UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


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

For the quarterly period ended June 30, 2018


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

For the transition period from to

COMMISSION FILE NUMBER 333-176382

_________________________

SYNIVERSE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

__________________________



Delaware	30-0041666
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

8125 Highwoods Palm Way

Tampa, Florida 33647

(Address of principal executive office)

(Zip code)

(813) 637-5000

(Registrant’s telephone number, including area code)

________________

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

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

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



Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company o	Emerging growth company o
		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares of common stock of the registrant outstanding at August 10, 2018 was 1,000.

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TABLE OF CONTENTS



		Page
Glossary of Terms		4
	PART I
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive (Loss) Income	7
	Condensed Consolidated Statements of Changes in Stockholder Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56
Item 4.	Controls and Procedures	56
	PART II
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3.	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5.	Other Information	57
Item 6.	Exhibits	58
Signatures		59

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GLOSSARY OF TERMS



Term	Definition
2011 Plan	2011 Equity Incentive Plan
4G	Fourth generation
A2P	Application to Peer
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Carlyle	Investment funds affiliated with The Carlyle Group
CDMA	Code division multiple access
CNAM	Caller name directory
EIS	Enterprise & Intelligence Solutions
E.U.	European Union
FASB	Financial Accounting Standards Board
FCC	Federal Communications Commission
FCPA	Foreign Corrupt Practices Act
GMAC	Guideline merged and acquired company
GPC	Guideline public company
GSM	Global system for mobiles
IASB	International Accounting Standards Board
IPX	Interworking packet exchange
LTE	Long-term evolution
M2M	Machine-to-machine
MNO	Mobile network operator
MTS	Mobile Transaction Services
MVNO	Mobile virtual network operators
NOL	Net operating loss
OFAC	The Office of Foreign Assets Control of the U.S. Department of the Treasury
OTT	Over-the-top provider
SEC	Securities and Exchange Commission
SS7	Signaling System 7
U.S.	United States of America
U.S. GAAP	Accounting principles generally accepted in the United States
VIE	Variable interest entity
VoLTE	Voice over LTE

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PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)



	June 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	81,070		$	127,677
Accounts receivable, net of allowances of $15,355 and $16,486, respectively	163,261			168,149
Income taxes receivable	4,651			4,134
Prepaid and other current assets	26,157			23,204
Total current assets	275,139			323,164
Property and equipment, net	88,539			93,203
Capitalized software, net	94,362			102,454
Goodwill	2,303,763			2,314,281
Identifiable intangibles, net	230,040			258,986
Deferred tax assets	3,389			3,608
Investment in unconsolidated subsidiaries	46,296			47,258
Other assets	6,092			4,972
Total assets	$	3,047,620		$	3,147,926
LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable	$	36,966		$	20,837
Income taxes payable	2,976			4,784
Accrued liabilities	72,579			89,249
Deferred revenues	8,807			5,997
Current portion of capital lease obligation	6,184			6,410
Current portion of long-term debt, net of original issue discount and deferred financing costs	58,221			2,595
Total current liabilities	185,733			129,872
Long-term liabilities:
Deferred tax liabilities	77,076			73,793
Deferred revenues	2,096			2,096
Long-term capital lease obligation, less current portion	2,174			4,340
Long-term debt, net of current portion, original issue discount and deferred financing costs	1,860,031			1,940,613
Other long-term liabilities	38,145			36,805
Total liabilities	2,165,255			2,187,519
Commitments and contingencies (Note 10)
Stockholder equity:
Common stock $0.01 par value; one thousand shares authorized, issued and outstanding as of June 30, 2018 and December 31, 2017	—			—
Additional paid-in capital	1,281,585			1,275,944
Accumulated deficit	(326,071		)	(261,615		)
Accumulated other comprehensive loss	(78,912		)	(63,226		)
Total Syniverse Holdings, Inc. stockholder equity	876,602			951,103
Noncontrolling interest	5,763			9,304
Total equity	882,365			960,407
Total liabilities and stockholder equity	$	3,047,620		$	3,147,926

See accompanying notes to unaudited condensed consolidated financial statements.

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SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
	(Unaudited)
Revenues	$	190,841		$	194,507		$	379,499		$	380,355
Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)	85,519			88,491			168,951			174,527
Sales and marketing	17,075			18,336			36,017			36,764
General and administrative	29,045			21,468			58,981			47,238
Depreciation and amortization	38,008			47,991			77,917			95,437
Employee termination benefits	1,004			86			5,320			152
Restructuring charges	60			2,878			216			4,029
	170,711			179,250			347,402			358,147
Operating income	20,130			15,257			32,097			22,208
Other income (expense), net:
Interest expense, net	(39,032		)	(30,468		)	(81,493		)	(70,082		)
Gain (loss) on early extinguishment of debt, net	—			362			(4,868		)	362
Equity loss in investees	(418		)	(407		)	(828		)	(514		)
Other, net	1,955			(962		)	752			(1,241		)
	(37,495		)	(31,475		)	(86,437		)	(71,475		)
Loss before provision for (benefit from) income taxes	(17,365		)	(16,218		)	(54,340		)	(49,267		)
Provision for (benefit from) income taxes	3,453			(486		)	7,714			(9,632		)
Net loss	(20,818		)	(15,732		)	(62,054		)	(39,635		)
Net (loss) income attributable to noncontrolling interest	(246		)	631			270			1,390
Net loss attributable to Syniverse Holdings, Inc.	$	(20,572	)	$	(16,363	)	$	(62,324	)	$	(41,025	)

See accompanying notes to unaudited condensed consolidated financial statements.

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SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(IN THOUSANDS)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
	(Unaudited)
Net loss	$	(20,818	)	$	(15,732	)	$	(62,054	)	$	(39,635	)
Other comprehensive income, net of tax:
Foreign currency translation adjustment	(26,767		)	21,871			(16,012		)	36,067
Amortization of unrecognized loss included in net periodic pension cost⁽¹⁾	50			59			103			115
Other comprehensive (loss) income	(26,717		)	21,930			(15,909		)	36,182
Comprehensive (loss) income	(47,535		)	6,198			(77,963		)	(3,453		)
Less: comprehensive (loss) income attributable to noncontrolling interest	(390		)	644			47			1,627
Comprehensive (loss) income attributable to Syniverse Holdings, Inc.	$	(47,145	)	$	5,554		$	(78,010	)	$	(5,080	)


(1)	Amortization of unrecognized loss included in net periodic pension cost is shown net of income tax expense of $22 and $45 for the three and six months ended June 30, 2018, respectively, and net of income tax expense of $26 and $51 for the three and six months ended June 30, 2017, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

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SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER EQUITY

(IN THOUSANDS)



	Stockholder of Syniverse Holdings, Inc.
	Common Stock
	Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Nonredeemable Noncontrolling Interest			Total
Balance, December 31, 2016	1	$	—	$	1,265,752		$	(237,021	)	$	(120,042	)	$	7,513		$	916,202
Net (loss) income	—	—		—			(41,025		)	—			1,390			(39,635		)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	—	—		—			—			35,830			237			36,067
Amortization of unrecognized loss included in net periodic pension cost, net of tax expense of $51	—	—		—			—			115			—			115
Stock-based compensation	—	—		7,646			—			—			—			7,646
Distribution to noncontrolling interest	—	—		—			—			—			(2,310		)	(2,310		)
Distribution to Syniverse Corporation	—	—		(2,282		)	—			—			—			(2,282		)
Balance, June 30, 2017 (Unaudited)	1	$	—	$	1,271,116		$	(278,046	)	$	(84,097	)	$	6,830		$	915,803

Balance, December 31, 2017	1	$	—	$	1,275,944		$	(261,615	)	$	(63,226	)	$	9,304		$	960,407
Cumulative effect of accounting change, net of tax of $36	—	—		—			(2,132		)	—			—			(2,132		)
Net (loss) income	—	—		—			(62,324		)	—			270			(62,054		)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	—	—		—			—			(15,789		)	(223		)	(16,012		)
Amortization of unrecognized loss included in net periodic pension cost, net of tax expense of $45	—	—		—			—			103			—			103
Stock-based compensation	—	—		8,340			—			—			—			8,340
Distribution to noncontrolling interest	—	—		—			—			—			(3,588		)	(3,588		)
Distribution to Syniverse Corporation	—	—		(2,699		)	—			—			—			(2,699		)
Balance, June 30, 2018 (Unaudited)	1	$	—	$	1,281,585		$	(326,071	)	$	(78,912	)	$	5,763		$	882,365

See accompanying notes to unaudited condensed consolidated financial statements.

