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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2018
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Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Nevada
(State or other jurisdiction of
incorporation or organization)
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81-0422894
(I.R.S. Employer
Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.001 par value
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Nasdaq Global Select Market
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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(1)
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For this purpose only, “non-affiliates” excludes directors and executive officers.
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16
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Glossary of Terms
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The following terms or acronyms used in this Form 10-K are defined below:
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Term or Acronym
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Definition
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2018 Notes
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8.125% senior subordinated notes due 2018 issued by SGC
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2020 Notes
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6.250% senior subordinated notes due 2020 issued by SGI
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2021 Notes
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6.625% senior subordinated notes due 2021 issued by SGI
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2022 Secured Notes
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7.000% senior secured notes due 2022 issued by SGI
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2025 Secured Notes
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5.000% senior secured notes due 2025 issued by SGI
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2026 Secured Euro Notes
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3.375% senior secured notes due 2026 issued by SGI
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2026 Unsecured Euro Notes
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5.500% senior unsecured notes due 2026 issued by SGI
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AEBITDA
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Adjusted EBITDA, our performance measure of profit or loss for our business segments (see Note 3). We have renamed our performance measure of profit or loss from Attributable EBITDA to Adjusted EBITDA, however such change had no impact on our definition or calculation of our performance measure of profit or loss.
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ASC
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Accounting Standards Codification
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ASU
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Accounting Standards Update
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B2C
|
business to consumer model
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Bally
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Bally Technologies, Inc.
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Coin-in
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the amount wagered
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CSG
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Beijing CITIC Scientific Games Technology Co., Ltd.
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CSP
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Cooperative Services Program
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D&A
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depreciation, amortization and impairments (excluding goodwill)
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Don Best
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Don Best Sports Corporation and DBS Canada Corporation
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ERP
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enterprise resource planning
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ESPP
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employee stock purchase plan
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ETS
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electronic table system
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Exchange Act
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Securities Exchange Act of 1934, as amended
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FASB
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Financial Accounting Standards Board
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GDPR
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General Data Protection Regulation
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GLB
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Beijing Guard Libang Technology Co., Ltd.
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Guarantor Subsidiaries
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substantially all of SGC’s 100%-owned U.S. subsidiaries other than SGC’s 100%-owned U.S. Social gaming subsidiaries
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Hellenic Lotteries
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Hellenic Lotteries S.A.
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Konami
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Konami Digital Entertainment, Inc.
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KPIs
|
Key Performance Indicators
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LAP
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local-area progressive
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Lapis
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Lapis Software Associates, LLC
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LBO
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licensed betting office
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LNS
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Lotterie Nazionali S.r.l.
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Net win
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Coin-in less payouts
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Non-Guarantor Subsidiaries
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SGC’s U.S. subsidiaries that are not Guarantor Subsidiaries and SGC’s foreign subsidiaries
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Northstar Illinois
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Northstar Lottery Group, LLC
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Northstar New Jersey
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Northstar New Jersey Lottery Group, LLC
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Note
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a note in the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K, unless otherwise indicated
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NOL
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net operating loss
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NYX
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NYX Gaming Group Limited
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NYX acquisition
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the acquisition of 100% of the ordinary shares of NYX by SGC on January 5, 2018
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Participation
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with respect to our Gaming business, refers to gaming machines provided to customers through service or leasing arrangements in which we earn revenues and are paid based on: (1) a percentage of the amount wagered less payouts; (2) fixed daily-fees; (3) a percentage of the amount wagered; or (4) a combination of (2) and (3), and with respect to our Lottery business, refers to a contract or arrangement in which we earn revenues and are paid based on a percentage of retail sales
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PASPA
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Professional and Amateur Sports Protection Act
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PCS
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post-contract customer support
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PMA
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private management agreement
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POS
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percentage of retail sales
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PPU
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price-per-unit
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PTG
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proprietary table games
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R&D
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research and development
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RCN
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Roberts Communications Network, LLC
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RFP
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request for proposal
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RMG
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real-money gaming
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RSU
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restricted stock unit
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SEC
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Securities and Exchange Commission
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Secured Notes
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refers to the 2022 Secured Notes, 2025 Secured Notes, and 2026 Secured Euro Notes, collectively
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Securities Act
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Securities Act of 1933, as amended
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Senior Notes
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the Secured Notes and the Unsecured Notes
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SG&A
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selling, general and administrative
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SGC
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Scientific Games Corporation
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SGI
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Scientific Games International, Inc., a wholly-owned subsidiary of SGC
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Shufflers
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various models of automatic card shufflers, deck checkers and roulette chip sorters
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Subordinated Notes
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refers to the 2020 Notes and 2021 Notes, collectively
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Tech Art
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Tech Art, Inc. and related entities
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Unsecured Notes
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10.000% senior unsecured notes due 2022 issued by SGI
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U.S. GAAP
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accounting principles generally accepted in the U.S.
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U.S. jurisdictions
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the 50 states in the U.S. plus the District of Columbia and Puerto Rico
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VGT
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video gaming terminal
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VLT
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video lottery terminal
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WAP
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wide-area progressive
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WMS
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WMS Industries, Inc.
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•
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competition;
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•
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U.S. and international economic and industry conditions;
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•
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slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;
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•
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ownership changes and consolidation in the gaming industry;
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•
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opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;
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•
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inability to adapt to, and offer products that keep pace with, evolving technology, including any failure of our investment of significant resources in our R&D efforts;
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•
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inability to develop successful products and services and capitalize on trends and changes in our industries, including the expansion of internet and other forms of interactive gaming;
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•
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laws and government regulations, both foreign and domestic, including those relating to gaming, data privacy and security, including with respect to the collection, storage, use, transmission and protection of personal information and other consumer data, and environmental laws, and those laws and regulations that affect companies conducting business on the internet, including online gambling;
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•
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the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in this area is likely within the U.S. and other jurisdictions;
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•
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significant opposition in some jurisdictions to interactive social gaming, including social casinos and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casinos specifically, and how this could result in a prohibition on interactive social gaming or social casinos altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations;
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•
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legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, especially internet wagering, social gaming and sports wagering;
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•
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reliance on technological blocking systems;
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•
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expectations of shift to regulated online gaming or sports wagering;
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•
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expectations of growth in total consumer spending on social casino gaming;
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•
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dependence upon key providers in our Social gaming business;
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•
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inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
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•
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protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;
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•
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security and integrity of our products and systems;
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•
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reliance on or failures in information technology and other systems;
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•
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security breaches and cyber-attacks, challenges or disruptions relating to the implementation of a new global enterprise resource planning system;
|
•
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failure to maintain adequate internal control over financial reporting;
|
•
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natural events that disrupt our operations or those of our customers, suppliers or regulators;
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•
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inability to benefit from, and risks associated with, strategic equity investments and relationships;
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•
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failure to achieve the intended benefits of our acquisitions, including the NYX acquisition and the Don Best acquisition;
|
•
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the ability to successfully integrate our acquisitions, including the NYX acquisition and the Don Best acquisition;
|
•
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risks related to the possibility of an initial public offering of a minority interest in our social gaming business, including the possibility that the contemplated initial public offering will not be pursued or completed and that the anticipated benefits of the contemplated initial public offering are not realized or that we may not be able to utilize the proceeds of the contemplated initial public offering as expected;
|
•
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incurrence of restructuring costs;
|
•
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implementation of complex new accounting standards;
|
•
|
changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;
|
•
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changes in demand for our products;
|
•
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fluctuations in our results due to seasonality and other factors;
|
•
|
dependence on suppliers and manufacturers;
|
•
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risks relating to foreign operations, including anti-corruption laws, fluctuations in currency rates, restrictions on the payment of dividends from earnings, restrictions on the import of products and financial instability, including the potential impact to our business resulting from the considerable uncertainty around the U.K.’s withdrawal from the European Union (“EU”) and the possibility of the British parliament’s failure to approve the U.K.’s withdrawal from the EU, resulting in a “hard Brexit” or “no deal Brexit”, and the potential impact to our instant lottery product concession or VLT lease arrangements resulting from the economic and political conditions in Greece;
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•
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possibility that the renewal of LNS’ concession to operate the Italian instant games lottery is not finalized (including as the result of a protest or any right of appeal on a court ruling on a protest);
|
•
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the impact of the new U.K. legislation approving the reduction of fixed-odds betting terminals maximum stakes limit;
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•
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changes in tax laws or tax rulings (including the comprehensive U.S. tax reform in 2017), or the examination of our tax positions;
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•
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difficulty predicting what impact, if any, the shutdown of the U.S. government or new tariffs imposed by and other trade actions taken by the U.S. and foreign jurisdictions could have on our business;
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•
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dependence on key employees;
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•
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litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products and systems, our employees (including labor disputes), intellectual property, environmental laws and our strategic relationships;
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•
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level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future cash needs;
|
•
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inability to reduce or refinance our indebtedness;
|
•
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restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
|
•
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influence of certain stockholders, including decisions that may conflict with the interests of other stockholders; and
|
•
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stock price volatility.
|
•
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Drive innovation
— We place great emphasis on producing innovative and high-performing Gaming, Lottery, Social and Digital content, products and services that provide differentiated value to our customers. We seek to leverage our expansive content library and portfolio of proprietary and licensed intellectual property, and use our extensive player and customer research in order to bring innovation to our products, services and processes.
|
•
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Focus on prudent fiscal management to improve financial returns and cash flow from operations
— Setting the right operational and strategic priorities to support our customers, aligning our resources to achieve our targets and tracking our performance is our near term focus. All of these factors, if successful, should increase our cash flow from operations available to reduce our financial leverage.
|
•
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Build a corporate culture open to new ideas and opportunities that help to accelerate deleveraging
— We are creating a culture of discipline that aligns and uses our resources more effectively, and at the same time cultivates open minds willing to capitalize on additional opportunistic situations where we might be able to accelerate our deleveraging efforts.
|
•
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adopt additional rules and regulations under the implementing statutes;
|
•
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investigate violations of gaming regulations;
|
•
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enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses;
|
•
|
review the character and fitness of manufacturers, distributors and operators of gaming products and services and make determinations regarding their suitability or qualification for licensure;
|
•
|
grant licenses for the manufacture, distribution and operation of gaming products and services;
|
•
|
review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and
|
•
|
establish and collect related fees and/or taxes.
|
Name
|
|
Age
|
|
Position
|
Barry L. Cottle
|
|
57
|
|
President and Chief Executive Officer
|
Michael A. Quartieri
|
|
50
|
|
Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
|
Michael F. Winterscheidt
|
|
48
|
|
Senior Vice President and Chief Accounting Officer
|
James Sottile
|
|
58
|
|
Executive Vice President and Chief Legal Officer
|
Patrick J. McHugh
|
|
54
|
|
Executive Vice President and Group Chief Executive, Lottery
|
Stephen E. Richardson
|
|
51
|
|
Senior Vice President, Chief Compliance Officer and Director of Corporate Security
|
•
|
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after they are filed electronically with or furnished to the SEC;
|
•
|
Section 16 ownership reports filed by our executive officers, directors and 10% stockholders on Forms 3, 4 and 5 and amendments to those reports as soon as reasonably practicable after they are filed electronically with the SEC; and
|
•
|
our Code of Business Conduct, which applies to all of our officers, directors and employees (including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer).
|
•
|
these platform providers discontinue or limit our access to their platforms;
|
•
|
governments or private parties, such as internet providers, impose bandwidth restrictions or increase charges or restrict or prohibit access to those platforms;
|
•
|
these platforms decline in popularity;
|
•
|
these platforms modify their current discovery mechanisms, communication channels available to developers, respective terms of service or other policies, including fees;
|
•
|
these platforms impose restrictions or make it more difficult for players to buy virtual currency; or
|
•
|
these platforms change how the personal information of players is made available to developers or develop their own competitive offerings.
|
•
|
cause us to incur greater costs and expenses in the protection of our intellectual property;
|
•
|
potentially negatively impact our intellectual property rights;
|
•
|
cause one or more of our patents, trademarks, copyrights or other intellectual property interests to be ruled or rendered
|
•
|
divert management’s attention and our resources.
|
•
|
be expensive and time consuming to defend or require us to pay significant amounts in damages;
|
•
|
invalidate our proprietary rights;
|
•
|
cause us to cease making, licensing or using products or services that incorporate the challenged intellectual property;
|
•
|
require us to redesign, reengineer or rebrand our products or services or limit our ability to bring new products and
|
•
|
require us to enter into costly or burdensome royalty, licensing or settlement agreements in order to obtain the right to
|
•
|
impact the commercial viability of the products and services that are the subject of the claim during the pendency of
|
•
|
require us by way of injunction to remove products or services on lease or stop selling or leasing new products or
|
•
|
services.
|
•
|
declare dividends or redeem or repurchase capital stock;
|
•
|
prepay, redeem or purchase other debt;
|
•
|
incur liens;
|
•
|
make loans, guarantees, acquisitions and investments;
|
•
|
incur additional indebtedness;
|
•
|
engage in sale and leaseback transactions;
|
•
|
amend or otherwise alter debt and other material agreements;
|
•
|
engage in mergers, acquisitions or asset sales;
|
•
|
engage in transactions with affiliates;
|
•
|
enter into arrangements that would prohibit us from granting liens or restrict our subsidiaries’ ability to pay dividends,
|
•
|
alter the business we conduct.
|
|
|
12/13
|
|
12/14
|
|
12/15
|
|
12/16
|
|
12/17
|
|
12/18
|
||||||||||||
Scientific Games Corporation
|
|
$
|
100.00
|
|
|
$
|
75.19
|
|
|
$
|
52.98
|
|
|
$
|
82.69
|
|
|
$
|
303.01
|
|
|
$
|
105.61
|
|
NASDAQ Composite
|
|
$
|
100.00
|
|
|
$
|
114.62
|
|
|
$
|
122.81
|
|
|
$
|
133.19
|
|
|
$
|
172.11
|
|
|
$
|
165.84
|
|
Peer Group
|
|
$
|
100.00
|
|
|
$
|
111.29
|
|
|
$
|
143.99
|
|
|
$
|
218.70
|
|
|
$
|
318.83
|
|
|
$
|
241.92
|
|
|
|
|
|
As of and for the Year Ended December 31,
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Total revenue
(1)
|
|
$
|
3,363.2
|
|
|
$
|
3,083.6
|
|
|
$
|
2,883.4
|
|
|
$
|
2,758.8
|
|
|
$
|
1,786.4
|
|
Net loss from continuing operations
|
|
$
|
(352.4
|
)
|
|
$
|
(242.3
|
)
|
|
$
|
(353.7
|
)
|
|
$
|
(1,394.3
|
)
|
|
$
|
(234.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted net loss per share from continuing operations
|
|
$
|
(3.87
|
)
|
|
$
|
(2.72
|
)
|
|
$
|
(4.05
|
)
|
|
$
|
(16.23
|
)
|
|
$
|
(2.77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
7,717.8
|
|
|
$
|
7,725.3
|
|
|
$
|
7,087.4
|
|
|
$
|
7,732.2
|
|
|
$
|
9,721.1
|
|
Total long-term debt, including current portion
|
|
$
|
9,036.9
|
|
|
$
|
8,776.6
|
|
|
$
|
8,074.2
|
|
|
$
|
8,207.0
|
|
|
$
|
8,312.9
|
|
(1) As described in Note 1, total revenue for the year ended December 31, 2018 is presented in accordance with ASC 606, while prior periods continue to be reported in accordance with historical revenue recognition guidance under ASC 605 or ASC 985-605, as applicable, in accordance with the modified retrospective transition method.
|
•
|
In January 2018, we acquired NYX, creating a leading digital provider of sports wagering, iGaming and iLottery technologies, platforms, content and services.
|
•
|
In January 2018, we acquired privately held Tech Art, which acquisition was accretive to our financial performance and expanded our portfolio of gaming products.
|
•
|
In November 2018, we completed the acquisition of Don Best, a leading global supplier of real-time betting data and pricing for North American sporting events, which broadened our portfolio of U.S. sports wagering industry services.
|
•
|
In February 2018, we successfully completed a series of financing transactions, including a private offering of an additional
$900.0 million
principal amount of our 2025 Secured Notes,
€325.0 million
of new 2026 Secured Euro Notes and
€250.0 million
of new 2026 Unsecured Euro Notes, and an amendment to our credit agreement to refinance our existing term loan B-4 facility and increase the term loans outstanding by
$900.0 million
under a new term loan B-5 facility (collectively referred to as the “February 2018 Refinancing”). We used the net proceeds of the February 2018 Refinancing to redeem
$2,100.0 million
of our outstanding 2022 Secured Notes and prepay a portion of our revolver borrowings under our credit agreement and pay accrued and unpaid interest thereon plus related premiums, fees and expenses. These actions extended the maturity of
$2,100.0 million
of our debt from 2022 out to 2024, 2025 and 2026. In connection with the amendment to our credit agreement, the interest rate on our term loans was decreased from LIBOR plus
3.25%
to LIBOR plus
2.75%
.
|
•
|
On October 18, 2018, we increased the amount of our existing revolving credit agreement by
$50.0 million
to
$495.7 million
until it matures on October 18, 2020. On December 12, 2018, we increased the amount of our existing revolving credit agreement by
$125.0 million
to
$620.7 million
until it matures on October 18, 2020.
|
•
|
In November 2018, we announced that we are considering a possible initial public offering of a minority interest in our social gaming business in 2019, which we believe will provide us with greater flexibility to pursue additional growth initiatives specifically designed for our social gaming business, as well as unlock additional value for our stakeholders.
|
•
|
On May 14, 2018 the Supreme Court of the U.S. overturned the PASPA, a decision that opened up a path to legalization of sports wagering across the country.
|
•
|
During the third quarter of 2018, we successfully launched our sports wagering platform with Caesars Entertainment in multiple jurisdictions.
|
•
|
On June 1, 2018, Barry L. Cottle succeeded Kevin M. Sheehan as SGC’s President and Chief Executive Officer, after previously having served as Chief Executive, SG Interactive.
|
•
|
In December 2018, we reached a settlement agreement with the plaintiffs in the Shuffle Tech Matter, which was settled for
$151.5 million
(see Note 22 and “Liquidity, Capital Resources and Working Capital - Cash and Available Revolver Capacity” below).
