|
|
|
4
|
%
|
|
18,862
|
|
|
2
|
%
|
|
—
|
|
|
18,862
|
|
|
5
|
%
|
|
1,635
|
|
|
9
|
%
|
|||||
Depreciation
|
|
61,225
|
|
|
14
|
%
|
|
47,282
|
|
|
5
|
%
|
|
—
|
|
|
47,282
|
|
|
11
|
%
|
|
13,943
|
|
|
29
|
%
|
|||||
Amortization
|
|
65,245
|
|
|
14
|
%
|
|
69,505
|
|
|
7
|
%
|
|
—
|
|
|
69,505
|
|
|
17
|
%
|
|
(4,260
|
)
|
|
(6
|
)%
|
|||||
Total costs and expenses
|
|
383,702
|
|
|
82
|
%
|
|
893,129
|
|
|
92
|
%
|
|
(564,202
|
)
|
|
328,927
|
|
|
80
|
%
|
|
54,775
|
|
|
17
|
%
|
|||||
Operating income
|
|
85,813
|
|
|
18
|
%
|
|
81,819
|
|
|
8
|
%
|
|
—
|
|
|
81,819
|
|
|
20
|
%
|
|
3,994
|
|
|
5
|
%
|
|
|
Year Ended
|
|
2018 As Reported vs
|
|||||||||||||||||||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
2017 As Adjusted
|
|||||||||||||||||||||||||
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||
|
|
As Reported
|
|
As Reported
|
Adjustments
|
As Adjusted
|
|
|
|
|
|||||||||||||||||||||
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest expense, net of interest income
|
|
83,001
|
|
|
18
|
%
|
|
102,136
|
|
|
11
|
%
|
|
—
|
|
|
102,136
|
|
|
24
|
%
|
|
(19,135
|
)
|
|
(19
|
)%
|
||||
Loss on extinguishment of debt
|
|
166
|
|
|
—
|
%
|
|
51,750
|
|
|
5
|
%
|
|
—
|
|
|
51,750
|
|
|
13
|
%
|
|
(51,584
|
)
|
|
(100
|
)%
|
||||
Total other expenses
|
|
83,167
|
|
|
18
|
%
|
|
153,886
|
|
|
16
|
%
|
|
—
|
|
|
153,886
|
|
|
37
|
%
|
|
(70,719
|
)
|
|
(46
|
)%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income (loss) before income tax
|
|
2,646
|
|
|
1
|
%
|
|
(72,067
|
)
|
|
(7
|
)%
|
|
—
|
|
|
(72,067
|
)
|
|
(18
|
)%
|
|
74,713
|
|
|
(104
|
)%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income tax (benefit) provision
|
|
(9,710
|
)
|
|
(2
|
)%
|
|
(20,164
|
)
|
|
(2
|
)%
|
|
—
|
|
|
(20,164
|
)
|
|
(5
|
)%
|
|
10,454
|
|
|
(52
|
)%
|
||||
Net income (loss)
|
|
$
|
12,356
|
|
|
3
|
%
|
|
$
|
(51,903
|
)
|
|
(5
|
)%
|
|
—
|
|
|
$
|
(51,903
|
)
|
|
(13
|
)%
|
|
$
|
64,259
|
|
|
124
|
%
|
|
|
Year Ended
|
|
2017 As Adjusted vs
|
|||||||||||||||||||||||||||||||||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
2016 As Adjusted
|
|||||||||||||||||||||||||||||||||||
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||||||||
|
|
As Reported
|
Adjustments
|
As Adjusted
|
|
As Reported
|
Adjustments
|
As Adjusted
|
|
|
|
|
|||||||||||||||||||||||||||||
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest expense, net of interest income
|
|
102,136
|
|
|
10
|
%
|
|
—
|
|
|
102,136
|
|
|
25
|
%
|
|
99,228
|
|
|
12
|
%
|
|
—
|
|
|
99,228
|
|
|
26
|
%
|
|
2,908
|
|
|
3
|
%
|
|||||
Loss on extinguishment of debt
|
|
51,750
|
|
|
6
|
%
|
|
—
|
|
|
51,750
|
|
|
12
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
51,750
|
|
|
—
|
%
|
|||||
Total other expenses
|
|
153,886
|
|
|
16
|
%
|
|
—
|
|
|
153,886
|
|
|
37
|
%
|
|
99,228
|
|
|
12
|
%
|
|
—
|
|
|
99,228
|
|
|
26
|
%
|
|
54,658
|
|
|
55
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Income (loss) before income tax
|
|
(72,067
|
)
|
|
(7
|
)%
|
|
—
|
|
|
(72,067
|
)
|
|
(18
|
)%
|
|
(217,783
|
)
|
|
(25
|
)%
|
|
—
|
|
|
(217,783
|
)
|
|
(57
|
)%
|
|
145,716
|
|
|
(67
|
)%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Income tax (benefit) provision
|
|
(20,164
|
)
|
|
(2
|
)%
|
|
—
|
|
|
(20,164
|
)
|
|
(5
|
)%
|
|
31,696
|
|
|
4
|
%
|
|
—
|
|
|
31,696
|
|
|
8
|
%
|
|
(51,860
|
)
|
|
(164
|
)%
|
|||||
Net income (loss)
|
|
$
|
(51,903
|
)
|
|
(5
|
)%
|
|
—
|
|
|
$
|
(51,903
|
)
|
|
(13
|
)%
|
|
$
|
(249,479
|
)
|
|
(29
|
)%
|
|
—
|
|
|
$
|
(249,479
|
)
|
|
(65
|
)%
|
|
$
|
197,576
|
|
|
(79
|
)%
|
•
|
Determination of stand-alone selling price (“SSP”) - We are required to make a significant judgment as to whether there is a sufficient quantity of items sold or renewed on a stand-alone basis and those prices demonstrate an appropriate level of concentration to conclude that a SSP exists. The SSP of our goods and services are generally determined based on observable prices, an adjusted market assessment approach, or an expected cost plus margin approach. We utilize a residual approach only when the SSP for performance obligations with observable prices have been established and the 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.
|
•
|
Contract combinations with multiple promised goods or services - Our contracts may include various performance obligations for promises to transfer multiple goods and services to a customer, especially since our Games and FinTech businesses may enter into multiple agreements with the same customer that meet the criteria to be combined for accounting purposes under ASC 606. For such arrangements, we use our judgment to analyze the nature of the promises made and determine whether each is distinct or should be combined with other promises in the contract based on the level of integration and interdependency between the individual deliverables.
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Balance sheet data
|
|
|
|
|
|
|
||
Total assets
|
|
$
|
1,548,261
|
|
|
$
|
1,537,074
|
|
Total borrowings
|
|
1,163,216
|
|
|
1,167,843
|
|
||
Total stockholders’ deficit
|
|
(108,895
|
)
|
|
(140,633
|
)
|
||
Cash available
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
297,532
|
|
|
$
|
128,586
|
|
Settlement receivables
|
|
82,359
|
|
|
227,403
|
|
||
Settlement liabilities
|
|
(334,198
|
)
|
|
(317,744
|
)
|
||
Net cash position
(1)
|
|
45,693
|
|
|
38,245
|
|
||
Undrawn revolving credit facility
|
|
35,000
|
|
|
35,000
|
|
||
Net cash available
(1)
|
|
$
|
80,693
|
|
|
$
|
73,245
|
|
|
(1)
|
Non‑GAAP measure. In order to enhance investor understanding of our cash balance, we are providing in this Annual Report on Form 10-K net cash position and net cash available, which are not measures of our financial performance or position under GAAP. Accordingly, these measures should not be considered in isolation or as a substitute for, and should be read in conjunction with, our cash and cash equivalents prepared in accordance with GAAP. We define (i) net cash position as cash and cash equivalents plus settlement receivables less settlement liabilities and (ii) net cash available as net cash position plus undrawn amounts available under our New Revolving Credit Facility (defined herein). We present net cash position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present net cash available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements, both on short term and long term basis.