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SYNIVERSE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)



	Six Months Ended June 30,
	2018			2017
	(Unaudited)
Cash flows from operating activities
Net loss	$	(62,054	)	$	(39,635	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	77,917			95,437
Amortization of original issue discount and deferred financing costs	4,801			6,496
Allowance for credit memos and uncollectible accounts	5,378			5,734
Deferred income tax expense (benefit)	4,097			(10,092		)
Debt modification costs	9,646			9,780
Loss (gain) on early extinguishment of debt, net	4,868			(362		)
Stock-based compensation	8,340			7,646
Other, net	1,870			856
Changes in operating assets and liabilities:
Accounts receivable	(1,264		)	(4,230		)
Income taxes receivable or payable	(2,631		)	(1,675		)
Prepaid and other current assets	(4,679		)	(6,547		)
Accounts payable	16,293			(8,837		)
Accrued liabilities and deferred revenues	(19,139		)	(16,494		)
Other assets and other long-term liabilities	(1,438		)	2,680
Net cash provided by operating activities	42,005			40,757
Cash flows from investing activities
Capital expenditures	(30,779		)	(34,399		)
Net cash used in investing activities	(30,779		)	(34,399		)
Cash flows from financing activities
Proceeds from issuance of long-term debt	1,922,000			—
Principal payments on long-term debt	(1,926,255		)	(17,325		)
Debt issuance costs paid	—			(690		)
Debt modification costs paid	(40,446		)	(9,768		)
Payments on capital lease and financing obligations	(4,607		)	(10,811		)
Distribution to Syniverse Corporation	(2,699		)	(2,282		)
Distribution to noncontrolling interest	(3,588		)	(2,310		)
Net cash used in financing activities	(55,595		)	(43,186		)
Effect of exchange rate changes on cash	(2,124		)	3,690
Net decrease in cash, cash equivalents and restricted cash	(46,493		)	(33,138		)
Cash, cash equivalents and restricted cash at beginning of period	128,677			137,690
Cash, cash equivalents and restricted cash at end of period	$	82,184		$	104,552

Supplemental noncash investing and financing activities
Assets acquired under capital lease and non-cash financing obligations	$	8,593		$	5,118
Supplemental cash flow information
Interest paid	$	75,039		$	53,961
Income taxes paid	$	6,167		$	2,093

See accompanying notes to unaudited condensed consolidated financial statements.

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SYNIVERSE HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

Syniverse is the leading global transaction processor that connects MNOs and enterprises in nearly 200 countries enabling seamless mobile communications across disparate and rapidly evolving networks, devices and applications. We process transactions that include the authorization and delivery of end user traffic, clearing of billing records and settlement of payments. We also offer a unique portfolio of intelligent policy and charging tools that enable our customers to use the real-time data generated by these transactions to deliver customized services and choices to their end-users. Our portfolio of mission-critical services enables our customers to connect to the mobile ecosystem, optimize their businesses and enhance and personalize the mobile experience for their end-users. We process over 4 billion billable transactions daily and settle approximately $15 billion annually between our customers.

We are the leader in LTE roaming and interconnect, offering superior connectivity critical for delivering the advanced mobile experiences end-users have come to expect from 4G and other advanced mobile network technologies, including VoLTE. Our IPX network currently directly connects to nearly half of the global mobile population. We believe our global footprint and operational scale are unmatched in our industry. As a trusted partner with 30 years of experience and a history of innovation, we believe we are well positioned to solve the technical, operational and financial complexities of the mobile ecosystem.

Our diverse customer base includes a broad range of participants in the mobile ecosystem, including approximately 900 MNOs and 450 OTTs and enterprises. Our customers include 97 of the top 100 MNOs globally, such as Verizon Wireless, América Móvil, Vodafone, Telefónica, China Unicom and Reliance Communications; OTTs, including 3 of the 5 largest social networking sites in the U.S. and one of the largest social networking sites in China; and blue-chip enterprise customers, including the top 3 credit card networks worldwide and a multinational hotel brand.

The mobile experience is a critical and pervasive component of modern life and has become increasingly complex. Mobile devices have evolved from basic cellular phones to include smartphones, tablets, wearables and other connected devices that people now use to conduct an expanding set of activities in real-time, such as streaming videos, posting social media updates, working and shopping. As a result, today’s mobile experience requires seamless and ubiquitous connectivity and coordination between MNOs, OTTs and enterprises across disparate and rapidly evolving networks, devices and applications. The failure to integrate any of these elements can disrupt service, resulting in frustrated end-users, erosion of our customers’ brands and loss of revenue by our customers. Our proprietary services bridge these technological and operational complexities.

Syniverse provides approximately 60 mission-critical services to manage the real-time exchange of information and traffic across the mobile ecosystem, enhance our customers’ brands and provide valuable intelligence about end-users. Our customers demand, and we deliver, high quality service as evidenced by our over 99.999% network availability. Our comprehensive suite of Mobile Transaction Services and Enterprise & Intelligence Solutions includes the services described below.

Mobile Transaction Services: Transaction-based services that are designed to support the long-term success of our MNO customers. Through Mobile Transaction Services, we:


•	Clear, process and exchange end-user billing records.


•	Process and settle payments between participants in the mobile ecosystem.


•	Activate, authenticate and authorize end-user mobile activities.


•	Manage the worldwide routing and delivery of text (SMS), multimedia (MMS) and next generation messaging.


•	Provide data transport services over our global IP data network regardless of technology protocol.


•	Provide intelligent policy and charging tools that enable our customers to use real-time data for improved end-user experience.


•	Provide risk management tools to prevent fraudulent activity on operator networks and identify problem areas in the end to end billing cycle.

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Enterprise & Intelligence Solutions: Services that bridge OTTs and enterprises with MNOs and incorporate our real-time intelligence capabilities to enable all of our customers to serve their end-users. Through Enterprise & Intelligence Solutions, we:


•	Connect enterprises to the mobile ecosystem to allow them to reliably reach and interact with their customers and employees via mobile devices.


•	Bridge OTTs to the mobile ecosystem allowing OTT end-users to seamlessly interact with traditional mobile end-users.


•	Enable enterprises to rapidly execute and optimize their mobile communications initiatives.


•	Provide data analytics and business intelligence solutions designed to measure, enhance and secure the end-user experience for our enterprise customers.


•	Provide solutions to enable MNOs to measure and manage the subscriber experience across networks.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements of Syniverse Holdings, Inc. have been prepared in accordance with U.S. GAAP for interim financial information and on a basis that is consistent with the accounting principles applied in our audited financial statements for the fiscal year ended December 31, 2017 (the “2017 financial statements”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. The unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and footnotes included in our annual report on Form 10-K filed with the SEC on March 14, 2018. Operating results for the interim periods noted herein are not necessarily indicative of the results that may be achieved for a full year.

The unaudited condensed consolidated financial statements include the accounts of Syniverse Holdings, Inc. and all of its wholly owned subsidiaries and a VIE for which Syniverse is deemed to be the primary beneficiary. References to “Syniverse,” “the Company,” “us,” or “we” include all of the consolidated companies. Noncontrolling interest is recognized for the portion of consolidated joint ventures not owned by us. All significant intercompany balances and transactions have been eliminated.

In May 2016, we acquired a noncontrolling interest in Vibes Media LLC (“Vibes”) for $45 million. The investment consisted of $40 million in cash and common shares of Syniverse Corporation valued at $5 million. The carrying amount of the investment in the equity method investee as of June 30, 2018 and December 31, 2017 was $41.7 million and $42.7 million, respectively and is included in Investment in unconsolidated subsidiaries in the unaudited condensed consolidated balance sheets. In addition to our investment in Vibes, Syniverse and Vibes have partnered to distribute Vibes’ cloud-based mobile marketing software platform. Expenses incurred from commercial transactions with Vibes, which is a related party to the Company, were$2.9 million and $5.7 million during the three and six months ended June 30, 2018, respectively, and $0.4 million and $1.0 million during the three and six months ended June 30, 2017, respectively.

Use of Estimates

We have prepared our financial statements in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the period. Actual results could differ from those estimates.

Revenue Recognition

Our revenues are generated through the sale of Mobile Transaction Services and Enterprise & Intelligence Solutions to MNOs and enterprise customers throughout the world. Revenues are recognized when control of our promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Our contracts with customers generally contain one or more performance obligations to stand-ready to process an unknown quantity of transactions as and when they are presented. We recognize revenue related to our stand-ready performance obligations satisfied over time as the customer simultaneously receives and consumes the benefits provided by our

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performance. We consider these performance obligations a series of distinct services that are substantially the same and have the same pattern of transfer to the customer.