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Total revenue
|
|
$
|
3,363.2
|
|
|
$
|
3,083.6
|
|
|
$
|
2,883.4
|
|
|
$
|
279.6
|
|
|
9
|
%
|
|
$
|
200.2
|
|
|
7
|
%
|
Total operating expenses
|
|
3,097.6
|
|
|
2,690.5
|
|
|
2,752.8
|
|
|
407.1
|
|
|
15
|
%
|
|
(62.3
|
)
|
|
(2
|
)%
|
|||||
Operating income
|
|
265.6
|
|
|
393.1
|
|
|
130.6
|
|
|
(127.5
|
)
|
|
(32
|
)%
|
|
262.5
|
|
|
201
|
%
|
|||||
Net loss before income tax
|
|
(339.3
|
)
|
|
(227.8
|
)
|
|
(478.7
|
)
|
|
(111.5
|
)
|
|
49
|
%
|
|
250.9
|
|
|
(52
|
)%
|
|||||
Net loss
|
|
(352.4
|
)
|
|
(242.3
|
)
|
|
(353.7
|
)
|
|
(110.1
|
)
|
|
45
|
%
|
|
111.4
|
|
|
(31
|
)%
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Gaming
|
|
$
|
1,831.4
|
|
|
$
|
1,844.3
|
|
|
$
|
1,772.7
|
|
|
$
|
(12.9
|
)
|
|
(1
|
)%
|
|
$
|
71.6
|
|
|
4
|
%
|
Lottery
|
|
846.3
|
|
|
811.5
|
|
|
777.9
|
|
|
34.8
|
|
|
4
|
%
|
|
33.6
|
|
|
4
|
%
|
|||||
Social
|
|
415.9
|
|
|
362.0
|
|
|
274.4
|
|
|
53.9
|
|
|
15
|
%
|
|
87.6
|
|
|
32
|
%
|
|||||
Digital
|
|
269.6
|
|
|
65.8
|
|
|
58.4
|
|
|
203.8
|
|
|
310
|
%
|
|
7.4
|
|
|
13
|
%
|
|||||
Total revenue
|
|
$
|
3,363.2
|
|
|
$
|
3,083.6
|
|
|
$
|
2,883.4
|
|
|
$
|
279.6
|
|
|
9
|
%
|
|
$
|
200.2
|
|
|
7
|
%
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services
(1)
|
$
|
505.6
|
|
|
$
|
417.2
|
|
|
$
|
396.5
|
|
|
$
|
88.4
|
|
|
21
|
%
|
|
$
|
20.7
|
|
|
5
|
%
|
Cost of product sales
(1)
|
465.6
|
|
|
465.3
|
|
|
424.6
|
|
|
0.3
|
|
|
—
|
%
|
|
40.7
|
|
|
10
|
%
|
|||||
Cost of instant products
(1)
|
284.1
|
|
|
282.1
|
|
|
285.2
|
|
|
2.0
|
|
|
1
|
%
|
|
(3.1
|
)
|
|
(1
|
)%
|
|||||
SG&A
|
696.9
|
|
|
613.1
|
|
|
577.0
|
|
|
83.8
|
|
|
14
|
%
|
|
36.1
|
|
|
6
|
%
|
|||||
R&D
|
202.3
|
|
|
184.1
|
|
|
204.8
|
|
|
18.2
|
|
|
10
|
%
|
|
(20.7
|
)
|
|
(10
|
)%
|
|||||
D&A
|
689.7
|
|
|
682.8
|
|
|
738.7
|
|
|
6.9
|
|
|
1
|
%
|
|
(55.9
|
)
|
|
(8
|
)%
|
|||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
69.0
|
|
|
—
|
|
|
N/A
|
|
|
(69.0
|
)
|
|
(100
|
)%
|
|||||
Restructuring and other
|
253.4
|
|
|
45.9
|
|
|
57.0
|
|
|
207.5
|
|
|
452
|
%
|
|
(11.1
|
)
|
|
(19
|
)%
|
|||||
Total operating expenses
|
$
|
3,097.6
|
|
|
$
|
2,690.5
|
|
|
$
|
2,752.8
|
|
|
$
|
407.1
|
|
|
15
|
%
|
|
$
|
(62.3
|
)
|
|
(2
|
)%
|
|
2018 vs. 2017
|
||||||||||
($ in millions)
|
Variance
|
|
NYX Impact
|
|
Remaining Variance
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of services
|
$
|
88.4
|
|
|
$
|
66.6
|
|
|
$
|
21.8
|
|
Cost of product sales
|
0.3
|
|
|
2.8
|
|
|
(2.5
|
)
|
|||
Cost of instant products
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|||
SG&A
|
83.8
|
|
|
65.2
|
|
|
18.6
|
|
|||
R&D
|
18.2
|
|
|
32.2
|
|
|
(14.0
|
)
|
|||
D&A
|
6.9
|
|
|
52.9
|
|
|
(46.0
|
)
|
|||
Restructuring and other
|
207.5
|
|
|
19.0
|
|
|
188.5
|
|
|||
Total operating expenses
|
$
|
407.1
|
|
|
$
|
238.7
|
|
|
$
|
168.4
|
|
(in millions)
|
Year Ended December 31,
|
|||||||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||||||||
|
Revenue
|
% Consolidated Revenue
|
F/X Impact on Revenue
|
|
Revenue
|
% Consolidated Revenue
|
F/X Impact on Revenue
|
|
Revenue
|
% Consolidated Revenue
|
F/X Impact on Revenue
|
|||||||||||||||
Foreign Currency:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
British Pound Sterling
|
$
|
335.7
|
|
10.0
|
%
|
$
|
15.7
|
|
|
$
|
224.3
|
|
7.3
|
%
|
$
|
(15.0
|
)
|
|
$
|
237.8
|
|
8.2
|
%
|
$
|
(42.2
|
)
|
Euro
(1)
|
227.8
|
|
6.8
|
%
|
11.9
|
|
|
152.7
|
|
5.0
|
%
|
3.3
|
|
|
131.6
|
|
4.6
|
%
|
(0.5
|
)
|
||||||
Australian Dollar
|
120.6
|
|
3.6
|
%
|
(0.9
|
)
|
|
143.0
|
|
4.6
|
%
|
3.1
|
|
|
134.0
|
|
4.6
|
%
|
(1.5
|
)
|
|
|
Services
|
|
Product sales
|
Gaming operations
|
|
Service revenues from gaming operations are derived from WAP, premium and daily-fee Participation gaming machines and other leased gaming machines (including VLTs and ETSs) and other services revenue associated with gaming operations and licensing arrangements.
|
|
N/A
|
Gaming machine sales
|
|
N/A
|
|
Sale of new and used gaming machines, ETSs and VLTs, conversion game kits and spare parts.
|
Gaming systems
|
|
We provide services which include installation and support of casino management systems, including ongoing hardware maintenance and ongoing software maintenance and upgrade services of customer casino management systems.
|
|
We offer core slot, casino and table-management systems (collectively, “casino-management systems”) that help our customers improve communication with players, add excitement to the gaming floor and enhance operating efficiencies.
|
Table products
|
|
Revenue is generated from supplied table products and services (including Shufflers).
|
|
Sale of table products (including Shufflers) and PTG licensing.
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Total revenue
|
|
$
|
1,831.4
|
|
|
$
|
1,844.3
|
|
|
$
|
1,772.7
|
|
|
$
|
(12.9
|
)
|
|
(1
|
)%
|
|
$
|
71.6
|
|
|
4
|
%
|
Total operating expenses
|
|
1,435.7
|
|
|
1,498.0
|
|
|
1,560.7
|
|
|
(62.3
|
)
|
|
(4
|
)%
|
|
(62.7
|
)
|
|
(4
|
)%
|
|||||
AEBITDA
|
|
919.5
|
|
|
895.6
|
|
|
821.6
|
|
|
23.9
|
|
|
3
|
%
|
|
74.0
|
|
|
9
|
%
|
(in millions, except for unit and per unit revenue information)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gaming operations
|
|
$
|
631.9
|
|
|
$
|
696.0
|
|
|
$
|
725.3
|
|
|
$
|
(64.1
|
)
|
|
(9
|
)%
|
|
$
|
(29.3
|
)
|
|
(4
|
)%
|
Gaming machine sales
|
|
646.3
|
|
|
672.4
|
|
|
618.2
|
|
|
(26.1
|
)
|
|
(4
|
)%
|
|
54.2
|
|
|
9
|
%
|
|||||
Gaming systems
|
|
320.6
|
|
|
274.0
|
|
|
240.8
|
|
|
46.6
|
|
|
17
|
%
|
|
33.2
|
|
|
14
|
%
|
|||||
Table products
|
|
232.6
|
|
|
201.9
|
|
|
188.4
|
|
|
30.7
|
|
|
15
|
%
|
|
13.5
|
|
|
7
|
%
|
|||||
Total revenue
|
|
$
|
1,831.4
|
|
|
$
|
1,844.3
|
|
|
$
|
1,772.7
|
|
|
$
|
(12.9
|
)
|
|
(1
|
)%
|
|
$
|
71.6
|
|
|
4
|
%
|
F/X impact on revenue
|
|
$
|
11.1
|
|
|
$
|
(1.6
|
)
|
|
$
|
(22.4
|
)
|
|
$
|
12.7
|
|
|
(794
|
)%
|
|
$
|
20.8
|
|
|
(93
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
KPIs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
WAP, premium and daily fee Participation units:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Installed base at period end
|
|
19,228
|
|
|
20,642
|
|
|
21,465
|
|
|
(1,414
|
)
|
|
(7
|
)%
|
|
(823
|
)
|
|
(4
|
)%
|
|||||
Average daily revenue per unit
|
|
$
|
50.72
|
|
|
$
|
50.96
|
|
|
$
|
51.73
|
|
|
$
|
(0.24
|
)
|
|
—
|
%
|
|
$
|
(0.77
|
)
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other Participation and leased units:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Installed base at period end
|
|
48,264
|
|
|
48,259
|
|
|
47,474
|
|
|
5
|
|
|
—
|
%
|
|
785
|
|
|
2
|
%
|
|||||
Average daily revenue per unit
|
|
$
|
13.65
|
|
|
$
|
14.64
|
|
|
$
|
15.29
|
|
|
$
|
(0.99
|
)
|
|
(7
|
)%
|
|
$
|
(0.65
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gaming machine sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. and Canadian new unit shipments
|
|
20,187
|
|
|
20,731
|
|
|
18,180
|
|
|
(544
|
)
|
|
(3
|
)%
|
|
2,551
|
|
|
14
|
%
|
|||||
International new unit shipments
|
|
11,608
|
|
|
13,257
|
|
|
13,430
|
|
|
(1,649
|
)
|
|
(12
|
)%
|
|
(173
|
)
|
|
(1
|
)%
|
|||||
Total new unit shipments
|
|
31,795
|
|
|
33,988
|
|
|
31,610
|
|
|
(2,193
|
)
|
|
(6
|
)%
|
|
2,378
|
|
|
8
|
%
|
|||||
Average sales price per new unit
|
|
$
|
17,375
|
|
|
$
|
17,231
|
|
|
$
|
16,647
|
|
|
$
|
144
|
|
|
1
|
%
|
|
$
|
584
|
|
|
4
|
%
|
|
Year Ended December 31,
|
|
Variance
|
||||||||
|
2018
|
|
2017
|
|
2018 vs. 2017
|
||||||
U.S. and Canadian unit shipments:
|
|
|
|
|
|
|
|
||||
Replacement units
|
16,185
|
|
|
15,265
|
|
|
920
|
|
|
6
|
%
|
Casino opening and expansion units
|
4,002
|
|
|
5,466
|
|
|
(1,464
|
)
|
|
(27
|
)%
|
Total unit shipments
|
20,187
|
|
|
20,731
|
|
|
(544
|
)
|
|
(3
|
)%
|
|
|
|
|
|
|
|
|
||||
International unit shipments:
|
|
|
|
|
|
|
|
||||
Replacement units
|
11,030
|
|
|
12,308
|
|
|
(1,278
|
)
|
|
(10
|
)%
|
Casino opening and expansion units
|
578
|
|
|
949
|
|
|
(371
|
)
|
|
(39
|
)%
|
Total unit shipments
|
11,608
|
|
|
13,257
|
|
|
(1,649
|
)
|
|
(12
|
)%
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Total revenue
|
|
$
|
846.3
|
|
|
$
|
811.5
|
|
|
$
|
777.9
|
|
|
$
|
34.8
|
|
|
4
|
%
|
|
$
|
33.6
|
|
|
4
|
%
|
Operating expenses
|
|
581.0
|
|
|
564.7
|
|
|
655.0
|
|
|
16.3
|
|
|
3
|
%
|
|
(90.3
|
)
|
|
(14
|
)%
|
|||||
AEBITDA
|
|
390.8
|
|
|
364.7
|
|
|
333.1
|
|
|
26.1
|
|
|
7
|
%
|
|
31.6
|
|
|
9
|
%
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Instant products
|
|
$
|
592.5
|
|
|
$
|
588.0
|
|
|
$
|
573.7
|
|
|
$
|
4.5
|
|
|
1
|
%
|
|
$
|
14.3
|
|
|
2
|
%
|
Lottery systems
|
|
253.8
|
|
|
223.5
|
|
|
204.2
|
|
|
30.3
|
|
|
14
|
%
|
|
19.3
|
|
|
9
|
%
|
|||||
Total revenue
|
|
$
|
846.3
|
|
|
$
|
811.5
|
|
|
$
|
777.9
|
|
|
$
|
34.8
|
|
|
4
|
%
|
|
$
|
33.6
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
F/X impact on revenue
|
|
$
|
4.8
|
|
|
$
|
(1.6
|
)
|
|
$
|
(9.1
|
)
|
|
$
|
6.4
|
|
|
(400
|
)%
|
|
$
|
7.5
|
|
|
(82
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
KPIs:
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in retail sales of U.S. lottery
instant products customers
(1)(2)
|
|
4
|
%
|
|
5
|
%
|
|
4
|
%
|
|
(1)pp
|
|
|
nm
|
|
|
1pp
|
|
|
nm
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in retail sales of U.S. lottery
systems contract customers
(1)(3)
|
|
8
|
%
|
|
(2
|
)%
|
|
7
|
%
|
|
10pp
|
|
|
nm
|
|
|
(9)pp
|
|
|
nm
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Change in Italy retail sales of instant
games
(1)
|
|
2
|
%
|
|
1
|
%
|
|
(1
|
)%
|
|
1pp
|
|
|
nm
|
|
|
2pp
|
|
|
nm
|
|
|||||
nm = not meaningful
pp = percentage points
(1) Information provided by third-party lottery operators.
