10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30,2015

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM             TO             

Commission File Number: 001 — 32622

EVERI HOLDINGS INC.

(Exact name of registrant as specified in its charter)

DELAWARE	20-0723270
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
7250 S. TENAYA WAY, SUITE 100
LAS VEGAS, NEVADA	89113
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(800) 833-7110

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2015, there were65,956,802 shares of the registrant’s $0.001 par value per share common stock outstanding.

TABLE OF CONTENTS

		Page
PART I: FINANCIAL INFORMATION
Item 1:	Financial Statements	3
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2015 and 2014	3
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September30, 2015 and 2014	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4:	Controls and Procedures	47
PART II: OTHER INFORMATION
Item 1:	Legal Proceedings	48
Item 1A:	Risk Factors	48
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3:	Defaults Upon Senior Securities	49
Item 4:	Mine Safety Disclosures	49
Item 5:	Other Information	49
Item 6:	Exhibits	50
Signatures		51

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements.

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues	$	208,746	$	145,481	$	622,583	$	440,998
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		129,817		108,568		384,062		331,181
Operating expenses		26,295		20,934		68,982		62,233
Research and Development		5,463		—		15,369		—
Depreciation		10,943		1,856		32,037		5,702
Amortization		21,512		3,352		62,941		8,476
Total costs and expenses		194,030		134,710		563,391		407,592
Operating income		14,716		10,771		59,192		33,406
Other expenses
Interest expense, net of interest income		24,696		1,996		75,309		5,625
Loss on extinguishment of debt		87		—		13,063		—
Total other expenses		24,783		1,996		88,372		5,625
(Loss) income from operations before tax		(10,067)		8,775		(29,180)		27,781
Income tax (benefit) provision		(3,957)		3,099		(10,798)		9,892
Net (loss) income		(6,110)		5,676		(18,382)		17,889
Foreign currency translation		(788)		(839)		(850)		(457)
Comprehensive (loss) income	$	(6,898)	$	4,837	$	(19,232)	$	17,432
(Loss) earnings per share
Basic	$	(0.09)	$	0.09	$	(0.28)	$	0.27
Diluted	$	(0.09)	$	0.09	$	(0.28)	$	0.27
Weighted average common shares outstanding
Basic		65,941		65,589		65,804		65,853
Diluted		65,941		66,747		65,804		67,051

See notes to unaudited condensed consolidated financial statements.

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EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

	At September 30,		At December 31,
	2015		2014
ASSETS
Current assets
Cash and cash equivalents	$	111,473	$	89,095
Settlement receivables		25,482		43,288
Trade receivables, net of allowances for doubtful accounts of 3.2 million and $2.8 million at September 30,  2015 and December 31, 2014 respectively		47,702		37,697
Other receivables		5,331		20,553
Inventory		25,481		27,163
Prepaid expenses and other assets		19,262		18,988
Deferred tax asset		9,591		9,591
Total current assets		244,322		246,375
Non-current assets
Property, equipment and leasehold improvements, net		102,101		106,085
Goodwill		863,907		857,913
Other intangible assets, net		397,161		436,785
Other receivables, non-current		7,076		9,184
Other assets, non-current		36,279		50,943
Total non-current assets		1,406,524		1,460,910
Total assets	$	1,650,846	$	1,707,285
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	106,579	$	119,157
Accounts payable and accrued expenses		106,602		104,668
Current portion of long-term debt		10,000		10,000
Total current liabilities		223,181		233,825
Non-current liabilities
Deferred tax liability, non-current		45,434		57,333
Long-term debt, less current portion		1,155,542		1,178,787
Other accrued expenses and liabilities		4,366		5,867
Total non-current liabilities		1,205,342		1,241,987
Total liabilities		1,428,523		1,475,812
Commitments and Contingencies (Note 13)
Stockholders’ Equity
Common stock, $0.001 par value, 500,000 shares authorized and 90,777 and 90,405 shares issued at September 30, 2015 and December 31, 2014, respectively		91		90
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at September 30, 2015 and December 31, 2014, respectively		—		—
Additional paid-in capital		255,817		245,682
Retained earnings		141,770		160,152
Accumulated other comprehensive income		719		1,569
Treasury stock, at cost, 24,824 and 24,816 shares at September 30, 2015 and December 31, 2014, respectively		(176,074)		(176,020)
Total stockholders’ equity		222,323		231,473
Total liabilities and stockholders’ equity	$	1,650,846	$	1,707,285

See notes to unaudited condensed consolidated financial statements.

4

EVERI HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)

	Nine Months Ended September 30,
	2015		2014
Cash flows from operating activities
Net (loss) income	$	(18,382)	$	17,889
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and Amortization		94,978		14,178
Amortization of financing costs		5,459		1,412
Loss/(gain) on sale or disposal of assets		(3,412)		79
Accretion of contract rights		6,006		—
Provision for bad debts		6,967		6,770
Loss on early extinguishment of debt		13,063		—
Stock-based compensation		6,088		7,533
Other non-cash items		127		—
Changes in operating assets and liabilities:
Trade and other receivables		1,873		(6,547)
Settlement receivables		17,672		10,828
Inventory		1,833		(1,430)
Prepaid and other assets		(1,662)		(2,927)
Deferred income taxes		(11,899)		8,554
Settlement liabilities		(12,120)		(28,125)
Accounts payable and accrued expenses		(3,228)		1,226
Net cash provided by operating activities		103,363		29,440
Cash flows from investing activities
Acquisitions, net of cash acquired		(10,857)		(11,845)
Capital expenditures		(49,534)		(11,035)
Proceeds from sale of fixed assets		2,103		298
Repayments under development agreements		3,104		—
Advances under development and placement agreements		(2,813)		—
Changes in restricted cash and cash equivalents		(66)		(77)
Net cash used in investing activities		(58,063)		(22,659)
Cash flows from financing activities
Repayments of prior credit facility		—		(7,258)
Repayments of credit facility		(7,500)		—
Repayments of secured notes		(350,000)		—
Proceeds from issuance of secured notes		335,000		—
Debt issuance costs		(1,146)		—
Proceeds from exercise of stock options		1,833		5,251
Purchase of treasury stock		(54)		(12,117)
Net cash used in financing activities		(21,867)		(14,124)
Effect of exchange rates on cash		(1,055)		(412)
Cash and cash equivalents
Net increase for the period		22,378		(7,755)
Balance, beginning of the period		89,095		114,254
Balance, end of the period	$	111,473	$	106,499
Supplemental cash disclosures
Cash paid for interest	$	59,655	$	5,154
Cash (refunded) paid for income tax, net	$	(13,166)	$	874
Supplemental non-cash disclosures
Accrued and unpaid capital expenditures	$	1,912	$	2,260
Accrued and unpaid contingent liability for acquisitions	$	4,681	$	2,463
Issuance of warrants	$	2,246	$	—

See notes to unaudited condensed consolidated financial statements.

5

EVERI HOLDINGS INC. AND SUBSIDIARIES

NOTES TO UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.BUSINESS

Overview

Everi Holdings Inc.(formerly known as Global Cash Access Holdings, Inc.)  (“Everi Holdings”, “Holdings”, “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Games Holding Company Inc.(formerly known as Multimedia Games Holding Company, Inc.), which owns all of the issued and outstanding shares of capital stock of Everi Games Inc.(formerly known as Multimedia Games, Inc.)  (“Everi Games”, “Games”) and Everi Payments Inc. (formerly known as Global Cash Access, Inc.)  (“Everi Payments”, “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries.

Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award winning TournEvent® slot tournament solution; and (b) the central determinant system for the video lottery terminals installed at racetracks in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via Automated Teller Machine cash withdrawals, credit card cash access transactions, point of sale debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities.

2.BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. The results for the three and nine months ended September 30, 2015are not necessarily indicative of results to be expected for the full fiscal year.  The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.

There have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, except for the following:

Cost of Revenues (exclusive of depreciation and amortization)

The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The principal costs included within cost of revenues (exclusive of depreciation and amortization) are field service and network operations personnel, those direct costs related to the inventory sold for electronic gaming machines (“EGMs”), fully integrated kiosks and system sales, commissions paid to gaming establishments, interchange fees paid to credit and debit card networks and transaction processing fees to our transaction processor.

Research and Development Costs

We conduct research and development activities primarily to develop and enhance our Games and Payments platforms, as well as game content and features. We believe our ability to deliver differentiated, appealing products and services to the

6

marketplace is based in part on our research and development investments, and we expect to continue to make such investments in the future. These research and development costs consist primarily of salaries and benefits, consulting fees, and game lab testing fees. Once the technological feasibility of a project has been established, it is transferred from research to development, and capitalization of development costs continues until the product is available for general release.

Advertising, Marketing and Promotional Costs

We expense advertising, marketing and promotional costs as incurred. Total advertising, marketing and promotional costs, included in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, were $1.1 million and $1.9 million and $0.2 million and $0.6 million, for the three and nine months ended September 30, 2015 and 2014, respectively.

Fair Values of Financial Instruments

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

In determining fair value, we use a hierarchy that includes three levels which are based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 indicates that the fair value is determined by using quoted prices in active markets for identical investments. Level 2 indicates that the fair value is determined using observable pricing inputs other than quoted prices in active markets such as models or other valuation methodologies. Level 3 indicates that the fair value is determined using pricing inputs that are unobservable for the investment and include situations where there is little, if any, market activity for the investment. Significant management estimates and judgment are used in the determination of the fair value of level 3 pricing inputs.

The carrying amount of cash and cash equivalents, settlement receivables, trade receivables, other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of our borrowings are estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity and similar instruments trading in more active markets.

The following table presents the fair value and outstanding balance of our long-term debt as of September 30,2015 (amounts in thousands):

	Levelof			Outstanding
	Hierarchy	FairValue		Balance
Term loan	1	$	490,653	$	492,500
Senior secured notes	3	$	331,650	$	335,000
Senior unsecured notes	1	$	315,000	$	350,000

The senior secured notes were fair valued using a Level 3 input by evaluating the trading activities of similar debt instruments as there was no market activity as of September 30,2015.  The senior unsecured notes were syndicated in April 2015 and transitioned from level 3 to level 1 on the fair value hierarchy. 

At December 31, 2014, the fair value of our long-term debt was considered to approximate the carrying amount as our acquisition of Everi Games occurred on December 19, 2014, for which our long-term debt was incurred.

Operating Segments

During the first quarter of 2015, we changed our organizational structure as part of our transformation to a Games and Payments company providing solutions to the gaming industry. As a result, information that our chief operating decision-making group regularly reviews for purposes of allocating resources and assessing performance changed. Therefore, beginning in the first quarter of 2015, we are reporting our financial performance based on our new segments described in “Note 18.  Segment Information”. We have presented prior period amounts to conform to the way we now internally

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manage and monitor segment performance beginning in 2015. This change had no impact on our condensed consolidated financial statements.

Recent Accounting Guidance

Recent Accounting Guidance Not Yet Adopted

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-16, which provides guidance on business combinations.  The ASUrequires an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value.  The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU No. 2015-03, which provides guidance to simplify the presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The pronouncement is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years, and early adoption is permitted for financial statements that have not been previously issued. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In January 2015, the FASB issued ASU No. 2015-01, which requires that an entity separately classify, present and disclose extraordinary events and transactions. The pronouncement is effective for annual periods ending after December 15, 2015. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In June 2014, the FASB issued ASU No. 2014-12, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of

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adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, which creates FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early adoption is not permitted. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within our Notes to the Condensed Consolidated Financial Statements.

3. BUSINESS COMBINATIONS

Multimedia Games Holding Company, Inc.

On December 19, 2014, Holdings completed its acquisition of Everi Games (formerly known as Multimedia Games Holding Company, Inc.). Pursuant to the terms of the Agreement and Plan of Merger, dated as of September 8, 2014 (the “Merger Agreement”), by and among Holdings, Movie Merger Sub, Inc., a wholly owned subsidiary of Holdings (“Merger Sub”), and Everi Games, Merger Sub merged with and into Everi Games, with Everi Games continuing as the surviving corporation (the “Merger”). In the Merger, Everi Games became a wholly owned subsidiary of Holdings. Also, as a result of the Merger, each outstanding share of common stock, par value $0.01 per share, of Everi Games, other than shares held by Holdings, Everi Games, Merger Sub or their respective subsidiaries, was cancelled and converted into the right to receive $36.50 in cash, without interest (the “Merger Consideration”), together with the consideration paid in connection with the acceleration and full vesting of certain Everi Games equity awards, (collectively, the “Total Merger Consideration”).

Everi Games designs, manufactures and supplies gaming machines and systems to commercial and Native American casino operators as well as select lottery operators and commercial bingo facility operators. Everi Games’ revenues were generated from the operation of gaming machines in revenue sharing or lease arrangements and from the sale of gaming machines and systems that feature proprietary game themes.

The total purchase consideration for Everi Games was as follows (in thousands, except per share amounts):

	Amount
Purchase consideration
Total purchase price for Everi Games common stock (29,948 shares at $36.50 per share)	$	1,093,105
Payment in respect to Everi Games outstanding equity awards		56,284
Total merger consideration		1,149,389
Repayments of Everi Games debt and other obligations		25,065
Less: Everi Games outstanding cash at acquisition date		(118,299)
Total purchase consideration	$	1,056,155

The Merger was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, none of which is deductible for tax purposes. The goodwill recognized is attributable primarily to the income potential from Everi Games penetrating into the Class III commercial casino market, the assembled workforce of Everi Games and expected synergies.

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The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of Everi Games’ assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The significant items for which a final fair value has not been determined include, but not limited to: accrued liabilities, the valuation and estimated useful lives of tangible and intangible assets and deferred income taxes. We expect to complete our fair value determinations no later than the fourth quarter of 2015. We do not expect our fair value determinations to materially change; however, there may be differences compared to those amounts originally recorded as we complete our fair value analysis.

The information below reflects the preliminary purchase price allocation (in thousands):

	Amount
Purchase price allocation
Current assets	$	68,548
Property, equipment and leasehold improvements, net		87,283
Goodwill		669,542
Other intangible assets, net		403,300
Other receivables, non-current		5,030
Other assets, long-term		3,392
Deferred tax asset, non-current		22,287
Total assets		1,259,382
Current liabilities		44,291
Deferred tax liability, non-current		158,418
Other accrued expenses and liabilities		518
Total liabilities		203,227
Net assets acquired	$	1,056,155

Trade receivables acquired of $24.7 million were considered to be collectible and therefore the carrying amounts were considered to approximate fair value. Inventory acquired of $16.5 million was fair valued based on model-based valuations for which inputs and value drivers were observable.

The following table summarizes acquired tangible assets (in thousands):

	UsefulLife			Estimated
	(years)			FairValue
Property, equipment and leased assets
Gaming equipment	2	-	4	$	78,201
Leasehold and building improvements	Lease Term				2,105
Machinery and equipment	3	-	5		4,126
Other	2	-	7		2,851
Total property, equipment and leased assets				$	87,283

The fair value of property, equipment and leased assets was determined using the cost approach as the primary approach for valuing the majority of the personal property. The market approach was used to estimate the value of vehicles. The income approach was used to quantify any economic obsolescence that may be present in the personal property. No economic obsolescence adjustments were made to the personal property, as the business enterprise valuation indicated sufficient cash flows to support the values established through the cost and market approaches.

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The following table summarizes acquired intangible assets (in thousands):

	Useful Life			Estimated
	(years)			FairValue
Other intangible assets
Tradenames and trademarks	3	-	7	$	14,800
Computer software	3	-	5		3,755
Developed technology	2	-	6		139,645
Customer relationships	8	-	12		231,100
Contract rights	1	-	7		14,000
Total other intangible assets				$	403,300

The fair values of trade names and trademarks and developed technology were determined by applying the income approach utilizing the relief from royalty methodology. The fair value of customer relationships was determined by applying the income approach utilizing the excess earnings methodology. The fair value of contract rights was considered to approximate the carrying amount based on contractual obligations associated with these other intangible assets. The discount rates utilized to estimate the fair value of these other intangible assets ranged from 10.0% to 11.0%. 

We expensed approximately $0.1 million and $2.0 million of costs incurred related to the acquisition of Everi Games for financial advisory services, financing related fees, accounting and legal fees and other transaction-related expenses during the three and nine months ended September 30, 2015, respectively. These expenses are included in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income within operating expenses. These costs do not include any costs related to additional site consolidation or rationalization that we might consider in the future.

NEWave, Inc.

In April 2014, we acquired all of the outstanding capital stock of NEWave, Inc. (“NEWave”) for an aggregate purchase price of approximately $14.9 million, of which we estimated that approximately $2.5 million would be paid in the second quarter of 2015. As of June 30, 2015, a final payment of $2.3 million was remitted. NEWave is a supplier of anti-money laundering compliance, audit and data efficiency software to the gaming industry. The NEWave acquisition did not have a material impact on our results of operations or financial condition.

We have not provided the supplemental pro forma impact of the NEWave acquisition on the revenue and earnings of the combined entity as if the acquisition date had been January 1, 2013, and the amount of revenue and earnings derived from NEWave have not been presented on a supplemental basis as such amounts are not material for the three and nine months ended September 30, 2014, respectively.

Resort Advantage, LLC

In August 2015, we acquired certain assets of Resort Advantage, LLC (“Resort Advantage”) for an aggregate purchase price of approximately $13.3 million, of which we estimated that approximately $4.7 million would be paid under the provisions of the agreement over a period of 40 months. Resort Advantage is a supplier of comprehensive and integrated solutions for complete Financial Crimes Enforcement Network (“FinCEN”) and IRS regulatory compliance to the gaming industry. The Resort Advantage acquisition did not have a material impact on our results of operations or financial condition.

We have not provided the supplemental pro forma impact of the Resort Advantage acquisition on the revenue and earnings of the combined entity as if the acquisition date had been January 1, 2014, and the amount of revenue and earnings derived from Resort Advantage have not been presented on a supplemental basis as such amounts are not material for the three and nine months ended September 30, 2015 and 2014, respectively.

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4. ATM FUNDING AGREEMENTS

Contract Cash Solutions Agreement

Our Contract Cash Solutions Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, were $0.5 million and $1.6 million and $0.6 million and $1.8 million for the three and nine months ended September 30, 2015 and 2014, respectively. We are exposed to interest rate risk to the extent that the applicable LIBOR increases.

Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable which is recorded on a net basis. As these funds are not our assets, supplied cash is not reflected on the Condensed Consolidated Balance Sheets. The outstanding balances of ATM cash utilized by us from Wells Fargo were $289.4 million and $396.3 million as of September 30,2015 and December 31, 2014, respectively.

In November 2014, we amended the Contract Cash Solutions Agreement to extend the term one year until November 30, 2015.

In June 2015, we amended the Contract Cash Solutions Agreement to decrease the maximum amount of cash to be provided to us from $500.0 million to $425.0 million and to extend the term of the agreement from November 30, 2015 to June 30, 2018. 

We are responsible for any losses of cash in the ATMs under this agreement and we self‑insure for this risk. We incurred no material losses related to this self‑insurance for the three and nine months ended September 30,  2015 and 2014.

Site-Funded ATMs

We operate ATMs at certain customer gaming establishments where the gaming establishment provides the cash required for the ATM operational needs. We are required to reimburse the customer for the amount of cash dispensed from these Site-Funded ATMs. The Site-Funded ATM liability is included within “Settlement liabilities” in the accompanying Condensed Consolidated Balance Sheets and was $54.7 million and $69.3 million as of September 30, 2015 and December 31, 2014, respectively.

5. TRADE RECEIVABLES

Trade receivables represent short-term credit granted to customers for which collateral is generally not required. The balance of trade receivables consists of outstanding balances owed to us by gaming establishments and casino patrons. The balance of trade receivables consisted of the following (in thousands):

.	At September 30,		At December 31,
	2015		2014
Trade receivables, net
Games trade receivables	$	34,871	$	28,270
Payments trade receivables		12,831		9,427
Total trade receivables, net	$	47,702	$	37,697

The material balance of the allowance for doubtful accounts for trade receivables is from warranty receivables. On a monthly basis, we evaluate the collectability of the outstanding balances and establish a reserve for the face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) in the Condensed Consolidated Statements of Operations and Comprehensive

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(Loss) Income. The outstanding balance of the warranty reserve was $3.2 and $2.8 million as of September 30,  2015 and December 31, 2014, respectively.

6. OTHER RECEIVABLES

Other receivables include the balance of notes and loans receivable on our games and fully integrated kiosk products, development agreements, which are generated from reimbursable amounts advanced to tribal customers generally used by the customer to build, expand or renovate its facility, and an agreement with Bee Caves Games, Inc. (“Bee Caves Games”) in July 2014, under which the Company agreed to make a loan pursuant to a secured promissory note in the amount of $4.5 million. In association with the promissory note, the Company received warrants to purchase Bee Caves Games common stock, and recorded a discount to the note for the fair value of the warrants received. The warrants are included in the balance of other assets, non-current.  The note, which bears interest at 7%, requires interest only payments for the first 24 months followed by repayments of principal and interest in 48 equal monthly installments.

Other receivables also include income taxes receivable and other miscellaneous receivables. The balance of other receivables consisted of the following (in thousands):

	At September 30,		At December 31,
	2015		2014
Other receivables
Notes and loans receivable, net of discount of $737 and $853, respectively	$	9,676	$	13,939
Federal and state income tax receivable		455		15,092
Other		2,276		706
Total other receivables		12,407		29,737
Less: Notes and loans receivable, non-current		7,076		9,184
Total other receivables, current portion	$	5,331	$	20,553

7. PREPAID AND OTHER ASSETS

Prepaid and other assets include the balance of prepaid expenses, deposits, debt issuance costs and other assets. The short-term portion of these assets is included in prepaid and other assets and the long-term portion is included in other assets, non-current.

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

	At September 30,		At December 31,
	2015		2014
Prepaid expenses and other assets
Prepaid expenses	$	5,799	$	7,163
Deposits		9,640		8,781
Other		3,823		3,044
Total prepaid expenses and other assets	$	19,262	$	18,988

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

	At September 30,		At December 31,
	2015		2014
Other assets, non-current
Debt issuance costs	$	25,333	$	41,109
Prepaid expenses and deposits, non-current		4,253		3,956
Other		6,693		5,878
Total other assets, non-current	$	36,279	$	50,943

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8. INVENTORY

We currently maintain separate inventories for our Games and Payments businesses. Our Games inventory primarily consists of component parts, completed player terminals and back office computer equipment. This inventory was stated at the lower of cost or market and accounted for using the first in, first out method during the current reporting period; whereas the inventory that existed at the time of the Merger was stated at fair value. The cost of inventory includes cost of materials, labor, overhead and freight. Our Payments inventory primarily consists of parts as well as finished goods and work-in-progress.  This inventory was stated at the lower of cost or market accounted for using the average cost method.  

Inventory consisted of the following (in thousands):

	At September 30,		At December 31,
	2015		2014
Inventory
Raw materials and component parts, net of reserves of $257 and $22, respectively	$	14,096	$	21,151
Work in progress		8,383		803
Finished goods		3,002		5,209
Total inventory	$	25,481	$	27,163

9. PROPERTY, EQUIPMENT AND LEASED ASSETS

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

				At September 30, 2015						At December 31, 2014
	UsefulLife					Accumulated		NetBook				Accumulated		Net Book
	(Years)			Cost		Depreciation		Value		Cost		Depreciation		Value
Property, equipment and leased assets
Rental pool - deployed	2	-	4	$	85,090	$	20,900	$	64,190	$	70,295	$	876	$	69,419
Rental pool - undeployed	2	-	4		13,305		3,144		10,161		10,562		151		10,411
ATM equipment		5			18,492		12,322		6,170		23,572		16,544		7,028
Leasehold and building improvements	Lease Term				6,474		1,742		4,732		6,289		895		5,394
Cash advance equipment		3			7,187		2,424		4,763		3,372		1,873		1,499
Machinery, office and other equipment	2	-	5		24,944		12,859		12,085		21,405		9,071		12,334
Total				$	155,492	$	53,391	$	102,101	$	135,495	$	29,410	$	106,085

Depreciation expense related to other property, equipment and leased assets totaled approximately $10.9 million and $32.0 million and $1.9 million and $5.7 million for the three and nine months ended September 30, 2015 and 2014, respectively. Our property, equipment and leased assets were not impaired forthe three and nine months ended September 30, 2015 and 2014.

In connection with the sale of certain assets related to our PokerTek products during the three months ended September 30, 2015 for a purchase price of $5.4 million, we recorded a gain of approximately $3.9 million, which was included in operating expenses in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. The balance of goodwill was $863.9 million and $857.9 million at September 30,  2015 and December 31, 2014, respectively. Our goodwill was not impaired for the three and nine months ended September 30, 2015 and 2014. Additionally, no impairment was identified during our annual impairment testing as of October 1, 2014.

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In accordance with ASC 350, we test goodwill at the reporting unit level, which in certain cases may be a component of an operating segment, for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The estimate of fair value requires significant judgment. We based our fair value estimates on assumptions that we believe to be reasonable but that are unpredictable and inherently uncertain, including estimates of future growth rates and operating margins and assumptions about the overall economic climate and the competitive environment for our reporting units. There can be no assurance that our estimates and assumptions made for purposes of our goodwill and identifiable intangible asset testing as of the time of testing will prove to be accurate predictions of the future. If our assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, we may be required to record goodwill and/or intangible asset impairment charges in future periods.

Other Intangible Assets

Other intangible assets consist of the following (in thousands):

				At September 30, 2015						At December 31, 2014
	Useful  Life					Accumulated		NetBook				Accumulated		NetBook
	(years)			Cost		Amortization		Value		Cost		Amortization		Value
Other intangible assets
Contract rights under development and placement fee agreements	1	-	7	$	16,454	$	6,006	$	10,448	$	14,000	$	301	$	13,699
Customer contracts	7	-	14		49,764		33,393		16,371		43,938		29,931		14,007
Customer relationships	8	-	12		231,100		16,481		214,619		231,100		733		230,367
Developed technology and software	1	-	6		194,795		54,610		140,185		174,417		14,604		159,813
Patents, trademarks and other	1	-	17		27,829		12,291		15,538		27,856		8,957		18,899
Total				$	519,942	$	122,781	$	397,161	$	491,311	$	54,526	$	436,785

Amortization expense related to other intangible assets totaled approximately$21.5million and$62.9million, and $3.4 million and $8.5 million, for the three and nine months ended September 30, 2015 and 2014, respectively. We capitalized and placed into service $6.7 million and $12.3 million, and $0.7 million and $5.6 million, of software development costs for the three and nine months ended September 30, 2015 and 2014, respectively.

On a quarterly basis, we evaluate our other intangible assets for potential impairment as part of our quarterly review process. No impairment was identified for our other intangible assets during our assessment for the three and nine months ended September 30, 2015 and 2014.

We enter into development and placement fee agreements to provide financing for new gaming facilities or for the expansion or improvement of existing facilities. All or a portion of the funds provided under development agreements are reimbursed to us, while funding under placement fee agreements is not reimbursed. In return for the fees under these agreements, each facility dedicates a percentage of its floor space, or an agreed upon unit count, for the placement of our EGMs over the term of the agreement, generally 12 to 83 months, and we receive a fixed percentage or flat fee of those machines’ hold per day. Certain of the agreements contain EGM performance standards that could allow the respective facility to reduce a portion of our guaranteed floor space.

In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The development agreements typically provide for a portion of the amounts retained by each facility for its share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable. Placement fees and amounts advanced in excess of those to be reimbursed by the customer for real property and land improvements are allocated to intangible assets and are generally amortized over the term of the contract, which is recorded as a reduction of revenue generated from the facility. In the past we have, and in the future, we may, by mutual

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agreement, amend these agreements to reduce our floor space at the facilities. Any proceeds received for the reduction of floor space is first applied against the intangible asset for that particular development or placement fee agreement, if any, and the remaining net book value of the intangible asset is prospectively amortized on a straight-line method over the remaining estimated useful life.

During the nine months ended September 30, 2015, we paid approximately $2.8 million to a customer for certain of its locations in Oklahoma to extend the placement of nearly 300 units for an additional term of up to 60 months.

11.ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table presents our accounts payable and accrued expenses (in thousands):

	At September 30,		At December 31,
	2015		2014
Accounts payable and accrued expenses
Trade accounts payable	$	46,351	$	48,962
Accrued interest		15,424		3,387
Payroll and related expenses		7,791		10,889
Deferred and unearned revenues		9,979		8,016
Cash access processing and related expenses		4,949		4,414
Accrued taxes		2,482		3,195
Other		19,626		25,805
Total accounts payable and accrued expenses	$	106,602	$	104,668

12. LONG-TERM DEBT

The following table summarizes our outstanding indebtedness (in thousands):

	At September 30,		At December 31,
	2015		2014
Long-term debt
Senior secured term loan	$	492,500	$	500,000
Senior secured notes		335,000		350,000
Senior unsecured notes		350,000		350,000
Total debt		1,177,500		1,200,000
Less: original issue and warrant discount		(11,958)		(11,213)
Total debt after discount		1,165,542		1,188,787
Less: current portion of long-term debt		(10,000)		(10,000)
Long-term debt, less current portion	$	1,155,542	$	1,178,787

Credit Facilities

In December 2014, we entered into a credit agreement that provided for a $500.0 million six-year senior secured term loan that matures in 2020 (the “Term Loan”) and a $50.0 million five-year revolver that matures in 2019 (the “Revolving Credit Facility”, and together with the Term Loan, the “Credit Facilities”). The fees associated with the Credit Facilities included original issue discounts of approximately $7.5 million and debt issuance costs of approximately $13.9 million.

We are required to repay the Term Loan in an amount equal to 0.50% per quarter of the initial aggregate principal with the final principal repayment installment on the maturity date.  Interest is due in arrears each March, June, September and December and at the maturity date; however, interest may be remitted within one to three months of such dates.

The Revolving Credit Facility remained undrawn as of September 30,  2015.

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The interest rate per annum applicable to the Revolving Credit Facility is, at our option, the base rate or LIBOR plus, in each case, an applicable margin. The interest rate per annum applicable to the Term Loan is also, at our option, the base rate or LIBOR plus, in each case, an applicable margin. LIBOR will be reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, with respect to the Revolving Credit Facility, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin, and, with respect to the Term Loan, if LIBOR is below 1.0%, then such rate will be equal to 1.0% plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (a) the prime lending rate announced by the administrative agent, (b) the federal funds effective rate from time to time plus 0.50%, and (c) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%. The applicable margins of 4.75% and 5.25% for the Revolving Credit Facility and Term Loan, respectively, are subject to adjustment based on our consolidated secured leverage ratio.

Voluntary prepayments of the Term Loan and the Revolving Credit Facility and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the credit agreement governing the Credit Facilities, with prior notice but without premium or penalty, except that certain refinancing transactions of the Term Loan within twelve months after the closing of the Credit Facilities will be subject to a prepayment premium of 1.00% of the principal amount repaid.

Subject to certain exceptions, the obligations under the Credit Facilities are secured by substantially all of the present and after acquired assets of each of Everi Payments,  Everi Holdings and the subsidiary guarantors (the “Collateral”) including: (a) a perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned material restricted subsidiary held by Everi Holdings, Everi Payments or any such subsidiary guarantor; and (b) a perfected first priority security interest in substantially all other tangible and intangible assets of Everi Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the Credit Facilities are unconditionally guaranteed by Everi Holdings and such subsidiary guarantors and Everi Games and its material domestic subsidiaries.