The transaction price of each contract includes the amount to which we expect to be entitled which is comprised of both fixed and variable consideration. Variable consideration includes transaction-based fees that are invoiced each month according to the number of records or transactions processed, the size of data records processed or both, and may include a fixed price per unit, a tier-based price per unit or fee, or a fixed amount plus additional fees for volume overages above a contractual threshold. For services with transaction-based fees, we allocate variable consideration to each distinct month in which our service is performed as the variable consideration relates specifically to our efforts to transfer each distinct monthly service during that period. The variability is driven by the number of transactions presented by the customer or end-user for the Company to process. The uncertainty related to the variable consideration is resolved on a monthly basis as the Company satisfies its obligation to perform services each month. For services performed under contracts with exclusively fixed monthly recurring fees, we generally record revenue on a straight-line basis over the contractual term. Less commonly, we enter into contracts with monthly recurring fees which are fixed over the course of each year under the contract, but which change at the completion of each twelve month period of the contract. In such cases, we apply judgment to determine whether a time-based measure or another output-based measure, such as volume, is the most appropriate measure of the pattern of our performance to satisfy the performance obligation. For contracts with significant customer implementations and development services that are highly interrelated with the ongoing services, we generally defer revenues and the associated direct costs and recognize them on a straight-line basis over the contractual term.

Revenues are recognized net of allowances and any taxes collected from customers and subsequently remitted to governmental authorities. We maintain an allowance for credit memos based upon an assessment of customer creditworthiness, historical payment experience and specific known matters. These allowances are recorded primarily as the result of service level penalties, price concessions, billing and service disputes and other customer specific matters. Allowances for credit memos are recorded as reductions of accounts receivable and revenues. If our billing discrepancies are not resolved satisfactorily or our customers’ disputes over billing are not resolved satisfactorily, increases to the allowance may be required.

Our payment terms vary by the type and location of our customers and the products or services offered. The term between invoicing and payment due date is not significant. For certain services, we require payment shortly before the services are delivered. For contracts containing significant implementation and development activities, we typically invoice the customer near the completion of such activities and record the revenues over time as the ongoing services to which the significant implementation and development services relate are performed.

Refer to Note 4 for further discussion of Revenues.

Customer Accounts

We provide financial settlement services to wireless operators to support the payment of roaming related charges to their roaming network partners. In accordance with our customer contracts, funds are held by us as an agent on behalf of our customers to settle their roaming related charges to other operators. These funds and the corresponding liability are not reflected in our condensed consolidated balance sheets. The off-balance sheet amounts totaled approximately $349.0 million and $372.3 million as of June 30, 2018 and December 31, 2017, respectively.

Cash, Cash Equivalents and Restricted Cash

We consider all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Cash and cash equivalents consists primarily of deposit accounts that are stated at cost, which approximates fair value.

Amounts included in restricted cash represent certificates of deposits and time deposits with original maturities greater than three months and cash that is restricted as to withdrawal or usage. These amounts are classified in prepaid and other current assets and other assets in the accompanying balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within our condensed consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash in our condensed consolidated statements of cash flows:

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	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
(in thousands)	(Unaudited)				(Unaudited)
Cash and cash equivalents	$	81,070	$	127,677	$	102,892	$	136,174
Restricted cash included in prepaid and other current assets	568		413		1,051		1,121
Restricted cash included in other assets	546		587		609		395
Total cash, cash equivalents and restricted cash	$	82,184	$	128,677	$	104,552	$	137,690

Capitalized Software Costs

We capitalize the cost of externally purchased software and certain software licenses, internal-use software and developed technology that has a useful life of one year or greater. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they enable the software to perform a task it previously was unable to perform. Software maintenance and training costs are expensed in the period in which they are incurred. Capitalized software and developed technology are amortized using the straight-line method over a period of 3 to 5 years and 3 to 8 years, respectively.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess purchase price of acquired businesses over the fair value of the net assets acquired. Goodwill is not amortized, but is instead tested for impairment, at least annually on October 1, or more frequently if indicators of impairment arise. Goodwill is tested for impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment, referred to as a component. We have not identified any components within our single operating segment and, hence, have a single reporting unit for purposes of our goodwill impairment analysis.

When evaluating goodwill for impairment, the Company may first perform an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. This qualitative assessment is commonly referred to as a "step zero" approach. If, based on the review of the qualitative factors, the Company determines it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative impairment test. If based on this assessment an impairment exits, a charge is recorded for the excess of the reporting unit’s carrying amount over its fair value in the condensed consolidated statement of operations. In connection with our annual goodwill impairment analysis at October 1, 2017, we did not record any impairment loss on goodwill for the year ended December 31, 2017. In the future, our reporting unit may be at risk of impairment due to lower operating results caused by declines in our CDMA portfolio as well as pricing pressure across many of our other services and other market factors. A goodwill impairment charge would not affect our adjusted EBITDA or free cash flows.

Indefinite-lived intangible assets are comprised of tradenames and trademarks. Indefinite-lived intangible assets are not amortized, but instead are tested for impairment, at least annually, or more frequently if indicators of impairment arise. When evaluating indefinite-lived identifiable intangible assess for impairment, the Company may first perform an assessment of qualitative factors to determine whether it is more likely than not that the asset is impaired. If, based on the review of the qualitative factors, the Company determines it is more-likely-than-not that the identifiable intangible asset is impaired, the Company performs an impairment test.

Foreign Currencies

We have operations in subsidiaries in Europe (primarily the United Kingdom, Germany and Luxembourg), India, the Asia-Pacific region and Latin America, each of whose functional currency is their local currency. Gains and losses on transactions denominated in currencies other than the relevant functional currencies are included in Other, net in the unaudited condensed consolidated statements of operations. For the three and six months ended June 30, 2018, we recorded foreign currency transaction gains of $2.7 million and $1.5 million, respectively. For the three and six months ended June 30, 2017, we recorded foreign currency transaction losses of $0.9 million and $1.1 million, respectively.

The assets and liabilities of subsidiaries whose functional currency is other than the U.S. dollar are translated at the period-end rate of exchange. The resulting translation adjustment is recorded as a component of Accumulated other comprehensive loss and is included in Stockholder equity in the condensed consolidated balance sheets. Transaction gains and losses on intercompany balances which are deemed to be of a long-term investment nature are also recorded as a component of Accumulated other comprehensive loss. Revenues and expenses within the unaudited condensed consolidated statements of operations are translated at the average rates prevailing during the period.

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Reclassifications

On January 1, 2018, we adopted ASU 2016-18, Restricted Cash using retrospective application. As a result, we have reclassified prior period amounts in our condensed consolidated statements of cash flows to conform to current year presentation.

3. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2016, the FASB issued ASU 2016-18, Restricted Cash, which is included in ASC Topic 230. ASU 2016-18 requires companies to show the change in total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. We adopted this update on January 1, 2018 and retrospectively applied the adjustment to all periods presented. The impact of this adoption was not material to our condensed consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which is included in ASC Topic 230. ASU 2016-15 includes multiple provisions intended to simplify various treatments of certain cash receipts and cash payments in the statement of cash flows under ASC Topic 230. We adopted this update on January 1, 2018. The adoption of this update had no impact on our condensed consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which is included in ASC Topic 606. ASU 2014-09 was issued as a converged guidance with the IASB on recognizing revenue in contracts with customers and is intended to improve the financial reporting requirements for revenue from contracts with customers by providing a principle based approach to the recognition of revenue. It requires entities to recognize revenue when control of promised goods or services is transferred to customers in an amount that reflects the consideration to which entity expects to be entitled in exchange for those goods or services. We adopted ASC Topic 606 on January 1, 2018 using the modified retrospective transition method. Refer to Note 4 for further details.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which is included in ASC Topic 220. ASU 2018-02 will improve the usefulness of information reported in the financial statements by allowing reclassification from accumulated other comprehensive income to retained earnings for the income tax effects resulting from the enactment of the Tax Cuts and Jobs Act legislation. The update is effective for the Company beginning January 1, 2019 and will be applied retrospectively to all periods affected by the Tax Cuts and Jobs Act. We do not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which is included in the ASC in Topic 326. ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The update will replace the incurred loss approach with an expected credit loss model. It also would require entities to present unrealized losses from available-for-sale debt securities as allowances rather than as a reduction in the amortized cost of the securities. The update is effective for the Company beginning January 1, 2020. We are currently assessing the impact of implementing this guidance on our condensed consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases, which is included in the ASC in Topic 842. ASU 2016-02 is intended to improve transparency and comparability of lease accounting among organizations. For leases with a term greater than 12 months, the amendments require the lease rights and obligations arising from the leasing arrangements, including operating leases, to be recognized as assets and liabilities on the balance sheet. However, the effect on the statement of comprehensive income and the statement of cash flows is largely unchanged from current GAAP. The amendments also expand the required disclosures surrounding leasing arrangements. The guidance must be applied using a modified retrospective approach and will be effective for financial statements issued for fiscal years beginning after December 15, 2018 and interim periods within those years. We expect to apply the package of practical expedients that allows companies not to reassess whether any expired or expiring contracts are or contain leases, lease classification for any expired or expiring leases and initial direct costs for any expired or expiring leases. Upon adoption, we expect our balance sheet to include a right of use asset and liability related

