Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2019	Nov. 11, 2019
Document and Entity Information
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Registrant Name	Exela Technologies, Inc.
Entity Central Index Key	0001620179
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		150,698,864
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 10,312	$ 25,615
Restricted cash	4,913	18,239
Accounts receivable, net of allowance for doubtful accounts of $7,021 and $4,359, respectively	260,438	270,812
Related party receivables	42	0
Inventories, net	16,996	16,220
Prepaid expenses and other current assets	22,695	25,015
Total current assets	315,396	355,901
Property, plant and equipment, net of accumulated depreciation of $171,913 and $154,060, respectively	119,469	132,986
Operating lease right-of-use assets, net	93,352
Goodwill	609,458	708,258
Intangible assets, net	374,445	407,021
Deferred income tax assets	15,830	16,225
Other noncurrent assets	13,557	19,391
Total assets	1,541,507	1,639,782
Current liabilities
Accounts payables	93,815	99,853
Related party payables	274	7,735
Income tax payable		1,996
Accrued liabilities	60,994	66,008
Accrued compensation and benefits	51,819	54,583
Accrued interest	24,602	49,071
Customer deposits	30,161	34,235
Deferred revenue	17,368	16,504
Obligation for claim payment	43,267	56,002
Current portion of finance lease liabilities	15,172
Current portion of finance lease liabilities, ASC 840		17,498
Current portion of operating lease liabilities	26,604
Current portion of long-term debts	37,237	29,237
Total current liabilities	401,313	432,722
Long-term debt, net of current maturities	1,367,583	1,306,423
Finance lease liabilities, net of current portion	24,159
Finance lease liabilities, net of current portion, ASC 840		26,738
Pension liabilities	26,667	25,269
Deferred income tax liabilities	12,677	11,212
Long-term income tax liabilities	2,892	3,024
Operating lease liabilities, net of current portion	71,661
Other long-term liabilities	7,866	15,400
Total liabilities	1,914,818	1,820,788
Commitments and Contingencies (Note 10)
Stockholders' equity (deficit)
Common stock, par value of $0.0001 per share; 1,600,000,000 shares authorized; 153,486,011 shares issued and 150,698,864 shares outstanding at September 30, 2019 and 152,692,140 shares issued and 150,142,955 shares outstanding at December 31, 2018	15	15
Preferred stock, par value of $0.0001 per share; 20,000,000 shares authorized; 4,419,233 shares issued and outstanding at September 30, 2019 and 4,569,233 shares issued and outstanding at December 31, 2018	1	1
Additional paid in capital	482,018	482,018
Less: common stock held in treasury, at cost; 2,787,147 shares at September 30, 2019 and 2,549,185 shares December 31, 2018	(10,949)	(10,342)
Equity-based compensation	48,411	41,731
Accumulated deficit	(876,043)	(678,563)
Accumulated other comprehensive loss:
Foreign currency translation adjustment	(7,786)	(6,565)
Unrealized pension actuarial losses, net of tax	(8,978)	(9,301)
Total accumulated other comprehensive loss	(16,764)	(15,866)
Total stockholders’ deficit	(373,311)	(181,006)
Total liabilities and stockholders’ deficit	$ 1,541,507	$ 1,639,782

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Condensed Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts	$ 7,021	$ 4,359
Accumulated depreciation on property, plant and equipment	$ 171,913	$ 154,060
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock shares authorized	1,600,000,000	1,600,000,000
Common stock, shares issued	153,486,011	152,692,140
Common stock, shares outstanding	150,698,864	150,142,955
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	4,419,233	4,569,233
Preferred stock, shares outstanding	4,419,233	4,569,233
Common stock held in treasury at cost (in shares)	2,787,147	2,549,185

Condensed Consolidated Statement of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statement of Operations
Revenue	$ 372,917	$ 383,030	$ 1,166,841	$ 1,186,579
Cost of revenue (exclusive of depreciation and amortization)	291,222	295,936	896,110	903,682
Selling, general and administrative expenses	50,372	44,913	151,884	137,231
Depreciation and amortization	27,114	35,041	82,326	109,428
Impairment of goodwill and other intangible assets	99,682		99,682
Related party expense	1,405	759	3,454	3,267
Operating income (loss)	(96,878)	6,381	(66,615)	32,971
Other expense (income), net:
Interest expense, net	39,747	38,339	117,778	114,883
Debt modification and extinguishment costs		1,067	1,404	1,067
Sundry expense (income), net	(10)	(2,571)	1,028	(4,961)
Other expense (income), net	581	(781)	4,965	(4,813)
Net loss before income taxes	(137,196)	(29,673)	(191,790)	(73,205)
Income tax (expense) benefit	3,769	733	(5,689)	(4,911)
Net loss	(133,427)	(28,940)	(197,479)	(78,116)
Cumulative dividends for Series A Preferred Stock	(884)	(914)	(2,712)	(2,742)
Net loss attributable to common stockholders	$ (134,311)	$ (29,854)	$ (200,191)	$ (80,858)
Loss per share - basic and diluted (in dollars per share)	$ (0.89)	$ (0.20)	$ (1.33)	$ (0.53)

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements of Comprehensive Loss
Net Loss	$ (133,427)	$ (28,940)	$ (197,479)	$ (78,116)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(2,325)	(2,492)	(1,221)	(3,639)
Unrealized pension actuarial gains (losses), net of tax	291	140	323	363
Total other comprehensive loss, net of tax	$ (135,461)	$ (31,292)	$ (198,377)	$ (81,392)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Condensed Consolidated Statements of Stockholders’ Deficit - USD ($) $ in Thousands	Common Stock	Preferred Stock	Treasury Stock	Additional Paid in Capital	Equity-Based Compensation	Foreign Currency Translation Adjustment	Unrealized Pension Actuarial Losses, net of tax	Accumulated Deficit	Total
Beginning balance at Dec. 31, 2017	$ 15	$ 1	$ (249)	$ 482,018	$ 34,085	$ (194)	$ (11,054)	$ (514,628)	$ (10,006)
Beginning balance (in shares) at Dec. 31, 2017	150,529,151	6,194,233	49,300
Increase (Decrease) in Stockholders’ Equity (Deficit)
Implementation of ASU								(1,418)	(1,418)
Net Loss								(23,994)	(23,994)
Equity-based compensation					959				959
Foreign currency translation adjustment						(268)			(268)
Net realized pension actuarial gains, net of tax							(403)		(403)
Preferred shares converted to common	1,986,767	(1,625,000)
Ending balance at Mar. 31, 2018	$ 15	$ 1	$ (249)	482,018	35,044	(462)	(11,457)	(540,040)	(35,130)
Ending balance (in shares) at Mar. 31, 2018	152,515,918	4,569,233	49,300
Beginning balance at Dec. 31, 2017	$ 15	$ 1	$ (249)	482,018	34,085	(194)	(11,054)	(514,628)	(10,006)
Beginning balance (in shares) at Dec. 31, 2017	150,529,151	6,194,233	49,300
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss									(78,116)
Foreign currency translation adjustment									(3,639)
Net realized pension actuarial gains, net of tax									363
Ending balance at Sep. 30, 2018	$ 15	$ 1	$ (5,148)	482,018	38,601	(3,833)	(10,691)	(594,162)	(93,199)
Ending balance (in shares) at Sep. 30, 2018	151,648,643	4,569,233	1,043,497
Beginning balance at Mar. 31, 2018	$ 15	$ 1	$ (249)	482,018	35,044	(462)	(11,457)	(540,040)	(35,130)
Beginning balance (in shares) at Mar. 31, 2018	152,515,918	4,569,233	49,300
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss								(25,182)	(25,182)
Equity-based compensation					1,936				1,936
Foreign currency translation adjustment						(879)			(879)
Net realized pension actuarial gains, net of tax							626		626
Shares repurchased			$ (3,479)						(3,479)
Shares repurchased (in shares)	(768,693)		768,693
Ending balance at Jun. 30, 2018	$ 15	$ 1	$ (3,728)	482,018	36,980	(1,341)	(10,831)	(565,222)	(62,108)
Ending balance (in shares) at Jun. 30, 2018	151,747,225	4,569,233	817,993
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss								(28,940)	(28,940)
Equity-based compensation					1,365				1,365
Foreign currency translation adjustment						(2,492)			(2,492)
Net realized pension actuarial gains, net of tax							140		140
Stock option exercised					256				256
Stock option exercised (in shares)	126,922
Shares repurchased			$ (1,420)						(1,420)
Shares repurchased (in shares)	(225,504)		225,504
Ending balance at Sep. 30, 2018	$ 15	$ 1	$ (5,148)	482,018	38,601	(3,833)	(10,691)	(594,162)	(93,199)
Ending balance (in shares) at Sep. 30, 2018	151,648,643	4,569,233	1,043,497
Beginning balance at Dec. 31, 2018	$ 15	$ 1	$ (10,342)	482,018	41,731	(6,565)	(9,301)	(678,563)	(181,006)
Beginning balance (in shares) at Dec. 31, 2018	150,142,955	4,569,233	2,549,185
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss								(29,907)	(29,907)
Equity-based compensation					2,798				2,798
Foreign currency translation adjustment						3,392			3,392
Net realized pension actuarial gains, net of tax							(224)		(224)
Ending balance at Mar. 31, 2019	$ 15	$ 1	$ (10,342)	482,018	44,529	(3,173)	(9,525)	(708,470)	(204,947)
Ending balance (in shares) at Mar. 31, 2019	150,142,955	4,569,233	2,549,185
Beginning balance at Dec. 31, 2018	$ 15	$ 1	$ (10,342)	482,018	41,731	(6,565)	(9,301)	(678,563)	(181,006)
Beginning balance (in shares) at Dec. 31, 2018	150,142,955	4,569,233	2,549,185
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss									(197,479)
Foreign currency translation adjustment									(1,221)
Net realized pension actuarial gains, net of tax									323
Ending balance at Sep. 30, 2019	$ 15	$ 1	$ (10,949)	482,018	48,411	(7,786)	(8,978)	(876,043)	(373,311)
Ending balance (in shares) at Sep. 30, 2019	150,698,864	4,419,233	2,787,147
Beginning balance at Mar. 31, 2019	$ 15	$ 1	$ (10,342)	482,018	44,529	(3,173)	(9,525)	(708,470)	(204,947)
Beginning balance (in shares) at Mar. 31, 2019	150,142,955	4,569,233	2,549,185
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss								(34,146)	(34,146)
Equity-based compensation					2,661				2,661
Foreign currency translation adjustment						(2,288)			(2,288)
Net realized pension actuarial gains, net of tax							256		256
RSU's vested (in shares)	102,092
Shares repurchased			$ (607)						(607)
Shares repurchased (in shares)	(237,962)		237,962
Ending balance at Jun. 30, 2019	$ 15	$ 1	$ (10,949)	482,018	47,190	(5,461)	(9,269)	(742,616)	(239,071)
Ending balance (in shares) at Jun. 30, 2019	150,007,085	4,569,233	2,787,147
Increase (Decrease) in Stockholders’ Equity (Deficit)
Net Loss								(133,427)	(133,427)
Equity-based compensation					1,444				1,444
Foreign currency translation adjustment						(2,325)			(2,325)
Net realized pension actuarial gains, net of tax							291		291
RSU's vested (in shares)	508,390
Withholding of employee taxes on vested RSUs					(223)				$ (223)
Preferred shares converted to common		(150,000)
Preferred shares converted to common	183,389
Shares repurchased (in shares)									0
Ending balance at Sep. 30, 2019	$ 15	$ 1	$ (10,949)	$ 482,018	$ 48,411	$ (7,786)	$ (8,978)	$ (876,043)	$ (373,311)
Ending balance (in shares) at Sep. 30, 2019	150,698,864	4,419,233	2,787,147

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net loss	$ (197,479)	$ (78,116)
Adjustments to reconcile net loss
Depreciation and amortization	82,326	109,428
Original issue discount and debt issuance cost amortization	8,730	8,062
Debt modification and extinguishment costs	1,049
Impairment of goodwill and other intangible assets	99,682
Provision for doubtful accounts	4,402	2,470
Deferred income tax provision	1,632	(3,689)
Share-based compensation expense	6,903	4,516
Foreign currency remeasurement	(173)	(2,040)
Loss (gain) on sale of assets	(191)	1,835
Fair value adjustment for interest rate swap	4,965	(5,456)
Change in operating assets and liabilities, net of effect from acquisitions
Accounts receivable	3,501	(6,374)
Prepaid expenses and other assets	2,377	(5,770)
Accounts payable and accrued liabilities	(43,861)	(23,457)
Related party payables	(7,502)	(3,689)
Net cash used in operating activities	(33,639)	(2,280)
Cash flows from investing activities
Purchase of property, plant and equipment	(10,797)	(14,077)
Additions to internally developed software	(5,074)	(3,080)
Additions to outsourcing contract costs	(14,304)	(5,427)
Cash paid in acquisition, net of cash received	(5,000)	(6,513)
Proceeds from sale of assets	360	1,095
Net cash used in investing activities	(34,815)	(28,002)
Cash flows from financing activities
Third party debt modification and extinguishment costs	355	1,067
Repurchases of common stock	(3,480)	(4,899)
Borrowings from other loans	1,728	3,068
Cash paid for equity issuance costs		(7,500)
Net borrowings under factoring arrangement	(494)
Cash paid for withholding taxes on vested RSUs	(223)
Proceeds from senior secured term loans	29,850	30,000
Cash paid for debt issuance costs	(362)	(1,094)
Borrowings from senior secured revolving facility	130,500	30,000
Repayments on senior secured revolving facility	(91,500)	(30,000)
Principal payments on finance lease obligations	(13,598)	(12,594)
Principal repayments on senior secured term loans and other loans	(12,922)	(9,053)
Net cash provided by (used in) financing activities	39,854	(1,005)
Effect of exchange rates on cash	(29)	(554)
Net decrease in cash and cash equivalents	(28,629)	(31,842)
Cash, restricted cash, and cash equivalents
Beginning of period	43,854	81,489
End of period	15,225	49,647
Supplemental cash flow data:
Income tax payments, net of refunds received	6,981	5,296
Interest paid	131,773	136,396
Noncash investing and financing activities:
Assets acquired through right-of-use arrangements	9,352	9,318
Leasehold improvements funded by lessor		1,565
Accrued capital expenditures	$ 1,083	$ 1,994

General

9 Months Ended

Sep. 30, 2019

General

General

1. General

These condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements as of and for the year ended December 31, 2018 included in the Exela Technologies, Inc. (the "Company," "Exela," "we," "our" or "us") annual report on Form 10-K for such period (the “2018 Form 10-K”).

