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x
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QUARTERLY 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
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LAS VEGAS
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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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Trading symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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EVRI
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The 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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Page
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PART I: FINANCIAL INFORMATION
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Item 1:
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Financial Statements
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Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2019 and 2018
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Unaudited Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018
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Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018
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Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2019 and 2018
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Notes to Unaudited Condensed Consolidated Financial Statements
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Item 2:
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3:
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Quantitative and Qualitative Disclosures About Market Risk
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Item 4:
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Controls and Procedures
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PART II: OTHER INFORMATION
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|||
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Item 1:
|
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Legal Proceedings
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Item 1A:
|
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Risk Factors
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Item 2:
|
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3:
|
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Defaults Upon Senior Securities
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Item 4:
|
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Mine Safety Disclosures
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Item 5:
|
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Other Information
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Item 6:
|
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Exhibits
|
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Signatures
|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
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||||||||||||
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2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Games revenues
|
|
|
|
|
|
|
|
|
|
||||||
Gaming operations
|
$
|
45,576
|
|
|
$
|
43,022
|
|
|
$
|
89,862
|
|
|
$
|
83,078
|
|
Gaming equipment and systems
|
23,412
|
|
|
22,278
|
|
|
46,499
|
|
|
42,431
|
|
||||
Gaming other
|
391
|
|
|
648
|
|
|
445
|
|
|
656
|
|
||||
Games total revenues
|
69,379
|
|
|
65,948
|
|
|
136,806
|
|
|
126,165
|
|
||||
FinTech revenues
|
|
|
|
|
|
|
|
|
|
||||||
Cash access services
|
39,696
|
|
|
39,739
|
|
|
80,528
|
|
|
77,958
|
|
||||
Equipment
|
7,835
|
|
|
4,765
|
|
|
14,863
|
|
|
9,183
|
|
||||
Information services and other
|
12,796
|
|
|
8,230
|
|
|
21,284
|
|
|
16,377
|
|
||||
FinTech total revenues
|
60,327
|
|
|
52,734
|
|
|
116,675
|
|
|
103,518
|
|
||||
Total revenues
|
129,706
|
|
|
118,682
|
|
|
253,481
|
|
|
229,683
|
|
||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
||||||
Games cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
||||||
Gaming operations
|
3,726
|
|
|
4,211
|
|
|
7,850
|
|
|
8,393
|
|
||||
Gaming equipment and systems
|
13,432
|
|
|
12,045
|
|
|
25,961
|
|
|
22,786
|
|
||||
Gaming other
|
347
|
|
|
559
|
|
|
347
|
|
|
559
|
|
||||
Games total cost of revenues
|
17,505
|
|
|
16,815
|
|
|
34,158
|
|
|
31,738
|
|
||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
||||||
Cash access services
|
2,968
|
|
|
2,446
|
|
|
5,665
|
|
|
4,676
|
|
||||
Equipment
|
4,597
|
|
|
3,426
|
|
|
8,927
|
|
|
5,940
|
|
||||
Information services and other
|
970
|
|
|
980
|
|
|
1,928
|
|
|
2,197
|
|
||||
FinTech total cost of revenues
|
8,535
|
|
|
6,852
|
|
|
16,520
|
|
|
12,813
|
|
||||
Operating expenses
|
39,167
|
|
|
37,570
|
|
|
73,815
|
|
|
69,757
|
|
||||
Research and development
|
6,672
|
|
|
4,595
|
|
|
14,203
|
|
|
8,906
|
|
||||
Depreciation
|
15,258
|
|
|
13,701
|
|
|
30,047
|
|
|
26,526
|
|
||||
Amortization
|
17,690
|
|
|
16,552
|
|
|
33,987
|
|
|
32,855
|
|
||||
Total costs and expenses
|
104,827
|
|
|
96,085
|
|
|
202,730
|
|
|
182,595
|
|
||||
Operating income
|
24,879
|
|
|
22,597
|
|
|
50,751
|
|
|
47,088
|
|
||||
Other expenses
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net of interest income
|
20,433
|
|
|
22,122
|
|
|
40,833
|
|
|
42,429
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
166
|
|
|
—
|
|
|
166
|
|
||||
Total other expenses
|
20,433
|
|
|
22,288
|
|
|
40,833
|
|
|
42,595
|
|
||||
Income before income tax
|
4,446
|
|
|
309
|
|
|
9,918
|
|
|
4,493
|
|
||||
Income tax benefit
|
(1,040
|
)
|
|
(1,166
|
)
|
|
(1,428
|
)
|
|
(1,591
|
)
|
||||
Net income
|
5,486
|
|
|
1,475
|
|
|
11,346
|
|
|
6,084
|
|
||||
Foreign currency translation
|
(35
|
)
|
|
(1,058
|
)
|
|
469
|
|
|
(735
|
)
|
||||
Comprehensive income
|
$
|
5,451
|
|
|
$
|
417
|
|
|
$
|
11,815
|
|
|
$
|
5,349
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.08
|
|
|
$
|
0.02
|
|
|
$
|
0.16
|
|
|
$
|
0.09
|
|
Diluted
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.15
|
|
|
$
|
0.08
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
71,477
|
|
|
69,203
|
|
|
70,909
|
|
|
68,946
|
|
||||
Diluted
|
79,158
|
|
|
73,440
|
|
|
77,211
|
|
|
73,323
|
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
123,845
|
|
|
$
|
297,532
|
|
Settlement receivables
|
244,183
|
|
|
82,359
|
|
||
Trade and other receivables, net of allowances for doubtful accounts of $6,645 and $6,425 at June 30, 2019 and December 31, 2018, respectively
|
71,707
|
|
|
64,387
|
|
||
Inventory
|
28,588
|
|
|
24,403
|
|
||
Prepaid expenses and other assets
|
24,205
|
|
|
20,259
|
|
||
Total current assets
|
492,528
|
|
|
488,940
|
|
||
Non-current assets
|
|
|
|
||||
Property, equipment and leased assets, net
|
111,093
|
|
|
116,288
|
|
||
Goodwill
|
673,352
|
|
|
640,537
|
|
||
Other intangible assets, net
|
284,347
|
|
|
287,397
|
|
||
Other receivables
|
13,755
|
|
|
8,847
|
|
||
Other assets
|
21,228
|
|
|
6,252
|
|
||
Total non-current assets
|
1,103,775
|
|
|
1,059,321
|
|
||
Total assets
|
$
|
1,596,303
|
|
|
$
|
1,548,261
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Settlement liabilities
|
$
|
331,291
|
|
|
$
|
334,198
|
|
Accounts payable and accrued expenses
|
146,387
|
|
|
129,238
|
|
||
Current portion of long-term debt
|
8,200
|
|
|
8,200
|
|
||
Total current liabilities
|
485,878
|
|
|
471,636
|
|
||
Non-current liabilities
|
|
|
|
||||
Deferred tax liability
|
26,119
|
|
|
27,867
|
|
||
Long-term debt, less current portion
|
1,139,007
|
|
|
1,155,016
|
|
||
Other accrued expenses and liabilities
|
29,736
|
|
|
2,637
|
|
||
Total non-current liabilities
|
1,194,862
|
|
|
1,185,520
|
|
||
Total liabilities
|
1,680,740
|
|
|
1,657,156