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to substantially all lease arrangements. We are currently assessing the impact of implementing this guidance on our condensed consolidated financial statements and related disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial instruments - Overall, which is included in ASC Topic 825. ASU 2016-01 will enhance certain aspects of the recognition, measurement, presentation and disclosure requirements for financial instruments. ASU 2016-01 requires entities to present separately, in other comprehensive income, the portion of the total change in a financial liability’s fair value that results from a change in instrument-specific credit risk. The update is effective for the Company beginning July 1, 2018. We do not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements and related disclosures.

4. Revenues

Adoption of ASC Topic 606, Revenue from Contracts with Customers

On January 1, 2018, we adopted ASC Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. We recognized the cumulative effect of applying ASC Topic 606 as an adjustment to the opening balance of retained earnings at January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while results for comparable prior periods are not adjusted and continue to be reported in accordance with the historical accounting standards in effect for those periods. We do not expect the adoption of ASC Topic 606 to have a material impact to revenue or net income on an ongoing basis.

We recorded a reduction to opening retained earnings at January 1, 2018 of $2.1 million, net of tax, for the cumulative effect of adopting ASC Topic 606, with the impact primarily related to deferring revenue associated with significant implementation and development services that are highly interrelated with the ongoing services we provide our customers. The impact to revenues as a result of applying ASC Topic 606 was not material for the three and six months ended June 30, 2018.

Revenue Recognition

Revenues by service offerings were as follows:



	Three Months Ended June 30,
	2018		2017
(in thousands)	(Unaudited)
Mobile Transaction Services	$	145,659	$	156,264
Enterprise & Intelligence Solutions	45,182		38,243
Revenues	$	190,841	$	194,507



	Six Months Ended June 30,
	2018		2017
(in thousands)	(Unaudited)
Mobile Transaction Services	$	291,426	$	306,550
Enterprise & Intelligence Solutions	88,073		73,805
Revenues	$	379,499	$	380,355

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Revenues by geographic region, based on the “bill to” location on the invoice, were as follows:



	Three Months Ended June 30,
	2018		2017
(in thousands)	(Unaudited)
North America	$	115,703	$	115,236
Europe, Middle East and Africa	33,222		35,198
Asia Pacific	29,136		29,692
Caribbean and Latin America	12,780		14,381
Revenues	$	190,841	$	194,507



	Six Months Ended June 30,
	2018		2017
(in thousands)	(Unaudited)
North America	$	227,261	$	226,793
Europe, Middle East and Africa	64,968		66,951
Asia Pacific	59,582		59,394
Caribbean and Latin America	27,688		27,217
Revenues	$	379,499	$	380,355

We record deferred revenues when cash payment is received or we have an unconditional right to payment in advance of revenue recognition. The increase in deferred revenues for the six months ended June 30, 2018 is primarily driven by the adoption of ASC Topic 606 and payments received or due in advance of revenue recognition, offset by $6.5 million of revenues recognized, of which $3.6 million were included in the deferred revenue balance on January 1, 2018.

We generally enter into multi-year non-cancelable contracts with our customers. The transaction price of each contract includes the amount to which we expect to be entitled which is comprised of fixed consideration, variable consideration or a combination of both. As of June 30, 2018, there was an aggregate amount of $401.4 million of revenue under these contracts to which we will be entitled upon providing services in the future. We expect to recognize revenue of approximately $179.6 million during the remainder of 2018, $151.4 million in 2019, $44.0 million in 2020 and $26.4 million thereafter under these contracts. These estimated amounts relate to the fixed consideration within the contracts and do not contain variable consideration under existing contracts related to transaction-based fee revenue. Given the transaction-based nature of our revenue, variable consideration has historically been a significant portion of the revenue recognized during each period which we expect to continue in the future. The uncertainty related to the variable consideration is resolved on a monthly basis as the Company satisfies its obligation to perform services each month.

Segment Information

We have evaluated our portfolio of service offerings, reportable segment and the financial information reviewed by our chief operating decision maker for purposes of making resource allocation decisions. We operate as a single operating segment, as our Chief Executive Officer, serving as our chief operating decision maker, reviews financial information on the basis of our consolidated financial results for purposes of making resource allocation decisions.

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5. Detail of Accrued Liabilities

Accrued liabilities consisted of the following:



	June 30, 2018		December 31, 2017
(in thousands)	(Unaudited)
Accrued payroll and related benefits	$	20,369	$	28,043
Accrued interest	9,860		18,017
Accrued network payables	18,678		21,999
Accrued revenue share expenses	3,596		2,228
Other accrued liabilities	20,076		18,962
Total accrued liabilities	$	72,579	$	89,249

6. Debt and Credit Facilities

Our total outstanding debt as of June 30, 2018 and December 31, 2017 was as follows:



	June 30, 2018			December 31, 2017
(in thousands)	(Unaudited)
Credit Facilities:
Tranche C Term Loans, due March 2023	$	1,697,745		$	—
Original issue discount	(18,522		)	—
Deferred financing costs	(16,822		)	—
Second Lien Term Loans, due March 2024	220,000			—
Original issue discount	(3,495		)	—
Deferred financing costs	(2,210		)	—
Initial Term Loans, due 2019	—			889,976
Original issue discount	—			(2,607		)
Deferred financing costs	—			(6,449		)
Tranche B Term Loans, due 2019	—			662,396
Original issue discount	—			(809		)
Deferred financing costs	—			(5,833		)
Senior Notes:
Syniverse Notes, due January 2019	41,727			41,727
Deferred financing costs	(171		)	(322		)
SFHC Notes, due 2022	—			369,547
Deferred financing costs	—			(4,418		)
Total Debt and Credit Facilities	1,918,252			1,943,208
Less: Current portion
Long-term debt, current portion	$	(58,747	)	$	(2,622	)
Original issue discount, current portion	186			7
Deferred financing costs, current portion	340			20
Current portion of long-term debt, net of original issue discount and deferred financing costs	$	(58,221	)	$	(2,595	)
Long-term debt, net of original issue discount and deferred financing costs	$	1,860,031		$	1,940,613

Amortization of original issue discount and deferred financing costs for the three and six months ended June 30, 2018 was $1.9 million and $4.8 million, respectively. Amortization of original issue discount and deferred financing costs for the three and six months ended June 30, 2017 was $3.3 million and $6.5 million, respectively. Amortization was related to our Senior

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Credit Facility (as defined below), First Lien and Second Lien credit facilities (as defined below) and our Senior Notes (as defined below) and were recorded in interest expense in the unaudited condensed consolidated statements of operations.

Credit Facilities

Senior Credit Facilities

On April 23, 2012, we entered into a credit agreement (the “Credit Agreement”) with Buccaneer Holdings, LLC (as successor by merger to Buccaneer), Barclays Bank PLC, as administrative agent, swing line lender and letters of credit issuer, and the other financial institutions and lenders from time to time party thereto, providing for a senior credit facility consisting of (i) a $950.0 million term loan facility (the “Initial Term Loans”); and (ii) a $150.0 million revolving credit facility for the making of revolving loans, swing line loans and issuance of letters of credit.

On June 28, 2013, the Company borrowed $700.0 million of incremental term loans (the “Tranche B Term Loans”), pursuant to an incremental amendment to the Credit Agreement. The proceeds of the Tranche B Term Loans were used to refinance indebtedness used to fund the MACH Acquisition.