The Term Loan had an applicable interest rate of 6.25% as of September 30,  2015 and December 31, 2014.  

We were in compliance with the terms of the Credit Facilities as of September 30,  2015 and December 31, 2014.

Senior Secured Notes and Refinance of Senior Secured Notes

In December 2014, we issued $350.0 million in aggregate principal amount of 7.75%Senior Secured Notes due 2021 (the “Secured Notes”). The fees associated with the Secured Notes included debt issuance costs of approximately $13.6 million.

Interest is due quarterly in arrears each January, April, July and October.

The Secured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement.  Under the terms of the purchase agreement, during a one year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Secured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty.

On April 15, 2015, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) among Everi Payments, CPPIB Credit Investments III Inc. (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”), and issued $335.0 million in aggregate principal amount of its 7.25% Senior Secured Notes due 2021 (the “Refinanced Secured Notes”) to the Purchaser in a private offering. With the proceeds from the issuance of the Refinanced Secured Notes, Everi Payments redeemed, in full, the Company’s then outstanding Secured Notes from the initial purchasers in accordance with the terms of the indenture governing the Secured Notes. In connection with the issuance of the Refinanced Secured Notes during the second quarter of 2015, we expensed $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.

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In connection with the issuance of the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued to the Purchaser a warrant to purchase 700,000 shares of Everi Holdings’ common stock, with an exercise price equal to $9.88 per share, representing a 30% premium to the volume-weighted average price of Everi Holdings’ common stock for the ten trading days prior to the issuance of the warrant. The warrant expires on the sixth anniversary of the date of issuance. The number of shares issuable pursuant to the warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The warrants were valued at $2.2 million using a modified Black-Scholes model and were accounted for as a debt discount.

Interest is due quarterly in arrears each January, April, July and October.

We were in compliance with the terms of the Refinanced Secured Notes as of September 30,  2015 and the Secured Notes as of December 31, 2014.

Senior Unsecured Notes

In December 2014, we issued $350 million in aggregate principal amount of 10.0% Senior Unsecured Notes due 2022 (the “Unsecured Notes”). The fees associated with the Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million.

Interest is due semi-annually in arrears each January and July.

The Unsecured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement.  Under the terms of the purchase agreement, during a one-year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Unsecured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.

In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes (the “Exchange Notes”) with terms identical to the Unsecured Notes (except that the Exchange Notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below). The obligation to complete the exchange offer and/or file a shelf registration statement will terminate on the second anniversary of the date of the Registration Rights Agreement. If the exchange offer is not completed (or, if required, the shelf registration statement is not declared effective) on or before December 19, 2015, the annual interest rate borne by the Unsecured Notes will be increased by 0.25% per annum for the first 90-day period immediately following such date and by an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum additional rate of 1.00% per annum thereafter until the exchange offer is completed or the shelf registration statement is declared effective, at which time the interest rate will revert to the original interest rate on the date the Unsecured Notes were originally issued. The registration statement for the Exchange Notes was filed with the Securities and Exchange Commission (“SEC”) on October 23, 2015 and declared effective on November 3, 2015.  The Company launched the exchange offer on November 4, 2015 and the exchange offer will expire at 5:00 p.m., New York City time, on December 4, 2015, unless extended.

We were in compliance with the terms of the Unsecured Notes as of September 30,  2015 and December 31, 2014.

13.COMMITMENTS AND CONTINGENCIES

Everi Games Shareholder Litigation

Putative shareholders of Everi Games filed suits in the United States District Court for the Western District of Texas (the “Texas Federal Action”) and the District Court of Travis County, Texas (the “Texas State Court Action”) alleging that Everi Games’ directors breached their fiduciary duties in connection with the Merger. The complaints further alleged that

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Everi Holdings and its formerly wholly-owned merger subsidiary, Merger Sub, aided and abetted those purported breaches of fiduciary duty.

The parties agreed to settle all claims asserted in the Texas Federal Action. Everi Games agreed to make certain additional disclosures in its proxy statement related to the Merger, and made those disclosures in a Current Report on Form 8-K filed on November 21, 2014. In addition, the defendants agreed not to oppose plaintiffs’ application for an attorneys’ fee award of up to $310,000. The court in the Texas Federal Action approved the settlement, awarded attorneys’ fees of $310,000, and entered judgment. The deadline to file any appeal from the judgment has expired and no appeal has been filed.

The judgment in the Texas Federal Action includes a release of the claims asserted in the Texas State Court Action. The Texas State Court Action has been dismissed with prejudice.

Alabama Litigation

The Company is currently involved in one lawsuit related to Everi Games’ former charity bingo operations in the State of Alabama, which we believe is not material from a damages perspective. The lawsuit is currently pending in federal court and includes claims related to the alleged illegality of electronic charity bingo in the State of Alabama.

Ozetta Hardy v. Whitehall Gaming Center, LLC, et al., a civil action, was filed against Whitehall Gaming Center, LLC (an entity that does not exist), Cornerstone Community Outreach, Inc., and Freedom Trail Ventures, Ltd., in the Circuit Court of Lowndes County, Alabama. On June 3, 2010, Everi Games and other manufacturers were added as defendants. The plaintiffs, who claim to have been patrons of White Hall, allege that Everi Games participated in gambling operations that violated Alabama state law by supplying to White Hall purportedly unlawful electronic bingo machines played by the plaintiffs, and the plaintiffs seek recovery of the monies lost on all electronic bingo games played by the plaintiffs in the six months prior to the filing of the complaint under Ala. Code, Sec 8-1-150(A). The plaintiffs requested that the court certify the action as a class action. On July 2, 2010, the defendants removed the case to the United States District Court for the Middle District of Alabama, Northern Division. The court has not ruled on the plaintiffs' motion for class certification. The Company continues to vigorously defend this matter. Given the inherent uncertainties in this litigation, however, the Company is unable to make any prediction as to the ultimate outcome.

Gain Contingency Settlement

In January 2014, we filed a complaint against certain third party defendants alleging conspiracy in restraint of competition regarding interchange fees, monopolization by defendants in the relevant market, and attempted monopolization of the defendants in the relevant market. We demanded a trial by jury of all issues so triable. The defendants filed a motion to dismiss on March 13, 2014. A settlement agreement was made as of January 16, 2015 and on January 22, 2015 the settlement agreement was executed and delivered for which we received $14.4 million in cash and recorded the settlement proceeds in the first quarter of 2015. This settlement is included as a reduction of operating expenses in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the nine months ended September 30, 2015.

We are also subject to other claims and suits that arise from time to time in the ordinary course of business. We do not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on our financial position, liquidity or results of operations.

14.SHAREHOLDERS’ EQUITY

Preferred Stock. Our amended and restated certificate of incorporation, as amended, allows our Board of Directors, without further action by stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences. As of September 30,  2015 and December 31, 2014, we had no shares outstanding of preferred stock.

Common Stock. Subject to the preferences that may apply to shares of preferred stock that may be outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at

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the times and in the amounts as our Board of Directors may from time to time determine. All dividends are non-cumulative. In the event of the liquidation, dissolution or winding up of Everi, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. There are no sinking fund provisions applicable to the common stock. Each outstanding share of common stock is fully paid and non-assessable. As of September 30,  2015 and December 31, 2014, we had 90,777,414 and 90,405,450 shares of common stock issued, respectively.

Treasury Stock. Employees may direct us to withhold vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to their restricted stock vesting. We repurchased or withheld from restricted stock awards 2,456 and 7,900, and 3,345 and 46,474, shares of common stock, at an aggregate purchase price of $14,214 and $54,124, and $27,361 and $396,057, for the three and nine months ended September 30, 2015 and 2014, respectively, to satisfy the minimum applicable tax withholding obligations related to the vesting of such restricted stock awards.

15.WEIGHTED AVERAGE COMMON SHARES

The weighted average number of common shares outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Weighted average shares
Weighted average number of common shares outstanding - basic	65,941	65,589	65,804	65,853
Potential dilution from equity grants(1)	—	1,158	—	1,198
Weighted average number of common shares outstanding - diluted	65,941	66,747	65,804	67,051

(1) The Company was in a net loss position for the three and nine months ended September 30, 2015, and therefore, no potential dilution from the application of the treasury stock method was applicable. The potential dilution excludes the weighted average effect of equity awards to acquire 8.0 million and 7.0 million shares of our common stock for the three and nine months ended September 30, 2014 as the application of the treasury stock method, as required, makes them anti-dilutive.

16.SHARE-BASED COMPENSATION

Equity Incentive Awards

Our 2014 Equity Incentive Plan (the “2014 Plan”) is used to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business.  The 2014 Plan superseded the then current 2005 Stock Incentive Plan (the “2005 Plan”). The 2014 Plan is administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive options or other equity incentive awards and to specify the terms and conditions of grants of options or other equity incentive awards, the vesting provisions, the term and the exercise price.

Generally, we grant the following award types: (a) time-based options, (b) cliff-vesting time-based options, (c) market-based options and (d) restricted stock.   These awards have varying vesting provisions and expiration periods. For the three and nine months ended September 30, 2015, we granted time-based options and market-based options.  

Our time-based stock options granted under the 2014 Plan vest at a rate of 25% per year on each of the first four yearly anniversaries of the option grant dates. These options expire after a ten-year period.

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Our market-based stock options granted under the 2014 Plan vest if our average stock price in any period of 30 consecutive trading days meets certain target prices during a four-year period that commenced on the date of grant for these options.  If these target prices are not met during such four-year period, the unvested shares underlying the options will terminate; however, upon the Participant’s termination of Service, if the Participant’s Service is terminated by the Company without Cause within ten days prior to, or within 18 months after, the date a Change in Control is consummated, the unvested options granted would become fully vested.  These options expire after a seven-year period.

A summary of award activity is as follows (in thousands):

	Stock Options	Restricted Stock
	Granted	Granted
Outstanding, December 31, 2014	13,626	440
Additional authorized shares	—	—
Granted	6,509	—
Exercised options or vested shares	(340)	(32)
Canceled or forfeited	(2,069)	(1)
Outstanding, September 30, 2015	17,726	407

The maximum number of shares available for future equity awards under the 2014 Plan is approximately 6.3 million shares of our common stock.There are no shares available for future equity awards under the 2005 Plan.

Stock Options

The fair value of time-based options was determined as of the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Nine months ended
	September 30,
	2015		2014
Risk-free interest rate	1	%	1	%
Expected life of options (in years)	4		4
Expected volatility	43	%	54	%
Expected dividend yield	0	%	0	%

The fair value of market-based options was determined as of the date of grant using a lattice-based option valuation model. For the market-based options issued this year, the assumptions were: (a) risk-free interest rate of 1%; (b) measurement period of four years; (c) expected volatility of 43%; and (d) no expected dividend yield.

The following tables present the options activity:

				Weighted
	Number of	Weighted Average		Average Life	Aggregate
	Common Shares	Exercise Price		Remaining	Intrinsic Value
	(in thousands)	(per share)		(years)	(in thousands)
Outstanding, December 31, 2014	13,626	$	7.64	6.5	$	9,148
Granted	6,509		7.68
Exercised	(340)		5.37
Canceled or forfeited	(2,069)		10.11
Outstanding, September 30, 2015	17,726	$	7.41	6.9	$	2,035
Vested and expected to vest, September 30, 2015	14,706	$	7.36	6.7	$	2,033
Exercisable, September 30, 2015	6,554	$	7.14	4.4	$	2,022

There were 0.4 and 6.5 million options granted for the three and nine months ended September 30, 2015. There were 10,000 and 5.0 million options granted for the three and nine months ended September 30, 2014, respectively. The weighted average grant date fair value per share of the options granted was $2.32 and $2.48 for the three and nine months

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ended September 30, 2015. The weighted average grant date fair value per share of the options granted was $3.54 and$3.27 forthe three and nine months ended September 30, 2014, respectively. The total intrinsic value of options exercised was $30,561 and $0.8 million and $0.4 million and $2.8 million for the three and nine months ended September 30, 2015 and 2014, respectively.

There was $20.4 million in unrecognized compensation expense related to options expected to vest as of September 30,  2015. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.8 years. We received $1.8 million in proceeds from the exercise of options and recorded $5.4 million in non-cash compensation expense related to options granted that were expected to vest for the nine months endedSeptember 30,  2015.

There was $13.4 million in unrecognized compensation expense related to options expected to vest as of September 30,  2014.  This cost was expected to be recognized on a straight-line basis over a weighted average period of 2.8 years. We recorded $5.3 million in non-cash compensation expense related to options granted that were expected to vest as of September 30,  2014. We received $6.6 million in cash from the exercise of options for the nine months endedSeptember 30,2014.

Restricted Stock

The following is a summary of non-vested share awards for our time-based restricted stock:

		Weighted
	Shares	Average Grant
	Outstanding	Date Fair Value
	(in thousands)	(per share)
Outstanding, December 31, 2014	440	$	7.11
Granted	—		—
Vested	(32)		7.09
Forfeited	(1)		7.09
Outstanding, September 30, 2015	407	$	7.11

There were no shares of restricted stock granted for the three and nine months ended September 30, 2015. The total fair value of restricted stock vested was $0.1 million and $0.2 million and $0.1 million and $1.1 million for the three and nine months ended September 30, 2015 and 2014, respectively.

There was $2.2 million in unrecognized compensation expense related to shares of time based restricted stock expected to vest as of September 30,  2015. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.6 years. There were 32,500,  shares of restricted stock that vested and we recorded $0.6 million in non-cash compensation expense related to the restricted stock granted that was expected to vest during the nine months ended September 30,2015.

There was $1.2 million in unrecognized compensation expense related to shares of time-based restricted stock expected to vest as of September 30,  2014. This cost was expected to be recognized on a straight-line basis over a weighted average period of 2.3 years. There were 0.2 million shares of time-based restricted shares vested and we recorded $0.9 million in non-cash compensation expense related to the restricted stock granted that was expected to vest for the nine months ended September 30,2014.

17.INCOME TAXES

The provision for income tax reflected an effective income tax rate benefit of 39.3% and 37.0% for the three and nine months ended September 30, 2015, respectively, which was higher than the statutory federal rate of 35.0% primarily due to state taxes and the lower foreign tax rate applicable to our foreign source income, partially offset by non-statutory stock options that expired in 2015. The provision for income tax reflected an effective income tax rate expense of 35.3% and 35.6% for the same periods in the prior year, which was higher than the statutory federal rate of 35.0% primarily due to state taxes, an increase in our valuation allowance for certain foreign losses and non-cash compensation expenses related to stock options, partially offset by a lower foreign tax rate applicable to our foreign source income.

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We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. As part of the Merger, the Company recorded $0.7 million of unrecognized tax benefits as of December 31, 2014, which is consistent with the balance as of September 30, 2015. Other than the unrecognized tax benefit related to the Merger, we believe that our income tax filing positions and deductions will be sustained upon audit and we do not anticipate any adjustments that will result in a material change to our financial position. We may from time to time be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. Our policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax expense.

18.SEGMENT INFORMATION

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group in deciding how to allocate resources and in assessing performance. Our chief operating decision-making group consists of the Chief Executive Officer and the Chief Financial Officer. The operating segments are reviewed separately because each represents products that can be sold separately to our customers.

Since the most recent filing of our Form 10-K, and in connection with the Merger, our chief operating decision-making group has determined the following to be the operating segments for which we conduct business: (a) Games, and (b) Payments. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting. Our chief operating decision-making group manages the business, allocates resources andmeasures profitability based on the Games and Payments operating segments.

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; and ancillary products and services.

The Payments 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 point of sale debit card transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.

Corporate overhead and depreciation and amortization expenses were allocated to the segments either through specific identification or based on a reasonable methodology.

Our business is predominantly domestic, with no specific regional concentrations and no significant assets in foreign locations.

The accounting policies of the operating segments are generally the same as those described in the summary of significant accounting policies.

The following tables present segment information (in thousands):

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	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues
Games	$	53,983	$	—	$	163,896	$	—
Payments		154,763		145,481		458,687		440,998
Total revenues	$	208,746	$	145,481	$	622,583	$	440,998
Operating income
Games	$	2,368	$	—	$	7,180	$	—
Payments		12,348		10,771		52,012		33,406
Total operating income	$	14,716	$	10,771	$	59,192	$	33,406

	At
	September 30, 2015		December 31, 2014
Total assets
Games	$	1,190,354	$	1,242,822
Payments		460,492		464,463
Total assets	$	1,650,846	$	1,707,285

Major Customers. For the three and nine months ended September 30, 2015 and 2014,  no single customer accounted for more than 10% of our revenues. Our five largest customers accounted for approximately 29% and 30% and 29% and 29%of our total revenue for the three and nine months ended September 30, 2015 and 2014, respectively.

19.CONDENSED CONSOLIDATING FINANCIAL INFORMATION

We conduct substantially all of our business through our U.S. and foreign subsidiaries. Everi Payments’ (“Subsidiary Issuer”) obligations under the Unsecured Notes are fully and unconditionally guaranteed,subject to certain customary release provisions, on a joint and several basis by Everi Holdings (“Parent”) and substantially all of our 100%owned U.S. subsidiaries other than Subsidiary Issuer (the“Guarantor Subsidiaries” and, together with Parent, the “Guarantors” and each a “Guarantor”). The guarantees of our UnsecuredNotes will be released under the following customary circumstances: (i) the sale or disposition of all or substantially all of the assets ofthe Guarantor (by way of merger, consolidation, or otherwise) to a person that is not (either before or after giving effect to suchtransaction) Parent, Subsidiary Issuer or a restricted subsidiary; (ii) the sale or disposition of sufficient capital stock of the Guarantor

to a person that is not (either before or after giving effect to such transaction) Parent, Subsidiary Issuer or a restricted subsidiary andthe Guarantor ceases to be a restricted subsidiary of Subsidiary Issuer as a result of the sale or other disposition; (iii) the designation ofthe Guarantor as an unrestricted subsidiary in accordance with the indenture governing the Unsecured Notes; or (iv) the legal or covenant defeasance of the UnsecuredNotes or the satisfaction and discharge of the indenture governing the Unsecured Notes.

Presented below is condensed consolidating financial information for (a) Parent, (b) Subsidiary Issuer, (c) the Guarantor Subsidiariesand (d) our U.S. subsidiaries that are not Guarantor Subsidiaries and our foreign subsidiaries (collectively, the “Non-GuarantorSubsidiaries”) as of September 30, 2015 and for the three and nine month periods ended September 30, 2015 and 2014. The condensedconsolidating financial information has been presented to show the nature of assets held and the results of operations and cash flows ofParent, Subsidiary Issuer, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming that the guarantee structure of theUnsecured Notes had been in effect at the beginning of the periods presented.

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	Three Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	143,031	$	61,110	$	4,767	$	(162)	$	208,746
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		112,344		14,970		2,503		—		129,817
Operating expenses		—		19,085		6,932		440		(162)		26,295
Research and development		—		—		5,463		—		—		5,463
Depreciation		—		1,881		9,018		44		—		10,943
Amortization		—		2,448		18,487		577		—		21,512
Total costs and expenses		—		135,758		54,870		3,564		(162)		194,030
Operating income		—		7,273		6,240		1,203		—		14,716
Other expense (income)
Interest expense, net of interest income		—		1,365		23,266		65		—		24,696
Equity in loss (income) of subsidaries		6,110		(3,365)		—		—		(2,745)		—
Loss on extinguishment of debt		—		87		—		—		—		87
Total other expense (income)		6,110		(1,913)		23,266		65		(2,745)		24,783
(Loss) income from operations before tax		(6,110)		9,186		(17,026)		1,138		2,745		(10,067)
Income tax expense (benefit)		—		2,356		(6,606)		293		—		(3,957)
Net (loss) income		(6,110)		6,830		(10,420)		845		2,745		(6,110)
Foreign currency translation		(788)		—		—		(788)		788		(788)
Comprehensive (loss) income	$	(6,898)	$	6,830	$	(10,420)	$	57	$	3,533	$	(6,898)

	Three Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	134,452	$	7,207	$	4,006	$	(184)	$	145,481
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		103,720		2,575		2,273		—		108,568
Operating expenses		—		19,593		787		738		(184)		20,934
Research and development		—		—		—		—		—		—
Depreciation		—		1,810		1		45		—		1,856
Amortization		—		3,252		—		100		—		3,352
Total costs and expenses		—		128,375		3,363		3,156		(184)		134,710
Operating income		—		6,077		3,844		850		—		10,771
Other (income) expense
Interest expense, net of interest income		—		1,902		—		94		—		1,996
Equity in income of subsidaries		(5,676)		(2,490)		—		—		8,166		—
Loss on extinguishment of debt		—		—		—		—		—		—
Total other (income) expense		(5,676)		(588)		—		94		8,166		1,996
Income from operations before tax		5,676		6,665		3,844		756		(8,166)		8,775
Income tax expense		—		1,197		1,721		181		—		3,099
Net income		5,676		5,468		2,123		575		(8,166)		5,676
Foreign currency translation		(839)		—		—		(839)		839		(839)
Comprehensive income (loss)	$	4,837	$	5,468	$	2,123	$	(264)	$	(7,327)	$	4,837

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	Nine Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	424,259	$	185,919	$	12,853	$	(448)	$	622,583
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		333,592		43,716		6,754		—		384,062
Operating expenses		—		42,084		26,027		1,319		(448)		68,982
Research and development		—		—		15,369		—		—		15,369
Depreciation		—		5,442		26,440		155		—		32,037
Amortization		—		6,858		54,222		1,861		—		62,941
Total costs and expenses		—		387,976		165,774		10,089		(448)		563,391
Operating income		—		36,283		20,145		2,764		—		59,192
Other expense (income)
Interest expense, net of interest income		—		5,977		69,089		243		—		75,309
Equity in loss (income) of subsidiaries		18,382		(10,077)		—		—		(8,305)		—
Loss on extinguishment of debt		—		13,063		—		—		—		13,063
Total other (income) expense		18,382		8,963		69,089		243		(8,305)		88,372
(Loss) income from operations before tax		(18,382)		27,320		(48,944)		2,521		8,305		(29,180)
Income tax expense (benefit)		—		7,378		(19,050)		874		—		(10,798)
Net (loss) income		(18,382)		19,942		(29,894)		1,647		8,305		(18,382)
Foreign currency translation		(850)		—		—		(850)		850		(850)
Comprehensive (loss) income	$	(19,232)	$	19,942	$	(29,894)	$	797	$	9,155	$	(19,232)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	408,971	$	21,117	$	11,457	$	(547)	$	440,998
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		319,976		6,861		4,344		—		331,181
Operating expenses		—		58,339		2,384		2,057		(547)		62,233
Research and development		—		—		—		—		—		—
Depreciation		—		5,563		3		136		—		5,702
Amortization		—		8,127		—		349		—		8,476
Total costs and expenses		—		392,005		9,248		6,886		(547)		407,592
Operating income		—		16,966		11,869		4,571		—		33,406
Other (income) expense
Interest expense, net of interest income		—		5,926		—		(301)		—		5,625
Equity in income of subsidiaries		(17,889)		(10,915)		—		—		28,804		—
Loss on extinguishment of debt		—		—		—		—		—		—
Total other (income) expense		(17,889)		(4,989)		—		(301)		28,804		5,625
Income from operations before tax		17,889		21,955		11,869		4,872		(28,804)		27,781
Income tax expense		—		4,066		4,535		1,291		—		9,892
Net income		17,889		17,889		7,334		3,581		(28,804)		17,889
Foreign currency translation		(457)		—		—		(457)		457		(457)
Comprehensive income	$	17,432	$	17,889	$	7,334	$	3,124	$	(28,347)	$	17,432

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	At September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	85,812	$	14,359	$	11,302	$	—	$	111,473
Settlement receivables		—		21,778		—		3,704		—		25,482
Trade receivables, net		—		9,211		38,491		—		—		47,702
Other receivables		—		4,648		619		64		—		5,331
Inventory		—		9,519		15,962		—		—		25,481
Prepaid expenses and other assets		—		6,866		2,985		9,411		—		19,262
Deferred tax asset		—		2,743		6,848		—		—		9,591
Intercompany balances		—		37,777		164,309		1,514		(203,600)		—
Total current assets		—		178,354		243,573		25,995		(203,600)		244,322
Non-current assets
Property, equipment and leasehold improvements, net		—		19,316		82,433		352		—		102,101
Goodwill		—		154,367		708,923		617		—		863,907
Other intangible assets, net		—		31,980		357,827		7,354		—		397,161
Other receivables, non-current		—		3,469		3,607		—		—		7,076
Investment in subsidiaries		222,323		156,621		—		86		(379,030)		—
Deferred tax asset, non-current		—		66,477		46,118		—		(112,595)		—
Other assets, non-current		—		31,767		4,018		494		—		36,279
Intercompany balances		—		1,134,916		—		—		(1,134,916)		—
Total non-current assets		222,323		1,598,913		1,202,926		8,903		(1,626,541)		1,406,524
Total assets	$	222,323	$	1,777,267	$	1,446,499	$	34,898	$	(1,830,141)	$	1,650,846
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	—	$	100,506	$	132	$	5,941	$	—	$	106,579
Accounts payable and accrued expenses		—		77,685		27,541		1,376		—		106,602
Current portion of long-term debt		—		10,000		—		—		—		10,000
Intercompany balances		—		165,791		30,728		7,081		(203,600)		—
Total current liabilities		—		353,982		58,401		14,398		(203,600)		223,181
Non-current liabilities
Deferred tax liability, non-current		—		1,072		156,957		—		(112,595)		45,434
Long-term debt, less current portion		—		1,155,542		—		—		—		1,155,542
Other accrued expenses and liabilities		—		3,925		441		—		—		4,366
Intercompany balances		—		—		1,134,916		—		(1,134,916)		—
Total non-current liabilities		—		1,160,539		1,292,314		—		(1,247,511)		1,205,342
Total liabilities		—		1,514,521		1,350,715		14,398		(1,451,111)		1,428,523
Total stockholders’ equity		222,323		262,746		95,784		20,500		(379,030)		222,323
Total liabilities and stockholders’ equity	$	222,323	$	1,777,267	$	1,446,499	$	34,898	$	(1,830,141)	$	1,650,846

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	At December 31, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	68,143	$	6,489	$	14,463	$	—	$	89,095
Settlement receivables		—		40,157		—		3,131		—		43,288
Trade receivables, net		—		6,578		31,116		3		—		37,697
Other receivables		—		3,416		16,992		145		—		20,553
Inventory		—		10,595		16,568		—		—		27,163
Prepaid expenses and other assets		—		7,143		2,821		9,024		—		18,988
Deferred tax asset		—		2,743		6,848		—		—		9,591
Intercompany balances		—		18,038		151,179		1,623		(170,840)		—
Total current assets		—		156,813		232,013		28,389		(170,840)		246,375
Non-current assets
Property, equipment and leasehold improvements, net		—		17,864		87,898		323		—		106,085
Goodwill		—		148,278		708,922		713		—		857,913
Other intangible assets, net		—		24,771		402,816		9,198		—		436,785
Other receivables, non-current		—		4,411		4,773		—		—		9,184
Investment in subsidiaries		231,473		147,195		—		86		(378,754)		—
Deferred tax asset, non-current		—		78,229		—		—		(78,229)		—
Other assets, non-current		—		47,508		3,366		69		—		50,943
Intercompany balances		—		1,130,380		—		—		(1,130,380)		—
Total non-current assets		231,473		1,598,636		1,207,775		10,389		(1,587,363)		1,460,910
Total assets	$	231,473	$	1,755,449	$	1,439,788	$	38,778	$	(1,758,203)	$	1,707,285
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	—	$	111,375	$	140	$	7,642	$	—	$	119,157
Accounts payable and accrued expenses		—		61,544		41,395		1,729		—		104,668
Current portion of long-term debt		—		10,000		—		—		—		10,000
Intercompany balances		—		152,802		8,159		9,879		(170,840)		—
Total current liabilities		—		335,721		49,694		19,250		(170,840)		233,825
Non-current liabilities
Deferred tax liability, non-current		—		1,072		134,490		—		(78,229)		57,333
Long-term debt, less current portion		—		1,178,787		—		—		—		1,178,787
Other accrued expenses and liabilities		—		5,377		490		—		—		5,867
Intercompany balances		—		—		1,130,380		—		(1,130,380)		—
Total non-current liabilities		—		1,185,236		1,265,360		—		(1,208,609)		1,241,987
Total liabilities		—		1,520,957		1,315,054		19,250		(1,379,449)		1,475,812
Total stockholders’ equity		231,473		234,492		124,734		19,528		(378,754)		231,473
Total liabilities and stockholders’ equity	$	231,473	$	1,755,449	$	1,439,788	$	38,778	$	(1,758,203)	$	1,707,285

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	Nine Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Cash flows from operating activities
Net (loss) income	$	(18,382)	$	19,942	$	(29,894)	$	1,647	$	8,305	$	(18,382)
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization		—		12,300		80,662		2,016		—		94,978
Amortization of financing costs		—		5,459		—		—		—		5,459
Gain on sale or disposal of assets		—		(60)		(3,352)		—		—		(3,412)
Accretion of contract rights		—		—		6,006		—		—		6,006
Provision for bad debts		—		—		6,967		—		—		6,967
Loss on early extinguishment of debt		—		13,063		—		—		—		13,063
Equity in income (loss) of subsidiaries		18,382		(10,077)		—		—		(8,305)		—
Stock-based compensation		—		5,144		944		—		—		6,088
Other non-cash items		—		—		127		—		—		127
Changes in operating assets and liabilities:
Net settlement receivables and liabilities		—		7,510		(9)		(1,949)		—		5,552
Other changes in operating assets and liabilities		(5)		8,163		(20,360)		(881)		—		(13,083)
Net cash (used in) provided by operating activities		(5)		61,444		41,091		833		—		103,363
Cash flows from investing activities
Acquisitions, net of cash acquired		—		(10,857)		—		—		—		(10,857)
Capital expenditures		—		(13,688)		(35,512)		(334)		—		(49,534)
Proceeds from sale of fixed assets		—		103		2,000		—		—		2,103
Repayments under development agreements		—		—		3,104		—		—		3,104
Advances under development and placement agreements		—		—		(2,813)		—		—		(2,813)
Changes in restricted cash and cash equivalents		—		(66)		—		—		—		(66)
Intercompany investing activities		(4,020)		6,600		—		(58)		(2,522)		—
Net cash used in investing activities		(4,020)		(17,908)		(33,221)		(392)		(2,522)		(58,063)
Cash flows from financing activities
Repayments of prior credit facility		—		—		—		—		—		—
Repayments of credit facility		—		(7,500)		—		—		—		(7,500)
Repayments of secured notes		—		(350,000)		—		—		—		(350,000)
Proceeds from issuance of secured notes		—		335,000		—		—		—		335,000
Debt issuance costs		—		(1,146)		—		—		—		(1,146)
Issuance of warrants		2,246		(2,246)		—		—		—		—
Proceeds from exercise of stock options		1,833		—		—		—		—		1,833
Purchase of treasury stock		(54)		—		—		—		—		(54)
Intercompany financing activities		—		25		—		(2,547)		2,522		—
Net cash provided by (used in) financing activities		4,025		(25,867)		—		(2,547)		2,522		(21,867)
Effect of exchange rates on cash		—		—		—		(1,055)		—		(1,055)
Cash and cash equivalents
Net increase (decrease) for the period		—		17,669		7,870		(3,161)		—		22,378
Balance, beginning of the period		—		68,143		6,489		14,463		—		89,095
Balance, end of the period	$	—	$	85,812	$	14,359	$	11,302	$	—	$	111,473

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	Nine Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Cash flows from operating activities
Net income	$	17,889	$	17,889	$	7,334	$	3,581	$	(28,804)	$	17,889
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		—		13,690		3		485		—		14,178
Amortization of financing costs		—		1,412		—		—		—		1,412
Loss on sale or disposal of assets		—		79		—		—		—		79
Accretion of contract rights		—		—		—		—		—		—
Provision for bad debts		—		—		6,770		—		—		6,770
Loss on early extinguishment of debt		—		—		—		—		—		—
Equity in (loss) income of subsidiaries		(17,889)		(10,915)		—		—		28,804		—
Stock-based compensation		—		7,533		—		—		—		7,533
Changes in operating assets and liabilities:
Net settlement receivables and liabilities		—		(15,244)		182		(2,235)		—		(17,297)
Other changes in operating assets and liabilities		(52)		23,237		(13,953)		(10,356)		—		(1,124)
Net cash (used in) provided by operating activities		(52)		37,681		336		(8,525)		—		29,440
Cash flows from investing activities
Acquisitions, net of cash acquired		—		(11,845)		—		—		—		(11,845)
Capital expenditures		—		(9,897)		(298)		(840)		—		(11,035)
Proceeds from sale of fixed assets		—		298		—		—		—		298
Repayments under development agreements		—		—		—		—		—		—
Advances under development and placement agreements		—		—		—		—		—		—
Changes in restricted cash and cash equivalents		—		(77)		—		—		—		(77)
Intercompany Investing Activities		6,918		(18,756)		—		68		11,770		—
Net cash used in (provided by)  investing activities		6,918		(40,277)		(298)		(772)		11,770		(22,659)
Cash flows from financing activities
Repayments of prior credit facility		—		(7,258)		—		—		—		(7,258)
Repayments of credit facility		—		—		—		—		—		—
Repayments of secured notes		—		—		—		—		—		—
Proceeds from issuance of secured notes		—		—		—		—		—		—
Debt issuance costs		—		—		—		—		—		—
Issuance of warrants		—		—		—		—		—		—
Proceeds from exercise of stock options		5,251		—		—		—		—		5,251
Purchase of treasury stock		(12,117)		—		—		—		—		(12,117)
Intercompany financing activities		—		1,512		—		10,258		(11,770)		—
Net cash (provided by) used in financing activities		(6,866)		(5,746)		—		10,258		(11,770)		(14,124)
Effect of exchange rates on cash		—		—		—		(412)		—		(412)
Cash and cash equivalents
Net increase for the period		—		(8,342)		38		549		—		(7,755)
Balance, beginning of the period		—		100,573		2,149		11,532		—		114,254
Balance, end of the period	$	—	$	92,231	$	2,187	$	12,081	$	—	$	106,499

20.SUBSEQUENT EVENTS

As of November 9, 2015 we had not identified, and were not aware of, any subsequent events for the three and nine months ended September 30, 2015.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

The following management discussion and analysis of financial condition and results of operations contains “forward-looking statements” as defined in the U.S. Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” or “will” and similar expressions to identify forward-looking statements. These forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or assumed, including, but not limited to, the following: the risk that our recent acquisition of Everi Games will not produce the expected results we anticipate; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate and operate such acquisitions consistent with our forecasts, including Everi Games; expectations regarding our existing and future installed base and win per day; expectations regarding development and placement fee arrangements; expectations regarding customers’ preferences and demands for future gaming offerings; expectations regarding our product portfolio; the overall growth of the gaming industry, if any; our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to successfully complete the conversion of our third-party processor; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with computer chips; our ability to introduce new products and services; gaming establishment and patron preferences; national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; inaccuracies in underlying operating assumptions; expenditures and product development; business prospects; anticipated sales performance; unanticipated expenses or capital needs; technological obsolescence; employee turnover and other statements that are not historical facts. If any of these assumptions prove to be incorrect, the results contemplated by the forward-looking statements regarding our future results of operations are unlikely to be realized.