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
|
|
||
Common stock, $0.001 par value, 500,000 shares authorized and 97,005 and 95,100 shares issued at June 30, 2019 and December 31, 2018, respectively
|
97
|
|
|
95
|
|
||
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and no shares outstanding at June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
312,550
|
|
|
298,929
|
|
||
Accumulated deficit
|
(218,111
|
)
|
|
(229,457
|
)
|
||
Accumulated other comprehensive loss
|
(1,529
|
)
|
|
(1,998
|
)
|
||
Treasury stock, at cost, 24,989 and 24,900 shares at June 30, 2019 and December 31, 2018, respectively
|
(177,444
|
)
|
|
(176,464
|
)
|
||
Total stockholders’ deficit
|
(84,437
|
)
|
|
(108,895
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
1,596,303
|
|
|
$
|
1,548,261
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
11,346
|
|
|
$
|
6,084
|
|
Adjustments to reconcile net income to cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation
|
30,047
|
|
|
26,526
|
|
||
Amortization
|
33,987
|
|
|
32,855
|
|
||
Amortization of financing costs and discounts
|
1,789
|
|
|
3,061
|
|
||
Loss on sale or disposal of assets
|
1,121
|
|
|
215
|
|
||
Accretion of contract rights
|
4,318
|
|
|
4,178
|
|
||
Provision for bad debts
|
5,912
|
|
|
5,114
|
|
||
Deferred income taxes
|
(1,748
|
)
|
|
(1,909
|
)
|
||
Write-down of inventory and fixed assets
|
843
|
|
|
2,575
|
|
||
Reserve for obsolescence
|
670
|
|
|
1,053
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
166
|
|
||
Stock-based compensation
|
4,160
|
|
|
4,305
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Settlement receivables
|
(161,117
|
)
|
|
87,336
|
|
||
Trade and other receivables
|
(16,497
|
)
|
|
(20,230
|
)
|
||
Inventory
|
(4,570
|
)
|
|
(2,359
|
)
|
||
Other assets
|
(18,500
|
)
|
|
1,977
|
|
||
Settlement liabilities
|
(3,478
|
)
|
|
(99,859
|
)
|
||
Other liabilities
|
24,060
|
|
|
(1,857
|
)
|
||
Net cash (used in) provided by operating activities
|
(87,657
|
)
|
|
49,231
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Capital expenditures
|
(45,683
|
)
|
|
(57,936
|
)
|
||
Acquisition
|
(20,000
|
)
|
|
—
|
|
||
Proceeds from sale of fixed assets
|
50
|
|
|
79
|
|
||
Placement fee agreements
|
(11,648
|
)
|
|
(10,117
|
)
|
||
Net cash used in investing activities
|
(77,281
|
)
|
|
(67,974
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Repayments of credit facilities
|
(17,700
|
)
|
|
(4,100
|
)
|
||
Debt issuance costs and discounts
|
—
|
|
|
(1,276
|
)
|
||
Proceeds from exercise of stock options
|
9,450
|
|
|
6,373
|
|
||
Purchase of treasury stock
|
(980
|
)
|
|
(47
|
)
|
||
Net cash (used in) provided by financing activities
|
(9,230
|
)
|
|
950
|
|
||
Effect of exchange rates on cash
|
714
|
|
|
(620
|
)
|
||
Cash, cash equivalents and restricted cash
|
|
|
|
||||
Net decrease for the period
|
(173,454
|
)
|
|
(18,413
|
)
|
||
Balance, beginning of the period
|
299,181
|
|
|
129,604
|
|
||
Balance, end of the period
|
$
|
125,727
|
|
|
$
|
111,191
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Supplemental cash disclosures
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
39,549
|
|
|
$
|
42,844
|
|
Cash paid for income tax, net of refunds
|
293
|
|
|
222
|
|
||
Supplemental non-cash disclosures
|
|
|
|
|
|
||
Accrued and unpaid capital expenditures
|
$
|
3,321
|
|
|
$
|
2,650
|
|
Accrued and unpaid placement fees added during the year
|
585
|
|
|
—
|
|
||
Transfer of leased gaming equipment to inventory
|
7,637
|
|
|
4,519
|
|
||
Operating lease ROU assets obtained in exchange for lease obligations
|
15,132
|
|
|
—
|
|
||
Acquisition-related items
|
|
|
|
||||
Fair value of assets acquired
|
50,240
|
|
|
—
|
|
||
Cash paid
|
20,000
|
|
|
—
|
|
||
Accrued and unpaid liability for loyalty acquisition
|
27,556
|
|
|
—
|
|
||
Liabilities assumed
|
2,684
|
|
|
—
|
|
|
|
Common Stock—
Series A |
|
Additional
|
|
Retained Earnings
|
|
Accumulated
Other |
|
|
|
|
|||||||||||||||
|
|
Number of
Shares |
|
Amount
|
|
Paid-in
Capital |
|
(Accumulated
Deficit) |
|
Comprehensive
Income (Loss) |
|
Treasury
Stock |
|
Total
Deficit
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2018
|
|
93,120
|
|
|
$
|
93
|
|
|
$
|
282,070
|
|
|
$
|
(246,202
|
)
|
|
$
|
(253
|
)
|
|
$
|
(176,341
|
)
|
|
$
|
(140,633
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,609
|
|
|
—
|
|
|
—
|
|
|
4,609
|
|
||||||
Cumulative adjustment related to adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,389
|
|
|
—
|
|
|
—
|
|
|
4,389
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324
|
|
|
—
|
|
|
324
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
2,350
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,350
|
|
||||||
Exercise of options
|
|
707
|
|
|
1
|
|
|
4,298
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,299
|
|
||||||
Restricted share vesting and withholding
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
||||||
Balance, March 31, 2018
|
|
93,832
|
|
|
$
|
94
|
|
|
$
|
288,718
|
|
|
$
|
(237,204
|
)
|
|
$
|
71
|
|
|
$
|
(176,379
|
)
|
|
$
|
(124,700
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,475
|
|
|
—
|
|
|
—
|
|
|
1,475
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,059
|
)
|
|
—
|
|
|
(1,059
|
)
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
1,955
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,955
|
|
||||||
Exercise of options
|
|
575
|
|
|
—
|
|
|
2,076
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,076
|
|
||||||
Restricted share vesting and withholding
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
||||||
Balance, June 30, 2018
|
|
94,408
|
|
|
$
|
94
|
|
|
$
|
292,749
|
|
|
$
|
(235,729
|
)
|
|
$
|
(988
|
)
|
|
$
|
(176,388
|
)
|
|
$
|
(120,262
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, January 1, 2019
|
|
95,100
|
|
|
$
|
95
|
|
|
$
|
298,929
|
|
|
$
|
(229,457
|
)
|
|
$
|
(1,998
|
)
|
|
$
|
(176,464
|
)
|
|
$
|
(108,895
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,860
|
|
|
—
|
|
|
—
|
|
|
5,860
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
504
|
|
|
—
|
|
|
504
|
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
1,773
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,773
|
|
||||||
Exercise of options
|
|
864
|
|
|
1
|
|
|
4,970
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,971
|
|
||||||
Restricted share vesting and withholding
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||
Balance, March 31, 2019
|
|
95,966
|
|
|
$
|
96
|
|
|
$
|
305,672
|
|
|
$
|
(223,597
|
)
|
|
$
|
(1,494
|
)
|
|
$
|
(176,479
|
)
|
|
$
|
(95,802
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,486
|
|
|
—
|
|
|
—
|
|
|
5,486
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
2,387
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,387
|
|
||||||
Exercise of options
|
|
764
|
|
|
1
|
|
|
4,491
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,492
|
|
||||||
Restricted share vesting and withholding
|
|
275
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(965
|
)
|
|
(965
|
)
|
||||||
Balance, June 30, 2019
|
|
97,005
|
|
|
$
|
97
|
|
|
$
|
312,550
|
|
|
$
|
(218,111
|
)
|
|
$
|
(1,529
|
)
|
|
$
|
(177,444
|
)
|
|
$
|
(84,437
|
)
|
|
|
Six Months Ended
|
||
|
|
June 30, 2019
|
||
|
|
|
||
Contract assets
(1)
|
|
|
||
Balance at January 1
|
|
$
|
11,310
|
|
Balance at June 30
|
|
13,403
|
|
|
Increase
|
|
$
|
2,093
|
|
|
|
|
||
Contract liabilities
(2)
|
|
|
||
Balance at January 1
|
|
$
|
15,470
|
|
Balance at June 30
|
|
30,028
|
|
|
Increase
|
|
$
|
14,558
|
|
(1)
|
The current portion of contract assets is included within trade and other receivables, net, and the non-current portion is included within other receivables in our Balance Sheets.