On September 23, 2013, the Company entered into the Second Amendment to the Credit Agreement. Under the Second Amendment, the rate at which the Initial Term Loans under the Credit Agreement bear interest was amended to reduce (i) the margin for Eurodollar rate loans from 3.75% to 3.00%, (ii) the margin for base rate loans from 2.75% to 2.00%, (iii) the Eurodollar rate floor from 1.25% to 1.00% and (iv) the base rate floor from 2.25% to 2.00%.

On April 14, 2017, we entered into an amendment (the “Amendment”) to the Credit Agreement to, among other things, (i) extend the scheduled maturity date of the revolving credit commitments to January 15, 2019, (ii) make certain modifications to the financial maintenance covenant, and (iii) provide for a flat commitment fee payable to each revolving credit lender of 0.50%. In addition, in connection with the Amendment, we reduced the aggregate revolving credit commitments from $150.0 million to $85.6 million and the letter of credit sublimit from $50.0 million to $40.0 million.

First Lien Credit Facility

On March 9, 2018, we completed the refinancing (the “2018 Refinancing”) of our old first lien credit facility (the “Old First Lien Credit Facility”) with the fifth amendment to the Old First Lien Credit Facility. The new first lien credit facility (the “New First Lien Credit Facility”), among other things, (i) extends the scheduled maturity date of the revolving credit facility (the “Revolving Credit Facility”), by converting the Revolving Credit Facility into a new tranche of revolving credit commitments (the “New Extended Revolving Credit Facility”), (ii) provides for a new tranche of term loans “C” in an aggregate principal amount of $1,702 million (the “Tranche C Term Loans”), (iii) amends the Old First Lien Credit Facility to, among other things, permit incurrence of the Tranche C Term Loans and the Second Lien Term Loans (as defined below) and (iv) further amends certain terms and conditions of the Old First Lien Credit Facility and the security agreement and guarantees entered into in connection therewith. The New Extended Revolving Credit Facility will mature on December 9, 2022 and the Tranche C Term Loans will mature on March 9, 2023. The Company’s obligations under the New Extended Revolving Credit Facility and the Tranche C Term Loans are guaranteed by the same guarantors, and secured by the same assets, that guaranteed and secured the Revolving Credit Facility and the Old First Lien Credit Facility.

Beginning with the end of the first full fiscal quarter commencing after March 9, 2018 (the “Closing Date”), the Tranche C Term Loans began amortizing in equal quarterly installments in an amount equal to 0.25% per quarter of the original principal amount thereof, with the remaining balance due at final maturity.

Borrowings under the New Extended Revolving Credit Facility and the Tranche C Term Loans bear interest at a floating rate which can be, at the Company’s option, either (i) a Eurodollar borrowing rate for a specified interest period plus an applicable margin or, (ii) an alternative base rate plus an applicable margin, subject to, a base rate floor of 0.00%, and in the case of the Tranche C Term Loans, a Eurodollar rate floor of 1.00%. The applicable margin for borrowings under the New Extended Revolving Credit Facility ranges from 4.50% to 5.00% per annum for Eurodollar loans and from 3.50% to 4.00% per annum for base rate loans and is determined by reference to a pricing grid based on the Company’s consolidated net first lien leverage ratio. The applicable margin for the Tranche C Term Loans is 5.00% per annum for Eurodollar loans and 4.00% per annum for base rate loans.

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The New First Lien Credit Facility contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are subject to customary exceptions and limited to the following: limitations on the incurrence of debt, liens, fundamental changes, restrictions on subsidiary distributions, transactions with affiliates, further negative pledge, asset sales, restricted equity and debt payments, investments and acquisitions, repayment of certain debt in the event of a change of control, amendments of certain debt documents and the activities of Buccaneer Holdings, LLC.

There are no financial covenants included in the New First Lien Credit Facility other than a springing maximum net first lien leverage ratio of (i) 6.50:1.00 for the fiscal quarters ended on June 30, 2018 and September 30, 2018 and (ii) 6.25:1.00 for the fiscal quarter ended on December 31, 2018 and each fiscal quarter ended thereafter, which is tested only for the benefit of the revolving lenders and only (x) commencing with the first full fiscal quarter of the Company after the Closing Date, when, at the end of any fiscal quarter, any revolving loans, any swing line loans or any letter of credit obligations (excluding undrawn letters of credit not in excess of $10.0 million in the aggregate and any letters of credit which are cash collateralized to at least 105.0% of their maximum stated amount) are outstanding and (y) upon an extension of credit under the New Extended Revolving Credit Facility in the form of the making of a revolving loan or a swing line loan, or the issuance of a letter of credit.

In connection with the 2018 Refinancing, we incurred debt modification costs of $9.6 million which was recorded in interest expense and loss on early extinguishment of debt, net, of $4.9 million for the period ended June 30, 2018 in the unaudited condensed consolidated statements of operations. We also recorded $23.2 million of original issue discount and $21.2 million of deferred financing costs to be amortized through interest expense over the life of the New Credit Facilities using the effective interest method.

As of June 30, 2018, there were no amounts outstanding under the New Extended Revolving Credit Facility.

Second Lien Credit Facility

On March 9, 2018, the Company also entered into a second lien credit agreement (the “Second Lien Credit Agreement”). The Second Lien Credit Agreement established the New Second Lien Credit Facility in an aggregate principal amount of $220 million. Proceeds of the term loans under the New Second Lien Credit Facility (the “Second Lien Term Loans”), together with proceeds of the Tranche C Term Loans and cash on hand, were used to fund the 2018 Refinancing. The Second Lien Term Loans will mature on March 11, 2024 and have no scheduled amortization prior to maturity. The Company’s obligations under the New Second Lien Credit Facility will be guaranteed by Buccaneer Holdings, LLC and certain subsidiary guarantors, which is junior to the lien securing facilities under the New First Lien Credit Facility.

Borrowings under the Second Lien Term Loans bear interest at a floating rate which can be, at the Company’s option, either (i) a Eurodollar borrowing rate for a specified interest period plus an applicable margin or, (ii) an alternative base rate plus an applicable margin, subject to a Eurodollar rate floor of 1.00% or a base rate floor of 0.00%, as applicable. The applicable margin for the Second Lien Term Loans is 9.00% per annum for Eurodollar loans and 8.00% per annum for base rate loans.

The Second Lien Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants. The negative covenants are subject to customary exceptions and limited to the following: limitations on the incurrence of debt, liens, fundamental changes, restrictions on subsidiary distributions, transactions with affiliates, further negative pledge, asset sales, restricted equity and debt payments, investments and acquisitions, repayment of certain debt in the event of a change of control, amendments of certain debt documents and the activities of Buccaneer Holdings, LLC.

There are no financial covenants included in the New Second Lien Credit Facility.

Proceeds of the Tranche C Term Loans, together with proceeds of the Second Lien Term Loans and cash on hand, were used to (i) prepay in full the Initial Term Loans and the Tranche B Term Loans, in each case, under and as defined in the Old First Lien Credit Facility, (ii) redeem in full the SFHC Notes and (iii) pay interest, premiums, costs, fees and expenses in connection with the foregoing. The New Extended Revolving Credit Facility replaced the old Revolving Credit Facility in its entirety. The New Extended Revolving Credit Facility will be used to finance the working capital needs of the company and for general corporate purposes.

The Company must prepay the term loans (New First Lien Credit Facility and the Second Lien Credit Facility) with the net cash proceeds of asset sales, casualty and condemnation events, the incurrence or issuance of indebtedness (other than indebtedness permitted to be incurred under the credit agreements (“First Lien Credit Agreement” and “Second Lien Credit Agreement”)) and, for the year ended December 31, 2018 and thereafter, excess cash flow (as defined by the credit agreements).

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In addition, the Company may voluntarily prepay the Term Loans, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty, except for the prepayment premiums set forth below:



Credit Facility	Anniversary	Prepayment Price
Tranche C Term Loans	On or prior to six months from closing date	101.000	%
Second Lien Term Loans	Prior to twelve months from closing date	103.000	%
Second Lien Term Loans	On or after twelve months and before twenty four months from closing date	102.000	%
Second Lien Term Loans	On or after twenty four months and before thirty six months from closing date	101.000	%

Senior Notes

SFHC Notes

On January 11, 2017, pursuant to the Exchange Offer, SFHC, our wholly-owned subsidiary, issued $369.5 million of SFHC Notes bearing interest at 9.125% per annum with a maturity date of January 15, 2022, and a like amount of Syniverse Notes were cancelled. We incurred debt modification fees of $9.8 million in connection with the Exchange Offer in the period ended March 31, 2017 which was recorded in Interest expense in the accompanying condensed consolidated statements of operations. On March 12, 2018, the SFHC Notes were redeemed in full in connection with the 2018 Refinancing.