(2) U.S. instant products customers’ retail sales include only sales of instant products.
(3) U.S. lottery systems customers’ retail sales primarily include sales of draw games, keno and instant products validated by the relevant system.
(4) Retail sales may not have a direct correlation to our revenue due to terms of our contracts, the impact of changes in our contracts or other factors.
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Total revenue
|
|
$
|
415.9
|
|
|
$
|
362.0
|
|
|
$
|
274.4
|
|
|
$
|
53.9
|
|
|
15
|
%
|
|
$
|
87.6
|
|
|
32
|
%
|
Operating expenses
|
|
359.9
|
|
|
304.4
|
|
|
230.0
|
|
|
55.5
|
|
|
18
|
%
|
|
74.4
|
|
|
32
|
%
|
|||||
AEBITDA
|
|
106.7
|
|
|
81.7
|
|
|
55.5
|
|
|
25.0
|
|
|
31
|
%
|
|
26.2
|
|
|
47
|
%
|
(in millions, except ARPDAU)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mobile
|
|
$
|
322.9
|
|
|
$
|
259.6
|
|
|
$
|
187.1
|
|
|
$
|
63.3
|
|
|
24
|
%
|
|
$
|
72.5
|
|
|
39
|
%
|
Web and other
|
|
93.0
|
|
|
102.4
|
|
|
87.3
|
|
|
(9.4
|
)
|
|
(9
|
)%
|
|
15.1
|
|
|
17
|
%
|
|||||
Total
|
|
$
|
415.9
|
|
|
$
|
362.0
|
|
|
$
|
274.4
|
|
|
$
|
53.9
|
|
|
15
|
%
|
|
$
|
87.6
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
KPIs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Social gaming:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mobile Penetration
(1)
|
|
78
|
%
|
|
72
|
%
|
|
68
|
%
|
|
6pp
|
|
|
nm
|
|
|
4pp
|
|
|
nm
|
|
|||||
Average MAU
(2)
|
|
8.3
|
|
|
7.6
|
|
|
7.9
|
|
|
0.7
|
|
|
9
|
%
|
|
(0.3
|
)
|
|
(4
|
)%
|
|||||
Average DAU
(3)
|
|
2.6
|
|
|
2.5
|
|
|
2.5
|
|
|
0.1
|
|
|
4
|
%
|
|
—
|
|
|
—
|
%
|
|||||
ARPDAU
(4)
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
|
$
|
0.31
|
|
|
$
|
0.03
|
|
|
8
|
%
|
|
$
|
0.09
|
|
|
29
|
%
|
nm = not meaningful
pp = percentage points
(1) Mobile penetration is defined by percentage of B2C social gaming revenue generated from mobile platforms.
(2) MAU = Monthly Active Users is a count of visitors to our sites during a month. An individual who plays two different games or from two different devices may, in certain circumstances, be counted twice. However, we use third-party data to limit the occurrence of double counting.
(3) DAU = Daily Active Users, a count of visitors to our sites during a day. An individual who plays two different games or from two different devices may, in certain circumstances, be counted twice. However, we use third-party data to limit the occurrence of double counting.
(4) ARPDAU = Average revenue per DAU is calculated by dividing revenue for a period by the DAU for the period by the number of days for the period.
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Total revenue
|
|
$
|
269.6
|
|
|
$
|
65.8
|
|
|
$
|
58.4
|
|
|
$
|
203.8
|
|
|
310
|
%
|
|
$
|
7.4
|
|
|
13
|
%
|
Operating expenses
|
|
302.9
|
|
|
59.0
|
|
|
54.3
|
|
|
243.9
|
|
|
413
|
%
|
|
4.7
|
|
|
9
|
%
|
|||||
AEBITDA
|
|
54.1
|
|
|
16.0
|
|
|
11.4
|
|
|
38.1
|
|
|
238
|
%
|
|
4.6
|
|
|
40
|
%
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sports and platform
|
|
$
|
100.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100.5
|
|
|
nm
|
|
|
$
|
—
|
|
|
nm
|
|
Gaming and other
|
|
169.1
|
|
|
65.8
|
|
|
58.4
|
|
|
103.3
|
|
|
157
|
%
|
|
7.4
|
|
|
13
|
%
|
|||||
Total revenue
|
|
$
|
269.6
|
|
|
$
|
65.8
|
|
|
$
|
58.4
|
|
|
$
|
203.8
|
|
|
310
|
%
|
|
$
|
7.4
|
|
|
13
|
%
|
nm = not meaningful.
|
•
|
Business combinations;
|
•
|
Revenue recognition;
|
•
|
Goodwill and other indefinite lived intangibles, long lived assets and finite lived intangible assets - impairment assessment;
|
•
|
Income taxes; and
|
•
|
Legal contingencies.
|
•
|
Contracts with Multiple Promised Goods and Services -
because we enter into contracts with customers that involve promises to transfer multiple products and services, the determination of the distinct performance obligations in contracts with multiple promises requires significant judgment. Our total gaming systems, lottery systems and digital revenue that often contain multiple promised goods and services was
$501.9 million
for the year ended
December 31, 2018
, or approximately
15 percent
of consolidated revenue, a portion of which would not be recognized if we had reached a different conclusion.
|
•
|
Determination of stand-alone selling prices -
the guidance in ASC 606 requires that we determine the stand-alone selling price for our goods and services as a basis for allocating the transaction price to the identified distinct performance obligations in our contracts with customers. Because we often bundle the selling price for multiple promised goods or services or we may license systems for which the solutions we provide are highly customized and therefore the prices we charge are either uncertain, highly variable, or both, the determination of a stand-alone selling price or the relative range requires significant judgment. Our total gaming systems, lottery systems and digital revenue that could be subject to this judgment and thus allocated to distinct performance obligations differently was a portion of
$501.9 million
for the year ended
December 31, 2018
, or approximately
15 percent
of consolidated revenue.
|
•
|
Transfer of control in Lottery POS contracts -
the guidance in ASC 606 requires that we recognize revenue when or as control over a performance obligation transfers to a customer. In instant products contracts under POS terms, instant products are delivered to lottery customers but we retain the risk of such inventory until retail sales of such tickets takes place. Because those shipments are to a lottery-controlled warehouse and we do not have the ability to direct the use of such instant products subsequent to this delivery, we have determined that control transfers upon delivery. This conclusion requires the use of judgment. If we concluded that control transferred upon retail sales when the end customer obtained control over the instant tickets, the revenue decrease would not be material for the year ended
December 31, 2018
.
|
Reporting Unit
|
|
Year
|
|
Impairment charge
|
|
Tax benefit
|
|
Goodwill (at December 31, 2018)
|
International Lottery Systems
|
|
2016
|
|
$69.0
|
|
$14.5
|
|
$22.6
|
(in millions)
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
|
$
|
168.2
|
|
|
$
|
788.8
|
|
Revolver capacity
|
|
620.7
|
|
|
596.2
|
|
||
Revolver capacity drawn or committed to letters of credit
|
|
(350.2
|
)
|
|
(375.6
|
)
|
||
Total
|
|
$
|
438.7
|
|
|
$
|
1,009.4
|
|
(in millions)
|
|
Year Ended December 31,
|
|
Variance
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||
Net cash provided by operating activities
|
|
$
|
346.1
|
|
|
$
|
507.1
|
|
|
$
|
419.0
|
|
|
$
|
(161.0
|
)
|
|
$
|
88.1
|
|
Net cash used in investing activities
|
|
(798.1
|
)
|
|
(414.6
|
)
|
|
(228.0
|
)
|
|
(383.5
|
)
|
|
(186.6
|
)
|
|||||
Net cash (used in) provided by financing activities
|
|
(156.2
|
)
|
|
580.2
|
|
|
(196.0
|
)
|
|
(736.4
|
)
|
|
776.2
|
|
|||||
Effect of exchange rates on cash, cash equivalents and restricted cash
|
|
(5.9
|
)
|
|
4.5
|
|
|
(4.9
|
)
|
|
(10.4
|
)
|
|
9.4
|
|
|||||
(Decrease) increase in cash, cash equivalents and restricted cash
|
|
$
|
(614.1
|
)
|
|
$
|
677.2
|
|
|
$
|
(9.9
|
)
|
|
$
|
(1,291.3
|
)
|
|
$
|
687.1
|
|
•
|
$125.8 million
decrease in accounts payable and accrued liabilities as a result of the following factors: (1) timing impacts; (2) lower interest accrual resulting from the change in timing of interest payments from the refinancing transactions; and (3) incentive compensation;
|
•
|
$3.3 million
net increase in contract assets and other current assets and liabilities; partially offset by
|
•
|
$31.8 million
decrease in accounts and notes receivable due to timing of collections.
|
•
|
$48.0 million
increase in accounts and notes receivable due to strong sales during the year;
|
•
|
$2.2 million
increase in inventories primarily due to the timing of orders and deployment of units in our Gaming segment; and
|
•
|
$28.6 million
positive net impact on cash flows from changes in other current assets and liabilities as a result of the timing of expenditures and interest payments.
|
|
Form 10-K Page
|
1. Financial Statements:
|
|
2. Financial Statement Schedule:
|
|
3.
Exhibits
|
|
Years Ended December 31,
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||
Revenue:
|
|
|
|
|
|
|||||||
Services
|
$
|
1,777.1
|
|
|
$
|
1,522.7
|
|
|
$
|
1,424.0
|
|
|
Product sales
|
993.8
|
|
|
978.6
|
|
|
896.2
|
|
||||
Instant products
|
592.3
|
|
|
582.3
|
|
|
563.2
|
|
||||
Total revenue
|
3,363.2
|
|
|
3,083.6
|
|
|
2,883.4
|
|
||||
Operating expenses:
|
|
|
|
|
|
|||||||
Cost of services
(1)
|
505.6
|
|
|
417.2
|
|
|
396.5
|
|
||||
Cost of product sales
(1)
|
465.6
|
|
|
465.3
|
|
|
424.6
|
|
||||
Cost of instant products
(1)
|
284.1
|
|
|
282.1
|
|
|
285.2
|
|
||||
Selling, general and administrative
|
696.9
|
|
|
613.1
|
|
|
577.0
|
|
||||
Research and development
|
202.3
|
|
|
184.1
|
|
|
204.8
|
|
||||
Depreciation, amortization and impairments
|
689.7
|
|
|
682.8
|
|
|
738.7
|
|
||||
Goodwill impairment
|
—
|
|
|
—
|
|
|
69.0
|
|
||||
Restructuring and other
|
253.4
|
|
|
45.9
|
|
|
57.0
|
|
||||
Operating income
|
265.6
|
|
|
393.1
|
|
|
130.6
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|||||||
Interest expense
|
(597.2
|
)
|
|
(609.7
|
)
|
|
(661.4
|
)
|
||||
Earnings from equity investments
|
24.9
|
|
|
26.7
|
|
|
13.0
|
|
||||
(Loss) gain on debt financing transactions
|
(93.2
|
)
|
|
(38.1
|
)
|
|
25.2
|
|
||||
Gain on remeasurement of debt
|
43.4
|
|
|
—
|
|
|
—
|
|
||||
Other income, net
|
17.2
|
|
|
0.2
|
|
|
13.9
|
|
||||
Total other expense, net
|
(604.9
|
)
|
|
(620.9
|
)
|
|
(609.3
|
)
|
||||
Net loss before income taxes
|
(339.3
|
)
|
|
(227.8
|
)
|
|
(478.7
|
)
|
||||
Income tax (expense) benefit
|
(13.1
|
)
|
|
(14.5
|
)
|
|
125.0
|
|
||||
Net loss
|
$
|
(352.4
|
)
|
|
$
|
(242.3
|
)
|
|
$
|
(353.7
|
)
|
|
|
|
|
|
|
|
|||||||
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation (loss) gain, net of tax
|
(98.4
|
)
|
|
126.4
|
|
|
(104.7
|
)
|
||||
Pension and post-retirement (loss) gain, net of tax
|
(1.3
|
)
|
|
3.3
|
|
|
(9.7
|
)
|
||||
Derivative financial instruments unrealized (loss) gain, net of tax
|
(0.1
|
)
|
|
4.2
|
|
|
3.0
|
|
||||
Other comprehensive (loss) income
|
(99.8
|
)
|
|
133.9
|
|
|
(111.4
|
)
|
||||
Comprehensive loss
|
$
|
(452.2
|
)
|
|
$
|
(108.4
|
)
|
|
$
|
(465.1
|
)
|
|
|
|
|
|
|
|
|||||||
Basic and diluted net loss per share:
|
|
|
|
|
|
|||||||
Basic
|
$
|
(3.87
|
)
|
|
$
|
(2.72
|
)
|
|
$
|
(4.05
|
)
|
|
Diluted
|
$
|
(3.87
|
)
|
|
$
|
(2.72
|
)
|
|
$
|
(4.05
|
)
|
|
|
|
|
|
|
|
|||||||
Weighted average number of shares used in per share calculations:
|
|
|
|
|
|
|||||||
Basic shares
|
91.1
|
|
|
89.1
|
|
|
87.3
|
|
||||
Diluted shares
|
91.1
|
|
|
89.1
|
|
|
87.3
|
|
||||
(1) Exclusive of D&A.
