Nevada
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81-0422894
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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Large accelerated filer
ý
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $.001 par value
|
SGMS
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Nasdaq Global Select Market
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Glossary of Terms
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The following terms or acronyms used in this Quarterly Report on Form 10-Q are defined below:
|
||
Term or Acronym
|
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Definition
|
2018 10-K
|
|
2018 Annual Report on Form 10-K filed with the SEC on February 28, 2019
|
2020 Notes
|
|
6.250% senior subordinated notes due 2020 issued by SGI
|
2021 Notes
|
|
6.625% senior subordinated notes due 2021 issued by SGI
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2022 Secured Notes
|
|
7.000% senior secured notes due 2022 issued by SGI
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2022 Unsecured Notes
|
|
10.000% senior unsecured notes due 2022 issued by SGI
|
2025 Secured Notes
|
|
5.000% senior secured notes due 2025 issued by SGI
|
2026 Secured Euro Notes
|
|
3.375% senior secured notes due 2026 issued by SGI
|
2026 Unsecured Euro Notes
|
|
5.500% senior unsecured notes due 2026 issued by SGI
|
2026 Unsecured Notes
|
|
8.250% senior unsecured notes due 2026 issued by SGI
|
AEBITDA
|
|
Adjusted EBITDA, our performance measure of profit or loss for our business segments (see Note 3)
|
ASC
|
|
Accounting Standards Codification
|
ASU
|
|
Accounting Standards Update
|
B2C
|
|
business to consumer model
|
D&A
|
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depreciation, amortization and impairments (excluding goodwill)
|
FASB
|
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Financial Accounting Standards Board
|
Guarantor Subsidiaries
|
|
substantially all of SGC’s 100%-owned U.S. subsidiaries other than SGC’s 100%-owned U.S. Social gaming subsidiaries
|
LNS
|
|
Lotterie Nazionali S.r.l.
|
Non-Guarantor Subsidiaries
|
|
SGC’s U.S. subsidiaries that are not Guarantor Subsidiaries and SGC’s foreign subsidiaries
|
Note
|
|
a note in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, unless otherwise indicated
|
Participation
|
|
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
|
POS
|
|
percentage of retail sales
|
PTG
|
|
proprietary table games
|
R&D
|
|
research and development
|
RFP
|
|
request for proposal
|
RMG
|
|
real-money gaming
|
RSU
|
|
restricted stock unit
|
SEC
|
|
Securities and Exchange Commission
|
Secured Notes
|
|
refers to the 2022 Secured Notes, 2025 Secured Notes, and 2026 Secured Euro Notes, collectively
|
SG&A
|
|
selling, general and administrative
|
SGC
|
|
Scientific Games Corporation
|
SGI
|
|
Scientific Games International, Inc., a wholly-owned subsidiary of SGC
|
Shufflers
|
|
various models of automatic card shufflers, deck checkers and roulette chip sorters
|
Subordinated Notes
|
|
refers to the 2020 Notes and 2021 Notes, collectively
|
Unsecured Notes
|
|
refers to the 2022 Unsecured Notes, 2026 Unsecured Euro Notes and 2026 Unsecured Notes, collecitvely
|
U.S. GAAP
|
|
accounting principles generally accepted in the U.S.
|
VGT
|
|
video gaming terminal
|
VLT
|
|
video lottery terminal
|
•
|
competition;
|
•
|
U.S. and international economic and industry conditions;
|
•
|
slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;
|
•
|
ownership changes and consolidation in the gaming industry;
|
•
|
opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
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;
|
•
|
legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, especially internet wagering, social gaming and sports wagering;
|
•
|
reliance on technological blocking systems;
|
•
|
expectations of shift to regulated online gaming or sports wagering;
|
•
|
expectations of growth in total consumer spending on social casino gaming;
|
•
|
dependence upon key providers in our Social gaming business;
|
•
|
inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
|
•
|
protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;
|
•
|
security and integrity of our products and systems;
|
•
|
reliance on or failures in information technology and other systems;
|
•
|
security breaches and cyber-attacks, challenges or disruptions relating to the implementation of a new global enterprise resource planning system;