The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America ("GAAP") and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission ("SEC") Regulation S-X as they apply to interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These accounting principles require us to use estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates.

The condensed consolidated financial statements are unaudited, but in our opinion include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim period. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

Net Loss per Share

Earnings per share ("EPS") is computed by dividing net loss available to holders of the Company's common stock, par value $0.0001 per share (“Common Stock”) by the weighted average number of shares of Common Stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock, using the more dilutive of the two-class method or if-converted method in periods of earnings. The two-class method is an earnings allocation method that determines earnings per share for Common Stock and participating securities. As the Company experienced net losses for the periods presented, the impact of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) was calculated based on the if-converted method. Diluted EPS excludes all dilutive potential of shares of Common Stock if their effect is anti-dilutive.

For the nine months ended September 30, 2019 outstanding shares of the Series A Preferred Stock, if converted would have resulted in an additional 5,402,954 shares of Common Stock outstanding, but were not included in the computation of diluted loss per share as their effects were anti-dilutive.

The Company was originally incorporated July 12, 2017 as a special purpose acquisition company under the name Quinpario Acquisition Corp 2 (“Quinpario”). The Company has not included the effect of 35,000,000 warrants sold in the Quinpario Initial Public Offering (“IPO”) in the calculation of net income (loss) per share. Warrants are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s Common Stock price during the applicable period.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net loss attributable to common stockholders (A)	$	(134,311)	$	(29,854)	$	(200,191)	$	(80,858)
Weighted average common shares outstanding - basic and diluted (B)		150,207,483		151,663,670		150,140,577		152,010,290
Loss Per Share:
Basic and diluted (A/B)	$	(0.89)	$	(0.20)	$	(1.33)	$	(0.53)

New Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

New Accounting Pronouncements

New Accounting Pronouncements

2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) no. 2016-02, Leases (ASC 842). This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted this guidance effective January 1, 2019, under the modified retrospective transition method provided by ASU 2018-11 with the following practical expedients below:

Not to record the leases with an initial term of 12 months or less on the balance sheet; and

Not to reassess the (1) definition of a lease, (2) lease classification, and (3) initial direct costs for existing leases during transition.

The adoption had a material impact on the Company's unaudited consolidated balance sheets, but did not have a material impact on the Company's unaudited consolidated income statements and unaudited consolidated statements of cash flows. The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases, while the Company's accounting for finance leases remained substantially unchanged. See Note 5 for relevant disclosures.

Effective January 1, 2019, the Company adopted ASU no. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this ASU addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this ASU addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019.

Effective January 1, 2019, the Company adopted ASU no. 2017-12, Derivatives and Hedging (Topic 815); Targeted Improvements to Accounting for Hedging Activities. The amendments in this ASU better align the risk management activities and financial reporting for these hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and presentation of hedge results. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019.

Effective January 1, 2019, the Company adopted ASU no. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU address a narrow-scope financial reporting issue related to the tax effects that may become “stranded” in accumulated other comprehensive income (“AOCI”) as a result of the Tax Cuts and Jobs Act (“TCJA”). An entity may elect to reclassify the income tax effects of the TCJA on items within AOCI to retained earnings. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019.

Effective January 1, 2019, the Company adopted ASU no. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting to amend the accounting for share-based payment awards issued to nonemployees. Under the revised guidance, the accounting for awards issued to nonemployees will be similar to the model for employee awards, except the ASU allows an entity to elect on an award-by-award basis to use the contractual term as the expected term assumption in the option pricing model, and the cost of the grant is recognized in the same period(s) and in the same manner as if the grantor had paid cash. The adoption had no impact on the Company's financial position, results of operations, and cash flows for the three and nine months ended September 30, 2019.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU no. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently in the early stages of evaluating the impact that adopting this standard will have on the consolidated financial statements.

In August 2018, the FASB issued ASU no. 2018-13, Fair Value Measurement (Topic 820); which changes the fair value measurement disclosure requirements of ASC 820. The amendments in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting. The FASB used the guidance in the Concepts Statement to improve the effectiveness of ASC 820’s disclosure requirements. The objective of the disclosure requirements in this subtopic is to provide users of financial statements with information about assets and liabilities measured at fair value in the statement of financial position or disclosed in the notes to financial statements. The ASU includes but is not limited to the valuation techniques and inputs that a reporting entity uses to arrive at its measures of fair value, including judgments and assumptions that the entity makes, the uncertainty in the fair value measurements as of the reporting date, and how changes in fair value measurements affect an entity’s performance and cash flows. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. The Company is currently in the early stages of evaluating the impact that adopting this standard will have on the consolidated financial statements.

In August 2018, the FASB issued ASU no. 2018-15, Intangibles, Goodwill, and Other - Internal Use Software (Subtopic 350-40): Customer's accounting for implementation costs incurred in a Cloud Computing Arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently in the early stages of evaluating the impact that adopting this standard will have on the consolidated financial statements.

Business Combinations

9 Months Ended

Sep. 30, 2019

Business Combinations

Business Combinations

3. Business Combinations

Asterion

On April 10, 2018, Exela completed the acquisition of Asterion International Group (“Asterion,” the “Asterion Business Combination”), a well-established provider of technology driven business process outsourcing, document management and business process automation across Europe. The purchase price was approximately $19.5 million. The acquisition comes with minimal customer overlap and is strategic to expanding Exela’s European business.

The acquired assets and assumed liabilities of Asterion were recorded at their estimated fair values. The following table summarizes the consideration paid for Asterion and the fair value of the assets acquired and liabilities assumed at the acquisition date on April 10, 2018:


Assets Acquired:
Cash and cash equivalents	$	5,595
Accounts receivable		25,740
Other current assets		2,282
Inventories, net		1,137
Property, plant, and equipment, net		4,747
Deferred income tax assets		6,316
Other noncurrent assets		522
Intangible assets, net		3,525
Goodwill		1,493
Total identifiable assets acquired	$	51,357
Liabilities Assumed:
Accounts payable	$	(5,596)
Income tax payable		(5)
Accrued liabilities		(6,593)
Accrued compensation and benefits		(7,079)
Deferred revenue		(880)
Current portion of long term debt		(994)
Customer deposits		(462)
Pension liabilities		(7,135)
Other long-term liabilities		(1,324)
Deferred income tax liabilities		(1,171)
Capital lease obligations, net of current maturities		(650)
Total liabilities assumed	$	(31,889)
Total Consideration	$	19,468

The majority of identifiable intangible assets consisted of customer relationships. Customer relationships were valued using the Income Approach, specifically the Multi-Period Excess Earnings method. This intangible acquired represents a Level 3 measurement as it is based on unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset at fair value.


	Weighted Average
	Useful Life (in years)	Fair Value
Customer Relationships	9.5	$	3,516

Through the acquisition of Asterion, the Company expects to leverage brand awareness, strengthen margins, and expand the existing Asterion sales channels. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Asterion’s identifiable net assets assumed, and as a result, the Company has recorded goodwill in connection with this acquisition. For the three and nine months ended September 30, 2019 the Company recognized $17.0 million and $56.8 million in revenue related to Asterion in the Consolidated Statement of Operations.

Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Significant Accounting Policies

Significant accounting policies

4. Significant Accounting Policies

The information presented below supplements the Significant Accounting Policies information presented in our 2018 Form 10-K, including Revenue Recognition for the adoption of ASC 606 (ASU 2014-09: Revenue from Contracts with Customers), which became effective January 1, 2018. See our 2018 Form 10-K for a description of our significant accounting policies in effect prior to the adoption of the new accounting standard.

Revenue Recognition

We account for revenue in accordance with ASC 606. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. All of our material sources of revenue are derived from contracts with customers, primarily related to the provision of business and transaction processing services within each of our segments. We do not have any significant extended payment terms, as payment is received shortly after goods are delivered or services are provided.

Nature of Services

Our primary performance obligations are to stand ready to provide various forms of business processing services, consisting of a series of distinct services that are substantially the same and have the same pattern of transfer over time, and accordingly are combined into a single performance obligation. Our promise to our customers is typically to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of transactions processed, requests fulfilled, etc.); as such, the total transaction price is variable. We allocate the variable fees to the single performance obligation charged to the distinct service period in which we have the contractual right to bill under the contract.

Disaggregation of Revenues

The following tables disaggregate revenue from contracts by geographic region and by segment for the three and nine months ended September 30, 2019 and 2018:


	Three Months Ended September 30,
	2019						2018
		ITPS		HS		LLPS		ITPS		HS		LLPS
United States	$	229,492	$	62,132	$	18,806	$	248,055	$	56,776	$	18,941
Europe		55,836		—		—		52,602		—		—
Other		6,651		—		—		6,656		—		—
Total	$	291,979	$	62,132	$	18,806	$	307,313	$	56,776	$	18,941


	Nine Months Ended September 30,
	2019						2018
		ITPS		HS		LLPS		ITPS		HS		LLPS
United States	$	718,936	$	186,915	$	54,217	$	782,870	$	171,722	$	65,476
Europe		186,337		—		—		146,242		—		—
Other		20,436		—		—		20,269		—		—
Total	$	925,709	$	186,915	$	54,217	$	949,381	$	171,722	$	65,476

Contract Balances

The following table presents contract assets and contract liabilities recognized at September 30, 2019 and December 31, 2018:


	September 30,		December 31,
	2019		2018
Accounts receivable, net	$	260,438	$	270,812
Deferred revenues		17,782		16,940
Costs to obtain and fulfill a contract		24,212		18,624
Customer deposits		30,161		34,235

Accounts receivable, net includes $37.6 million and $39.5 million as of September 30, 2019 and December 31, 2018, respectively, representing amounts not billed to customers. We have accrued the unbilled receivables for work performed in accordance with the terms of contracts with customers.

Deferred revenues relate to payments received in advance of performance under a contract. A significant portion of this balance relates to maintenance contracts or other service contracts where we received payments for upfront conversions or implementation activities which do not transfer a service to the customer but rather are used in fulfilling the related performance obligations that transfer over time. The advance consideration received from customers is deferred over the contract term. We recognized revenue of $12.8 million during the nine months ended September 30, 2019 that had been deferred as of December 31, 2018.

Costs incurred to obtain and fulfill contracts are deferred and expensed on a straight-line basis over the estimated benefit period. We recognized $8.4 million of amortization for these costs in the first nine months of 2019 within depreciation and amortization expense. These costs represent incremental external costs or certain specific internal costs that are directly related to the contract acquisition or transition activities and can be separated into two principal categories: contract commissions and transition/set-up costs. Examples of such capitalized costs include hourly labor and related fringe benefits and travel costs. Applying the practical expedient in ASC 340-40-25-4, we recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in Selling, general and administrative expenses. The effect of applying this practical expedient was not material.

Customer deposits consist primarily of amounts received from customers in advance for postage. The majority of the amounts recorded as of December 31, 2018 were used to pay for postage with the corresponding postage revenue being recognized during the nine months ended September 30, 2019.

Performance Obligations

At the inception of each contract, we assess the goods and services promised in our contracts and identify each distinct performance obligation. The majority of our contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts. For the majority of our business and transaction processing service contracts, revenues are recognized as services are provided based on an appropriate input or output method, typically based on the related labor or transactional volumes.

Certain of our contracts have multiple performance obligations, including contracts that combine software implementation services with post-implementation customer support. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which we estimate our expected costs of satisfying a performance obligation and add an appropriate margin for that distinct good or service. We also use the adjusted market approach whereby we estimate the price that customers in the market would be willing to pay. In assessing whether to allocate variable consideration to a specific part of the contract, we consider the nature of the variable payment and whether it relates specifically to its efforts to satisfy a specific part of the contract. Certain of our software implementation performance obligations are satisfied at a point in time, typically when customer acceptance is obtained.

When evaluating the transaction price, we analyze, on a contract-by-contract basis, all applicable variable consideration. The nature of our contracts give rise to variable consideration, including volume discounts, contract penalties, and other similar items that generally decrease the transaction price. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We do not anticipate significant changes to our estimates of variable consideration.

We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations

In accordance with optional exemptions available under ASC 606, we did not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less, and (2) contracts for which variable consideration relates entirely to an unsatisfied performance obligation, which comprise the majority of our contracts. We have certain non-cancellable contracts where we receive a fixed monthly fee in exchange for a series of distinct services that are substantially the same and have the same pattern of transfer over time, with the corresponding remaining performance obligations as of September 30, 2019 in each of the future periods below:


Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations

Remainder of 2019	$	17,335
2020		52,951
2021		42,443
2022		31,951
2023		27,775
2024 and thereafter		54,159
Total	$	226,614

Leases

9 Months Ended

Sep. 30, 2019

Leases

Leases

5. Leases

The following table summarizes the impact of the changes made to the January 1, 2019 consolidated balance sheet for the adoption of the new accounting standard pertaining to leases. The prior periods have not been restated and have been reported under the accounting standard in effect for those periods.


	Balance at				Balance at
	December 31,		Impact of		January 1,
	2018		Lease Standard		2019
Total assets	$	1,639,782	$	102,651	$	1,742,433
Total current liabilities		432,722		25,304		458,026
Total long-term liabilities		1,820,788		79,703		1,900,491

The increase in total assets and total liabilities at September 30, 2019 from December 31, 2018 was primarily due to the impact from the adoption of the new accounting standard pertaining to lease arrangements. See Note 2 for additional information on the impact of the adoption of this standard.

The Company determines if a contract is, or contains, a lease at contract inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion in the Company's unaudited consolidated balance sheets. Finance leases are included in property and equipment, current portion of finance lease obligations and finance lease obligations, net of current portion in the Company's unaudited consolidated balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date, and exclude lease incentives. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of one year or less are generally not included in ROU assets and liabilities.

Operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheet as follows:


	September 30,
	2019
Balance sheet location:
Operating Lease
Operating lease right-of-use assets, net	$	93,352
Current portion of operating lease liabilities		26,604
Operating lease liabilities, net of current portion		71,661
Finance Lease
Finance lease right-of-use assets, net (included in property, plant and equipment, net)		28,394
Current portion of finance lease liabilities		15,172
Finance lease liabilities, net of current portion		24,159

As of September 30, 2019, weighted-average remaining lease term of operating leases and finance leases was 4.89 years and 3.41 years, respectively. The weighted-average discount rate for operating leases and finance leases was 10.39% and 8.84%, respectively.

The interest on financing lease liabilities for the three and nine months ended September 30, 2019 was $0.9 million and $2.5 million, respectively. The amortization expense on finance lease right-of-use assets for the three and nine months ended September 30, 2019 was $3.7 and $10.7 million, respectively.