|
(2)
|
The current portion of contract liabilities is included within accounts payable and accrued expenses, and the non-current portion is included within other accrued expenses and liabilities in our Balance Sheets.
|
|
Level of
Hierarchy
|
|
Fair Value
|
|
Outstanding
Balance
|
||||
June 30, 2019
|
|
|
|
|
|
|
|
||
Term loan
|
2
|
|
$
|
790,079
|
|
|
$
|
790,000
|
|
Senior unsecured notes
|
1
|
|
$
|
395,625
|
|
|
$
|
375,000
|
|
December 31, 2018
|
|
|
|
|
|
|
|
||
Term loan
|
2
|
|
$
|
784,479
|
|
|
$
|
807,700
|
|
Senior unsecured notes
|
1
|
|
$
|
354,863
|
|
|
$
|
375,000
|
|
|
|
Classification on our Balance Sheets
|
|
At June 30, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease ROU assets
|
|
Other assets, non-current
|
|
$
|
12,812
|
|
Liabilities
|
|
|
|
|
||
Current operating lease liabilities
|
|
Accounts payable and accrued expenses
|
|
$
|
5,323
|
|
Non-current operating lease liabilities
|
|
Other accrued expenses and liabilities
|
|
$
|
11,116
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
|
June 30, 2019
|
|
June 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
1,524
|
|
|
$
|
2,958
|
|
Operating lease ROU assets obtained in exchange for lease obligations
(1)
|
|
$
|
—
|
|
|
$
|
15,132
|
|
(1)
|
The amount includes approximately
$14.1
million of operating lease ROU assets obtained in exchange for existing lease obligations and approximately
$1.0 million
of operating lease ROU assets obtained in exchange for new lease obligations entered into during the six months ended
June 30, 2019
, excluding amortization for the period. There were no new operating lease ROU assets obtained in exchange for lease obligations during the three months ended
June 30, 2019
.
|
|
|
At June 30, 2019
|
|
Weighted average remaining lease term (in years)
|
|
3.1
|
|
Weighted average discount rate
|
|
5.25
|
%
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
|
June 30, 2019
|
|
June 30, 2019
|
||||
Lease Cost:
|
|
|
|
|
||||
Operating lease cost
|
|
$
|
1,331
|
|
|
$
|
2,275
|
|
Variable lease cost
|
|
$
|
400
|
|
|
$
|
839
|
|
Year ending December 31,
|
|
Amount
|
||
2019 (excluding the six months ended June 30, 2019)
|
|
$
|
3,003
|
|
2020
|
|
6,131
|
|
|
2021
|
|
4,955
|
|
|
2022
|
|
2,710
|
|
|
2023
|
|
1,010
|
|
|
Thereafter
|
|
—
|
|
|
Total future minimum lease payments
|
|
$
|
17,809
|
|
Amount representing interest
|
|
1,370
|
|
|
Present value of future minimum lease payments
|
|
$
|
16,439
|
|
Current operating lease obligations
|
|
5,323
|
|
|
Long-term lease obligations
|
|
$
|
11,116
|
|
Year ending December 31,
|
|
Amount
|
||
2019
|
|
$
|
5,570
|
|
2020
|
|
5,680
|
|
|
2021
|
|
4,598
|
|
|
2022
|
|
2,799
|
|
|
2023
|
|
1,074
|
|
|
Thereafter
|
|
—
|
|
|
Total future minimum lease payments
|
|
$
|
19,721
|
|
|
|
Classification on our Balance Sheets
|
|
At June 30, 2019
|
||
Assets
|
|
|
|
|
||
Net investment in sales-type leases - current
|
|
Trade and other receivables, net
|
|
$
|
882
|
|
Net investment in sales-type leases - non-current
|
|
Other receivables
|
|
$
|
1,655
|
|
|
|
Amount
|
||
Purchase consideration
|
|
|
||
Cash consideration paid at closing
|
|
$
|
20,000
|
|
Cash consideration to be paid in subsequent periods (at fair value)
|
|
18,528
|
|
|
Total cash consideration
|
|
38,528
|
|
|
Contingent consideration (at fair value)
|
|
9,028
|
|
|
Total purchase consideration
|
|
$
|
47,556
|
|
|
|
Amount
|
||
Current assets
|
|
$
|
2,896
|
|
Property, equipment and leased assets, net
|
|
8
|
|
|
Operating lease ROU assets
|
|
239
|
|
|
Goodwill
|
|
32,897
|
|
|
Other intangible assets, net
|
|
14,200
|
|
|
Total assets
|
|
50,240
|
|
|
Contract liabilities
|
|
(2,445
|
)
|
|
Current operating lease liabilities
|
|
(105
|
)
|
|
Non-current operating lease liabilities
|
|
(134
|
)
|
|
Total liabilities
|
|
(2,684
|
)
|
|
Net assets acquired
|
|
$
|
47,556
|
|
|
|
Useful Life (Years)
|
|
Estimated Fair Value
|
||
Other Intangible Assets
|
|
|
|
|
||
Developed technology
|
|
3
|
|
$
|
5,000
|
|
Customer contracts
|
|
5
|
|
9,200
|
|
|
Total other intangible assets
|
|
|
|
$
|
14,200
|
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Trade and other receivables, net
|
|
|
|
|
|
||
Games trade and loans receivables
|
$
|
49,128
|
|
|
$
|
53,011
|
|
FinTech trade and loans receivables
|
29,925
|
|
|
18,890
|
|
||
Other receivables
|
3,872
|
|
|
1,333
|
|
||
Net investment in sales-type leases
(1)
|
2,537
|
|
|
—
|
|
||
Total trade and other receivables, net
|
85,462
|
|
|
73,234
|
|
||
Non-current portion of receivables
|
|
|
|
|
|
||
Games trade and loans receivables
|
(1,838
|
)
|
|
(2,922
|
)
|
||
FinTech trade and loans receivables
|
(10,262
|
)
|
|
(5,925
|
)
|
||
Net investment in sales-type leases
(1)
|
(1,655
|
)
|
|
—
|
|
||
Total non-current portion of receivables
|
(13,755
|
)
|
|
(8,847
|
)
|
||
Total trade and other receivables, current portion
|
$
|
71,707
|
|
|
$
|
64,387
|
|
(1)
|
Refer to “Note 3 — Leases” for discussion on net investment in sales-type leases
recorded on the Balance Sheets as a result of the implementation of ASC 842.