These cautionary statements qualify our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This quarterly report should be read in conjunction with our most recent Annual Report on Form 10-K and the information included in our other press releases, reports and other filings with the Securities and Exchange Commission (the “SEC”). Understanding the information contained in these filings is important in order to fully understand our reported financial results and our business outlook for future periods.

Overview

Everi Holdings Inc. (formerly known as Global Cash Access Holdings, Inc.)  (“Everi Holdings”, “Holdings”, “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Games Holding Company Inc. (formerly known as Multimedia Games Holding Company, Inc.), which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (formerly known as Multimedia Games, Inc.)  (“Everi Games”, “Games”) and Everi Payments Inc. (formerly known as Global Cash Access, Inc.)  (“Everi Payments”, “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries.

Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award winning TournEvent® slot tournament solution; and (b) the central determinant system for the video lottery terminals installed at racetracks in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via Automated Teller Machine cash withdrawals, credit card cash access transactions, point of sale debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming

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establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities.

Significant Trends and Developments Impacting Our Business

Merger with Multimedia Games Holding Company, Inc.

In December 2014, Holdings completed its acquisition of Everi Games (formerly known as Multimedia Games Holding Company, Inc.). Pursuant to the terms of the Agreement and Plan of Merger, dated as of September 8, 2014 (the “Merger Agreement”), by and among Holdings, Movie Merger Sub, Inc., a wholly owned subsidiary of Holdings (“Merger Sub”), and Everi Games, Merger Sub merged with and into Everi Games, with Everi Games continuing as the surviving corporation (the “Merger”). In the Merger, Everi Games became a wholly owned subsidiary of Holdings. Also, as a result of the Merger, each outstanding share of common stock, par value $0.01 per share, of Everi Games, other than shares held by Holdings, Everi Games, Merger Sub or their respective subsidiaries, was cancelled and converted into the right to receive $36.50 in cash, without interest (the “Merger Consideration”), together with consideration paid in connection with the acceleration and full vesting of certain Everi Games equity awards, collectively, the “Total Merger Consideration”. We completed the Merger and paid the Total Merger Consideration of approximately $1.1 billion in cash. To fund the Merger, we entered into a credit facility consisting of a $500.0 million, six year senior secured term loan facility that matures in 2020 (the “Term Loan”) and a $50.0 million, five year senior secured revolving credit facility that matures in 2019 (“Revolving Credit Facility”, and together with the Term Loan, the “Credit Facilities”) and issued $350.0 million aggregate principal amount of 7.75% Senior Secured Notes due 2021 (the “Secured Notes”), and $350.0 million aggregate principal amount of 10.00% Senior Unsecured Notes due 2022 (the “Unsecured Notes” and, together with the Secured Notes, the “Notes”). The Secured Notes were subsequently refinanced, as discussed below.  The Revolving Credit Facility remained undrawn at the closing of the Merger. In relation to the Merger, we incurred expenses of approximately $52.6 million associated with debt issuance costs and original issue discounts.  These amounts were capitalized and are being amortized to interest expense based upon the related debt agreements using the straight-line method.

We expensed approximately $0.1 million and $2.0 of costs incurred related to the acquisition of Everi Games for financial advisory services, financing related fees, accounting and legal fees and other transaction-related expenses during the three and nine months ended September 30, 2015, respectively. These expenses are included in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income within operating expenses. These expenses do not include any costs related to additional site consolidation or rationalization that we might consider in the future.

Gain Contingency Settlement

In January 2014, we filed a complaint against certain third party defendants alleging conspiracy in restraint of competition regarding interchange fees, monopolization by defendants in the relevant market, and attempted monopolization of the defendants in the relevant market. We demanded a trial by jury of all issues so triable. The defendants filed a motion to dismiss on March 13, 2014. A settlement agreement was made as of January 16, 2015 and on January 22, 2015 the settlement agreement was executed and delivered in connection with respect to which we received $14.4 million in cash and recorded the settlement proceeds in the first quarter of 2015. This settlement is included as a reduction of operating expenses in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the nine months ended September 30,2015. The Company utilized the proceeds along with cash on hand to make a $15.0 million principal reduction payment on the Secured Notes in the first quarter of 2015.

Refinance of Secured Notes

The terms of the Secured Notes purchase agreement stipulated that the Company was required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Secured Notes. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty. On April 15, 2015, the Company entered into a note purchase agreement (the “Note Purchase Agreement”), among Everi Payments, CPPIB Credit Investments III Inc. (the “Purchaser”) and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”) and issued $335.0 million in aggregate principal amount of its 7.25% Senior Secured Notes due 2021 (the “Refinanced Secured Notes”) in a private offering to the Purchaser. With the proceeds from the issuance of the Refinanced Secured Notes, we redeemed, in full, the Company’s outstanding Secured Notes from the note holders thereof in accordance with the terms of the indenture

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governing the Secured Notes. In connection with this transaction during the second quarter of 2015, we expensed approximately $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.

In connection with the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued to the Purchaser a warrant to purchase 700,000 shares of Holdings’ common stock, with an exercise price equal to $9.88 per share, representing a 30% premium to the volume-weighted average price of Holdings’ common stock for the ten trading days prior to the issuance of the warrant. The warrant expires on the sixth anniversary of the date of issuance. The number of shares issuable pursuant to the warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The warrants were valued at $2.2 million using a modified Black-Scholes model and were accounted for as a debt discount.

Unsecured Notes Syndication

In connection with the terms of the Unsecured Notes purchase agreement for which we were required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Unsecured Notes, the Company prepared an updated offering memorandum and participated in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.

Unsecured Notes Registration

In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes (the “Exchange Notes”) with terms identical to the Unsecured Notes (except that the Exchange Notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below). The obligation to complete the exchange offer and/or file a shelf registration statement will terminate on the second anniversary of the date of the Registration Rights Agreement. If the exchange offer is not completed (or, if required, the shelf registration statement is not declared effective) on or before December 19, 2015, the annual interest rate borne by the Unsecured Notes will be increased by 0.25% per annum for the first 90-day period immediately following such date and by an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum additional rate of 1.00% per annum thereafter until the exchange offer is completed or the shelf registration statement is declared effective, at which time the interest rate will revert to the original interest rate on the date the Unsecured Notes were originally issued. The registration statement for the Exchange Notes was filed with the Securities and Exchange Commission (“SEC”) on October 23, 2015and declared effective on November 3, 2015.  The Company launched the exchange offer on November 4, 2015 and the exchange offer will expire at 5:00 p.m., New York City time, on December 4, 2015, unless extended.

Other Trends and Developments

Our strategic planning and forecasting processes include the consideration of economic and industry-wide trends that may impact our Games and Payments businesses. We have identified the more material positive and negative trends affecting our business as the following:

· The North American gaming industry is expected to grow slowly with certain markets anticipated to show strength, while other markets are presumed to continue to be flat or decline in the current year.

· The North American gaming industry reported a year-over-year decline in the purchase of electronic gaming machines (“EGMs”) in the prior year and visibility into casino operator capital allocation trends for replacement units continues to be limited in the current year.

· There continues to be a migration from the use of traditional paper checks and cash to electronic payments, which may impact the type of cash access used by our customers.

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· We face increased competition from smaller competitors in the 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 Payments businesses.

· There is increasing governmental oversight related to the cost of transaction processing and related fees to the consumer. We expect the financial services and payments industry to respond to these legislative acts by changing other fees and costs, which may negatively impact the Payments 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.

· The credit markets in the United States and around the world are volatile and unpredictable.

Factors Affecting Comparability

Our condensed consolidated financial statements included in this report that present our financial condition and results of operations reflect the following transactions and events:

· In March 2014, our contract with Caesars Entertainment Corporation (“CET”) expired and was not renewed. As such, our Payments revenues and cost of revenues were impacted for the remainder of 2014 and the first quarter of 2015.

· In April 2014, we acquired all of the outstanding capital stock of NEWave, Inc. (“NEWave”), a supplier of compliance, audit and data efficiency software to the gaming industry. The NEWave acquisition did not have a material impact on our results of operations and financial condition.

· In December 2014, we acquired all of the outstanding capital stock of Everi Games. The results contributed by the Everi Games business for the third quarter 2015 are reflected in our Games segment and condensed consolidated financial statements. We incurred additional acquisition-related expenses, which are reflected in operating expenses for the three and nine months ended September 30, 2015. In addition, depreciation and amortization expenses increased due to the purchase price allocation, which included tangible fixed assets and definite-lived intangible assets with relatively short amortization periods and interest expense increased in connection with the debt incurred to fund the Merger.

· In December 2014, to effect the Merger, we entered into the Credit Facilities and issued the Notes and we used a portion of these proceeds to repay the outstanding amounts owed under prior credit facilities of $210.0 million and $35.0 million for Everi Payments and Everi Games, respectively (the ‘‘Prior Credit Facilities’’). As a result, we expensed $2.7 million of related debt issuance costs and fees to ‘‘Loss on extinguishment of debt’’ associated with the Prior Credit Facilities of Everi Payments and Everi Games that were in effect prior to the consummation of the Merger.

· In April 2015, we redeemed, in full, the Secured Notes and issued the Refinanced Secured Notes. The Refinanced Secured Notes will reduce the amount of interest expense paid by the Company by approximately $1.7 million per annum.  As a result, we expensed $13.0 million of debt issuance costs and fees to “Loss on extinguishment of debt”.

· In August 2015, we acquired certain assets of Resort Advantage, LLC (“Resort Advantage”) a supplier of comprehensive and integrated solutions for complete Financial Crimes Enforcement Network (“FinCEN”) and IRS regulatory compliance to the gaming industry. The Resort Advantage acquisition did not have a material impact on our results of operations and financial condition.

As a result of the above transactions and events, the results of operations and earnings per share in the periods covered by the condensed consolidated financial statements may not be directly comparable.

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Operating Segments

During the first quarter of 2015, we changed our organizational structure as part of our transformation to a Games and Payments company providing solutions to the gaming industry. As a result, information that our chief operating decision makers regularly review for purposes of allocating resources and assessing performance changed. Therefore, beginning in the first quarter of 2015, we are reporting our financial performance based on our new segments. We have presented prior period amounts to conform to the way we now internally manage and monitor segment performance beginning in 2015. This change had no impact on our condensed consolidated financial statements. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting.

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker(s), or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision-making group consists of the Chief Executive Officer and the Chief Financial Officer. The operating segments are reviewed separately because each represents products that can be sold separately to our customers.

· 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; and ancillary products and services.

· The Payments 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 point of sale debit card transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.

Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology. In addition, we allocate depreciation and amortization expenses to the business segments.

Our business is predominantly domestic, with no specific regional concentrations and no significant assets in foreign locations.

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Results of Operations

Three months ended September 30,  2015 compared to three months ended September 30,  2014

The following table presents our unaudited condensed consolidated results of operations (in thousands)*:

	Three Months Ended
	September 30, 2015				September 30, 2014				September 30, 2015 vs 2014
	$		%		$		%		$ Variance		% Variance
Revenues
Games	$	53,983	26	%	$	—	—	%	$	53,983	—	%
Payments		154,763	74	%		145,481	100	%		9,282	6	%
Total revenues		208,746	100	%		145,481	100	%		63,265	43	%
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		129,817	62	%		108,568	75	%		21,249	20	%
Operating expenses		26,295	13	%		20,934	14	%		5,361	26	%
Research and Development		5,463	3	%		—	—	%		5,463	—	%
Depreciation		10,943	5	%		1,856	1	%		9,087	490	%
Amortization		21,512	10	%		3,352	2	%		18,160	542	%
Total costs and expenses		194,030	93	%		134,710	93	%		59,320	44	%
Operating income		14,716	7	%		10,771	7	%		3,945	37	%
Other expenses
Interest expense, net of interest income		24,696	12	%		1,996	1	%		22,700	1,137	%
Loss on extinguishment of debt		87	0	%		—	—	%		87	—	%
Total other expenses		24,783	12	%		1,996	1	%		22,787	1,142	%
(Loss) income from operations before tax		(10,067)	(5)	%		8,775	6	%		(18,842)	(215)	%
Income tax (benefit) provision		(3,957)	(2)	%		3,099	2	%		(7,056)	(228)	%
Net (loss) income	$	(6,110)	(3)	%	$	5,676	4	%	$	(11,786)	(208)	%

*    Rounding may cause variances.

Total Revenues

Total revenues increased by $63.3 million, or 43%, to $208.7 million for the three months ended September 30,  2015, as compared to the same period in the prior year. Revenues included $54.0 million from the acquired Games business.

Payments revenues increased by $9.3 million, or 6%, to $154.8 million for the three months ended September 30,  2015, as compared to the same period in the prior year. This was primarily due to higher dollar and transaction volumes and a $3.1 million increase in revenue related to kiosk sales and service.

Costs and Expenses

Cost of revenues (exclusive of depreciation and amortization) increased by $21.2 million, or 20%, to $129.8 million for the three months ended September 30, 2015, as compared to the same period in the prior year. This was primarily due to

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the cost of revenues associated with the acquired Games business. Cost of revenues decreased as a percentage of total revenue to 62% from 75% due to the margin provided by the Games segment.

Operating expenses increased by $5.4 million, or 26%, to $26.3 million for the three months ended September 30, 2015, as compared to the same period in the prior year. This was primarily due to the operating costs from the acquired Games business.

Research and development costs were $5.5 million for the three months ended September 30, 2015 associated with the acquired Games business.

Depreciation increased by $9.1 million, or 490%, to $10.9 million for the three months ended September 30, 2015, as compared to the same period in the prior year. This was primarily related to tangible assets from the acquired Games business.

Amortization increased by $18.2 million, or 542%, to $21.5 million for the three months ended September 30, 2015, as compared to the same period in the prior year. This was primarily related to the definite-lived intangible assets from the acquired Games business.

Primarily as a result of the factors described above, operating income increased by $3.9 million, or 37%, to $14.7 million for the three months ended September 30, 2015, as compared to the same period in the prior year. The operating income margin remained consistent at 7% for both the three months ended September 30, 2015 and 2014.

Interest expense, net of interest income, increased by $22.7 million, or 1,137%, to $24.7 million for the three months ended September 30, 2015, as compared to the same period in the prior year. This was associated with the additional indebtedness incurred to fund the acquisition of the Games business.

Loss on extinguishment of debt was $0.1 million for the three months ended September 30, 2015 due to the refinancing of our Senior Secured Notes.

Income tax expense decreased by $7.1 million, or 228%, to a benefit of $4.0 million for the three months ended September 30, 2015, as compared to the same period in the prior year. This was primarily due to the loss from operations before income tax expense of $10.1 million. The benefit for income tax reflected an effective income tax rate benefit of 39.3% for the three months ended September 30, 2015, which was higher than the statutory federal rate of 35% primarily due to state taxes and the lower foreign tax rate applicable to our foreign source income partially offset by non-statutory stock options that expired in 2015. The provision for income tax reflected an effective income tax rate expense of 35.3% for the same period in the prior year, which was slightly higher than the statutory federal rate of 35% primarily due to state taxes, an increase in our valuation allowance for certain foreign losses and non-cash compensation expenses related to stock options, partially offset by a lower foreign tax rate applicable to certain foreign source income.

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Nine months endedSeptember 30, 2015 compared to nine months ended September 30,2014

The following table presents our unaudited condensed consolidated results of operations (in thousands)*:

	Nine Months Ended
	September 30, 2015				September 30, 2014				September 30, 2015 vs 2014
	$		%		$		%		$ Variance		% Variance
Revenues
Games	$	163,896	26	%	$	—	—	%	$	163,896	—
Payments		458,687	74	%		440,998	100	%		17,689	4	%
Total revenues		622,583	100	%		440,998	100	%		181,585	41	%
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		384,062	62	%		331,181	75	%		52,881	16	%
Operating expenses		68,982	11	%		62,233	14	%		6,749	11	%
Research and Development		15,369	2	%		—	—	%		15,369	—
Depreciation		32,037	5	%		5,702	1	%		26,335	462	%
Amortization		62,941	10	%		8,476	2	%		54,465	643	%
Total costs and expenses		563,391	90	%		407,592	92	%		155,799	38	%
Operating income		59,192	10	%		33,406	8	%		25,786	77	%
Other expenses
Interest expense, net of interest income		75,309	12	%		5,625	1	%		69,684	1,239	%
Loss on extinguishment of debt		13,063	2	%		—	—	%		13,063	—	%
Total other expenses		88,372	14	%		5,625	1	%		82,747	1,471	%
(Loss) income from operations before tax		(29,180)	(5)	%		27,781	6	%		(56,961)	(205)	%
Income tax (benefit) provision		(10,798)	(2)	%		9,892	2	%		(20,690)	(209)	%
Net (loss) income	$	(18,382)	(3)	%	$	17,889	4	%	$	(36,271)	(203)	%

*    Rounding may cause variances.

Total Revenues

Total revenues increased by $181.6 million, or 41%, to $622.6 million for the nine months endedSeptember 30, 2015, as compared to the same period in the prior year. Revenues included $163.9 million from the acquired Games business.

Payments revenues increased by $17.7 million, or 4%, to $458.7 million for the nine months endedSeptember 30, 2015, as compared to the same period in the prior year. This was primarily due to higher dollar and transaction volumes, new business and offerings from our anti-money laundering and tax compliance solutions that commenced during the second quarter 2014. Excluding the impact of the CET contract, Payments revenues increased 7%, or $30.2 million.

Costs and Expenses

Cost of revenues (exclusive of depreciation and amortization) increased by $52.9 million, or 16%, to $384.1 million for the nine months ended September 30,2015, as compared to the same period in the prior year. This was primarily due to

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the cost of revenues associated with the acquired Games business. Cost of revenues decreased as a percentage of total revenue to 62% from 75% due to the margin provided by the Games business.

Operating expenses increased by $6.7 million, or 11%, to $69.0 million for the nine months endedSeptember 30, 2015, as compared to the same period in the prior year. This was primarily due to the operating costs from the acquired Games business, partially offset by litigation settlement proceeds of $14.4 million that reduced expenses.

Research and development costs were $15.4 million for the nine months ended2015 associated with the acquired Games business.

Depreciation increased by $26.3 million, or 462%, to $32.0 million for the nine months ended September 30,2015, as compared to the same period in the prior year. This was primarily related to tangible assets from the acquired Games business.

Amortization increased by $54.5 million, or 643%, to $62.9 million for the nine months ended September 30,2015, as compared to the same period in the prior year. This was primarily related to the definite-lived intangible assets from the acquired Games business.

Primarily as a result of the factors described above, operating income increased by $25.8 million, or 77%, to $59.2 million for the nine months ended September 30,2015, as compared to the same period in the prior year. The operating income margin increased to 10% for the nine months ended September 30,2015, as compared to 8% for the same period in the prior year.

Interest expense, net of interest income, increased by $69.7 million, or 1,239%, to $75.3 million for the nine months ended September 30,2015, as compared to the same period in the prior year. This was associated with the additional indebtedness incurred to fund the acquisition of the Games business.

Loss on extinguishment of debt was $13.1 million for the nine months ended September 30,2015 due to the refinancing of our Senior Secured Notes.

Income tax expense decreased by $20.7 million, or 209%, to a benefit of $10.8 million for the nine months ended September 30, 2015, as compared to the same period in the prior year. This was primarily due to the loss from operations before income tax expense of $29.2 million. The benefit for income tax reflected an effective income tax rate benefit of 37% for the nine months ended September 30, 2015, which was higher than the statutory federal rate of 35% primarily due to state taxes and the lower foreign tax rate applicable to our foreign source income; partially offset by non-statutory stock options that expired in the year. The provision for income tax reflected an effective income tax rate expense of 35.6% for the same period in the prior year, which was higher than the statutory federal rate of 35% primarily due to state taxes, an increase in our valuation allowance for certain foreign losses and non-cash compensation expenses related to stock options, partially offset by a lower foreign tax rate applicable to certain foreign source income.

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Games Revenues and Participation Units

The following table includes the revenues from our Games segment and the related participation units (amounts in thousands):

	As of September 30, 2015	For the three months ended September 30, 2015				For the nine months ended September 30, 2015
				% of Total Games				% of Total Games
	Total EGMs	Revenue		Revenue		Revenue		Revenue
Games revenues and participation units
Contractual Agreement	5,671	$	10,543	20	%	$	32,108	20	%
Participation Revenue	7,477		24,532	45	%		73,256	45	%
Sales	—		10,775	20	%		38,872	23	%
NY Lottery	—		4,474	8	%		13,183	8	%
Other	—		3,659	7	%		6,477	4	%
Total	13,148	$	53,983	100	%	$	163,896	100	%

Since the Merger occurred in December 2014, there was no comparative financial information provided for the three and nine months ended and at September 30, 2014.

Critical Accounting Policies

The preparation of our financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in our condensed consolidated financial statements. The SEC has defined critical accounting policies as the ones that are most important to the portrayal of the financial condition and results of operations, and which require management to make its most difficult and subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain.

For the three and nine months ended September 30, 2015, there were no material changes to the critical accounting policies and estimates discussed in our audited Consolidated Financial Statements included in our most recently filed Annual Report on Form 10-K, except for the determination of our operating segments described above in “Business Segments.”

Recent Accounting Guidance

Recent Accounting Guidance Not Yet Adopted

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-16, which provides guidance on business combinations.  The ASUrequires an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value.  The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail

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inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The pronouncement is effective for annual periods beginningafter December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU No. 2015-03, which provides guidance to simplify the presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The pronouncement is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years, and early adoption is permitted for financial statements that have not been previously issued. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In January 2015, the FASB issued ASU No. 2015-01, which requires that an entity separately classify, present and disclose extraordinary events and transactions. The pronouncement is effective for annual periods ending after December 15, 2015. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In June 2014, the FASB issued ASU No. 2014-12, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, which creates FASB Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry-specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016;  however, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017.Early application is not permitted. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within our Notes to the Condensed Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The following table presents selected information about our financial position (in thousands):

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	At September 30,		At December 31,
	2015		2014
Balance sheet data
Total assets	$	1,650,846	$	1,707,285
Total borrowings		1,165,542		1,188,787
Stockholders’ equity		222,323		231,473
Net available cash*
Cash and cash equivalents		111,473		89,095
Add: Settlement receivables		25,482		43,288
Less: Settlement liabilities		(106,579)		(119,157)
Total net available cash	$	30,376	$	13,226

*    Non-GAAP measure

Cash Resources

Our cash balance, cash flows and Credit Facilities are expected to be sufficient to meet our recurring operating commitments and to fund our planned capital expenditures for the foreseeable future. Cash and cash equivalents at September 30, 2015 included cash in non-U.S. jurisdictions of approximately $19.0 million. Generally, these funds are available for operating and investment purposes within the jurisdiction in which they reside, but are subject to taxation in the U.S. upon repatriation.

We provide cash settlement services to our customers. These services involve the movement of funds between the various parties associated with cash access transactions. These activities result in a balance due to us at the end of each business day that we recoup over the next few business days and classify as settlement receivables. These activities also result in a balance due to our customers at the end of each business day that we remit over the next few business days and classify as settlement liabilities. As of September 30, 2015, we had $25.5 million in settlement receivables for which we received payment in October 2015. As of September 30, 2015, we had $106.6 million in settlement liabilities due to our customers for these settlement services that were paid in October 2015. As the timing of cash received from settlement receivables and payment of settlement liabilities may differ, the total amount of cash held by us will fluctuate throughout the year. As of September 30, 2015 and December 31, 2014, the net cash available after considering settlement amounts was approximately $30.4 million and $13.2 million, respectively.

Sources and Uses of Cash

The following table presents a summary of our cash flow activity (in thousands):

	For the Nine Months Ended September 30,				Increase/(Decrease)
	2015		2014		Sept-15 vs. Sept-14
Cash flow activities
Net cash provided by operating activities	$	103,363	$	29,440	$	73,923
Net cash used in investing activities		(58,063)		(22,659)		(35,404)
Net cash used in financing activities		(21,867)		(14,124)		(7,743)
Effect of exchange rates on cash		(1,055)		(412)		(643)
Cash and cash equivalents
Net increase for the period		22,378		(7,755)		30,133
Balance, beginning of the period		89,095		114,254		(25,159)
Balance, end of the period	$	111,473	$	106,499	$	4,974

Cash flows provided by operating activities increased by $73.9million for the nine months ended September 30,2015, as compared to the same period in the prior year. This was related to the operating cash from our acquisition of Everi Games.

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Cash flows used in investing activities increased by $35.4 million for the nine months ended September 30,2015, as compared to the same period in the prior year.  This was due to an increase in capital expenditures associated with our acquisition of Everi Games and other acquisitions made by us during 2015.

Cash flows used in financing activities increased by $7.7 million for the nine months ended September 30,2015, as compared to the same period in the prior year. This was due to higher principal payments on our Credit Facilities compared to the same period in the prior year. The Credit Facilities were acquired to fund the acquisition of Everi Games.

Long-Term Debt

The following table summarizes our indebtedness (in thousands):

	At September 30,		At December 31,
	2015		2014
Long-term debt
Senior secured term loan	$	492,500	$	500,000
Senior secured notes		335,000		350,000
Senior unsecured notes		350,000		350,000
Total debt		1,177,500		1,200,000
Less: original issue and warrant discount		(11,958)		(11,213)
Total debt after discount		1,165,542		1,188,787
Less: current portion of long-term debt		(10,000)		(10,000)
Long-term debt, less current portion	$	1,155,542	$	1,178,787

Credit Facilities

In December 2014, we entered into the Credit Facilities, consisting of the Term Loan and Revolving Credit Facility. The fees associated with the Credit Facilities included original issue discounts of approximately $7.5 million and debt issuance costs of approximately $13.9 million.

We are required to repay the Term Loan in an amount equal to 0.50% per quarter of the initial aggregate principal with the final principal repayment installment on the maturity date.  Interest is due in arrears each March, June, September and December and at the maturity date; however, interest may be remitted within one to three months of such dates.

The Revolving Credit Facility remained undrawn as of September 30, 2015.

The interest rate per annum applicable to the Revolving Credit Facility is, at our option, the base rate or LIBOR plus, in each case, an applicable margin. The interest rate per annum applicable to the Term Loan is also, at our option, the base rate or LIBOR plus, in each case, an applicable margin. LIBOR will be reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, with respect to the Revolving Credit Facility, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin, and, with respect to the Term Loan, if LIBOR is below 1.0%, then such rate will be equal to 1.0% plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (a) the prime lending rate announced by the administrative agent, (b) the federal funds effective rate from time to time plus 0.50%, and (c) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%. The applicable margins of 4.75% and 5.25% for the Revolving Credit Facility and Term Loan, respectively, are subject to adjustment based on our consolidated secured leverage ratio.

Voluntary prepayments of the Term Loan and the Revolving Credit Facility and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the credit agreement governing the Credit Facilities, with prior notice but without premium or penalty, except that certain refinancing transactions of the Term Loan within twelve months after the closing of the Credit Facilities will be subject to a prepayment premium of 1.00% of the principal amount repaid.