|
•
|
failure to maintain adequate internal control over financial reporting;
|
•
|
natural events that disrupt our operations or those of our customers, suppliers or regulators;
|
•
|
inability to benefit from, and risks associated with, strategic equity investments and relationships;
|
•
|
risks related to the initial public offering of a minority interest in our social gaming business, including the possibility that the anticipated benefits of the initial public offering are not realized or that we may not be able to utilize the proceeds of the initial public offering as expected;
|
•
|
incurrence of restructuring costs;
|
•
|
implementation of complex new accounting standards;
|
•
|
changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;
|
•
|
changes in demand for our products;
|
•
|
fluctuations in our results due to seasonality and other factors;
|
•
|
dependence on suppliers and manufacturers;
|
•
|
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”;
|
•
|
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);
|
•
|
the impact of the new U.K. legislation approving the reduction of fixed-odds betting terminals maximum stakes limit;
|
•
|
changes in tax laws or tax rulings, or the examination of our tax positions;
|
•
|
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;
|
•
|
dependence on key employees;
|
•
|
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;
|
•
|
level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future cash needs;
|
•
|
inability to reduce or refinance our indebtedness;
|
•
|
restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
|
•
|
influence of certain stockholders, including decisions that may conflict with the interests of other stockholders; and
|
•
|
stock price volatility.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Services
|
$
|
459
|
|
|
$
|
438
|
|
Product sales
|
238
|
|
|
224
|
|
||
Instant products
|
140
|
|
|
150
|
|
||
Total revenue
|
837
|
|
|
812
|
|
||
Operating expenses:
|
|
|
|
||||
Cost of services
(1)
|
133
|
|
|
122
|
|
||
Cost of product sales
(1)
|
107
|
|
|
105
|
|
||
Cost of instant products
(1)
|
67
|
|
|
70
|
|
||
Selling, general and administrative
|
186
|
|
|
172
|
|
||
Research and development
|
49
|
|
|
54
|
|
||
Depreciation, amortization and impairments
|
165
|
|
|
188
|
|
||
Restructuring and other
|
7
|
|
|
52
|
|
||
Operating income
|
123
|
|
|
49
|
|
||
Other (expense) income:
|
|
|
|
||||
Interest expense
|
(154
|
)
|
|
(155
|
)
|
||
Earnings from equity investments
|
6
|
|
|
7
|
|
||
Loss on debt financing transactions
|
—
|
|
|
(93
|
)
|
||
Gain (loss) on remeasurement of debt
|
5
|
|
|
(1
|
)
|
||
Other expense, net
|
—
|
|
|
(3
|
)
|
||
Total other expense, net
|
(143
|
)
|
|
(245
|
)
|
||
Net loss before income taxes
|
(20
|
)
|
|
(196
|
)
|
||
Income tax expense
|
(4
|
)
|
|
(6
|
)
|
||
Net loss
|
$
|
(24
|
)
|
|
$
|
(202
|
)
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation gain, net of tax
|
55
|
|
|
51
|
|
||
Pension and post-retirement gain (loss), net of tax
|
1
|
|
|
(1
|
)
|
||
Derivative financial instruments unrealized (loss) gain, net of tax
|
(5
|
)
|
|
2
|
|
||
Other comprehensive income
|
51
|
|
|
52
|
|
||
Comprehensive income (loss)
|
$
|
27
|
|
|
$
|
(150
|
)
|
|
|
|
|
||||
Basic and diluted net loss per share:
|
|
|
|
|
|||
Basic
|
$
|
(0.26
|
)
|
|
$
|
(2.24
|
)
|
Diluted
|
$
|
(0.26
|
)
|
|
$
|
(2.24
|
)
|
|
|
|
|
||||
Weighted average number of shares used in per share calculations:
|
|
|
|
|
|||
Basic shares
|
92
|
|
|
90
|
|
||
Diluted shares
|
92
|
|
|
90
|
|
||
(1) Excludes D&A.
|
|
|
|
||||
See accompanying notes to condensed consolidated financial statements.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,213
|
|
|
$
|
168
|
|
Restricted cash
|
41
|
|
|
39
|
|
||
Accounts receivable, net
|
621
|
|
|
599
|
|
||
Notes receivable, net
|
104
|
|
|
114
|
|
||
Inventories
|
229
|
|
|
216
|
|
||
Prepaid expenses, deposits and other current assets
|
238
|
|
|
233
|
|
||
Total current assets
|
2,446
|
|
|
1,369
|
|
||
Non-current assets:
|
|
|
|
||||
Restricted cash
|
12
|
|
|
13
|
|
||
Notes receivable, net
|
33
|
|
|
40
|
|
||
Property and equipment, net
|
517
|
|
|
547
|
|
||
Operating lease right-of-use assets
|
118
|
|
|
—
|
|
||
Goodwill
|
3,301
|
|
|
3,280
|
|
||
Intangible assets, net
|
1,745
|
|
|
1,809
|
|
||
Software, net
|
277
|
|
|
285
|
|
||
Equity investments
|
296
|
|
|
298
|
|
||
