Derivative Financial Instruments

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments 

Risk Management Objectives of Using Derivatives - Interest rate risk

The Company is exposed to interest rate risk associated with its vault cash rental obligations and its variable rate debt. The Company uses varying notional amount interest rate swap contracts and interest rate cap agreements (“Interest Rate Derivatives”) to manage the interest rate risk associated with its vault cash rental obligations in the U.S., Canada, the U.K., and Australia. Intermittently, the Company has also used interest rate swap or cap contracts to mitigate its exposure to floating interest rates on its floating-rate debt.

The majority of the Company’s Interest Rate Derivatives serve to mitigate interest rate risk exposure by converting a portion of the Company’s monthly floating-rate vault cash rental payments to either monthly fixed-rate vault cash rental payments or to vault cash rental payments with a capped rate. Typically, the Company receives monthly floating-rate payments from its Interest Rate Derivative counterparties that correspond to, in all material respects, the monthly floating-rate payments that are paid by the Company to its vault cash rental providers for the portion of the average outstanding vault cash balances that have been hedged. The floating-rate payments may or may not be capped or limited. In return, the Company pays its counterparties a monthly fixed-rate amount based on the same notional amounts outstanding. By converting the vault cash rental and, from time to time, the interest on certain debt from floating-rate to a fixed or a capped rate, the impact of favorable and unfavorable changes in future interest rates on the monthly vault cash rental payments recognized in the Cost of ATM operating revenues line and on the interest payments on floating-rate debt recognized in the Interest expense, net line in the Consolidated Statements of Operations has been reduced.

During the year ended December 31, 2020, the Company entered into a new interest rate swap contract to hedge its exposure on floating interest rates on vault cash rental obligations. The interest rate swap contract began March 6, 2020 with a $200 million aggregate notional amount at a fixed rate of 0.713% and will terminate on December 31, 2024. In June 2020, the Company designated interest rate swap contracts with an aggregate notional amount of 50 million U.K. pounds sterling as cash flow hedges of its vault cash rental obligations. These swap contracts were not previously designated and ended on December 31, 2020. During the year ended December 31, 2020, the Company also entered into new interest rate cap contracts to hedge its exposure to floating interest rates on its Term Loan. These interest rate cap contracts began August 1, 2020 with a $250 million aggregate notional amount and a cap rate of 1% and will terminate on December 31, 2025. See Note 11. Current and Long-Term Debt for information on the Term Loan.

Risk Management Objectives of Using Derivatives - Foreign Currency Exchange Rate Risk

The Company is also exposed to foreign currency exchange rate risk with respect to its operations outside the U.S. The Company has at times used foreign currency forward contracts to mitigate its foreign exchange rate risk associated with certain anticipated transactions. The Company regularly designates its foreign currency derivatives as cash flow hedges; however, the Company is not presently party to any foreign currency derivatives designated as cash flow hedges.

Undesignated Foreign Currency Forward Contracts

On October 14, 2019, the Company entered into foreign currency forward contracts with an aggregate notional amount of $150 million and a fixed rate of 1.267 U.S. dollars to 1 U.K. pounds sterling. These forward contracts allowed for settlement between November 2, 2020 and December 1, 2020. Although not designated as hedging instruments for accounting purposes, these forward contracts were associated with the anticipated conversion of U.K. pounds sterling to U.S. dollars intended to partially fund the repayment of the Company's 1.00% Convertible Notes and serve to mitigate currency fluctuation risk. The Company recognized mark-to-market losses of $7.9 million and mark-to-market gains of $12.0 million on these contracts during the years ended December 31, 2019, and 2020, respectively, and realized a gain of $4.1 million upon terminating these foreign currency contracts in June 2020. These contracts were terminated shortly after completion of the issuance of the new Term Loan, which provided sufficient funds in U.S. dollars to repay the Convertible Notes, removing the need for future U.K. pounds sterling borrowings and the forward contracts. The mark-to-market and realized gains on the Company's undesignated foreign currency forward contracts are recognized in the Other income, net line of the Consolidated Statements of Operations.

Derivative Accounting Policy 

The Interest Rate Derivatives discussed above are used by the Company to hedge its exposure to variability in expected future cash flows attributable to a particular risk and therefore typically qualify as and are designated as cash flow hedging instruments. The Company does not currently hold any interest rate derivative instruments not designated as cash flow hedges.

As discussed above, the Company generally utilizes fixed-for-floating Interest Rate Derivatives where the underlying pricing terms of the cash flow hedging instrument agree, in all material respects, with the pricing terms of the anticipated vault cash rental obligations, anticipated Amended Credit Agreement borrowings or other variable rate debt borrowings. Therefore, the amount of ineffectiveness associated with the Interest Rate Derivatives has historically been immaterial. If the Company concludes (i) that the obligations that have been hedged are no longer probable or (ii) that the underlying terms of the agreements have changed such that they do not sufficiently agree to the pricing terms of the Interest Rate Derivatives, the Interest Rate Derivative contracts would be deemed ineffective. The Company does not currently anticipate terminating or modifying terms of its existing Interest Rate Derivatives instruments prior to their expiration dates.