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Inventory
|
|
|
|
|
|
||
Component parts, net of reserves of $1,758 and $1,468 at June 30, 2019 and December 31, 2018, respectively
|
$
|
22,765
|
|
|
$
|
23,197
|
|
Work-in-progress
|
3,131
|
|
|
280
|
|
||
Finished goods
|
2,692
|
|
|
926
|
|
||
Total inventory
|
$
|
28,588
|
|
|
$
|
24,403
|
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Prepaid expenses and other assets
|
|
|
|
|
|
||
Prepaid expenses
|
$
|
13,435
|
|
|
$
|
8,351
|
|
Deposits
|
7,699
|
|
|
8,241
|
|
||
Other
|
3,071
|
|
|
3,667
|
|
||
Total prepaid expenses and other assets
|
$
|
24,205
|
|
|
$
|
20,259
|
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Other assets
|
|
|
|
|
|
||
Operating lease ROU assets
(1)
|
$
|
12,812
|
|
|
$
|
—
|
|
Prepaid expenses and deposits
|
7,582
|
|
|
5,289
|
|
||
Debt issuance costs of revolving credit facility
|
557
|
|
|
654
|
|
||
Other
|
277
|
|
|
309
|
|
||
Total other assets
|
$
|
21,228
|
|
|
$
|
6,252
|
|
(1)
|
Refer to “Note 3 — Leases” for discussion on operating lease ROU assets recorded on the Balance Sheets as a result of the implementation of ASC 842.
|
|
|
|
At June 30, 2019
|
|
At December 31, 2018
|
||||||||||||||||||||
|
Useful Life
(Years)
|
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
|
Cost
|
|
Accumulated
Depreciation
|
|
Net Book
Value
|
||||||||||||
Property, equipment, and leased assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rental pool - deployed
|
2-4
|
|
$
|
174,511
|
|
|
$
|
97,906
|
|
|
$
|
76,605
|
|
|
$
|
183,309
|
|
|
$
|
105,038
|
|
|
$
|
78,271
|
|
Rental pool - undeployed
|
2-4
|
|
25,994
|
|
|
17,283
|
|
|
8,711
|
|
|
23,825
|
|
|
14,680
|
|
|
9,145
|
|
||||||
FinTech equipment
|
3-5
|
|
26,747
|
|
|
21,156
|
|
|
5,591
|
|
|
27,285
|
|
|
21,000
|
|
|
6,285
|
|
||||||
Leasehold and building improvements
|
Lease Term
|
|
11,699
|
|
|
7,397
|
|
|
4,302
|
|
|
11,857
|
|
|
6,938
|
|
|
4,919
|
|
||||||
Machinery, office, and other equipment
|
2-5
|
|
43,320
|
|
|
27,436
|
|
|
15,884
|
|
|
46,322
|
|
|
28,654
|
|
|
17,668
|
|
||||||
Total
|
|
|
$
|
282,271
|
|
|
$
|
171,178
|
|
|
$
|
111,093
|
|
|
$
|
292,598
|
|
|
$
|
176,310
|
|
|
$
|
116,288
|
|
|
|
|
At June 30, 2019
|
|
At December 31, 2018
|
||||||||||||||||||||
|
Weighted Average
Remaining Life
(Years)
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contract rights under placement fee agreements
|
5
|
|
$
|
58,941
|
|
|
$
|
16,496
|
|
|
$
|
42,445
|
|
|
$
|
57,440
|
|
|
$
|
12,178
|
|
|
$
|
45,262
|
|
Customer contracts
|
4
|
|
60,375
|
|
|
47,693
|
|
|
12,682
|
|
|
51,175
|
|
|
46,162
|
|
|
5,013
|
|
||||||
Customer relationships
|
7
|
|
231,100
|
|
|
95,101
|
|
|
135,999
|
|
|
231,100
|
|
|
84,619
|
|
|
146,481
|
|
||||||
Developed technology and software
|
1
|
|
295,164
|
|
|
205,542
|
|
|
89,622
|
|
|
277,243
|
|
|
190,886
|
|
|
86,357
|
|
||||||
Patents, trademarks, and other
|
3
|
|
29,082
|
|
|
25,483
|
|
|
3,599
|
|
|
29,168
|
|
|
24,884
|
|
|
4,284
|
|
||||||
Total
|
|
|
$
|
674,662
|
|
|
$
|
390,315
|
|
|
$
|
284,347
|
|
|
$
|
646,126
|
|
|
$
|
358,729
|
|
|
$
|
287,397
|
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Accounts payable and accrued expenses
|
|
|
|
||||
Trade accounts payable
|
$
|
82,010
|
|
|
$
|
70,796
|
|
Contract liabilities
|
29,607
|
|
|
12,887
|
|
||
Payroll and related expenses
|
9,604
|
|
|
15,055
|
|
||
Cash access processing and related expenses
|
7,583
|
|
|
4,160
|
|
||
Placement fees
|
6,167
|
|
|
16,746
|
|
||
Operating lease liabilities
(1)
|
5,323
|
|
|
—
|
|
||
Other
|
2,356
|
|
|
6,303
|
|
||
Accrued taxes
|
2,130
|
|
|
1,917
|
|
||
Accrued interest
|
1,607
|
|
|
1,374
|
|
||
Total accounts payable and accrued expenses
|
$
|
146,387
|
|
|
$
|
129,238
|
|
(1)
|
Refer to “Note 3 — Leases” for discussion on operating lease liabilities recorded on the Balance Sheets as a result of the implementation of ASC 842.
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Long-term debt
|
|
|
|
||||
Senior secured term loan
|
$
|
790,000
|
|
|
$
|
807,700
|
|
Senior unsecured notes
|
375,000
|
|
|
375,000
|
|
||
Total debt
|
1,165,000
|
|
|
1,182,700
|
|
||
Debt issuance costs and discount
|
(17,793
|
)
|
|
(19,484
|
)
|
||
Total debt after debt issuance costs and discount
|
1,147,207
|
|
|
1,163,216
|
|
||
Current portion of long-term debt
|
(8,200
|
)
|
|
(8,200
|
)
|
||
Long-term debt, less current portion
|
$
|
1,139,007
|
|
|
$
|
1,155,016
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted average shares
|
|
|
|
|
|
|
|
|
|
||
Weighted average number of common shares outstanding - basic
|
71,477
|
|
|
69,203
|
|
|
70,909
|
|
|
68,946
|
|
Potential dilution from equity awards
(1)
|
7,681
|
|
|
4,237
|
|
|
6,302
|
|
|
4,377
|
|
Weighted average number of common shares outstanding - diluted
(1)
|
79,158
|
|
|
73,440
|
|
|
77,211
|
|
|
73,323
|
|
(1)
|
The potential dilution excludes the weighted average effect of equity awards to purchase approximately
0.1 million
and
1.7 million
shares of common stock for the
three and six
months ended
June 30, 2019
,
respectively,
and approximately
8.6 million
and
8.1 million
shares of common stock for the
three and six
months ended June 30, 2018, respectively, as the application of the treasury stock method, as required, makes them anti-dilutive.
|
|
Stock Options
|
|
Restricted Stock
Awards
|
|
Restricted Stock
Units
|
|||
Outstanding, December 31, 2018
|
15,674
|
|
|
8
|
|
|
1,797
|
|
Granted
|
—
|
|
|
—
|
|
|
1,954
|
|
Exercised options or vested shares
|
(1,628
|
)
|
|
(8
|
)
|
|
(278
|
)
|
Canceled or forfeited
|
(1,081
|
)
|
|
—
|
|
|
(41
|
)
|
Outstanding, June 30, 2019
|
12,965
|
|
|
—
|
|
|
3,432
|
|
|
Number of
Options
(in thousands)
|
|
Weighted Average
Exercise Price
(per Share)
|
|
Weighted
Average Life
Remaining
(Years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding, December 31, 2018
|
15,674
|
|
|
$
|
5.39
|
|
|
6.0
|
|
$
|
17,733
|
|
Granted
|
—
|
|
|
|
|
|
|
|
|
|||
Exercised
|
(1,628
|
)
|
|
$
|
5.67
|
|
|
|
|
|
||
Canceled or forfeited
|
(1,081
|
)
|
|
$
|
7.49
|
|
|
|
|
|
||
Outstanding, June 30, 2019
|
12,965
|
|
|
$
|
5.18
|
|
|
5.8
|
|
$
|
87,485
|
|
Vested and expected to vest, June 30, 2019
|
12,647
|
|
|
$
|
5.24
|
|
|
5.8
|
|
$
|
84,661
|
|
Exercisable, June 30, 2019
|
10,173
|
|
|
$
|
5.75
|
|
|
5.3
|
|
$
|
62,879
|
|
|
Shares
Outstanding
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
(per share)
|
|||
Outstanding, December 31, 2018
|
8
|
|
|
$
|
6.66
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Vested
|
(8
|
)
|
|
$
|
6.66
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Outstanding, June 30, 2019
|
—
|
|
|
$
|
—
|
|
|
Shares
Outstanding
(in thousands)
|
|
Weighted
Average Grant
Date Fair Value
(per share)
|
|
Weighted
Average Life
Remaining
(years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding, December 31, 2018
|
1,797
|
|
|
$
|
7.49
|
|
|
2.0
|
|
$
|
9,254
|
|
Granted
|
1,954
|
|
|
$
|
10.15
|
|
|
|
|
|
|
|
Vested
|
(278
|
)
|
|
$
|
7.45
|
|
|
|
|
|
|
|
Forfeited
|
(41
|
)
|
|
$
|
7.84
|
|
|
|
|
|
|
|
Outstanding, June 30, 2019
|
3,432
|
|
|
$
|
9.00
|
|
|
2.2
|
|
$
|
40,944
|
|
Vested and expected to vest, June 30, 2019
|
2,241
|
|
|
$
|
8.94
|
|
|
2.0
|
|
$
|
26,733
|
|
•
|
The Games segment provides solutions directly to gaming establishments to offer their patrons gaming entertainment- related experiences including: leased gaming equipment; sales of gaming equipment; gaming systems; interactive solutions; and ancillary products and services.