Other assets
|
92
|
|
|
77
|
|
||
Total assets
|
$
|
8,837
|
|
|
$
|
7,718
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
1,046
|
|
|
$
|
45
|
|
Accounts payable
|
200
|
|
|
225
|
|
||
Accrued liabilities
|
540
|
|
|
477
|
|
||
Total current liabilities
|
1,786
|
|
|
747
|
|
||
Deferred income taxes
|
109
|
|
|
108
|
|
||
Operating lease liabilities
|
98
|
|
|
—
|
|
||
Other long-term liabilities
|
330
|
|
|
334
|
|
||
Long-term debt, excluding current portion
|
8,937
|
|
|
8,992
|
|
||
Total liabilities
|
11,260
|
|
|
10,181
|
|
||
Commitments and contingencies (see Note 16)
|
|
|
|
|
|
||
Stockholders’ deficit:
|
|
|
|
||||
Common stock, par value $0.001 per share: 199 shares authorized; 110 and 109 shares issued and 93 and 92 shares outstanding, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
848
|
|
|
835
|
|
||
Accumulated loss
|
(2,848
|
)
|
|
(2,824
|
)
|
||
Treasury stock, at cost, 17 shares
|
(175
|
)
|
|
(175
|
)
|
||
Accumulated other comprehensive loss
|
(249
|
)
|
|
(300
|
)
|
||
Total stockholders’ deficit
|
(2,423
|
)
|
|
(2,463
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
8,837
|
|
|
$
|
7,718
|
|
See accompanying notes to condensed consolidated financial statements.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(24
|
)
|
|
$
|
(202
|
)
|
Adjustments to reconcile net loss to cash provided by operating activities
|
179
|
|
|
309
|
|
||
Changes in working capital accounts, net of effects of acquisitions
|
6
|
|
|
(78
|
)
|
||
Changes in deferred income taxes and other
|
6
|
|
|
1
|
|
||
Net cash provided by operating activities
|
167
|
|
|
30
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(67
|
)
|
|
(88
|
)
|
||
Acquisitions of businesses and assets, net of cash acquired
|
—
|
|
|
(274
|
)
|
||
Distributions of capital from equity investments
|
3
|
|
|
2
|
|
||
Net cash used in investing activities
|
(64
|
)
|
|
(360
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under revolving credit facility
|
40
|
|
|
—
|
|
||
Repayments under revolving credit facility
|
(175
|
)
|
|
(295
|
)
|
||
Proceeds from issuance of senior notes and term loans
|
1,100
|
|
|
2,512
|
|
||
Repayment of senior notes and term loans (inclusive of redemption premium)
|
—
|
|
|
(2,210
|
)
|
||
Repayment of assumed NYX debt
|
—
|
|
|
(288
|
)
|
||
Payments on long-term debt
|
(12
|
)
|
|
(2
|
)
|
||
Payments of debt issuance and deferred financing costs
|
(14
|
)
|
|
(39
|
)
|
||
Payments on license obligations
|
(7
|
)
|
|
(7
|
)
|
||
Sale of future revenue
|
11
|
|
|
—
|
|
||
Net redemptions of common stock under stock-based compensation plans and other
|
(1
|
)
|
|
(17
|
)
|
||
Net cash provided by (used in) financing activities
|
942
|
|
|
(346
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
1
|
|
|
2
|
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
1,046
|
|
|
(674
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
220
|
|
|
834
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
1,266
|
|
|
$
|
160
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
80
|
|
|
$
|
161
|
|
Income taxes paid
|
10
|
|
|
7
|
|
||
Distributed earnings from equity investments
|
4
|
|
|
1
|
|
||
Supplemental non-cash transactions:
|
|
|
|
||||
Non-cash rollover and refinancing of Term loans
|
$
|
—
|
|
|
$
|
3,275
|
|
Non-cash interest expense
|
7
|
|
|
6
|
|
||
NYX non-cash consideration transferred (inclusive of 2017 acquisition of ordinary shares)
|
—
|
|
|
93
|
|
||
See accompanying notes to condensed consolidated financial statements.
|
•
|
A tax receivable agreement (“TRA”), which provides for the payment by SciPlay to us of
85%
of the amount of tax benefits, if any, that SciPlay actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of assets of SciPlay Parent Company, LLC (“SciPlay Parent LLC”) (a) in connection with the SciPlay IPO, (b) resulting from any redemptions or exchanges of membership interests of SciPlay Parent LLC pursuant to the SciPlay Parent LLC Operating Agreement or (c) resulting from certain
|
•
|
An Intercompany Services Agreement, under which we provide to the Social gaming business certain corporate level general and administrative services, including but not limited to, finance, corporate development, human resources, legal (which could include liability related to litigation awards related to SciPlay), information technology and rental fees for shared assets. These expenses will be charged to the Social gaming business and settled in cash.