|
|
|
Year Ended December 31,
|
|
Increase/(Decrease)
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs 2017
|
|
2017 vs 2016
|
||||||||||
Cash flow activities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
294,286
|
|
|
$
|
96,259
|
|
|
$
|
131,899
|
|
|
$
|
198,027
|
|
|
$
|
(35,640
|
)
|
Net cash used in investing activities
|
|
(123,350
|
)
|
|
(109,780
|
)
|
|
(88,148
|
)
|
|
(13,570
|
)
|
|
(21,632
|
)
|
|||||
Net cash provided by (used in) financing activities
|
|
11
|
|
|
22,394
|
|
|
(24,922
|
)
|
|
(22,383
|
)
|
|
47,316
|
|
|||||
Effect of exchange rates on cash
|
|
(1,370
|
)
|
|
1,292
|
|
|
(1,714
|
)
|
|
(2,662
|
)
|
|
3,006
|
|
|||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase for the period
|
|
169,577
|
|
|
10,165
|
|
|
17,115
|
|
|
159,412
|
|
|
(6,950
|
)
|
|||||
Balance, beginning of the period
|
|
129,604
|
|
|
119,439
|
|
|
102,324
|
|
|
10,165
|
|
|
17,115
|
|
|||||
Balance, end of the period
|
|
$
|
299,181
|
|
|
$
|
129,604
|
|
|
$
|
119,439
|
|
|
$
|
169,577
|
|
|
$
|
10,165
|
|
|
|
At December 31,
|
||||||||||||||||||||||||||
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||||
Contractual obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt obligations
(1)
|
|
$
|
1,182,700
|
|
|
$
|
8,200
|
|
|
$
|
8,200
|
|
|
$
|
8,200
|
|
|
$
|
8,200
|
|
|
$
|
8,200
|
|
|
$
|
1,141,700
|
|
Estimated interest obligations
(2)
|
|
435,709
|
|
|
73,566
|
|
|
73,186
|
|
|
72,769
|
|
|
72,189
|
|
|
71,730
|
|
|
72,269
|
|
|||||||
Operating lease obligations
(3)
|
|
19,721
|
|
|
5,570
|
|
|
5,680
|
|
|
4,598
|
|
|
2,799
|
|
|
1,074
|
|
|
—
|
|
|||||||
Purchase obligations
(4)
|
|
66,463
|
|
|
56,233
|
|
|
7,887
|
|
|
1,835
|
|
|
508
|
|
|
—
|
|
|
—
|
|
|||||||
Total contractual obligations
|
|
$
|
1,704,593
|
|
|
$
|
143,569
|
|
|
$
|
94,953
|
|
|
$
|
87,402
|
|
|
$
|
83,696
|
|
|
$
|
81,004
|
|
|
$
|
1,213,969
|
|
|
(1)
|
We are required to make principal payments of
0.25%
per quarter of the initial aggregate principal, with the final principal repayment installment on the maturity date and may also be required to make an excess cash flow payment that is based on full year end earnings and our consolidated secured leverage ratio in effect at that time. The above table does not reflect any future payments related to excess cash flow payments.
|
(2)
|
Estimated interest payments were computed using the interest rate in effect at
December 31, 2018
multiplied by the principal balance outstanding after scheduled principal amortization payments. For our debt obligations, the weighted average rate assumed was approximately
6.16%
until 2024, when the weighted average rate would increase to approximately
7.50%
until the remaining debt is fully satisfied in 2025.
|
(3)
|
Our operating lease obligations primarily consist of real estate arrangements we enter into with third parties. See Note 13 for additional information regarding our operating leases.
|
(4)
|
Our purchase obligations primarily consist of open purchase orders and placement fee agreements related to our Games business as well as minimum transaction processing services from various third‑party processors used by our FinTech business.
|
|
||
|
||
|
||
|
||
|
||
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues
|
|
|
|
|
|
|
|
|||||
Games revenues
|
|
|
|
|
|
|
||||||
Gaming operations
|
|
$
|
168,146
|
|
|
$
|
148,654
|
|
|
$
|
152,514
|
|
Gaming equipment and systems
|
|
87,038
|
|
|
70,118
|
|
|
56,277
|
|
|||
Gaming other
|
|
3,794
|
|
|
4,005
|
|
|
4,462
|
|
|||
Games total revenues
|
|
258,978
|
|
|
222,777
|
|
|
213,253
|
|
|||
|
|
|
|
|
|
|
||||||
FinTech revenues
|
|
|
|
|
|
|
||||||
Cash access services
|
|
156,806
|
|
|
707,222
|
|
|
601,874
|
|
|||
Equipment
|
|
20,977
|
|
|
13,258
|
|
|
14,995
|
|
|||
Information services and other
|
|
32,754
|
|
|
31,691
|
|
|
29,334
|
|
|||
FinTech total revenues
|
|
210,537
|
|
|
752,171
|
|
|
646,203
|
|
|||
|
|
|
|
|
|
|
||||||
Total revenues
|
|
469,515
|
|
|
974,948
|
|
|
859,456
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Games cost of revenues
(1)
|
|
|
|
|
|
|
||||||
Gaming operations
|
|
17,603
|
|
|
15,741
|
|
|
15,265
|
|
|||
Gaming equipment and systems
|
|
47,121
|
|
|
35,707
|
|
|
31,602
|
|
|||
Gaming other
|
|
3,285
|
|
|
3,247
|
|
|
3,441
|
|
|||
Games total cost of revenues
|
|
68,009
|
|
|
54,695
|
|
|
50,308
|
|
|||
|
|
|
|
|
|
|
||||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
||||||
Cash access services
|
|
9,717
|
|
|
572,880
|
|
|
485,061
|
|
|||
Equipment
|
|
12,601
|
|
|
7,717
|
|
|
9,889
|
|
|||
Information services and other
|
|
4,110
|
|
|
3,253
|
|
|
3,756
|
|
|||
FinTech total cost of revenues
|
|
26,428
|
|
|
583,850
|
|
|
498,706
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
142,298
|
|
|
118,935
|
|
|
118,709
|
|
|||
Research and development
|
|
20,497
|
|
|
18,862
|
|
|
19,356
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
146,299
|
|
|||
Depreciation
|
|
61,225
|
|
|
47,282
|
|
|
49,995
|
|
|||
Amortization
|
|
65,245
|
|
|
69,505
|
|
|
94,638
|
|
|||
Total costs and expenses
|
|
383,702
|
|
|
893,129
|
|
|
978,011
|
|
|||
|
|
|
|
|
|
|
||||||
Operating income (expense)
|
|
85,813
|
|
|
81,819
|
|
|
(118,555
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Other expenses
|
|
|
|
|
|
|
||||||
Interest expense, net of interest income
|
|
83,001
|
|
102,136
|
|
|
99,228
|
|
||||
Loss on extinguishment of debt
|
|
166
|
|
|
51,750
|
|
|
—
|
|
|||
Total other expenses
|
|
83,167
|
|
|
153,886
|
|
|
99,228
|
|
|||
|
|
|
|
|
|
|
||||||
Income (loss) before income tax
|
|
2,646
|
|
|
(72,067
|
)
|
|
(217,783
|
)
|
|||
|
|
|
|
|
|
|
||||||
Income tax (benefit) provision
|
|
(9,710
|
)
|
|
(20,164
|
)
|
|
31,696
|
|
|||
Net income (loss)
|
|
12,356
|
|
|
(51,903
|
)
|
|
(249,479
|
)
|
|||
Foreign currency translation
|
|
(1,745
|
)
|
|
1,856
|
|
|
(2,427
|
)
|
|||
Comprehensive income (loss)
|
|
$
|
10,611
|
|
|
$
|
(50,047
|
)
|
|
$
|
(251,906
|
)
|
Earnings (loss) per share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.18
|
|
|
$
|
(0.78
|
)
|
|
$
|
(3.78
|
)
|
Diluted
|
|
$
|
0.17
|
|
|
$
|
(0.78
|
)
|
|
$
|
(3.78
|
)
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
69,464
|
|
|
66,816
|
|
|
66,050
|
|
|||
Diluted
|
|
73,796
|
|
|
66,816
|
|
|
66,050
|
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
297,532
|
|
|
$
|
128,586
|
|
Settlement receivables
|
|
82,359
|
|
|
227,403
|
|
||
Trade and other receivables, net of allowances for doubtful accounts of $6,425 and
$4,706 at December 31, 2018 and December 31, 2017, respectively
|
|
64,387
|
|
|
47,782
|
|
||
Inventory
|
|
24,403
|
|
|
23,967
|
|
||
Prepaid expenses and other assets
|
|
20,259
|
|
|
20,670
|
|
||
Total current assets
|
|
488,940
|
|
|
448,408
|
|
||
Non-current assets
|
|
|
|
|
|
|
||
Property, equipment and leased assets, net
|
|
116,288
|
|
|
113,519
|
|
||
Goodwill
|
|
640,537
|
|
|
640,589
|
|
||
Other intangible assets, net
|
|
287,397
|
|
|
324,311
|
|
||
Other receivables
|
|
8,847
|
|
|
2,638
|
|
||
Other assets
|
|
6,252
|
|
|
7,609
|
|
||
Total non-current assets
|
|
1,059,321
|
|
|
1,088,666
|
|
||
Total assets
|
|
$
|
1,548,261
|
|
|
$
|
1,537,074
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
|
||
Settlement liabilities
|
|
$
|
334,198
|
|
|
$
|
317,744
|
|
Accounts payable and accrued expenses
|
|
129,238
|
|
|
134,504
|
|
||
Current portion of long-term debt
|
|
8,200
|
|
|
8,200
|
|
||
Total current liabilities
|
|
471,636
|
|
|
460,448
|
|
||
Non-current liabilities
|
|
|
|
|
|
|
||
Deferred tax liability
|
|
27,867
|
|
|
38,207
|
|
||
Long-term debt, less current portion
|
|
1,155,016
|
|
|
1,159,643
|
|
||
Other accrued expenses and liabilities
|
|
2,637
|
|
|
19,409
|
|
||
Total non-current liabilities
|
|
1,185,520
|
|
|
1,217,259
|
|
||
Total liabilities
|
|
1,657,156
|
|
|
1,677,707
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
|
|
|
||
Common stock, $0.001 par value, 500,000 shares authorized and 95,100 and 93,120 shares issued at December 31, 2018 and December 31, 2017, respectively
|
|
95
|
|
|
93
|
|
||