Subject to certain exceptions, the obligations under the Credit Facilities are secured by substantially all of the present and after acquired assets of each of Everi Payments, Everi Holdings and the subsidiary guarantors (the “Collateral”) including: (a) a perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned

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material restricted subsidiary held by Everi Holdings, Everi Payments or any such subsidiary guarantor; and (b) a perfected first priority security interest in substantially all other tangible and intangible assets of Everi Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the Credit Facilities are unconditionally guaranteed by Everi Holdings and such subsidiary guarantors and Everi Games and its material domestic subsidiaries.

The Term Loan had an applicable interest rate of 6.25% as of September 30, 2015 and December 31, 2014.

We were in compliance with the terms of the Credit Facilities as of September 30, 2015 and December 31, 2014.

Senior Secured Notes and Refinance of Senior Secured Notes

In December 2014, we issued $350.0 million in aggregate principal amount of 7.75%Senior Secured Notes due 2021 (“the “Secured Notes”). The fees associated with the Secured Notes included debt issuance costs of approximately $13.6 million.

The Secured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement.  Under the terms of the purchase agreement, during a one year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Secured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty. On April 15, 2015, the Company entered into a note purchase agreement (the “Note Purchase Agreement”), among Everi Payments, CPPIB Credit Investments III Inc. (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”), and issued $335.0 million in aggregate principal amount of its 7.25% Senior Secured Notes due 2021 (the “Refinanced Secured Notes”) to the Purchaser in a private offering. With the proceeds from the issuance of the Refinanced Secured Notes, we redeemed, in full, the Company’s then outstanding Secured Notes from the initial purchasers in accordance with the terms of the indenture governing the Secured Notes. In connection with the issuance of the Refinanced Secured Notes during the second quarter of 2015, we expensed $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.

In connection with the issuance of the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued to the Purchaser a warrant to purchase 700,000 shares of Everi Holdings’ common stock, with an exercise price equal to $9.88 per share, representing a 30% premium to the volume-weighted average price of Everi Holdings’ common stock for the ten trading days prior to the issuance of the warrant. The warrant expires on the sixth anniversary of the date of issuance. The number of shares issuable pursuant to the warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The warrants were valued at $2.2 million using a modified Black-Scholes model and were accounted for as a debt discount.

Interest is due quarterly in arrears each January, April, July and October.

We were in compliance with the terms of the Refinanced Secured Notes as of September 30,  2015 and the Secured Notes as of December 31, 2014.

Senior Unsecured Notes

In December 2014, we issued $350 million in aggregate principal amount of 10.0% Senior Unsecured Notes due 2022 (the “Unsecured Notes”). The fees associated with the Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million.

Interest is due semi-annually in arrears each January and July.

The Unsecured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement.  Under the terms of the purchase agreement, during a one-year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the purchasers in the resale of the Unsecured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing

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efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.

In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes (the “Exchange Notes”) with terms identical to the Unsecured Notes (except that the Exchange Notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below). The obligation to complete the exchange offer and/or file a shelf registration statement will terminate on the second anniversary of the date of the Registration Rights Agreement. If the exchange offer is not completed (or, if required, the shelf registration statement is not declared effective) on or before December 19, 2015, the annual interest rate borne by the Unsecured Notes will be increased by 0.25% per annum for the first 90-day period immediately following such date and by an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum additional rate of 1.00% per annum thereafter until the exchange offer is completed or the shelf registration statement is declared effective, at which time the interest rate will revert to the original interest rate on the date the Unsecured Notes were originally issued. The registration statement for the Exchange Notes was filed with the Securities and Exchange Commission (“SEC”) on October 23, 2015 and declared effective on November 3, 2015.  The Company launched the exchange offer on November 4, 2015 and the exchange offer will expire at 5:00 p.m., New York City time, on December 4, 2015, unless extended.

We were in compliance with the terms of the Unsecured Notes as of September 30, 2015 and December 31, 2014.

Deferred Tax Asset

The Company recognized a deferred tax asset upon its conversion from a limited liability company to a corporation on May 14, 2004. Prior to that time, all tax attributes flowed through to the members of the limited liability company. The principal component of the deferred tax asset is a difference between our assets for financial accounting purposes and tax purposes. This difference results from a significant balance of acquired goodwill of approximately $687.4 million that was generated as part of the conversion to a corporation plus approximately $97.6 million in preexisting goodwill carried over from periods prior to the conversion. Both of these assets are recorded for tax purposes but not for accounting purposes. This asset is amortized over 15 years for tax purposes, resulting in annual pretax income being $52.3 million lower for tax purposes than for financial accounting purposes. At an estimated blended domestic statutory tax rate of 36.3%, this results in tax payments being approximately $19.0 million less than the annual provision for income taxes shown on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for financial accounting purposes, or the amount of the annual provision, if less. There is an expected aggregate of $68.1 million in cash savings over the remaining life of the portion of the deferred tax asset related to the conversion. This deferred tax asset may be subject to certain limitations. We believe that it is more likely than not that it will be able to utilize the deferred tax asset. However, the utilization of this tax asset is subject to many factors including our earnings, a change of control of the Company and future earnings.

Other Liquidity Needs and Resources

We need cash to support our foreign operations. For some foreign jurisdictions, such as the United Kingdom, applicable law and cross-border treaties allow us to transfer funds between our domestic and foreign operations efficiently. For other foreign jurisdictions, we must rely on the cash generated by our operations in those foreign jurisdictions, and the cost of repatriation is prohibitive. For example, Global Cash Access (Canada), Inc. (“GCA Canada”), the subsidiary through which we operate in Canada, generates cash that is sufficient to support its operations, and all cash generated through such operations is expected to be retained by GCA Canada. As we expand our cash access business into new foreign jurisdictions, we must rely on treaty-favored cross-border transfers of funds, the cash generated by our operations in those foreign jurisdictions or alternate sources of working capital.

Off-Balance Sheet Arrangements

Our Contract Cash Solutions Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds,

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we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, were $0.5 million and $1.6 million and $0.6 million and $1.8 million the three and nine months ended September 30, 2015 and 2014, respectively. We are exposed to interest rate risk to the extent that the applicable LIBOR increases.

Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable which is recorded on a net basis. As these funds are not our assets, supplied cash is not reflected on the Condensed Consolidated Balance Sheets. The outstanding balances of ATM cash utilized by us from Wells Fargo were $289.4 million and $396.3 million as of September 30, 2015 and December 31, 2014, respectively.

In November 2014, we amended the Contract Cash Solutions Agreement to extend the term one year until November 30, 2015.

In June 2015, we amended the Contract Cash Solutions Agreement to decrease the maximum amount of cash to be provided to us from $500.0 million to $425.0 million and to extend the term of the agreement from November 30, 2015 to June 30, 2018.

We are responsible for any losses of cash in the ATMs under this agreement and we self-insure for this risk. We incurred no material losses relatedto this self-insurance forthe three and nine months ended September 30, 2015 and 2014.

Effects of Inflation

Our monetary assets, consisting primarily of cash, receivables, inventory and our non-monetary assets, consisting primarily of the deferred tax asset, goodwill and other intangible assets, are not significantly affected by inflation. We believe that replacement costs of equipment, furniture and leasehold improvements will not materially affect our operations. However, the rate of inflation affects our operating expenses, such as those for salaries and benefits, armored carrier expenses, telecommunications expenses and equipment repair and maintenance services, which may not be readily recoverable in the financial terms under which we provide our Payments and Games products and services to gaming establishments and their patrons.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of business, we are exposed to foreign currency exchange risk. We operate and conduct business in foreign countries and, as a result, are exposed to movements in foreign currency exchange rates. Our exposure to foreign currency exchange risk related to our foreign operations is not material to our results of operations, cash flows or financial position. At present, we do not hedge this risk, but continue to evaluate such foreign currency translation risk exposure.

Wells Fargo supplies us with currency needed for normal operating requirements of our domestic ATMs pursuant to the Contract Cash Solutions Agreement. Under the terms of this agreement, we pay a monthly cash usage fee based upon the product of the average daily dollars outstanding in all such ATMs multiplied by a margin that is tied to LIBOR.  We are, therefore, exposed to interest rate risk to the extent that the applicable LIBOR increases. The currency supplied by Wells Fargo was $289.4 million as of September 30, 2015. Based upon this outstanding amount of currency supplied by Wells Fargo, each 1% increase in the applicable LIBOR would have a $2.9 million impact on income before taxes over a 12-month period.  Foreign gaming establishments supply the currency needs for the ATMs located on their premises.

The Credit Facilities bear interest at rates that can vary over time. We have the option of having interest on the outstanding amounts under the Credit Facilities paid based on a base rate or based on LIBOR and we have historically elected to pay interest based on LIBOR, and we expect to continue to pay interest based on LIBOR of various maturities. The weighted average interest rate on the Credit Facilities was approximately 6.25% for the nine months ended September 30,2015. Based upon the outstanding balance on the Credit Facilities of $492.5 million as of September 30, 2015, each 1% increase in the applicable LIBOR would have a $4.9 million impact on interest expense over a 12 month period. The interest rates on the Notes are fixed and therefore an increase in LIBOR does not impact the interest expense associated with the Notes.

46

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and operating effectiveness as of September 30, 2015 of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act. We completed the acquisition ofEveri Games in December 2014, which represented approximately 72% of our total assets as of September 30, 2015 and approximately 26% of total revenues for the nine months ended September 30,2015.  Everi Games was excluded from our evaluation in accordance with the SEC’s general guidance that a recently acquired business may be omitted from the scope of the assessment for a period of up to one year from the date of acquisition.   Based on this evaluation our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2015.

Changes in Internal Control over Financial Reporting during the Quarter Ended September 30, 2015

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the third quarter ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

47

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Everi Games Shareholder Litigation

Putative shareholders of Everi Games filed suits in the United States District Court for the Western District of Texas (the “Texas Federal Action”) and the District Court of Travis County, Texas (the “Texas State Court Action”) alleging that Everi Games’ directors breached their fiduciary duties in connection with the Merger. The complaints further alleged that Everi Holdings and its formerly wholly-owned merger subsidiary, Merger Sub, aided and abetted those purported breaches of fiduciary duty.

The parties agreed to settle all claims asserted in the Texas Federal Action. Everi Games agreed to make certain additional disclosures in its proxy statement related to the Merger, and made those disclosures in a Current Report on Form 8-K filed on November 21, 2014. In addition, the defendants agreed not to oppose plaintiffs’ application for an attorneys’ fee award of up to $310,000. The court in the Texas Federal Action approved the settlement, awarded attorneys’ fees of $310,000, and entered judgment. The deadline to file any appeal from the judgment has expired and no appeal has been filed.

The judgment in the Texas Federal Action includes a release of the claims asserted in the Texas State Court Action. The Texas State Court Action has been dismissed with prejudice.

Alabama Litigation

The Company is currently involved in one lawsuit related to Everi Games’ former charity bingo operations in the State of Alabama, which we believe is not material from a damages perspective. The lawsuit is currently pending in federal court and includes claims related to the alleged illegality of electronic charity bingo in the State of Alabama.

Ozetta Hardy v. Whitehall Gaming Center, LLC, et al., a civil action, was filed against Whitehall Gaming Center, LLC (an entity that does not exist), Cornerstone Community Outreach, Inc., and Freedom Trail Ventures, Ltd., in the Circuit Court of Lowndes County, Alabama. On June 3, 2010, Everi Games and other manufacturers were added as defendants. The plaintiffs, who claim to have been patrons of White Hall, allege that Everi Games participated in gambling operations that violated Alabama state law by supplying to White Hall purportedly unlawful electronic bingo machines played by the plaintiffs, and the plaintiffs seek recovery of the monies lost on all electronic bingo games played by the plaintiffs in the six months prior to the filing of the complaint under Ala. Code, Sec 8-1-150(A). The plaintiffs requested that the court certify the action as a class action. On July 2, 2010, the defendants removed the case to the United States District Court for the Middle District of Alabama, Northern Division. The court has not ruled on the plaintiffs' motion for class certification. The Company continues to vigorously defend this matter. Given the inherent uncertainties in this litigation, however, the Company is unable to make any prediction as to the ultimate outcome.

We are also subject to other claims and suits that arise from time to time in the ordinary course of business. We do not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on our financial position, liquidity or results of operations.

Item 1A. Risk Factors.

There have been no changes to our risk factors since the most recent filing of our Form 10-K.

48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases and Withholding of Equity Securities

	Total Number of		Average Price per
	Shares Purchased or		Share Purchased or
	Withheld		Withheld
	(000’s)
Tax Withholdings
7/1/15 - 7/31/15	0.8	(1)	$	7.64	(2)
8/1/15 - 8/31/15	0.8	(1)	$	4.95	(2)
9/1/15 - 9/30/15	0.8	(1)	$	4.76	(2)
Sub-Total	2.4	(1)		5.79	(2)
Total	2.4		$	5.79

(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 awards. There are no limitations on the number of shares of the Company’s common stock that may be withheld from restricted stock awards to satisfy the minimum tax withholding obligations incident to the vesting of such awards.

(2) Represents the average price per share of the Company’s common stock withheld from restricted stock awards on the date of withholding.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

49

Item 6. Exhibits

Exhibit Number	Description
3.1	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Everi Holdings Inc. (incorporated by reference to Exhibit 3.1 of Everi Holdings Inc.’s Current Report on Form 8-K filed with the SEC on August 14, 2015).
3.2	Second Amended and Restated Bylaws of Everi Holdings Inc. (incorporated by reference to Exhibit 3.2 to Everi Holdings Inc.’s Current Report on Form 8-K filed with the SEC on August 14, 2015).
31.1*	Certification of Ram V. Chary, Chief Executive Officer of Everi Holdings Inc. in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Randy L. Taylor, Chief Financial Officer of Everi Holdings Inc. in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Ram V. Chary, Chief Executive Officer of Everi Holdings Inc. in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Randy L. Taylor, Chief Financial Officer of Everi Holdings Inc. in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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.

50

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

November 9, 2015	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)

51

EXHIBIT INDEX

Exhibit Number	Description
3.1	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Everi Holdings Inc. (incorporated by reference to Exhibit 3.1 of Everi Holdings Inc.’s Current Report on Form 8-K filed with the SEC on August 14, 2015).
3.2	Second Amended and Restated Bylaws of Everi Holdings Inc. (incorporated by reference to Exhibit 3.2 to Everi Holdings Inc.’s Current Report on Form 8-K filed with the SEC on August 14, 2015).
31.1*	Certification of Ram V. Chary, Chief Executive Officer of Everi Holdings Inc. in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Randy L. Taylor, Chief Financial Officer of Everi Holdings Inc. in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Ram V. Chary, Chief Executive Officer of Everi Holdings Inc. in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Randy L. Taylor, Chief Financial Officer of Everi Holdings Inc. in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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.

52

EX-31.1

Exhibit 31.1

GLOBAL CASH ACCESS HOLDINGS, INC.

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ram V. Chary, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Global Cash Access 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 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 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: November 9, 2015	By:	/s/ Ram V. Chary
		Ram V. Chary
		Chief Executive Officer

EX-31.2

Exhibit 31.2

GLOBAL CASH ACCESS HOLDINGS, INC.

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION302 OF THE SARBANES-OXLEY ACT OF 2002

I, Randy L. Taylor, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Global Cash Access 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 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 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: November 9, 2015	By:	/s/ Randy L.  Taylor
		Randy L. Taylor
		Chief Financial Officer

EX-32.1

Exhibit 32.1

GLOBAL CASH ACCESS HOLDINGS, INC.

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION1350

AS ADOPTED PURSUANT TO SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the periodic report of Global Cash Access Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Ram V. Chary, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(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.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated: November 9, 2015	By:	/s/ Ram V. Chary
		Ram V. Chary
		Chief Executive Officer

EX-32.2

Exhibit 32.2

GLOBAL CASH ACCESS HOLDINGS, INC.

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION1350

AS ADOPTED PURSUANT TO SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the periodic report of Global Cash Access Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Randy L. Taylor, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(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.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated: November 9, 2015	By:	/s/ Randy L. Taylor
		Randy L. Taylor
		Chief Financial Officer

XML

SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2015

SEGMENT INFORMATION

Schedule of results of operations and total assets by operating segment

The following tables present segment information (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues
Games	$	53,983	$	—	$	163,896	$	—
Payments		154,763		145,481		458,687		440,998
Total revenues	$	208,746	$	145,481	$	622,583	$	440,998
Operating income
Games	$	2,368	$	—	$	7,180	$	—
Payments		12,348		10,771		52,012		33,406
Total operating income	$	14,716	$	10,771	$	59,192	$	33,406

	At
	September 30, 2015		December 31, 2014
Total assets
Games	$	1,190,354	$	1,242,822
Payments		460,492		464,463
Total assets	$	1,650,846	$	1,707,285

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Other Intangible Assets
Cost	$ 519,942		$ 519,942		$ 491,311
Accumulated Amortization	122,781		122,781		54,526
Net Book Value	397,161		397,161		436,785
Amortization of Intangible Assets	21,500	$ 3,400	62,900	$ 8,500
Contract rights under development and placement fee agreements
Other Intangible Assets
Cost	16,454		16,454		14,000
Accumulated Amortization	6,006		6,006		301
Net Book Value	10,448		$ 10,448		13,699
Contract rights under development and placement fee agreements | Minimum
Other Intangible Assets
Useful Life (years)			1 year
Contract rights under development and placement fee agreements | Maximum
Other Intangible Assets
Useful Life (years)			7 years
Customer contracts
Other Intangible Assets
Cost	49,764		$ 49,764		43,938
Accumulated Amortization	33,393		33,393		29,931
Net Book Value	16,371		$ 16,371		14,007
Customer contracts | Minimum
Other Intangible Assets
Useful Life (years)			7 years
Customer contracts | Maximum
Other Intangible Assets
Useful Life (years)			14 years
Customer relationships
Other Intangible Assets
Cost	231,100		$ 231,100		231,100
Accumulated Amortization	16,481		16,481		733
Net Book Value	214,619		$ 214,619		230,367
Customer relationships | Minimum
Other Intangible Assets
Useful Life (years)			8 years
Customer relationships | Maximum
Other Intangible Assets
Useful Life (years)			12 years
Developed technology and software
Other Intangible Assets
Cost	194,795		$ 194,795		174,417
Accumulated Amortization	54,610		54,610		14,604
Net Book Value	140,185		140,185		159,813
Development costs capitalized	6,700	$ 700	$ 12,300	$ 5,600
Developed technology and software | Minimum
Other Intangible Assets
Useful Life (years)			1 year
Developed technology and software | Maximum
Other Intangible Assets
Useful Life (years)			6 years
Patents, trademarks and other
Other Intangible Assets
Cost	27,829		$ 27,829		27,856
Accumulated Amortization	12,291		12,291		8,957
Net Book Value	$ 15,538		$ 15,538		$ 18,899
Patents, trademarks and other | Minimum
Other Intangible Assets
Useful Life (years)			1 year
Patents, trademarks and other | Maximum
Other Intangible Assets
Useful Life (years)			17 years

XML

TRADE RECEIVABLES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
TRADE RECEIVABLES
Trade receivables, net	$ 47,702	$ 37,697
Outstanding balance of warranty reserve	3,200	2,800
Gaming
TRADE RECEIVABLES
Trade receivables, net	34,871	28,270
Payments
TRADE RECEIVABLES
Trade receivables, net	$ 12,831	$ 9,427

XML

SEGMENT INFORMATION (Details) - item	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Major Customers
Number of customers individually exceeding 10% of consolidated revenue	0	0	0	0
Number of major customers	5	5	5	5
Five Largest Customers [Member]
Major Customers
Concentration risk (as a percent)	29.00%	29.00%	30.00%	29.00%

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($) item
Units Located Across Oklahoma
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payment advances made under development and placement fee agreements | $	$ 2.8
Number of unit placement with period coverage extension	300
Minimum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
General term of the agreement	12 months
Maximum
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
General term of the agreement	83 months
Maximum | Units Located Across Oklahoma
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Additional term	60 months

XML

BUSINESS COMBINATIONS (Details 4) - USD ($) $ in Thousands		1 Months Ended		3 Months Ended		6 Months Ended	9 Months Ended	40 Months Ended
	Dec. 19, 2014	Aug. 31, 2015	Apr. 30, 2014	Sep. 30, 2015	Jun. 30, 2015	Jun. 30, 2015	Sep. 30, 2015	Nov. 30, 2018
NEWave, Inc.
Purchased intangible assets
Aggregate purchase price			$ 14,900
Aggregate purchase price expected to be paid					$ 2,500
Final Payment						$ 2,300
Everi Games
Property, Equipment and Leased Assets
Estimated Fair Value	$ 87,283
Purchased intangible assets
Estimated Fair Value	403,300
Aggregate purchase price	1,149,389
Acquisition related costs				$ 100			$ 2,000
Everi Games | Tradenames and trademarks
Purchased intangible assets
Estimated Fair Value	14,800
Everi Games | Computer software
Purchased intangible assets
Estimated Fair Value	3,755
Everi Games | Developed technology
Purchased intangible assets
Estimated Fair Value	139,645
Everi Games | Customer relationships
Purchased intangible assets
Estimated Fair Value	231,100
Everi Games | Contract Rights
Purchased intangible assets
Estimated Fair Value	14,000
Everi Games | Gaming Equipment
Property, Equipment and Leased Assets
Estimated Fair Value	78,201
Everi Games | Leasehold and building improvements
Property, Equipment and Leased Assets
Estimated Fair Value	2,105
Everi Games | Machinery, office and other equipment
Property, Equipment and Leased Assets
Estimated Fair Value	4,126
Everi Games | Other
Property, Equipment and Leased Assets
Estimated Fair Value	$ 2,851
Resort Advantage, LLC
Purchased intangible assets
Aggregate purchase price		$ 13,300
Resort Advantage, LLC | Scenario Forecast
Purchased intangible assets
Aggregate purchase price expected to be paid								$ 4,700
Period following the acquisition during which a certain portion of the purchase price is expected to be paid, dependant upon financial performance of the acquired assets		40 months
Minimum | Customer relationships
Purchased intangible assets
Useful Life (years)							8 years
Minimum | Other intangible asset
Purchased intangible assets
Discount rate (as a percent)							10.00%
Minimum | Machinery, office and other equipment
Property, Equipment and Leased Assets
Useful Life (years)							2 years
Minimum | Everi Games | Tradenames and trademarks
Purchased intangible assets
Useful Life (years)	3 years
Minimum | Everi Games | Computer software
Purchased intangible assets
Useful Life (years)	3 years
Minimum | Everi Games | Developed technology
Purchased intangible assets
Useful Life (years)	2 years
Minimum | Everi Games | Customer relationships
Purchased intangible assets
Useful Life (years)	8 years
Minimum | Everi Games | Contract Rights
Purchased intangible assets
Useful Life (years)	1 year
Minimum | Everi Games | Gaming Equipment
Property, Equipment and Leased Assets
Useful Life (years)	2 years
Minimum | Everi Games | Machinery, office and other equipment
Property, Equipment and Leased Assets
Useful Life (years)	3 years
Minimum | Everi Games | Other
Property, Equipment and Leased Assets
Useful Life (years)	2 years
Maximum | Customer relationships
Purchased intangible assets
Useful Life (years)							12 years
Maximum | Other intangible asset
Purchased intangible assets
Discount rate (as a percent)							11.00%
Maximum | Machinery, office and other equipment
Property, Equipment and Leased Assets
Useful Life (years)							5 years
Maximum | Everi Games | Tradenames and trademarks
Purchased intangible assets
Useful Life (years)	7 years
Maximum | Everi Games | Computer software
Purchased intangible assets
Useful Life (years)	5 years
Maximum | Everi Games | Developed technology
Purchased intangible assets
Useful Life (years)	6 years
Maximum | Everi Games | Customer relationships
Purchased intangible assets
Useful Life (years)	12 years
Maximum | Everi Games | Contract Rights
Purchased intangible assets
Useful Life (years)	7 years
Maximum | Everi Games | Gaming Equipment
Property, Equipment and Leased Assets
Useful Life (years)	4 years
Maximum | Everi Games | Machinery, office and other equipment
Property, Equipment and Leased Assets
Useful Life (years)	5 years
Maximum | Everi Games | Other
Property, Equipment and Leased Assets
Useful Life (years)	7 years

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PROPERTY, EQUIPMENT AND LEASED ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

PROPERTY, EQUIPMENT AND LEASED ASSETS

Schedule of property, equipment and leased assets

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

				At September 30, 2015						At December 31, 2014
	UsefulLife					Accumulated		NetBook				Accumulated		Net Book
	(Years)			Cost		Depreciation		Value		Cost		Depreciation		Value
Property, equipment and leased assets
Rental pool - deployed	2	-	4	$	85,090	$	20,900	$	64,190	$	70,295	$	876	$	69,419
Rental pool - undeployed	2	-	4		13,305		3,144		10,161		10,562		151		10,411
ATM equipment		5			18,492		12,322		6,170		23,572		16,544		7,028
Leasehold and building improvements	Lease Term				6,474		1,742		4,732		6,289		895		5,394
Cash advance equipment		3			7,187		2,424		4,763		3,372		1,873		1,499
Machinery, office and other equipment	2	-	5		24,944		12,859		12,085		21,405		9,071		12,334
Total				$	155,492	$	53,391	$	102,101	$	135,495	$	29,410	$	106,085

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Ops) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Condensed Income Statements, Captions [Line Items]
Revenues	$ 208,746	$ 145,481	$ 622,583	$ 440,998
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)	129,817	108,568	384,062	331,181
Operating expenses	26,295	20,934	68,982	62,233
Research and Development	5,463		15,369
Depreciation	10,943	1,856	32,037	5,702
Amortization	21,512	3,352	62,941	8,476
Total costs and expenses	194,030	134,710	563,391	407,592
Operating income	14,716	10,771	59,192	33,406
Other expenses
Interest expense, net of interest income	24,696	1,996	75,309	5,625
Loss on extinguishment of debt	87		13,063
Total other (income) expenses	24,783	1,996	88,372	5,625
(Loss) income from operations before tax	(10,067)	8,775	(29,180)	27,781
Income tax (benefit) provision	(3,957)	3,099	(10,798)	9,892
Net (loss) income	(6,110)	5,676	(18,382)	17,889
Foreign currency translation	(788)	(839)	(850)	(457)
Comprehensive (loss) income	(6,898)	4,837	(19,232)	17,432
Eliminations
Condensed Income Statements, Captions [Line Items]
Revenues	(162)	(184)	(448)	(547)
Costs and expenses
Operating expenses	(162)	(184)	(448)	(547)
Total costs and expenses	(162)	(184)	(448)	(547)
Other expenses
Equity in loss (income) of subsidiaries	(2,745)	8,166	(8,305)	28,804
Total other (income) expenses	(2,745)	8,166	(8,305)	28,804
(Loss) income from operations before tax	2,745	(8,166)	8,305	(28,804)
Net (loss) income	2,745	(8,166)	8,305	(28,804)
Foreign currency translation	788	839	850	457
Comprehensive (loss) income	3,533	(7,327)	9,155	(28,347)
Parent | Reportable Legal Entities
Other expenses
Equity in loss (income) of subsidiaries	6,110	(5,676)	18,382	(17,889)
Total other (income) expenses	6,110	(5,676)	18,382	(17,889)
(Loss) income from operations before tax	(6,110)	5,676	(18,382)	17,889
Net (loss) income	(6,110)	5,676	(18,382)	17,889
Foreign currency translation	(788)	(839)	(850)	(457)
Comprehensive (loss) income	(6,898)	4,837	(19,232)	17,432
Subsidiary Issuer | Reportable Legal Entities
Condensed Income Statements, Captions [Line Items]
Revenues	143,031	134,452	424,259	408,971
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)	112,344	103,720	333,592	319,976
Operating expenses	19,085	19,593	42,084	58,339
Depreciation	1,881	1,810	5,442	5,563
Amortization	2,448	3,252	6,858	8,127
Total costs and expenses	135,758	128,375	387,976	392,005
Operating income	7,273	6,077	36,283	16,966
Other expenses
Interest expense, net of interest income	1,365	1,902	5,977	5,926
Equity in loss (income) of subsidiaries	(3,365)	(2,490)	(10,077)	(10,915)
Loss on extinguishment of debt	87		13,063
Total other (income) expenses	(1,913)	(588)	8,963	(4,989)
(Loss) income from operations before tax	9,186	6,665	27,320	21,955
Income tax (benefit) provision	2,356	1,197	7,378	4,066
Net (loss) income	6,830	5,468	19,942	17,889
Comprehensive (loss) income	6,830	5,468	19,942	17,889
Guarantor Subsidiaries | Reportable Legal Entities
Condensed Income Statements, Captions [Line Items]
Revenues	61,110	7,207	185,919	21,117
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)	14,970	2,575	43,716	6,861
Operating expenses	6,932	787	26,027	2,384
Research and Development	5,463		15,369
Depreciation	9,018	1	26,440	3
Amortization	18,487		54,222
Total costs and expenses	54,870	3,363	165,774	9,248
Operating income	6,240	3,844	20,145	11,869
Other expenses
Interest expense, net of interest income	23,266		69,089
Total other (income) expenses	23,266		69,089
(Loss) income from operations before tax	(17,026)	3,844	(48,944)	11,869
Income tax (benefit) provision	(6,606)	1,721	(19,050)	4,535
Net (loss) income	(10,420)	2,123	(29,894)	7,334
Comprehensive (loss) income	(10,420)	2,123	(29,894)	7,334
Non-Guarantor Subsidiaries | Reportable Legal Entities
Condensed Income Statements, Captions [Line Items]
Revenues	4,767	4,006	12,853	11,457
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)	2,503	2,273	6,754	4,344
Operating expenses	440	738	1,319	2,057
Depreciation	44	45	155	136
Amortization	577	100	1,861	349
Total costs and expenses	3,564	3,156	10,089	6,886
Operating income	1,203	850	2,764	4,571
Other expenses
Interest expense, net of interest income	65	94	243	(301)
Total other (income) expenses	65	94	243	(301)
(Loss) income from operations before tax	1,138	756	2,521	4,872
Income tax (benefit) provision	293	181	874	1,291
Net (loss) income	845	575	1,647	3,581
Foreign currency translation	(788)	(839)	(850)	(457)
Comprehensive (loss) income	$ 57	$ (264)	$ 797	$ 3,124

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LONG-TERM DEBT (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
BORROWINGS
Total Debt	$ 1,177,500	$ 1,200,000
Less: original issue discount	(11,958)	(11,213)
Total debt after discount	1,165,542	1,188,787
Less: current portion of long-term debt	(10,000)	(10,000)
Long-term debt, less current portion	1,155,542	1,178,787
Senior secured term Loan
BORROWINGS
Total Debt	492,500	500,000
Senior secured notes
BORROWINGS
Total Debt	335,000	350,000
Senior unsecured notes
BORROWINGS
Total Debt	$ 350,000	350,000
Less: original issue discount		$ (3,800)

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SEGMENT INFORMATION (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Results of operations by operating segment
Revenues	$ 208,746	$ 145,481	$ 622,583	$ 440,998
Operating income	14,716	10,771	59,192	33,406
Payments
Results of operations by operating segment
Revenues	154,763	145,481	458,687	440,998
Operating income	12,348	$ 10,771	52,012	$ 33,406
Gaming Operations Member
Results of operations by operating segment
Revenues	53,983		163,896
Operating income	$ 2,368		$ 7,180

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2015

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

20.SUBSEQUENT EVENTS

As of November 9, 2015 we had not identified, and were not aware of, any subsequent events for the three and nine months ended September 30, 2015.