|
•
|
The FinTech segment provides solutions directly to gaming establishments to offer their patrons cash access-related services and products, including: access to cash at gaming facilities via ATM cash withdrawals; credit card cash access transactions and POS debit card cash access transactions; check-related services; equipment, including self-service enrollment and loyalty card printing kiosks and a marketing platform that manages and delivers a gaming operator’s marketing programs, and related maintenance services; compliance, audit, and data software; casino credit data and reporting services, and other ancillary offerings.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Games
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Gaming operations
|
$
|
45,576
|
|
|
$
|
43,022
|
|
|
$
|
89,862
|
|
|
$
|
83,078
|
|
Gaming equipment and systems
|
23,412
|
|
|
22,278
|
|
|
46,499
|
|
|
42,431
|
|
||||
Gaming other
|
391
|
|
|
648
|
|
|
445
|
|
|
656
|
|
||||
Total revenues
|
69,379
|
|
|
65,948
|
|
|
136,806
|
|
|
126,165
|
|
||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
||||||
Cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
||||||
Gaming operations
|
3,726
|
|
|
4,211
|
|
|
7,850
|
|
|
8,393
|
|
||||
Gaming equipment and systems
|
13,432
|
|
|
12,045
|
|
|
25,961
|
|
|
22,786
|
|
||||
Gaming other
|
347
|
|
|
559
|
|
|
347
|
|
|
559
|
|
||||
Cost of revenues
|
17,505
|
|
|
16,815
|
|
|
34,158
|
|
|
31,738
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
15,964
|
|
|
16,210
|
|
|
30,631
|
|
|
28,217
|
|
||||
Research and development
|
5,265
|
|
|
4,595
|
|
|
11,112
|
|
|
8,906
|
|
||||
Depreciation
|
13,489
|
|
|
12,112
|
|
|
26,863
|
|
|
23,252
|
|
||||
Amortization
|
14,604
|
|
|
13,907
|
|
|
28,386
|
|
|
27,392
|
|
||||
Total costs and expenses
|
66,827
|
|
|
63,639
|
|
|
131,150
|
|
|
119,505
|
|
||||
Operating income
|
$
|
2,552
|
|
|
$
|
2,309
|
|
|
$
|
5,656
|
|
|
$
|
6,660
|
|
(1)
|
Exclusive of depreciation and amortization.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
FinTech
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Cash access services
|
$
|
39,696
|
|
|
$
|
39,739
|
|
|
$
|
80,528
|
|
|
$
|
77,958
|
|
Equipment
|
7,835
|
|
|
4,765
|
|
|
14,863
|
|
|
9,183
|
|
||||
Information services and other
|
12,796
|
|
|
8,230
|
|
|
21,284
|
|
|
16,377
|
|
||||
Total revenues
|
60,327
|
|
|
52,734
|
|
|
116,675
|
|
|
103,518
|
|
||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
||||||
Cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
||||||
Cash access services
|
2,968
|
|
|
2,446
|
|
|
5,665
|
|
|
4,676
|
|
||||
Equipment
|
4,597
|
|
|
3,426
|
|
|
8,927
|
|
|
5,940
|
|
||||
Information services and other
|
970
|
|
|
980
|
|
|
1,928
|
|
|
2,197
|
|
||||
Cost of revenues
|
8,535
|
|
|
6,852
|
|
|
16,520
|
|
|
12,813
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
23,203
|
|
|
21,360
|
|
|
43,184
|
|
|
41,540
|
|
||||
Research and development
|
1,407
|
|
|
—
|
|
|
3,091
|
|
|
—
|
|
||||
Depreciation
|
1,769
|
|
|
1,589
|
|
|
3,184
|
|
|
3,274
|
|
||||
Amortization
|
3,086
|
|
|
2,645
|
|
|
5,601
|
|
|
5,463
|
|
||||
Total costs and expenses
|
38,000
|
|
|
32,446
|
|
|
71,580
|
|
|
63,090
|
|
||||
Operating income
|
$
|
22,327
|
|
|
$
|
20,288
|
|
|
$
|
45,095
|
|
|
$
|
40,428
|
|
(1)
|
Exclusive of depreciation and amortization.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Total Games and FinTech
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
$
|
129,706
|
|
|
$
|
118,682
|
|
|
$
|
253,481
|
|
|
$
|
229,683
|
|
Costs and expenses
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
(1)
|
26,040
|
|
|
23,667
|
|
|
50,678
|
|
|
44,551
|
|
||||
Operating expenses
|
39,167
|
|
|
37,570
|
|
|
73,815
|
|
|
69,757
|
|
||||
Research and development
|
6,672
|
|
|
4,595
|
|
|
14,203
|
|
|
8,906
|
|
||||
Depreciation
|
15,258
|
|
|
13,701
|
|
|
30,047
|
|
|
26,526
|
|
||||
Amortization
|
17,690
|
|
|
16,552
|
|
|
33,987
|
|
|
32,855
|
|
||||
Total costs and expenses
|
104,827
|
|
|
96,085
|
|
|
202,730
|
|
|
182,595
|
|
||||
Operating income
|
$
|
24,879
|
|
|
$
|
22,597
|
|
|
$
|
50,751
|
|
|
$
|
47,088
|
|
(1)
|
Exclusive of depreciation and amortization.