The following table summarizes maturities of finance and operating lease liabilities based on lease term as of September 30, 2019:



	Finance		Operating
	Leases		Leases
Remainder of 2019	$	6,554	$	8,469
2020		14,931		24,803
2021		11,587		19,707
2022		5,470		15,651
2023		2,847		11,721
2024 and thereafter		4,120		23,244
Total lease payments		45,509		103,595
Less: Imputed interest		6,178		5,380
Present value of lease liabilities	$	39,331	$	98,265

At December 31, 2018, the Company had the following future minimum payments due under non-cancelable leases:


		Finance	Operating
		Leases	Leases
2019	$	20,080	$	38,057
2020		11,851		29,346
2021		9,018		22,239
2022		4,169		16,782
2023		2,244		12,302
2024 and thereafter		3,617		18,874
Total minimum lease payments	$	50,979	$	137,600
Less: imputed interest		6,743
Total net minimum lease payments		44,236
Less: Current portion of obligations under finance leases		17,498
Long-term portion of obligations under finance leases	$	26,738

Consolidated rental expense for all operating leases was $83.8 million for the year ended December 31, 2018. Consolidated rental expense for all operating leases was $19.0 million and $56.4 million for the three and nine months ended September 30, 2019, respectively.

The following table summarizes the cash paid and related right-of-use operating finance or operating lease recognized for the nine months ended September 30, 2019.



		Nine Months Ended
		September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	28,831
Financing cash flows from finance leases		13,598
Right-of-use lease assets obtained in the exchange for lease liabilities:
Operating leases		3,894
Finance leases		9,352

Intangibles Assets and Goodwill

9 Months Ended

Sep. 30, 2019

Intangibles Assets and Goodwill

Intangibles Assets and Goodwill

6. Intangibles Assets and Goodwill

Intangible Assets

Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consists of the following:


	September 30, 2019
	Gross Carrying				Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,901	$	(226,123)	$	281,778
Developed technology		89,053		(86,966)		2,087
Trade names (b)		8,400		(3,100)		5,300
Outsource contract costs		60,514		(36,303)		24,212
Internally developed software		41,971		(9,956)		32,015
Trademarks		23,378		(23,370)		8
Non compete agreements		1,350		(1,350)		—
Assembled workforce		4,473		(839)		3,634
Purchased software		26,749		(1,337)		25,412
Intangibles, net	$	763,789	$	(389,344)	$	374,445


	December 31, 2018
	Gross Carrying				Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,905	$	(190,666)	$	317,239
Developed technology		89,053		(85,967)		3,086
Trade names (c)		9,400		(3,100)		6,300
Outsource contract costs		46,342		(27,719)		18,623
Internally developed software		36,820		(6,278)		30,542
Trademarks		23,379		(23,370)		9
Non compete agreements		1,350		(1,350)		—
Assembled workforce		4,473		—		4,473
Purchased software		26,749		—		26,749
Intangibles, net	$	745,471	$	(338,450)	$	407,021

(a)

Amounts include intangible assets acquired in business combinations and asset acquisitions.

(b)

The carrying amount of trade names for September 30, 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in the nine months ended September 30, 2019.

(c)

The carrying amount of trade names for 2018 is net of accumulated impairment losses of $43.1 million, of which $3.7 million was recognized in 2018.

Goodwill and other indefinite-lived assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We conduct our annual goodwill and indefinite-lived assets impairment tests on October 1st of each year, or more frequently if indicators of impairment exist. The Company utilizes the Income Approach, specifically the Relief-from-Royalty method, to determine the fair value of the indefinite-lived assets. The Company uses a combination of the Guideline Public Company Method of the Market Approach and the Discounted Cash Flow Method of the Income Approach to determine the reporting unit fair value for goodwill impairment.

During the three months ended September 30, 2019, the Company made an evaluation based on factors such as changes in the Company’s growth rate and recent trends in the Company’s market capitalization, and concluded that a triggering event for an interim impairment analysis had occurred in the third quarter of 2019. As part of the assessment, it was determined that the increase in the discount rate applied in the valuation was required to reflect current market dynamics and company-specific risk. This higher discount rate, in conjunction with revised long-term projections, resulted in lower than previously projected long-term future cash flows for the reporting units which reduced the estimated fair value to below carrying value. As a result of the interim impairment assessment, the Company recorded an impairment charge to goodwill and trade names of $98.7 million, including taxes, and $1.0 million, respectively. The impairment charges are included within Impairment of goodwill and other intangible assets in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019.

Goodwill

The Company’s operating segments are significant strategic business units that align its products and services with how it manages its business, approach the markets and interacts with its clients. The Company is organized into three segments: ITPS, HS, and LLPS (See Note 15).

Goodwill by reporting segment consists of the following:


										Currency
										Translation
	Goodwill			Additions			Reductions			Adjustments		Goodwill (a)
ITPS	$	566,215	$	5,580	(c)	$	—		$	(220)	$	571,575
HS		86,786		—			—			—		86,786
LLPS		94,324		—			(44,427)	(b)		—		49,897
Balance as of December 31, 2018	$	747,325	$	5,580		$	(44,427)		$	(220)	$	708,258
ITPS		571,575		—			(90,361)	(d)		(118)		481,096
HS		86,786		—			—			—		86,786
LLPS		49,897		—			(8,321)	(e)		—		41,576
Balance as of September 30, 2019	$	708,258	$	—		$	(98,682)		$	(118)	$	609,458

(a)

The goodwill amount for all periods presented is net of accumulated impairment losses of $167.9 million.

(b)

The reduction in goodwill is due to $44.4 million, including taxes, for impairment recorded in the fourth quarter of 2018.

(c)

Addition to goodwill due to the acquisition of Asterion and immaterial acquisitions in the third and fourth quarters of 2018.

(d)

The reduction in goodwill is due to $90.4 million, including taxes, for impairment recorded in the third quarter of 2019.

(e)

The reduction in goodwill is due to $8.3 million, including taxes, for impairment recorded in the third quarter of 2019.

Long-Term Debt and Credit Facilities

9 Months Ended

Sep. 30, 2019

Long-Term Debt and Credit Facilities

Long-Term Debt and Credit Facilities

7. Long-Term Debt and Credit Facilities

Senior Secured Notes

On July 12, 2017, the Company issued $1.0 billion in aggregate principal amount of 10.0% First Priority Senior Secured Notes due 2023 with an original issue discount (“OID”) of $22.5 million (the “Notes”). The Notes are guaranteed by certain subsidiaries of the Company. The Notes bear interest at a rate of 10.0% per year. The Company pays interest on the Notes on January 15 and July 15 of each year, commencing on January 15, 2018. The Notes will mature on July 15, 2023.

Senior Credit Facilities

On July 12, 2017, the Company entered into a First Lien Credit Agreement with Royal Bank of Canada, Credit Suisse AG, Cayman Islands Branch, Natixis, New York Branch and KKR Corporate Lending LLC (the “Credit Agreement”) providing Exela Intermediate LLC, a wholly owned subsidiary of the Company, upon the terms and subject to the conditions set forth in the Credit Agreement, a (i) $350.0 million senior secured term loan maturing July 12, 2023 with an OID of $7.0 million, and (ii) a $100.0 million senior secured revolving facility maturing July 12, 2022. As of September 30, 2019 and December 31, 2018, the Company had outstanding irrevocable letters of credit totaling approximately $21 million and $20.6 million, respectively, under the senior secured revolving facility.

The Credit Agreement provided for the following interest rates for borrowings under the senior secured term facility and senior secured revolving facility: at the Company’s option, either (1) an adjusted LIBOR, subject to a 1.0% floor in the case of term loans, or (2) a base rate, in each case plus an applicable margin. The initial applicable margin for the senior secured term facility is 7.5% with respect to LIBOR borrowings and 6.5% with respect to base rate borrowings. The initial applicable margin for the senior secured revolving facility is 7.0% with respect to LIBOR borrowings and 6.0% with respect to base rate borrowings. The applicable margin for borrowings under the senior secured revolving facility is subject to step-downs based on leverage ratios. The senior secured term loan is subject to amortization payments, commencing on the last day of the first full fiscal quarter of the Company following the closing date, of 0.6% of the aggregate principal amount for each of the first eight payments and 1.3% of the aggregate principal amount for payments thereafter, with any balance due at maturity.

Term Loan Repricing

On July 13, 2018, Exela successfully repriced the $343.4 million of term loans outstanding under its senior secured credit facilities (the “Repricing”). The Repricing was accomplished pursuant to a First Amendment to First Lien Credit Agreement (the “First Amendment”), dated as of July 13, 2018, by and among the Company’s subsidiaries Exela Intermediate Holdings LLC, Exela Intermediate, LLC, each “Subsidiary Loan Party” listed on the signature pages thereto, Royal Bank of Canada, as administrative agent, and each of the lenders party thereto, whereby the Company borrowed $343.4 million of refinancing term loans (the “Repricing Term Loans”) to refinance the Company’s existing senior secured term loans.

In accordance with ASC 470 -- Debt -- Modifications and Extinguishments, as a result of certain lenders that participated in Exela's debt structure prior to the Repricing and Exela's debt structure after the Repricing, it was determined that a portion of the refinancing of Exela's senior secured credit facilities would be accounted for as a debt modification, and the remaining would be accounted for as an extinguishment. The Company incurred $1.0 million in new debt issuance costs related to the refinancing, of which $1.0 million was expensed pursuant to modification accounting. The proportion of debt that was extinguished resulted in a write off of previously recognized debt issue costs of $0.1 million. Additionally, for the new lenders who exceeded the 10% test, less than $0.1 million was recorded as additional debt issue costs. All unamortized costs and discounts will be amortized over the life of the new term loan using the effective interest rate of the term loan.

The Repricing Term Loans will bear interest at a rate per annum of, at the Company’s option, either (a) a LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.0% floor, or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.5%, (ii) the prime rate and (iii) the one-month adjusted LIBOR plus 1.0%, in each case plus an applicable margin of 6.5% for LIBOR loans and 5.5% for base rate loans. The interest rates applicable to the Repricing Term Loans are 100 basis points lower than the interest rates applicable to the existing senior secured term loans that were incurred on July 12, 2017 pursuant to the Credit Agreement. The Repricing Term Loans will mature on July 12, 2023, the same maturity date as the prior senior secured term loans.

2018 Incremental Term Loans

On July 13, 2018, the Company successfully borrowed an additional $30.0 million pursuant to incremental term loans (the “2018 Incremental Term Loans”) under the First Amendment. The proceeds of the 2018 Incremental Term Loans were used by the Company for general corporate purposes and to pay fees and expenses in connection with the First Amendment. The interest rates applicable to the Incremental Term Loans are the same as those for the Repricing Term Loans.

The Company may voluntarily repay the Repricing Term Loans and the 2018 Incremental Term Loans (collectively, the “Term Loans”) at any time, without prepayment premium or penalty, except in connection with a repricing event as described in the following sentence, subject to customary “breakage” costs with respect to LIBOR rate loans. Any refinancing of the Term Loans through the issuance of certain debt or any repricing amendment, in either case, that constitutes a “repricing event” applicable to the Term Loans resulting in a lower yield occurring at any time during the first six months after July 13, 2018 will be accompanied by a 1.00% prepayment premium or fee, as applicable.

Other than as described above, the terms, conditions and covenants applicable to the Repricing Term Loans and the 2018 Incremental Term Loans are consistent with the terms, conditions and covenants that were applicable to the existing senior secured term loans under the Credit Agreement. The Repricing and issuance of the 2018 Incremental Term Loans resulted in a partial debt extinguishment, for which Exela recognized $1.1 million in debt extinguishment costs in the third quarter of 2018.

2019 Incremental Term Loan

On April 16, 2019, the Company successfully borrowed an additional $30.0 million pursuant to incremental term loans (the “2019 Incremental Term Loans”) under the Second Amendment to First Lien Credit Agreement (the “Second Amendment”). The proceeds of the 2019 Incremental Term Loans were used to replace the cash spent for acquisitions, pay related fees, expenses and related borrowings and for general corporate purposes.

The 2019 Incremental Term Loans will bear interest at a rate per annum that is the same as the Company’s Repricing Term Loans under the senior credit facility. The 2019 Incremental Term Loans will mature on July 12, 2023, the same maturity date as the Term Loans.

The Company may voluntarily repay the 2019 Incremental Term Loans at any time, without prepayment premium or penalty, subject to customary “breakage” costs with respect to LIBOR rate loans.

Other than as described above, the terms, conditions and covenants applicable to the 2019 Incremental Term Loans are consistent with the terms, conditions and covenants that are applicable to the Repricing Term Loans and 2018 Incremental Term Loans under the Credit Agreement and which are described in the registrant’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on July 18, 2017 and July 17, 2018. The Repricing and issuance of the 2018 and 2019 Incremental Term Loans resulted in a partial debt extinguishment, for which Exela recognized $1.4 million in debt extinguishment costs in the second quarter of 2019.

Long-Term Debt Outstanding

As of September 30, 2019 and December 31, 2018, the following long-term debt instruments were outstanding:


	September 30,		December 31,
	2019		2018
Other (a)	$	23,904	$	25,321
First lien credit agreement (b)		364,068		335,896
Senior secured notes (c)		977,848		974,443
Revolver		39,000		—
Total debt		1,404,820		1,335,660
Less: Current portion of long-term debt		(37,237)		(29,237)
Long-term debt, net of current maturities	$	1,367,583	$	1,306,423

(a)

Other debt represents the Company’s outstanding loan balances associated with various hardware and software purchases along with loans entered into by subsidiaries of the Company.

(b)

Net of unamortized original issue discount and debt issuance costs of $6.9 million and $20.1 million as of September 30, 2019 and $8.3 million and $24.5 million as of December 31, 2018.

(c)

Net of unamortized debt discount and debt issuance costs of $15.8 million and $6.3 million as of September 30, 2019 and $18.2 million and $7.3 million as of December 31, 2018.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2019
Income Taxes
Income Taxes	8. Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods, as required under GAAP. The Company recorded an income tax benefit of $3.8 million and $0.7 million for the three months ended September 30, 2019 and 2018, respectively. The Company recorded an income tax expense of $5.7 million and $4.9 million for the nine months ended September 30, 2019 and 2018, respectively. The Company's ETR of (2.7%) and (3.0%) for the three and nine months ended September 30, 2019 differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s deferred tax assets on U.S. disallowed interest expense carryforward’s created by the provisions of The Tax Cuts and Jobs Act (“TCJA”). For the three and nine months ended September 30, 2018, the Company’s ETR of 2.5% and (6.7%) differed from the expected U.S. statutory tax rate of 21.0%, and was primarily impacted by permanent tax adjustments, state and local current expense, foreign operations, and valuation allowances, including valuation allowances on a portion of the Company’s U.S. disallowed interest expense carryforward’s created by the provisions of the TCJA. As of September 30, 2019, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2018. The Company's valuation allowances have increased by approximately $28.8 million from December 31, 2018 to September 30, 2019 due largely to effects of TCJA relating to interest expense.