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PREPAID AND OTHER ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Prepaid expenses and other assets
Prepaid expenses	$ 5,799	$ 7,163
Deposits	9,640	8,781
Other	3,823	3,044
Total prepaid expenses and other assets	19,262	18,988
Other assets non-current
Debt issuance costs	25,333	41,109
Prepaid expense And Deposits non-current	4,253	3,956
Other	6,693	5,878
Total other assets, non-current	$ 36,279	$ 50,943

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) $ in Thousands	Sep. 30, 2015 USD ($)
Fair Value Inputs Level1 [Member] | Fair Value | Term Loan [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 490,653
Fair Value Inputs Level1 [Member] | Outstanding Balance | Term Loan [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	492,500
Level 3 | Fair Value | Senior secured notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	331,650
Level 3 | Fair Value | Senior unsecured notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	315,000
Level 3 | Outstanding Balance | Senior secured notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	335,000
Level 3 | Outstanding Balance | Senior unsecured notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt	$ 350,000

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CFS) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net (loss) income	$ (6,110)	$ 5,676	$ (18,382)	$ 17,889
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and Amortization			94,978	14,178
Amortization of financing costs			5,459	1,412
Loss/(gain) on sale or disposal of assets			(3,412)	79
Accretion of contract rights			6,006
Provision for bad debts			6,967	6,770
Loss on extinguishment of debt	87		13,063
Stock-based compensation			6,088	7,533
Other non-cash items			127
Changes in operating assets and liabilities:
Net settlement receivables and liabilities			5,552	(17,297)
Other changes in operating assets and liabilities			(13,083)	(1,124)
Net cash provided by operating activities			103,363	29,440
Cash flows from investing activities
Acquisitions, net of cash acquired			(10,857)	(11,845)
Capital expenditures			(49,534)	(11,035)
Proceeds from Sale of Productive Assets			2,103	298
Repayments under development agreements			3,104
Advances under development and placement agreements			(2,813)
Changes in restricted cash and cash equivalents			(66)	(77)
Net cash used in investing activities			(58,063)	(22,659)
Cash flows from financing activities
Repayments against prior credit facility				(7,258)
Repayments of credit facility			(7,500)
Repayments of secured notes			(350,000)
Proceeds from issuance of secured notes			335,000
Debt issuance costs			(1,146)
Proceeds from exercise of stock options			1,833	5,251
Purchase of treasury stock			(54)	(12,117)
Net cash used in financing activities			(21,867)	(14,124)
Effect of exchange rates on cash			(1,055)	(412)
Cash and cash equivalents
Net increase for the period			22,378	(7,755)
Balance, beginning of the period			89,095	114,254
Balance, end of the period	111,473	106,499	111,473	106,499
Reportable Legal Entities | Parent
Cash flows from operating activities
Net (loss) income	(6,110)	5,676	(18,382)	17,889
Adjustments to reconcile net income to cash provided by operating activities:
Equity in income (loss) of subsidiaries			18,382	(17,889)
Changes in operating assets and liabilities:
Other changes in operating assets and liabilities			(5)	(52)
Net cash provided by operating activities			(5)	(52)
Cash flows from investing activities
Intercompany investing activities			(4,020)	6,918
Net cash used in investing activities			(4,020)	6,918
Cash flows from financing activities
Issuance of warrants			2,246
Proceeds from exercise of stock options			1,833	5,251
Purchase of treasury stock			(54)	(12,117)
Net cash used in financing activities			4,025	(6,866)
Reportable Legal Entities | Subsidiary Issuer
Cash flows from operating activities
Net (loss) income	6,830	5,468	19,942	17,889
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and Amortization			12,300	13,690
Amortization of financing costs			5,459	1,412
Loss/(gain) on sale or disposal of assets			(60)	79
Loss on extinguishment of debt	87		13,063
Equity in income (loss) of subsidiaries			(10,077)	(10,915)
Stock-based compensation			5,144	7,533
Changes in operating assets and liabilities:
Net settlement receivables and liabilities			7,510	(15,244)
Other changes in operating assets and liabilities			8,163	23,237
Net cash provided by operating activities			61,444	37,681
Cash flows from investing activities
Acquisitions, net of cash acquired			(10,857)	(11,845)
Capital expenditures			(13,688)	(9,897)
Proceeds from Sale of Productive Assets			103	298
Changes in restricted cash and cash equivalents			(66)	(77)
Intercompany investing activities			6,600	(18,756)
Net cash used in investing activities			(17,908)	(40,277)
Cash flows from financing activities
Repayments against prior credit facility				(7,258)
Repayments of credit facility			(7,500)
Repayments of secured notes			(350,000)
Proceeds from issuance of secured notes			335,000
Debt issuance costs			(1,146)
Issuance of warrants			(2,246)
Intercompany financing activities			25	1,512
Net cash used in financing activities			(25,867)	(5,746)
Cash and cash equivalents
Net increase for the period			17,669	(8,342)
Balance, beginning of the period			68,143	100,573
Balance, end of the period	85,812	92,231	85,812	92,231
Reportable Legal Entities | Guarantor Subsidiaries
Cash flows from operating activities
Net (loss) income	(10,420)	2,123	(29,894)	7,334
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and Amortization			80,662	3
Loss/(gain) on sale or disposal of assets			(3,352)
Accretion of contract rights			6,006
Provision for bad debts			6,967	6,770
Stock-based compensation			944
Other non-cash items			127
Changes in operating assets and liabilities:
Net settlement receivables and liabilities			(9)	182
Other changes in operating assets and liabilities			(20,360)	(13,953)
Net cash provided by operating activities			41,091	336
Cash flows from investing activities
Capital expenditures			(35,512)	(298)
Proceeds from Sale of Productive Assets			2,000
Repayments under development agreements			3,104
Advances under development and placement agreements			(2,813)
Net cash used in investing activities			(33,221)	(298)
Cash and cash equivalents
Net increase for the period			7,870	38
Balance, beginning of the period			6,489	2,149
Balance, end of the period	14,359	2,187	14,359	2,187
Reportable Legal Entities | Non-Guarantor Subsidiaries
Cash flows from operating activities
Net (loss) income	845	575	1,647	3,581
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and Amortization			2,016	485
Changes in operating assets and liabilities:
Net settlement receivables and liabilities			(1,949)	(2,235)
Other changes in operating assets and liabilities			(881)	(10,356)
Net cash provided by operating activities			833	(8,525)
Cash flows from investing activities
Capital expenditures			(334)	(840)
Intercompany investing activities			(58)	68
Net cash used in investing activities			(392)	(772)
Cash flows from financing activities
Intercompany financing activities			(2,547)	10,258
Net cash used in financing activities			(2,547)	10,258
Effect of exchange rates on cash			(1,055)	(412)
Cash and cash equivalents
Net increase for the period			(3,161)	549
Balance, beginning of the period			14,463	11,532
Balance, end of the period	11,302	12,081	11,302	12,081
Eliminations
Cash flows from operating activities
Net (loss) income	$ 2,745	$ (8,166)	8,305	(28,804)
Adjustments to reconcile net income to cash provided by operating activities:
Equity in income (loss) of subsidiaries			(8,305)	28,804
Cash flows from investing activities
Intercompany investing activities			(2,522)	11,770
Net cash used in investing activities			(2,522)	11,770
Cash flows from financing activities
Intercompany financing activities			2,522	(11,770)
Net cash used in financing activities			$ 2,522	$ (11,770)

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WEIGHTED AVERAGE COMMON SHARES (Tables)

9 Months Ended

Sep. 30, 2015

WEIGHTED AVERAGE COMMON SHARES

Schedule of weighted average number of common shares outstanding used in the computation of basic and diluted earnings per share

The weighted average number of common shares outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Weighted average shares
Weighted average number of common shares outstanding - basic	65,941	65,589	65,804	65,853
Potential dilution from equity grants(1)	—	1,158	—	1,198
Weighted average number of common shares outstanding - diluted	65,941	66,747	65,804	67,051

The Company was in a net loss position for the three and nine months ended September 30, 2015, and therefore, no potential dilution from the application of the treasury stock method was applicable. The potential dilution excludes the weighted average effect of equity awards to acquire 8.0 million and 7.0 million shares of our common stock for the three and nine months ended September 30, 2014 as the application of the treasury stock method, as required, makes them anti-dilutive.

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PROPERTY, EQUIPMENT AND LEASED ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
PROPERTY, EQUIPMENT AND LEASED ASSETS
Cost	$ 155,492		$ 155,492		$ 135,495
Accumulated Depreciation	53,391		53,391		29,410
Net Book Value	102,101		102,101		106,085
Depreciation expense	10,943	$ 1,856	32,037	$ 5,702
Proceeds from sale of assets			2,103	$ 298
Certain assets related to PokerTek products
PROPERTY, EQUIPMENT AND LEASED ASSETS
Proceeds from sale of assets	5,400
Certain assets related to PokerTek products | Operating expenses
PROPERTY, EQUIPMENT AND LEASED ASSETS
Gain on sale of assets	3,900
Rental pool - deployed
PROPERTY, EQUIPMENT AND LEASED ASSETS
Cost	85,090		85,090		70,295
Accumulated Depreciation	20,900		20,900		876
Net Book Value	64,190		$ 64,190		69,419
Rental pool - deployed | Minimum
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			2 years
Rental pool - deployed | Maximum
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			4 years
Rental pool - undeployed
PROPERTY, EQUIPMENT AND LEASED ASSETS
Cost	13,305		$ 13,305		10,562
Accumulated Depreciation	3,144		3,144		151
Net Book Value	10,161		$ 10,161		10,411
Rental pool - undeployed | Minimum
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			2 years
Rental pool - undeployed | Maximum
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			4 years
ATM equipment
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			5 years
Cost	18,492		$ 18,492		23,572
Accumulated Depreciation	12,322		12,322		16,544
Net Book Value	6,170		6,170		7,028
Leasehold and building improvements
PROPERTY, EQUIPMENT AND LEASED ASSETS
Cost	6,474		6,474		6,289
Accumulated Depreciation	1,742		1,742		895
Net Book Value	4,732		$ 4,732		5,394
Cash advance equipment
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			3 years
Cost	7,187		$ 7,187		3,372
Accumulated Depreciation	2,424		2,424		1,873
Net Book Value	4,763		4,763		1,499
Machinery, office and other equipment
PROPERTY, EQUIPMENT AND LEASED ASSETS
Cost	24,944		24,944		21,405
Accumulated Depreciation	12,859		12,859		9,071
Net Book Value	$ 12,085		$ 12,085		$ 12,334
Machinery, office and other equipment | Minimum
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			2 years
Machinery, office and other equipment | Maximum
PROPERTY, EQUIPMENT AND LEASED ASSETS
Useful Life (years)			5 years

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SHARE-BASED COMPENSATION - Restricted Stock (Details) - Restricted Stock [Member] - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014
Restricted Stock Granted
Balance outstanding at the beginning of the period (in shares)		440,000
Granted (in shares)	0	0
Vested (in shares)		(32,500)	(200,000)
Forfeited (in shares)		(1,000)
Balance outstanding at the end of the period (in shares)	407,000	407,000
Weighted Average Grant Date Fair Value (in dollars per share)
Balance outstanding at the beginning of the period (in dollars per share)		$ 7.11
Vested (in dollars per share)		7.09
Forfeited (in dollars per share)		7.09
Balance outstanding at the end of the period (in dollars per share)	$ 7.11	$ 7.11

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COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	Mar. 31, 2015 USD ($)
Gain Contingency
Litigation Settlement Awards
Amount received and recorded from settlement	$ 14.4

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ATM FUNDING AGREEMENTS (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Nov. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
ATM Funding Agreements
Site-Funded ATM liability		$ 54.7		$ 54.7				$ 69.3
Gains (losses) related to self-insurance		0.0	$ 0.0	0.0	$ 0.0
Indemnification Guarantee [Member] | Cash [Member]
ATM Funding Agreements
Cash usage fees incurred		0.5	$ 0.6	1.6	$ 1.8
Indemnification Guarantee [Member] | Contract Cash Solutions Agreement [Member]
ATM Funding Agreements
Extended agreement term	1 year
Indemnification Guarantee [Member] | Contract Cash Solutions Agreement [Member] | Cash [Member]
ATM Funding Agreements
Outstanding balance of ATM cash utilized						$ 425.0	$ 500.0
Indemnification Guarantee [Member] | Second Amendment Contract Cash Solutions Agreement [Member] | Cash [Member]
ATM Funding Agreements
Maximum amount		$ 289.4		$ 289.4				$ 396.3

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ATM FUNDING AGREEMENTS

9 Months Ended

Sep. 30, 2015

ATM FUNDING AGREEMENTS

ATM FUNDING AGREEMENTS

4. ATM FUNDING AGREEMENTS

Contract Cash Solutions Agreement

Our Contract Cash Solutions Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) allows us to use funds owned by Wells Fargo to provide the currency needed for normal operating requirements for our ATMs. For the use of these funds, we pay Wells Fargo a cash usage fee on the average daily balance of funds utilized multiplied by a contractually defined cash usage rate. These cash usage fees, reflected as interest expense within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, were $0.5 million and $1.6 million and $0.6 million and $1.8 million for the three and nine months ended September 30, 2015 and 2014, respectively. We are exposed to interest rate risk to the extent that the applicable LIBOR increases.

Under this agreement, all currency supplied by Wells Fargo remains the sole property of Wells Fargo at all times until it is dispensed, at which time Wells Fargo obtains an interest in the corresponding settlement receivable which is recorded on a net basis. As these funds are not our assets, supplied cash is not reflected on the Condensed Consolidated Balance Sheets. The outstanding balances of ATM cash utilized by us from Wells Fargo were $289.4 million and $396.3 million as of September 30,2015 and December 31, 2014, respectively.

In November 2014, we amended the Contract Cash Solutions Agreement to extend the term one year until November 30, 2015.

In June 2015, we amended the Contract Cash Solutions Agreement to decrease the maximum amount of cash to be provided to us from $500.0 million to $425.0 million and to extend the term of the agreement from November 30, 2015 to June 30, 2018. 

We are responsible for any losses of cash in the ATMs under this agreement and we self‑insure for this risk. We incurred no material losses related to this self‑insurance for the three and nine months ended September 30,  2015 and 2014.

Site-Funded ATMs

We operate ATMs at certain customer gaming establishments where the gaming establishment provides the cash required for the ATM operational needs. We are required to reimburse the customer for the amount of cash dispensed from these Site-Funded ATMs. The Site-Funded ATM liability is included within “Settlement liabilities” in the accompanying Condensed Consolidated Balance Sheets and was $54.7 million and $69.3 million as of September 30, 2015 and December 31, 2014, respectively.

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SHAREHOLDERS' EQUITY (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
SHAREHOLDERS' EQUITY
Preferred stock, shares authorized	50,000,000		50,000,000		50,000,000
Preferred stock, shares outstanding	0		0		0
Common stock, votes per share			1
Common stock, shares issued	90,777,000		90,777,000		90,405,000
Total Number of Shares Purchased or Withheld
Shares withheld from restricted stock vesting	2,456	3,345	7,900	46,474
Cost of Shares Purchased or Withheld
Shares withheld from restricted stock vesting (in dollars)	$ 14,214	$ 27,361	$ 54,124	$ 396,057

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BUSINESS COMBINATIONS (Details) - $ / shares	Sep. 30, 2015	Dec. 31, 2014	Dec. 19, 2014
Business Combinations
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Everi Games
Business Combinations
Common stock par value (in dollars per share)			$ 0.01

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TRADE RECEIVABLES (Tables)

9 Months Ended

Sep. 30, 2015

TRADE RECEIVABLES

Schedule of trade receivables

The balance of trade receivables consisted of the following (in thousands):

.	At September 30,		At December 31,
	2015		2014
Trade receivables, net
Games trade receivables	$	34,871	$	28,270
Payments trade receivables		12,831		9,427
Total trade receivables, net	$	47,702	$	37,697

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BUSINESS COMBINATIONS (Tables)

9 Months Ended

Sep. 30, 2015

BUSINESS COMBINATIONS

Schedule of total purchase consideration

The total purchase consideration for Everi Games was as follows (in thousands, except per share amounts):

	Amount
Purchase consideration
Total purchase price for Everi Games common stock (29,948 shares at $36.50 per share)	$	1,093,105
Payment in respect to Everi Games outstanding equity awards		56,284
Total merger consideration		1,149,389
Repayments of Everi Games debt and other obligations		25,065
Less: Everi Games outstanding cash at acquisition date		(118,299)
Total purchase consideration	$	1,056,155

Summary of estimated fair values of the assets acquired and liabilities assumed at the date of acquisition

The information below reflects the preliminary purchase price allocation (in thousands):

	Amount
Purchase price allocation
Current assets	$	68,548
Property, equipment and leasehold improvements, net		87,283
Goodwill		669,542
Other intangible assets, net		403,300
Other receivables, non-current		5,030
Other assets, long-term		3,392
Deferred tax asset, non-current		22,287
Total assets		1,259,382
Current liabilities		44,291
Deferred tax liability, non-current		158,418
Other accrued expenses and liabilities		518
Total liabilities		203,227
Net assets acquired	$	1,056,155

Summarized acquired tangible assets

The following table summarizes acquired tangible assets (in thousands):

	UsefulLife			Estimated
	(years)			FairValue
Property, equipment and leased assets
Gaming equipment	2	-	4	$	78,201
Leasehold and building improvements	Lease Term				2,105
Machinery and equipment	3	-	5		4,126
Other	2	-	7		2,851
Total property, equipment and leased assets				$	87,283

Summarized acquired intangible assets

The following table summarizes acquired intangible assets (in thousands):

	Useful Life			Estimated
	(years)			FairValue
Other intangible assets
Tradenames and trademarks	3	-	7	$	14,800
Computer software	3	-	5		3,755
Developed technology	2	-	6		139,645
Customer relationships	8	-	12		231,100
Contract rights	1	-	7		14,000
Total other intangible assets				$	403,300

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts payable and accrued expenses
Trade accounts payable	$ 46,351	$ 48,962
Accrued interest	15,424	3,387
Payroll and related expenses	7,791	10,889
Deferred and unearned revenues	9,979	8,016
Cash access processing and related expenses	4,949	4,414
Accrued taxes	2,482	3,195
Other	19,626	25,805
Total accounts payable and accrued expenses	$ 106,602	$ 104,668

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BUSINESS COMBINATIONS (Details 2) - Everi Games $ / shares in Units, shares in Thousands, $ in Thousands	Dec. 19, 2014 USD ($) $ / shares shares
Total purchase price for Multimedia Games common stock (29,948 shares at $36.50 per share)	$ 1,093,105
Common stock shares issued (in shares) | shares	29,948
Share price (in dollars per share) | $ / shares	$ 36.50
Total merger consideration	$ 1,149,389
Repayments of debt and other obligations	25,065
Outstanding cash at acquisition date	(118,299)
Total purchase consideration	1,056,155
Equity Award Holders
Cash consideration paid	$ 56,284

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OTHER RECEIVABLES (Tables)

9 Months Ended

Sep. 30, 2015

OTHER RECEIVABLES.

Schedule of other receivables

The balance of other receivables consisted of the following (in thousands):

	At September 30,		At December 31,
	2015		2014
Other receivables
Notes and loans receivable, net of discount of $737 and $853, respectively	$	9,676	$	13,939
Federal and state income tax receivable		455		15,092
Other		2,276		706
Total other receivables		12,407		29,737
Less: Notes and loans receivable, non-current		7,076		9,184
Total other receivables, current portion	$	5,331	$	20,553

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PREPAID AND OTHER ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

PREPAID AND OTHER ASSETS

Schedule of prepaid and other assets current

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

	At September 30,		At December 31,
	2015		2014
Prepaid expenses and other assets
Prepaid expenses	$	5,799	$	7,163
Deposits		9,640		8,781
Other		3,823		3,044
Total prepaid expenses and other assets	$	19,262	$	18,988

Schedule of prepaid and other assets non-current

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

	At September 30,		At December 31,
	2015		2014
Other assets, non-current
Debt issuance costs	$	25,333	$	41,109
Prepaid expenses and deposits, non-current		4,253		3,956
Other		6,693		5,878
Total other assets, non-current	$	36,279	$	50,943

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BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2015

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

3. BUSINESS COMBINATIONS

Multimedia Games Holding Company, Inc.

On December 19, 2014, Holdings completed its acquisition of Everi Games (formerly known as Multimedia Games Holding Company, Inc.). Pursuant to the terms of the Agreement and Plan of Merger, dated as of September 8, 2014 (the “Merger Agreement”), by and among Holdings, Movie Merger Sub, Inc., a wholly owned subsidiary of Holdings (“Merger Sub”), and Everi Games, Merger Sub merged with and into Everi Games, with Everi Games continuing as the surviving corporation (the “Merger”). In the Merger, Everi Games became a wholly owned subsidiary of Holdings. Also, as a result of the Merger, each outstanding share of common stock, par value $0.01 per share, of Everi Games, other than shares held by Holdings, Everi Games, Merger Sub or their respective subsidiaries, was cancelled and converted into the right to receive $36.50 in cash, without interest (the “Merger Consideration”), together with the consideration paid in connection with the acceleration and full vesting of certain Everi Games equity awards, (collectively, the “Total Merger Consideration”).

Everi Games designs, manufactures and supplies gaming machines and systems to commercial and Native American casino operators as well as select lottery operators and commercial bingo facility operators. Everi Games’ revenues were generated from the operation of gaming machines in revenue sharing or lease arrangements and from the sale of gaming machines and systems that feature proprietary game themes.

The total purchase consideration for Everi Games was as follows (in thousands, except per share amounts):

	Amount
Purchase consideration
Total purchase price for Everi Games common stock (29,948 shares at $36.50 per share)	$	1,093,105
Payment in respect to Everi Games outstanding equity awards		56,284
Total merger consideration		1,149,389
Repayments of Everi Games debt and other obligations		25,065
Less: Everi Games outstanding cash at acquisition date		(118,299)
Total purchase consideration	$	1,056,155

The Merger was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The excess of the purchase price over those fair values was recorded as goodwill, none of which is deductible for tax purposes. The goodwill recognized is attributable primarily to the income potential from Everi Games penetrating into the Class III commercial casino market, the assembled workforce of Everi Games and expected synergies.

The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future cash flows. The estimated fair values of Everi Games’ assets acquired and liabilities assumed and resulting goodwill are subject to adjustment as we finalize our fair value analysis. The significant items for which a final fair value has not been determined include, but not limited to: accrued liabilities, the valuation and estimated useful lives of tangible and intangible assets and deferred income taxes. We expect to complete our fair value determinations no later than the fourth quarter of 2015. We do not expect our fair value determinations to materially change; however, there may be differences compared to those amounts originally recorded as we complete our fair value analysis.

The information below reflects the preliminary purchase price allocation (in thousands):

	Amount
Purchase price allocation
Current assets	$	68,548
Property, equipment and leasehold improvements, net		87,283
Goodwill		669,542
Other intangible assets, net		403,300
Other receivables, non-current		5,030
Other assets, long-term		3,392
Deferred tax asset, non-current		22,287
Total assets		1,259,382
Current liabilities		44,291
Deferred tax liability, non-current		158,418
Other accrued expenses and liabilities		518
Total liabilities		203,227
Net assets acquired	$	1,056,155

Trade receivables acquired of $24.7 million were considered to be collectible and therefore the carrying amounts were considered to approximate fair value. Inventory acquired of $16.5 million was fair valued based on model-based valuations for which inputs and value drivers were observable.

The following table summarizes acquired tangible assets (in thousands):

	UsefulLife			Estimated
	(years)			FairValue
Property, equipment and leased assets
Gaming equipment	2	-	4	$	78,201
Leasehold and building improvements	Lease Term				2,105
Machinery and equipment	3	-	5		4,126
Other	2	-	7		2,851
Total property, equipment and leased assets				$	87,283

The fair value of property, equipment and leased assets was determined using the cost approach as the primary approach for valuing the majority of the personal property. The market approach was used to estimate the value of vehicles. The income approach was used to quantify any economic obsolescence that may be present in the personal property. No economic obsolescence adjustments were made to the personal property, as the business enterprise valuation indicated sufficient cash flows to support the values established through the cost and market approaches.

The following table summarizes acquired intangible assets (in thousands):

	Useful Life			Estimated
	(years)			FairValue
Other intangible assets
Tradenames and trademarks	3	-	7	$	14,800
Computer software	3	-	5		3,755
Developed technology	2	-	6		139,645
Customer relationships	8	-	12		231,100
Contract rights	1	-	7		14,000
Total other intangible assets				$	403,300

The fair values of trade names and trademarks and developed technology were determined by applying the income approach utilizing the relief from royalty methodology. The fair value of customer relationships was determined by applying the income approach utilizing the excess earnings methodology. The fair value of contract rights was considered to approximate the carrying amount based on contractual obligations associated with these other intangible assets. The discount rates utilized to estimate the fair value of these other intangible assets ranged from 10.0% to 11.0%. 

We expensed approximately $0.1 million and $2.0 million of costs incurred related to the acquisition of Everi Games for financial advisory services, financing related fees, accounting and legal fees and other transaction-related expenses during the three and nine months ended September 30, 2015, respectively. These expenses are included in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income within operating expenses. These costs do not include any costs related to additional site consolidation or rationalization that we might consider in the future.

NEWave, Inc.

In April 2014, we acquired all of the outstanding capital stock of NEWave, Inc. (“NEWave”) for an aggregate purchase price of approximately $14.9 million, of which we estimated that approximately $2.5 million would be paid in the second quarter of 2015. As of June 30, 2015, a final payment of $2.3 million was remitted. NEWave is a supplier of anti-money laundering compliance, audit and data efficiency software to the gaming industry. The NEWave acquisition did not have a material impact on our results of operations or financial condition.

We have not provided the supplemental pro forma impact of the NEWave acquisition on the revenue and earnings of the combined entity as if the acquisition date had been January 1, 2013, and the amount of revenue and earnings derived from NEWave have not been presented on a supplemental basis as such amounts are not material for the three and nine months ended September 30, 2014, respectively.

Resort Advantage, LLC

In August 2015, we acquired certain assets of Resort Advantage, LLC (“Resort Advantage”) for an aggregate purchase price of approximately $13.3 million, of which we estimated that approximately $4.7 million would be paid under the provisions of the agreement over a period of 40 months. Resort Advantage is a supplier of comprehensive and integrated solutions for complete Financial Crimes Enforcement Network (“FinCEN”) and IRS regulatory compliance to the gaming industry. The Resort Advantage acquisition did not have a material impact on our results of operations or financial condition.

We have not provided the supplemental pro forma impact of the Resort Advantage acquisition on the revenue and earnings of the combined entity as if the acquisition date had been January 1, 2014, and the amount of revenue and earnings derived from Resort Advantage have not been presented on a supplemental basis as such amounts are not material for the three and nine months ended September 30, 2015 and 2014, respectively.