Syniverse Notes

On December 22, 2010, we issued $475.0 million Syniverse Notes bearing interest at 9.125% that will mature on January 15, 2019. Interest on the notes is paid on January 15 and July 15 of each year. We incurred financing fees of $20.4 million in connection with the issuance of the Syniverse Notes which have been amortized over the term of the notes using the effective interest method.

The Syniverse Notes are guaranteed on a senior basis by the Subsidiary Guarantors. In addition, we have the ability to designate certain of our subsidiaries as unrestricted subsidiaries pursuant to the terms of the indenture governing our Syniverse Notes, and any subsidiary so designated will not be a guarantor of the notes. The right of noteholders to receive payment on the Syniverse Notes is effectively subordinated to the rights of our existing and future secured creditors. We may redeem the Syniverse Notes, at our option, in whole at any time or in part from time to time, at 100% of the principal amount of the Syniverse Notes to be redeemed, plus accrued and unpaid interest, if any, to the redemption date.

The Syniverse Notes contain customary negative covenants including, but not limited to, restrictions on our and our restricted subsidiaries’ ability to merge and consolidate, sell, transfer or otherwise dispose of assets, incur additional debt or issue certain preferred shares, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends on or make other distributions in respect of Syniverse’s capital stock or make other restricted payments or enter into certain transactions with affiliates, subject to certain exceptions.

On January 11, 2017 pursuant to the Exchange Offer, $369.5 million of Syniverse Notes were cancelled. Following the Exchange Offer, $105.5 million aggregate principal amount of the Syniverse Notes were outstanding. On April 25, 2017 and September 18, 2017, we repurchased $16.0 million and $7.7 million aggregate principal amount of the Syniverse Notes, respectively, and submitted them to Wilmington Trust, National Association, as trustee, for cancellation. On December 29, 2017, we redeemed an additional $40.0 million aggregate principal amount of the Syniverse Notes at 100%. Following these transactions, $41.7 million aggregate principal amount of the Syniverse Notes remains outstanding at June 30, 2018.

7. Stock-Based Compensation

Effective April 6, 2011, Syniverse Corporation, our indirect parent, established the 2011 Plan for the employees, consultants and directors of Syniverse Corporation and its subsidiaries. The 2011 Plan provides incentive compensation through grants of incentive or non-qualified stock options, stock purchase rights, restricted stock awards, restricted stock units or any combination of the foregoing. Syniverse Corporation will issue shares of its common stock to satisfy equity based compensation instruments.

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Stock-based compensation expense for the three and six months ended June 30, 2018 and 2017 was as follows:



	Three Months Ended June 30,
	2018		2017
(in thousands)	(Unaudited)
Cost of operations	$	231	$	218
Sales and marketing	713		798
General and administrative	3,058		3,543
Stock-based compensation	$	4,002	$	4,559




	Six Months Ended June 30,
	2018		2017
(in thousands)	(Unaudited)
Cost of operations	$	432	$	420
Sales and marketing	1,304		1,503
General and administrative	6,604		5,723
Stock-based compensation	$	8,340	$	7,646

The following table summarizes our stock option activity under the 2011 Plan for the six months ended June 30, 2018:



Stock Options	Shares		Weighted- Average Exercise Price
Outstanding at December 31, 2017	8,249,251		$	10.79
Granted	3,105,001		13.37
Canceled or expired	(638,250	)	11.01
Outstanding at June 30, 2018	10,716,002		$	11.48

The fair value of options granted during the six months ended June 30, 2018 was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:



Risk-free interest rate	2.4%
Volatility factor	26.5%
Dividend yield	—%
Weighted average expected life of options (in years)	5.6

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Restricted stock is issued and measured at fair value on the date of grant. The following table summarizes our restricted stock activity under the 2011 Plan for the six months ended June 30, 2018:



Restricted Stock	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2017	1,617,759		$	10.27
Granted	1,435,259		10.00
Vested	(731,250	)	10.55
Forfeited	(151,250	)	10.18
Outstanding at June 30, 2018	2,170,518		$	10.00

8. Employee Termination Benefits and Restructuring

The following table summarizes the activity in our employee termination benefit liabilities for the six months ended June 30, 2018:



	December 31, 2017							June 30, 2018
(in thousands)	Balance		Additions	Payments		Adjustments		Balance
Employee termination benefits	$	1,234	5,320	(3,273	)	(46	)	$	3,235

Employee termination benefits represents non-retirement post-employment benefit costs including severance benefits and other employee related costs that are unrelated to a restructuring plan.

The following table summarizes the activity in our restructuring liabilities for the six months ended June 30, 2018:



	December 31, 2017									June 30, 2018
(in thousands)	Balance		Additions		Payments			Adjustments		Balance
December 2016 Plan	$	937	39		(969		)	—		$	7
March 2016 Plan	$	1,579	177		(1,746		)	—		$	10
October 2014 Plan	$	275	—		(234		)	13		$	54
Total	$	2,791	$	216	$	(2,949	)	$	13	$	71

In December 2016, we implemented a restructuring plan (the “December 2016 restructuring plan”) to realign costs and expenses with revenue trends across our portfolio. As a result of this plan, we incurred severance related costs of $9.0 million. We have paid $9.0 million related to this plan as of June 30, 2018 and anticipate the remaining cash outlays to take place during 2018.

In March 2016, we implemented a restructuring plan (the “March 2016 restructuring plan”) to realign costs and expenses with revenue trends across our portfolio, reducing costs associated with certain of our legacy products and services to provide for increased investment in our growth businesses. As a result of this plan, we incurred severance related costs of $14.4 million and contract termination costs of $9.2 million related to the exit of data center leases. We have paid $23.5 million related to this plan as of June 30, 2018 and anticipate the remaining cash outlays to take place during 2018.

9. Income Taxes

We provide for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The effective tax rate for the three and six months ended June 30, 2018, was a provision of (19.9)%

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and (14.2)%, respectively. The effective tax rate for the three and six months ended June 30, 2017, was a benefit of 3.0% and 19.6%, respectively. The change in our effective tax rate was chiefly attributable to (i) the impact of the new U.S. base erosion and anti-abuse tax in 2018, (ii) the establishment of a valuation allowance against U.S. deferred tax assets which was first established in Q1 2017, (iii) the impact of the U.S. provisional transition tax offset by the change in valuation allowance, and (iv) the relative mix of earnings and losses in the U.S. versus foreign tax jurisdictions.

On December 22, 2017, the United States enacted comprehensive tax legislation called the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including reducing the US federal corporate tax rate from 35% to 21%, requiring a mandatory transition tax on unremitted foreign earnings, a move from a worldwide to a territorial tax system and placing potential limits on the deductibility of interest expense. In 2017, we recorded a provisional deferred income tax benefit of $36.8 million related to the revaluation of the Company’s net deferred tax assets and liabilities at the December 22, 2017 enactment date using the new 21% statutory rate. The calculation of the one-time transition tax is based on our total post-1986 deferred foreign income held in cash and other assets. We have recorded a provisional non-cash charge of $6.9 million for the transition tax on previously deferred foreign earnings. In addition, we continue to assess the other provisions of the Tax Act.

We, and our eligible subsidiaries, file a consolidated U.S. federal income tax return under Syniverse Corporation, our parent company. All subsidiaries incorporated outside of the U.S. are consolidated for financial reporting purposes; however, they are not eligible to be included in our consolidated U.S. federal income tax return. Separate provisions for income taxes have been recorded for these entities. We intend to reinvest substantially all of the unremitted earnings of our non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes, outside of the transition tax mentioned above, for these non-U.S. subsidiaries was recorded in the accompanying unaudited condensed consolidated statements of operations.

10. Commitments and Contingencies

We are currently a party to various claims and legal actions that arise in the ordinary course of business. We believe such claims and legal actions, individually and in the aggregate, will not have a material adverse effect on our business, financial condition, results of operations or cash flows. As of June 30, 2018, we have considered all of the claims and disputes of which we are aware and have provided for probable losses, which are not material to the unaudited condensed consolidated financial statements.

11. Fair Value Measurements

The accounting standards for fair value require disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is as follows:

Level 1—Quoted prices for identical assets and liabilities in active markets.

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs for the asset or liability.

Transfers between levels are determined at the end of the reporting period. No transfers between levels have been recognized for the six months ended June 30, 2018 and 2017.