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
168.2
|
|
|
$
|
788.8
|
|
Restricted cash
|
38.7
|
|
|
29.0
|
|
||
Accounts receivable, net
|
599.2
|
|
|
540.9
|
|
||
Notes receivable, net
|
113.9
|
|
|
143.5
|
|
||
Inventories
|
215.6
|
|
|
243.1
|
|
||
Prepaid expenses, deposits and other current assets
|
232.7
|
|
|
131.1
|
|
||
Total current assets
|
1,368.3
|
|
|
1,876.4
|
|
||
Non-current assets:
|
|
|
|
||||
Restricted cash
|
13.1
|
|
|
16.3
|
|
||
Notes receivable, net
|
40.2
|
|
|
52.8
|
|
||
Property and equipment, net
|
547.0
|
|
|
568.2
|
|
||
Goodwill
|
3,279.9
|
|
|
2,956.1
|
|
||
Intangible assets, net
|
1,809.1
|
|
|
1,604.6
|
|
||
Software, net
|
285.3
|
|
|
339.4
|
|
||
Equity investments
|
298.4
|
|
|
253.9
|
|
||
Other assets
|
76.5
|
|
|
57.6
|
|
||
Total assets
|
$
|
7,717.8
|
|
|
$
|
7,725.3
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|||||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
45.0
|
|
|
$
|
40.3
|
|
Accounts payable
|
225.1
|
|
|
190.4
|
|
||
Accrued liabilities
|
477.2
|
|
|
509.1
|
|
||
Total current liabilities
|
747.3
|
|
|
739.8
|
|
||
Deferred income taxes
|
107.6
|
|
|
73.1
|
|
||
Other long-term liabilities
|
334.2
|
|
|
203.1
|
|
||
Long-term debt, excluding current portion
|
8,991.9
|
|
|
8,736.3
|
|
||
Total liabilities
|
10,181.0
|
|
|
9,752.3
|
|
||
Commitments and contingencies (see Note 15 and Note 22)
|
|
|
|
|
|
||
Stockholders’ deficit:
|
|
|
|
||||
Common stock, par value $0.001 per share
(1)
, 199.3 shares authorized, 109.1 and 107.1 shares issued and 91.9 and 89.9 shares outstanding as of December 31, 2018 and 2017, respectively
|
1.1
|
|
|
1.1
|
|
||
Additional paid-in capital
|
834.7
|
|
|
807.8
|
|
||
Accumulated loss
|
(2,824.3
|
)
|
|
(2,461.0
|
)
|
||
Treasury stock, at cost - 17.2 shares
|
(175.2
|
)
|
|
(175.2
|
)
|
||
Accumulated other comprehensive loss
|
(299.5
|
)
|
|
(199.7
|
)
|
||
Total stockholders’ deficit
|
(2,463.2
|
)
|
|
(2,027.0
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
7,717.8
|
|
|
$
|
7,725.3
|
|
(1) Following the consummation of the reincorporation merger on January 10, 2018, each authorized, issued and outstanding share of Class A common stock of SGC, par value $0.01 per share, automatically converted into one share of common stock of the surviving corporation, par value $0.001 per share. The change in par value had no impact on total number of authorized, issued and outstanding shares.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Common stock:
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
1.1
|
|
|
$
|
1.0
|
|
|
$
|
1.0
|
|
Issuances and purchases of common stock
(1)
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Ending balance
|
1.1
|
|
|
1.1
|
|
|
1.0
|
|
|||
Additional paid-in capital:
|
|
|
|
|
|
||||||
Beginning balance
|
807.8
|
|
|
790.8
|
|
|
765.9
|
|
|||
Issuance of common stock
(1)
in connection with employee stock purchase plan
|
—
|
|
|
0.8
|
|
|
—
|
|
|||
Net redemption of common stock
(1)
in connection with stock options and RSUs
|
(15.5
|
)
|
|
(7.1
|
)
|
|
(6.1
|
)
|
|||
Stock-based compensation
|
42.4
|
|
|
23.3
|
|
|
33.7
|
|
|||
Tax effect from employee stock options and RSUs
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|||
Ending balance
|
834.7
|
|
|
807.8
|
|
|
790.8
|
|
|||
Accumulated loss:
|
|
|
|
|
|
||||||
Beginning balance
|
(2,461.0
|
)
|
|
(2,218.7
|
)
|
|
(1,865.0
|
)
|
|||
Net loss
|
(352.4
|
)
|
|
(242.3
|
)
|
|
(353.7
|
)
|
|||
Adoption impact of ASC 606
|
(10.9
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
(2,824.3
|
)
|
|
(2,461.0
|
)
|
|
(2,218.7
|
)
|
|||
Treasury stock:
|
|
|
|
|
|
||||||
Beginning and ending balance
|
(175.2
|
)
|
|
(175.2
|
)
|
|
(175.2
|
)
|
|||
Accumulated other comprehensive loss:
|
|
|
|
|
|
||||||
Beginning balance
|
(199.7
|
)
|
|
(333.6
|
)
|
|
(222.2
|
)
|
|||
Other comprehensive (loss) income
|
(99.8
|
)
|
|
133.9
|
|
|
(111.4
|
)
|
|||
Ending balance
|
(299.5
|
)
|
|
(199.7
|
)
|
|
(333.6
|
)
|
|||
Total stockholders’ deficit
|
$
|
(2,463.2
|
)
|
|
$
|
(2,027.0
|
)
|
|
$
|
(1,935.7
|
)
|
(1) Following the consummation of the reincorporation merger on January 10, 2018, each authorized, issued and outstanding share of Class A common stock of SGC, par value $0.01 per share, automatically converted into one share of common stock of the surviving corporation, par value $0.001 per share. The change in par value had no impact on the total number of authorized, issued and outstanding shares.
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(352.4
|
)
|
|
$
|
(242.3
|
)
|
|
$
|
(353.7
|
)
|
Adjustments to reconcile net loss to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation, amortization and impairments
|
689.7
|
|
|
682.8
|
|
|
738.7
|
|
|||
Goodwill impairment
|
—
|
|
|
—
|
|
|
69.0
|
|
|||
Change in deferred income taxes
|
(33.3
|
)
|
|
(5.7
|
)
|
|
(164.6
|
)
|
|||
Stock-based compensation
|
43.9
|
|
|
27.2
|
|
|
35.3
|
|
|||
Non-cash interest expense
|
25.4
|
|
|
21.2
|
|
|
40.4
|
|
|||
Earnings from equity investments, net
|
(24.9
|
)
|
|
(26.7
|
)
|
|
(13.0
|
)
|
|||
Distributed earnings from equity investments
|
32.8
|
|
|
33.2
|
|
|
26.4
|
|
|||
(Gain) loss on sale of assets and other, net
|
(16.3
|
)
|
|
0.9
|
|
|
(2.8
|
)
|
|||
Loss (gain) on debt financing transactions
|
93.2
|
|
|
38.1
|
|
|
(25.2
|
)
|
|||
Gain on remeasurement of debt
|
(43.4
|
)
|
|
—
|
|
|
—
|
|
|||
Contingent acquisition consideration fair value adjustment
|
28.7
|
|
|
—
|
|
|
—
|
|
|||
Changes in current assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
||||||
Accounts and notes receivable, net
|
31.8
|
|
|
(48.0
|
)
|
|
30.0
|
|
|||
Inventories
|
23.7
|
|
|
(2.2
|
)
|
|
2.5
|
|
|||
Other current assets and liabilities
|
(27.0
|
)
|
|
(35.9
|
)
|
|
21.3
|
|
|||
Accounts payable and accrued liabilities
|
(125.8
|
)
|
|
64.5
|
|
|
14.7
|
|
|||
Net cash provided by operating activities
|
346.1
|
|
|
507.1
|
|
|
419.0
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(390.8
|
)
|
|
(293.7
|
)
|
|
(272.9
|
)
|
|||
Acquisitions of businesses and assets, net of cash acquired
|
(296.6
|
)
|
|
(57.7
|
)
|
|
—
|
|
|||
Proceeds from asset sales
|
40.0
|
|
|
7.5
|
|
|
16.7
|
|
|||
Acquisitions and additions to equity method investments
|
(180.4
|
)
|
|
(107.3
|
)
|
|
(1.2
|
)
|
|||
Distributions of capital from equity investments
|
29.7
|
|
|
34.1
|
|
|
25.3
|
|
|||
Changes in other assets and liabilities and other
|
—
|
|
|
2.5
|
|
|
4.1
|
|
|||
Net cash used in investing activities
|
(798.1
|
)
|
|
(414.6
|
)
|
|
(228.0
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Borrowings under revolving credit facility
|
560.0
|
|
|
475.0
|
|
|
360.0
|
|
|||
Repayments under revolving credit facility
|
(585.0
|
)
|
|
(170.0
|
)
|
|
(410.0
|
)
|
|||
Proceeds from issuance of long-term debt
|
2,512.4
|
|
|
2,112.4
|
|
|
—
|
|
|||
Repayment of assumed NYX and other acquisitions debt
|
(290.1
|
)
|
|
—
|
|
|
—
|
|
|||
Payments on long-term debt
|
(38.9
|
)
|
|
(23.0
|
)
|
|
(49.8
|
)
|
|||
Repayments of senior notes and term loans (including redemption premium)
|
(2,210.3
|
)
|
|
(1,693.4
|
)
|
|
(39.9
|
)
|
|||
Payments of debt issuance and deferred financing costs
|
(38.5
|
)
|
|
(58.7
|
)
|
|
—
|
|
|||
Payments on license obligations
|
(44.9
|
)
|
|
(52.6
|
)
|
|
(50.2
|
)
|
|||
Net redemptions of common stock under stock-based compensation plans and other
|
(20.9
|
)
|
|
(9.5
|
)
|
|
(6.1
|
)
|
|||
Net cash (used in) provided by financing activities
|
(156.2
|
)
|
|
580.2
|
|
|
(196.0
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(5.9
|
)
|
|
4.5
|
|
|
(4.9
|
)
|
|||
(Decrease) increase in cash, cash equivalents and restricted cash
|
(614.1
|
)
|
|
677.2
|
|
|
(9.9
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
834.1
|
|
|
156.9
|
|
|
166.8
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
220.0
|
|
|
$
|
834.1
|
|
|
$
|
156.9
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
633.0
|
|
|
$
|
575.0
|
|
|
$
|
621.5
|
|
Income taxes paid
|
32.9
|
|
|
37.8
|
|
|
21.9
|
|
|||
Non-cash investing and financing transactions:
|
|
|
|
|
|
||||||
Non-cash rollover and refinancing of Term loans (see Note 16)
|
3,274.6
|
|
|
6,030.4
|
|
|
—
|
|
|||
Non-cash additions to intangible assets related to license agreements
|
137.5
|
|
|
26.0
|
|
|
78.3
|
|
|||
NYX non-cash consideration transferred (including 2017 acquisition of ordinary shares) (see Note 9)
|
93.2
|
|
|
—
|
|
|
—
|
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accrued liabilities
|
|
$
|
50.1
|
|
|
$
|
47.4
|
|
Other long-term liabilities
|
|
212.4
|
|
|
117.6
|
|
||
Total minimum guarantee obligations
|
|
$
|
262.5
|
|
|
$
|
165.0
|
|
Weighted average remaining term (in years)
|
|
4.2
|
|
|
3.0
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
After 2023
|
Expected future payments
|
$50.1
|
|
$45.7
|
|
$41.2
|
|
$42.2
|
|
$27.5
|
|
$55.8
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Property and equipment, net:
|
|
|
|
|
||||
U.S.
|
|
$
|
334.5
|
|
|
$
|
390.1
|
|
Other
|
|
212.5
|
|
|
178.1
|
|
||
Total
|
|
$
|
547.0
|
|
|
$
|
568.2
|
|
|
Revenue recognized for Year Ended December 31,
|
||||||||||
Revenue category
|
2018
|
|
2017
|
|
2016
|
||||||
Gaming
|
|
|
|
|
|
||||||
Gaming operations
|
$
|
631.9
|
|
|
$
|
696.0
|
|
|
$
|
725.3
|
|
Gaming machine sales
|
646.3
|
|
|
672.4
|
|
|
618.2
|
|
|||
Gaming systems
|
320.6
|
|
|
274.0
|
|
|
240.8
|
|
|||
Table products
|
232.6
|
|
|
201.9
|
|
|
188.4
|
|
|||
Total
|
$
|
1,831.4
|
|
|
$
|
1,844.3
|
|
|
$
|
1,772.7
|
|
|
|
|
|
|
|
||||||
Lottery
|
|
|
|
|
|
||||||
Instant products
|
$
|
592.5
|
|
|
$
|
588.0
|
|
|
$
|
573.7
|
|
Lottery systems
|
253.8
|
|
|
223.5
|
|
|
204.2
|
|
|||
Total
|
$
|
846.3
|
|
|
$
|
811.5
|
|
|
$
|
777.9
|
|
|
|
|
|
|
|
||||||
Social
|
|
|
|
|
|
||||||
Mobile
|
$
|
322.9
|
|
|
$
|
259.6
|
|
|
$
|
187.1
|
|
Web and other
|
93.0
|
|
|
102.4
|
|
|
87.3
|
|
|||
Total
|
$
|
415.9
|
|
|
$
|
362.0
|
|
|
$
|
274.4
|
|
|
|
|
|
|
|
||||||
Digital
|
|
|
|
|
|
||||||
Sports and platform
|
$
|
100.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gaming and other
|
169.1
|
|
|
65.8
|
|
|
58.4
|
|
|||
Total
|
$
|
269.6
|
|
|
$
|
65.8
|
|
|
$
|
58.4
|
|
|
|
Year Ended December 31, 2018
|
||
Contract liability balance, beginning of period
(1)
|
|
$
|
88.2
|
|
Liabilities recognized during the period
|
|
53.7
|
|
|
Amounts recognized in revenue from beginning balance
|
|
(44.8
|
)
|
|
Contract liability balance, end of period
(1)
|
|
$
|
97.1
|
|
(1) Contract liabilities are included within accrued liabilities and other long-term liabilities in our consolidated balance sheet.
|
•
|
Revenue from the sale of instant products that are sold on a PPU basis is recognized when the customer accepts the product pursuant to the terms of the contract and are recognized under general accounting policy described above.
|
•
|
Revenue from the sale of instant products that are sold on a Participation basis (POS and CSP) is recognized as retail sales are generated. We believe that products and services provided under these arrangements are delivered contemporaneously and are not separate units of account; therefore, as the services offered are a comprehensive solution in exchange for Participation-based or price-per-unit based compensation, this revenue is recognized under the general revenue recognition policy above.
|
•
|
Revenue from the provision of lottery system services provided on a Participation basis is recognized when the retail sales of draw lottery games are generated. Some lottery systems contracts also result in recognition of revenue when retail sales of instant tickets through the system are generated.
|
•
|
Revenue from the perpetual licensing of customized lottery software is recognized under the percentage of completion method of accounting, based on the ratio of costs incurred to estimated costs to complete.
|
•
|
Revenue derived from maintenance on lottery software and lottery terminals is recognized ratably over the maintenance period.
|
|
As of December 31,
|
||||||
|
2018
|
|
2017
|
||||
Current:
|
|
|
|
||||
Accounts receivable
|
$
|
615.1
|
|
|
$
|
551.5
|
|
Notes receivable
|
138.4
|
|
|
164.1
|
|
||
Allowance for doubtful accounts
|
(40.4
|
)
|
|
(31.2
|
)
|
||
Current accounts and notes receivable, net
|
$
|
713.1
|
|
|
$
|
684.4
|
|
Long-term:
|
|
|
|
||||
Accounts and notes receivable, net of allowance of $0.1 and $0.2
|
40.2
|
|
|
52.8
|
|
||
Total accounts and notes receivable, net
|
$
|
753.3
|
|
|
$
|
737.2
|
|
•
|
Mexico - Our notes receivable, net, from certain customers in Mexico at
December 31, 2018
was
$25.2 million
. We collected
$33.8 million
of outstanding receivables from these customers during the year ended
December 31, 2018
.
|
•
|
Peru - Our notes receivable, net, from certain customers in Peru at
December 31, 2018
was
$15.5 million
. We collected
$11.8 million
of outstanding receivables from these customers during the year ended
December 31, 2018
.
|
•
|
Argentina - Our notes receivable, net, from customers in Argentina at
December 31, 2018
was
$18.5 million
, which are denominated in USD. Our customers are required to and have continued to pay us in pesos at the spot exchange rate on the date of payment. We collected
$34.2 million
of outstanding receivables from customers in Argentina during the year ended
December 31, 2018
.