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INVENTORY (Tables)

9 Months Ended

Sep. 30, 2015

INVENTORY

Schedule of inventory

Inventory consisted of the following (in thousands):

	At September 30,		At December 31,
	2015		2014
Inventory
Raw materials and component parts, net of reserves of $257 and $22, respectively	$	14,096	$	21,151
Work in progress		8,383		803
Finished goods		3,002		5,209
Total inventory	$	25,481	$	27,163

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables)

9 Months Ended

Sep. 30, 2015

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Schedule of condensed consolidating statements of income and comprehenseive income

	Three Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	134,452	$	7,207	$	4,006	$	(184)	$	145,481
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		103,720		2,575		2,273		—		108,568
Operating expenses		—		19,593		787		738		(184)		20,934
Research and development		—		—		—		—		—		—
Depreciation		—		1,810		1		45		—		1,856
Amortization		—		3,252		—		100		—		3,352
Total costs and expenses		—		128,375		3,363		3,156		(184)		134,710
Operating income		—		6,077		3,844		850		—		10,771
Other (income) expense
Interest expense, net of interest income		—		1,902		—		94		—		1,996
Equity in income of subsidaries		(5,676)		(2,490)		—		—		8,166		—
Loss on extinguishment of debt		—		—		—		—		—		—
Total other (income) expense		(5,676)		(588)		—		94		8,166		1,996
Income from operations before tax		5,676		6,665		3,844		756		(8,166)		8,775
Income tax expense		—		1,197		1,721		181		—		3,099
Net income		5,676		5,468		2,123		575		(8,166)		5,676
Foreign currency translation		(839)		—		—		(839)		839		(839)
Comprehensive income (loss)	$	4,837	$	5,468	$	2,123	$	(264)	$	(7,327)	$	4,837

	Nine Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	424,259	$	185,919	$	12,853	$	(448)	$	622,583
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		333,592		43,716		6,754		—		384,062
Operating expenses		—		42,084		26,027		1,319		(448)		68,982
Research and development		—		—		15,369		—		—		15,369
Depreciation		—		5,442		26,440		155		—		32,037
Amortization		—		6,858		54,222		1,861		—		62,941
Total costs and expenses		—		387,976		165,774		10,089		(448)		563,391
Operating income		—		36,283		20,145		2,764		—		59,192
Other expense (income)
Interest expense, net of interest income		—		5,977		69,089		243		—		75,309
Equity in loss (income) of subsidiaries		18,382		(10,077)		—		—		(8,305)		—
Loss on extinguishment of debt		—		13,063		—		—		—		13,063
Total other (income) expense		18,382		8,963		69,089		243		(8,305)		88,372
(Loss) income from operations before tax		(18,382)		27,320		(48,944)		2,521		8,305		(29,180)
Income tax expense (benefit)		—		7,378		(19,050)		874		—		(10,798)
Net (loss) income		(18,382)		19,942		(29,894)		1,647		8,305		(18,382)
Foreign currency translation		(850)		—		—		(850)		850		(850)
Comprehensive (loss) income	$	(19,232)	$	19,942	$	(29,894)	$	797	$	9,155	$	(19,232)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	408,971	$	21,117	$	11,457	$	(547)	$	440,998
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		319,976		6,861		4,344		—		331,181
Operating expenses		—		58,339		2,384		2,057		(547)		62,233
Research and development		—		—		—		—		—		—
Depreciation		—		5,563		3		136		—		5,702
Amortization		—		8,127		—		349		—		8,476
Total costs and expenses		—		392,005		9,248		6,886		(547)		407,592
Operating income		—		16,966		11,869		4,571		—		33,406
Other (income) expense
Interest expense, net of interest income		—		5,926		—		(301)		—		5,625
Equity in income of subsidiaries		(17,889)		(10,915)		—		—		28,804		—
Loss on extinguishment of debt		—		—		—		—		—		—
Total other (income) expense		(17,889)		(4,989)		—		(301)		28,804		5,625
Income from operations before tax		17,889		21,955		11,869		4,872		(28,804)		27,781
Income tax expense		—		4,066		4,535		1,291		—		9,892
Net income		17,889		17,889		7,334		3,581		(28,804)		17,889
Foreign currency translation		(457)		—		—		(457)		457		(457)
Comprehensive income	$	17,432	$	17,889	$	7,334	$	3,124	$	(28,347)	$	17,432

Schedule of condensed consolidating balance sheets

	At September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	85,812	$	14,359	$	11,302	$	—	$	111,473
Settlement receivables		—		21,778		—		3,704		—		25,482
Trade receivables, net		—		9,211		38,491		—		—		47,702
Other receivables		—		4,648		619		64		—		5,331
Inventory		—		9,519		15,962		—		—		25,481
Prepaid expenses and other assets		—		6,866		2,985		9,411		—		19,262
Deferred tax asset		—		2,743		6,848		—		—		9,591
Intercompany balances		—		37,777		164,309		1,514		(203,600)		—
Total current assets		—		178,354		243,573		25,995		(203,600)		244,322
Non-current assets
Property, equipment and leasehold improvements, net		—		19,316		82,433		352		—		102,101
Goodwill		—		154,367		708,923		617		—		863,907
Other intangible assets, net		—		31,980		357,827		7,354		—		397,161
Other receivables, non-current		—		3,469		3,607		—		—		7,076
Investment in subsidiaries		222,323		156,621		—		86		(379,030)		—
Deferred tax asset, non-current		—		66,477		46,118		—		(112,595)		—
Other assets, non-current		—		31,767		4,018		494		—		36,279
Intercompany balances		—		1,134,916		—		—		(1,134,916)		—
Total non-current assets		222,323		1,598,913		1,202,926		8,903		(1,626,541)		1,406,524
Total assets	$	222,323	$	1,777,267	$	1,446,499	$	34,898	$	(1,830,141)	$	1,650,846
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	—	$	100,506	$	132	$	5,941	$	—	$	106,579
Accounts payable and accrued expenses		—		77,685		27,541		1,376		—		106,602
Current portion of long-term debt		—		10,000		—		—		—		10,000
Intercompany balances		—		165,791		30,728		7,081		(203,600)		—
Total current liabilities		—		353,982		58,401		14,398		(203,600)		223,181
Non-current liabilities
Deferred tax liability, non-current		—		1,072		156,957		—		(112,595)		45,434
Long-term debt, less current portion		—		1,155,542		—		—		—		1,155,542
Other accrued expenses and liabilities		—		3,925		441		—		—		4,366
Intercompany balances		—		—		1,134,916		—		(1,134,916)		—
Total non-current liabilities		—		1,160,539		1,292,314		—		(1,247,511)		1,205,342
Total liabilities		—		1,514,521		1,350,715		14,398		(1,451,111)		1,428,523
Total stockholders’ equity		222,323		262,746		95,784		20,500		(379,030)		222,323
Total liabilities and stockholders’ equity	$	222,323	$	1,777,267	$	1,446,499	$	34,898	$	(1,830,141)	$	1,650,846

	At December 31, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	68,143	$	6,489	$	14,463	$	—	$	89,095
Settlement receivables		—		40,157		—		3,131		—		43,288
Trade receivables, net		—		6,578		31,116		3		—		37,697
Other receivables		—		3,416		16,992		145		—		20,553
Inventory		—		10,595		16,568		—		—		27,163
Prepaid expenses and other assets		—		7,143		2,821		9,024		—		18,988
Deferred tax asset		—		2,743		6,848		—		—		9,591
Intercompany balances		—		18,038		151,179		1,623		(170,840)		—
Total current assets		—		156,813		232,013		28,389		(170,840)		246,375
Non-current assets
Property, equipment and leasehold improvements, net		—		17,864		87,898		323		—		106,085
Goodwill		—		148,278		708,922		713		—		857,913
Other intangible assets, net		—		24,771		402,816		9,198		—		436,785
Other receivables, non-current		—		4,411		4,773		—		—		9,184
Investment in subsidiaries		231,473		147,195		—		86		(378,754)		—
Deferred tax asset, non-current		—		78,229		—		—		(78,229)		—
Other assets, non-current		—		47,508		3,366		69		—		50,943
Intercompany balances		—		1,130,380		—		—		(1,130,380)		—
Total non-current assets		231,473		1,598,636		1,207,775		10,389		(1,587,363)		1,460,910
Total assets	$	231,473	$	1,755,449	$	1,439,788	$	38,778	$	(1,758,203)	$	1,707,285
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	—	$	111,375	$	140	$	7,642	$	—	$	119,157
Accounts payable and accrued expenses		—		61,544		41,395		1,729		—		104,668
Current portion of long-term debt		—		10,000		—		—		—		10,000
Intercompany balances		—		152,802		8,159		9,879		(170,840)		—
Total current liabilities		—		335,721		49,694		19,250		(170,840)		233,825
Non-current liabilities
Deferred tax liability, non-current		—		1,072		134,490		—		(78,229)		57,333
Long-term debt, less current portion		—		1,178,787		—		—		—		1,178,787
Other accrued expenses and liabilities		—		5,377		490		—		—		5,867
Intercompany balances		—		—		1,130,380		—		(1,130,380)		—
Total non-current liabilities		—		1,185,236		1,265,360		—		(1,208,609)		1,241,987
Total liabilities		—		1,520,957		1,315,054		19,250		(1,379,449)		1,475,812
Total stockholders’ equity		231,473		234,492		124,734		19,528		(378,754)		231,473
Total liabilities and stockholders’ equity	$	231,473	$	1,755,449	$	1,439,788	$	38,778	$	(1,758,203)	$	1,707,285

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GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Changes in the carrying amount of goodwill
Goodwill	$ 863,907		$ 863,907		$ 857,913
Key assumptions used in estimating fair value under the discounted cash flow approach and under the income approach
Goodwill impairment	$ 0	$ 0	$ 0	$ 0

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SEGMENT INFORMATION (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets by operating segment
Total Assets	$ 1,650,846	$ 1,707,285
Payments
Assets by operating segment
Total Assets	460,492	464,463
Gaming Operations Member
Assets by operating segment
Total Assets	$ 1,190,354	$ 1,242,822

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Revenues	$ 208,746	$ 145,481	$ 622,583	$ 440,998
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)	129,817	108,568	384,062	331,181
Operating expenses	26,295	20,934	68,982	62,233
Research and Development	5,463		15,369
Depreciation	10,943	1,856	32,037	5,702
Amortization	21,512	3,352	62,941	8,476
Total costs and expenses	194,030	134,710	563,391	407,592
Operating income	14,716	10,771	59,192	33,406
Other expenses
Interest expense, net of interest income	24,696	1,996	75,309	5,625
Loss on extinguishment of debt	87		13,063
Total other (income) expenses	24,783	1,996	88,372	5,625
(Loss) income from operations before tax	(10,067)	8,775	(29,180)	27,781
Income tax (benefit) provision	(3,957)	3,099	(10,798)	9,892
Net (loss) income	(6,110)	5,676	(18,382)	17,889
Foreign currency translation	(788)	(839)	(850)	(457)
Comprehensive (loss) income	$ (6,898)	$ 4,837	$ (19,232)	$ 17,432
(Loss) earnings per share
Basic (in dollars per share)	$ (0.09)	$ 0.09	$ (0.28)	$ 0.27
Diluted (in dollars per share)	$ (0.09)	$ 0.09	$ (0.28)	$ 0.27
Weighted average common shares outstanding
Basic (in shares)	65,941	65,589	65,804	65,853
Diluted (in shares)	65,941	66,747	65,804	67,051

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BUSINESS COMBINATIONS (Details 3) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Dec. 19, 2014
Goodwill	$ 863,907	$ 857,913
Everi Games
Current Assets			$ 68,548
Property, equipment and leasehold improvements, net			87,283
Goodwill			669,542
Other intangible assets, net			403,300
Other receivables, non-current			5,030
Other assets, long-term			3,392
Deferred tax asset, non-current			22,287
Total assets			1,259,382
Current Liabilities			44,291
Deferred tax liability, non-current			158,418
Other accrued expenses and liabilities			518
Total liabilities			203,227
Net assets acquired			1,056,155
Receivables acquired			24,700
Inventory acquired			$ 16,500

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BUSINESS

9 Months Ended

Sep. 30, 2015

BUSINESS

BUSINESS

1.BUSINESS

Overview

Everi Holdings Inc. (formerly known as Global Cash Access Holdings, Inc.)  (“Everi Holdings”, “Holdings”, “Everi”) is a holding company, the assets of which are the issued and outstanding shares of capital stock of each of Everi Games Holding Company Inc. (formerly known as Multimedia Games Holding Company, Inc.), which owns all of the issued and outstanding shares of capital stock of Everi Games Inc. (formerly known as Multimedia Games, Inc.)  (“Everi Games”, “Games”) and Everi Payments Inc. (formerly known as Global Cash Access, Inc.)  (“Everi Payments”, “Payments”). Unless otherwise indicated, the terms the “Company,” “we,” “us” and “our” refer to Holdings together with its consolidated subsidiaries.

Everi is dedicated to providing video and mechanical reel gaming content and technology solutions, integrated gaming payments solutions and compliance and efficiency software. Everi Games provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award winning TournEvent® slot tournament solution; and (b) the central determinant system for the video lottery terminals installed at racetracks in the State of New York. Everi Payments provides: (a) access to cash at gaming facilities via Automated Teller Machine cash withdrawals, credit card cash access transactions, point of sale debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and (e) online payment processing solutions for gaming operators in states that offer intrastate, Internet-based gaming and lottery activities.

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LONG-TERM DEBT (Details 3) $ / shares in Units, $ in Thousands		9 Months Ended	12 Months Ended
	Apr. 15, 2015 USD ($)	Sep. 30, 2015 USD ($) item $ / shares shares	Dec. 31, 2014 USD ($)
BORROWINGS
Total Debt		$ 1,177,500	$ 1,200,000
Senior secured notes
BORROWINGS
Debt instrument term			1 year
Total Debt		$ 335,000	$ 350,000
Senior secured notes | 7.75% Senior Secured Notes Due 2021
BORROWINGS
Debt issuance costs and fees			13,600
Total Debt			$ 350,000
Notes stated interest percentage			7.75%
Senior secured notes | 7.25% Senior Secured Notes Due 2021
BORROWINGS
Debt issuance costs and fees	$ 13,000
Total Debt	$ 335,000
Notes stated interest percentage	7.25%
Number of shares exercisable | shares		700,000
Exercise price | $ / shares		$ 9.88
Percentage of premium to volume-weighted average price		30.00%
Number of trading days | item		10

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2015

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Schedule of accounts payable and accrued expenses

The following table presents our accounts payable and accrued expenses (in thousands):

	At September 30,		At December 31,
	2015		2014
Accounts payable and accrued expenses
Trade accounts payable	$	46,351	$	48,962
Accrued interest		15,424		3,387
Payroll and related expenses		7,791		10,889
Deferred and unearned revenues		9,979		8,016
Cash access processing and related expenses		4,949		4,414
Accrued taxes		2,482		3,195
Other		19,626		25,805
Total accounts payable and accrued expenses	$	106,602	$	104,668

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SHARE-BASED COMPENSATION - Stock Options, Weighted Average Assumptions (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014
Time Based Options [Member]
Weighted-average assumptions used in estimating fair value
Risk-free interest rate (as a percent)		1.00%	1.00%
Expected life of options		4 years	4 years
Expected volatility (as a percent)		43.00%	54.00%
Expected dividend yield (as a percent)		0.00%	0.00%
Market Performance Based Options [Member]
Weighted-average assumptions used in estimating fair value
Risk-free interest rate (as a percent)	1.00%
Expected life of options	4 years
Expected volatility (as a percent)	43.00%
Expected dividend yield (as a percent)	0.00%

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INCOME TAXES

9 Months Ended

Sep. 30, 2015

INCOME TAXES

INCOME TAXES

17.INCOME TAXES

The provision for income tax reflected an effective income tax rate benefit of 39.3% and 37.0% for the three and nine months ended September 30, 2015, respectively, which was higher than the statutory federal rate of 35.0% primarily due to state taxes and the lower foreign tax rate applicable to our foreign source income, partially offset by non-statutory stock options that expired in 2015. The provision for income tax reflected an effective income tax rate expense of 35.3% and 35.6% for the same periods in the prior year, which was higher than the statutory federal rate of 35.0% primarily due to state taxes, an increase in our valuation allowance for certain foreign losses and non-cash compensation expenses related to stock options, partially offset by a lower foreign tax rate applicable to our foreign source income.

We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. As part of the Merger, the Company recorded $0.7 million of unrecognized tax benefits as of December 31, 2014, which is consistent with the balance as of September 30, 2015. Other than the unrecognized tax benefit related to the Merger, we believe that our income tax filing positions and deductions will be sustained upon audit and we do not anticipate any adjustments that will result in a material change to our financial position. We may from time to time be assessed interest or penalties by tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. Our policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax expense.

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LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 30, 2015

LONG-TERM DEBT.

Schedule of total amounts of borrowings

The following table summarizes our outstanding indebtedness (in thousands):

	At September 30,		At December 31,
	2015		2014
Long-term debt
Senior secured term loan	$	492,500	$	500,000
Senior secured notes		335,000		350,000
Senior unsecured notes		350,000		350,000
Total debt		1,177,500		1,200,000
Less: original issue and warrant discount		(11,958)		(11,213)
Total debt after discount		1,165,542		1,188,787
Less: current portion of long-term debt		(10,000)		(10,000)
Long-term debt, less current portion	$	1,155,542	$	1,178,787

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION

9 Months Ended

Sep. 30, 2015

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

19.CONDENSED CONSOLIDATING FINANCIAL INFORMATION

We conduct substantially all of our business through our U.S. and foreign subsidiaries. Everi Payments’ (“Subsidiary Issuer”) obligations under the Unsecured Notes are fully and unconditionally guaranteed,subject to certain customary release provisions, on a joint and several basis by Everi Holdings (“Parent”) and substantially all of our 100%owned U.S. subsidiaries other than Subsidiary Issuer (the“Guarantor Subsidiaries” and, together with Parent, the “Guarantors” and each a “Guarantor”). The guarantees of our UnsecuredNotes will be released under the following customary circumstances: (i) the sale or disposition of all or substantially all of the assets ofthe Guarantor (by way of merger, consolidation, or otherwise) to a person that is not (either before or after giving effect to suchtransaction) Parent, Subsidiary Issuer or a restricted subsidiary; (ii) the sale or disposition of sufficient capital stock of the Guarantor

to a person that is not (either before or after giving effect to such transaction) Parent, Subsidiary Issuer or a restricted subsidiary andthe Guarantor ceases to be a restricted subsidiary of Subsidiary Issuer as a result of the sale or other disposition; (iii) the designation ofthe Guarantor as an unrestricted subsidiary in accordance with the indenture governing the Unsecured Notes; or (iv) the legal or covenant defeasance of the UnsecuredNotes or the satisfaction and discharge of the indenture governing the Unsecured Notes.

Presented below is condensed consolidating financial information for (a) Parent, (b) Subsidiary Issuer, (c) the Guarantor Subsidiariesand (d) our U.S. subsidiaries that are not Guarantor Subsidiaries and our foreign subsidiaries (collectively, the “Non-GuarantorSubsidiaries”) as of September 30, 2015 and for the three and nine month periods ended September 30, 2015 and 2014. The condensedconsolidating financial information has been presented to show the nature of assets held and the results of operations and cash flows ofParent, Subsidiary Issuer, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming that the guarantee structure of theUnsecured Notes had been in effect at the beginning of the periods presented.

	Three Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	143,031	$	61,110	$	4,767	$	(162)	$	208,746
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		112,344		14,970		2,503		—		129,817
Operating expenses		—		19,085		6,932		440		(162)		26,295
Research and development		—		—		5,463		—		—		5,463
Depreciation		—		1,881		9,018		44		—		10,943
Amortization		—		2,448		18,487		577		—		21,512
Total costs and expenses		—		135,758		54,870		3,564		(162)		194,030
Operating income		—		7,273		6,240		1,203		—		14,716
Other expense (income)
Interest expense, net of interest income		—		1,365		23,266		65		—		24,696
Equity in loss (income) of subsidaries		6,110		(3,365)		—		—		(2,745)		—
Loss on extinguishment of debt		—		87		—		—		—		87
Total other expense (income)		6,110		(1,913)		23,266		65		(2,745)		24,783
(Loss) income from operations before tax		(6,110)		9,186		(17,026)		1,138		2,745		(10,067)
Income tax expense (benefit)		—		2,356		(6,606)		293		—		(3,957)
Net (loss) income		(6,110)		6,830		(10,420)		845		2,745		(6,110)
Foreign currency translation		(788)		—		—		(788)		788		(788)
Comprehensive (loss) income	$	(6,898)	$	6,830	$	(10,420)	$	57	$	3,533	$	(6,898)

	Three Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	134,452	$	7,207	$	4,006	$	(184)	$	145,481
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		103,720		2,575		2,273		—		108,568
Operating expenses		—		19,593		787		738		(184)		20,934
Research and development		—		—		—		—		—		—
Depreciation		—		1,810		1		45		—		1,856
Amortization		—		3,252		—		100		—		3,352
Total costs and expenses		—		128,375		3,363		3,156		(184)		134,710
Operating income		—		6,077		3,844		850		—		10,771
Other (income) expense
Interest expense, net of interest income		—		1,902		—		94		—		1,996
Equity in income of subsidaries		(5,676)		(2,490)		—		—		8,166		—
Loss on extinguishment of debt		—		—		—		—		—		—
Total other (income) expense		(5,676)		(588)		—		94		8,166		1,996
Income from operations before tax		5,676		6,665		3,844		756		(8,166)		8,775
Income tax expense		—		1,197		1,721		181		—		3,099
Net income		5,676		5,468		2,123		575		(8,166)		5,676
Foreign currency translation		(839)		—		—		(839)		839		(839)
Comprehensive income (loss)	$	4,837	$	5,468	$	2,123	$	(264)	$	(7,327)	$	4,837

	Nine Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	424,259	$	185,919	$	12,853	$	(448)	$	622,583
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		333,592		43,716		6,754		—		384,062
Operating expenses		—		42,084		26,027		1,319		(448)		68,982
Research and development		—		—		15,369		—		—		15,369
Depreciation		—		5,442		26,440		155		—		32,037
Amortization		—		6,858		54,222		1,861		—		62,941
Total costs and expenses		—		387,976		165,774		10,089		(448)		563,391
Operating income		—		36,283		20,145		2,764		—		59,192
Other expense (income)
Interest expense, net of interest income		—		5,977		69,089		243		—		75,309
Equity in loss (income) of subsidiaries		18,382		(10,077)		—		—		(8,305)		—
Loss on extinguishment of debt		—		13,063		—		—		—		13,063
Total other (income) expense		18,382		8,963		69,089		243		(8,305)		88,372
(Loss) income from operations before tax		(18,382)		27,320		(48,944)		2,521		8,305		(29,180)
Income tax expense (benefit)		—		7,378		(19,050)		874		—		(10,798)
Net (loss) income		(18,382)		19,942		(29,894)		1,647		8,305		(18,382)
Foreign currency translation		(850)		—		—		(850)		850		(850)
Comprehensive (loss) income	$	(19,232)	$	19,942	$	(29,894)	$	797	$	9,155	$	(19,232)

	Nine Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Revenues	$	—	$	408,971	$	21,117	$	11,457	$	(547)	$	440,998
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization)		—		319,976		6,861		4,344		—		331,181
Operating expenses		—		58,339		2,384		2,057		(547)		62,233
Research and development		—		—		—		—		—		—
Depreciation		—		5,563		3		136		—		5,702
Amortization		—		8,127		—		349		—		8,476
Total costs and expenses		—		392,005		9,248		6,886		(547)		407,592
Operating income		—		16,966		11,869		4,571		—		33,406
Other (income) expense
Interest expense, net of interest income		—		5,926		—		(301)		—		5,625
Equity in income of subsidiaries		(17,889)		(10,915)		—		—		28,804		—
Loss on extinguishment of debt		—		—		—		—		—		—
Total other (income) expense		(17,889)		(4,989)		—		(301)		28,804		5,625
Income from operations before tax		17,889		21,955		11,869		4,872		(28,804)		27,781
Income tax expense		—		4,066		4,535		1,291		—		9,892
Net income		17,889		17,889		7,334		3,581		(28,804)		17,889
Foreign currency translation		(457)		—		—		(457)		457		(457)
Comprehensive income	$	17,432	$	17,889	$	7,334	$	3,124	$	(28,347)	$	17,432

	At September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	85,812	$	14,359	$	11,302	$	—	$	111,473
Settlement receivables		—		21,778		—		3,704		—		25,482
Trade receivables, net		—		9,211		38,491		—		—		47,702
Other receivables		—		4,648		619		64		—		5,331
Inventory		—		9,519		15,962		—		—		25,481
Prepaid expenses and other assets		—		6,866		2,985		9,411		—		19,262
Deferred tax asset		—		2,743		6,848		—		—		9,591
Intercompany balances		—		37,777		164,309		1,514		(203,600)		—
Total current assets		—		178,354		243,573		25,995		(203,600)		244,322
Non-current assets
Property, equipment and leasehold improvements, net		—		19,316		82,433		352		—		102,101
Goodwill		—		154,367		708,923		617		—		863,907
Other intangible assets, net		—		31,980		357,827		7,354		—		397,161
Other receivables, non-current		—		3,469		3,607		—		—		7,076
Investment in subsidiaries		222,323		156,621		—		86		(379,030)		—
Deferred tax asset, non-current		—		66,477		46,118		—		(112,595)		—
Other assets, non-current		—		31,767		4,018		494		—		36,279
Intercompany balances		—		1,134,916		—		—		(1,134,916)		—
Total non-current assets		222,323		1,598,913		1,202,926		8,903		(1,626,541)		1,406,524
Total assets	$	222,323	$	1,777,267	$	1,446,499	$	34,898	$	(1,830,141)	$	1,650,846
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	—	$	100,506	$	132	$	5,941	$	—	$	106,579
Accounts payable and accrued expenses		—		77,685		27,541		1,376		—		106,602
Current portion of long-term debt		—		10,000		—		—		—		10,000
Intercompany balances		—		165,791		30,728		7,081		(203,600)		—
Total current liabilities		—		353,982		58,401		14,398		(203,600)		223,181
Non-current liabilities
Deferred tax liability, non-current		—		1,072		156,957		—		(112,595)		45,434
Long-term debt, less current portion		—		1,155,542		—		—		—		1,155,542
Other accrued expenses and liabilities		—		3,925		441		—		—		4,366
Intercompany balances		—		—		1,134,916		—		(1,134,916)		—
Total non-current liabilities		—		1,160,539		1,292,314		—		(1,247,511)		1,205,342
Total liabilities		—		1,514,521		1,350,715		14,398		(1,451,111)		1,428,523
Total stockholders’ equity		222,323		262,746		95,784		20,500		(379,030)		222,323
Total liabilities and stockholders’ equity	$	222,323	$	1,777,267	$	1,446,499	$	34,898	$	(1,830,141)	$	1,650,846

	At December 31, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	68,143	$	6,489	$	14,463	$	—	$	89,095
Settlement receivables		—		40,157		—		3,131		—		43,288
Trade receivables, net		—		6,578		31,116		3		—		37,697
Other receivables		—		3,416		16,992		145		—		20,553
Inventory		—		10,595		16,568		—		—		27,163
Prepaid expenses and other assets		—		7,143		2,821		9,024		—		18,988
Deferred tax asset		—		2,743		6,848		—		—		9,591
Intercompany balances		—		18,038		151,179		1,623		(170,840)		—
Total current assets		—		156,813		232,013		28,389		(170,840)		246,375
Non-current assets
Property, equipment and leasehold improvements, net		—		17,864		87,898		323		—		106,085
Goodwill		—		148,278		708,922		713		—		857,913
Other intangible assets, net		—		24,771		402,816		9,198		—		436,785
Other receivables, non-current		—		4,411		4,773		—		—		9,184
Investment in subsidiaries		231,473		147,195		—		86		(378,754)		—
Deferred tax asset, non-current		—		78,229		—		—		(78,229)		—
Other assets, non-current		—		47,508		3,366		69		—		50,943
Intercompany balances		—		1,130,380		—		—		(1,130,380)		—
Total non-current assets		231,473		1,598,636		1,207,775		10,389		(1,587,363)		1,460,910
Total assets	$	231,473	$	1,755,449	$	1,439,788	$	38,778	$	(1,758,203)	$	1,707,285
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Settlement liabilities	$	—	$	111,375	$	140	$	7,642	$	—	$	119,157
Accounts payable and accrued expenses		—		61,544		41,395		1,729		—		104,668
Current portion of long-term debt		—		10,000		—		—		—		10,000
Intercompany balances		—		152,802		8,159		9,879		(170,840)		—
Total current liabilities		—		335,721		49,694		19,250		(170,840)		233,825
Non-current liabilities
Deferred tax liability, non-current		—		1,072		134,490		—		(78,229)		57,333
Long-term debt, less current portion		—		1,178,787		—		—		—		1,178,787
Other accrued expenses and liabilities		—		5,377		490		—		—		5,867
Intercompany balances		—		—		1,130,380		—		(1,130,380)		—
Total non-current liabilities		—		1,185,236		1,265,360		—		(1,208,609)		1,241,987
Total liabilities		—		1,520,957		1,315,054		19,250		(1,379,449)		1,475,812
Total stockholders’ equity		231,473		234,492		124,734		19,528		(378,754)		231,473
Total liabilities and stockholders’ equity	$	231,473	$	1,755,449	$	1,439,788	$	38,778	$	(1,758,203)	$	1,707,285

	Nine Months Ended September 30, 2015
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Cash flows from operating activities
Net (loss) income	$	(18,382)	$	19,942	$	(29,894)	$	1,647	$	8,305	$	(18,382)
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization		—		12,300		80,662		2,016		—		94,978
Amortization of financing costs		—		5,459		—		—		—		5,459
Gain on sale or disposal of assets		—		(60)		(3,352)		—		—		(3,412)
Accretion of contract rights		—		—		6,006		—		—		6,006
Provision for bad debts		—		—		6,967		—		—		6,967
Loss on early extinguishment of debt		—		13,063		—		—		—		13,063
Equity in income (loss) of subsidiaries		18,382		(10,077)		—		—		(8,305)		—
Stock-based compensation		—		5,144		944		—		—		6,088
Other non-cash items		—		—		127		—		—		127
Changes in operating assets and liabilities:
Net settlement receivables and liabilities		—		7,510		(9)		(1,949)		—		5,552
Other changes in operating assets and liabilities		(5)		8,163		(20,360)		(881)		—		(13,083)
Net cash (used in) provided by operating activities		(5)		61,444		41,091		833		—		103,363
Cash flows from investing activities
Acquisitions, net of cash acquired		—		(10,857)		—		—		—		(10,857)
Capital expenditures		—		(13,688)		(35,512)		(334)		—		(49,534)
Proceeds from sale of fixed assets		—		103		2,000		—		—		2,103
Repayments under development agreements		—		—		3,104		—		—		3,104
Advances under development and placement agreements		—		—		(2,813)		—		—		(2,813)
Changes in restricted cash and cash equivalents		—		(66)		—		—		—		(66)
Intercompany investing activities		(4,020)		6,600		—		(58)		(2,522)		—
Net cash used in investing activities		(4,020)		(17,908)		(33,221)		(392)		(2,522)		(58,063)
Cash flows from financing activities
Repayments of prior credit facility		—		—		—		—		—		—
Repayments of credit facility		—		(7,500)		—		—		—		(7,500)
Repayments of secured notes		—		(350,000)		—		—		—		(350,000)
Proceeds from issuance of secured notes		—		335,000		—		—		—		335,000
Debt issuance costs		—		(1,146)		—		—		—		(1,146)
Issuance of warrants		2,246		(2,246)		—		—		—		—
Proceeds from exercise of stock options		1,833		—		—		—		—		1,833
Purchase of treasury stock		(54)		—		—		—		—		(54)
Intercompany financing activities		—		25		—		(2,547)		2,522		—
Net cash provided by (used in) financing activities		4,025		(25,867)		—		(2,547)		2,522		(21,867)
Effect of exchange rates on cash		—		—		—		(1,055)		—		(1,055)
Cash and cash equivalents
Net increase (decrease) for the period		—		17,669		7,870		(3,161)		—		22,378
Balance, beginning of the period		—		68,143		6,489		14,463		—		89,095
Balance, end of the period	$	—	$	85,812	$	14,359	$	11,302	$	—	$	111,473

	Nine Months Ended September 30, 2014
	Parent		Subsidiary Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Total
Cash flows from operating activities
Net income	$	17,889	$	17,889	$	7,334	$	3,581	$	(28,804)	$	17,889
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		—		13,690		3		485		—		14,178
Amortization of financing costs		—		1,412		—		—		—		1,412
Loss on sale or disposal of assets		—		79		—		—		—		79
Accretion of contract rights		—		—		—		—		—		—
Provision for bad debts		—		—		6,770		—		—		6,770
Loss on early extinguishment of debt		—		—		—		—		—		—
Equity in (loss) income of subsidiaries		(17,889)		(10,915)		—		—		28,804		—
Stock-based compensation		—		7,533		—		—		—		7,533
Changes in operating assets and liabilities:
Net settlement receivables and liabilities		—		(15,244)		182		(2,235)		—		(17,297)
Other changes in operating assets and liabilities		(52)		23,237		(13,953)		(10,356)		—		(1,124)
Net cash (used in) provided by operating activities		(52)		37,681		336		(8,525)		—		29,440
Cash flows from investing activities
Acquisitions, net of cash acquired		—		(11,845)		—		—		—		(11,845)
Capital expenditures		—		(9,897)		(298)		(840)		—		(11,035)
Proceeds from sale of fixed assets		—		298		—		—		—		298
Repayments under development agreements		—		—		—		—		—		—
Advances under development and placement agreements		—		—		—		—		—		—
Changes in restricted cash and cash equivalents		—		(77)		—		—		—		(77)
Intercompany Investing Activities		6,918		(18,756)		—		68		11,770		—
Net cash used in (provided by)  investing activities		6,918		(40,277)		(298)		(772)		11,770		(22,659)
Cash flows from financing activities
Repayments of prior credit facility		—		(7,258)		—		—		—		(7,258)
Repayments of credit facility		—		—		—		—		—		—
Repayments of secured notes		—		—		—		—		—		—
Proceeds from issuance of secured notes		—		—		—		—		—		—
Debt issuance costs		—		—		—		—		—		—
Issuance of warrants		—		—		—		—		—		—
Proceeds from exercise of stock options		5,251		—		—		—		—		5,251
Purchase of treasury stock		(12,117)		—		—		—		—		(12,117)
Intercompany financing activities		—		1,512		—		10,258		(11,770)		—
Net cash (provided by) used in financing activities		(6,866)		(5,746)		—		10,258		(11,770)		(14,124)
Effect of exchange rates on cash		—		—		—		(412)		—		(412)
Cash and cash equivalents
Net increase for the period		—		(8,342)		38		549		—		(7,755)
Balance, beginning of the period		—		100,573		2,149		11,532		—		114,254
Balance, end of the period	$	—	$	92,231	$	2,187	$	12,081	$	—	$	106,499

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SHARE-BASED COMPENSATION - Restricted Stock, Additional Details (Details) - Restricted Stock [Member] - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Additional disclosures
Total fair value of shares vested	$ 0.1	$ 0.1	$ 0.2	$ 1.1
Unrecognized compensation expense	$ 2.2	$ 1.2	$ 2.2	$ 1.2
Weighted-average period for recognition of unrecognized compensation expense			2 years 7 months 6 days	2 years 3 months 18 days
Non-cash compensation expense			$ 0.6	$ 0.9
Vested (in shares)			32,500	200,000

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2015

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. The results for the three and nine months ended September 30, 2015are not necessarily indicative of results to be expected for the full fiscal year.  The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.