|
•
|
An intellectual property license agreement (“IP License Agreement”), pursuant to which the Social gaming business acquired the following licenses from a restricted subsidiary of SGC for a one-time payment of
$255 million
: (i) an exclusive (subject to certain limited exceptions), perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming, Inc. (“Bally Gaming”) or its affiliates on or before the third anniversary of the date of the IP License Agreement (the date of the IP License Agreement, the “Effective Date”), in any of the Covered Games (defined as any of SciPlay’s currently available or future social games that are developed for mobile platforms, social media platforms, internet platforms or other interactive platforms and distributed solely via digital delivery); (ii) an exclusive (subject to certain limited exceptions and payment of royalties owed to third-party licensors for SciPlay's use of third-party licensed property) license to use third-party intellectual property licensed to Bally Gaming or its affiliates on or before the third anniversary of the Effective Date, to the extent permitted to be sublicensed to the Social gaming business, in any of the Covered Games; (iii) a non-exclusive, perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming or its affiliates after the third anniversary of the Effective Date, but only in the Social gaming business’ currently available games; and (iv) a non-exclusive license to use third-party intellectual property licensed to Bally Gaming or its affiliates after the third anniversary of the Effective Date, to the extent permitted to be sublicensed to the Social gaming business, but only in the Social gaming business’ currently available games.
|
•
|
SciPlay Holding Company, LLC (“SciPlay Holding”), a subsidiary of SciPlay, entered into a
$150 million
revolving credit agreement (the “SciPlay Revolver”) by and among SciPlay Holding, as the borrower, SciPlay Parent LLC, as a guarantor, the subsidiary guarantors party thereto (which are all domestic entities that comprise our Social gaming business), the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent that matures in May 2024. The interest rate is either Adjusted LIBOR (as defined in the SciPlay Revolver) plus
2.250%
(with one
0.250%
leverage-based step-down to the margin and one
0.250%
leverage-based step-up to the margin) or ABR (as defined in the SciPlay Revolver) plus
1.250%
(with one
0.250%
leverage-based step-down to the margin and one
0.250%
leverage-based step-up to the margin) at the option of SciPlay Holding. SciPlay Holding is required to pay to the lenders a commitment fee of
0.500%
per annum on the average daily unused portion of the revolving commitments through maturity, which fee varies based on the total net leverage ratio and is subject to a floor of
0.375%
. The SciPlay Revolver provides for up to
$15.0 million
in letter of credit issuances, which requires customary issuance and administration fees, and a fronting fee of
0.125%
.
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Gaming
|
|
|
|
||||
Gaming operations
|
$
|
152
|
|
|
$
|
161
|
|
Gaming machine sales
|
136
|
|
|
145
|
|
||
Gaming systems
|
74
|
|
|
75
|
|
||
Table products
|
60
|
|
|
62
|
|
||
Total
|
$
|
422
|
|
|
$
|
443
|
|
|
|
|
|
||||
Lottery
|
|
|
|
||||
Instant products
|
$
|
140
|
|
|
$
|
150
|
|
Lottery systems
|
87
|
|
|
52
|
|
||
Total
|
$
|
227
|
|
|
$
|
202
|
|
|
|
|
|
||||
Social
|
|
|
|
||||
Mobile
|
$
|
97
|
|
|
$
|
73
|
|
Web and other
|
21
|
|
|
24
|
|
||
Total
|
$
|
118
|
|
|
$
|
97
|
|
|
|
|
|
||||
Digital
|
|
|
|
||||
Sports and platform
|
$
|
30
|
|
|
$
|
26
|
|
Gaming and other
|
40
|
|
|
44
|
|
||
Total
|
$
|
70
|
|
|
$
|
70
|
|
|
Three Months Ended March 31,
|
||
|
2019
|
||
Contract liability balance, beginning of period
(1)
|
$
|
97
|
|
Liabilities recognized during the period
|
26
|
|
|
Amounts recognized in revenue from beginning balance
|
(22
|
)
|
|
Contract liability balance, end of period
(1)
|
$
|
101
|
|
(1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our March 31, 2019 consolidated balance sheet.
|
|
Receivables
|
|
Contract Assets
(1)
|
||||
Beginning of period balance
|
$
|
753
|
|
|
$
|
114
|
|
End of period balance, March 31, 2019
|
758
|
|
|
114
|
|
||
(1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our March 31, 2019 consolidated balance sheet.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Current:
|
|
|
|
||||
Accounts receivable
|
$
|
636
|
|
|
$
|
615
|
|
Notes receivable
|
127
|
|
|
138
|
|
||
Allowance for doubtful accounts and notes
|
(38
|
)
|
|
(40
|
)
|
||
Current accounts and notes receivable, net
|
$
|
725
|
|
|
$
|
713
|
|
Long-term:
|
|
|
|
||||
Notes receivable, net of allowance
|
33
|
|
|
40
|
|
||
Total accounts and notes receivable, net
|
$
|
758
|
|
|
$
|
753
|
|
•
|
Mexico - Our notes receivable, net, from certain customers in Mexico at
March 31, 2019
was
$24 million
. We collected
$8 million
of outstanding receivables from these customers during the
three
months ended
March 31, 2019
.