|
|
December 31, 2018
|
|
Balances over 90 days past due
|
|
December 31, 2017
|
|
Balances over 90 days past due
|
||||||||
Notes receivable:
|
|
|
|
|
|
|
|
||||||||
Domestic
|
$
|
55.1
|
|
|
$
|
6.2
|
|
|
$
|
93.5
|
|
|
$
|
9.2
|
|
International
|
123.5
|
|
|
24.8
|
|
|
123.6
|
|
|
33.2
|
|
||||
Total notes receivable
|
178.6
|
|
|
31.0
|
|
|
217.1
|
|
|
42.4
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Notes receivable allowance
|
|
|
|
|
|
|
|
||||||||
Domestic
|
(6.5
|
)
|
|
(6.5
|
)
|
|
(4.0
|
)
|
|
(4.0
|
)
|
||||
International
|
(17.9
|
)
|
|
(17.9
|
)
|
|
(16.8
|
)
|
|
(16.8
|
)
|
||||
Total notes receivable allowance
|
(24.4
|
)
|
|
(24.4
|
)
|
|
(20.8
|
)
|
|
(20.8
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Notes receivable, net
|
$
|
154.2
|
|
|
$
|
6.6
|
|
|
$
|
196.3
|
|
|
$
|
21.6
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Beginning allowance for notes receivable
|
$
|
(20.8
|
)
|
|
$
|
(15.0
|
)
|
Provision
|
(6.3
|
)
|
|
(7.3
|
)
|
||
Charge-offs and recoveries
|
2.7
|
|
|
1.5
|
|
||
Ending allowance for notes receivable
|
$
|
(24.4
|
)
|
|
$
|
(20.8
|
)
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Parts and work-in-process
|
|
$
|
130.5
|
|
|
$
|
128.7
|
|
Finished goods
|
|
85.1
|
|
|
114.4
|
|
||
Total inventories
|
|
$
|
215.6
|
|
|
$
|
243.1
|
|
Item
|
|
Estimated Life in Years
|
Lottery and other machinery and equipment
|
|
3 - 15
|
Gaming equipment
|
|
1 - 5
|
Transportation equipment
|
|
3 - 8
|
Furniture and fixtures
|
|
5 - 10
|
Buildings and improvements
|
|
15 - 40
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Land
|
|
$
|
15.0
|
|
|
$
|
35.7
|
|
Buildings and leasehold improvements
|
|
128.2
|
|
|
183.6
|
|
||
Gaming and lottery machinery and equipment
|
|
1,041.3
|
|
|
962.2
|
|
||
Furniture and fixtures
|
|
27.0
|
|
|
33.2
|
|
||
Construction in progress
|
|
17.0
|
|
|
27.7
|
|
||
Other property and equipment
|
|
239.7
|
|
|
236.9
|
|
||
Less: accumulated depreciation
|
|
(921.2
|
)
|
|
(911.1
|
)
|
||
Total property and equipment, net
|
|
$
|
547.0
|
|
|
$
|
568.2
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Depreciation expense
|
$
|
212.5
|
|
|
$
|
269.5
|
|
|
$
|
323.1
|
|
|
Year Ended
|
||
|
December 31, 2018
|
||
Revenue
|
$
|
198.0
|
|
Net loss
|
41.1
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross Carrying
Value |
|
Accumulated
Amortization |
|
Net Balance
|
|
Gross Carrying
Value
|
|
Accumulated
Amortization
|
|
Net Balance
|
||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
1,083.9
|
|
|
$
|
(298.7
|
)
|
|
$
|
785.2
|
|
|
$
|
881.4
|
|
|
$
|
(214.8
|
)
|
|
$
|
666.6
|
|
Intellectual property
|
930.6
|
|
|
(452.6
|
)
|
|
478.0
|
|
|
788.1
|
|
|
(332.7
|
)
|
|
455.4
|
|
||||||
Licenses
|
546.2
|
|
|
(253.5
|
)
|
|
292.7
|
|
|
419.5
|
|
|
(206.9
|
)
|
|
212.6
|
|
||||||
Brand names
|
123.4
|
|
|
(58.9
|
)
|
|
64.5
|
|
|
125.7
|
|
|
(46.5
|
)
|
|
79.2
|
|
||||||
Trade names
|
107.3
|
|
|
(22.5
|
)
|
|
84.8
|
|
|
98.7
|
|
|
(14.7
|
)
|
|
84.0
|
|
||||||
Patents and other
|
23.3
|
|
|
(13.6
|
)
|
|
9.7
|
|
|
27.1
|
|
|
(14.5
|
)
|
|
12.6
|
|
||||||
|
2,814.7
|
|
|
(1,099.8
|
)
|
|
1,714.9
|
|
|
2,340.5
|
|
|
(830.1
|
)
|
|
1,510.4
|
|
||||||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
96.3
|
|
|
(2.1
|
)
|
|
94.2
|
|
|
96.3
|
|
|
(2.1
|
)
|
|
94.2
|
|
||||||
Total intangible assets
|
$
|
2,911.0
|
|
|
$
|
(1,101.9
|
)
|
|
$
|
1,809.1
|
|
|
$
|
2,436.8
|
|
|
$
|
(832.2
|
)
|
|
$
|
1,604.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Amortization expense
|
$
|
297.1
|
|
|
$
|
260.0
|
|
|
$
|
251.9
|
|
|
Year Ending December 31,
|
||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||
Amortization expense
|
$
|
284.5
|
|
|
$
|
241.1
|
|
|
$
|
223.6
|
|
|
$
|
195.7
|
|
|
$
|
189.3
|
|
•
|
A terminal revenue growth rate of
2.0%
;
|
•
|
A terminal profit margin percentage reflecting our historical normalized profit margins;
|
•
|
Assumptions regarding future capital expenditures reflective of maintaining and renewing our current customer contracts under normalized operations; and
|
•
|
An overall discount rate of
8.0%
based on our weighted average cost of capital for the International Lottery Systems reporting unit.
|
|
|
As of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Software
|
|
$
|
1,101.6
|
|
|
$
|
1,003.2
|
|
Accumulated amortization
|
|
(816.3
|
)
|
|
(663.8
|
)
|
||
Software, net
|
|
$
|
285.3
|
|
|
$
|
339.4
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Amortization expense
|
$
|
160.5
|
|
|
$
|
153.3
|
|
|
$
|
158.9
|
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||
Future minimum lease payments
|
|
$
|
33.4
|
|
|
$
|
27.2
|
|
|
$
|
22.8
|
|
|
$
|
17.9
|
|
|
$
|
14.4
|
|
|
$
|
29.3
|
|
|
|
As of December 31,
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|||||||||||||||||
|
|
Final Maturity
|
|
Rate(s)
|
|
Face Value
|
|
Unamortized debt discount/premium and deferred financing costs, net
|
|
Book Value
|
|
Book Value
|
|||||||||
Senior Secured Credit Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2018 Revolver, varying interest rate
|
|
2018
|
|
variable
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100.5
|
|
2020 Revolver, varying interest rate
|
|
2020
|
|
variable
|
|
|
325.0
|
|
|
—
|
|
|
325.0
|
|
|
249.5
|
|
||||
Term Loan B-4
|
|
2024
|
|
variable
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,193.6
|
|
||||
Term Loan B-5
|
|
2024
|
|
variable
|
|
|
4,143.3
|
|
|
(72.3
|
)
|
|
4,071.0
|
|
|
—
|
|
||||
Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2022 Secured Notes
|
|
2022
|
|
7.000
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,130.7
|
|
||||
2025 Secured Notes
(1)
|
|
2025
|
|
5.000
|
%
|
|
1,250.0
|
|
|
(17.5
|
)
|
|
1,232.5
|
|
|
343.7
|
|
||||
2026 Secured Euro Notes
(2)
|
|
2026
|
|
3.375
|
%
|
|
371.9
|
|
|
(5.4
|
)
|
|
366.5
|
|
|
—
|
|
||||
Unsecured Notes
|
|
2022
|
|
10.000
|
%
|
|
2,200.0
|
|
|
(23.8
|
)
|
|
2,176.2
|
|
|
2,170.1
|
|
||||
2026 Unsecured Euro Notes
(2)
|
|
2026
|
|
5.500
|
%
|
|
286.1
|
|
|
(4.2
|
)
|
|
281.9
|
|
|
—
|
|
||||
Subordinated Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2020 Notes
|
|
2020
|
|
6.250
|
%
|
|
243.5
|
|
|
(1.0
|
)
|
|
242.5
|
|
|
241.8
|
|
||||
2021 Notes
|
|
2021
|
|
6.625
|
%
|
|
340.6
|
|
|
(3.3
|
)
|
|
337.3
|
|
|
336.0
|
|
||||
Capital lease obligations, 3.9% as of December 31, 2018 payable monthly through 2020
|
|
2020
|
|
3.900
|
%
|
|
4.0
|
|
|
—
|
|
|
4.0
|
|
|
10.7
|
|
||||
Total long-term debt outstanding
|
|
|
|
|
|
$
|
9,164.4
|
|
|
$
|
(127.5
|
)
|
|
$
|
9,036.9
|
|
|
$
|
8,776.6
|
|
|
Less: current portion of long-term debt
|
|
|
|
|
|
|
|
|
|
(45.0
|
)
|
|
(40.3
|
)
|
|||||||
Long-term debt, excluding current portion
|
|
|
|
|
|
|
|
|
|
$
|
8,991.9
|
|
|
$
|
8,736.3
|
|
|||||
Fair value of debt
(3)
|
|
|
|
|
|
$
|
8,773.3
|
|
|
|
|
|
|
|
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
After 2023
|
||||||||||||||
Senior Secured Credit Facilities
|
|
$
|
4,468.3
|
|
|
$
|
41.7
|
|
|
$
|
366.7
|
|
|
$
|
41.7
|
|
|
$
|
41.7
|
|
|
$
|
41.7
|
|
|
$
|
3,934.8
|
|
Senior Notes
|
|
4,108.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,200.0
|
|
|
—
|
|
|
1,908.0
|
|
|||||||
Subordinated Notes
|
|
584.1
|
|
|
—
|
|
|
243.5
|
|
|
340.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Capital lease obligations
|
|
4.0
|
|
|
3.3
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total long-term debt outstanding
|
|
$
|
9,164.4
|
|
|
$
|
45.0
|
|
|
$
|
610.9
|
|
|
$
|
382.3
|
|
|
$
|
2,241.7
|
|
|
$
|
41.7
|
|
|
$
|
5,842.8
|
|
Unamortized deferred financing costs and discount/premium
|
|
(127.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total debt book value
|
|
$
|
9,036.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Repurchase and cancellation of principal balance at premium (discount)
|
$
|
110.3
|
|
|
$
|
—
|
|
|
$
|
(26.0
|
)
|
Unamortized debt (premium) discount and deferred financing costs. net
|
(29.8
|
)
|
|
26.4
|
|
|
0.8
|
|
|||
Third party debt issuance fees
|
12.7
|
|
|
11.7
|
|
|
—
|
|
|||
Total loss (gain) on debt financing transactions
|
$
|
93.2
|
|
|
$
|
38.1
|
|
|
$
|
(25.2
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gains (losses) recorded in accumulated other comprehensive loss, net of tax
|
|
$
|
0.1
|
|
|
$
|
(4.2
|
)
|
|
$
|
(3.0
|
)
|
Interest expense recorded related to interest rate swap contracts
|
|
2.6
|
|
|
7.0
|
|
|
8.2
|
|
|
|
Year Ended December 31,
2018
|
||
|
|
Interest expense
|
||
Total amounts of expense line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded
|
|
$
|
(597.2
|
)
|
Hedged item
|
|
(16.6
|
)
|
|
Derivative designated as hedging instrument
|
|
14.0
|
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
Shares outstanding as of beginning of period
|
|
89.9
|
|
|
88.0
|
|
Shares issued as part of equity-based compensation plans and the ESPP, net of shares surrendered
|
|
2.0
|
|
|
1.9
|
|
Shares outstanding as of end of period
|
|
91.9
|
|
|
89.9
|
|
|
|
Number of
Restricted
Stock
Units
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Unvested RSUs as of December 31, 2017
|
|
3.9
|
|
|
$
|
13.73
|
|
Granted
|
|
1.1
|
|
|
$
|
47.17
|
|
Vested
|
|
(2.1
|
)
|
|
$
|
15.45
|
|
Cancelled
|
|
(0.3
|
)
|
|
$
|
22.02
|
|
Unvested RSUs as of December 31, 2018
|
|
2.6
|
|
|
$
|
25.37
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
133.8
|
|
|
$
|
121.0
|
|
Service cost
|
|
2.5
|
|
|
2.4
|
|
||
Interest cost
|
|
3.8
|
|
|
4.2
|
|
||
Participant contributions
|
|
0.9
|
|
|
1.0
|
|
||
Actuarial (gain) loss
|
|
(6.6
|
)
|
|
1.2
|
|
||
Benefits paid
|
|
(3.8
|
)
|
|
(6.0
|
)
|
||
Other, principally foreign exchange
|
|
(5.5
|
)
|
|
10.0
|
|
||
Benefit obligation at end of year
|
|
$
|
125.1
|
|
|
$
|
133.8
|
|
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
115.5
|
|
|
$
|
99.3
|
|
Actual (loss) gain on plan assets
|
|
(4.1
|
)
|
|
10.4
|
|
||
Employer contributions
|
|
3.2
|
|
|
3.1
|
|
||
Participant contributions
|
|
0.9
|
|
|
1.0
|
|
||
Benefits paid
|
|
(3.8
|
)
|
|
(6.0
|
)
|
||
Other, principally foreign exchange
|
|
(4.8
|
)
|
|
7.7
|
|
||
Fair value of assets at end of year
|
|
$
|
106.9
|
|
|
$
|
115.5
|
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
|
||||
Funded status (current)
|
|
$
|
—
|
|
|
$
|
—
|
|
Funded status (non-current)
|
|
(18.2
|
)
|
|
(18.3
|
)
|
||
Accumulated other comprehensive loss:
|
|
|
|
|
||||
Unrecognized actuarial loss
|
|
24.7
|
|
|
20.6
|
|
||
Unrecognized prior service cost
|
|
0.5
|
|
|
0.5
|
|
||
Deferred taxes
|
|
(4.7
|
)
|
|
(4.7
|
)
|
||
Net amount recognized
|
|
$
|
2.3
|
|
|
$
|
(1.9
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Components of net periodic pension benefit cost:
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
2.5
|
|
|
$
|
2.4
|
|
|
$
|
2.2
|
|
Interest cost
|
|
3.8
|
|
|
4.2
|
|
|
4.1
|
|
|||
Expected return on plan assets
|
|
(5.4
|
)
|
|
(5.9
|
)
|
|
(5.8
|
)
|
|||
Amortization of actuarial losses
|
|
1.0
|
|
|
1.4
|
|
|
0.3
|
|
|||
Net periodic cost
|
|
$
|
1.9
|
|
|
$
|
2.1
|
|
|
$
|
0.8
|
|
|
|
|
||
Unrecognized loss
|
|
$
|
1.8
|
|
Unrecognized prior service cost
|
|
(0.5
|
)
|
|
Net amount expected to be recognized
|
|
$
|
1.3
|
|
|
2018
|
|
2017
|
||||
Significant unobservable inputs (Level 3), beginning of period
|
$
|
4.2
|
|
|
$
|
10.9
|
|
Unrealized gain (loss) on asset still held
|
—
|
|
|
(6.7
|
)
|
||
Significant unobservable inputs (Level 3), end of period
|
$
|
4.2
|
|
|
$
|
4.2
|
|
|
|
U.K. Plan
|
|
Canadian Plan
|