There have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, except for the following:

Cost of Revenues (exclusive of depreciation and amortization)

The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The principal costs included within cost of revenues (exclusive of depreciation and amortization) are field service and network operations personnel, those direct costs related to the inventory sold for electronic gaming machines (“EGMs”), fully integrated kiosks and system sales, commissions paid to gaming establishments, interchange fees paid to credit and debit card networks and transaction processing fees to our transaction processor.

Research and Development Costs

We conduct research and development activities primarily to develop and enhance our Games and Payments platforms, as well as game content and features. We believe our ability to deliver differentiated, appealing products and services to the marketplace is based in part on our research and development investments, and we expect to continue to make such investments in the future. These research and development costs consist primarily of salaries and benefits, consulting fees, and game lab testing fees. Once the technological feasibility of a project has been established, it is transferred from research to development, and capitalization of development costs continues until the product is available for general release.

Advertising, Marketing and Promotional Costs

We expense advertising, marketing and promotional costs as incurred. Total advertising, marketing and promotional costs, included in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, were $1.1 million and $1.9 million and $0.2 million and $0.6 million, for the three and nine months ended September 30, 2015 and 2014, respectively.

Fair Values of Financial Instruments

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

In determining fair value, we use a hierarchy that includes three levels which are based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 indicates that the fair value is determined by using quoted prices in active markets for identical investments. Level 2 indicates that the fair value is determined using observable pricing inputs other than quoted prices in active markets such as models or other valuation methodologies. Level 3 indicates that the fair value is determined using pricing inputs that are unobservable for the investment and include situations where there is little, if any, market activity for the investment. Significant management estimates and judgment are used in the determination of the fair value of level 3 pricing inputs.

The carrying amount of cash and cash equivalents, settlement receivables, trade receivables, other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of our borrowings are estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity and similar instruments trading in more active markets.

The following table presents the fair value and outstanding balance of our long-term debt as of September 30,2015 (amounts in thousands):

	Levelof			Outstanding
	Hierarchy	FairValue		Balance
Term loan	1	$	490,653	$	492,500
Senior secured notes	3	$	331,650	$	335,000
Senior unsecured notes	1	$	315,000	$	350,000

The senior secured notes were fair valued using a Level 3 input by evaluating the trading activities of similar debt instruments as there was no market activity as of September 30,2015.  The senior unsecured notes were syndicated in April 2015 and transitioned from level 3 to level 1 on the fair value hierarchy. 

At December 31, 2014, the fair value of our long-term debt was considered to approximate the carrying amount as our acquisition of Everi Games occurred on December 19, 2014, for which our long-term debt was incurred.

Operating Segments

During the first quarter of 2015, we changed our organizational structure as part of our transformation to a Games and Payments company providing solutions to the gaming industry. As a result, information that our chief operating decision-making group regularly reviews for purposes of allocating resources and assessing performance changed. Therefore, beginning in the first quarter of 2015, we are reporting our financial performance based on our new segments described in “Note 18.  Segment Information”. We have presented prior period amounts to conform to the way we now internally manage and monitor segment performance beginning in 2015. This change had no impact on our condensed consolidated financial statements.

Recent Accounting Guidance

Recent Accounting Guidance Not Yet Adopted

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-16, which provides guidance on business combinations.  The ASUrequires an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value.  The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU No. 2015-03, which provides guidance to simplify the presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The pronouncement is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years, and early adoption is permitted for financial statements that have not been previously issued. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In January 2015, the FASB issued ASU No. 2015-01, which requires that an entity separately classify, present and disclose extraordinary events and transactions. The pronouncement is effective for annual periods ending after December 15, 2015. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In June 2014, the FASB issued ASU No. 2014-12, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, which creates FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early adoption is not permitted. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within our Notes to the Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 111,473	$ 89,095
Settlement receivables	25,482	43,288
Trade receivables, net of allowances for doubtful accounts of $3.2 million and $2.8 million at September 30, 2015 and December 31, 2014, respectively	47,702	37,697
Other receivables	5,331	20,553
Inventory	25,481	27,163
Prepaid expenses and other assets	19,262	18,988
Total current assets	244,322	246,375
Non-current assets
Property, equipment and leasehold improvements, net	102,101	106,085
Goodwill	863,907	857,913
Other intangible assets, net	397,161	436,785
Other receivables, non-current	7,076	9,184
Other assets, non-current	36,279	50,943
Total non-current assets	1,406,524	1,460,910
Total assets	1,650,846	1,707,285
Current Liabilities
Settlement liabilities	106,579	119,157
Accounts payable and accrued expenses	106,602	104,668
Current portion of long-term debt	10,000	10,000
Total current liabilities	223,181	233,825
Non-current liabilities
Deferred tax liability, non-current	45,434	57,333
Long-term debt, less current portion	1,155,542	1,178,787
Other accrued expenses and liabilities	4,366	5,867
Total non-current liabilities	1,205,342	1,241,987
Total liabilities	$ 1,428,523	$ 1,475,812
Commitments and Contingencies (Note 13)
Stockholders' Equity
Common stock, $0.001 par value, 500,000 shares authorized and 90,777 and 90,405 shares issued at September 30, 2015 and December 31, 2014, respectively	$ 91	$ 90
Additional paid-in capital	255,817	245,682
Retained earnings	141,770	160,152
Accumulated other comprehensive income	719	1,569
Treasury stock, at cost, 24,824 and 24,816 shares at September 30, 2015 and December 31, 2014, respectively	(176,074)	(176,020)
Total stockholders' equity	222,323	231,473
Total liabilities and stockholders' equity	$ 1,650,846	$ 1,707,285

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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2015

LONG-TERM DEBT.

LONG-TERM DEBT

12. LONG-TERM DEBT

The following table summarizes our outstanding indebtedness (in thousands):

	At September 30,		At December 31,
	2015		2014
Long-term debt
Senior secured term loan	$	492,500	$	500,000
Senior secured notes		335,000		350,000
Senior unsecured notes		350,000		350,000
Total debt		1,177,500		1,200,000
Less: original issue and warrant discount		(11,958)		(11,213)
Total debt after discount		1,165,542		1,188,787
Less: current portion of long-term debt		(10,000)		(10,000)
Long-term debt, less current portion	$	1,155,542	$	1,178,787

Credit Facilities

In December 2014, we entered into a credit agreement that provided for a $500.0 million six-year senior secured term loan that matures in 2020 (the “Term Loan”) and a $50.0 million five-year revolver that matures in 2019 (the “Revolving Credit Facility”, and together with the Term Loan, the “Credit Facilities”). The fees associated with the Credit Facilities included original issue discounts of approximately $7.5 million and debt issuance costs of approximately $13.9 million.

We are required to repay the Term Loan in an amount equal to 0.50% per quarter of the initial aggregate principal with the final principal repayment installment on the maturity date.  Interest is due in arrears each March, June, September and December and at the maturity date; however, interest may be remitted within one to three months of such dates.

The Revolving Credit Facility remained undrawn as of September 30,  2015.

The interest rate per annum applicable to the Revolving Credit Facility is, at our option, the base rate or LIBOR plus, in each case, an applicable margin. The interest rate per annum applicable to the Term Loan is also, at our option, the base rate or LIBOR plus, in each case, an applicable margin. LIBOR will be reset at the beginning of each selected interest period based on the LIBOR rate then in effect; provided that, with respect to the Revolving Credit Facility, if LIBOR is below zero, then such rate will be equal to zero plus the applicable margin, and, with respect to the Term Loan, if LIBOR is below 1.0%, then such rate will be equal to 1.0% plus the applicable margin. The base rate is a fluctuating interest rate equal to the highest of (a) the prime lending rate announced by the administrative agent, (b) the federal funds effective rate from time to time plus 0.50%, and (c) LIBOR (after taking account of any applicable floor) applicable for an interest period of one month plus 1.00%. The applicable margins of 4.75% and 5.25% for the Revolving Credit Facility and Term Loan, respectively, are subject to adjustment based on our consolidated secured leverage ratio.

Voluntary prepayments of the Term Loan and the Revolving Credit Facility and voluntary reductions in the unused commitments are permitted in whole or in part, in minimum amounts as set forth in the credit agreement governing the Credit Facilities, with prior notice but without premium or penalty, except that certain refinancing transactions of the Term Loan within twelve months after the closing of the Credit Facilities will be subject to a prepayment premium of 1.00% of the principal amount repaid.

Subject to certain exceptions, the obligations under the Credit Facilities are secured by substantially all of the present and after acquired assets of each of Everi Payments,  Everi Holdings and the subsidiary guarantors (the “Collateral”) including: (a) a perfected first priority pledge of all the capital stock of Everi Payments and each domestic direct, wholly owned material restricted subsidiary held by Everi Holdings, Everi Payments or any such subsidiary guarantor; and (b) a perfected first priority security interest in substantially all other tangible and intangible assets of Everi Holdings, Everi Payments, and such subsidiary guarantors (including, but not limited to, accounts receivable, inventory, equipment, general intangibles, investment property, real property, intellectual property and the proceeds of the foregoing). Subject to certain exceptions, the Credit Facilities are unconditionally guaranteed by Everi Holdings and such subsidiary guarantors and Everi Games and its material domestic subsidiaries.

The Term Loan had an applicable interest rate of 6.25% as of September 30,  2015 and December 31, 2014.  

We were in compliance with the terms of the Credit Facilities as of September 30,  2015 and December 31, 2014.

Senior Secured Notes and Refinance of Senior Secured Notes

In December 2014, we issued $350.0 million in aggregate principal amount of 7.75%Senior Secured Notes due 2021 (the “Secured Notes”). The fees associated with the Secured Notes included debt issuance costs of approximately $13.6 million.

Interest is due quarterly in arrears each January, April, July and October.

The Secured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement.  Under the terms of the purchase agreement, during a one year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Secured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. Alternatively, we had the ability to redeem the Secured Notes from the initial purchasers without penalty.

On April 15, 2015, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) among Everi Payments, CPPIB Credit Investments III Inc. (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”), and issued $335.0 million in aggregate principal amount of its 7.25% Senior Secured Notes due 2021 (the “Refinanced Secured Notes”) to the Purchaser in a private offering. With the proceeds from the issuance of the Refinanced Secured Notes, Everi Payments redeemed, in full, the Company’s then outstanding Secured Notes from the initial purchasers in accordance with the terms of the indenture governing the Secured Notes. In connection with the issuance of the Refinanced Secured Notes during the second quarter of 2015, we expensed $13.0 million of related debt issuance costs and fees to “Loss on extinguishment of debt” associated with the redeemed Senior Secured Notes that were outstanding prior to the refinance transaction.

In connection with the issuance of the Refinanced Secured Notes and pursuant to the terms of the Note Purchase Agreement, the Company issued to the Purchaser a warrant to purchase 700,000 shares of Everi Holdings’ common stock, with an exercise price equal to $9.88 per share, representing a 30% premium to the volume-weighted average price of Everi Holdings’ common stock for the ten trading days prior to the issuance of the warrant. The warrant expires on the sixth anniversary of the date of issuance. The number of shares issuable pursuant to the warrant and the warrant exercise price are subject to adjustment for stock splits, reverse stock splits, stock dividends, mergers and certain other events. The warrants were valued at $2.2 million using a modified Black-Scholes model and were accounted for as a debt discount.

Interest is due quarterly in arrears each January, April, July and October.

We were in compliance with the terms of the Refinanced Secured Notes as of September 30,  2015 and the Secured Notes as of December 31, 2014.

Senior Unsecured Notes

In December 2014, we issued $350 million in aggregate principal amount of 10.0% Senior Unsecured Notes due 2022 (the “Unsecured Notes”). The fees associated with the Unsecured Notes included original issue discounts of approximately $3.8 million and debt issuance costs of approximately $14.0 million.

Interest is due semi-annually in arrears each January and July.

The Unsecured Notes were acquired by the initial purchasers pursuant to the terms of a purchase agreement.  Under the terms of the purchase agreement, during a one-year period following the closing and upon prior notice from the initial purchasers, the Company was required to use commercially reasonable efforts to aid the initial purchasers in the resale of the Unsecured Notes, including by preparing an updated offering memorandum and participating in reasonable marketing efforts including road shows, to the extent required therein. The Unsecured Notes were resold by the initial purchasers to third parties in the second quarter of 2015.

In connection with the issuance of the Unsecured Notes, the Company entered into a registration rights agreement pursuant to which the Company agreed, for the benefit of the initial holders of the Unsecured Notes, to file with the SEC, and use its commercially reasonable efforts to cause to become effective, a registration statement relating to an offer to exchange the Unsecured Notes for an issue of SEC-registered notes (the “Exchange Notes”) with terms identical to the Unsecured Notes (except that the Exchange Notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below). The obligation to complete the exchange offer and/or file a shelf registration statement will terminate on the second anniversary of the date of the Registration Rights Agreement. If the exchange offer is not completed (or, if required, the shelf registration statement is not declared effective) on or before December 19, 2015, the annual interest rate borne by the Unsecured Notes will be increased by 0.25% per annum for the first 90-day period immediately following such date and by an additional 0.25% per annum with respect to each subsequent 90-day period, up to a maximum additional rate of 1.00% per annum thereafter until the exchange offer is completed or the shelf registration statement is declared effective, at which time the interest rate will revert to the original interest rate on the date the Unsecured Notes were originally issued. The registration statement for the Exchange Notes was filed with the Securities and Exchange Commission (“SEC”) on October 23, 2015 and declared effective on November 3, 2015.  The Company launched the exchange offer on November 4, 2015 and the exchange offer will expire at 5:00 p.m., New York City time, on December 4, 2015, unless extended.

We were in compliance with the terms of the Unsecured Notes as of September 30,  2015 and December 31, 2014.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 29, 2015
Document and Entity Information
Entity Registrant Name	Everi Holdings Inc.
Entity Central Index Key	0001318568
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		65,956,802
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

13.COMMITMENTS AND CONTINGENCIES

Everi Games Shareholder Litigation

Putative shareholders of Everi Games filed suits in the United States District Court for the Western District of Texas (the “Texas Federal Action”) and the District Court of Travis County, Texas (the “Texas State Court Action”) alleging that Everi Games’ directors breached their fiduciary duties in connection with the Merger. The complaints further alleged that Everi Holdings and its formerly wholly-owned merger subsidiary, Merger Sub, aided and abetted those purported breaches of fiduciary duty.

The parties agreed to settle all claims asserted in the Texas Federal Action. Everi Games agreed to make certain additional disclosures in its proxy statement related to the Merger, and made those disclosures in a Current Report on Form 8-K filed on November 21, 2014. In addition, the defendants agreed not to oppose plaintiffs’ application for an attorneys’ fee award of up to $310,000. The court in the Texas Federal Action approved the settlement, awarded attorneys’ fees of $310,000, and entered judgment. The deadline to file any appeal from the judgment has expired and no appeal has been filed.

The judgment in the Texas Federal Action includes a release of the claims asserted in the Texas State Court Action. The Texas State Court Action has been dismissed with prejudice.

Alabama Litigation

The Company is currently involved in one lawsuit related to Everi Games’ former charity bingo operations in the State of Alabama, which we believe is not material from a damages perspective. The lawsuit is currently pending in federal court and includes claims related to the alleged illegality of electronic charity bingo in the State of Alabama.

Ozetta Hardy v. Whitehall Gaming Center, LLC, et al., a civil action, was filed against Whitehall Gaming Center, LLC (an entity that does not exist), Cornerstone Community Outreach, Inc., and Freedom Trail Ventures, Ltd., in the Circuit Court of Lowndes County, Alabama. On June 3, 2010, Everi Games and other manufacturers were added as defendants. The plaintiffs, who claim to have been patrons of White Hall, allege that Everi Games participated in gambling operations that violated Alabama state law by supplying to White Hall purportedly unlawful electronic bingo machines played by the plaintiffs, and the plaintiffs seek recovery of the monies lost on all electronic bingo games played by the plaintiffs in the six months prior to the filing of the complaint under Ala. Code, Sec 8-1-150(A). The plaintiffs requested that the court certify the action as a class action. On July 2, 2010, the defendants removed the case to the United States District Court for the Middle District of Alabama, Northern Division. The court has not ruled on the plaintiffs' motion for class certification. The Company continues to vigorously defend this matter. Given the inherent uncertainties in this litigation, however, the Company is unable to make any prediction as to the ultimate outcome.

Gain Contingency Settlement

In January 2014, we filed a complaint against certain third party defendants alleging conspiracy in restraint of competition regarding interchange fees, monopolization by defendants in the relevant market, and attempted monopolization of the defendants in the relevant market. We demanded a trial by jury of all issues so triable. The defendants filed a motion to dismiss on March 13, 2014. A settlement agreement was made as of January 16, 2015 and on January 22, 2015 the settlement agreement was executed and delivered for which we received $14.4 million in cash and recorded the settlement proceeds in the first quarter of 2015. This settlement is included as a reduction of operating expenses in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the nine months ended September 30, 2015.

We are also subject to other claims and suits that arise from time to time in the ordinary course of business. We do not believe the liabilities, if any, which may ultimately result from the outcome of such matters, individually or in the aggregate, will have a material adverse impact on our financial position, liquidity or results of operations.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Allowances for doubtful accounts	$ 3.2	$ 2.8
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	90,777,000	90,405,000
Convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	50,000,000	50,000,000
Convertible preferred stock, shares outstanding	0	0
Treasury stock, shares	24,824,000	24,816,000

XML

PREPAID AND OTHER ASSETS

9 Months Ended

Sep. 30, 2015

PREPAID AND OTHER ASSETS

PREPAID AND OTHER ASSETS

7. PREPAID AND OTHER ASSETS

Prepaid and other assets include the balance of prepaid expenses, deposits, debt issuance costs and other assets. The short-term portion of these assets is included in prepaid and other assets and the long-term portion is included in other assets, non-current.

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

	At September 30,		At December 31,
	2015		2014
Prepaid expenses and other assets
Prepaid expenses	$	5,799	$	7,163
Deposits		9,640		8,781
Other		3,823		3,044
Total prepaid expenses and other assets	$	19,262	$	18,988

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

	At September 30,		At December 31,
	2015		2014
Other assets, non-current
Debt issuance costs	$	25,333	$	41,109
Prepaid expenses and deposits, non-current		4,253		3,956
Other		6,693		5,878
Total other assets, non-current	$	36,279	$	50,943

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OTHER RECEIVABLES

9 Months Ended

Sep. 30, 2015

OTHER RECEIVABLES.

OTHER RECEIVABLES

6. OTHER RECEIVABLES

Other receivables include the balance of notes and loans receivable on our games and fully integrated kiosk products, development agreements, which are generated from reimbursable amounts advanced to tribal customers generally used by the customer to build, expand or renovate its facility, and an agreement with Bee Caves Games, Inc. (“Bee Caves Games”) in July 2014, under which the Company agreed to make a loan pursuant to a secured promissory note in the amount of $4.5 million. In association with the promissory note, the Company received warrants to purchase Bee Caves Games common stock, and recorded a discount to the note for the fair value of the warrants received. The warrants are included in the balance of other assets, non-current.  The note, which bears interest at 7%, requires interest only payments for the first 24 months followed by repayments of principal and interest in 48 equal monthly installments.

Other receivables also include income taxes receivable and other miscellaneous receivables. The balance of other receivables consisted of the following (in thousands):

	At September 30,		At December 31,
	2015		2014
Other receivables
Notes and loans receivable, net of discount of $737 and $853, respectively	$	9,676	$	13,939
Federal and state income tax receivable		455		15,092
Other		2,276		706
Total other receivables		12,407		29,737
Less: Notes and loans receivable, non-current		7,076		9,184
Total other receivables, current portion	$	5,331	$	20,553

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SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2015

SEGMENT INFORMATION

SEGMENT INFORMATION

18.SEGMENT INFORMATION

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group in deciding how to allocate resources and in assessing performance. Our chief operating decision-making group consists of the Chief Executive Officer and the Chief Financial Officer. The operating segments are reviewed separately because each represents products that can be sold separately to our customers.

Since the most recent filing of our Form 10-K, and in connection with the Merger, our chief operating decision-making group has determined the following to be the operating segments for which we conduct business: (a) Games, and (b) Payments. Each of these segments is monitored by our management for performance against its internal forecast and is consistent with our internal management reporting. Our chief operating decision-making group manages the business, allocates resources andmeasures profitability based on the Games and Payments operating segments.

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; and ancillary products and services.

The Payments 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 point of sale debit card transactions; check-related services; fully integrated kiosks and maintenance services; compliance, audit and data software; casino credit data and reporting services and other ancillary offerings.

Corporate overhead and depreciation and amortization expenses were allocated to the segments either through specific identification or based on a reasonable methodology.

Our business is predominantly domestic, with no specific regional concentrations and no significant assets in foreign locations.

The accounting policies of the operating segments are generally the same as those described in the summary of significant accounting policies.

The following tables present segment information (in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues
Games	$	53,983	$	—	$	163,896	$	—
Payments		154,763		145,481		458,687		440,998
Total revenues	$	208,746	$	145,481	$	622,583	$	440,998
Operating income
Games	$	2,368	$	—	$	7,180	$	—
Payments		12,348		10,771		52,012		33,406
Total operating income	$	14,716	$	10,771	$	59,192	$	33,406

	At
	September 30, 2015		December 31, 2014
Total assets
Games	$	1,190,354	$	1,242,822
Payments		460,492		464,463
Total assets	$	1,650,846	$	1,707,285

Major Customers. For the three and nine months ended September 30, 2015 and 2014,  no single customer accounted for more than 10% of our revenues. Our five largest customers accounted for approximately 29% and 30% and 29% and 29%of our total revenue for the three and nine months ended September 30, 2015 and 2014, respectively.

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2015

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

14.SHAREHOLDERS’ EQUITY

Preferred Stock. Our amended and restated certificate of incorporation, as amended, allows our Board of Directors, without further action by stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges and relative participating, optional, or special rights as well as the qualifications, limitations or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences. As of September 30,  2015 and December 31, 2014, we had no shares outstanding of preferred stock.

Common Stock. Subject to the preferences that may apply to shares of preferred stock that may be outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as our Board of Directors may from time to time determine. All dividends are non-cumulative. In the event of the liquidation, dissolution or winding up of Everi, the holders of common stock are entitled to share ratably in all assets remaining after the payment of liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. There are no sinking fund provisions applicable to the common stock. Each outstanding share of common stock is fully paid and non-assessable. As of September 30,  2015 and December 31, 2014, we had 90,777,414 and 90,405,450 shares of common stock issued, respectively.

Treasury Stock. Employees may direct us to withhold vested shares of restricted stock to satisfy the minimum statutory withholding requirements applicable to their restricted stock vesting. We repurchased or withheld from restricted stock awards 2,456 and 7,900, and 3,345 and 46,474, shares of common stock, at an aggregate purchase price of $14,214 and $54,124, and $27,361 and $396,057, for the three and nine months ended September 30, 2015 and 2014, respectively, to satisfy the minimum applicable tax withholding obligations related to the vesting of such restricted stock awards.

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2015

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

10. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired plus liabilities assumed arising from business combinations. The balance of goodwill was $863.9 million and $857.9 million at September 30,  2015 and December 31, 2014, respectively. Our goodwill was not impaired for the three and nine months ended September 30, 2015 and 2014. Additionally, no impairment was identified during our annual impairment testing as of October 1, 2014.

In accordance with ASC 350, we test goodwill at the reporting unit level, which in certain cases may be a component of an operating segment, for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The estimate of fair value requires significant judgment. We based our fair value estimates on assumptions that we believe to be reasonable but that are unpredictable and inherently uncertain, including estimates of future growth rates and operating margins and assumptions about the overall economic climate and the competitive environment for our reporting units. There can be no assurance that our estimates and assumptions made for purposes of our goodwill and identifiable intangible asset testing as of the time of testing will prove to be accurate predictions of the future. If our assumptions regarding business plans, competitive environments or anticipated growth rates are not correct, we may be required to record goodwill and/or intangible asset impairment charges in future periods.

Other Intangible Assets

Other intangible assets consist of the following (in thousands):

				At September 30, 2015						At December 31, 2014
	Useful  Life					Accumulated		NetBook				Accumulated		NetBook
	(years)			Cost		Amortization		Value		Cost		Amortization		Value
Other intangible assets
Contract rights under development and placement fee agreements	1	-	7	$	16,454	$	6,006	$	10,448	$	14,000	$	301	$	13,699
Customer contracts	7	-	14		49,764		33,393		16,371		43,938		29,931		14,007
Customer relationships	8	-	12		231,100		16,481		214,619		231,100		733		230,367
Developed technology and software	1	-	6		194,795		54,610		140,185		174,417		14,604		159,813
Patents, trademarks and other	1	-	17		27,829		12,291		15,538		27,856		8,957		18,899
Total				$	519,942	$	122,781	$	397,161	$	491,311	$	54,526	$	436,785

Amortization expense related to other intangible assets totaled approximately$21.5million and$62.9million, and $3.4 million and $8.5 million, for the three and nine months ended September 30, 2015 and 2014, respectively. We capitalized and placed into service $6.7 million and $12.3 million, and $0.7 million and $5.6 million, of software development costs for the three and nine months ended September 30, 2015 and 2014, respectively.

On a quarterly basis, we evaluate our other intangible assets for potential impairment as part of our quarterly review process. No impairment was identified for our other intangible assets during our assessment for the three and nine months ended September 30, 2015 and 2014.

We enter into development and placement fee agreements to provide financing for new gaming facilities or for the expansion or improvement of existing facilities. All or a portion of the funds provided under development agreements are reimbursed to us, while funding under placement fee agreements is not reimbursed. In return for the fees under these agreements, each facility dedicates a percentage of its floor space, or an agreed upon unit count, for the placement of our EGMs over the term of the agreement, generally 12 to 83 months, and we receive a fixed percentage or flat fee of those machines’ hold per day. Certain of the agreements contain EGM performance standards that could allow the respective facility to reduce a portion of our guaranteed floor space.

In addition, certain development agreements allow the facilities to buy out floor space after advances that are subject to repayment have been repaid. The development agreements typically provide for a portion of the amounts retained by each facility for its share of the operating profits of the facility to be used to repay some or all of the advances recorded as notes receivable. Placement fees and amounts advanced in excess of those to be reimbursed by the customer for real property and land improvements are allocated to intangible assets and are generally amortized over the term of the contract, which is recorded as a reduction of revenue generated from the facility. In the past we have, and in the future, we may, by mutual agreement, amend these agreements to reduce our floor space at the facilities. Any proceeds received for the reduction of floor space is first applied against the intangible asset for that particular development or placement fee agreement, if any, and the remaining net book value of the intangible asset is prospectively amortized on a straight-line method over the remaining estimated useful life.

During the nine months ended September 30, 2015, we paid approximately $2.8 million to a customer for certain of its locations in Oklahoma to extend the placement of nearly 300 units for an additional term of up to 60 months.

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LONG-TERM DEBT (Details 4) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
BORROWINGS
Total Debt	$ 1,177,500	$ 1,200,000
Less: original issue discount	11,958	11,213
Senior unsecured notes
BORROWINGS
Debt issuance costs and fees		14,000
Total Debt	$ 350,000	$ 350,000
Notes stated interest percentage		10.00%
Less: original issue discount		$ 3,800
First 90-day period	0.25%
Subsequent 90-day period	0.25%
Senior unsecured notes | Maximum
BORROWINGS
Maximum additional interest rate	1.00%

XML

INVENTORY

9 Months Ended

Sep. 30, 2015

INVENTORY

INVENTORY

8. INVENTORY

We currently maintain separate inventories for our Games and Payments businesses. Our Games inventory primarily consists of component parts, completed player terminals and back office computer equipment. This inventory was stated at the lower of cost or market and accounted for using the first in, first out method during the current reporting period; whereas the inventory that existed at the time of the Merger was stated at fair value. The cost of inventory includes cost of materials, labor, overhead and freight. Our Payments inventory primarily consists of parts as well as finished goods and work-in-progress.  This inventory was stated at the lower of cost or market accounted for using the average cost method.  

Inventory consisted of the following (in thousands):

	At September 30,		At December 31,
	2015		2014
Inventory
Raw materials and component parts, net of reserves of $257 and $22, respectively	$	14,096	$	21,151
Work in progress		8,383		803
Finished goods		3,002		5,209
Total inventory	$	25,481	$	27,163

XML

PROPERTY, EQUIPMENT AND LEASED ASSETS

9 Months Ended

Sep. 30, 2015

PROPERTY, EQUIPMENT AND LEASED ASSETS

PROPERTY, EQUIPMENT AND LEASED ASSETS

9. PROPERTY, EQUIPMENT AND LEASED ASSETS

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

				At September 30, 2015						At December 31, 2014
	UsefulLife					Accumulated		NetBook				Accumulated		Net Book
	(Years)			Cost		Depreciation		Value		Cost		Depreciation		Value
Property, equipment and leased assets
Rental pool - deployed	2	-	4	$	85,090	$	20,900	$	64,190	$	70,295	$	876	$	69,419
Rental pool - undeployed	2	-	4		13,305		3,144		10,161		10,562		151		10,411
ATM equipment		5			18,492		12,322		6,170		23,572		16,544		7,028
Leasehold and building improvements	Lease Term				6,474		1,742		4,732		6,289		895		5,394
Cash advance equipment		3			7,187		2,424		4,763		3,372		1,873		1,499
Machinery, office and other equipment	2	-	5		24,944		12,859		12,085		21,405		9,071		12,334
Total				$	155,492	$	53,391	$	102,101	$	135,495	$	29,410	$	106,085

Depreciation expense related to other property, equipment and leased assets totaled approximately $10.9 million and $32.0 million and $1.9 million and $5.7 million for the three and nine months ended September 30, 2015 and 2014, respectively. Our property, equipment and leased assets were not impaired forthe three and nine months ended September 30, 2015 and 2014.