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at December 31, 2018 and December 31, 2017, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
298,929
|
|
|
282,070
|
|
||
Accumulated deficit
|
|
(229,457
|
)
|
|
(246,202
|
)
|
||
Accumulated other comprehensive loss
|
|
(1,998
|
)
|
|
(253
|
)
|
||
Treasury stock, at cost, 24,900 and 24,883 shares at December 31, 2018 and December 31, 2017, respectively
|
|
(176,464
|
)
|
|
(176,341
|
)
|
||
Total stockholders’ deficit
|
|
(108,895
|
)
|
|
(140,633
|
)
|
||
Total liabilities and stockholders’ deficit
|
|
$
|
1,548,261
|
|
|
$
|
1,537,074
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
12,356
|
|
|
$
|
(51,903
|
)
|
|
$
|
(249,479
|
)
|
Adjustments to reconcile net income (loss) to cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation
|
|
61,225
|
|
|
47,282
|
|
|
49,995
|
|
|||
Amortization
|
|
65,245
|
|
|
69,505
|
|
|
94,638
|
|
|||
Amortization of financing costs and discounts
|
|
4,877
|
|
|
8,706
|
|
|
6,695
|
|
|||
Loss on sale or disposal of assets
|
|
869
|
|
|
2,513
|
|
|
2,563
|
|
|||
Accretion of contract rights
|
|
8,421
|
|
|
7,819
|
|
|
8,692
|
|
|||
Provision for bad debts
|
|
11,459
|
|
|
9,737
|
|
|
9,908
|
|
|||
Deferred income taxes
|
|
(10,343
|
)
|
|
(20,015
|
)
|
|
29,940
|
|
|||
Write-down of assets
|
|
2,575
|
|
|
—
|
|
|
4,289
|
|
|||
Reserve for obsolescence
|
|
1,919
|
|
|
397
|
|
|
3,581
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
146,299
|
|
|||
Loss on extinguishment of debt
|
|
166
|
|
|
51,750
|
|
|
—
|
|
|||
Stock-based compensation
|
|
7,251
|
|
|
6,411
|
|
|
6,735
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Settlement receivables
|
|
143,705
|
|
|
(98,390
|
)
|
|
(83,998
|
)
|
|||
Trade and other receivables
|
|
(29,320
|
)
|
|
(884
|
)
|
|
(8,207
|
)
|
|||
Inventory
|
|
(3,848
|
)
|
|
(5,753
|
)
|
|
5,600
|
|
|||
Prepaid and other assets
|
|
1,672
|
|
|
(1,105
|
)
|
|
4,668
|
|
|||
Settlement liabilities
|
|
17,159
|
|
|
78,465
|
|
|
99,245
|
|
|||
Accounts payable and accrued expenses
|
|
(1,102
|
)
|
|
(8,276
|
)
|
|
735
|
|
|||
Net cash provided by operating activities
|
|
294,286
|
|
|
96,259
|
|
|
131,899
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(103,031
|
)
|
|
(96,490
|
)
|
|
(80,741
|
)
|
|||
Acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(694
|
)
|
|||
Proceeds from sale of fixed assets
|
|
237
|
|
|
10
|
|
|
4,599
|
|
|||
Placement fee agreements
|
|
(20,556
|
)
|
|
(13,300
|
)
|
|
(11,312
|
)
|
|||
Net cash used in investing activities
|
|
(123,350
|
)
|
|
(109,780
|
)
|
|
(88,148
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Proceeds from new credit facility
|
|
—
|
|
|
820,000
|
|
|
—
|
|
|||
Proceeds from unsecured notes
|
|
—
|
|
|
375,000
|
|
|
—
|
|
|||
Repayments of prior credit facility
|
|
—
|
|
|
(465,600
|
)
|
|
(24,400
|
)
|
|||
Repayments of secured notes
|
|
—
|
|
|
(335,000
|
)
|
|
—
|
|
|||
Repayments of unsecured notes
|
|
—
|
|
|
(350,000
|
)
|
|
—
|
|
|||
Repayments of new credit facility
|
|
(8,200
|
)
|
|
(4,100
|
)
|
|
—
|
|
|||
Debt issuance costs and discounts
|
|
(1,276
|
)
|
|
(28,702
|
)
|
|
(480
|
)
|
|||
Proceeds from exercise of stock options
|
|
9,610
|
|
|
10,906
|
|
|
—
|
|
|||
Purchase of treasury stock
|
|
(123
|
)
|
|
(110
|
)
|
|
(42
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
11
|
|
|
22,394
|
|
|
(24,922
|
)
|
|||
Effect of exchange rates on cash
|
|
(1,370
|
)
|
|
1,292
|
|
|
(1,714
|
)
|
|||
Cash, cash equivalents and restricted cash
|
|
|
|
|
|
|
||||||
Net increase for the period
|
|
169,577
|
|
|
10,165
|
|
|
17,115
|
|
|||
Balance, beginning of the period
|
|
129,604
|
|
|
119,439
|
|
|
102,324
|
|
|||
Balance, end of the period
|
|
$
|
299,181
|
|
|
$
|
129,604
|
|
|
$
|
119,439
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Supplemental cash disclosures
|
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$
|
81,609
|
|
|
$
|
89,008
|
|
|
$
|
93,420
|
|
Cash paid for income tax
|
|
406
|
|
|
1,009
|
|
|
1,703
|
|
|||
Cash refunded for income tax
|
|
4
|
|
|
829
|
|
|
171
|
|
|||
Supplemental non-cash disclosures
|
|
|
|
|
|
|
|
|
|
|||
Accrued and unpaid capital expenditures
|
|
$
|
3,657
|
|
|
$
|
1,386
|
|
|
$
|
2,104
|
|
Accrued and unpaid placement fees added during the year
|
|
—
|
|
|
39,074
|
|
|
—
|
|
|||
Accrued and unpaid contingent liability for acquisitions
|
|
(550
|
)
|
|
—
|
|
|
(3,169
|
)
|
|||
Transfer of leased gaming equipment to inventory
|
|
10,028
|
|
|
7,820
|
|
|
9,042
|
|
|
|
Common Stock—
Series A
|
|
Additional
|
|
Retained Earnings
|
|
Accumulated
Other
|
|
|
|
Total
|
|||||||||||||||
|
|
Number of
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
(Accumulated
Deficit)
|
|
Comprehensive
Income (Loss)
|
|
Treasury
Stock
|
|
Equity (Deficit)
|
|||||||||||||
Balance, January 1, 2016
|
|
90,877
|
|
|
$
|
91
|
|
|
$
|
258,020
|
|
|
$
|
55,180
|
|
|
$
|
318
|
|
|
$
|
(176,189
|
)
|
|
$
|
137,420
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(249,479
|
)
|
|
—
|
|
|
—
|
|
|
(249,479
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,427
|
)
|
|
—
|
|
|
(2,427
|
)
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
6,735
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,735
|
|
||||||
Restricted share vesting withholdings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
(42
|
)
|
||||||
Restricted shares
|
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, December 31, 2016
|
|
90,952
|
|
|
$
|
91
|
|
|
$
|
264,755
|
|
|
$
|
(194,299
|
)
|
|
$
|
(2,109
|
)
|
|
$
|
(176,231
|
)
|
|
$
|
(107,793
|
)
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,903
|
)
|
|
—
|
|
|
—
|
|
|
(51,903
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,856
|
|
|
—
|
|
|
1,856
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
6,411
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,411
|
|
||||||
Exercise of options
|
|
2,037
|
|
|
2
|
|
|
10,904
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,906
|
|
||||||
Restricted share vesting withholdings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|
(110
|
)
|
||||||
Restricted shares
|
|
131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, December 31, 2017
|
|
93,120
|
|
|
$
|
93
|
|
|
$
|
282,070
|
|
|
$
|
(246,202
|
)
|
|
$
|
(253
|
)
|
|
$
|
(176,341
|
)
|
|
$
|
(140,633
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,356
|
|
|
—
|
|
|
—
|
|
|
12,356
|
|
||||||
Cumulative adjustment related to adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,389
|
|
|
—
|
|
|
—
|
|
|
4,389
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,745
|
)
|
|
—
|
|
|
(1,745
|
)
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
7,251
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,251
|
|
||||||
Exercise of options
|
|
1,980
|
|
|
2
|
|
|
9,608
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,610
|
|
||||||
Restricted share vesting withholdings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
(123
|
)
|
||||||
Balance, December 31, 2018
|
|
95,100
|
|
|
$
|
95
|
|
|
$
|
298,929
|
|
|
$
|
(229,457
|
)
|
|
$
|
(1,998
|
)
|
|
$
|
(176,464
|
)
|
|
$
|
(108,895
|
)
|
|
|
For the Year Ended
|
||
|
|
December 31, 2018
|
||
|
|
|
||
Contract assets
(1)
|
|
|
||
Balance at January 1
|
|
$
|
8,433
|
|
Balance at December 31
|
|
11,310
|
|
|
Increase (decrease)
|
|
2,877
|
|
|
|
|
|
||
Contract liabilities
(2)
|
|
|
||
Balance at January 1
|
|
12,397
|
|
|
Balance at December 31
|
|
15,470
|
|
|
Increase (decrease)
|
|
$
|
3,073
|
|
|
Level of
Hierarchy
|
|
Fair Value
|
|
Outstanding
Balance
|
||||
December 31, 2018
|
|
|
|
|
|
|
|
||
Term loan
|
2
|
|
$
|
784,479
|
|
|
$
|
807,700
|
|
Senior unsecured notes
|
1
|
|
$
|
354,863
|
|
|
$
|
375,000
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||
Term loan
|
2
|
|
$
|
826,099
|
|
|
$
|
815,900
|
|
Senior unsecured notes
|
1
|
|
$
|
372,656
|
|
|
$
|
375,000
|
|
Lessor Perspective
|
Expected Impact Upon Adoption
|
Games and FinTech Segments
|
The adoption of ASC 842 will not have a material impact on the Company from the lessor perspective as our lessor accounting for leases will be consistent with current practices.