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Total assets
|
|
|
|
|
|
||
Games
|
$
|
898,215
|
|
|
$
|
912,849
|
|
FinTech
|
698,088
|
|
|
635,412
|
|
||
Total assets
|
$
|
1,596,303
|
|
|
$
|
1,548,261
|
|
|
Three Months Ended
|
|
|
|||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
2019 vs 2018
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Games revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
$
|
45,576
|
|
|
35
|
%
|
|
$
|
43,022
|
|
|
36
|
%
|
|
$
|
2,554
|
|
|
6
|
%
|
Gaming equipment and systems
|
23,412
|
|
|
18
|
%
|
|
22,278
|
|
|
19
|
%
|
|
1,134
|
|
|
5
|
%
|
|||
Gaming other
|
391
|
|
|
—
|
%
|
|
648
|
|
|
1
|
%
|
|
(257
|
)
|
|
(40
|
)%
|
|||
Games total revenues
|
69,379
|
|
|
53
|
%
|
|
65,948
|
|
|
56
|
%
|
|
3,431
|
|
|
5
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
FinTech revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
39,696
|
|
|
31
|
%
|
|
39,739
|
|
|
33
|
%
|
|
(43
|
)
|
|
—
|
%
|
|||
Equipment
|
7,835
|
|
|
6
|
%
|
|
4,765
|
|
|
4
|
%
|
|
3,070
|
|
|
64
|
%
|
|||
Information services and other
|
12,796
|
|
|
10
|
%
|
|
8,230
|
|
|
7
|
%
|
|
4,566
|
|
|
55
|
%
|
|||
FinTech total revenues
|
60,327
|
|
|
47
|
%
|
|
52,734
|
|
|
44
|
%
|
|
7,593
|
|
|
14
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total revenues
|
129,706
|
|
|
100
|
%
|
|
118,682
|
|
|
100
|
%
|
|
11,024
|
|
|
9
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Games cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
3,726
|
|
|
3
|
%
|
|
4,211
|
|
|
4
|
%
|
|
(485
|
)
|
|
(12
|
)%
|
|||
Gaming equipment and systems
|
13,432
|
|
|
10
|
%
|
|
12,045
|
|
|
10
|
%
|
|
1,387
|
|
|
12
|
%
|
|||
Gaming other
|
347
|
|
|
—
|
%
|
|
559
|
|
|
—
|
%
|
|
(212
|
)
|
|
(38
|
)%
|
|||
Games total cost of revenues
|
17,505
|
|
|
13
|
%
|
|
16,815
|
|
|
14
|
%
|
|
690
|
|
|
4
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
2,968
|
|
|
2
|
%
|
|
2,446
|
|
|
2
|
%
|
|
522
|
|
|
21
|
%
|
|||
Equipment
|
4,597
|
|
|
4
|
%
|
|
3,426
|
|
|
3
|
%
|
|
1,171
|
|
|
34
|
%
|
|||
Information services and other
|
970
|
|
|
1
|
%
|
|
980
|
|
|
1
|
%
|
|
(10
|
)
|
|
(1
|
)%
|
|||
FinTech total cost of revenues
|
8,535
|
|
|
7
|
%
|
|
6,852
|
|
|
6
|
%
|
|
1,683
|
|
|
25
|
%
|
|
Three Months Ended
|
|
|
|||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
2019 vs 2018
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|||||||||||||||
Operating expenses
|
39,167
|
|
|
30
|
%
|
|
37,570
|
|
|
31
|
%
|
|
1,597
|
|
|
4
|
%
|
|||
Research and development
|
6,672
|
|
|
5
|
%
|
|
4,595
|
|
|
4
|
%
|
|
2,077
|
|
|
45
|
%
|
|||
Depreciation
|
15,258
|
|
|
12
|
%
|
|
13,701
|
|
|
12
|
%
|
|
1,557
|
|
|
11
|
%
|
|||
Amortization
|
17,690
|
|
|
14
|
%
|
|
16,552
|
|
|
14
|
%
|
|
1,138
|
|
|
7
|
%
|
|||
Total costs and expenses
|
104,827
|
|
|
81
|
%
|
|
96,085
|
|
|
81
|
%
|
|
8,742
|
|
|
9
|
%
|
|||
Operating income
|
24,879
|
|
|
19
|
%
|
|
22,597
|
|
|
19
|
%
|
|
2,282
|
|
|
10
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense, net of interest income
|
20,433
|
|
|
16
|
%
|
|
22,122
|
|
|
19
|
%
|
|
(1,689
|
)
|
|
(8
|
)%
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
%
|
|
166
|
|
|
—
|
%
|
|
(166
|
)
|
|
(100
|
)%
|
|||
Total other expenses
|
20,433
|
|
|
16
|
|
|
22,288
|
|
|
19
|
%
|
|
(1,855
|
)
|
|
(8
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income tax
|
4,446
|
|
|
3
|
%
|
|
309
|
|
|
—
|
%
|
|
4,137
|
|
|
1,339
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income tax benefit
|
(1,040
|
)
|
|
(1
|
)%
|
|
(1,166
|
)
|
|
(1
|
)%
|
|
126
|
|
|
(11
|
)%
|
|||
Net income
|
$
|
5,486
|
|
|
4
|
%
|
|
$
|
1,475
|
|
|
1
|
%
|
|
$
|
4,011
|
|
|
272
|
%
|
|
Six Months Ended
|
|
|
|||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
2019 vs 2018
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Games revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
$
|
89,862
|
|
|
35
|
%
|
|
$
|
83,078
|
|
|
36
|
%
|
|
$
|
6,784
|
|
|
8
|
%
|
Gaming equipment and systems
|
46,499
|
|
|
19
|
%
|
|
42,431
|
|
|
19
|
%
|
|
4,068
|
|
|
10
|
%
|
|||
Gaming other
|
445
|
|
|
—
|
%
|
|
656
|
|
|
—
|
%
|
|
(211
|
)
|
|
(32
|
)%
|
|||
Games total revenues
|
136,806
|
|
|
54
|
%
|
|
126,165
|
|
|
55
|
%
|
|
10,641
|
|
|
8
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
FinTech revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
80,528
|
|
|
32
|
%
|
|
77,958
|
|
|
34
|
%
|
|
2,570
|
|
|
3
|
%
|
|||
Equipment
|
14,863
|
|
|
6
|
%
|
|
9,183
|
|
|
4
|
%
|
|
5,680
|
|
|
62
|
%
|
|||
Information services and other
|
21,284
|
|
|
8
|
%
|
|
16,377
|
|
|
7
|
%
|
|
4,907
|
|
|
30
|
%
|
|||
FinTech total revenues
|
116,675
|
|
|
46
|
%
|
|
103,518
|
|
|
45
|
%
|
|
13,157
|
|
|
13
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total revenues
|
253,481
|
|
|
100
|
%
|
|
229,683
|
|
|
100
|
%
|
|
23,798
|
|
|
10
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Games cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Gaming operations
|
7,850
|
|
|
3
|
%
|
|
8,393
|
|
|
4
|
%
|
|
(543
|
)
|
|
(6
|
)%
|
|||
Gaming equipment and systems
|
25,961
|
|
|
10
|
%
|
|
22,786
|
|
|
10
|
%
|
|
3,175
|
|
|
14
|
%
|
|||
Gaming other
|
347
|
|
|
—
|
%
|
|
559
|
|
|
—
|
%
|
|
(212
|
)
|
|
(38
|
)%
|
|||
Games total cost of revenues
|
34,158
|
|
|
13
|
%
|
|
31,738
|
|
|
14
|
%
|
|
2,420
|
|
|
8
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
FinTech cost of revenues
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash access services
|
5,665
|
|
|
2
|
%
|
|
4,676
|
|
|
2
|
%
|
|
989
|
|
|
21
|
%
|
|||
Equipment
|
8,927
|
|
|
4
|
%
|
|
5,940
|
|
|
3
|
%
|
|
2,987
|
|
|
50
|
%
|
|||
Information services and other
|
1,928
|
|
|
1
|
%
|
|
2,197
|
|
|
1
|
%
|
|
(269
|
)
|
|
(12
|
)%
|
|||
FinTech total cost of revenues
|
16,520
|
|
|
7
|
%
|
|
12,813
|
|
|
6
|
%
|
|
3,707
|
|
|
29
|
%
|
|
Six Months Ended
|
|
|
|||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
2019 vs 2018
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
|
|
|
|
|
|||||||||||||||
Operating expenses
|
73,815
|
|
|
29
|
%
|
|
69,757
|
|
|
30
|
%
|
|
4,058
|
|
|
6
|
%
|
|||
Research and development
|
14,203
|
|
|
6
|
%
|
|
8,906
|
|
|
4
|
%
|
|
5,297
|