Employee Benefit Plans

9 Months Ended

Sep. 30, 2019

Employee Benefit Plans

Employee Benefit Plans

9. Employee Benefit Plans

German Pension Plan

The Company’s subsidiary in Germany provides pension benefits to certain retirees. Employees eligible for participation include all employees who started working for the Company or its predecessors prior to September 30, 1987 and have finished a qualifying period of at least 10 years. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan. The German pension plan is an unfunded plan and therefore has no plan assets.

U.K. Pension Plan

The Company’s subsidiary in the United Kingdom provides pension benefits to certain retirees and eligible dependents. Employees eligible for participation included all full-time regular employees who were more than three years from retirement prior to October 2001. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan.

Norway Pension Plan

The Company’s subsidiary in Norway provides pension benefits to eligible retirees and eligible dependents. Employees eligible for participation include all employees who were more than three years from retirement prior to March 2018. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. The Company uses a December 31 measurement date for this plan.

Asterion Pension Plan

The Company acquired certain pension benefit obligations to eligible retirees and eligible dependents in 2018 pursuant to the Asterion Business Combination. Employees eligible for participation included all full-time regular employees who were more than three years from retirement prior to July 2003. A retirement pension or a lump-sum payment may be paid dependent upon length of service at the mandatory retirement age. The Company accrues the cost of these benefits over the service lives of the covered employees based on an actuarial calculation. As there are no active employees for this plan there are no earned pension entitlements and actuarial assumptions are only measured when assumptions are changed.

Tax Effect on Accumulated Other Comprehensive Loss

As of September 30, 2019 and December 31, 2018 the Company recorded actuarial losses of $8.9 million and $9.3 million in accumulated other comprehensive loss on the condensed consolidated balance sheets, respectively, which are net of a deferred tax benefit of $1.7 million.

Pension Expense

The components of the net periodic benefit cost are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Service cost	$	23	$	27	$	68	$	56
Interest cost		592		569		1,777		1,686
Expected return on plan assets		(612)		(701)		(1,837)		(2,076)
Amortization:
Amortization of prior service cost		25		(34)		76		(102)
Amortization of net (gain) loss		406		433		1,218		1,294
Net periodic benefit cost	$	434	$	294	$	1,302	$	858

Upon adopting ASU no. 2017-07 as described in Note 2, the Company now records pension interest cost within Interest expense, net. Expected return on plan assets, amortization of prior service costs, and amortization of net losses are recorded within Other income, net. Service cost is recorded within Cost of revenue.

Employer Contributions

The Company’s funding of employer contributions is based on governmental requirements and differs from those methods used to recognize pension expense. The Company made contributions of $2.2 million and $2.3 million to its pension plans during the nine months ended September 30, 2019 and 2018, respectively. The Company has funded the pension plans with the required contributions for 2019 based on current plan provisions.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2019
Commitments and Contingencies
Commitments and Contingencies	10. Commitments and Contingencies Appraisal Demand On September 21, 2017, former stockholders of SourceHOV Holdings, Inc. (“SourceHOV”), who allege combined ownership of 10,304 shares of SourceHOV common stock, filed a petition for appraisal pursuant to 8 Del. C. § 262 in the Delaware Court of Chancery, captioned Manichaean Capital, LLC, et al. v. SourceHOV Holdings, Inc., C.A. No. 2017-0673-JRS (the "Appraisal Action"). The Appraisal Action arises out of the acquisition of SourceHOV and Novitex Holdings, Inc., by Quinpario in July 2017 (“Novitex Business Combination”), which gave rise to appraisal rights pursuant to 8 Del. C. § 262. In the Appraisal Action, the petitioners seek, among other things, a determination of the fair value of their SourceHOV shares at the time of the Novitex Business Combination. On October 12, 2017, SourceHOV filed its answer to the petition and a verified list pursuant to 8 Del. C. § 262(f). The Court conducted a trial in June 2019, the parties submitted post-trial briefs in August 2019, and final arguments were held in October 2019. The Court’s decision remains pending, but is expected by the end of January 2020. The parties and their experts have offered competing valuations of the SourceHOV shares as of the date of the Novitex Business Combination. SourceHOV argues the value was no more than $1,633.85 per share and the petitioners argue the value was at least $5,079.28 per share. Interest accrues on the value of the shares from the date of the Business Combination, resulting in a potential range of values based on the respective proposals of approximately $19.6 million to $61.0 million as of September 30, 2019. The Company believes the petitioners’ claims of value of the SourceHOV shares are without merit and will continue to defend its position vigorously. The Court may determine a fair value that is above or below the values indicated by the parties and their experts. At this stage of the litigation, the Company is unable to predict the outcome of the Appraisal Action or estimate what the Court will determine the fair value of SourceHOV common stock to be as of the date of the Novitex Business Combination. As a result of the Appraisal Action, 4,570,734 shares of our Common Stock issued to Ex-Sigma 2 LLC, our principal stockholder, will be forfeited at such time as the PIPE Financing (as defined in and pursuant to the terms of the Consent, Waiver and Amendment, dated June 15, 2017) is repaid.

Fair Value Measurement

9 Months Ended

Sep. 30, 2019

Fair Value Measurement

Fair Value Measurement

11. Fair Value Measurement

Assets and Liabilities Measured at Fair Value

The carrying amount of assets and liabilities including cash and cash equivalents, accounts receivable and accounts payable approximated their fair value as of September 30, 2019, and December 31, 2018, due to the relative short maturity of these instruments. Management estimates the fair values of the secured term loan and secured notes at approximately 59.5% and 55.0% respectively, of the respective principal balance outstanding as of September 30, 2019. The fair value is substantially less than the carrying value for the long-term debt. Other debt represents the Company's outstanding loan balances associated with various hardware and software purchases along with loans entered into by subsidiaries of the Company and as such, the cost incurred would approximate fair value. Property and equipment, intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value.

The Company determined the fair value of its long-term debt using Level 2 inputs including the recent issue of the debt, the Company’s credit rating, and the current risk-free rate. The Company’s contingent liabilities related to prior acquisitions are re-measured each period and represent a Level 2 measurement as it is based on using an earn out method based on the agreement terms.

The Company determined the fair value of the interest rate swap using Level 2 inputs. The Company uses closing prices as provided by a third party institution.

The following table provides the carrying amounts and estimated fair values of the Company’s financial instruments as of September 30, 2019, and December 31, 2018:


	Carrying		Fair		Fair Value Measurements
As of September 30, 2019	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,367,583	$	769,403	$	—	$	769,403	$	—
Interest rate swap liability		1,128		1,128		—		1,128		—
Acquisition contingent liability	$	721	$	721	$	—	$	—	$	721
Nonrecurring assets and liabilities:
Goodwill		609,458		609,458		—		—		609,458


	Carrying		Fair		Fair Value Measurements
As of December 31, 2018	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,306,423	$	1,316,306	$	—	$	1,316,306	$	—
Interest rate swap asset		3,836		3,836		—		3,836		—
Acquisition contingent liability	$	721	$	721	$	—	$	—	$	721
Nonrecurring assets and liabilities:
Goodwill		708,258		708,258		—		—		708,258

The significant unobservable inputs used in the fair value of the Company’s acquisition contingent liability are the discount rate, growth assumptions, and revenue thresholds. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement. For all significant unobservable inputs used in the fair value measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the other based on the current level of billings.

The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3 for which a reconciliation is required:


	September 30,		December 31,
	2019		2018
Balance as of Beginning of Period	$	721	$	721
Payments/Reductions		—		—
Balance as of End of Period	$	721	$	721

During the three months ended September 30, 2019, goodwill impairment charges totaling $98.7 million, including taxes, were recognized within our ITPS and LLPS segments (See Note 6).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Stock-Based Compensation

Stock-Based Compensation

12. Stock-Based Compensation

At closing of the Novitex Business Combination, SourceHOV had 24,535 restricted stock units (“RSUs”) outstanding under its 2013 Long Term Incentive Plan ("2013 Plan"). Simultaneous with the closing of the Novitex Business Combination, the 2013 Plan, as well as all vested and unvested RSUs under the 2013 Plan, were assumed by Ex-Sigma LLC (“Ex-Sigma”), an entity formed by the former SourceHOV equity holders, which is also indirectly the Company's principal stockholder. In accordance with GAAP, the Company continues to incur compensation expense related to the 9,880 unvested RSUs as of July 12, 2017 on a straight-line basis until fully vested, as the recipients of the RSUs are employees of the Company. Subject to continuous employment and other terms of the 2013 Plan, all remaining unvested RSUs with an initial vesting period of three or four years vested in April 2019. As of September 30, 2019, because all shares vested in April 2019, there are no nonvested shares related to the 2013 Plan.

Exela 2018 Stock Incentive Plan

On January 17, 2018, Exela’s 2018 Stock Incentive Plan (the “2018 Plan”) became effective. The 2018 Plan provides for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other stock-based compensation to eligible participants. The Company is authorized to issue up to 8,323,764 shares of Common Stock under the 2018 Plan.

Restricted Stock Unit Grants

Restricted stock unit awards generally vest ratably over a one to two year period. Restricted stock units are subject to forfeiture if employment terminates prior to vesting and are expensed ratably over the vesting period.

A summary of the status of restricted stock units related to the 2018 Plan as of September 30, 2019 is presented as follows:


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life	Aggregate
	of Shares	Date Fair Value		(Years)	Intrinsic Value
Balance as of December 31, 2018	893,297	$	5.86	0.76	$	5,239
Shares granted	268,607
Shares forfeited	(151,067)
Shares vested	(610,482)
Balance as of September 30, 2019	400,355	$	2.12	1.43	$	849

The majority of the RSUs that vested in the three months ended September 30, 2019 were net-share settled such that the Company withheld shares with value equivalent to the employee’s minimum statutory obligation for applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were 194,010 shares and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payment for the employee’s tax obligations to taxing authorities were $0.2 million and is reflected as a financing activity within the Condensed Consolidated Statements of Cash flows.

Options

Under the 2018 Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire 10 years from the grant date. Options granted under the 2018 Plan generally require no less than a two or four year ratable vesting period. Stock option activity in the first nine months of 2019 is summarized in the following table:


		Weighted		Average Remaining
		Average		Vesting Period	Aggregate
	Outstanding	Exercise Price		(Years)	Intrinsic Value
Balance as of December 31, 2018	3,570,300	$	6.06	2.92	$	9,590
Granted	2,050,600
Exercised	—
Forfeited	(618,200)
Expired	—
Balance as of September 30, 2019	5,002,700	$	4.13	2.74	$	9,864

As of September 30, 2019, there was approximately $7.5 million of total unrecognized compensation expense related to non-vested awards for the 2018 Plan, which will be recognized over the respective service period.

Stock-based compensation expense is recorded within Selling, general, and administrative expenses. The Company incurred total compensation expense of $1.4 million and $6.9 million related to plan awards for the three and nine months ended September 30, 2019 and $1.6 million and $4.5 million related to plan awards for the three and nine months ended September 30, 2018.

Stockholders’ Equity	9 Months Ended
Stockholders’ Equity	Sep. 30, 2019
Stockholders’ Equity
Stockholders’ Equity	13. Stockholders’ Equity The following description summarizes the material terms and provisions of the securities that the Company has authorized. Common Stock The Company is authorized to issue 1,600,000,000 shares of Common Stock. Except as otherwise required by law or as otherwise provided in any certificate of designation for any series of preferred stock, the holders of Common Stock possess all voting power for the election of Exela's directors and all other matters requiring stockholder action and will at all times vote together as one class on all matters submitted to a vote of Exela stockholders. Holders of Common Stock are entitled to one vote per share on matters to be voted on by stockholders. Holders of Common Stock will be entitled to receive such dividends and other distributions, if any, as may be declared from time to time by the board of directors in its discretion out of funds legally available therefor and shall share equally on a per share basis in such dividends and distributions. The holders of the Common Stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the Common Stock. In August 2019, 150,000 shares of Series A Preferred Stock were converted into 183,389 shares of Common Stock. As of September 30, 2019 and December 31, 2018, there were 153,486,011 and 152,692,140 shares of Common Stock issued, respectively. As of September 30, 2019 and December 31, 2018, there were 150,698,864 and 150,142,955 shares outstanding, respectively. Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. At September 30, 2019 and December 31, 2018, the Company had 4,419,233 shares and 4,569,233 shares of Series A Preferred Stock outstanding, respectively. The par value of Series A Preferred Stock is $0.0001 per share. Each share of Series A Preferred Stock will be convertible at the holder's option, at any time after the six-month anniversary and prior to the third anniversary of the issue date, initially into 1.2226 shares of Common Stock. Holders of the Series A Preferred Stock will be entitled to receive cumulative dividends at a rate per annum of 10% of the Liquidation Preference per share of Series A Preferred Stock, paid or accrued quarterly in arrears. From the issue date until the third anniversary of the issue date, the amount of all accrued but unpaid dividends on the Series A Preferred Stock will be added to the Liquidation Preference without any action by the Company’s board of directors. For the three months ended September 30, 2019 and 2018 this amount was $0.9 million as reflected on the Consolidated Statement of Operations. For the nine months ended September 30, 2019 and 2018 this amount was $2.7 million as reflected on the Consolidated Statement of Operations. The cumulative accrued but unpaid dividends of the Series A Preferred Stock since their inception on July 12, 2017 is $8.9 million. The per share averages of cumulative preferred dividends for the three and nine months ended September 30, 2019 and 2018 are $0.2. Following the third anniversary of the issue date, dividends on the Series A Preferred Stock will be accrued by adding to the Liquidation Preference or paid in cash, or a combination thereof. In addition, holders of the Series A Preferred Stock will participate in any dividend or distribution of cash or other property paid in respect of the Common Stock pro rata with the holders of the Common Stock (other than certain dividends or distributions that trigger an adjustment to the conversion rate, as described in the Certificate of Designations), as if all shares of Series A Preferred Stock had been converted into Common Stock immediately prior to the date on which such holders of the Common Stock became entitled to such dividend or distribution. Treasury Stock On November 8, 2017, the Company's board of directors authorized a share buyback program (the "Share Buyback Program"), pursuant to which the Company was authorized to purchase, from time to time, up to 5,000,000 shares of its Common Stock through various means, including, open market transactions and privately negotiated transactions. The decision as to whether to purchase any shares and the timing of purchases was based on the price of the Company's Common Stock, general business and market conditions and other investment considerations and factors. The Share Buyback Program did not obligate the Company to purchase any shares and has expired. The Company purchased 237,962 shares during the nine months ended September 30, 2019 under the Share Buyback Program. No shares were repurchased during the three months ended September 30, 2019. As of September 30, 2019, a total of 2,787,147 shares had been repurchased under the Share Buyback Program and are held in treasury stock. The Company records treasury stock using the cost method. Warrants At September 30, 2019 there were 34,988,302 warrants outstanding. As part of its IPO, Quinpario had issued 35,000,000 units including one share of common stock and one warrant of which 34,988,302 have been separated from the original unit and 11,698 warrants remain an unseparated part of the originally issued units. The warrants are traded on the OTC Bulletin Board as of September 30, 2019. Each warrant entitles the holder to purchase one-half of one share of Common Stock at a price of $5.75 per half share ($11.50 per whole share). Warrants may be exercised only for a whole number of shares of Common Stock. No fractional shares will be issued upon exercise of the warrants. Each warrant is currently exercisable and will expire July 12, 2022 (five years after the completion of the Novitex Business Combination), or earlier upon redemption. The Company may call the warrants for redemption at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, if, and only if, the last sales price of shares of Common Stock equals or exceeds $24.00 per share for any 20 trading days within a 30 trading day period (the “30-day trading period”) ending three business days before we send the notice of redemption, and if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption.