||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||
Discount rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Benefit obligation
|
|
2.90
|
%
|
|
2.60
|
%
|
|
2.80
|
%
|
|
3.90
|
%
|
|
4.00
|
%
|
|
4.00
|
%
|
Net periodic pension cost
|
|
2.60
|
%
|
|
2.80
|
%
|
|
4.00
|
%
|
|
3.60
|
%
|
|
3.60
|
%
|
|
4.15
|
%
|
Rate of compensation increase
|
|
1.00
|
%
|
|
1.00
|
%
|
|
1.00
|
%
|
|
1.00
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
Expected return on assets
|
|
5.00
|
%
|
|
4.80
|
%
|
|
5.70
|
%
|
|
5.70
|
%
|
|
6.00
|
%
|
|
6.25
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
|
$
|
(356.0
|
)
|
|
$
|
(336.6
|
)
|
|
$
|
(563.7
|
)
|
Foreign
|
|
16.7
|
|
|
108.8
|
|
|
85.0
|
|
|||
Net loss before income tax (benefit) expense
|
|
$
|
(339.3
|
)
|
|
$
|
(227.8
|
)
|
|
$
|
(478.7
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
|
|
|
|
|
|
||||||
U.S. Federal
|
|
$
|
19.0
|
|
|
$
|
5.0
|
|
|
$
|
10.2
|
|
U.S. State
|
|
3.7
|
|
|
(4.0
|
)
|
|
(0.3
|
)
|
|||
Foreign
|
|
22.6
|
|
|
24.8
|
|
|
32.0
|
|
|||
Total
|
|
45.3
|
|
|
25.8
|
|
|
41.9
|
|
|||
Deferred
|
|
|
|
|
|
|
||||||
U.S. Federal
|
|
(9.8
|
)
|
|
(5.8
|
)
|
|
(129.5
|
)
|
|||
U.S. State
|
|
(7.1
|
)
|
|
2.5
|
|
|
(8.5
|
)
|
|||
Foreign
|
|
(15.3
|
)
|
|
(8.0
|
)
|
|
(28.9
|
)
|
|||
Total
|
|
(32.2
|
)
|
|
(11.3
|
)
|
|
(166.9
|
)
|
|||
Total income tax expense (benefit)
|
|
$
|
13.1
|
|
|
$
|
14.5
|
|
|
$
|
(125.0
|
)
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Statutory U.S. federal income tax rate
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Foreign earnings at rates different than U.S. federal rate
|
|
(1.5
|
)%
|
|
(5.7
|
)%
|
|
(1.5
|
)%
|
Valuation allowance adjustments
|
|
(16.8
|
)%
|
|
(40.8
|
)%
|
|
(6.5
|
)%
|
Impact of U.S. Tax Reform
|
|
(3.1
|
)%
|
|
4.3
|
%
|
|
—
|
%
|
Other
|
|
(3.5
|
)%
|
|
0.8
|
%
|
|
(0.9
|
)%
|
Effective income tax rate
|
|
(3.9
|
)%
|
|
(6.4
|
)%
|
|
26.1
|
%
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Reserves and other accrued expenses
|
|
$
|
37.1
|
|
|
$
|
29.4
|
|
Net operating loss carry forwards
|
|
436.2
|
|
|
395.5
|
|
||
Tax credit carry forwards
|
|
29.1
|
|
|
26.7
|
|
||
Interest limitation carryforwards
|
|
105.8
|
|
|
—
|
|
||
Differences in financial reporting and tax basis for:
|
|
|
|
|
||||
Other
|
|
63.6
|
|
|
70.7
|
|
||
Valuation allowance
|
|
(245.2
|
)
|
|
(158.8
|
)
|
||
Realizable deferred tax assets
|
|
426.6
|
|
|
363.5
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
|
|
||
Reserves and other accrued expenses
|
|
(4.5
|
)
|
|
(16.0
|
)
|
||
Deferred costs and prepaid expenses
|
|
(45.2
|
)
|
|
(8.2
|
)
|
||
Differences in financial reporting and tax basis for:
|
|
|
|
|
||||
Identifiable intangible assets
|
|
(382.6
|
)
|
|
(352.0
|
)
|
||
Property and equipment
|
|
(62.3
|
)
|
|
(25.5
|
)
|
||
Other
|
|
(9.6
|
)
|
|
(2.0
|
)
|
||
Total deferred tax liabilities
|
|
(504.2
|
)
|
|
(403.7
|
)
|
||
Net deferred tax liability on balance sheet
|
|
$
|
(77.6
|
)
|
|
$
|
(40.2
|
)
|
|
December 31, 2018
|
||||||||||
|
Federal
|
|
State
|
|
Foreign
|
||||||
NOL carry forwards
|
$
|
1,540.3
|
|
|
$
|
1,437.2
|
|
|
$
|
164.7
|
|
Interest limitation carry forwards
|
413.9
|
|
|
252.6
|
|
|
7.4
|
|
|||
R&D and state credit carry forwards
|
29.1
|
|
|
2.4
|
|
|
—
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of period
|
|
$
|
21.8
|
|
|
$
|
27.4
|
|
|
$
|
10.8
|
|
Tax positions related to current year additions
|
|
10.8
|
|
|
2.3
|
|
|
8.4
|
|
|||
Additions for tax positions of prior years
|
|
2.6
|
|
|
—
|
|
|
9.7
|
|
|||
Tax positions related to prior years reductions
|
|
(0.2
|
)
|
|
(7.3
|
)
|
|
(0.3
|
)
|
|||
Reductions due to lapse of statute of limitations on tax positions
|
|
(1.2
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||
Settlements
|
|
—
|
|
|
(0.6
|
)
|
|
(0.8
|
)
|
|||
Balance at end of period
|
|
$
|
33.8
|
|
|
$
|
21.8
|
|
|
$
|
27.4
|
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
73.5
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
95.1
|
|
|
$
|
(1.3
|
)
|
|
$
|
168.2
|
|
Restricted cash
|
|
—
|
|
|
0.8
|
|
|
31.6
|
|
|
6.3
|
|
|
—
|
|
|
38.7
|
|
||||||
Accounts receivable, net
|
|
—
|
|
|
79.2
|
|
|
204.8
|
|
|
315.2
|
|
|
—
|
|
|
599.2
|
|
||||||
Notes receivable, net
|
|
—
|
|
|
—
|
|
|
100.6
|
|
|
13.3
|
|
|
—
|
|
|
113.9
|
|
||||||
Inventories
|
|
—
|
|
|
40.4
|
|
|
81.7
|
|
|
110.8
|
|
|
(17.3
|
)
|
|
215.6
|
|
||||||
Prepaid expenses, deposits and other current assets
|
|
6.2
|
|
|
63.3
|
|
|
92.5
|
|
|
70.5
|
|
|
0.2
|
|
|
232.7
|
|
||||||
Property and equipment, net
|
|
31.0
|
|
|
112.1
|
|
|
218.6
|
|
|
218.2
|
|
|
(32.9
|
)
|
|
547.0
|
|
||||||
Investment in subsidiaries
|
|
2,835.9
|
|
|
974.5
|
|
|
1,093.4
|
|
|
—
|
|
|
(4,903.8
|
)
|
|
—
|
|
||||||
Goodwill
|
|
—
|
|
|
240.2
|
|
|
1,896.8
|
|
|
1,142.9
|
|
|
—
|
|
|
3,279.9
|
|
||||||
Intangible assets, net
|
|
42.6
|
|
|
34.1
|
|
|
1,291.4
|
|
|
441.0
|
|
|
—
|
|
|
1,809.1
|
|
||||||
Intercompany balances
|
|
—
|
|
|
6,053.9
|
|
|
—
|
|
|
—
|
|
|
(6,053.9
|
)
|
|
—
|
|
||||||
Software, net
|
|
58.6
|
|
|
38.2
|
|
|
128.3
|
|
|
60.2
|
|
|
—
|
|
|
285.3
|
|
||||||
Other assets
(2)
|
|
110.0
|
|
|
404.4
|
|
|
45.9
|
|
|
307.8
|
|
|
(439.9
|
)
|
|
428.2
|
|
||||||
Total assets
|
|
$
|
3,157.8
|
|
|
$
|
8,042.0
|
|
|
$
|
5,185.6
|
|
|
$
|
2,781.3
|
|
|
$
|
(11,448.9
|
)
|
|
$
|
7,717.8
|
|
Liabilities and stockholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
41.7
|
|
|
$
|
—
|
|
|
$
|
3.3
|
|
|
$
|
—
|
|
|
$
|
45.0
|
|
Other current liabilities
|
|
63.8
|
|
|
162.4
|
|
|
247.9
|
|
|
254.1
|
|
|
(25.9
|
)
|
|
702.3
|
|
||||||
Long-term debt, excluding current portion
|
|
—
|
|
|
8,991.1
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
8,991.9
|
|
||||||
Other long-term liabilities
|
|
105.8
|
|
|
7.6
|
|
|
637.3
|
|
|
171.9
|
|
|
(480.8
|
)
|
|
441.8
|
|
||||||
Intercompany balances
|
|
5,451.4
|
|
|
—
|
|
|
48.1
|
|
|
554.4
|
|
|
(6,053.9
|
)
|
|
—
|
|
||||||
Stockholders’ (deficit) equity
|
|
(2,463.2
|
)
|
|
(1,160.8
|
)
|
|
4,252.3
|
|
|
1,796.8
|
|
|
(4,888.3
|
)
|
|
(2,463.2
|
)
|
||||||
Total liabilities and stockholders’ (deficit) equity
|
|
$
|
3,157.8
|
|
|
$
|
8,042.0
|
|
|
$
|
5,185.6
|
|
|
$
|
2,781.3
|
|
|
$
|
(11,448.9
|
)
|
|
$
|
7,717.8
|
|
|
||||||||||||||||||||||||
1 - Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, the Unsecured Notes, the 2025 Secured Notes, which were issued in October 2017, and the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes, which were issued in February 2018.
|
||||||||||||||||||||||||
2 - Includes $12.2 million and $0.9 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
732.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59.4
|
|
|
$
|
(3.2
|
)
|
|
$
|
788.8
|
|
Restricted cash
|
|
—
|
|
|
0.6
|
|
|
28.3
|
|
|
0.1
|
|
|
—
|
|
|
29.0
|
|
||||||
Accounts receivable, net
|
|
0.4
|
|
|
68.1
|
|
|
192.6
|
|
|
279.8
|
|
|
—
|
|
|
540.9
|
|
||||||
Notes receivable, net
|
|
—
|
|
|
—
|
|
|
121.1
|
|
|
22.4
|
|
|
—
|
|
|
143.5
|
|
||||||
Inventories
|
|
—
|
|
|
40.7
|
|
|
91.8
|
|
|
131.8
|
|
|
(21.2
|
)
|
|
243.1
|
|
||||||
Prepaid expenses, deposits and other current assets
|
|
6.5
|
|
|
30.3
|
|
|
41.6
|
|
|
52.7
|
|
|
—
|
|
|
131.1
|
|
||||||
Property and equipment, net
|
|
28.8
|
|
|
91.5
|
|
|
295.6
|
|
|
179.9
|
|
|
(27.6
|
)
|
|
568.2
|
|
||||||
Investment in subsidiaries
|
|
3,098.7
|
|
|
867.9
|
|
|
987.7
|
|
|
—
|
|
|
(4,954.3
|
)
|
|
—
|
|
||||||
Goodwill
|
|
—
|
|
|
240.3
|
|
|
1,880.4
|
|
|
835.4
|
|
|
—
|
|
|
2,956.1
|
|
||||||
Intangible assets, net
|
|
15.7
|
|
|
34.9
|
|
|
1,335.3
|
|
|
218.7
|
|
|
—
|
|
|
1,604.6
|
|
||||||
Intercompany balances
|
|
—
|
|
|
5,889.8
|
|
|
—
|
|
|
222.5
|
|
|
(6,112.3
|
)
|
|
—
|
|
||||||
Software, net
|
|
67.2
|
|
|
24.7
|
|
|
199.0
|
|
|
48.5
|
|
|
—
|
|
|
339.4
|
|
||||||
Other assets
(2)
|
|
234.4
|
|
|
388.8
|
|
|
62.0
|
|
|
270.3
|
|
|
(574.9
|
)
|
|
380.6
|
|
||||||
Total assets
|
|
$
|
4,184.3
|
|
|
$
|
7,677.6
|
|
|
$
|
5,235.4
|
|
|
$
|
2,321.5
|
|
|
$
|
(11,693.5
|
)
|
|
$
|
7,725.3
|
|
Liabilities and stockholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
32.8
|
|
|
$
|
—
|
|
|
$
|
7.5
|
|
|
$
|
—
|
|
|
$
|
40.3
|
|
Other current liabilities
|
|
67.6
|
|
|
199.0
|
|
|
254.2
|
|
|
206.4
|
|
|
(27.7
|
)
|
|
699.5
|
|
||||||
Long-term debt, excluding current portion
|
|
—
|
|
|
8,733.0
|
|
|
—
|
|
|
3.3
|
|
|
—
|
|
|
8,736.3
|
|
||||||
Other long-term liabilities
|
|
68.8
|
|
|
11.3
|
|
|
650.3
|
|
|
110.9
|
|
|
(565.1
|
)
|
|
276.2
|
|
||||||
Intercompany balances
|
|
6,074.9
|
|
|
—
|
|
|
37.4
|
|
|
—
|
|
|
(6,112.3
|
)
|
|
—
|
|
||||||
Stockholders’ (deficit) equity
|
|
(2,027.0
|
)
|
|
(1,298.5
|
)
|
|
4,293.5
|
|
|
1,993.4
|
|
|
(4,988.4
|
)
|
|
(2,027.0
|
)
|
||||||
Total liabilities and stockholders’ (deficit) equity
|
|
$
|
4,184.3
|
|
|
$
|
7,677.6
|
|
|
$
|
5,235.4
|
|
|
$
|
2,321.5
|
|
|
$
|
(11,693.5
|
)
|
|
$
|
7,725.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
1 - Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, the 2025 Secured Notes and the Unsecured Notes.
|
||||||||||||||||||||||||
2 - Includes $15.6 million and $0.7 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
547.1
|
|
|
$
|
1,654.0
|
|
|
$
|
1,540.3
|
|
|
$
|
(378.2
|
)
|
|
$
|
3,363.2
|
|
Cost of services, cost of product sales and cost of instant products
(2)
|
|
—
|
|
|
360.9
|
|
|
490.3
|
|
|
721.2
|
|
|
(317.1
|
)
|
|
1,255.3
|
|
||||||
Selling, general and administrative
|
|
154.4
|
|
|
42.4
|
|
|
227.0
|
|
|
325.5
|
|
|
(52.4
|
)
|
|
696.9
|
|
||||||
Research and development
|
|
—
|
|
|
2.7
|
|
|
87.2
|
|
|
112.4
|
|
|
—
|
|
|
202.3
|
|
||||||
Depreciation, amortization and impairments
|
|
44.2
|
|
|
32.6
|
|
|
439.4
|
|
|
188.3
|
|
|
(14.8
|
)
|
|
689.7
|
|
||||||
Restructuring and other
|
|
194.7
|
|
|
(1.1
|
)
|
|
9.2
|
|
|
50.6
|
|
|
—
|
|
|
253.4
|
|
||||||
Operating (loss) income
|
|
(393.3
|
)
|
|
109.6
|
|
|
400.9
|
|
|
142.3
|
|
|
6.1
|
|
|
265.6
|
|
||||||
Interest expense
|
|
—
|
|
|
(596.7
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
(597.2
|
)
|
||||||
Loss on debt financing transactions
|
|
—
|
|
|
(93.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93.2
|
)
|
||||||
Gain on remeasurement of debt
|
|
—
|
|
|
43.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.4
|
|
||||||
Other income (expense), net
|
|
335.7
|
|
|
534.9
|
|
|
(744.8
|
)
|
|
(83.7
|
)
|
|
—
|
|
|
42.1
|
|
||||||
Net (loss) income before equity in (loss) income of subsidiaries and income taxes
|
|
(57.6
|
)
|
|
(2.0
|
)
|
|
(343.9
|
)
|
|
58.1
|
|
|
6.1
|
|
|
(339.3
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(218.5
|
)
|
|
43.6
|
|
|
(28.2
|
)
|
|
—
|
|
|
203.1
|
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(76.3
|
)
|
|
0.5
|
|
|
82.3
|
|
|
(19.6
|
)
|
|
—
|
|
|
(13.1
|
)
|
||||||
Net (loss) income
|
|
$
|
(352.4
|
)
|
|
$
|
42.1
|
|
|
$
|
(289.8
|
)
|
|
$
|
38.5
|
|
|
$
|
209.2
|
|
|
$
|
(352.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive (loss) income
|
|
(99.8
|
)
|
|
30.0
|
|
|
(66.3
|
)
|
|
(113.8
|
)
|
|
150.1
|
|
|
(99.8
|
)
|
||||||
Comprehensive (loss) income
|
|
$
|
(452.2
|
)
|
|
$
|
72.1
|
|
|
$
|
(356.1
|
)
|
|
$
|
(75.3
|
)
|
|
$
|
359.3
|
|
|
$
|
(452.2
|
)
|
|
||||||||||||||||||||||||
1 - Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, the Unsecured Notes, the 2025 Secured Notes, which were issued in October 2017, and the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes, which were issued in February 2018.