|
•
|
Peru - Our notes receivable, net, from certain customers in Peru at
March 31, 2019
was
$15 million
. We collected
$2 million
of outstanding receivables from these customers during the
three
months ended
March 31, 2019
.
|
•
|
Argentina - Our notes receivable, net, from customers in Argentina at
March 31, 2019
was
$16 million
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
$6 million
of outstanding receivables from customers in Argentina during the
three
months ended
March 31, 2019
.
|
|
March 31, 2019
|
|
Balances over 90 days past due
|
|
December 31, 2018
|
|
Balances over 90 days past due
|
||||||||
Notes receivable:
|
|
|
|
|
|
|
|
||||||||
Domestic
|
$
|
61
|
|
|
$
|
8
|
|
|
$
|
55
|
|
|
$
|
6
|
|
International
|
99
|
|
|
26
|
|
|
123
|
|
|
25
|
|
||||
Total notes receivable
|
160
|
|
|
34
|
|
|
178
|
|
|
31
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Notes receivable allowance
|
|
|
|
|
|
|
|
||||||||
Domestic
|
(6
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
International
|
(17
|
)
|
|
(17
|
)
|
|
(18
|
)
|
|
(18
|
)
|
||||
Total notes receivable allowance
|
(23
|
)
|
|
(23
|
)
|
|
(24
|
)
|
|
(24
|
)
|
||||
Notes receivable, net
|
$
|
137
|
|
|
$
|
11
|
|
|
$
|
154
|
|
|
$
|
7
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Beginning allowance for notes receivable
|
|
$
|
(24
|
)
|
|
$
|
(21
|
)
|
Provision
|
|
(2
|
)
|
|
(3
|
)
|
||
Charge-offs and recoveries
|
|
3
|
|
|
1
|
|
||
Ending allowance for notes receivable
|
|
$
|
(23
|
)
|
|
$
|
(23
|
)
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Parts and work-in-process
|
|
$
|
139
|
|
|
$
|
131
|
|
Finished goods
|
|
90
|
|
|
85
|
|
||
Total inventories
|
|
$
|
229
|
|
|
$
|
216
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Land
|
$
|
15
|
|
|
$
|
15
|
|
Buildings and leasehold improvements
|
130
|
|
|
128
|
|
||
Gaming and lottery machinery and equipment
|
1,034
|
|
|
1,041
|
|
||
Furniture and fixtures
|
28
|
|
|
27
|
|
||
Construction in progress
|
15
|
|
|
17
|
|
||
Other property and equipment
|
245
|
|
|
240
|
|
||
Less: accumulated depreciation
|
(950
|
)
|
|
(921
|
)
|
||
Total property and equipment, net
|
$
|
517
|
|
|
$
|
547
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Depreciation expense
|
$
|
58
|
|
|
$
|
53
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Balance
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Balance
|
||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
1,092
|
|
|
$
|
(321
|
)
|
|
$
|
771
|
|
|
$
|
1,084
|
|
|
$
|
(299
|
)
|
|
$
|
785
|
|
Intellectual property
|
935
|
|
|
(485
|
)
|
|
450
|
|
|
931
|
|
|
(453
|
)
|
|
478
|
|
||||||
Licenses
|
549
|
|
|
(273
|
)
|
|
276
|
|
|
546
|
|
|
(253
|
)
|
|
293
|
|
||||||
Brand names
|
124
|
|
|
(62
|
)
|
|
62
|
|
|
123
|
|
|
(59
|
)
|
|
64
|
|
||||||
Trade names
|
108
|
|
|
(25
|
)
|
|
83
|
|
|
108
|
|
|
(23
|
)
|
|
85
|
|
||||||
Patents and other
|
23
|
|
|
(14
|
)
|
|
9
|
|
|
23
|
|
|
(13
|
)
|
|
10
|
|
||||||
|
2,831
|
|
|
(1,180
|
)
|
|
1,651
|
|
|
2,815
|
|
|
(1,100
|
)
|
|
1,715
|
|
||||||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
96
|
|
|
(2
|
)
|
|
94
|
|
|
96
|
|
|
(2
|
)
|
|
94
|
|
||||||
Total intangible assets
|
$
|
2,927
|
|
|
$
|
(1,182
|
)
|
|
$
|
1,745
|
|
|
$
|
2,911
|
|
|
$
|
(1,102
|
)
|
|
$
|
1,809
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Amortization expense
|
$
|
77
|