|
|
59
|
%
|
|||
Depreciation
|
30,047
|
|
|
12
|
%
|
|
26,526
|
|
|
12
|
%
|
|
3,521
|
|
|
13
|
%
|
|||
Amortization
|
33,987
|
|
|
13
|
%
|
|
32,855
|
|
|
14
|
%
|
|
1,132
|
|
|
3
|
%
|
|||
Total costs and expenses
|
202,730
|
|
|
80
|
%
|
|
182,595
|
|
|
79
|
%
|
|
20,135
|
|
|
11
|
%
|
|||
Operating income
|
50,751
|
|
|
20
|
%
|
|
47,088
|
|
|
21
|
%
|
|
3,663
|
|
|
8
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense, net of interest income
|
40,833
|
|
|
16
|
%
|
|
42,429
|
|
|
19
|
%
|
|
(1,596
|
)
|
|
(4
|
)%
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
%
|
|
166
|
|
|
—
|
%
|
|
(166
|
)
|
|
(100
|
)%
|
|||
Total other expenses
|
40,833
|
|
|
16
|
%
|
|
42,595
|
|
|
19
|
%
|
|
(1,762
|
)
|
|
(4
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before income tax
|
9,918
|
|
|
4
|
%
|
|
4,493
|
|
|
2
|
%
|
|
5,425
|
|
|
121
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income tax benefit
|
(1,428
|
)
|
|
(1
|
)%
|
|
(1,591
|
)
|
|
(1
|
)%
|
|
163
|
|
|
(10
|
)%
|
|||
Net income
|
$
|
11,346
|
|
|
4
|
%
|
|
$
|
6,084
|
|
|
3
|
%
|
|
$
|
5,262
|
|
|
86
|
%
|
|
At June 30,
|
|
At December 31,
|
||||
|
2019
|
|
2018
|
||||
Balance sheet data
|
|
|
|
|
|
||
Total assets
|
$
|
1,596,303
|
|
|
$
|
1,548,261
|
|
Total borrowings
|
1,147,207
|
|
|
1,163,216
|
|
||
Total stockholders’ deficit
|
(84,437
|
)
|
|
(108,895
|
)
|
||
Cash available
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
123,845
|
|
|
$
|
297,532
|
|
Settlement receivables
|
244,183
|
|
|
82,359
|
|
||
Settlement liabilities
|
(331,291
|
)
|
|
(334,198
|
)
|
||
Net cash position
(1)
|
36,737
|
|
|
45,693
|
|
||
Undrawn revolving credit facility
|
35,000
|
|
|
35,000
|
|
||
Net cash available
(1)
|
$
|
71,737
|
|
|
$
|
80,693
|
|
(1)
|
Non-GAAP measure. In order to enhance investor understanding of our cash balance, we are providing in this Quarterly Report on Form 10-Q net cash position and net cash available, which are not measures of our financial performance or position under GAAP. Accordingly, these measures should not be considered in isolation or as a substitute for, and should be read in conjunction with, our cash and cash equivalents prepared in accordance with GAAP. We define (a) net cash position as cash and cash equivalents plus settlement receivables less settlement liabilities, and (b) net cash available as net cash position plus undrawn amounts available under our Revolving Credit Facility (defined herein). We present net cash position because our cash position, as measured by cash and cash equivalents, depends upon changes in settlement receivables and the timing of payments related to settlement liabilities. As such, our cash and cash equivalents can change substantially based upon the timing of our receipt of payments for settlement receivables and payments we make to customers for our settlement liabilities. We present net cash available as management monitors this amount in connection with its forecasting of cash flows and future cash requirements, both on a short-term and long-term basis.
|
|
Six Months Ended June 30,
|
|
2019 vs 2018
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Cash flow activities
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
$
|
(87,657
|
)
|
|
$
|
49,231
|
|
|
$
|
(136,888
|
)
|
Investing activities
|
(77,281
|
)
|
|
(67,974
|
)
|
|
(9,307
|
)
|
|||
Financing activities
|
(9,230
|
)
|
|
950
|
|
|
(10,180
|
)
|
|||
Effect of exchange rates on cash
|
714
|
|
|
(620
|
)
|
|
1,334
|
|
|||
Cash, cash equivalents and restricted cash
|
|
|
|
|
|
|
|
|
|||
Net decrease for the period
|
(173,454
|
)
|
|
(18,413
|
)
|
|
(155,041
|
)
|
|||
Balance, beginning of the period
|
299,181
|
|
|
129,604
|
|
|
169,577
|
|
|||
Balance, end of the period
|
$
|
125,727
|
|
|
$
|
111,191
|
|
|
$
|
14,536
|
|
|
Total Number of
Shares Purchased
(1)
(in thousands)
|
|
Average Price Paid per
Share
(2)
|
|||
Tax Withholdings
|
|
|
|
|
|
|
4/1/19 - 4/30/19
|
0.9
|
|
|
$
|
10.26
|
|
5/1/19 - 5/31/19
|
84.5
|
|
|
$
|
11.20
|
|
6/1/19 - 6/30/19
|
0.8
|
|
|
$
|
11.14
|
|
Total
|
86.2
|
|
|
$
|
11.18
|
|
(1)
|
Represents withholding of vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to the restricted stock vesting.
|
(2)
|
Represents the average price per share of common stock withheld from restricted stock awards on the date of withholding
.
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
†*10.1
|
|
|
|
|
|
*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.
|
August 6, 2019
|
|
|
EVERI HOLDINGS INC.
|
(Date)
|
|
|
(Registrant)
|
|
|
|
|
|
|
By:
|
/s/ Todd A. Valli
|
|
|
|
Todd A. Valli
|
|
|
|
Senior Vice President, Corporate Finance and Chief Accounting Officer
|
|
|
|
(For the Registrant and as Principal Accounting Officer)
|
Participant:
|
|
Award Number:
|
|
Date of Grant:
|
|
||
Total Number of Units:
|
, subject to adjustment as provided by the Restricted Stock Units Agreement.
|
||
Vesting Start Date:
|
May 1, 2019
|
||
Vested Units:
|
Except as provided in the Restricted Stock Units Agreement and provided that the Participant’s Service has not terminated prior to the end of the Performance Period, the number of Units that will be earned and become eligible to become Vested Units (disregarding any resulting fractional Unit) shall be based on the achievement of the performance metrics described on
Exhibit A
attached hereto. For the avoidance of doubt, 50% of the Total Number of Units may be earned and become eligible to become Vested Units based on the Revenue Growth Rate metric and 50% of the Total Number of Units may be earned and become eligible to become Vested Units based on the Free Cash Flow Growth Rate metric (each as defined in
Exhibit A
), with achievement of each metric to be determined independently of one another.
At a meeting of the Committee occurring after the Committee has received the Company’s audited financial statements for the fiscal year ending with the end of the Performance Period, the Committee shall determine and certify in writing the level of achievement of the performance metrics described on
Exhibit A
and the resulting number of Units that have been earned and become eligible to become Vested Units.