Cash, accounts receivable, accounts payable and accrued liabilities are reflected in the condensed consolidated balance sheets at their carrying value, which approximate their fair value due to their short maturity.

From time to time, we measure certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment. We estimate the fair value of our long-lived assets using company-specific assumptions which would be categorized within Level 3 of the fair value hierarchy.

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The principal amount and fair value of our long-term debt, as of June 30, 2018 and December 31, 2017 were as follows:



	June 30, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
(in thousands)	(Unaudited)
Tranche C Term Loans	$	1,697,745	$	1,695,623	$	—	$	—
Second Lien Term Loans	$	220,000	$	218,900	$	—	$	—
Syniverse Notes	$	41,727	$	41,466	$	41,727	$	41,414
Initial Term Loans	$	—	$	—	$	889,976	$	874,401
Tranche B Term Loans	$	—	$	—	$	662,396	$	650,804
SFHC Notes	$	—	$	—	$	369,547	$	378,786

The fair values of our long-term debt were based upon quoted market prices in inactive markets for similar instruments (Level 2).

12. Related Party Transactions

Arrangements with Carlyle

On January 13, 2011, we entered into a ten-year consulting agreement with Carlyle under which we pay Carlyle a fee for consulting services Carlyle provides to us and our subsidiaries. During the three and six months ended June 30, 2018, we recorded $0.8 million and $1.6 million, respectively, of expenses associated with the consulting fee and the reimbursement of out-of-pocket expenses. During the three and six months ended June 30, 2017, we recorded $0.8 million and $1.5 million, respectively, of expenses associated with the consulting fee and the reimbursement of out-of-pocket expenses.

Carlyle, from time to time, participates as a debt holder within the syndicate under our Term Loans. As of June 30, 2018, Carlyle held $47.9 million of our Tranche C Term Loans. As of December 31, 2017, Carlyle held $19.4 million and $24.4 million of our Initial Term Loans and Tranche B Term Loans, respectively.

From time to time, and in the ordinary course of business we may engage other Carlyle portfolio companies as service providers and other Carlyle portfolio companies may engage us as a service provider. Revenues and expenses associated with these related parties were not material during the three and six months ended June 30, 2018 and 2017.

13. Supplemental Consolidating Financial Information

On December 22, 2010, Syniverse issued $475.0 million of Syniverse Notes guaranteed on a joint and several basis by each of its existing and future domestic restricted subsidiaries that guarantee the Senior Credit Facility (collectively, the “Subsidiary Guarantors”). Such guarantees are irrevocable, full, unconditional and joint and several.

We have presented supplemental consolidating balance sheets, statements of operations, statements of comprehensive income (loss) and statements of cash flows for Syniverse Holdings, Inc., which we refer to in this footnote only as Syniverse, Inc., the subsidiary guarantors and the subsidiary non-guarantors for all periods presented to reflect the guarantor structure under the Senior Notes. The supplemental financial information reflects the investment of Syniverse, Inc. using the equity method of accounting.

The Company is presenting the tables below in order to comply with the covenant contained in the indenture of the Syniverse Notes.

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CONSOLIDATING BALANCE SHEET (UNAUDITED)

AS OF JUNE 30, 2018

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors		Subsidiary Non-Guarantors			Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	48,630	$	32,440		$	—		$	81,070
Accounts receivable, net of allowances	—			122,208		41,053			—			163,261
Accounts receivable - affiliates	2,037,512			1,775,816		87,091			(3,900,419		)	—
Income taxes receivable	—			281		4,370			—			4,651
Prepaid and other current assets	240			16,952		8,965			—			26,157
Total current assets	2,037,752			1,963,887		173,919			(3,900,419		)	275,139
Property and equipment, net	—			65,339		23,200			—			88,539
Capitalized software, net	—			74,241		20,121			—			94,362
Goodwill	—			1,924,005		379,758			—			2,303,763
Identifiable intangibles, net	—			196,563		33,477			—			230,040
Deferred tax assets	—			—		3,389			—			3,389
Investment in unconsolidated subsidiaries	—			41,747		4,549			—			46,296
Other assets	826			2,194		3,072			—			6,092
Investment in subsidiaries	2,479,053			520,599		—			(2,999,652		)	—
Total assets	$	4,517,631		$	4,788,575	$	641,485		$	(6,900,071	)	$	3,047,620

LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable	$	—		$	27,790	$	9,176		$	—		$	36,966
Accounts payable - affiliates	1,734,771			2,127,142		38,505			(3,900,418		)	—
Income taxes payable	—			1,333		1,643			—			2,976
Accrued liabilities	9,754			40,462		22,363			—			72,579
Deferred revenues	—			6,106		2,701			—			8,807
Current portion of capital lease obligation	—			5,157		1,027			—			6,184
Current portion of long-term debt, net of original issue discount and deferred financing costs	58,221			—		—			—			58,221
Total current liabilities	1,802,746			2,207,990		75,415			(3,900,418		)	185,733
Long-term liabilities:
Deferred tax liabilities	(21,749		)	85,952		12,873			—			77,076
Deferred revenues	—			1,618		478			—			2,096
Long-term capital lease obligation, net of current portion	—			2,024		150			—			2,174
Long-term debt, net of current portion, original issue discount and deferred financing costs	1,860,031			—		—			—			1,860,031
Other long-term liabilities	—			11,938		26,207			—			38,145
Total liabilities	3,641,028			2,309,522		115,123			(3,900,418		)	2,165,255
Commitments and contingencies:
Stockholder equity:
Common stock	—			—		—			—			—
Additional paid-in capital	1,202,749			2,246,699		745,835			(2,913,698		)	1,281,585
(Accumulated deficit) retained earnings	(325,176		)	231,821		(145,639		)	(87,077		)	(326,071		)
Accumulated other comprehensive (loss) income	(970		)	533		(79,597		)	1,122			(78,912		)
Total Syniverse, Inc. stockholder equity	876,603			2,479,053		520,599			(2,999,653		)	876,602
Noncontrolling interest	—			—		5,763			—			5,763
Total equity	876,603			2,479,053		526,362			(2,999,653		)	882,365
Total liabilities and stockholder equity	$	4,517,631		$	4,788,575	$	641,485		$	(6,900,071	)	$	3,047,620

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CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2018

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments		Consolidated
Revenues	$	—		$	151,169		$	39,672		$	—	$	190,841
Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)	—			77,575			7,944			—		85,519
Sales and marketing	—			11,775			5,300			—		17,075
General and administrative	—			20,146			8,899			—		29,045
Depreciation and amortization	—			29,019			8,989			—		38,008
Employee termination benefits	—			313			691			—		1,004
Restructuring	—			49			11			—		60
	—			138,877			31,834			—		170,711
Operating income	—			12,292			7,838			—		20,130
Other income (expense), net:
(Loss) income from equity investment	(18,322		)	7,743			—			10,579		—
Interest expense, net	(38,842		)	(148		)	(42		)	—		(39,032		)
Equity (loss) income in investee	—			(457		)	39			—		(418		)
Other, net	36,592			(36,171		)	1,534			—		1,955
	(20,572		)	(29,033		)	1,531			10,579		(37,495		)
(Loss) income before (benefit from) provision for income taxes	(20,572		)	(16,741		)	9,369			10,579		(17,365		)
Provision for income taxes	—			1,581			1,872			—		3,453
Net (loss) income	(20,572		)	(18,322		)	7,497			10,579		(20,818		)
Net loss attributable to noncontrolling interest	—			—			(246		)	—		(246		)
Net (loss) income attributable to Syniverse, Inc.	$	(20,572	)	$	(18,322	)	$	7,743		$	10,579	$	(20,572	)

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CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2018

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments		Consolidated
Net (loss) income	$	(20,572	)	$	(18,322	)	$	7,497		$	10,579	$	(20,818	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	—			—			(26,767		)	—		(26,767		)
Amortization of unrecognized loss included in net periodic pension cost, net of income tax expense of $22	—			—			50			—		50
Other comprehensive loss	—			—			(26,717		)	—		(26,717		)
Comprehensive (loss) income	(20,572		)	(18,322		)	(19,220		)	10,579		(47,535		)
Less: comprehensive loss attributable to noncontrolling interest	—			—			(390		)	—		(390		)
Comprehensive (loss) income attributable to Syniverse, Inc.	$	(20,572	)	$	(18,322	)	$	(18,830	)	$	10,579	$	(47,145	)

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CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2018