|
|
|
Lessee Perspective
|
Expected Impact Upon Adoption
|
Games and FinTech Segments
|
We will recognize operating lease ROU assets and liabilities primarily associated with real estate leases on our Balance Sheets for lease contracts with terms that are longer than 12 months with no material impact to the Statements of Income (Loss). The operating lease ROU assets and liabilities are expected to be recognized at the commencement date based on the present value of lease payments over the lease terms.
|
|
Year Ended December 31, 2018
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
Without Adoption
of ASC 606
|
||||||
Revenues
|
|
|
|
|
|
||||||
Games revenues
|
|
|
|
|
|
||||||
Gaming operations
|
$
|
168,146
|
|
|
$
|
2,364
|
|
|
$
|
170,510
|
|
Games total revenues
|
258,978
|
|
|
2,364
|
|
|
261,342
|
|
|||
|
|
|
|
|
|
||||||
FinTech revenues
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
156,806
|
|
|
629,641
|
|
|
786,447
|
|
|||
Equipment
|
20,977
|
|
|
(1,622
|
)
|
|
19,355
|
|
|||
FinTech total revenues
|
210,537
|
|
|
628,019
|
|
|
838,556
|
|
|||
|
|
|
|
|
|
||||||
Total revenues
|
469,515
|
|
|
630,383
|
|
|
1,099,898
|
|
|||
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|||
Games cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
17,603
|
|
|
2,364
|
|
|
19,967
|
|
|||
Games total cost of revenues
|
68,009
|
|
|
2,364
|
|
|
70,373
|
|
|||
|
|
|
|
|
|
||||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
9,717
|
|
|
629,092
|
|
|
638,809
|
|
|||
Equipment
|
12,601
|
|
|
(825
|
)
|
|
11,776
|
|
|||
FinTech total cost of revenues
|
26,428
|
|
|
628,267
|
|
|
654,695
|
|
|||
|
|
|
|
|
|
||||||
Total costs and expenses
|
383,702
|
|
|
630,631
|
|
|
1,014,333
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
85,813
|
|
|
(248
|
)
|
|
85,565
|
|
|||
|
|
|
|
|
|
||||||
Income before income tax
|
2,646
|
|
|
(248
|
)
|
|
2,398
|
|
|||
|
|
|
|
|
|
||||||
Income tax benefit
|
(9,710
|
)
|
|
—
|
|
|
(9,710
|
)
|
|||
Net income
|
12,356
|
|
|
(248
|
)
|
|
12,108
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
10,611
|
|
|
(248
|
)
|
|
10,363
|
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Trade and other receivables, net
|
|
|
|
|
|
|
||
Games trade and loans receivables
|
|
$
|
53,011
|
|
|
$
|
38,070
|
|
FinTech trade and loans receivables
|
|
18,890
|
|
|
10,780
|
|
||
Other receivables
|
|
1,333
|
|
|
1,570
|
|
||
Total trade and other receivables, net
|
|
$
|
73,234
|
|
|
$
|
50,420
|
|
Non-current portion of receivables
|
|
|
|
|
||||
Games trade and loans receivables
|
|
(2,922
|
)
|
|
(1,267
|
)
|
||
FinTech trade and loans receivables
(1)
|
|
(5,925
|
)
|
|
(1,371
|
)
|
||
Total non-current portion of receivables
|
|
$
|
(8,847
|
)
|
|
$
|
(2,638
|
)
|
Total trade and other receivables, current portion
|
|
$
|
64,387
|
|
|
$
|
47,782
|
|
|
Amount
|
||
Balance, December 31, 2015
|
$
|
2,973
|
|
Warranty expense provision
|
8,694
|
|
|
Charge-offs against reserve
|
(8,972
|
)
|
|
Balance, December 31, 2016
|
2,695
|
|
|
Warranty expense provision
|
9,418
|
|
|
Charge-offs against reserve
|
(9,404
|
)
|
|
Balance, December 31, 2017
|
2,709
|
|
|
Warranty expense provision
|
9,819
|
|
|
Charge-offs against reserve
|
(9,366
|
)
|
|
Balance, December 31, 2018
|
$
|
3,162
|
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Inventory
|
|
|
|
|
|
|
||
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
|
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
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
|
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
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
|
|
|
|
|
|
At December 31, 2018
|
|
At December 31, 2017
|
||||||||||||||||||||
|
|
Useful Life
(Years) |
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
||||||||||||
Property, equipment and
leased assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rental pool - deployed
|
|
2-4
|
|
$
|
183,309
|
|
|
$
|
105,038
|
|
|
$
|
78,271
|
|
|
$
|
162,319
|
|
|
$
|
80,895
|
|
|
$
|
81,424
|
|
Rental pool - undeployed
|
|
2-4
|
|
23,825
|
|
|
14,680
|
|
|
9,145
|
|
|
17,366
|
|
|
9,374
|
|
|
7,992
|
|
||||||
FinTech equipment
|
|
3-5
|
|
27,285
|
|
|
21,000
|
|
|
6,285
|
|
|
25,907
|
|
|
18,654
|
|
|
7,253
|
|
||||||
Leasehold and building
improvements |
|
Lease
Term |
|
11,857
|
|
|
6,938
|
|
|
4,919
|
|
|
10,981
|
|
|
5,211
|
|
|
5,770
|
|
||||||
Machinery, office and other
equipment |
|
2-5
|
|
46,322
|
|
|
28,654
|
|
|
17,668
|
|
|
35,167
|
|
|
24,087
|
|
|
11,080
|
|
||||||
Total
|
|
|
|
$
|
292,598
|
|
|
$
|
176,310
|
|
|
$
|
116,288
|
|
|
$
|
251,740
|
|
|
$
|
138,221
|
|
|
$
|
113,519
|
|
|
|
Games
|
|
Cash Access Services
|
|
Kiosk Sales and Services
|
|
Central Credit Services
|
|
Compliance Sales and Services
|
|
Total
|
||||||||||||
Goodwill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, December 31, 2016
|
|
$
|
449,041
|
|
|
$
|
157,055
|
|
|
$
|
5,745
|
|
|
$
|
17,127
|
|
|
$
|
11,578
|
|
|
$
|
640,546
|
|
Foreign translation adjustment
|
|
—
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
||||||
Balance, December 31, 2017
|
|
$
|
449,041
|
|
|
$
|
157,098
|
|
|
$
|
5,745
|
|
|
$
|
17,127
|
|
|
$
|
11,578
|
|
|
$
|
640,589
|
|
Foreign translation adjustment
|
|
—
|
|
|
(52
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
||||||
Balance, December 31, 2018
|
|
$
|
449,041
|
|
|
$
|
157,046
|
|
|
$
|
5,745
|
|
|
$
|
17,127
|
|
|
$
|
11,578
|
|
|
$
|
640,537
|
|
|
|
|
|
At December 31, 2018
|
|
At December 31, 2017
|
||||||||||||||||||||
|
|
Weighted Average
Remaining
Life
(Years)
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contract rights under
placement fee agreements
|
|
4
|
|
$
|
57,440
|
|
|
$
|
12,178
|
|
|
$
|
45,262
|
|
|
$
|
57,231
|
|
|
$
|
3,910
|
|
|
$
|
53,321
|
|
Customer contracts
|
|
6
|
|
51,175
|
|
|
46,162
|
|
|
5,013
|
|
|
51,175
|
|
|
43,638
|
|
|
7,537
|
|
||||||
Customer relationships
|
|
8
|
|
231,100
|
|
|
84,619
|
|
|
146,481
|
|
|
231,100
|
|
|
63,653
|
|
|
167,447
|
|
||||||
Developed technology and
software
|
|
2
|
|
277,243
|
|
|
190,886
|
|
|
86,357
|
|
|
249,064
|
|
|
158,919
|
|
|
90,145
|
|
||||||
Patents, trademarks and other
|
|
4
|
|
29,168
|
|
|
24,884
|
|
|
4,284
|
|
|
29,046
|
|
|
23,185
|
|
|
5,861
|
|
||||||
Total
|
|
|
|
$
|
646,126
|
|
|
$
|
358,729
|
|
|
$
|
287,397
|
|
|
$
|
617,616
|
|
|
$
|
293,305
|
|
|
$
|
324,311
|
|
Anticipated amortization expense
|
Amount
|
||
2019
|
$
|
64,380
|
|
2020
|
52,168
|
|
|
2021
|
41,440
|
|
|
2022
|
33,473
|
|
|
2023
|
20,241
|
|
|
Thereafter
|
50,316
|
|
|
Total
(1)
|
$
|
262,018
|
|
|
(1)
|
For the year ended
December 31, 2018
, the Company had
$25.4 million
in other intangible assets which had not yet been placed into service.