|
||||||||||||||||||||||||
2 - Exclusive of D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
498.1
|
|
|
$
|
1,683.9
|
|
|
$
|
1,223.3
|
|
|
$
|
(321.7
|
)
|
|
$
|
3,083.6
|
|
Cost of services, cost of product sales and cost of instant products
(2)
|
|
—
|
|
|
341.9
|
|
|
511.0
|
|
|
629.1
|
|
|
(317.4
|
)
|
|
1,164.6
|
|
||||||
Selling, general and administrative
|
|
127.1
|
|
|
41.3
|
|
|
244.4
|
|
|
250.2
|
|
|
(49.9
|
)
|
|
613.1
|
|
||||||
Research and development
|
|
2.1
|
|
|
6.5
|
|
|
101.3
|
|
|
74.2
|
|
|
—
|
|
|
184.1
|
|
||||||
Depreciation, amortization and impairments
|
|
71.6
|
|
|
31.3
|
|
|
462.7
|
|
|
128.0
|
|
|
(10.8
|
)
|
|
682.8
|
|
||||||
Restructuring and other
|
|
29.7
|
|
|
5.1
|
|
|
7.3
|
|
|
3.8
|
|
|
—
|
|
|
45.9
|
|
||||||
Operating (loss) income
|
|
(230.5
|
)
|
|
72.0
|
|
|
357.2
|
|
|
138.0
|
|
|
56.4
|
|
|
393.1
|
|
||||||
Interest expense
|
|
(4.6
|
)
|
|
(603.9
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
(609.7
|
)
|
||||||
Loss on debt financing transactions
|
|
(1.1
|
)
|
|
(37.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.1
|
)
|
||||||
Other income (expense), net
|
|
87.7
|
|
|
150.4
|
|
|
(184.7
|
)
|
|
(26.5
|
)
|
|
—
|
|
|
26.9
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(148.5
|
)
|
|
(418.5
|
)
|
|
172.5
|
|
|
110.3
|
|
|
56.4
|
|
|
(227.8
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(45.4
|
)
|
|
67.6
|
|
|
21.9
|
|
|
—
|
|
|
(44.1
|
)
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(48.4
|
)
|
|
157.9
|
|
|
(85.6
|
)
|
|
(38.4
|
)
|
|
—
|
|
|
(14.5
|
)
|
||||||
Net (loss) income
|
|
$
|
(242.3
|
)
|
|
$
|
(193.0
|
)
|
|
$
|
108.8
|
|
|
$
|
71.9
|
|
|
$
|
12.3
|
|
|
$
|
(242.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income
|
|
133.9
|
|
|
10.3
|
|
|
65.8
|
|
|
128.7
|
|
|
(204.8
|
)
|
|
133.9
|
|
||||||
Comprehensive (loss) income
|
|
$
|
(108.4
|
)
|
|
$
|
(182.7
|
)
|
|
$
|
174.6
|
|
|
$
|
200.6
|
|
|
$
|
(192.5
|
)
|
|
$
|
(108.4
|
)
|
|
||||||||||||||||||||||||
(1) Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, the Unsecured Notes and the 2025 Secured Notes, which were issued in October 2017.
|
||||||||||||||||||||||||
(2) Exclusive of D&A.
|
|
|
SGC (Parent
1
)
|
|
SGI (Issuer
2
)
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
469.5
|
|
|
$
|
1,583.5
|
|
|
$
|
1,148.6
|
|
|
$
|
(318.2
|
)
|
|
$
|
2,883.4
|
|
Cost of services, cost of product sales and cost of instant products
(3)
|
|
—
|
|
|
328.6
|
|
|
480.9
|
|
|
553.8
|
|
|
(257.0
|
)
|
|
1,106.3
|
|
||||||
Selling, general and administrative
|
|
121.0
|
|
|
46.9
|
|
|
213.8
|
|
|
235.9
|
|
|
(40.6
|
)
|
|
577.0
|
|
||||||
Research and development
|
|
6.1
|
|
|
10.7
|
|
|
145.2
|
|
|
42.8
|
|
|
—
|
|
|
204.8
|
|
||||||
Depreciation, amortization and impairments
|
|
53.5
|
|
|
40.9
|
|
|
534.6
|
|
|
116.0
|
|
|
(6.3
|
)
|
|
738.7
|
|
||||||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69.0
|
|
|
—
|
|
|
69.0
|
|
||||||
Restructuring and other
|
|
32.6
|
|
|
4.6
|
|
|
11.7
|
|
|
8.1
|
|
|
—
|
|
|
57.0
|
|
||||||
Operating (loss) income
|
|
(213.2
|
)
|
|
37.8
|
|
|
197.3
|
|
|
123.0
|
|
|
(14.3
|
)
|
|
130.6
|
|
||||||
Interest expense
|
|
(21.0
|
)
|
|
(640.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(661.4
|
)
|
||||||
Gain on debt financing transactions
|
|
—
|
|
|
25.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25.2
|
|
||||||
Other income (expense), net
|
|
64.0
|
|
|
194.4
|
|
|
(227.3
|
)
|
|
(4.2
|
)
|
|
—
|
|
|
26.9
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(170.2
|
)
|
|
(382.8
|
)
|
|
(30.0
|
)
|
|
118.6
|
|
|
(14.3
|
)
|
|
(478.7
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(180.1
|
)
|
|
48.5
|
|
|
61.1
|
|
|
—
|
|
|
70.5
|
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(3.4
|
)
|
|
138.2
|
|
|
15.9
|
|
|
(25.7
|
)
|
|
—
|
|
|
125.0
|
|
||||||
Net (loss) income
|
|
$
|
(353.7
|
)
|
|
$
|
(196.1
|
)
|
|
$
|
47.0
|
|
|
$
|
92.9
|
|
|
$
|
56.2
|
|
|
$
|
(353.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive (loss) income
|
|
(111.4
|
)
|
|
(1.7
|
)
|
|
(43.1
|
)
|
|
(135.1
|
)
|
|
179.9
|
|
|
(111.4
|
)
|
||||||
Comprehensive (loss) income
|
|
$
|
(465.1
|
)
|
|
$
|
(197.8
|
)
|
|
$
|
3.9
|
|
|
$
|
(42.2
|
)
|
|
$
|
236.1
|
|
|
$
|
(465.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the 2018 Notes, which were redeemed on March 17, 2017.
|
||||||||||||||||||||||||
(2) Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, and the Unsecured Notes.
|
||||||||||||||||||||||||
(3) Exclusive of D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(221.1
|
)
|
|
$
|
18.3
|
|
|
$
|
205.8
|
|
|
$
|
341.2
|
|
|
$
|
1.9
|
|
|
$
|
346.1
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
|
(35.0
|
)
|
|
(63.2
|
)
|
|
(145.9
|
)
|
|
(146.7
|
)
|
|
—
|
|
|
(390.8
|
)
|
||||||
Acquisitions of businesses and assets, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(32.1
|
)
|
|
(264.5
|
)
|
|
—
|
|
|
(296.6
|
)
|
||||||
Proceeds from asset sales
|
|
—
|
|
|
—
|
|
|
40.0
|
|
|
—
|
|
|
—
|
|
|
40.0
|
|
||||||
Acquisitions and additions to equity method investments
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|
(178.5
|
)
|
|
—
|
|
|
(180.4
|
)
|
||||||
Distributions of capital from equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.7
|
|
|
—
|
|
|
29.7
|
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
(159.3
|
)
|
|
—
|
|
|
—
|
|
|
159.3
|
|
|
—
|
|
||||||
Net cash used in by investing activities
|
|
(35.0
|
)
|
|
(224.4
|
)
|
|
(138.0
|
)
|
|
(560.0
|
)
|
|
159.3
|
|
|
(798.1
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Payments on long-term debt, net of proceeds
|
|
—
|
|
|
245.7
|
|
|
—
|
|
|
(7.5
|
)
|
|
—
|
|
|
238.2
|
|
||||||
Payments of assumed NYX debt and other acquisitions debt
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|
(288.2
|
)
|
|
—
|
|
|
(290.1
|
)
|
||||||
Payments of debt issuance and deferred financing costs
|
|
—
|
|
|
(38.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.5
|
)
|
||||||
Payments on license obligations
|
|
(42.9
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
(44.9
|
)
|
||||||
Net redemptions of common stock under stock-based compensation plans and other
|
|
(18.4
|
)
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
(20.9
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
(341.7
|
)
|
|
—
|
|
|
(61.5
|
)
|
|
562.5
|
|
|
(159.3
|
)
|
|
—
|
|
||||||
Net cash (used in) provided by financing activities
|
|
(403.0
|
)
|
|
207.2
|
|
|
(67.9
|
)
|
|
266.8
|
|
|
(159.3
|
)
|
|
(156.2
|
)
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
|
—
|
|
|
(5.9
|
)
|
||||||
(Decrease) increase in cash, cash equivalents and restricted cash
|
|
(659.1
|
)
|
|
1.1
|
|
|
(0.1
|
)
|
|
42.1
|
|
|
1.9
|
|
|
(614.1
|
)
|
||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
732.6
|
|
|
0.6
|
|
|
43.9
|
|
|
60.2
|
|
|
(3.2
|
)
|
|
834.1
|
|
||||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
73.5
|
|
|
$
|
1.7
|
|
|
$
|
43.8
|
|
|
$
|
102.3
|
|
|
$
|
(1.3
|
)
|
|
$
|
220.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, the Unsecured Notes, the 2025 Secured Notes, which were issued in October 2017, and the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes, which were issued in February 2018.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(40.7
|
)
|
|
$
|
(300.0
|
)
|
|
$
|
567.3
|
|
|
$
|
282.6
|
|
|
$
|
(2.1
|
)
|
|
$
|
507.1
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
|
(53.3
|
)
|
|
(31.0
|
)
|
|
(128.8
|
)
|
|
(80.6
|
)
|
|
—
|
|
|
(293.7
|
)
|
||||||
Acquisitions of businesses, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(26.3
|
)
|
|
(31.4
|
)
|
|
—
|
|
|
(57.7
|
)
|
||||||
Acquisitions and additions to equity method investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(107.3
|
)
|
|
—
|
|
|
(107.3
|
)
|
||||||
Distributions of capital on equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.1
|
|
|
—
|
|
|
34.1
|
|
||||||
Changes in other assets and liabilities and other
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
2.5
|
|
|
—
|
|
|
10.0
|
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
(569.1
|
)
|
|
—
|
|
|
(120.1
|
)
|
|
689.2
|
|
|
—
|
|
||||||
Net cash (used in) provided by investing activities
|
|
(53.3
|
)
|
|
(600.1
|
)
|
|
(147.6
|
)
|
|
(302.8
|
)
|
|
689.2
|
|
|
(414.6
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net (payments) proceeds of long-term debt including senior notes and term loans
|
|
(250.0
|
)
|
|
957.7
|
|
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
701.0
|
|
||||||
Payments of debt issuance and deferred financing costs
|
|
—
|
|
|
(58.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58.7
|
)
|
||||||
Payments on license obligations
|
|
(47.5
|
)
|
|
—
|
|
|
(5.1
|
)
|
|
—
|
|
|
—
|
|
|
(52.6
|
)
|
||||||
Net redemptions of common stock under stock-based compensation plans and other
|
|
(8.5
|
)
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
(9.5
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
1,099.9
|
|
|
—
|
|
|
(410.7
|
)
|
|
—
|
|
|
(689.2
|
)
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
|
793.9
|
|
|
899.0
|
|
|
(416.8
|
)
|
|
(6.7
|
)
|
|
(689.2
|
)
|
|
580.2
|
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|
—
|
|
|
4.5
|
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
699.9
|
|
|
(1.1
|
)
|
|
2.9
|
|
|
(22.4
|
)
|
|
(2.1
|
)
|
|
677.2
|
|
||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
32.7
|
|
|
1.7
|
|
|
41.0
|
|
|
82.6
|
|
|
(1.1
|
)
|
|
156.9
|
|
||||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
732.6
|
|
|
$
|
0.6
|
|
|
$
|
43.9
|
|
|
$
|
60.2
|
|
|
$
|
(3.2
|
)
|
|
$
|
834.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, the Unsecured Notes and the 2025 Secured Notes, which were issued in October 2017.
|
|
|
SGC (Parent
1
)
|
|
SGI (Issuer
2
)
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminating
Entries
|
|
Consolidated
|
||||||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(90.4
|
)
|
|
$
|
(259.8
|
)
|
|
$
|
535.0
|
|
|
$
|
235.3
|
|
|
$
|
(1.1
|
)
|
|
$
|
419.0
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital expenditures
|
|
(39.1
|
)
|
|
(22.8
|
)
|
|
(149.5
|
)
|
|
(61.5
|
)
|
|
—
|
|
|
(272.9
|
)
|
||||||
Distribution of capital on equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25.3
|
|
|
—
|
|
|
25.3
|
|
||||||
Changes in other assets and liabilities and other
|
|
—
|
|
|
(1.2
|
)
|
|
16.8
|
|
|
4.0
|
|
|
—
|
|
|
19.6
|
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
418.4
|
|
|
—
|
|
|
(194.5
|
)
|
|
(223.9
|
)
|
|
—
|
|
||||||
Net cash (used in) provided by investing activities
|
|
(39.1
|
)
|
|
394.4
|
|
|
(132.7
|
)
|
|
(226.7
|
)
|
|
(223.9
|
)
|
|
(228.0
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net payments on long-term debt
|
|
—
|
|
|
(132.9
|
)
|
|
—
|
|
|
(6.8
|
)
|
|
—
|
|
|
(139.7
|
)
|
||||||
Payments on license obligations
|
|
(38.0
|
)
|
|
—
|
|
|
(12.2
|
)
|
|
—
|
|
|
—
|
|
|
(50.2
|
)
|
||||||
Net (redemptions) issuances of common stock under stock-based compensation plans and other
|
|
(6.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.1
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
163.1
|
|
|
—
|
|
|
(387.0
|
)
|
|
—
|
|
|
223.9
|
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
|
119.0
|
|
|
(132.9
|
)
|
|
(399.2
|
)
|
|
(6.8
|
)
|
|
223.9
|
|
|
(196.0
|
)
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
(4.9
|
)
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
(10.5
|
)
|
|
1.7
|
|
|
3.1
|
|
|
(3.1
|
)
|
|
(1.1
|
)
|
|
(9.9
|
)
|
||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
|
43.2
|
|
|
—
|
|
|
37.9
|
|
|
85.7
|
|
|
—
|
|
|
166.8
|
|
||||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
32.7
|
|
|
$
|
1.7
|
|
|
$
|
41.0
|
|
|
$
|
82.6
|
|
|
$
|
(1.1
|
)
|
|
$
|
156.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the 2018 Notes, which were redeemed on March 17, 2017.
|
||||||||||||||||||||||||
(2) Issuer of obligations under the 2020 Notes, the 2021 Notes, the 2022 Secured Notes, which were redeemed in March 2018, and the Unsecured Notes.
|
|
Quarter Ended 2018
|
||||||||||||||
|
March 31 (a)
|
|
June 30 (b)
|
|
September 30 (c)
|
|
December 31 (d)
|
||||||||
Total operating revenues
|
$
|
811.8
|
|
|
$
|
844.7
|
|
|
$
|
821.0
|
|
|
$
|
885.7
|
|
Total cost of revenues
(1)
|
296.7
|
|
|
315.9
|
|
|
301.3
|
|
|
341.4
|
|
||||
Selling, general and administrative
|
171.6
|
|
|
173.9
|
|
|
169.7
|
|
|
181.7
|
|
||||
Research and development
|
53.8
|
|
|
49.2
|
|
|
49.5
|
|
|
49.8
|
|
||||
Restructuring and other
|
52.2
|
|
|
33.5
|
|
|
338.7
|
|
|
(171.0
|
)
|
||||
Depreciation, amortization and impairments
|
188.1
|
|
|
172.7
|
|
|
166.3
|
|
|
162.6
|
|
||||
Operating income (loss)
|
49.4
|
|
|
99.5
|
|
|
(204.5
|
)
|
|
321.2
|
|
||||
Net (loss) income
|
$
|
(201.8
|
)
|
|
$
|
(5.8
|
)
|
|
$
|
(351.6
|
)
|
|
$
|
206.8
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Basic net (loss) income per share
|
$
|
(2.24
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(3.85
|
)
|
|
$
|
2.25
|
|
Diluted net (loss) income per share
|
$
|
(2.24
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(3.85
|
)
|
|
$
|
2.21
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic shares
|
90.1
|
|
|
91.0
|
|
|
91.4
|
|
|
91.8
|
|
||||
Diluted shares
|
90.1
|
|
|
91.0
|
|
|
91.4
|
|
|
93.4
|
|
||||
(1) Exclusive of D&A
|
(a)
|
Includes a loss on debt financing transactions of
$93.2 million
in connection with the February 2018 Refinancing and
$1.1 million
loss on remeasurement of debt.