Subject to the acceleration of vesting as provided below under “Termination of Service” and “Change in Control,” the number of Units earned as determined pursuant to
Exhibit A
and certified by the Committee will vest and become Vested Units on the third anniversary of the Vesting Start Date (the “
Final Vesting Date
”), subject to the Participant’s continued Service with the Company through such Final Vesting Date.
|
||
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 prior to the Final Vesting Date, the number of Units that will be earned and become eligible to become Vested Units (disregarding any resulting fractional Unit) shall be determined as provided above based on the actual achievement of the performance metrics through the end of the Performance Period (and without regard to the Participant’s failure to serve for the entire Performance Period or to serve through the Final Vesting Date). The Award shall be settled on the Final Vesting Date as provided above.
|
Termination of Service – Other than Death or Disability
|
Termination without Cause during Performance Period
: If the Participant’s Service is terminated during the Performance Period by the Company without Cause the number of Units that will be earned and become eligible to become Vested Units (disregarding any resulting fractional Unit) shall be determined as provided above, based on actual achievement of the performance metrics through the end of the Performance Period, with the result prorated based on the ratio of (i) the number of days that have elapsed from the beginning of the Performance Period through the date the Participant ceases to be an employee of the Company, to (ii) the total number of days in the Performance Period. The Award shall be settled on the Final Vesting Date as provided above. If the Participant’s Service is terminated during the Performance Period for any other reason, the Award shall be immediately forfeited and no Units shall be earned or become eligible to become Vested Units.
Termination without Cause following Performance Period
: If the Participant’s Service is terminated following the end of the Performance Period and prior to the Final Vesting Date by the Company without Cause, then the number of Units that will be earned and become eligible to become Vested Units (disregarding any resulting fractional Unit) shall be determined as provided above, based on actual achievement of the performance metrics through the end of the Performance Period (and without regard to the Participant’s failure to serve through the Final Vesting Date). The Award shall be settled on the Final Vesting Date as provided above. If the Participant’s Service is terminated following the end of the Performance Period and prior to the Final Vesting Date for any other reason, then the Award shall be immediately forfeited and no Units shall be earned or become eligible to become Vested Units.
|
||
Change in Control:
|
Change in Control during Performance Period
: Upon the occurrence of a Change in Control during the Performance Period, 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 accelerate and the number of Units that will be earned and immediately become Vested Units (disregarding any resulting fractional Unit) shall be determined based on the greater of (A) the assumed achievement of the performance metrics set forth in
Exhibit A
at 100% of Target with the result prorated based on the ratio of (1) the number of days that have elapsed from the beginning of the Performance Period through the date of the Change in Control or the Involuntary Termination, as applicable, to (2) the total number of days in the Performance Period, or (b) the actual achievement of the performance metrics set forth in
Exhibit A
through the date of the Change in Control or the Involuntary Termination, as applicable.
Change in Control following Performance Period
: Upon the occurrence of a Change in Control following the end of the Performance Period and prior to the Final Vesting Date, then vesting shall accelerate and the number of Units that will be earned and immediately become Vested Units (disregarding any resulting fractional Unit) shall be determined as provided above, based on actual achievement of the performance metrics through the end of the Performance Period (and without regard to the Participant’s failure to serve through the Final Vesting Date).
|
||
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:
|
|
|
|
[officer name]
|
Signature
|
|
[officer title]
|
|
|
Date
|
|
Address:
|
|
|
|
|
Address
|
|
|
|
ATTACHMENTS:
|
2014 Equity Incentive Plan, as amended to the Date of Grant; Restricted Stock Units Agreement and Plan Prospectus
|
1.
|
The number of Units earned and eligible to become Vested Units will be determined, based on the extent to which the Revenue Growth Rate metrics described below have been achieved, as measured over the period beginning on January 1, 2019 and ending on December 31, 2021 (the “
Performance Period
”).
|
2.
|
For purposes of this agreement, “
Revenue
” means the total consolidated revenues of the Company determined in accordance with GAAP and as reported in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, for the corresponding fiscal year, as may be adjusted in accordance with this Exhibit or the Plan.
|
3.
|
For purposes of this agreement, “
Revenue Growth Rate
” means the compounded annual growth rate, expressed as a percentage (rounded to the nearest tenth of a percent), of the Company’s Revenue during the Performance Period, as determined at the end of the Performance Period.
|
4.
|
Based on the Revenue Growth Rate of the Company over the Performance Period, the number of Units that will be earned and become eligible to become Vested Units will be equal to the product of (a) Total Number of Units, multiplied by (b) 0.5, and multiplied by (c) the percentage determined below:
|
Below Threshold
|
|
Revenue Growth Rate of less than 7.0%
|
|
0%
|
Threshold
|
|
Revenue Growth Rate of 7.0%
|
|
50%
|
Target
|
|
Revenue Growth Rate of 8.8%
|
|
100%
|
Maximum
|
|
Revenue Growth Rate of 11.4%
|
|
200%
|
5.
|
All calculations with respect to Revenue and the Revenue Growth Rate shall be made by the Committee (or its designee) in the Committee’s sole discretion, and such calculations and resulting determinations shall be final and binding. Without limiting the foregoing, the calculation of Revenue and Revenue Growth Rate shall exclude the effect (whether positive or negative) of any change in accounting standards or any unusual or infrequently occurring event or transaction, as determined by the Committee, including mergers, acquisitions, divestitures or natural disasters, in each case occurring after the date of this Agreement, with each such adjustment, if any, made solely for the purpose of providing a consistent basis from period to period for the calculation of Revenue and Revenue Growth Rate in order to prevent the dilution or enlargement of the Participant’s rights with respect to the Award.
|
1.
|
The number of Units earned and eligible to become Vested Units will be determined, based on the extent to which the Free Cash Flow Growth Rate metrics described below have been achieved, as measured over the period beginning on January 1, 2019 and ending on December 31, 2021 (the “
Performance Period
”).
|
2.
|
For purposes of this agreement, “
Free Cash Flow
” means the Company’s “Free Cash Flow” as reported in the Company’s annual earnings release filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission, for the corresponding fiscal year, as may be adjusted in accordance with this Exhibit or the Plan.
|
3.
|
For purposes of this agreement, “
Free Cash Flow Growth Rate
” means the compounded annual growth rate, expressed as a percentage (rounded to the nearest tenth of a percent), of the Company’s Free Cash Flow during the Performance Period, as determined at the end of the Performance Period.
|
4.
|
Based on the Free Cash Flow Growth Rate of the Company over the Performance Period, the number of Units that will be earned and become eligible to become Vested Units will be equal to the product of (a) the Total Number of Units, multiplied by (b) 0.5, and multiplied by (c) the percentage determined below:
|
Below Threshold
|
|
Revenue Growth Rate of less than 60.7%
|
|
0%
|
Threshold
|
|
Revenue Growth Rate of 60.7%
|
|
50%
|
Target
|
|
Revenue Growth Rate of 75.9%
|
|
100%
|
Maximum
|
|
Revenue Growth Rate of 98.7%
|
|
200%
|
5.
|
All calculations with respect to the Free Cash Flow Growth Rate shall be made by the Committee (or its designee) in the Committee’s sole discretion, and such calculations and resulting determinations shall be final and binding. Without limiting the foregoing, the calculation of Free Cash Flow and Free Cash Flow Growth Rate shall exclude the effect (whether positive or negative) of any change in accounting standards or any unusual or infrequently occurring event or transaction, as determined by the Committee, including mergers, acquisitions, divestitures or natural disasters, in each case occurring after the date of this Agreement, with each such adjustment, if any, made solely for the purpose of providing a consistent basis from period to period for the calculation of Free Cash Flow and Free Cash Flow Growth Rate in order to prevent the dilution or enlargement of the Participant’s rights with respect to the Award.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Everi Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: August 6, 2019
|
By:
|
/s/ Michael D. Rumbolz
|
|
|
Michael D. Rumbolz
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Everi Holdings Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: August 6, 2019
|
By:
|
/s/ Randy L. Taylor
|
|
|
Randy L. Taylor
|
|
|
Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
|
Dated:
|
|
August 6, 2019
|
|
By:
|
/s/ Michael D. Rumbolz
|
|
|
|
|
|
Michael D. Rumbolz
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
Dated:
|
|
August 6, 2019
|
|
By:
|
/s/ Randy L. Taylor
|
|
|
|
|
|
Randy L. Taylor
|
|
|
|
|
|
Chief Financial Officer
|