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accounts payable and accrued expenses
|
|
|
|
|
||||
Trade accounts payable
|
|
$
|
70,796
|
|
|
$
|
59,435
|
|
Placement fees
(1)
|
|
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
|
|
|
(1)
|
The total outstanding balance of the placement fee liability was approximately
$16.7 million
and
$39.1 million
as of
December 31, 2018
and
2017
, respectively. The placement fee liability was considered current portion due to the remaining obligation being due within twelve months of
December 31, 2018
. The remaining non-current placement fees of approximately
$16.8 million
as of December 31, 2017 were included in other accrued expenses and liabilities in our Balance Sheets.
|
|
|
At December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Long-term debt
|
|
|
|
|
||||
Senior secured term loan
|
|
$
|
807,700
|
|
|
$
|
815,900
|
|
Senior unsecured notes
|
|
375,000
|
|
|
375,000
|
|
||
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
|
|
|
Amount
|
||
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
|
|
|
|
At December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Weighted average shares
|
|
|
|
|
|
|
|||
Weighted average number of common shares outstanding - basic
|
|
69,464
|
|
|
66,816
|
|
|
66,050
|
|
Potential dilution from equity awards
(1)
|
|
4,332
|
|
|
—
|
|
|
—
|
|
Weighted average number of common shares outstanding - diluted
(1)
|
|
73,796
|
|
|
66,816
|
|
|
66,050
|
|
|
(1)
|
The potential dilution excludes the weighted average effect of equity awards to purchase approximately
7.5 million
shares of common stock for the year ended
December 31, 2018
, as the application of the treasury stock method, as required, makes them anti-dilutive. The Company was in a net loss position for the years ended
December 31, 2017
and
2016
; therefore, no potential dilution from the application of the treasury stock method was applicable. Equity awards to purchase approximately
16.0 million
and
15.7 million
shares of common stock for the years ended
December 31, 2017
and
2016
, respectively, were excluded from the computation of diluted net loss per share, as their effect would have been anti-dilutive.
|
|
|
Stock Options
Granted
|
|
Restricted Stock Awards Granted
|
|
Restricted Stock Units Granted
|
|||
Outstanding, December 31, 2017
|
|
19,131
|
|
|
74
|
|
|
—
|
|
Granted
|
|
20
|
|
|
—
|
|
|
1,877
|
|
Exercised options or vested shares
|
|
(1,980
|
)
|
|
(66
|
)
|
|
—
|
|
Cancelled or forfeited
|
|
(1,497
|
)
|
|
—
|
|
|
(80
|
)
|
Outstanding, December 31, 2018
|
|
15,674
|
|
|
8
|
|
|
1,797
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Risk-free interest rate
|
|
3
|
%
|
|
2
|
%
|
|
1
|
%
|
Expected life of options (in years)
|
|
6
|
|
|
6
|
|
|
5
|
|
Expected volatility
|
|
53
|
%
|
|
54
|
%
|
|
51
|
%
|
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Year Ended December 31,
|
||||
|
|
2017
|
|
2016
|
||
Risk-free interest rate
|
|
3
|
%
|
|
2
|
%
|
Measurement period (in years)
|
|
10
|
|
|
10
|
|
Expected volatility
|
|
70
|
%
|
|
68
|
%
|
Expected dividend yield
|
|
—
|
|
|
—
|
|
|
|
Number of
Options
(in thousands)
|
|
Weighted Average
Exercise Price
(per Share)
|
|
Weighted
Average Life
Remaining
(Years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding, December 31, 2017
|
|
19,131
|
|
|
$
|
5.34
|
|
|
6.4
|
|
$
|
45,887
|
|
Granted
|
|
20
|
|
|
7.88
|
|
|
|
|
|
|||
Exercised
|
|
(1,980
|
)
|
|
4.84
|
|
|
|
|
|
|||
Canceled or forfeited
|
|
(1,497
|
)
|
|
5.51
|
|
|
|
|
|
|||
Outstanding, December 31, 2018
|
|
15,674
|
|
|
$
|
5.39
|
|
|
6.0
|
|
$
|
17,733
|
|
Vested and expected to vest, December 31, 2018
|
|
14,947
|
|
|
$
|
5.44
|
|
|
5.9
|
|
$
|
16,559
|
|
Exercisable, December 31, 2018
|
|
9,728
|
|
|
$
|
6.15
|
|
|
5.3
|
|
$
|
7,284
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||
|
|
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contract
|
|
Weighted
Average
Exercise
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
|
||||||||||
Range of Exercise Prices
|
|
(in thousands)
|
|
Life (Years)
|
|
Prices
|
|
(in thousands)
|
|
Price
|
||||||||||||
$
|
1.46
|
|
|
$
|
2.40
|
|
|
2,630
|
|
|
7.3
|
|
$
|
1.54
|
|
|
1,110
|
|
|
$
|
1.55
|
|
2.70
|
|
|
2.78
|
|
|
565
|
|
|
7.1
|
|
2.77
|
|
|
515
|
|
|
2.77
|
|
||||
3.29
|
|
|
3.29
|
|
|
3,326
|
|
|
8.2
|
|
3.29
|
|
|
741
|
|
|
3.29
|
|
||||
3.41
|
|
|
7.05
|
|
|
2,611
|
|
|
4.1
|
|
5.81
|
|
|
2,545
|
|
|
5.79
|
|
||||
7.09
|
|
|
7.61
|
|
|
929
|
|
|
5.5
|
|
7.34
|
|
|
810
|
|
|
7.32
|
|
||||
7.74
|
|
|
9.74
|
|
|
5,613
|
|
|
4.9
|
|
8.19
|
|
|
4,007
|
|
|
8.36
|
|
||||
|
|
|
|
15,674
|
|
|
|
|
|
|
9,728
|
|
|
|
|
|
Shares
Outstanding
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
(per Share)
|
|||
Outstanding, December 31, 2017
|
|
74
|
|
|
$
|
7.00
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Vested
|
|
(66
|
)
|
|
7.04
|
||
Forfeited
|
|
—
|
|
|
—
|
|
|
Outstanding, December 31, 2018
|
|
8
|
|
|
$
|
6.66
|
|
|
|
Shares Outstanding
(in thousands)
|
|
Weighted Average
Grant Date Fair Value
(per Share)
|
|
Weighted
Average Life
Remaining
(Years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding, December 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
|
|
1,877
|
|
|
7.49
|
|
|
|
|
|
|||
Exercised
|
|
—
|
|
|
—
|
|
|
|
|
|
|||
Canceled or forfeited
|
|
(80
|
)
|
|
7.46
|
|
|
|
|
|
|||
Outstanding, December 31, 2018
|
|
1,797
|
|
|
$
|
7.49
|
|
|
2.0
|
|
$
|
9,254
|
|
Vested and expected to vest, December 31, 2018
|
|
1,219
|
|
|
$
|
7.49
|
|
|
1.8
|
|
$
|
6,278
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
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
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
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
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Income tax reconciliation
|
|
|
|
|
|
|
|||
Federal statutory rate
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Foreign provision
|
|
6.8
|
%
|
|
0.3
|
%
|
|
0.5
|
%
|
State/province income tax
|
|
12.4
|
%
|
|
2.4
|
%
|
|
0.8
|
%
|
Non-deductible compensation cost
|
|
(7.7
|
)%
|
|
(2.0
|
)%
|
|
(0.5
|
)%
|
Adjustment to carrying value
(1)
|
|
6.2
|
%
|
|
31.2
|
%
|
|
0.2
|
%
|
Research credit
|
|
(76.3
|
)%
|
|
1.9
|
%
|
|
0.2
|
%
|
Valuation allowance
|
|
(344.9
|
)%
|
|
(39.6
|
)%
|
|
(27.4
|
)%
|
Goodwill impairment
|
|
—
|
%
|
|
—
|
%
|
|
(23.5
|
)%
|
Global intangible low-taxed income
|
|
9.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Non-deductible expenses - other
|
|
7.2
|
%
|
|
(0.5
|
)%
|
|
(0.1
|
)%
|
Other
|
|
(0.8
|
)%
|
|
(0.7
|
)%
|
|
0.2
|
%
|
Effective tax rate
|
|
(367.0
|
)%
|
|
28.0
|
%
|
|
(14.6
|
)%
|
|
(1)
|
The adjustment to carrying value in 2017 is due primarily to the federal tax rate change in the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”).