|
(b)
|
Includes a gain on remeasurement of debt of
$34.5 million
.
|
(c)
|
Includes a loss on remeasurement of debt of
$4.0 million
and a
$309.6 million
reserve related to the Shuffle Tech Matter.
|
(d)
|
Includes a gain on remeasurement of debt of
$14.0 million
and a
$183.1 million
reversal of the Shuffle Tech Matter legal reserve as a result of a settlement agreement reached (see Note 22).
|
|
|
Quarter Ended 2017
|
||||||||||||||
|
|
March 31 (a)
|
|
June 30
|
|
September 30 (b)
|
|
December 31
|
||||||||
Total operating revenues
|
|
$
|
725.4
|
|
|
$
|
766.3
|
|
|
$
|
768.9
|
|
|
$
|
823.0
|
|
Total cost of revenues
(1)
|
|
280.0
|
|
|
278.9
|
|
|
290.8
|
|
|
314.9
|
|
||||
Selling, general and administrative
|
|
140.7
|
|
|
145.9
|
|
|
158.8
|
|
|
167.7
|
|
||||
Research and development
|
|
42.4
|
|
|
48.1
|
|
|
47.8
|
|
|
45.8
|
|
||||
Restructuring and other
|
|
9.2
|
|
|
1.1
|
|
|
7.8
|
|
|
27.8
|
|
||||
Depreciation, amortization and impairments
|
|
165.1
|
|
|
175.0
|
|
|
173.1
|
|
|
169.6
|
|
||||
Operating income
|
|
88.0
|
|
|
117.3
|
|
|
90.6
|
|
|
97.2
|
|
||||
Net loss
|
|
$
|
(100.8
|
)
|
|
$
|
(39.1
|
)
|
|
$
|
(59.3
|
)
|
|
$
|
(43.1
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per share
|
|
$
|
(1.14
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(0.48
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares used in per share calculations:
|
|
|
|
|
|
|
|
|
||||||||
Basic shares
|
|
88.2
|
|
|
89.1
|
|
|
89.6
|
|
|
89.7
|
|
||||
Diluted shares
|
|
88.2
|
|
|
89.1
|
|
|
89.6
|
|
|
89.7
|
|
||||
(1) Exclusive of D&A.
|
(a)
|
Includes a loss recorded of
$29.7 million
in connection with the refinancing that we completed in February 2017.
|
(b)
|
Includes a loss recorded of
$8.4 million
in connection with the refinancing that we completed in August 2017.
|
Allowance for doubtful accounts
|
|
Balance at
beginning of period |
|
Additions
|
|
Deductions
(1)
|
|
Balance at end
of period |
||||||
Year ended December 31, 2018
|
|
$
|
31.4
|
|
|
9.3
|
|
|
(0.2
|
)
|
|
$
|
40.5
|
|
Year ended December 31, 2017
|
|
$
|
28.1
|
|
|
11.4
|
|
|
(8.1
|
)
|
|
$
|
31.4
|
|
Year ended December 31, 2016
|
|
$
|
23.8
|
|
|
8.6
|
|
|
(4.3
|
)
|
|
$
|
28.1
|
|
Tax-related valuation allowance
|
|
Balance at
beginning of period |
|
Added (charged) to
tax benefit |
|
Balance at end
of period |
|||||
Year ended December 31, 2018
|
|
$
|
158.8
|
|
|
86.4
|
|
|
$
|
245.2
|
|
Year ended December 31, 2017
|
|
$
|
119.0
|
|
|
39.8
|
|
|
$
|
158.8
|
|
Year ended December 31, 2016
|
|
$
|
95.6
|
|
|
23.4
|
|
|
$
|
119.0
|
|
(1) Amounts written off, net of recovery, and related impact of foreign currency exchange.
|
Exhibit Number
|
Description
|
2.1
|
|
|
|
2.2
|
|
|
|
2.3
|
|
|
|
2.4
|
|
|
|
2.5
|
|
|
|
3.1(a)
|
|
|
|
3.1(b)
|
|
|
|
3.1(c)
|
|
|
|
3.1(d)
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.10
|
|
|
|
4.11
|
|
|
|
4.12
|
|
|
|
4.13
|
|
|
|
4.14
|
|
|
|
4.15
|
|
|
|
4.16
|
|
|
|
4.17
|
|
|
|
4.18
|
|
|
|
4.19
|
|
|
|
4.20
|
|
|
|
4.21
|
|
|
|
4.22
|
|
|
|
4.23
|
|
|
|
4.24
|
|
|
|
4.25
|
|
|
|
4.26
|
|
|
|
4.27
|
|
|
|
4.28
|
|
|
|
4.29
|
|
|
|
4.30
|
|
|
|
4.31
|
|
|
|
4.32
|
|
|
|
4.33
|
|
|
|
4.34
|
|
|
|
4.35
|
|
|
|
4.36
|
|
|
|
4.37
|
|
|
|
4.38
|
|
|
|
4.39
|
|
|
|
4.40
|
|
|
|
4.41
|
|
|
|
4.42
|
|
|
|
4.43
|
|
|
|
4.44
|
|
|
|
4.45
|
|
|
|
4.46
|
|
|
|
4.47
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
|
|
|
10.9
|
|
|
|
10.10
|
|
|
|
10.11
|
|
|
|
10.12
|
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
10.15
|
|
|
|
10.16
|
|
|
|
10.17
|
|
|
|
10.18
|
|
|
|
10.19
|
|
|
10.20
|
|
|
|
10.21
|
|
|
|
10.22
|
|
|
|
10.23
|
|
|
|
10.24
|
|
|
|
10.25
|
|
|
|
10.26
|
|
|
|
10.27
|
|
|
|
10.28
|
|
|
|
10.29
|
|
|
|
10.30
|
|
|
|
10.31
|
|
|
|
10.32
|
|
|
|
10.33
|
|
|
|
10.34
|
|
|
|
10.35
|
|
|
|
10.36
|
|
|
|
10.37
|
|
|
|
10.38
|
|
|
|
10.39
|
|
|
|
10.40
|
|
|
|
10.41
|
|
|
|
10.42
|
|
|
|
10.43
|
|
|
|
10.44
|
|
|
|
10.45
|
|
|
|
10.46
|
|
|
|
10.47
|
|
|
|
10.48
|
|
|
|
10.49
|
|
|
|
10.50
|
|
|
|
10.51
|
|
|
|
10.52
|
|
|
|
10.53
|
|
|
|
10.54
|
|
|
|
10.55
|
|
|
|
10.56
|
|
|
|
21
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
99.1
|
|
|
|
99.2
|
|
|
|
99.3
|
|
|
|
99.4
|
|
|
|
99.5
|
|
|
|
99.6
|
|
|
|
99.7
|
|
|
|
99.8
|
|
|
|
99.9
|
|
|
99.10
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
101.DEF
|
XBRL Taxonomy Definition Label Linkbase
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
February 28, 2019
|
|
SCIENTIFIC GAMES CORPORATION
|
||
|
|
By:
|
|
/s/ Michael A. Quartieri
|
Michael A. Quartieri,
Chief Financial Officer
|
||||
|
|
|
|
|
|
|
By:
|
|
/s/ Michael F. Winterscheidt
|
Michael F. Winterscheidt,
Chief Accounting Officer
|
|
|
|
Signature
|
|
Title
|
|
|
|
/s/ Barry L. Cottle
|
|
President and Chief Executive Officer and Director (principal executive officer)
|
Barry L. Cottle
|
||
|
|
|
/s/ Michael A. Quartieri
|
|
Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary (principal financial officer)
|
Michael A. Quartieri
|
||
|
|
|
/s/ Michael F. Winterscheidt
|
|
Senior Vice President and Chief Accounting Officer (principal accounting officer)
|
Michael F. Winterscheidt
|
||
|
|
|
/s/ Peter A. Cohen
|
|
Vice Chairman of the Board of Directors and Director
|
Peter A. Cohen
|
||
|
|
|
/s/ Richard M. Haddrill
|
|
Vice Chairman of the Board of Directors and Director
|
Richard M. Haddrill
|
|
|
|
Signature
|
|
Title
|
|
|
|
/s/ Gerald J. Ford
|
|
Director
|
Gerald J. Ford
|
|
|
|
|
|
/s/ David L. Kennedy
|
|
Director
|
David L. Kennedy
|
|
|
|
|
|
/s/ Gabrielle K. McDonald
|
|
Director
|
Gabrielle K. McDonald
|
|
|
|
|
|
/s/ Paul M. Meister
|
|
Director
|
Paul M. Meister
|
|
|
|
|
|
/s/ Michael J. Regan
|
|
Director
|
Michael J. Regan
|
||
|
|
|
/s/ Barry F. Schwartz
|
|
Director
|
Barry F. Schwartz
|
||
|
|
|
/s/ Frances F. Townsend
|
|
Director
|
Frances F. Townsend
|
||
|
|
|
/s/ Kneeland C. Youngblood
|
|
Director
|
Kneeland C. Youngblood
|
1.
|
Increase in Base Salary
. As of the Amendment Effective Date, the Executive’s base salary is increased to six hundred and seventy-five thousand U.S. dollars ($675,000) per annum.
|
2.
|
Extension of Agreement Term
. The Agreement is hereby amended by deleting the fourth sentence of Section 1 thereof and replacing it with the following:
|
3.
|
Amendment to Sections 4(e)(v), (f) and (g)
. Section 4(e)(v) is deleted in its entirety and replaced with the following:
|
1.
|
Extension Restricted Stock Unit Award
.
In connection with Executive’s execution of this Amendment, the Company shall grant to Executive a special award within 10 days following the Second Amendment Effective Date comprised of 15,000 restricted stock units (the “
Extension Award
”), pursuant to an equity award agreement to be entered into by and between the Company and Executive (the “
Extension Award Agreement
”);
provided
that the Extension Award shall not be granted prior to, and shall be conditioned on, the prior approval of the Compensation Committee. The Extension Award Agreement or applicable grant notice shall provide that 5,000 of the Extension Award restricted stock units will vest on the first anniversary date of the grant of the Extension Award, 5,000 of the Extension Award restricted stock units will vest on the second anniversary date of the grant of the Extension Award and 5,000 of the Extension Award restricted stock units will vest on the third anniversary date of the grant of the Extension Award, subject to the vesting conditions described in the Extension Award Agreement or applicable grant notice.
|
2.
|
Extension Cash Bonus
. On or before March 31, 2019, the Company shall pay Executive a cash payment (“
Extension Bonus
”) with the amount of the Extension Bonus calculated by the Company so that the net amount received by Executive, after all required tax withholdings, is $26,000.
|
3.
|
Term
. The Term shall be extended to December 31, 2019, subject to earlier termination in accordance with Section 4 of the Agreement. For the avoidance of doubt, the last sentence of Section 1 of the Agreement shall continue to apply, such that, absent the written notice specified in such section, the Term shall automatically be extended as specified in the Agreement.
|
4.
|
Position and Duties
. Section 2 of the Agreement shall be deleted in its entirety and replaced with the following:
|
5.
|
Equity Awards
. Section 3(c) of the Agreement shall be deleted in its entirety and replaced with the following:
|
6.
|
Health and Welfare Benefits
. Effective upon the Second Amendment Effective Date, the phrase “similarly situated executives” contained in Section 3(e) of the Agreement shall be deleted and replaced with the phrase “its senior executives”. The parties agree that Executive will be eligible for senior executive level travel benefits at all times during his employment with the Company.
|
7.
|
Good Reason
. Executive hereby agrees that this Amendment constitutes Executive’s prior written consent, as contemplated by Section 4(e) of the Agreement, to the changes to Employee’s employment contemplated by this Amendment and any actions taken by the Company in furtherance thereof so that such changes and actions shall not constitute Good Reason for purposes of the Agreement. Furthermore, Executive agrees that the second sentence in Section 4(e) of the Agreement containing the definition of “Good Reason” is deleted and replaced with the following:
|
8.
|
Section 4(e)(v)
. Section 4(e)(v) of the Agreement is deleted in its entirety and replaced with the following:
|
9.
|
Expiration of Term of Agreement
. Section 4(g) of the Agreement shall be deleted in its entirety and replaced with the following. If Executive’s employment with the Company and its affiliates is terminated by the Company at the end of the Term, Executive shall receive the Standard Termination Payments, and, provided Executive has, within 21 days of the date the Agreement expires, delivered to the Company, and not revoked, a release agreement as referred to in Section 4(l) of the Agreement:
|
i.
|
for a period of eighteen (18) months after such termination, continued payment of Executive’s base salary in accordance with Section 4(h) of the Agreement;
|
ii.
|
the Severance Bonus Amount, payable over a period of 12 months after such termination in accordance with Section 4(h) of the Agreement;
|
iii.
|
no later than March 15 following the end of the year in which such termination occurs, in lieu of any Incentive Compensation for the year in which such termination occurs, a payment of an amount equal to (A) the Incentive Compensation which would have been payable to Executive had Executive remained in employment with the Company during the entire year in which such termination occurs, multiplied by (B) a fraction the numerator of which is the number of days Executive was employed in the year in which such termination occurs and the denominator of which is the total number of days in the year in which such termination occurs;
|
iv.
|
if Executive elects to continue medical coverage under the Company’s group health plan in accordance with COBRA, the monthly premiums for such coverage until the earlier of: (A) a period of eighteen (18) months has elapsed; or (B) Executive is eligible for medical coverage under a plan provided by a new employer; and
|
v.
|
subject to Section 5.6 and except to the extent otherwise provided at the time of grant under the terms of any equity award made to Executive, any unvested stock options, unvested restricted stock units or other unvested equity-based
|
10.
|
Release
. In the penultimate sentence of Section 4(l) of the Agreement, the phrase “that constitute deferred compensation under Section 409A (if any)” shall be deleted.
|
11.
|
Noncompetition
. The third sentence of Section 5.1(a) of the Agreement which contains the definition of “Competing Business” shall be deleted and replaced with:
|
12.
|
Notices
. Section 15 of the Agreement shall be deleted and replaced with:
|
|
SCIENTIFIC GAMES CORPORATION
|
|
|
|
By:
/s/Shawn Williams
|
|
|
|
EXECUTIVE
|
|
|
|
/s/ Patrick J. McHugh
_______________
Patrick J. McHugh
|
1.
|
Change in Title
. The Agreement is hereby amended, effective as of the Amendment Effective Date, by deleting “Chief Accounting Officer” and replacing it with “Senior Vice President and Chief Accounting Officer” in Section 2.
|
2.
|
Increase in Base Salary
. The Agreement is hereby amended, effective as of the Amendment Effective Date, by adding the following sentence to the end of Section 3(a):
|
3.
|
Change in Notice address for the Company
. The Company’s address for notices in Section 15 is changed to the following:
“
Scientific Games Corporation, Attn: Legal Department, 6601 Bermuda Rd., Las Vegas, NV 89119.” This Amendment constitutes written notice of such change pursuant to Section 15(c) of the Agreement.
|
4.
|
Except as set forth in this Amendment, all terms and conditions of the Agreement shall remain unchanged and in full force and effect in accordance with their terms. All references to the “Agreement” in the Agreement shall refer to the Agreement as amended by this Amendment.
Any defined terms used in this Amendment and not defined herein shall have the meaning as set forth in the Agreement.
|
5.
|
This Amendment may be executed in counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.
|
/s/ Barry L. Cottle
|
Barry L. Cottle
|
Chief Executive Officer
|
/s/ Michael A. Quartieri
|
Michael A. Quartieri
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Chief Financial Officer
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/s/ Barry L. Cottle
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Barry L. Cottle
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Chief Executive Officer
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February 28, 2019
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/s/ Michael A. Quartieri
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Michael A. Quartieri
|
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Chief Financial Officer
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|
February 28, 2019
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