|
|
$
|
77
|
|
Goodwill
|
|
Gaming
|
|
Lottery
|
|
Social
|
|
Digital
|
|
Totals
|
||||||||||
Balance as of December 31, 2018
|
|
$
|
2,449
|
|
|
$
|
352
|
|
|
$
|
115
|
|
|
$
|
364
|
|
|
$
|
3,280
|
|
Foreign currency adjustments
|
|
13
|
|
|
(1
|
)
|
|
—
|
|
|
9
|
|
|
21
|
|
|||||
Balance as of March 31, 2019
|
|
$
|
2,462
|
|
|
$
|
351
|
|
|
$
|
115
|
|
|
$
|
373
|
|
|
$
|
3,301
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Software
|
|
$
|
1,126
|
|
|
$
|
1,101
|
|
Accumulated amortization
|
|
(849
|
)
|
|
(816
|
)
|
||
Software, net
|
|
$
|
277
|
|
|
$
|
285
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Amortization expense
|
|
$
|
30
|
|
|
$
|
39
|
|
|
As of
|
|||||||||||||||||||
|
March 31, 2019
|
|
December 31, 2018
|
|||||||||||||||||
|
Final Maturity
|
|
Rate(s)
|
|
Face value
|
|
Unamortized debt discount/premium and deferred financing costs, net
|
|
Book value
|
|
Book value
|
|||||||||
Senior Secured Credit Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revolver, varying interest rate
|
2020
|
|
variable
|
|
|
$
|
190
|
|
|
$
|
—
|
|
|
$
|
190
|
|
|
$
|
325
|
|
Term Loan B-5
|
2024
|
|
variable
|
|
|
4,133
|
|
|
(69
|
)
|
|
4,064
|
|
|
4,071
|
|
||||
Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2025 Secured Notes
(2)
|
2025
|
|
5.000
|
%
|
|
1,250
|
|
|
(17
|
)
|
|
1,233
|
|
|
1,233
|
|
||||
2026 Secured Euro Notes
(3)
|
2026
|
|
3.375
|
%
|
|
367
|
|
|
(5
|
)
|
|
362
|
|
|
367
|
|
||||
2022 Unsecured Notes
(4)
|
2022
|
|
10.000
|
%
|
|
2,200
|
|
|
(22
|
)
|
|
2,178
|
|
|
2,176
|
|
||||
2026 Unsecured Euro Notes
(3)
|
2026
|
|
5.500
|
%
|
|
282
|
|
|
(4
|
)
|
|
278
|
|
|
282
|
|
||||
2026 Unsecured Notes
|
2026
|
|
8.250
|
%
|
|
1,100
|
|
|
(16
|
)
|
|
1,084
|
|
|
—
|
|
||||
Subordinated Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2020 Notes
|
2020
|
|
6.250
|
%
|
|
244
|
|
|
(1
|
)
|
|
243
|
|
|
242
|
|
||||
2021 Notes
|
2021
|
|
6.625
|
%
|
|
341
|
|
|
(3
|
)
|
|
338
|
|
|
337
|
|
||||
Finance lease obligations as of March 31, 2019 payable monthly through 2019 and other
(5)
|
2019
|
|
3.900
|
%
|
|
13
|
|
|
—
|
|
|
13
|
|
|
4
|
|
||||
Total long-term debt outstanding
|
|
|
|
|
$
|
10,120
|
|
|
$
|
(137
|
)
|
|
$
|
9,983
|
|
|
$
|
9,037
|
|
|
Less: current portion of long-term debt
(4)
|
|
|
|
|
|
|
|
|
(1,046
|
)
|
|
(45
|
)
|
|||||||
Long-term debt, excluding current portion
|
|
|
|
|
|
|
|
|
$
|
8,937
|
|
|
$
|
8,992
|
|
|||||
Fair value of debt
(1)
|
|
|
|
|
$
|
10,197
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Repayment and cancellation of principal balance at premium
|
$
|
—
|
|
|
$
|
110
|
|
Unamortized debt (premium) discount and deferred financing costs, net
|
—
|
|
|
(30
|
)
|
||
Third party debt issuance fees
|
—
|
|
|
13
|
|
||
Total loss on debt financing transactions
|
$
|
—
|
|
|
$
|
93
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
(Loss) gain recorded in accumulated other comprehensive income (loss), net of tax
|
$
|
(5
|
)
|
|
$
|
2
|
|
Interest expense recorded related to interest rate swap contracts
|
—
|
|
|
1
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
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
|
$
|
(154
|
)
|
|
$
|
(155
|
)
|
Hedged item
|
(5
|
)
|
|
(2
|
)
|
||
Derivative designated as hedging instrument
|
5
|
|
|
1
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid in Capital
|
|
Accumulated Loss