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
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
|
|
—
|
|
|
—
|
|
|
493
|
|
|||
Other
|
|
1,319
|
|
|
479
|
|
|
1,399
|
|
|||
Tax credits
|
|
9,244
|
|
|
6,822
|
|
|
6,394
|
|
|||
Interest Limitation
|
|
2,738
|
|
|
—
|
|
|
—
|
|
|||
Valuation allowance
|
|
(53,156
|
)
|
|
(63,303
|
)
|
|
(61,012
|
)
|
|||
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
|
|
|
—
|
|
|||
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
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
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)
|
|
(1,022
|
)
|
|
4,554
|
|
|
—
|
|
|||
Balance at end of period
|
|
$
|
53,156
|
|
|
$
|
63,303
|
|
|
$
|
61,012
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
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
|
|
•
|
The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment- related experiences including: leased gaming equipment; sales and maintenance-related services of gaming equipment; gaming systems; interactive solutions; and ancillary products and services.
|
•
|
The FinTech segment provides solutions directly to gaming establishments to offer their patrons cash access-related services and products, including: access to cash at gaming facilities via ATM cash withdrawals; credit card cash access transactions and POS debit card cash access transactions; check-related services; equipment and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Games
|
|
|
|
|
|
|
|
|
|
|||
Revenue
|
|
|
|
|
|
|
||||||
Gaming operations
|
|
$
|
168,146
|
|
|
$
|
148,654
|
|
|
$
|
152,514
|
|
Gaming equipment and systems
|
|
87,038
|
|
|
70,118
|
|
|
56,277
|
|
|||
Gaming other
|
|
3,794
|
|
|
4,005
|
|
|
4,462
|
|
|||
Total revenues
|
|
$
|
258,978
|
|
|
$
|
222,777
|
|
|
$
|
213,253
|
|
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Cost of revenues
(1)
|
|
|
|
|
|
|
||||||
Gaming operations
|
|
17,603
|
|
|
15,741
|
|
|
15,265
|
|
|||
Gaming equipment and systems
|
|
47,121
|
|
|
35,707
|
|
|
31,602
|
|
|||
Gaming other
|
|
3,285
|
|
|
3,247
|
|
|
3,441
|
|
|||
Total cost of revenues
|
|
68,009
|
|
|
54,695
|
|
|
50,308
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
57,244
|
|
|
42,780
|
|
|
42,561
|
|
|||
Research and development
|
|
20,497
|
|
|
18,862
|
|
|
19,356
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
146,299
|
|
|||
Depreciation
|
|
55,058
|
|
|
40,428
|
|
|
41,582
|
|
|||
Amortization
|
|
55,099
|
|
|
57,060
|
|
|
79,390
|
|
|||
Total costs and expenses
|
|
255,907
|
|
|
213,825
|
|
|
379,496
|
|
|||
Operating income (loss)
|
|
$
|
3,071
|
|
|
$
|
8,952
|
|
|
$
|
(166,243
|
)
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
FinTech
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Cash access services
|
|
$
|
156,806
|
|
|
$
|
707,222
|
|
|
$
|
601,874
|
|
Equipment
|
|
20,977
|
|
|
13,258
|
|
|
14,995
|
|
|||
Information services and other
|
|
32,754
|
|
|
31,691
|
|
|
29,334
|
|
|||
Total revenues
|
|
$
|
210,537
|
|
|
$
|
752,171
|
|
|
$
|
646,203
|
|
|
|
|
|
|
|
|
||||||
Costs and expenses
|
|
|
|
|
|
|
||||||
Cost of revenues
(1)
|
|
|
|
|
|
|
||||||
Cash access services
|
|
9,717
|
|
|
572,880
|
|
|
485,061
|
|
|||
Equipment
|
|
12,601
|
|
|
7,717
|
|
|
9,889
|
|
|||
Information services and other
|
|
4,110
|
|
|
3,253
|
|
|
3,756
|
|
|||
Cost of revenues
|
|
26,428
|
|
|
583,850
|
|
|
498,706
|
|
|||
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
85,054
|
|
|
76,155
|
|
|
76,148
|
|
|||
Depreciation
|
|
6,167
|
|
|
6,854
|
|
|
8,413
|
|
|||
Amortization
|
|
10,146
|
|
|
12,445
|
|
|
15,248
|
|
|||
Total costs and expenses
|
|
127,795
|
|
|
679,304
|
|
|
598,515
|
|
|||
Operating income
|
|
$
|
82,742
|
|
|
$
|
72,867
|
|
|
$
|
47,688
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Total Games and FinTech
|
|
|
|
|
|
|
|
|
|
|||
Total revenues
|
|
$
|
469,515
|
|
|
$
|
974,948
|
|
|
$
|
859,456
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|||
Cost of revenues
(1)
|
|
94,437
|
|
|
638,545
|
|
|
549,014
|
|
|||
Operating expenses
|
|
142,298
|
|
|
118,935
|
|
|
118,709
|
|
|||
Research and development
|
|
20,497
|
|
|
18,862
|
|
|
19,356
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
146,299
|
|
|||
Depreciation
|
|
61,225
|
|
|
47,282
|
|
|
49,995
|
|
|||
Amortization
|
|
65,245
|
|
|
69,505
|
|
|
94,638
|
|
|||
Total costs and expenses
|
|
383,702
|
|
|
893,129
|
|
|
978,011
|
|
|||
Operating income (loss)
|
|
$
|
85,813
|
|
|
$
|
81,819
|
|
|
$
|
(118,555
|
)
|
|
|
Quarter
|
|
|
||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
111,001
|
|
|
$
|
118,682
|
|
|
$
|
120,330
|
|
|
$
|
119,502
|
|
|
$
|
469,515
|
|
Operating income
|
|
24,491
|
|
|
22,597
|
|
|
21,510
|
|
|
17,215
|
|
|
85,813
|
|
|||||
Net income
|
|
4,609
|
|
|
1,475
|
|
|
2,069
|
|
|
4,203
|
|
|
12,356
|
|
|||||
Basic earnings per share
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.18
|
|
Diluted earnings per share
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.17
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
68,686
|
|
|
69,203
|
|
|
69,750
|
|
|
70,196
|
|
|
69,464
|
|
|||||
Diluted
|
|
73,285
|
|
|
73,440
|
|
|
74,594
|
|
|
74,024
|
|
|
73,796
|
|
|||||
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
237,537
|
|
|
$
|
242,230
|
|
|
$
|
247,322
|
|
|
$
|
247,859
|
|
|
$
|
974,948
|
|
Operating income (loss)
|
|
22,603
|
|
|
21,292
|
|
|
19,795
|
|
|
18,129
|
|
|
81,819
|
|
|||||
Net loss
|
|
(3,508
|
)
|
|
(19,057
|
)
|
|
(4,289
|
)
|
|
(25,049
|
)
|
|
(51,903
|
)
|
|||||
Basic loss per share
|
|
$
|
(0.05
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.78
|
)
|
Diluted loss per share
|
|
$
|
(0.05
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.78
|
)
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
66,090
|
|
|
66,350
|
|
|
66,897
|
|
|
67,755
|
|
|
66,816
|
|
|||||
Diluted
|
|
66,090
|
|
|
66,350
|
|
|
66,897
|
|
|
67,755
|
|
|
66,816
|
|
*
|
Rounding may cause variances.
|
(a)
|
The following documents are filed as part of this Annual Report on Form 10‑K:
|
|
||
|
||
|
||
|
||
|
||
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
†10.7
|
|
|
|
|
|
†10.8
|
|
|
|
|
|
†10.9
|
|
|
|
|
|
†10.10
|
|
|
|
|
|
†10.11
|
|
|
|
|
|
†10.12
|
|
|
|
|
|
†10.13
|
|
|
|
|
|
†10.14
|
|
|
|
|
|
†10.15
|
|
|
|
|
|
†10.16
|
|
|
|
|
|
†10.17
|
|
|
|
|
|
†10.18
|
|
|
|
|
|
†10.19
|
|
|
|
|
|
†10.20
|
|
|
|
|
|
†10.21
|
|
|
|
|
|
†10.22
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
†10.23
|
|
|
|
|
|
†10.24
|
|
|
|
|
|
†10.25
|
|
|
|
|
|
†10.26
|
|
|
|
|
|
†10.27
|
|
|
|
|
|
†10.28
|
|
|
|
|
|
†10.29
|
|
|
|
|
|
†10.30
|
|
|
|
|
|
†10.31
|
|
|
|
|
|
†10.32
|
|
|
|
|
|
†10.33
|
|
|
|
|
|
†10.34
|
|
|
|
|
|
†10.35
|
|
|
|
|
|
†10.36
|
|
|
|
|
|
†10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
†*10.40
|
|
|
|
|
|
†*10.41
|
|
Exhibit
Number
|
|
Exhibit Description
|
†10.42
|
|
|
|
|
|
†10.43
|
|
|
|
|
|
†10.44
|
|
|
|
|
|
†10.45
|
|
|
|
|
|
†10.46
|
|
|
|
|
|
†10.47
|
|
|
|
|
|
†10.48
|
|
|
|
|
|
†10.49
|
|
|
|
|
|
†10.50
|
|
|
|
|
|
*21.1
|
|
|
|
|
|
*23.1
|
|
|
|
|
|
*24.1
|
|
|
|
|
|
*31.1
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
**32.1
|
|
|
|
|
|
*101.INS
|
|
XBRL Instance Document.