The Company recognizes its Interest Rate Derivative contracts as assets or liabilities at fair value and the accumulated changes in the fair values of the related Interest Rate Derivative contracts are reported net of taxes in Accumulated other comprehensive loss, net within the Consolidated Balance Sheets. For additional information related to the Company’s interest rate swap and cap contracts and the associated fair value measurements, see Note 18. Fair Value Measurements.

In accordance with U.S. GAAP, the Company reports the gain or loss related to each highly effective cash flow hedging instrument, including any ineffectiveness, as a component of Accumulated other comprehensive loss, net within the accompanying Consolidated Balance Sheets and reclassifies the gain or loss into earnings within the Cost of ATM operating revenues, Interest expense, net, or Other income, net lines of the Consolidated Statements of Operations in the same period or periods during which the hedged transaction affects and has been forecasted in earnings. The classification of the gain or loss is determined based on the associated hedge designation.

None of the Company’s existing derivative contracts contain credit-risk-related contingent features.

Summary of Outstanding Interest Rate Derivatives

The notional amounts, weighted average fixed rates, and remaining terms associated with the interest rate swap contracts and cap agreements that are currently in place in the U.S., Canada, the U.K, and Australia as of December 31, 2020 are as follows:

Remaining Term of Hedging Instrument	Segment	Currency	Weighted Average Fixed Rate/Cap Rate (1)	Notional Value in Respective Currency
				(In millions)
Interest Rate Swap Contracts - Vault Cash
January 1, 2021 – December 31, 2021	North America	U.S. Dollar	1.46%	1,200
January 1, 2022 – December 31, 2022	North America	U.S. Dollar	1.17%	1,000
January 1, 2023 – December 31, 2024	North America	U.S. Dollar	0.98%	600
January 1, 2021 – December 31, 2021	North America	Canadian Dollar	2.46%	125
January 1, 2021 – December 31, 2022	Europe & Africa	Pound Sterling	0.94%	500
January 1, 2021 – December 31, 2021	Australia & New Zealand	Australian Dollar	0.71%	40
Interest Rate Cap Contracts - Vault Cash
January 1, 2021 – December 31, 2023	North America	U.S. Dollar	3.25%	200
Interest Rate Cap Contracts - Variable Debt
January 1, 2021 – December 31, 2025	North America	U.S. Dollar	1.00%	250

(1) Cap rate represents the maximum amount of interest to be paid each year as per terms of the cap. The cost of the cap related to vault cash is amortized through vault cash rental expense over the term of the cap while the cost of the cap related to floating-rate debt is amortized through interest expense over the term of the cap.

Effects of Derivative Contracts on the Consolidated Balance Sheets and Consolidated Statements of Operations

The following tables depict the effects of the use of the Company’s derivative contracts in the accompanying Consolidated Balance Sheets and Consolidated Statements of Operations.

Balance Sheet Data 

Asset (Liability) Derivative Instruments	Balance Sheet Location	Fair Value
		December 31, 2020		December 31, 2019
		(In thousands)
Derivatives designated as hedging instruments:
Interest rate swap and cap contracts	Prepaid expenses, deferred costs, and other current assets	$	—	$	1,872
Interest rate swap and cap contracts	Prepaid expenses, deferred costs, and other noncurrent assets	—		8,766
Interest rate swap and cap contracts	Current portion of other long-term liabilities	(23,916)		(7,697)
Interest rate swap and cap contracts	Other long-term liabilities	(26,994)		(9,723)
Total derivatives designated as hedging instruments, net		$	(50,910)	$	(6,782)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Current portion of other long-term liabilities	—		(7,868)
Total derivative instruments, net		$	(50,910)	$	(14,650)

Statements of Operations Data

	Year Ended December 31,
Derivatives in Cash Flow Hedging Relationship	Amount of Loss on Derivative Instruments Recognized in Accumulated other comprehensive loss, net				Location of Loss Reclassified from Accumulated other comprehensive loss, net into Income	Amount of Loss Reclassified from Accumulated other comprehensive loss, net into Income
	2020		2019			2020		2019
	(In thousands)					(In thousands)
Interest rate swap and cap contracts	$	(60,264)	$	(19,928)	Cost of ATM operating revenues	$	(27,370)	$	(1,935)
Interest rate swap and cap contracts	(720)		(383)		Interest expense, net	(199)		$	(197)
Total	$	(60,984)	$	(20,311)		$	(27,569)	$	(2,132)

As of December 31, 2020, the Company expects to reclassify $23.9 million of net derivative-related losses contained in the Accumulated comprehensive loss, net line within its Consolidated Balance Sheets into earnings during the next twelve months concurrent with the recording of the related vault cash rental expense and Term Loan interest expense amounts.

The following table shows the impact of the Company's cash flow hedge accounting relationships on the Consolidated Statements of Operations for the years ended December 31, 2020 and 2019.

	Location and Amount of Loss Recognized in Income on Cash Flow Hedging Relationships in the Year Ended
	December 31, 2020				December 31, 2019
	(In thousands)
	Cost of ATM Operating Revenues		Interest Expense, net		Cost of ATM Operating Revenues		Interest Expense, net
Total amount of expense presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	652,906	$	37,097	$	830,359	$	26,604
Amount of loss reclassified from Accumulated other comprehensive loss, net into expense	$	27,370	$	199	$	1,935	$	197