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
||||||||||||
January 1, 2019
|
$
|
1
|
|
|
$
|
835
|
|
|
$
|
(2,824
|
)
|
|
$
|
(175
|
)
|
|
$
|
(300
|
)
|
|
$
|
(2,463
|
)
|
Net proceeds of common stock in connection with stock options and RSUs
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Stock-based compensation
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
||||||
Other Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
||||||
March 31, 2019
|
$
|
1
|
|
|
$
|
848
|
|
|
$
|
(2,848
|
)
|
|
$
|
(175
|
)
|
|
$
|
(249
|
)
|
|
$
|
(2,423
|
)
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid in Capital
|
|
Accumulated Loss
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
||||||||||||
January 1, 2018
|
$
|
1
|
|
|
$
|
808
|
|
|
$
|
(2,461
|
)
|
|
$
|
(175
|
)
|
|
$
|
(200
|
)
|
|
$
|
(2,027
|
)
|
Net redemption of common stock in connection with stock options and RSUs
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
(202
|
)
|
|
—
|
|
|
—
|
|
|
(202
|
)
|
||||||
Adoption impact of ASC 606
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||||
Other Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
52
|
|
||||||
March 31, 2018
|
$
|
1
|
|
|
$
|
800
|
|
|
$
|
(2,674
|
)
|
|
$
|
(175
|
)
|
|
$
|
(148
|
)
|
|
$
|
(2,196
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Related to stock options
|
$
|
2
|
|
|
$
|
2
|
|
Related to RSUs
|
12
|
|
|
7
|
|
||
Total
|
$
|
14
|
|
|
$
|
9
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Less Imputed Interest
|
|
Total
|
||||||||||||||||
Operating leases
|
$
|
24
|
|
|
$
|
28
|
|
|
$
|
24
|
|
|
$
|
19
|
|
|
$
|
15
|
|
|
$
|
34
|
|
|
$
|
(20
|
)
|
|
$
|
124
|
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
1,119
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
95
|
|
|
$
|
(2
|
)
|
|
$
|
1,213
|
|
Restricted cash
|
|
—
|
|
|
1
|
|
|
33
|
|
|
7
|
|
|
—
|
|
|
41
|
|
||||||
Accounts receivable, net
|
|
—
|
|
|
102
|
|
|
204
|
|
|
315
|
|
|
—
|
|
|
621
|
|
||||||
Notes receivable, net
|
|
—
|
|
|
—
|
|
|
89
|
|
|
15
|
|
|
—
|
|
|
104
|
|
||||||
Inventories
|
|
—
|
|
|
45
|
|
|
89
|
|
|
109
|
|
|
(14
|
)
|
|
229
|
|
||||||
Prepaid expenses, deposits and other current assets
|
|
3
|
|
|
60
|
|
|
95
|
|
|
79
|
|
|
1
|
|
|
238
|
|
||||||
Property and equipment, net
|
|
31
|
|
|
99
|
|
|
208
|
|
|
215
|
|
|
(36
|
)
|
|
517
|
|
||||||
Operating lease right-of-use asset
|
|
1
|
|
|
24
|
|
|
35
|
|
|
58
|
|
|
—
|
|
|
118
|
|
||||||
Investment in subsidiaries
|
|
2,896
|
|
|
959
|
|
|
1,216
|
|
|
—
|
|
|
(5,071
|
)
|
|
—
|
|
||||||
Goodwill
|
|
—
|
|
|
240
|
|
|
1,897
|
|
|
1,164
|
|
|
—
|
|
|
3,301
|
|
||||||
Intangible assets, net
|
|
40
|
|
|
34
|
|
|
1,239
|
|
|
432
|
|
|
—
|
|
|
1,745
|
|
||||||
Intercompany balances
|
|
—
|
|
|
7,096
|
|
|
74
|
|
|
—
|
|
|
(7,170
|
)
|
|
—
|
|
||||||
Software, net
|
|
53
|
|
|
37
|
|
|
118
|
|
|
69
|
|
|
—
|
|
|
277
|
|
||||||
Other assets
(2)
|
|
113
|
|
|
412
|
|
|
37
|
|
|
309
|
|
|
(438
|
)
|
|
433
|
|
||||||
Total assets
|
|
$
|
4,256
|
|
|
$
|
9,110
|
|
|
$
|
5,334
|
|
|
$
|
2,867
|
|
|
$
|
(12,730
|
)
|
|
$
|
8,837
|
|
Liabilities and stockholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
1,042
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1,046
|
|
Other current liabilities
|
|
58
|
|
|
224
|
|
|
235
|
|
|
258
|
|
|
(35
|
)
|
|
740
|
|
||||||
Long-term debt, excluding current portion