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith.
|
|
**
|
Furnished herewith.
|
|
†
|
Management contracts or compensatory plans or arrangements.
|
|
+
|
Confidential treatment has been granted for certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The confidential information has been omitted and filed separately with the SEC.
|
Dated: March 12, 2019
|
|
EVERI HOLDINGS INC.
|
|
|
|
|
|
|
|
By:
|
/s/ TODD A. VALLI
|
|
|
|
Todd A. Valli
Chief Accounting Officer (Principal
Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ MICHAEL D. RUMBOLZ
|
|
President and Chief Executive Officer
|
|
March 12, 2019
|
Michael D. Rumbolz
|
|
(Principal Executive Officer) and Director
|
|
|
|
|
|
|
|
/s/ RANDY L. TAYLOR
|
|
Chief Financial Officer
|
|
March 12, 2019
|
Randy L. Taylor
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ TODD A. VALLI
|
|
Chief Accounting Officer
|
|
March 12, 2019
|
Todd A. Valli
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ E. MILES KILBURN
|
|
Chairman of the Board and Director
|
|
March 12, 2019
|
E. Miles Kilburn
|
|
|
|
|
|
|
|
|
|
/s/ GEOFFREY P. JUDGE
|
|
Director
|
|
March 12, 2019
|
Geoffrey P. Judge
|
|
|
|
|
|
|
|
|
|
/s/ RONALD V. CONGEMI
|
|
Director
|
|
March 12, 2019
|
Ronald V. Congemi
|
|
|
|
|
|
|
|
|
|
/s/ EILEEN F. RANEY
|
|
Director
|
|
March 12, 2019
|
Eileen F. Raney
|
|
|
|
|
|
|
|
|
|
/s/ LINSTER W. FOX
|
|
Director
|
|
March 12, 2019
|
Linster W. Fox
|
|
|
|
|
|
|
|
|
|
/s/ MAUREEN T. MULLARKEY
|
|
Director
|
|
March 12, 2019
|
Maureen T. Mullarkey
|
|
|
|
|
A.
|
The Company and Executive desire to assurance of the association and services of Executive in order to retain Executive’s experience, skills, abilities, background and knowledge, and are willing to engage Executive’s continued services on the terms and conditions set forth in this Agreement.
|
B.
|
The Company has entered into the Agreement with Executive to serve as President and Chief Executive Officer of the Company through the Employment Period, which is currently due to expire on May 4, 2019.
|
C.
|
The Company desires to amend Agreement to reflect the extension of the Employment Period through January 31, 2021 on the terms and conditions set forth in this Amendment and Executive is willing to continue employment on the terms and conditions set forth in this Amendment.
|
D.
|
The Company and Executive (together, the “
Parties
”) wish to enter into the Amendment.
|
EVERI PAYMENTS INC.
|
|
EXECUTIVE
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ E. Miles Kilburn
|
|
/s/ Michael D. Rumbolz
|
|
E. Miles Kilburn
|
|
Michael D. Rumbolz
|
|
Chairman of the Board of Directors
|
|
|
Interference with Business:
|
Participant acknowledges that because of Participant’s position in the Company, Participant will have access to the Company’s and its affiliates’ new and additional Proprietary Information (as defined below), including confidential information and trade secrets. Subject to clause 1(a) and 1(d) of the Participant’s Employee Proprietary Information and Inventions Agreement (“
EPIIA
”), Participant agrees that during Participant’s Service and for a period of 12 months after termination of Participant’s Service, Participant shall not directly or indirectly, either for Participant or for any other individual, corporation, partnership, joint venture or other entity, participate in any business (including, without limitation, any division, group, or franchise of a larger organization) anywhere in the world that engages in or that proposes to engage in any business in which the Company or any affiliate of the Company is engaged or proposes to engage in during the term of Participant’s Service. Subject to clause 1(a) and 1(d) of the EPIIA, Participant also agrees during Participant’s Service and for a period of 12 months after termination of Participant’s Service, Participant shall not directly or indirectly, either for Participant or for any other individual, corporation, partnership, joint venture or other entity, (i) divert or attempt to divert from the Company or any affiliate of the Company any business of any kind, including without limitation the solicitation of or interference with any of its customers, clients, business partners or suppliers, or (ii) solicit, induce, recruit or encourage any person employed by the Company or any affiliate of the Company to terminate his or her employment. For purposes of the foregoing, the term “participate in” shall include, without limitation, having any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any individual, corporation, partnership, joint venture and other business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise).
“
Proprietary Information
” means all information and any idea in whatever form, tangible or intangible, whether disclosed to or learned or developed by Participant, pertaining in any manner to the business of the Company or to the Company’s affiliates, consultants, or business associates, unless: (i) the information is or becomes publicly known through lawful means; (ii) the information was rightfully in Participant’s possession or part of Participant’s general knowledge prior to Participant’s employment by the Company; or (iii) the information is disclosed to Participant without confidential or proprietary restrictions by a third party who rightfully possesses the information (without confidential or proprietary restrictions) and did not learn of it, directly or indirectly, from the Company. Participant further understands that the Company considers the following information to be included, without limitation, in the definition of Proprietary Information: (A) schematics, techniques, employee suggestions, development tools and processes, computer printouts, computer programs, design drawings and manuals, electronic codes, formulas and improvements; (B) information about costs, profits, markets, sales, customers, prospective customers, customer contracts (including without limitation the terms and conditions of such customer contracts) and bids; (C) plans for business, marketing, future development and new product concepts; (D) customer lists, and distributor and representative lists; (E) all documents, books, papers, drawings, models, sketches, and other data of any kind and description, including electronic data recorded or retrieved by any means, that have been or will be given to the Participant by the Company (or any affiliate of it), as well as written or verbal
|
|
instructions or comments; (F) any information or material not described in (A)-(E) above which relate to the Company’s inventions, technological developments, “know how”, purchasing, accounts, merchandising, or licensing; (G) employee personnel files and information about employee compensation and benefits; and (H) any information of the type described in (A)-(G) above which the Company has a legal obligation to treat as confidential, or which the Company treats as proprietary or designates as confidential, whether or not owned or developed by the Company.
Participant acknowledges that Participant’s fulfillment of the obligations contained in the section, including, but not limited to, Participant’s obligation not to interfere with the Company’s business as provided above, is necessary to protect the Proprietary Information and, consequently, to preserve the value and goodwill of the Company. Participant further acknowledges the time, geographic and scope limitations of Participant’s obligations as described above are reasonable, especially in light of the Company’s desire to protect its Proprietary Information, and that Participant will not be precluded from gainful employment if Participant is obligated not to compete with the Company during the specified period and within the specified geography.
The covenants contained herein shall be construed as a series of separate covenants, one for each state, province, country and other political subdivision. Except for geographic coverage, each such separate covenant shall be deemed identical in terms of the covenant contained herein. In the event that the scope, territory or period of time of any separate covenant is determined to be unenforceable by a court of competent jurisdiction, the court, if allowed under applicable law, shall reduce the scope, territory or period of time of that separate covenant to a level that the court deems enforceable and the remaining separate covenants, as well as all other terms and covenants in this Grant Notice, shall be valid and be enforceable to the fullest extent permitted by law. In the event that any separate covenant is found to be unenforceable in its entirety, the court, if allowed under applicable law, shall eliminate such covenant from this Grant Notice in that case and the remaining separate covenants, as well as all other terms and covenants in this Grant Notice, shall be valid and be enforceable to the fullest extent permitted by law. The covenants set forth herein are intended to be enforced to the maximum degree permitted by law.
|
EVERI HOLDINGS INC.
|
|
PARTICIPANT
|
|
|
|
|
|
By:
|
|
|
|
|
E. Miles Kilburn
|
|
Signature
|
|
Chairman of the Board
|
|
|
|
|
Date
|
|
Address:
|
7250 S. Tenaya Way, Suite 100
|
|
|
|
Las Vegas, NV 89113
|
|
Address
|
|
|
|
|
ATTACHMENTS:
|
2014 Equity Incentive Plan, as amended to the Date of Grant; Restricted Stock Units Agreement; and Plan Prospectus.
|
Participant:
|
Michael Rumbolz
|
Award Number:
|
|
Date of Grant:
|
February 1, 2019
|
||
Total Number of Units:
|
50,000, subject to adjustment as provided by the Restricted Stock Units Agreement.