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Revenues	$	—		$	300,075		$	79,424		$	—		$	379,499
Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)	—			154,812			14,139			—			168,951
Sales and marketing	—			24,631			11,386			—			36,017
General and administrative	—			40,890			18,091			—			58,981
Depreciation and amortization	—			59,727			18,190			—			77,917
Employee termination benefits	—			3,443			1,877			—			5,320
Restructuring	—			180			36			—			216
	—			283,683			63,719			—			347,402
Operating income	—			16,392			15,705			—			32,097
Other income (expense), net:
(Loss) income from equity investment	(2,043		)	5,944			—			(3,901		)	—
Interest expense, net	(74,378		)	(260		)	(6,855		)	—			(81,493		)
Loss on early extinguishment of debt, net	(3,910		)	—			(958		)	—			(4,868		)
Equity (loss) income in investee	—			(930		)	102			—			(828		)
Other, net	18,007			(18,295		)	1,040			—			752
	(62,324		)	(13,541		)	(6,671		)	(3,901		)	(86,437		)
(Loss) income before (benefit from) provision for income taxes	(62,324		)	2,851			9,034			(3,901		)	(54,340		)
Provision for income taxes	—			4,894			2,820			—			7,714
Net (loss) income	(62,324		)	(2,043		)	6,214			(3,901		)	(62,054		)
Net income attributable to nonredeemable noncontrolling interest	—			—			270			—			270
Net (loss) income attributable to Syniverse, Inc.	$	(62,324	)	$	(2,043	)	$	5,944		$	(3,901	)	$	(62,324	)

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CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2018

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Net (loss) income	$	(62,324	)	$	(2,043	)	$	6,214		$	(3,901	)	$	(62,054	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	—			—			(16,012		)	—			(16,012		)
Amortization of unrecognized loss included in net periodic pension cost, net of income tax expense of $45	—			—			103			—			103
Other comprehensive loss	—			—			(15,909		)	—			(15,909		)
Comprehensive loss	(62,324		)	(2,043		)	(9,695		)	(3,901		)	(77,963		)
Less: comprehensive income attributable to nonredeemable noncontrolling interest	—			—			47			—			47
Comprehensive loss attributable to Syniverse, Inc.	$	(62,324	)	$	(2,043	)	$	(9,742	)	$	(3,901	)	$	(78,010	)

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CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2018

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments		Consolidated
Cash flows from operating activities
Net cash provided by (used in) operating activities	$	6,954		$	63,048		$	(27,997	)	$	—	$	42,005
Cash flows from investing activities
Capital expenditures	—			(22,777		)	(8,002		)	—		(30,779		)
Purchase of certificate of deposit	—			—			—			—		—
Receipts on intercompany notes	—			—			—			—		—
Net cash used in investing activities	—			(22,777		)	(8,002		)	—		(30,779		)
Cash flows from financing activities
Proceeds from issuance of long-term debt	1,922,000			—			—			—		1,922,000
Principal payments on long-term debt	(1,926,255		)	—			—			—		(1,926,255		)
Debt modification costs paid	—			(40,446		)	—			—		(40,446		)
Payments on capital lease obligation	—			(4,349		)	(258		)	—		(4,607		)
Distribution to Syniverse Corporation	(2,699		)	—			—			—		(2,699		)
Distribution to noncontrolling interest	—			—			(3,588		)	—		(3,588		)
Net cash used in financing activities	(6,954		)	(44,795		)	(3,846		)	—		(55,595		)
Effect of exchange rate changes on cash	—			—			(2,124		)	—		(2,124		)
Net decrease in cash, cash equivalents and restricted cash	—			(4,524		)	(41,969		)	—		(46,493		)
Cash, cash equivalents and restricted cash at beginning of period	—			53,709			74,968			—		128,677
Cash, cash equivalents and restricted cash at end of period	$	—		$	49,185		$	32,999		$	—	$	82,184

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CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2017

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors		Subsidiary Non-Guarantors			Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	53,243	$	74,434		$	—		$	127,677
Accounts receivable, net of allowances	—			120,369		47,780			—			168,149
Accounts receivable - affiliates	2,071,648			1,716,547		57,954			(3,846,149		)	—
Income taxes receivable	—			231		3,903			—			4,134
Prepaid and other current assets	686			13,856		8,662			—			23,204
Total current assets	2,072,334			1,904,246		192,733			(3,846,149		)	323,164
Property and equipment, net	—			70,355		22,848			—			93,203
Capitalized software, net	—			78,212		24,242			—			102,454
Goodwill	—			1,922,230		392,051			—			2,314,281
Identifiable intangibles, net	—			218,332		40,654			—			258,986
Deferred tax assets	21,749			—		3,608			(21,749		)	3,608
Investment in unconsolidated subsidiaries	—			42,676		4,582			—			47,258
Other assets	29			2,719		2,224			—			4,972
Investment in subsidiaries	2,152,970			178,693		—			(2,331,663		)	—
Total assets	$	4,247,082		$	4,417,463	$	682,942		$	(6,199,561	)	$	3,147,926

LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities:
Accounts payable	$	—		$	14,834	$	6,003		$	—		$	20,837
Accounts payable - affiliates	1,715,046			2,094,598		36,504			(3,846,148		)	—
Income taxes payable	—			242		4,542			—			4,784
Accrued liabilities	2,853			43,484		42,912			—			89,249
Deferred revenues	—			3,975		2,022			—			5,997
Current portion of capital lease obligation	—			6,311		99			—			6,410
Current portion of long-term debt, net of original issue discount and deferred financing costs	2,595			—		—			—			2,595
Total current liabilities	1,720,494			2,163,444		92,082			(3,846,148		)	129,872
Long-term liabilities:
Deferred tax liabilities	—			84,186		11,356			(21,749		)	73,793
Deferred revenues	—			1,852		244			—			2,096
Long-term capital lease obligation, net of current portion	—			4,229		111			—			4,340
Long-term debt, net of current portion, original issue discount and deferred financing costs	1,575,484			—		365,129			—			1,940,613
Other long-term liabilities	—			10,782		26,023			—			36,805
Total liabilities	3,295,978			2,264,493		494,945			(3,867,897		)	2,187,519
Commitments and contingencies
Stockholder equity:
Common stock	—			—		—			—			—
Additional paid-in capital	1,214,927			1,919,497		368,464			(2,226,944		)	1,275,944
(Accumulated deficit) retained earnings	(262,853		)	232,940		(125,858		)	(105,844		)	(261,615		)
Accumulated other comprehensive (loss) income	(970		)	533		(63,913		)	1,124			(63,226		)
Total Syniverse, Inc. stockholder equity	951,104			2,152,970		178,693			(2,331,664		)	951,103
Noncontrolling interest	—			—		9,304			—			9,304
Total equity	951,104			2,152,970		187,997			(2,331,664		)	960,407
Total liabilities and stockholder equity	$	4,247,082		$	4,417,463	$	682,942		$	(6,199,561	)	$	3,147,926

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CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2017

(IN THOUSANDS)



	Syniverse			Subsidiary Guarantors			Subsidiary Non-Guarantors			Adjustments			Consolidated
Revenues	$	—		$	151,203		$	43,304		$	—		$	194,507
Costs and expenses:
Cost of operations (excluding depreciation and amortization shown separately below)	—			81,896			6,595			—			88,491
Sales and marketing	—			12,700			5,636			—			18,336
General and administrative	—			16,243			5,225			—			21,468
Depreciation and amortization	—			39,107			8,884			—			47,991
Employee termination benefits	—			(31		)	117			—			86
Restructuring	—			2,475			403			—			2,878
	—			152,390			26,860			—			179,250
Operating (loss) income	—			(1,187		)	16,444			—			15,257
Other income (expense), net:
Income (loss) from equity investment	33,652			1,038			—			(34,690		)	—
Interest expense, net	(21,712		)	(162		)	(8,594		)	—			(30,468		)
Gain on early extinguishment of debt, net	362			—			—			—			362
Equity (loss) income in investee	—			(474		)	67			—			(407		)
Other, net	(33,910		)	33,801			(853		)	—			(962		)
	(21,608		)	34,203			(9,380		)	(34,690		)	(31,475		)
(Loss) income before (benefit from) provision for income taxes	(21,608		)	33,016			7,064			(34,690		)	(16,218		)
(Benefit from) provision for income taxes	(5,245		)	(636		)	5,395			—			(486		)
Net (loss) income	(16,363		)

SYNIVERSE HOLDINGS INC 10-Q