Related-Party Transactions

9 Months Ended

Sep. 30, 2019

Related-Party Transactions

Related-Party Transactions

14. Related-Party Transactions

Operating Facility Leases

Certain operating companies lease their operating facilities from HOV RE, LLC and HOV Services Limited, which are affiliates under common control with Ex-Sigma. The rental expense for these operating leases was $0.1 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively, and $0.3 million and $0.5 million for the nine months ended September 30, 2019 and 2018, respectively.

Consulting Agreement

The Company receives services from Oakana Holdings, Inc. The Company and Oakana Holdings, Inc. are related through a family relationship between certain shareholders and the president of Oakana Holdings, Inc. The expense recognized for these services was $0.1 million for the three months ended September 30, 2019 and 2018, respectively. The expense recognized for these services was $0.1 million for the nine months ended September 30, 2019 and 2018, respectively.

The Company received consulting services from Shadow Pond, LLC. Shadow Pond, LLC is wholly owned and controlled by Vik Negi, our Executive Vice President Treasury and Business Affairs. The consulting arrangement was established to compensate Mr. Negi for his services to the Company prior to becoming an employee. The expense recognized for these services was $0.1 million for the nine months ended September 30, 2018. This consulting arrangement with Shadow Pond, LLC terminated on April 1, 2018 and Mr. Negi continues to provide services as an employee of the Company. As such, there were no additional expenses for the three months ended September 30, 2018 and for the three and nine months ended September 30, 2019.

Relationship with HandsOn Global Management

Pursuant to a master agreement dated January 1, 2015 between Rule 14, LLC and a subsidiary of the Company, the Company incurs marketing fees to Rule 14, LLC, a portfolio company of HandsOn Fund 4 I, LLC (“HGM”). Similarly, the Company is party to ten master agreements with entities affiliated with HGM's managed funds, each of which were entered into during 2015 and 2016. Each master agreement provides the Company with free use of certain technology and includes a reseller arrangement pursuant to which the Company is entitled to sell these services to third parties. Any revenue earned by the Company in such third-party sale is shared 75%/25% with each of HGM's venture affiliates in favor of the Company. The brands Zuma, Athena, Peri, BancMate, Spring, Jet, Teletype, CourtQ and Rewardio are part of the HGM managed funds. The Company has the license to use and resell such brands, as described therein. The fee relating to these agreements was $0.2 million for the three months ended September 30, 2019 and 2018, respectively. The Company incurred fees relating to these agreements of $0.3 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively.

Relationship with HOV Services, Ltd.

HOV Services, Ltd. provides the Company data capture and technology services. HOV Services, Ltd is an indirect equity holder of Ex-Sigma. The expense recognized for these services was $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $1.1 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively. These expenses are included in cost of revenue in the consolidated statements of operations.

Relationship with Apollo Global Management, LLC

The Company provides services to and receives services from certain Apollo Global Management, LLC (“Apollo”) affiliated companies. Funds managed by Apollo have the right to designate two of the Company’s directors. On November 18, 2014, one of the Company's subsidiaries entered into a master services agreement with an indirect wholly owned subsidiary of Apollo. Pursuant to this master services agreement, the Company provides printer supplies and maintenance services, including toner maintenance, training, quarterly business review and printer procurement. The Company recognized revenue of $0.1 million in our consolidated statements of operations from Apollo affiliated companies under this agreement for the three months ended September 30, 2019 and 2018, respectively. The company recognized revenue of $0.4 million and $0.5 million for the nine months ended September 30, 2019 and 2018, respectively, in our consolidated statements of operations from Apollo affiliated companies under this agreement.

On January 18, 2017, one of the Company’s subsidiaries entered into a master purchase and professional services agreement with Caesars Enterprise Services, LLC ("Caesars"). Caesars is controlled by investment funds affiliated with Apollo. Pursuant to this master purchase and professional services agreement, the Company provides managed print services to Caesars, including general equipment operation, supply management, support services and technical support. The Company recognized revenue of approximately $1.1 million in our consolidated statements of operations from Caesars under this master purchase and professional services agreement for the three months ended September, 2019 and 2018, respectively. The Company recognized revenue of approximately $3.3 million and $3.1 million in our consolidated statements of operations from Caesars under this master purchase and professional services agreement for the nine months ended September 30, 2019 and 2018, respectively.

On May 5, 2017, one of the Company’s subsidiaries entered into a master services agreement with ADT LLC. ADT LLC is controlled by investment funds affiliated with Apollo. Pursuant to this master services agreement, the Company provides ADT LLC with mailroom and onsite mail delivery services at an ADT LLC office location and managed print services, including supply management, equipment maintenance and technical support services. The Company recognized revenue of $0.3 million and $0.2 million in our consolidated statements of operations from ADT LLC under this master services agreement for the three months ended September 30, 2019 and 2018, respectively. The Company recognized revenue of $0.9 million and $0.4 million in our consolidated statements of operations from ADT LLC under this master services agreement for the nine months ended September 30, 2019 and 2018, respectively.

On July 20, 2017, one of the Company’s subsidiaries entered into a master services agreement with Diamond Resorts Centralized Services Company. Diamond Resorts Centralized Services Company is controlled by investment funds affiliated with Apollo. Pursuant to this master services agreement, the Company provides commercial print and promotional product procurement services to Diamond Resorts Centralized Services Company, including sourcing, inventory management and fulfillment services. The Company recognized revenue of $1.4 million and $0.7 million for the three months ended September 30, 2019 and 2018, respectively, from Diamond Resorts Centralized Services Company under this master services agreement. The Company recognized revenue of $4.0 million and $4.9 million for the nine months ended September 30, 2019 and 2018, respectively, and related party expense of $0.1 million for the nine months ended September 30, 2019 and 2018, respectively, from Diamond Resorts Centralized Services Company under this master services agreement.

In April 2016, one of the Company’s subsidiaries entered into a master services agreement with Presidio Networked Solutions Group, LLC ("Presidio Group"), a wholly owned subsidiary of Presidio, Inc., a portion of which is owned by affiliates of Apollo. Pursuant to this master services agreement, Presidio Group provides the Company with employees, subcontractors, and/or goods and services. For the three months ended September 30, 2019 and 2018 there were related party expenses of $0.4 million and $0.2 million, respectively, for this service. For the nine months ended September 30, 2019 and 2018 there were related party expenses of $0.7 million and $0.5 million, respectively, for this service.

In June 2019, one of the Company’s subsidiaries entered into a master lease agreement with Presidio Technology Capital, LLC ("Presidio Capital"), a wholly owned subsidiary of Presidio, Inc., a portion of which is owned by affiliates of Apollo. Pursuant to this master lease agreement, Presidio Capital provides the Company certain equipment on finance lease. The Company recorded a finance lease liability of $1.0 million for this lease. As of September 30, 2019 total finance lease liability of the Company included $1.0 million pertaining to this lease.

Payable and Receivable Balances with Affiliates

Payable and receivable balances with affiliates as of September 30, 2019 and December 31, 2018 are as follows below. As of December 31, 2018 there were no related party receivables.


	September 30,				December 31,
	2019				2018
	Receivable		Payable		Payable
HOV Services, Ltd	$	—	$	23	$	405
Rule 14		—		198		127
HGM		42		—		6,998
Apollo affiliated company		—		53		205
	$	42	$	274	$	7,735

Segment Information

9 Months Ended

Sep. 30, 2019

Segment Information

Segment Information

15. Segment and Geographic Area Information

ITPS: The ITPS segment provides a wide range of solutions and services designed to aid businesses in information capture, processing, decisioning and distribution to customers primarily in the financial services, commercial, public sector and legal industries.

HS: The HS segment operates and maintains a consulting and outsourcing business specializing in both the healthcare provider and payer markets.

LLPS: The LLPS segment provides a broad and active array of legal services in connection with class action, bankruptcy labor, claims adjudication and employment and other legal matters.

The chief operating decision maker reviews operating segment revenue and cost of revenue. The Company does not allocate Selling, general, and administrative expenses, depreciation and amortization, interest expense and sundry, net. The Company manages assets on a total company basis, not by operating segment, and therefore asset information and capital expenditures by operating segments are not presented.


	Three months ended September 30, 2019
	ITPS		HS		LLPS		Total
Revenue	$	291,979	$	62,132	$	18,806	$	372,917
Cost of revenue		239,388		40,973		10,861		291,222
Selling, general and administrative expenses								50,372
Depreciation and amortization								27,114
Impairment of goodwill and other intangible assets								99,682
Related party expense								1,405
Interest expense, net								39,747
Debt modification and extinguishment costs								—
Sundry income, net								(10)
Other expense, net								581
Net loss before income taxes							$	(137,196)


	Three months ended September 30, 2018
	ITPS		HS		LLPS		Total
Revenue	$	307,313	$	56,776	$	18,941	$	383,030
Cost of revenue		246,492		36,919		12,525		295,936
Selling, general and administrative expenses								44,913
Depreciation and amortization								35,041
Related party expense								759
Interest expense, net								38,339
Debt modification and extinguishment costs								1,067
Sundry income, net								(2,571)
Other income, net								(781)
Net loss before income taxes							$	(29,673)


		Nine months ended September 30, 2019
	ITPS		HS		LLPS		Total
Revenue	$	925,709	$	186,915	$	54,217	$	1,166,841
Cost of revenue		743,557		119,816		32,737		896,110
Selling, general and administrative expenses								151,884
Depreciation and amortization								82,326
Impairment of goodwill and other intangible assets								99,682
Related party expense								3,454
Interest expense, net								117,778
Debt modification and extinguishment costs								1,404
Sundry expense, net								1,028
Other expense, net								4,965
Net loss before income taxes							$	(191,790)


		Nine months ended September 30, 2018
	ITPS		HS		LLPS		Total
Revenue	$	949,381	$	171,722	$	65,476	$	1,186,579
Cost of revenue		752,796		111,135		39,751		903,682
Selling, general and administrative expenses								137,231
Depreciation and amortization								109,428
Related party expense								3,267
Interest expense, net								114,883
Debt modification and extinguishment costs								1,067
Sundry income, net								(4,961)
Other income, net								(4,813)
Net loss before income taxes							$	(73,205)

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Significant Accounting Policies

Revenue Recognition

Nature of Services

Disaggregation of Revenues

The following tables disaggregate revenue from contracts by geographic region and by segment for the three and nine months ended September 30, 2019 and 2018:


	Three Months Ended September 30,
	2019						2018
		ITPS		HS		LLPS		ITPS		HS		LLPS
United States	$	229,492	$	62,132	$	18,806	$	248,055	$	56,776	$	18,941
Europe		55,836		—		—		52,602		—		—
Other		6,651		—		—		6,656		—		—
Total	$	291,979	$	62,132	$	18,806	$	307,313	$	56,776	$	18,941


	Nine Months Ended September 30,
	2019						2018
		ITPS		HS		LLPS		ITPS		HS		LLPS
United States	$	718,936	$	186,915	$	54,217	$	782,870	$	171,722	$	65,476
Europe		186,337		—		—		146,242		—		—
Other		20,436		—		—		20,269		—		—
Total	$	925,709	$	186,915	$	54,217	$	949,381	$	171,722	$	65,476

Contract Balances

The following table presents contract assets and contract liabilities recognized at September 30, 2019 and December 31, 2018:


	September 30,		December 31,
	2019		2018
Accounts receivable, net	$	260,438	$	270,812
Deferred revenues		17,782		16,940
Costs to obtain and fulfill a contract		24,212		18,624
Customer deposits		30,161		34,235

Performance Obligations

We include reimbursements from customers, such as postage costs, in revenue, while the related costs are included in cost of revenue.