|
||
Vesting Start Date:
|
February 1, 2019
|
||
Vested Units:
|
Subject to the acceleration of vesting as provided below under “Termination of Service” and “Change in Control,” except as provided in the Restricted Stock Units Agreement and provided that the Participant’s Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the
“
Vested Ratio
”
determined as of such date, as follows:
Vested Ratio
Prior to the one (1)-month anniversary of the Vesting Start Date 0
Each one (1)-month anniversary of the Vesting Start Date 1/24
|
||
Settlement Date:
|
Shares shall be settled and delivered (provided that such delivery is otherwise in accordance with federal and state securities laws) with respect to Vested Units as soon as practicable following the date on which a Unit becomes a Vested Unit.
|
||
Termination of Service – Death or Disability:
|
Upon the death or Disability of the Participant, vesting shall fully accelerate and the Vested Ratio shall be 1/1 (100%).
|
||
Termination of Service – Other than Death or Disability
|
If the Participant’s Service is terminated for any reason other than death or Disability, all Units that are not Vested Units shall be immediately forfeited.
|
||
Change in Control:
|
Upon the occurrence of a Change in Control prior to the twenty-fourth one-month anniversary of the Vesting Start Date, if (i) the Award is not assumed, continued, or substituted by the Acquiror as described in Section 13.1(b) of the Plan; or (ii) the Award is assumed, continued, or substituted by the Acquiror as described in Section 13.1(b) of the Plan and the Participant’s Service terminates as a result of Involuntary Termination (as defined in Section 13.1(a) of the Plan) within twenty four (24) months thereafter, then vesting shall fully accelerate and the Vested Ratio shall be 1/1 (100%).
|
||
Superseding Agreement:
|
None.
|
Interference with Business:
|
Participant acknowledges that because of Participant’s position in the Company, Participant will have access to the Company’s and its affiliates’ new and additional Proprietary Information (as defined below), including confidential information and trade secrets. Subject to clause 1(a) and 1(d) of the Participant’s Employee Proprietary Information and Inventions Agreement (“
EPIIA
”), Participant agrees that during Participant’s Service and for a period of 12 months after termination of Participant’s Service, Participant shall not directly or indirectly, either for Participant or for any other individual, corporation, partnership, joint venture or other entity, participate in any business (including, without limitation, any division, group, or franchise of a larger organization) anywhere in the world that engages in or that proposes to engage in any business in which the Company or any affiliate of the Company is engaged or proposes to engage in during the term of Participant’s Service. Subject to clause 1(a) and 1(d) of the EPIIA, Participant also agrees during Participant’s Service and for a period of 12 months after termination of Participant’s Service, Participant shall not directly or indirectly, either for Participant or for any other individual, corporation, partnership, joint venture or other entity, (i) divert or attempt to divert from the Company or any affiliate of the Company any business of any kind, including without limitation the solicitation of or interference with any of its customers, clients, business partners or suppliers, or (ii) solicit, induce, recruit or encourage any person employed by the Company or any affiliate of the Company to terminate his or her employment. For purposes of the foregoing, the term “participate in” shall include, without limitation, having any direct or indirect interest in any corporation, partnership, joint venture or other entity, whether as a sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or indirect service or assistance to any individual, corporation, partnership, joint venture and other business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant or otherwise).
“
Proprietary Information
” means all information and any idea in whatever form, tangible or intangible, whether disclosed to or learned or developed by Participant, pertaining in any manner to the business of the Company or to the Company’s affiliates, consultants, or business associates, unless: (i) the information is or becomes publicly known through lawful means; (ii) the information was rightfully in Participant’s possession or part of Participant’s general knowledge prior to Participant’s employment by the Company; or (iii) the information is disclosed to Participant without confidential or proprietary restrictions by a third party who rightfully possesses the information (without confidential or proprietary restrictions) and did not learn of it, directly or indirectly, from the Company. Participant further understands that the Company considers the following information to be included, without limitation, in the definition of Proprietary Information: (A) schematics, techniques, employee suggestions, development tools and processes, computer printouts, computer programs, design drawings and manuals, electronic codes, formulas and improvements; (B) information about costs, profits, markets, sales, customers, prospective customers, customer contracts (including without limitation the terms and conditions of such customer contracts) and bids; (C) plans for business, marketing, future development and new product concepts; (D) customer lists, and distributor and representative lists; (E) all documents, books, papers, drawings, models, sketches, and other data of any kind and description, including electronic data recorded or retrieved by any means, that have been or will be given to the Participant by the Company (or any affiliate of it), as well as written or verbal instructions or comments; (F) any information or material not described in (A)-(E) above which relate to the Company’s inventions, technological developments, “know how”, purchasing, accounts, merchandising, or licensing; (G) employee personnel files and information about employee compensation and benefits; and (H) any information of the type described in (A)-(G) above which the Company has a legal obligation to treat as confidential, or which the Company treats as proprietary or designates as confidential, whether or not owned or developed by the Company.
|
|
Participant acknowledges that Participant’s fulfillment of the obligations contained in the section, including, but not limited to, Participant’s obligation not to interfere with the Company’s business as provided above, is necessary to protect the Proprietary Information and, consequently, to preserve the value and goodwill of the Company. Participant further acknowledges the time, geographic and scope limitations of Participant’s obligations as described above are reasonable, especially in light of the Company’s desire to protect its Proprietary Information, and that Participant will not be precluded from gainful employment if Participant is obligated not to compete with the Company during the specified period and within the specified geography.
The covenants contained herein shall be construed as a series of separate covenants, one for each state, province, country and other political subdivision. Except for geographic coverage, each such separate covenant shall be deemed identical in terms of the covenant contained herein. In the event that the scope, territory or period of time of any separate covenant is determined to be unenforceable by a court of competent jurisdiction, the court, if allowed under applicable law, shall reduce the scope, territory or period of time of that separate covenant to a level that the court deems enforceable and the remaining separate covenants, as well as all other terms and covenants in this Grant Notice, shall be valid and be enforceable to the fullest extent permitted by law. In the event that any separate covenant is found to be unenforceable in its entirety, the court, if allowed under applicable law, shall eliminate such covenant from this Grant Notice in that case and the remaining separate covenants, as well as all other terms and covenants in this Grant Notice, shall be valid and be enforceable to the fullest extent permitted by law. The covenants set forth herein are intended to be enforced to the maximum degree permitted by law.
|
EVERI HOLDINGS INC.
|
|
PARTICIPANT
|
|
|
|
|
|
By: /s/ E. Miles Kilburn
|
|
/s/ Michael D. Rumbolz
|
|
E. Miles Kilburn
|
|
Signature
|
|
Chairman of the Board
|
|
|
|
|
|
Date
|
|
Address:
|
7250 S. Tenaya Way, Suite 100
|
|
|
|
Las Vegas, NV 89113
|
|
Address
|
|
|
|
|
ATTACHMENTS:
|
2014 Equity Incentive Plan, as amended to the Date of Grant; Restricted Stock Units Agreement; and Plan Prospectus.
|
Name
|
Jurisdiction of Incorporation or Organization
|
Everi Payments Inc.
|
Delaware
|
Everi Logistics LLC
|
Nevada
|
Everi Payments (Canada) Inc.
|
Ontario, Canada
|
Global Cash Access (Panama), Inc.
|
Panama
|
Game Financial Caribbean N.V.
|
Netherlands, Antilles
|
Global Cash Access (Belize) Ltd
|
Belize
|
Central Credit, LLC
|
Delaware
|
Global Cash Access (BVI), Inc.
|
British Virgin Islands
|
Arriva Card, Inc.
|
Delaware
|
Global Cash Access Switzerland AG
|
Switzerland
|
Global Cash Access (HK) Limited
|
Hong Kong
|
GCA (Macau) S.A.
|
Macau SAR
|
Global Cash Access (Belgium) SA
|
Belgium
|
Global Cash Access (UK) Limited
|
United Kingdom
|
Everi India Private Limited
|
India
|
GCA MTL, LLC
|
Delaware
|
Everi Games Holding Inc.
|
Texas
|
Everi Games Inc.
|
Delaware
|
Everi Games (Canada) Inc.
|
British Columbia
|
Everi Interactive LLC
|
Delaware
|
MegaBingo International, LLC
|
Delaware
|
Multimedia Games de Mexico S. de R.L. de C.V.
|
Mexico
|
Multimedia Games de Mexico 1 S. de R.L. C.V.
|
Mexico
|
Servicios de Wild Basin S. de R.L. de C.V.
|
Mexico
|
MGAM Peru S.R.L.
|
Peru
|
1.
|
I have reviewed this Annual Report on Form 10‑K of Everi Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of a report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 12, 2019
|
/s/ Michael D. Rumbolz
|
|
Michael D. Rumbolz
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10‑K of Everi Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of a report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: March 12, 2019
|
/s/ Randy L. Taylor
|
|
Randy L. Taylor
|
|
Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
|
Dated:
|
|
March 12, 2019
|
|
By:
|
|
/s/ Michael D. Rumbolz
|
|
|
|
|
|
|
Michael D. Rumbolz
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Dated:
|
|
March 12, 2019
|
|
|
|
/s/ Randy L. Taylor
|
|
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Randy L. Taylor
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Chief Financial Officer
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