In connection with the sale of certain assets related to our PokerTek products during the three months ended September 30, 2015 for a purchase price of $5.4 million, we recorded a gain of approximately $3.9 million, which was included in operating expenses in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2015

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

11.ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The following table presents our accounts payable and accrued expenses (in thousands):

	At September 30,		At December 31,
	2015		2014
Accounts payable and accrued expenses
Trade accounts payable	$	46,351	$	48,962
Accrued interest		15,424		3,387
Payroll and related expenses		7,791		10,889
Deferred and unearned revenues		9,979		8,016
Cash access processing and related expenses		4,949		4,414
Accrued taxes		2,482		3,195
Other		19,626		25,805
Total accounts payable and accrued expenses	$	106,602	$	104,668

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SHARE-BASED COMPENSATION - Award Activity (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
2005 Plan
Equity Awards Available for Grant
Shares of reserved common stock increased annually			0
2014 Plan
Equity Awards Available for Grant
Shares of reserved common stock increased annually			6,300,000
Stock Option [Member]
Stock Options Granted
Balance outstanding at the beginning of the period (in shares)			13,626,000
Granted (in shares)	400,000	10,000,000,000	6,509,000	5,000,000
Exercised options (in shares)			(340,000)
Canceled or forfeited (in shares)			(2,069,000)
Balance outstanding at the end of the period (in shares)	17,726,000		17,726,000
Time Based Options [Member] | 2014 Plan
Equity Incentive Awards
Vesting rate (as a percent)			25.00%
Vesting period for 25% of shares			4 years
Expiration period			10 years
Market Performance Based Options [Member]
Equity Incentive Awards
Expiration period			7 years
Number of consecutive trading days the Company's average stock price meets certain target prices, which satisfy vesting requirements			30 days
Vesting period			4 years
Restricted Stock [Member]
Restricted Stock Granted
Balance outstanding at the beginning of the period (in shares)			440,000
Granted (in shares)	0		0
Vested (in shares)			(32,500)	(200,000)
Forfeited (in shares)			(1,000)
Balance outstanding at the end of the period (in shares)	407,000		407,000

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SHARE-BASED COMPENSATION - Stock Options, Activity (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Additional disclosures
Proceeds from exercise of stock options			$ 1,833,000	$ 5,251,000
Stock Option [Member]
Stock Options Granted
Balance outstanding at the beginning of the period (in shares)			13,626
Granted (in shares)	400	10,000,000	6,509	5,000
Exercised options (in shares)			(340)
Canceled or forfeited (in shares)			(2,069)
Balance outstanding at the end of the period (in shares)	17,726		17,726		13,626
Vested and expected to vest (in shares)	14,706		14,706
Balance exercisable at the end of the period (in shares)	6,554		6,554
Weighted Average Exercise Price
Balance outstanding at the beginning of the period (in dollars per share)			$ 7.64
Granted (in dollars per share)			7.68
Exercised options (in dollars per share)			5.37
Canceled or forfeited (in dollars per share)			10.11
Balance outstanding at the end of the period (in dollars per share)	$ 7.41		7.41		$ 7.64
Vested and expected to vest (in dollars per share)	7.36		7.36
Balance exercisable at the end of the period (in dollars per share)	$ 7.14		$ 7.14
Weighted Average Life Remaining
Balance outstanding at the beginning of the period			6 years 10 months 24 days		6 years 6 months
Balance outstanding at the beginning of the period			6 years 10 months 24 days		6 years 6 months
Vested and expected to vest			6 years 8 months 12 days
Balance exercisable at the end of the period			4 years 4 months 24 days
Aggregate Intrinsic Value
Balance outstanding at the beginning of the period (in dollars)			$ 9,148,000
Balance outstanding at the end of the period (in dollars)	$ 2,035,000		2,035,000		$ 9,148,000
Vested and expected to vest (in dollars)	2,033,000		2,033,000
Balance exercisable at the end of the period (in dollars)	$ 2,022,000		$ 2,022,000
Additional disclosures
Weighted average grant date fair value (in dollars per share)	$ 2.32	$ 3.54	$ 2.48	$ 3.27
Total intrinsic value of options exercised	$ 30,561	$ 400,000	$ 800,000	$ 2,800,000
Unrecognized compensation expense	$ 20,400,000	$ 13,400,000	$ 20,400,000	$ 13,400,000
Weighted-average period for recognition of unrecognized compensation expense			2 years 9 months 18 days	2 years 9 months 18 days
Non-cash compensation expense			$ 5,400,000	$ 5,300,000
Proceeds from exercise of stock options			$ 1,800,000	$ 6,600,000

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WEIGHTED AVERAGE COMMON SHARES (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Weighted-average number of common shares outstanding used in the computation of basic and diluted earnings per share
Weighted average number of common shares outstanding - basic	65,941	65,589	65,804	65,853
Potential dilution from equity awards(1)		1,158		1,198
Weighted average number of common shares outstanding - diluted	65,941	66,747	65,804	67,051
Anti-dilutive equity awards excluded from computation of earnings per share (in shares)	8,000		7,000

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

GOODWILL AND OTHER INTANGIBLE ASSETS

Schedule of other intangible assets

Other intangible assets consist of the following (in thousands):

				At September 30, 2015						At December 31, 2014
	Useful  Life					Accumulated		NetBook				Accumulated		NetBook
	(years)			Cost		Amortization		Value		Cost		Amortization		Value
Other intangible assets
Contract rights under development and placement fee agreements	1	-	7	$	16,454	$	6,006	$	10,448	$	14,000	$	301	$	13,699
Customer contracts	7	-	14		49,764		33,393		16,371		43,938		29,931		14,007
Customer relationships	8	-	12		231,100		16,481		214,619		231,100		733		230,367
Developed technology and software	1	-	6		194,795		54,610		140,185		174,417		14,604		159,813
Patents, trademarks and other	1	-	17		27,829		12,291		15,538		27,856		8,957		18,899
Total				$	519,942	$	122,781	$	397,161	$	491,311	$	54,526	$	436,785

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INVENTORY (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
INVENTORY
Raw materials and component parts, net of reserves of $257 and $22, respectively	$ 14,096	$ 21,151
Work in progress	8,383	803
Finished goods	3,002	5,209
Inventory, Net, Total	25,481	27,163
Raw materials and component parts, reserves	$ 257	$ 22

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SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2015

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

16.SHARE-BASED COMPENSATION

Equity Incentive Awards

Our 2014 Equity Incentive Plan (the “2014 Plan”) is used to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business.  The 2014 Plan superseded the then current 2005 Stock Incentive Plan (the “2005 Plan”). The 2014 Plan is administered by the Compensation Committee of our Board of Directors, which has the authority to select individuals who are to receive options or other equity incentive awards and to specify the terms and conditions of grants of options or other equity incentive awards, the vesting provisions, the term and the exercise price.

Generally, we grant the following award types: (a) time-based options, (b) cliff-vesting time-based options, (c) market-based options and (d) restricted stock.   These awards have varying vesting provisions and expiration periods. For the three and nine months ended September 30, 2015, we granted time-based options and market-based options.  

Our time-based stock options granted under the 2014 Plan vest at a rate of 25% per year on each of the first four yearly anniversaries of the option grant dates. These options expire after a ten-year period.

Our market-based stock options granted under the 2014 Plan vest if our average stock price in any period of 30 consecutive trading days meets certain target prices during a four-year period that commenced on the date of grant for these options.  If these target prices are not met during such four-year period, the unvested shares underlying the options will terminate; however, upon the Participant’s termination of Service, if the Participant’s Service is terminated by the Company without Cause within ten days prior to, or within 18 months after, the date a Change in Control is consummated, the unvested options granted would become fully vested.  These options expire after a seven-year period.

A summary of award activity is as follows (in thousands):

	Stock Options	Restricted Stock
	Granted	Granted
Outstanding, December 31, 2014	13,626	440
Additional authorized shares	—	—
Granted	6,509	—
Exercised options or vested shares	(340)	(32)
Canceled or forfeited	(2,069)	(1)
Outstanding, September 30, 2015	17,726	407

The maximum number of shares available for future equity awards under the 2014 Plan is approximately 6.3 million shares of our common stock.There are no shares available for future equity awards under the 2005 Plan.

Stock Options

The fair value of time-based options was determined as of the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Nine months ended
	September 30,
	2015		2014
Risk-free interest rate	1	%	1	%
Expected life of options (in years)	4		4
Expected volatility	43	%	54	%
Expected dividend yield	0	%	0	%

The fair value of market-based options was determined as of the date of grant using a lattice-based option valuation model. For the market-based options issued this year, the assumptions were: (a) risk-free interest rate of 1%; (b) measurement period of four years; (c) expected volatility of 43%; and (d) no expected dividend yield.

The following tables present the options activity:

				Weighted
	Number of	Weighted Average		Average Life	Aggregate
	Common Shares	Exercise Price		Remaining	Intrinsic Value
	(in thousands)	(per share)		(years)	(in thousands)
Outstanding, December 31, 2014	13,626	$	7.64	6.5	$	9,148
Granted	6,509		7.68
Exercised	(340)		5.37
Canceled or forfeited	(2,069)		10.11
Outstanding, September 30, 2015	17,726	$	7.41	6.9	$	2,035
Vested and expected to vest, September 30, 2015	14,706	$	7.36	6.7	$	2,033
Exercisable, September 30, 2015	6,554	$	7.14	4.4	$	2,022

There were 0.4 and 6.5 million options granted for the three and nine months ended September 30, 2015. There were 10,000 and 5.0 million options granted for the three and nine months ended September 30, 2014, respectively. The weighted average grant date fair value per share of the options granted was $2.32 and $2.48for the three and nine months ended September 30, 2015. The weighted average grant date fair value per share of the options granted was $3.54 and$3.27 forthe three and nine months ended September 30, 2014, respectively. The total intrinsic value of options exercised was $30,561 and $0.8 million and $0.4 million and $2.8 million for the three and nine months ended September 30, 2015 and 2014, respectively.

There was $20.4 million in unrecognized compensation expense related to options expected to vest as of September 30,  2015. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.8 years. We received $1.8 million in proceeds from the exercise of options and recorded $5.4 million in non-cash compensation expense related to options granted that were expected to vest for the nine months endedSeptember 30,  2015.

There was $13.4 million in unrecognized compensation expense related to options expected to vest as of September 30,  2014.  This cost was expected to be recognized on a straight-line basis over a weighted average period of 2.8 years. We recorded $5.3 million in non-cash compensation expense related to options granted that were expected to vest as of September 30,  2014. We received $6.6 million in cash from the exercise of options for the nine months endedSeptember 30,2014.

Restricted Stock

The following is a summary of non-vested share awards for our time-based restricted stock:

		Weighted
	Shares	Average Grant
	Outstanding	Date Fair Value
	(in thousands)	(per share)
Outstanding, December 31, 2014	440	$	7.11
Granted	—		—
Vested	(32)		7.09
Forfeited	(1)		7.09
Outstanding, September 30, 2015	407	$	7.11

There were no shares of restricted stock granted for the three and nine months ended September 30, 2015. The total fair value of restricted stock vested was $0.1 million and $0.2 million and $0.1 million and $1.1 million for the three and nine months ended September 30, 2015 and 2014, respectively.

There was $2.2 million in unrecognized compensation expense related to shares of time based restricted stock expected to vest as of September 30,  2015. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.6 years. There were 32,500,  shares of restricted stock that vested and we recorded $0.6 million in non-cash compensation expense related to the restricted stock granted that was expected to vest during the nine months ended September 30,2015.

There was $1.2 million in unrecognized compensation expense related to shares of time-based restricted stock expected to vest as of September 30,  2014. This cost was expected to be recognized on a straight-line basis over a weighted average period of 2.3 years. There were 0.2 million shares of time-based restricted shares vested and we recorded $0.9 million in non-cash compensation expense related to the restricted stock granted that was expected to vest for the nine months ended September 30,2014.

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2015

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

Our unaudited condensed consolidated financial statements included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. The results for the three and nine months ended September 30, 2015are not necessarily indicative of results to be expected for the full fiscal year.  The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.

There have been no changes to our basis of presentation and significant accounting policies since the most recent filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, except for the following:

Cost of Revenues (exclusive of depreciation and amortization)

Cost of Revenues (exclusive of depreciation and amortization)

The cost of revenues (exclusive of depreciation and amortization) represents the direct costs required to perform revenue generating transactions. The principal costs included within cost of revenues (exclusive of depreciation and amortization) are field service and network operations personnel, those direct costs related to the inventory sold for electronic gaming machines (“EGMs”), fully integrated kiosks and system sales, commissions paid to gaming establishments, interchange fees paid to credit and debit card networks and transaction processing fees to our transaction processor.

Research and Development Costs

Research and Development Costs

We conduct research and development activities primarily to develop and enhance our Games and Payments platforms, as well as game content and features. We believe our ability to deliver differentiated, appealing products and services to the marketplace is based in part on our research and development investments, and we expect to continue to make such investments in the future. These research and development costs consist primarily of salaries and benefits, consulting fees, and game lab testing fees. Once the technological feasibility of a project has been established, it is transferred from research to development, and capitalization of development costs continues until the product is available for general release.

Advertising, Marketing and Promotional Costs

Advertising, Marketing and Promotional Costs

We expense advertising, marketing and promotional costs as incurred. Total advertising, marketing and promotional costs, included in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, were $1.1 million and $1.9 million and $0.2 million and $0.6 million, for the three and nine months ended September 30, 2015 and 2014, respectively.

Fair Values of Financial Instruments

Fair Values of Financial Instruments

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

In determining fair value, we use a hierarchy that includes three levels which are based on the extent to which inputs used in measuring fair value are observable in the market. Level 1 indicates that the fair value is determined by using quoted prices in active markets for identical investments. Level 2 indicates that the fair value is determined using observable pricing inputs other than quoted prices in active markets such as models or other valuation methodologies. Level 3 indicates that the fair value is determined using pricing inputs that are unobservable for the investment and include situations where there is little, if any, market activity for the investment. Significant management estimates and judgment are used in the determination of the fair value of level 3 pricing inputs.

The carrying amount of cash and cash equivalents, settlement receivables, trade receivables, other receivables, settlement liabilities, accounts payable and accrued expenses approximates fair value due to the short-term maturities of these instruments. The fair value of our borrowings are estimated based on various inputs to determine a market price, such as: market demand and supply, size of tranche, maturity and similar instruments trading in more active markets.

The following table presents the fair value and outstanding balance of our long-term debt as of September 30,2015 (amounts in thousands):

	Levelof			Outstanding
	Hierarchy	FairValue		Balance
Term loan	1	$	490,653	$	492,500
Senior secured notes	3	$	331,650	$	335,000
Senior unsecured notes	1	$	315,000	$	350,000

The senior secured notes were fair valued using a Level 3 input by evaluating the trading activities of similar debt instruments as there was no market activity as of September 30,2015.  The senior unsecured notes were syndicated in April 2015 and transitioned from level 3 to level 1 on the fair value hierarchy. 

At December 31, 2014, the fair value of our long-term debt was considered to approximate the carrying amount as our acquisition of Everi Games occurred on December 19, 2014, for which our long-term debt was incurred.

Operating Segments

Operating Segments

During the first quarter of 2015, we changed our organizational structure as part of our transformation to a Games and Payments company providing solutions to the gaming industry. As a result, information that our chief operating decision-making group regularly reviews for purposes of allocating resources and assessing performance changed. Therefore, beginning in the first quarter of 2015, we are reporting our financial performance based on our new segments described in “Note 18.  Segment Information”. We have presented prior period amounts to conform to the way we now internally manage and monitor segment performance beginning in 2015. This change had no impact on our condensed consolidated financial statements.

Recent Accounting Guidance

Recent Accounting Guidance

Recent Accounting Guidance Not Yet Adopted

In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-16, which provides guidance on business combinations.  The ASUrequires an acquirer recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In July 2015, the FASB issued ASU No. 2015-11, which provides guidance on the measurement of inventory value.  The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. The pronouncement is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In April 2015, the FASB issued ASU No. 2015-03, which provides guidance to simplify the presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The pronouncement is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years, and early adoption is permitted for financial statements that have not been previously issued. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In January 2015, the FASB issued ASU No. 2015-01, which requires that an entity separately classify, present and disclose extraordinary events and transactions. The pronouncement is effective for annual periods ending after December 15, 2015. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In August 2014, the FASB issued ASU No. 2014-15, which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In June 2014, the FASB issued ASU No. 2014-12, which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within Notes to the Condensed Consolidated Financial Statements.

In May 2014, the FASB issued ASU No. 2014-09, which creates FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” and supersedes ASC Topic 605, “Revenue Recognition”. The guidance replaces industry specific guidance and establishes a single five-step model to identify and recognize revenue. The core principle of the guidance is that an entity should recognize revenue upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires the entity to disclose further quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. This guidance was originally effective for interim and annual reporting periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, which extended the effective date to interim and annual periods beginning after December 15, 2017. Early adoption is not permitted. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. We are currently evaluating the impact of adopting this guidance on our condensed consolidated financial statements and disclosures included within our Notes to the Condensed Consolidated Financial Statements

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OTHER RECEIVABLES (Details) - USD ($) $ in Thousands	Jul. 17, 2014	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable
Notes and loans receivables, net of discount of $737 and $853, respectively		$ 9,676	$ 13,939
Federal and state income tax receivable		455	15,092
Other		2,276	706
Total Other receivables		12,407	29,737
Less: Notes and loans receivable, non-current		7,076	9,184
Total other receivables, current portion		5,331	20,553
Discount of notes receivable other		$ 737	$ 853
Bee Caves Games, Inc
Financing Receivable
Note receivable, Face Amount	$ 4,500
Note receivable, stated interest rate (as a percent)	7.00%
Note receivable, interest only payments term	24 months
Note receivable, Repayment of principle and interest term	48 months

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Advertising, Marketing and Promotional Costs
Total advertising, marketing and promotional costs	$ 1.1	$ 0.2	$ 1.9	$ 0.6

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net (loss) income	$ (18,382)	$ 17,889
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and Amortization	94,978	14,178
Amortization of financing costs	5,459	1,412
Loss/(gain) on sale or disposal of assets	(3,412)	79
Accretion of contract rights	6,006
Provision for bad debts	6,967	6,770
Loss on early extinguishment of debt	13,063
Stock-based compensation	6,088	7,533
Other non-cash items	127
Changes in operating assets and liabilities:
Trade and other receivables	1,873	(6,547)
Settlement receivables	17,672	10,828
Inventory	1,833	(1,430)
Prepaid and other assets	(1,662)	(2,927)
Deferred income taxes	(11,899)	8,554
Settlement liabilities	(12,120)	(28,125)
Accounts payable and accrued expenses	(3,228)	1,226
Net cash provided by operating activities	103,363	29,440
Cash flows from investing activities
Acquisitions, net of cash acquired	(10,857)	(11,845)
Capital expenditures	(49,534)	(11,035)
Proceeds from sale of fixed assets	2,103	298
Repayments under development agreements	3,104
Advances under development and placement agreements	(2,813)
Changes in restricted cash and cash equivalents	(66)	(77)
Net cash used in investing activities	(58,063)	(22,659)
Cash flows from financing activities
Repayments against prior credit facility		(7,258)
Repayments of credit facility	(7,500)
Repayments of secured notes	(350,000)
Proceeds from issuance of secured notes	335,000
Debt issuance costs	(1,146)
Proceeds from exercise of stock options	1,833	5,251
Purchase of treasury stock	(54)	(12,117)
Net cash used in financing activities	(21,867)	(14,124)
Effect of exchange rates on cash	(1,055)	(412)
Cash and cash equivalents
Net increase for the period	22,378	(7,755)
Balance, beginning of the period	89,095	114,254
Balance, end of the period	111,473	106,499
Supplemental cash disclosures
Cash paid for interest	59,655	5,154
Cash (refunded) paid for income tax, net	(13,166)	874
Supplemental non-cash disclosures
Accrued and unpaid capital expenditures	1,912	2,260
Accrued and unpaid contingent liability for acquisitions	4,681	$ 2,463
Issuance of stock warrants	$ 2,246

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TRADE RCEIVABLES

9 Months Ended

Sep. 30, 2015

TRADE RECEIVABLES

TRADE RECEIVABLES

5. TRADE RECEIVABLES

Trade receivables represent short-term credit granted to customers for which collateral is generally not required. The balance of trade receivables consists of outstanding balances owed to us by gaming establishments and casino patrons. The balance of trade receivables consisted of the following (in thousands):

.	At September 30,		At December 31,
	2015		2014
Trade receivables, net
Games trade receivables	$	34,871	$	28,270
Payments trade receivables		12,831		9,427
Total trade receivables, net	$	47,702	$	37,697

The material balance of the allowance for doubtful accounts for trade receivables is from warranty receivables. On a monthly basis, we evaluate the collectability of the outstanding balances and establish a reserve for the face amount of the expected losses on these receivables. The warranty expense associated with this reserve is included within cost of revenues (exclusive of depreciation and amortization) in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The outstanding balance of the warranty reserve was $3.2 and $2.8 million as of September 30,  2015 and December 31, 2014, respectively.

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LONG-TERM DEBT (Details 2) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2014	Sep. 30, 2015	Dec. 31, 2014
BORROWINGS
Less: original issue discount	$ 11,213	$ 11,958	$ 11,213
Senior secured notes
BORROWINGS
Debt instrument term			1 year
Term Loan [Member]
BORROWINGS
Percentage of initial aggregate principal used to calculate quarterly term loan repayment amount	0.50%
Notes stated interest percentage	6.25%	6.25%	6.25%
Term Loan [Member] | London Interbank Offered Rate L I B O R [Member]
BORROWINGS
Variable rate basis		LIBOR
Term Loan [Member] | London Interbank Offered Rate L I B O R [Member] | Minimum
BORROWINGS
Variable rate of debt (as a percent)		1.00%
Revolving Credit Facility [Member]
BORROWINGS
Maximum borrowing capacity	$ 500,000		$ 500,000
Debt instrument term	6 years
Revolving Credit Facility [Member] | London Interbank Offered Rate L I B O R [Member]
BORROWINGS
Interest rate margin		4.75%
Revolving Credit Facility [Member] | London Interbank Offered Rate L I B O R [Member] | Minimum
BORROWINGS
Variable rate of debt (as a percent)		0.00%
Credit Facilities
BORROWINGS
Debt issuance costs and fees	$ 13,900
Less: original issue discount	7,500		7,500
Premium on principal repayment		1.00%
Credit Facilities | Federal funds effective rate
BORROWINGS
Interest rate margin		0.50%
Credit Facilities | LIBOR (after taking account of any applicable floor) applicable for an interest period of one month
BORROWINGS
Interest rate margin		1.00%
Credit Facilities | Senior secured term Loan
BORROWINGS
Maximum borrowing capacity	$ 50,000		$ 50,000
Credit Facilities | Senior secured term Loan | London Interbank Offered Rate L I B O R [Member]
BORROWINGS
Interest rate margin		5.25%
Credit Facilities | Senior secured notes
BORROWINGS
Debt instrument term	5 years

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
INCOME TAXES
Effective tax rate (as a percent)	39.30%	35.30%	37.00%	35.60%
Statutory federal rate (as a percent)	35.00%	35.00%	35.00%	35.00%
Unrecognized tax benefits					$ 0.7

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2015

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of fair value and carrying value of our borrowings

The following table presents the fair value and outstanding balance of our long-term debt as of September 30,2015 (amounts in thousands):

	Levelof			Outstanding
	Hierarchy	FairValue		Balance
Term loan	1	$	490,653	$	492,500
Senior secured notes	3	$	331,650	$	335,000
Senior unsecured notes	1	$	315,000	$	350,000

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CONDENSED CONSOLIDATING FINANCIAL INFORMATION (BalSh) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 111,473	$ 89,095	$ 106,499	$ 114,254
Settlement receivables	25,482	43,288
Trade receivables, net	47,702	37,697
Other receivables	5,331	20,553
Inventory	25,481	27,163
Prepaid expenses and other assets	19,262	18,988
Deferred tax asset	9,591	9,591
Total current assets	244,322	246,375
Non-current assets
Property, equipment and leasehold improvements, net	102,101	106,085
Goodwill	863,907	857,913
Other intangible assets, net	397,161	436,785
Other receivables, non-current	7,076	9,184
Other assets, non-current	36,279	50,943
Total non-current assets	1,406,524	1,460,910
Total assets	1,650,846	1,707,285
Current Liabilities
Settlement liabilities	106,579	119,157
Accounts payable and accrued expenses	106,602	104,668
Current portion of long-term debt	10,000	10,000
Total current liabilities	223,181	233,825
Non-current liabilities
Deferred tax liability, non-current	45,434	57,333
Long-term debt, less current portion	1,155,542	1,178,787
Other accrued expenses and liabilities	4,366	5,867
Total non-current liabilities	1,205,342	1,241,987
Total liabilities	1,428,523	1,475,812
Stockholders' Equity
Total stockholders' equity	222,323	231,473
Total liabilities and stockholders' equity	1,650,846	1,707,285
Reportable Legal Entities | Parent
Non-current assets
Investment in subsidiaries	222,323	231,473
Total non-current assets	222,323	231,473
Total assets	222,323	231,473
Stockholders' Equity
Total stockholders' equity	222,323	231,473
Total liabilities and stockholders' equity	222,323	231,473
Reportable Legal Entities | Subsidiary Issuer
Current assets
Cash and cash equivalents	85,812	68,143	92,231	100,573
Settlement receivables	21,778	40,157
Trade receivables, net	9,211	6,578
Other receivables	4,648	3,416
Inventory	9,519	10,595
Prepaid expenses and other assets	6,866	7,143
Deferred tax asset	2,743	2,743
Intercompany balances	37,777	18,038
Total current assets	178,354	156,813
Non-current assets
Property, equipment and leasehold improvements, net	19,316	17,864
Goodwill	154,367	148,278
Other intangible assets, net	31,980	24,771
Other receivables, non-current	3,469	4,411
Investment in subsidiaries	156,621	147,195
Deferred tax asset, non-current	66,477	78,229
Other assets, non-current	31,767	47,508
Intercompany balances	1,134,916	1,130,380
Total non-current assets	1,598,913	1,598,636
Total assets	1,777,267	1,755,449
Current Liabilities
Settlement liabilities	100,506	111,375
Accounts payable and accrued expenses	77,685	61,544
Current portion of long-term debt	10,000	10,000
Intercompany balances	165,791	152,802
Total current liabilities	353,982	335,721
Non-current liabilities
Deferred tax liability, non-current	1,072	1,072
Long-term debt, less current portion	1,155,542	1,178,787
Other accrued expenses and liabilities	3,925	5,377
Total non-current liabilities	1,160,539	1,185,236
Total liabilities	1,514,521	1,520,957
Stockholders' Equity
Total stockholders' equity	262,746	234,492
Total liabilities and stockholders' equity	1,777,267	1,755,449
Reportable Legal Entities | Guarantor Subsidiaries
Current assets
Cash and cash equivalents	14,359	6,489	2,187	2,149
Trade receivables, net	38,491	31,116
Other receivables	619	16,992
Inventory	15,962	16,568
Prepaid expenses and other assets	2,985	2,821
Deferred tax asset	6,848	6,848
Intercompany balances	164,309	151,179
Total current assets	243,573	232,013
Non-current assets
Property, equipment and leasehold improvements, net	82,433	87,898
Goodwill	708,923	708,922
Other intangible assets, net	357,827	402,816
Other receivables, non-current	3,607	4,773
Deferred tax asset, non-current	46,118
Other assets, non-current	4,018	3,366
Total non-current assets	1,202,926	1,207,775
Total assets	1,446,499	1,439,788
Current Liabilities
Settlement liabilities	132	140
Accounts payable and accrued expenses	27,541	41,395
Intercompany balances	30,728	8,159
Total current liabilities	58,401	49,694
Non-current liabilities
Deferred tax liability, non-current	156,957	134,490
Other accrued expenses and liabilities	441	490
Intercompany balances	1,134,916	1,130,380
Total non-current liabilities	1,292,314	1,265,360
Total liabilities	1,350,715	1,315,054
Stockholders' Equity
Total stockholders' equity	95,784	124,734
Total liabilities and stockholders' equity	1,446,499	1,439,788
Reportable Legal Entities | Non-Guarantor Subsidiaries
Current assets
Cash and cash equivalents	11,302	14,463	$ 12,081	$ 11,532
Settlement receivables	3,704	3,131
Trade receivables, net		3
Other receivables	64	145
Prepaid expenses and other assets	9,411	9,024
Intercompany balances	1,514	1,623
Total current assets	25,995	28,389
Non-current assets
Property, equipment and leasehold improvements, net	352	323
Goodwill	617	713
Other intangible assets, net	7,354	9,198
Investment in subsidiaries	86	86
Other assets, non-current	494	69
Total non-current assets	8,903	10,389
Total assets	34,898	38,778
Current Liabilities
Settlement liabilities	5,941	7,642
Accounts payable and accrued expenses	1,376	1,729
Intercompany balances	7,081	9,879
Total current liabilities	14,398	19,250
Non-current liabilities
Total liabilities	14,398	19,250
Stockholders' Equity
Total stockholders' equity	20,500	19,528
Total liabilities and stockholders' equity	34,898	38,778
Eliminations
Current assets
Intercompany balances	(203,600)	(170,840)
Total current assets	(203,600)	(170,840)
Non-current assets
Investment in subsidiaries	(379,030)	(378,754)
Deferred tax asset, non-current	(112,595)	(78,229)
Intercompany balances	(1,134,916)	(1,130,380)
Total non-current assets	(1,626,541)	(1,587,363)
Total assets	(1,830,141)	(1,758,203)
Current Liabilities
Intercompany balances	(203,600)	(170,840)
Total current liabilities	(203,600)	(170,840)
Non-current liabilities
Deferred tax liability, non-current	(112,595)	(78,229)
Intercompany balances	(1,134,916)	(1,130,380)
Total non-current liabilities	(1,247,511)	(1,208,609)
Total liabilities	(1,451,111)	(1,379,449)
Stockholders' Equity
Total stockholders' equity	(379,030)	(378,754)
Total liabilities and stockholders' equity	$ (1,830,141)	$ (1,758,203)

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SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2015

SHARE-BASED COMPENSATION

Summary of award activity

A summary of award activity is as follows (in thousands):

	Stock Options	Restricted Stock
	Granted	Granted
Outstanding, December 31, 2014	13,626	440
Additional authorized shares	—	—
Granted	6,509	—
Exercised options or vested shares	(340)	(32)
Canceled or forfeited	(2,069)	(1)
Outstanding, September 30, 2015	17,726	407

Schedule of weighted-average assumptions, stock options

	Nine months ended
	September 30,
	2015		2014
Risk-free interest rate	1	%	1	%
Expected life of options (in years)	4		4
Expected volatility	43	%	54	%
Expected dividend yield	0	%	0	%

Summary of option activity

				Weighted
	Number of	Weighted Average		Average Life	Aggregate
	Common Shares	Exercise Price		Remaining	Intrinsic Value
	(in thousands)	(per share)		(years)	(in thousands)
Outstanding, December 31, 2014	13,626	$	7.64	6.5	$	9,148
Granted	6,509		7.68
Exercised	(340)		5.37
Canceled or forfeited	(2,069)		10.11
Outstanding, September 30, 2015	17,726	$	7.41	6.9	$	2,035
Vested and expected to vest, September 30, 2015	14,706	$	7.36	6.7	$	2,033
Exercisable, September 30, 2015	6,554	$	7.14	4.4	$	2,022

Summary of non-vested share awards for time-based restricted shares

		Weighted
	Shares	Average Grant
	Outstanding	Date Fair Value
	(in thousands)	(per share)
Outstanding, December 31, 2014	440	$	7.11
Granted	—		—
Vested	(32)		7.09
Forfeited	(1)		7.09
Outstanding, September 30, 2015	407	$	7.11

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WEIGHTED AVERAGE COMMON SHARES

9 Months Ended

Sep. 30, 2015

WEIGHTED AVERAGE COMMON SHARES

WEIGHTED AVERAGE COMMON SHARES

15.WEIGHTED AVERAGE COMMON SHARES

The weighted average number of common shares outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Weighted average shares
Weighted average number of common shares outstanding - basic	65,941	65,589	65,804	65,853
Potential dilution from equity grants(1)	—	1,158	—	1,198
Weighted average number of common shares outstanding - diluted	65,941	66,747	65,804	67,051

(1) The Company was in a net loss position for the three and nine months ended September 30, 2015, and therefore, no potential dilution from the application of the treasury stock method was applicable. The potential dilution excludes the weighted average effect of equity awards to acquire 8.0 million and 7.0 million shares of our common stock for the three and nine months ended September 30, 2014 as the application of the treasury stock method, as required, makes them anti-dilutive.