Transaction Price Allocated to the Remaining Performance Obligations


Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations

Remainder of 2019	$	17,335
2020		52,951
2021		42,443
2022		31,951
2023		27,775
2024 and thereafter		54,159
Total	$	226,614

General (Tables)

9 Months Ended

Sep. 30, 2019

General

Schedule of components of basic and diluted EPS


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net loss attributable to common stockholders (A)	$	(134,311)	$	(29,854)	$	(200,191)	$	(80,858)
Weighted average common shares outstanding - basic and diluted (B)		150,207,483		151,663,670		150,140,577		152,010,290
Loss Per Share:
Basic and diluted (A/B)	$	(0.89)	$	(0.20)	$	(1.33)	$	(0.53)

Business Combinations (Tables) - Asterion

9 Months Ended

Sep. 30, 2019

Business Combinations and Acquisitions

Schedule of consideration paid and the preliminary fair value of the assets acquired and liabilities assumed


Assets Acquired:
Cash and cash equivalents	$	5,595
Accounts receivable		25,740
Other current assets		2,282
Inventories, net		1,137
Property, plant, and equipment, net		4,747
Deferred income tax assets		6,316
Other noncurrent assets		522
Intangible assets, net		3,525
Goodwill		1,493
Total identifiable assets acquired	$	51,357
Liabilities Assumed:
Accounts payable	$	(5,596)
Income tax payable		(5)
Accrued liabilities		(6,593)
Accrued compensation and benefits		(7,079)
Deferred revenue		(880)
Current portion of long term debt		(994)
Customer deposits		(462)
Pension liabilities		(7,135)
Other long-term liabilities		(1,324)
Deferred income tax liabilities		(1,171)
Capital lease obligations, net of current maturities		(650)
Total liabilities assumed	$	(31,889)
Total Consideration	$	19,468

Schedule of identifiable intangible assets


	Weighted Average
	Useful Life (in years)	Fair Value
Customer Relationships	9.5	$	3,516

Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Significant Accounting Policies

Schedule of disaggregates revenue from contracts by geographic region and by segment


	Three Months Ended September 30,
	2019						2018
		ITPS		HS		LLPS		ITPS		HS		LLPS
United States	$	229,492	$	62,132	$	18,806	$	248,055	$	56,776	$	18,941
Europe		55,836		—		—		52,602		—		—
Other		6,651		—		—		6,656		—		—
Total	$	291,979	$	62,132	$	18,806	$	307,313	$	56,776	$	18,941


	Nine Months Ended September 30,
	2019						2018
		ITPS		HS		LLPS		ITPS		HS		LLPS
United States	$	718,936	$	186,915	$	54,217	$	782,870	$	171,722	$	65,476
Europe		186,337		—		—		146,242		—		—
Other		20,436		—		—		20,269		—		—
Total	$	925,709	$	186,915	$	54,217	$	949,381	$	171,722	$	65,476

Schedule of contract balances


	September 30,		December 31,
	2019		2018
Accounts receivable, net	$	260,438	$	270,812
Deferred revenues		17,782		16,940
Costs to obtain and fulfill a contract		24,212		18,624
Customer deposits		30,161		34,235

Schedule of estimated remaining fixed consideration for unsatisfied performance obligations


Estimated Remaining Fixed Consideration for Unsatisfied Performance Obligations

Remainder of 2019	$	17,335
2020		52,951
2021		42,443
2022		31,951
2023		27,775
2024 and thereafter		54,159
Total	$	226,614

Leases (Tables)

9 Months Ended

Sep. 30, 2019

Lessee, Lease, Description [Line Items]

Schedule of balance sheet location


	September 30,
	2019
Balance sheet location:
Operating Lease
Operating lease right-of-use assets, net	$	93,352
Current portion of operating lease liabilities		26,604
Operating lease liabilities, net of current portion		71,661
Finance Lease
Finance lease right-of-use assets, net (included in property, plant and equipment, net)		28,394
Current portion of finance lease liabilities		15,172
Finance lease liabilities, net of current portion		24,159

Schedule of maturities of operating lease liabilities



	Finance		Operating
	Leases		Leases
Remainder of 2019	$	6,554	$	8,469
2020		14,931		24,803
2021		11,587		19,707
2022		5,470		15,651
2023		2,847		11,721
2024 and thereafter		4,120		23,244
Total lease payments		45,509		103,595
Less: Imputed interest		6,178		5,380
Present value of lease liabilities	$	39,331	$	98,265

Schedule of maturities of finance lease liabilities

The following table summarizes maturities of finance and operating lease liabilities based on lease term as of September 30, 2019:



	Finance		Operating
	Leases		Leases
Remainder of 2019	$	6,554	$	8,469
2020		14,931		24,803
2021		11,587		19,707
2022		5,470		15,651
2023		2,847		11,721
2024 and thereafter		4,120		23,244
Total lease payments		45,509		103,595
Less: Imputed interest		6,178		5,380
Present value of lease liabilities	$	39,331	$	98,265

Schedule of future minimum payments due under non‐cancelable leases under ASC 840


		Finance	Operating
		Leases	Leases
2019	$	20,080	$	38,057
2020		11,851		29,346
2021		9,018		22,239
2022		4,169		16,782
2023		2,244		12,302
2024 and thereafter		3,617		18,874
Total minimum lease payments	$	50,979	$	137,600
Less: imputed interest		6,743
Total net minimum lease payments		44,236
Less: Current portion of obligations under finance leases		17,498
Long-term portion of obligations under finance leases	$	26,738

Schedule of cash paid and lease recognition



		Nine Months Ended
		September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	28,831
Financing cash flows from finance leases		13,598
Right-of-use lease assets obtained in the exchange for lease liabilities:
Operating leases		3,894
Finance leases		9,352

ASU 2016-02

Lessee, Lease, Description [Line Items]

Schedule of new accounting standard adoption


	Balance at				Balance at
	December 31,		Impact of		January 1,
	2018		Lease Standard		2019
Total assets	$	1,639,782	$	102,651	$	1,742,433
Total current liabilities		432,722		25,304		458,026
Total long-term liabilities		1,820,788		79,703		1,900,491

Intangibles Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2019

Intangibles Assets and Goodwill

Schedule of intangible assets


	September 30, 2019
	Gross Carrying				Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,901	$	(226,123)	$	281,778
Developed technology		89,053		(86,966)		2,087
Trade names (b)		8,400		(3,100)		5,300
Outsource contract costs		60,514		(36,303)		24,212
Internally developed software		41,971		(9,956)		32,015
Trademarks		23,378		(23,370)		8
Non compete agreements		1,350		(1,350)		—
Assembled workforce		4,473		(839)		3,634
Purchased software		26,749		(1,337)		25,412
Intangibles, net	$	763,789	$	(389,344)	$	374,445


	December 31, 2018
	Gross Carrying				Intangible
	Amount (a)		Amortization		Asset, net
Customer relationships	$	507,905	$	(190,666)	$	317,239
Developed technology		89,053		(85,967)		3,086
Trade names (c)		9,400		(3,100)		6,300
Outsource contract costs		46,342		(27,719)		18,623
Internally developed software		36,820		(6,278)		30,542
Trademarks		23,379		(23,370)		9
Non compete agreements		1,350		(1,350)		—
Assembled workforce		4,473		—		4,473
Purchased software		26,749		—		26,749
Intangibles, net	$	745,471	$	(338,450)	$	407,021

(a)

Amounts include intangible assets acquired in business combinations and asset acquisitions.

(b)

The carrying amount of trade names for September 30, 2019 is net of accumulated impairment losses of $44.1 million, of which $1.0 million was recognized in the nine months ended September 30, 2019.

(c)

The carrying amount of trade names for 2018 is net of accumulated impairment losses of $43.1 million, of which $3.7 million was recognized in 2018.

Schedule of goodwill by reporting segment


										Currency
										Translation
	Goodwill			Additions			Reductions			Adjustments		Goodwill (a)
ITPS	$	566,215	$	5,580	(c)	$	—		$	(220)	$	571,575
HS		86,786		—			—			—		86,786
LLPS		94,324		—			(44,427)	(b)		—		49,897
Balance as of December 31, 2018	$	747,325	$	5,580		$	(44,427)		$	(220)	$	708,258
ITPS		571,575		—			(90,361)	(d)		(118)		481,096
HS		86,786		—			—			—		86,786
LLPS		49,897		—			(8,321)	(e)		—		41,576
Balance as of September 30, 2019	$	708,258	$	—		$	(98,682)		$	(118)	$	609,458

(a)

The goodwill amount for all periods presented is net of accumulated impairment losses of $167.9 million.

(b)

The reduction in goodwill is due to $44.4 million, including taxes, for impairment recorded in the fourth quarter of 2018.

(c)

Addition to goodwill due to the acquisition of Asterion and immaterial acquisitions in the third and fourth quarters of 2018.

(d)

The reduction in goodwill is due to $90.4 million, including taxes, for impairment recorded in the third quarter of 2019.

(e)

The reduction in goodwill is due to $8.3 million, including taxes, for impairment recorded in the third quarter of 2019.

Long-Term Debt and Credit Facilities (Tables)

9 Months Ended

Sep. 30, 2019

Long-Term Debt and Credit Facilities

Schedule of outstanding long-term debt instruments


	September 30,		December 31,
	2019		2018
Other (a)	$	23,904	$	25,321
First lien credit agreement (b)		364,068		335,896
Senior secured notes (c)		977,848		974,443
Revolver		39,000		—
Total debt		1,404,820		1,335,660
Less: Current portion of long-term debt		(37,237)		(29,237)
Long-term debt, net of current maturities	$	1,367,583	$	1,306,423

(a)

Other debt represents the Company’s outstanding loan balances associated with various hardware and software purchases along with loans entered into by subsidiaries of the Company.

(b)

Net of unamortized original issue discount and debt issuance costs of $6.9 million and $20.1 million as of September 30, 2019 and $8.3 million and $24.5 million as of December 31, 2018.

(c)

Net of unamortized debt discount and debt issuance costs of $15.8 million and $6.3 million as of September 30, 2019 and $18.2 million and $7.3 million as of December 31, 2018.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2019

Employee Benefit Plans

Schedule of components of the net periodic benefit cost


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Service cost	$	23	$	27	$	68	$	56
Interest cost		592		569		1,777		1,686
Expected return on plan assets		(612)		(701)		(1,837)		(2,076)
Amortization:
Amortization of prior service cost		25		(34)		76		(102)
Amortization of net (gain) loss		406		433		1,218		1,294
Net periodic benefit cost	$	434	$	294	$	1,302	$	858

Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Measurement

Schedule of fair value of financial instruments


	Carrying		Fair		Fair Value Measurements
As of September 30, 2019	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,367,583	$	769,403	$	—	$	769,403	$	—
Interest rate swap liability		1,128		1,128		—		1,128		—
Acquisition contingent liability	$	721	$	721	$	—	$	—	$	721
Nonrecurring assets and liabilities:
Goodwill		609,458		609,458		—		—		609,458


	Carrying		Fair		Fair Value Measurements
As of December 31, 2018	Amount		Value		Level 1		Level 2		Level 3
Recurring assets and liabilities:
Long-term debt	$	1,306,423	$	1,316,306	$	—	$	1,316,306	$	—
Interest rate swap asset		3,836		3,836		—		3,836		—
Acquisition contingent liability	$	721	$	721	$	—	$	—	$	721
Nonrecurring assets and liabilities:
Goodwill		708,258		708,258		—		—		708,258

Schedule of net assets and liabilities classified as Level 3 for reconciliation


	September 30,		December 31,
	2019		2018
Balance as of Beginning of Period	$	721	$	721
Payments/Reductions		—		—
Balance as of End of Period	$	721	$	721

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Stock-Based Compensation

Summary of the status of restricted stock units


				Average
		Weighted		Remaining
	Number	Average Grant		Contractual Life	Aggregate
	of Shares	Date Fair Value		(Years)	Intrinsic Value
Balance as of December 31, 2018	893,297	$	5.86	0.76	$	5,239
Shares granted	268,607
Shares forfeited	(151,067)
Shares vested	(610,482)
Balance as of September 30, 2019	400,355	$	2.12	1.43	$	849

Schedule of stock option activity


		Weighted		Average Remaining
		Average		Vesting Period	Aggregate
	Outstanding	Exercise Price		(Years)	Intrinsic Value
Balance as of December 31, 2018	3,570,300	$	6.06	2.92	$	9,590
Granted	2,050,600
Exercised	—
Forfeited	(618,200)
Expired	—
Balance as of September 30, 2019	5,002,700	$	4.13	2.74	$	9,864

Related-Party Transactions (Tables)

9 Months Ended

Sep. 30, 2019

Related-Party Transactions

Schedule of payable and receivable balances with affiliates


	September 30,				December 31,
	2019				2018
	Receivable		Payable		Payable
HOV Services, Ltd	$	—	$	23	$	405
Rule 14		—		198		127
HGM		42		—		6,998
Apollo affiliated company		—		53		205
	$	42	$	274	$	7,735

Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Segment Information

Schedule of revenue by segment information


	Three months ended September 30, 2019
	ITPS		HS		LLPS		Total
Revenue	$	291,979	$	62,132	$	18,806	$	372,917
Cost of revenue		239,388		40,973		10,861		291,222
Selling, general and administrative expenses								50,372
Depreciation and amortization								27,114
Impairment of goodwill and other intangible assets								99,682
Related party expense								1,405
Interest expense, net								39,747
Debt modification and extinguishment costs								—
Sundry income, net								(10)
Other expense, net								581
Net loss before income taxes							$	(137,196)


	Three months ended September 30, 2018
	ITPS		HS		LLPS		Total
Revenue	$	307,313	$	56,776	$	18,941	$	383,030
Cost of revenue		246,492		36,919		12,525		295,936
Selling, general and administrative expenses								44,913
Depreciation and amortization								35,041
Related party expense								759
Interest expense, net								38,339
Debt modification and extinguishment costs								1,067
Sundry income, net								(2,571)
Other income, net								(781)
Net loss before income taxes							$	(29,673)


		Nine months ended September 30, 2019
	ITPS		HS		LLPS		Total
Revenue	$	925,709	$	186,915	$	54,217	$	1,166,841
Cost of revenue		743,557		119,816		32,737		896,110
Selling, general and administrative expenses								151,884
Depreciation and amortization								82,326
Impairment of goodwill and other intangible assets								99,682
Related party expense								3,454
Interest expense, net								117,778
Debt modification and extinguishment costs								1,404
Sundry expense, net								1,028
Other expense, net								4,965
Net loss before income taxes							$	(191,790)


		Nine months ended September 30, 2018
	ITPS		HS		LLPS		Total
Revenue	$	949,381	$	171,722	$	65,476	$	1,186,579
Cost of revenue		752,796		111,135		39,751		903,682
Selling, general and administrative expenses								137,231
Depreciation and amortization								109,428
Related party expense								3,267
Interest expense, net								114,883
Debt modification and extinguishment costs								1,067
Sundry income, net								(4,961)
Other income, net								(4,813)
Net loss before income taxes							$	(73,205)

General - Net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 12, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Net loss per share
Common stock, par value (in dollars per share)		$ 0.0001		$ 0.0001		$ 0.0001
Net loss attributable to common stockholders		$ (134,311)	$ (29,854)	$ (200,191)	$ (80,858)
Weighted average common shares outstanding - basic and diluted		150,207,483	151,663,670	150,140,577	152,010,290
Loss per share - Basic and diluted		$ (0.89)	$ (0.20)	$ (1.33)	$ (0.53)
Series A Preferred Stock
Net loss per share
Number of anti-dilutive shares excluded from computation of diluted loss per share				5,402,954
Warrants
Net loss per share
Number of anti-dilutive shares excluded from computation of diluted loss per share	35,000,000

New Accounting Pronouncements - Recently Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Jan. 01, 2019	Sep. 30, 2019	Sep. 30, 2019
ASU 2016-02
Recently Adopted Accounting Pronouncements
Accounting Standards Update adopted	true
ASU transition method	Modified Retrospective
ASU adoption, prior periods not restated		true	true
Lease, Practical Expedients, Package [true false]	true
ASU 2017-11
Recently Adopted Accounting Pronouncements
Accounting Standards Update adopted	true
Impact of adoption on financial statements		$ 0	$ 0
ASU 2017-12
Recently Adopted Accounting Pronouncements
Accounting Standards Update adopted	true
Impact of adoption on financial statements		0	0
ASU 2018-02
Recently Adopted Accounting Pronouncements
Accounting Standards Update adopted	true
Impact of adoption on financial statements		0	0
ASU 2018-07
Recently Adopted Accounting Pronouncements
Accounting Standards Update adopted	true
Impact of adoption on financial statements		$ 0	$ 0

Business Combinations - Asterion (Details) - USD ($) $ in Thousands	Apr. 10, 2018	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Assets Acquired:
Goodwill		$ 609,458	$ 708,258	$ 747,325
Asterion
Business Combinations and Acquisitions
Purchase price	$ 19,500
Assets Acquired:
Cash and cash equivalents	5,595
Accounts receivable	25,740
Other current assets	2,282
Inventories, net	1,137
Property, plant, and equipment, net	4,747
Deferred income tax assets	6,316
Other noncurrent assets	522
Intangible assets, net	3,525
Goodwill	1,493
Total identifiable assets acquired	51,357
Liabilities Assumed:
Accounts payable	(5,596)
Income tax payable	(5)
Accrued liabilities	(6,593)
Accrued compensation and benefits	(7,079)
Deferred revenue	(880)
Current portion of long term debt	(994)
Customer deposits	(462)
Pension liabilities	(7,135)
Other long-term liabilities	(1,324)
Deferred income tax liabilities	(1,171)
Capital lease obligations, net of current maturities	(650)
Total liabilities assumed	(31,889)
Total Consideration	$ 19,468

Business Combinations - Intangible Assets - Asterion (Details) - Asterion - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
	Apr. 10, 2018	Sep. 30, 2019	Sep. 30, 2019
Intangible Assets
Revenue since acquisition date		$ 17,000	$ 56,800
Customer relationships
Intangible Assets
Weighted Average Useful Life (in years)	9 years 6 months
Fair value	$ 3,516

Significant Accounting Policies - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenues
Revenue	$ 372,917	$ 383,030	$ 1,166,841	$ 1,186,579
ITPS
Disaggregation of Revenues
Revenue	291,979	307,313	925,709	949,381
ITPS \| United States
Disaggregation of Revenues
Revenue	229,492	248,055	718,936	782,870
ITPS \| Europe
Disaggregation of Revenues
Revenue	55,836	52,602	186,337	146,242
ITPS \| Other
Disaggregation of Revenues
Revenue	6,651	6,656	20,436	20,269
HS
Disaggregation of Revenues
Revenue	62,132	56,776	186,915	171,722
HS \| United States
Disaggregation of Revenues
Revenue	62,132	56,776	186,915	171,722
LLPS
Disaggregation of Revenues
Revenue	18,806	18,941	54,217	65,476
LLPS \| United States
Disaggregation of Revenues
Revenue	$ 18,806	$ 18,941	$ 54,217	$ 65,476

Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Significant Accounting Policies
Accounts receivable, net	$ 260,438	$ 270,812
Deferred revenues	17,782	16,940
Costs to obtain and fulfill a contract	24,212	18,624
Customer deposits	30,161	34,235
Unbilled receivables, net	37,600	$ 39,500
Revenue recognized from deferred revenue	12,800
Amortization of contract costs	$ 8,400
Practical expedient on incremental costs of obtaining contracts	true

Significant Accounting Policies - Performance Obligations (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)
Significant Accounting Policies
Contracts with an original expected length	true
Remainder of 2019	$ 17,335
2020	52,951
2021	42,443
2022	31,951
2023	27,775
2024 and thereafter	54,159
Total	$ 226,614

Leases - Restated (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
Leases - Restated (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Total assets	$ 1,541,507	$ 1,541,507	$ 1,742,433	$ 1,639,782
Total current liabilities	401,313	401,313	458,026	432,722
Total long-term liabilities	$ 1,914,818	$ 1,914,818	1,900,491	$ 1,820,788
ASU 2016-02
Lessee, Lease, Description [Line Items]
ASU adoption, prior periods not restated	true	true
ASU 2016-02 \| Adjustment
Lessee, Lease, Description [Line Items]
Total assets			102,651
Total current liabilities			25,304
Total long-term liabilities			$ 79,703

Leases - Option to Extend or Terminate (Details)	9 Months Ended
Leases - Option to Extend or Terminate (Details)	Sep. 30, 2019
Leases
Options to extend - operating lease	true
Options to extend - finance lease	true
Options to terminate - operating lease	true
Options to terminate - finance lease	true

Leases - Balance Sheet Location (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases
Operating lease right-of-use assets, net	$ 93,352
Current portion of operating lease liabilities	26,604
Operating lease liabilities, net of current portion	71,661
Finance Lease
Finance lease right-of-use asset, net	$ 28,394
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us_gaap:PropertyPlantAndEquipment
Current portion of finance lease liabilities	$ 15,172
Finance lease liabilities, net of current portion	$ 24,159

Leases - Other Information (Details) $ in Millions	3 Months Ended	9 Months Ended
Leases - Other Information (Details) $ in Millions	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Leases
Weighted-average remaining lease term of operating leases	4 years 10 months 21 days	4 years 10 months 21 days
Weighted-average remaining lease term of finance leases	3 years 4 months 28 days	3 years 4 months 28 days
Weighted-average discount rate for operating leases	10.39%	10.39%
Weighted-average discount rate for finance leases	8.84%	8.84%
Interest on financing lease liabilities	$ 0.9	$ 2.5
Amortization expense on finance lease right-of-use assets	$ 3.7	$ 10.7

Leases - Maturities of Operating Lease Liabilities - ASC 842 (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Maturities of operating lease liabilities:
Remainder of 2019	$ 8,469
2020	24,803
2021	19,707
2022	15,651
2023	11,721
Thereafter	23,244
Total operating lease payments	103,595
Less: Imputed interest	5,380
Present value of lease liabilities	98,265
Maturities of finance lease liabilities
Remainder of 2019	6,554
2020	14,931
2021	11,587
2022	5,470
2023	2,847
2024 and thereafter	4,120
Total finance lease payments	45,509
Less: imputed interest	6,178
Present value of finance lease liabilities	$ 39,331

Leases - Future Minimum Payments Due Under Non‐Cancelable Leases - ASC 840 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Future minimum payments due under Operating Leases:
2019	$ 38,057
2020	29,346
2021	22,239
2022	16,782
2023	12,302
Thereafter	18,874
Total lease payments	137,600
Future minimum payments due under Finance Leases
2019	20,080
2020	11,851
2021	9,018
2022	4,169
2023	2,244
2024 and thereafter	3,617
Total minimum lease payments	50,979
Less: imputed interest	6,743
Total net minimum lease payments	44,236
Less: Current portion of obligations under finance leases	17,498
Long-term portion of obligations under finance leases	$ 26,738

Leases - Rental Expenses (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
Leases - Rental Expenses (Details) - USD ($) $ in Millions	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Rental expenses - ASC 840
Rental expenses			$ 83.8
Rental expenses - ASC 842
Rental expenses	$ 19.0	$ 56.4

Leases - Cash Paid and Lease Recognition (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 28,831
Financing cash flows from finance leases	13,598	$ 12,594
Right-of-use lease assets obtained in the exchange for lease liabilities:
Operating leases	3,894
Finance leases	$ 9,352

Intangibles Assets and Goodwill - Intangibles (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Intangibles
Gross Carrying Amount	$ 763,789	$ 745,471
Amortization	(389,344)	(338,450)
Intangible Asset, net	374,445	407,021
Customer relationships
Intangibles
Gross Carrying Amount	507,901	507,905
Amortization	(226,123)	(190,666)
Intangible Asset, net	281,778	317,239
Developed technology
Intangibles
Gross Carrying Amount	89,053	89,053
Amortization	(86,966)	(85,967)
Intangible Asset, net	2,087	3,086
Trade names
Intangibles
Gross Carrying Amount	8,400	9,400
Amortization	(3,100)	(3,100)
Intangible Asset, net	5,300	6,300
Impairment charge	1,000	3,700
Accumulated impairment losses	44,100	43,100
Outsource contract costs
Intangibles
Gross Carrying Amount	60,514	46,342
Amortization	(36,303)	(27,719)
Intangible Asset, net	24,212	18,623
Internally developed software
Intangibles
Gross Carrying Amount	41,971	36,820
Amortization	(9,956)	(6,278)
Intangible Asset, net	32,015	30,542
Trademarks
Intangibles
Gross Carrying Amount	23,378	23,379
Amortization	(23,370)	(23,370)
Intangible Asset, net	8	9
Non compete agreements
Intangibles
Gross Carrying Amount	1,350	1,350
Amortization	(1,350)	(1,350)
Assembled workforce
Intangibles
Gross Carrying Amount	4,473	4,473
Amortization	(839)
Intangible Asset, net	3,634	4,473
Purchased software
Intangibles
Gross Carrying Amount	26,749	26,749
Amortization	(1,337)
Intangible Asset, net	25,412	$ 26,749
Goodwill.
Intangibles
Impairment charge	$ 98,700

Intangibles Assets and Goodwill - Goodwill (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($) segment	Dec. 31, 2018 USD ($)
Goodwill
Number of Operating Segments \| segment		3
Goodwill
Goodwill, beginning of the period		$ 708,258	$ 747,325
Additions			5,580
Reductions		98,682	44,427
Currency translation adjustments		(118)	(220)
Goodwill, end of the period	$ 609,458	609,458	708,258
Accumulated impairment losses	167,900	167,900	167,900
Impairment of goodwill and other intangible assets	99,682	99,682
ITPS
Goodwill
Goodwill, beginning of the period		571,575	566,215
Additions			5,580
Reductions		90,361
Currency translation adjustments		(118)	(220)
Goodwill, end of the period	481,096	481,096	571,575
HS
Goodwill
Goodwill, beginning of the period		86,786	86,786
Goodwill, end of the period	86,786	86,786	86,786
LLPS
Goodwill
Goodwill, beginning of the period		49,897	94,324
Reductions		8,321	44,427
Goodwill, end of the period	$ 41,576	$ 41,576	$ 49,897

Long-Term Debt and Credit Facilities - Senior Secured Notes (Details) - Senior secured notes $ in Millions	Jul. 12, 2017 USD ($)
Debt instruments
Debt instrument face amount	$ 1,000.0
Interest rate (in percent)	10.00%
Original issue discount	$ 22.5

Long-Term Debt and Credit Facilities - Senior Credit Facilities (Details) - First lien credit agreement - USD ($) $ in Millions	Jul. 12, 2017	Sep. 30, 2019	Dec. 31, 2018
Debt instruments
Original issue discount		$ 6.9	$ 8.3
Senior secured term loan
Debt instruments
Debt instrument face amount	$ 350.0
Original issue discount	$ 7.0
Principal percentage of each of first eight payments (as a percent)	0.60%
Principal percentage of each payment thereafter (as a percent)	1.30%
Senior secured revolving facility
Debt instruments
Maximum borrowing capacity	$ 100.0
Outstanding credit facility		$ 21.0	$ 20.6
LIBOR \| Senior secured term loan
Debt instruments
Applicable margin rate	7.50%
Floor interest rate	1.00%
LIBOR \| Senior secured revolving facility
Debt instruments
Applicable margin rate	7.00%
Base rate \| Senior secured term loan
Debt instruments
Applicable margin rate	6.50%
Base rate \| Senior secured revolving facility
Debt instruments
Applicable margin rate	6.00%

Long-Term Debt and Credit Facilities - Term Loan Repricing (Details) - USD ($) $ in Thousands	Jul. 13, 2018	Sep. 30, 2019	Dec. 31, 2018
Debt instruments
Outstanding amount of term loans		$ 1,404,820	$ 1,335,660
First Amendment
Debt instruments
Proceeds from refinancing term loans	$ 343,400
Reduction in interest rate (in percentage)	1.00%
First Amendment \| Federal funds rate
Debt instruments
Variable interest rate (as a percent)	0.50%
First Amendment \| LIBOR
Debt instruments
Floor interest rate	1.00%
Variable interest rate (as a percent)	6.50%
First Amendment \| One-month adjusted LIBOR
Debt instruments
Variable interest rate (as a percent)	1.00%
First Amendment \| Base rate
Debt instruments
Variable interest rate (as a percent)	5.50%
Senior secured revolving facility
Debt instruments
Outstanding amount of term loans	$ 343,400
Senior secured revolving facility \| First Amendment
Debt instruments
Debt issuance costs	1,000
Amortization expense of debt issuance costs	1,000
Write off of previously recognized debt issuance costs	100
Maximum debt issuance costs for new lenders exceeded 10% test	$ 100

Long-Term Debt and Credit Facilities - Incremental Term Loan (Details) - USD ($) $ in Millions			3 Months Ended
	Apr. 16, 2019	Jul. 13, 2018	Jun. 30, 2019	Sep. 30, 2018
Incremental Term Loan
Debt instruments
Proceeds from refinancing term loans		$ 30.0
Percent of prepayment premium or fee		1.00%
Repricing and incremental of term loan
Debt instruments
Debt extinguishment costs			$ 1.4	$ 1.1
Incremental term loan
Debt instruments
Proceeds from refinancing term loans	$ 30.0

Long-Term Debt and Credit Facilities - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Jul. 12, 2017
Debt instruments
Total debt	$ 1,404,820	$ 1,335,660
Less: Current portion of long-term debt	(37,237)	(29,237)
Long-term debt, net of current maturities	1,367,583	1,306,423
Senior secured notes
Debt instruments
Total debt	977,848	974,443
Debt discount			$ 22,500
Other
Debt instruments
Total debt	23,904	25,321
First lien credit agreement
Debt instruments
Total debt	364,068	335,896
Debt discount	6,900	8,300
Unamortized debt issuance costs	20,100	24,500
Senior secured notes
Debt instruments
Debt discount	15,800	18,200
Unamortized debt issuance costs	6,300	$ 7,300
Revolver
Debt instruments
Total debt	$ 39,000

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Taxes
Income tax (expense) benefit	$ 3,769	$ 733	$ (5,689)	$ (4,911)
Actual effective tax rate	(2.70%)	2.50%	(3.00%)	(6.70%)
Statutory tax rate			21.00%	21.00%
Increase (decrease) in valuation allowance			$ 28,800

Employee Benefit Plans - Germany & UK (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
German Pension Plan \| Unfunded Plan
Pension plans
Plan assets	$ 0.0
German Pension Plan \| Unfunded Plan \| Minimum
Pension plans
Qualifying period	10 years
U.K. Pension Plan \| Minimum
Pension plans
Minimum required years prior to retirement for eligibility	3 years
Asterion Pension Plan \| Minimum
Pension plans
Minimum required years prior to retirement for eligibility	3 years
Norway Pension Plan \| Minimum
Pension plans
Minimum required years prior to retirement for eligibility	3 years

Employee Benefit Plans - Tax Effect on Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Amounts in Accumulated Other Comprehensive Loss Expected to be Recognized in Net Periodic Benefit Costs
Net actuarial loss	$ 8.9	$ 9.3
Deferred tax benefit	$ 1.7

Employee Benefit Plans - Pension Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net periodic benefit cost
Employer contributions			$ 2,200	$ 2,300
Pension [Member]
Net periodic benefit cost
Service cost	$ 23	$ 27	68	56
Interest cost	592	569	1,777	1,686
Expected return on plan assets	(612)	(701)	(1,837)	(2,076)
Amortization of prior service cost	25	(34)	76	(102)
Amortization of net (gain) loss	406	433	1,218	1,294
Net periodic benefit cost	$ 434	$ 294	$ 1,302	$ 858

Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended
	Sep. 21, 2017	Jun. 30, 2019	Sep. 30, 2019	Jul. 12, 2017
Minimum \| SourceHOV
Commitments and Contingencies
Argued fair value per share				$ 1,633.85
Interest accrues			$ 19.6
Maximum \| SourceHOV
Commitments and Contingencies
Interest accrues			$ 61.0
Maximum \| Petitioners
Commitments and Contingencies
Argued fair value per share				$ 5,079.28
Fair value guarantee \| Common Stock \| SourceHOV
Commitments and Contingencies
Number of shares owned	10,304
Fair value guarantee \| Common Stock \| Ex-Sigma 2, LLC
Commitments and Contingencies
Shares to be forfeited		4,570,734

Fair Value Measurement (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
Fair Value Measurement (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Carrying amounts and estimated fair values of financial instruments
Goodwill	$ 609,458	$ 708,258	$ 747,325
Reconciliation of net assets and liabilities
Impairment of goodwill	$ 98,682	44,427
Senior secured term loan
Assets and liabilities measured at fair value
Fair value percentage	59.50%
Senior secured notes
Assets and liabilities measured at fair value
Fair value percentage	55.00%
Level 3
Reconciliation of net assets and liabilities
Balance as of Beginning of Period	$ 721	721
Balance as of End of Period	721	721
Carrying Amount \| Recurring assets and liabilities
Carrying amounts and estimated fair values of financial instruments
Long-term debt	1,367,583	1,306,423
Interest rate swap	1,128	3,836
Goodwill	609,458	708,258
Carrying Amount \| Nonrecurring assets and liabilities
Carrying amounts and estimated fair values of financial instruments
Acquisition contingent liability	721	721
Fair Value \| Recurring assets and liabilities
Carrying amounts and estimated fair values of financial instruments
Long-term debt	769,403	1,316,306
Interest rate swap	1,128	3,836
Goodwill	609,458	708,258
Fair Value \| Recurring assets and liabilities \| Level 2
Carrying amounts and estimated fair values of financial instruments
Long-term debt	769,403	1,316,306
Interest rate swap	1,128	3,836
Fair Value \| Recurring assets and liabilities \| Level 3
Carrying amounts and estimated fair values of financial instruments
Goodwill	609,458	708,258
Fair Value \| Nonrecurring assets and liabilities
Carrying amounts and estimated fair values of financial instruments
Acquisition contingent liability	721	721
Fair Value \| Nonrecurring assets and liabilities \| Level 3
Carrying amounts and estimated fair values of financial instruments
Acquisition contingent liability	$ 721	$ 721

Stock-Based Compensation (Details) - RSU's - 2013 Plan - shares	9 Months Ended
	Sep. 30, 2019	Jul. 12, 2017
Stock-based compensation
Unvested RSU's	0	9,880
Minimum
Stock-based compensation
Initial vesting period of remaining RSU's vesting in April 2019	3 years
Maximum
Stock-based compensation
Initial vesting period of remaining RSU's vesting in April 2019	4 years
SourceHOV
Stock-based compensation
Restricted stock units outstanding		24,535

Stock-Based Compensation - Restricted Stock Unit Grants (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Dividend Share-based Payment Arrangement
Cash paid for withholding taxes	$ 223
RSU's
Dividend Share-based Payment Arrangement
Shares Paid for Tax Withholding for Share Based Compensation	194,010
Cash paid for withholding taxes	$ 200
RSU's \| 2018 Plan
Number of Shares
Balance at the beginning of the period (in shares)	893,297
Shares granted	268,607
Shares forfeited	(151,067)
Shares vested	(610,482)
Balance at the end of the period (in shares)	400,355	893,297
Weighted Average Grant Date Fair Value
Balance at the beginning of the period	$ 5.86
Balance at the end of the period	$ 2.12	$ 5.86
Average Remaining Contractual Life (Years)
Weighted average remaining contractual life (in years)	1 year 5 months 5 days	9 months 4 days
Aggregate Intrinsic Value
Aggregate intrinsic value outstanding	$ 849	$ 5,239
RSU's \| 2018 Plan \| Minimum
Stock-Based Compensation
Vesting period	1 year
RSU's \| 2018 Plan \| Maximum
Stock-Based Compensation
Vesting period	2 years

Stock-Based Compensation - Options (Details) - 2018 Plan - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 17, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Unrecognized compensation expense
Unrecognized compensation expense		$ 7,500		$ 7,500
Selling, general and administrative expense
Unrecognized compensation expense
Total compensation expense		$ 1,400	$ 1,600	$ 6,900	$ 4,500
Stock options
Stock-based compensation
Minimum fair market value per share of underlying stock used to determine option grant price, as a percent	100.00%
Expiration of stock options	10 years
Outstanding
Balance at beginning of period (in shares)				3,570,300
Granted (in shares)				2,050,600
Forfeited (in shares)				(618,200)
Balance at the end of period (in shares)		5,002,700		5,002,700		3,570,300
Weighted Average Exercise Price
Balance at the beginning of period				$ 6.06
Balance at the end of period (in shares)		$ 4.13		$ 4.13		$ 6.06
Additional information
Average Remaining Vesting Period				2 years 8 months 27 days		2 years 11 months 1 day
Aggregate Intrinsic Value		$ 9,864		$ 9,864		$ 9,590
Stock options \| Minimum
Stock-based compensation
Vesting period					2 years
Stock options \| Maximum
Stock-based compensation
Vesting period					4 years

Stockholders’ Equity - Common Stock (Details)	1 Months Ended	3 Months Ended		9 Months Ended
Stockholders’ Equity - Common Stock (Details)	Aug. 31, 2019 shares	Sep. 30, 2019 shares	Mar. 31, 2018 shares	Sep. 30, 2019 Vote shares	Dec. 31, 2018 shares
Common Stock
Common Stock, shares authorized		1,600,000,000		1,600,000,000	1,600,000,000
Common stock, shares issued		153,486,011		153,486,011	152,692,140
Common Stock, shares, outstanding		150,698,864		150,698,864	150,142,955
Number of voting rights entitled for each share of Common Stock held \| Vote				1
Series A Preferred Stock
Common Stock
Preferred shares converted to common	150,000
Common Stock
Common Stock
Common stock, shares issued		153,486,011		153,486,011	152,692,140
Common Stock, shares, outstanding		150,698,864		150,698,864	150,142,955
Preferred shares converted to common	183,389	183,389	1,986,767

Stockholders’ Equity - Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Jul. 12, 2017
Preferred Stock
Preferred stock, shares authorized	20,000,000		20,000,000		20,000,000
Preferred stock, shares outstanding	4,419,233		4,419,233		4,569,233
Preferred Stock, par value (in dollars per share)	$ 0.0001		$ 0.0001		$ 0.0001
Conversion ratio to Common Stock	1.2226		1.2226
Preferred Stock, cumulative dividends rate (in percentage)			10.00%
Cumulative dividends for Series A Preferred Stock	$ 884	$ 914	$ 2,712	$ 2,742
Series A Preferred Stock
Preferred Stock
Preferred stock, shares outstanding	4,419,233		4,419,233		4,569,233
Cumulative accrued but unpaid dividends						$ 8,900
Cumulative preferred dividends (in dollars per share)	$ 0.2	$ 0.2	$ 0.2	$ 0.2

Stockholders’ Equity - Treasury Stock (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018	Nov. 08, 2017
Stockholders’ Equity
Treasury stock, shares authorized				5,000,000
Treasury stock purchases (in shares)		237,962
Share Repurchased (in shares)	0
Treasury shares	2,787,147	2,787,147	2,549,185

Stockholders’ Equity - Warrants (Details)	9 Months Ended
Stockholders’ Equity - Warrants (Details)	Sep. 30, 2019 item $ / shares shares
Warrants
Number of Common Stock each warrant may purchase	0.5
Exercise price of warrant per half of Common Stock \| $ / shares	$ 5.75
Exercise price of warrant per one Common Stock (in US$ per share) \| $ / shares	$ 11.50
Expiration of warrants from business acquisition date	5 years
Warrant redemption price (in US$ per share) \| $ / shares	$ 0.01
Minimum written notice period of redemption	30 days
Minimum common stock sales price for exercise of redemption right (in US$ per share) \| $ / shares	$ 24.00
Minimum trading days within 30-day period at $24 per share for exercise of redemption right \| item	20
Trading day period for exercise of redemption right	30 days
Period of the 30-day period prior to notice of redemption	3 days
Period of current registration effectivity prior to 30-day trading period	5 days
Warrants
Warrants
Warrants outstanding	34,988,302
Number of warrants separated from the original unit	34,988,302
Number of warrants not separated from the original unit	11,698
Warrants \| IPO
Warrants
Units issued	35,000,000
Common stock included in units	1
Warrants included in units	1

Related-Party Transactions - Consulting Agreement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Related-Party Transactions
Related party expense	$ 1,405	$ 759	$ 3,454	$ 3,267
Oakana Holdings Inc
Related-Party Transactions
Related party expense	100	100	100	100
Consulting Services \| Shadow Pond LLC
Related-Party Transactions
Related party expense	$ 0	$ 0	$ 0	$ 100

Related-Party Transactions - Relationship with HandsOn Global Management (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2016 agreement	Dec. 31, 2015 agreement
Related-Party Transactions
Related party expense	$ 1,405	$ 759	$ 3,454	$ 3,267
Amount of related party transaction	1,405	759	$ 3,454	3,267
Entities affiliated with HGM managed funds \| Master Agreement
Related-Party Transactions
Revenue share percentage			25.00%
SourceHOV \| Master Agreement
Related-Party Transactions
Revenue share percentage			75.00%
SourceHOV \| Entities affiliated with HGM managed funds \| Master Agreement
Related-Party Transactions
Related party expense	$ 200	$ 200	$ 300	$ 600
Number of master agreements \| agreement					10	10

Related-Party Transactions - Relationship with HOV Services, Ltd (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Related-Party Transactions
Related party expense	$ 1,405	$ 759	$ 3,454	$ 3,267
Amount of related party transaction	1,405	759	3,454	3,267
HOV Services, Ltd \| Data Capture And Technology Services \| Cost of revenue
Related-Party Transactions
Related party expense	$ 400	$ 400	$ 1,100	$ 1,200

Related Party Transactions - Relationship with Apollo Global Management, LLC (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) director	Sep. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)
Related-Party Transactions
Related party expense	$ 1,405	$ 759	$ 3,454	$ 3,267
Finance lease liability	39,331		$ 39,331
Apollo
Related-Party Transactions
Number of directors right to designate \| director			2
Management Holdings \| Master Service Agreement
Related-Party Transactions
Revenue from related parties	100	100	$ 400	500
Caesars \| Master Service Agreement
Related-Party Transactions
Revenue from related parties	1,100	1,100	3,300	3,100
ADT LLC \| Master Service Agreement
Related-Party Transactions
Revenue from related parties	300	200	900	400
Diamond Resorts Centralized Services \| Master Service Agreement
Related-Party Transactions
Revenue from related parties	1,400	700	4,000	4,900
Related party cost of revenue			100	100
Presidio Capital \| Master Lease Agreement
Related-Party Transactions
Finance lease liability	1,000		1,000		$ 1,000
Novitex Solutions \| Presidio Group \| Master Service Agreement
Related-Party Transactions
Related party expense	$ 400	$ 200	$ 700	$ 500

Related-Party Transactions - Receivable and Payable Balance with Affiliates (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Receivable and Payable Balances with Affiliates
Receivable balances with affiliates	$ 42	$ 0
Payable balances with affiliates	274	7,735
HOV Services, Ltd
Receivable and Payable Balances with Affiliates
Payable balances with affiliates	23	405
Rule 14, LLC
Receivable and Payable Balances with Affiliates
Payable balances with affiliates	198	127
HGM
Receivable and Payable Balances with Affiliates
Receivable balances with affiliates	42
Payable balances with affiliates		6,998
Apollo
Receivable and Payable Balances with Affiliates
Payable balances with affiliates	$ 53	$ 205

Segment Information - Revenue by segment information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)
Segment information
Number of segments \| segment			3
Revenue	$ 372,917	$ 383,030	$ 1,166,841	$ 1,186,579
Cost of revenue	291,222	295,936	896,110	903,682
Selling, general and administrative expenses	50,372	44,913	151,884	137,231
Depreciation and amortization	27,114	35,041	82,326	109,428
Impairment of goodwill and other intangible assets	99,682		99,682
Related party expense	1,405	759	3,454	3,267
Interest expense, net	39,747	38,339	117,778	114,883
Loss on extinguishment of debt		1,067		1,067
Debt modification and extinguishment costs		1,067	1,404	1,067
Sundry expense (income), net	(10)	(2,571)	1,028	(4,961)
Other expense (income), net	581	(781)	4,965	(4,813)
Net loss before income taxes	(137,196)	(29,673)	(191,790)	(73,205)
ITPS
Segment information
Revenue	291,979	307,313	925,709	949,381
Cost of revenue	239,388	246,492	743,557	752,796
HS
Segment information
Revenue	62,132	56,776	186,915	171,722
Cost of revenue	40,973	36,919	119,816	111,135
LLPS
Segment information
Revenue	18,806	18,941	54,217	65,476
Cost of revenue	$ 10,861	$ 12,525	$ 32,737	$ 39,751

Stock-Based Compensation - Stock Incentive Plan (Details) - shares	Sep. 30, 2019	Dec. 31, 2018	Jan. 17, 2018
Exela 2018 Stock Incentive Plan
Common stock shares authorized	1,600,000,000	1,600,000,000
2018 Plan
Exela 2018 Stock Incentive Plan
Common stock shares authorized			8,323,764