|
|
—
|
|
|
8,928
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
8,937
|
|
||||||
Operating lease liabilities
|
|
1
|
|
|
20
|
|
|
30
|
|
|
47
|
|
|
—
|
|
|
98
|
|
||||||
Other long-term liabilities
|
|
104
|
|
|
13
|
|
|
637
|
|
|
176
|
|
|
(491
|
)
|
|
439
|
|
||||||
Intercompany balances
|
|
6,516
|
|
|
—
|
|
|
—
|
|
|
654
|
|
|
(7,170
|
)
|
|
—
|
|
||||||
Stockholders’ (deficit) equity
|
|
(2,423
|
)
|
|
(1,117
|
)
|
|
4,421
|
|
|
1,730
|
|
|
(5,034
|
)
|
|
(2,423
|
)
|
||||||
Total liabilities and stockholders’ (deficit) equity
|
|
$
|
4,256
|
|
|
$
|
9,110
|
|
|
$
|
5,334
|
|
|
$
|
2,867
|
|
|
$
|
(12,730
|
)
|
|
$
|
8,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
(2) Includes $11 million and $1 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
|
|
$
|
74
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
(1
|
)
|
|
$
|
168
|
|
Restricted cash
|
|
—
|
|
|
1
|
|
|
32
|
|
|
6
|
|
|
—
|
|
|
39
|
|
||||||
Accounts receivable, net
|
|
—
|
|
|
79
|
|
|
205
|
|
|
315
|
|
|
—
|
|
|
599
|
|
||||||
Notes receivable, net
|
|
—
|
|
|
—
|
|
|
101
|
|
|
13
|
|
|
—
|
|
|
114
|
|
||||||
Inventories
|
|
—
|
|
|
40
|
|
|
82
|
|
|
111
|
|
|
(17
|
)
|
|
216
|
|
||||||
Prepaid expenses, deposits and other current assets
|
|
6
|
|
|
63
|
|
|
92
|
|
|
72
|
|
|
—
|
|
|
233
|
|
||||||
Property and equipment, net
|
|
31
|
|
|
112
|
|
|
219
|
|
|
218
|
|
|
(33
|
)
|
|
547
|
|
||||||
Investment in subsidiaries
|
|
2,836
|
|
|
975
|
|
|
1,093
|
|
|
—
|
|
|
(4,904
|
)
|
|
—
|
|
||||||
Goodwill
|
|
—
|
|
|
240
|
|
|
1,897
|
|
|
1,143
|
|
|
—
|
|
|
3,280
|
|
||||||
Intangible assets, net
|
|
43
|
|
|
34
|
|
|
1,291
|
|
|
441
|
|
|
—
|
|
|
1,809
|
|
||||||
Intercompany balances
|
|
—
|
|
|
6,054
|
|
|
—
|
|
|
—
|
|
|
(6,054
|
)
|
|
—
|
|
||||||
Software, net
|
|
58
|
|
|
39
|
|
|
128
|
|
|
60
|
|
|
—
|
|
|
285
|
|
||||||
Other assets
(2)
|
|
110
|
|
|
404
|
|
|
46
|
|
|
308
|
|
|
(440
|
)
|
|
428
|
|
||||||
Total assets
|
|
$
|
3,158
|
|
|
$
|
8,042
|
|
|
$
|
5,186
|
|
|
$
|
2,781
|
|
|
$
|
(11,449
|
)
|
|
$
|
7,718
|
|
Liabilities and stockholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
45
|
|
Other current liabilities
|
|
64
|
|
|
162
|
|
|
248
|
|
|
254
|
|
|
(26
|
)
|
|
702
|
|
||||||
Long-term debt, excluding current portion
|
|
—
|
|
|
8,991
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
8,992
|
|
||||||
Other long-term liabilities
|
|
106
|
|
|
8
|
|
|
637
|
|
|
172
|
|
|
(481
|
)
|
|
442
|
|
||||||
Intercompany balances
|
|
5,451
|
|
|
—
|
|
|
49
|
|
|
554
|
|
|
(6,054
|
)
|
|
—
|
|
||||||
Stockholders’ (deficit) equity
|
|
(2,463
|
)
|
|
(1,161
|
)
|
|
4,252
|
|
|
1,797
|
|
|
(4,888
|
)
|
|
(2,463
|
)
|
||||||
Total liabilities and stockholders’ (deficit) equity
|
|
$
|
3,158
|
|
|
$
|
8,042
|
|
|
$
|
5,186
|
|
|
$
|
2,781
|
|
|
$
|
(11,449
|
)
|
|
$
|
7,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until February 2019) and the Secured Notes.
|
||||||||||||||||||||||||
(2) Includes $12 million and $1 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
|
|
$
|
—
|
|
|
$
|
158
|
|
|
$
|
358
|
|
|
$
|
385
|
|
|
$
|
(64
|
)
|
|
$
|
837
|
|
Cost of services, cost of product sales and cost of instant products
(2)
|
|
—
|
|
|
101
|
|
|
102
|
|
|
152
|
|
|
(48
|
)
|
|
307
|
|
||||||
SG&A
|
|
35
|
|
|
11
|
|
|
59
|
|
|
94
|
|
|
(13
|
)
|
|
186
|
|
||||||
R&D
|
|
—
|
|
|
1
|
|
|
23
|
|
|
25
|
|
|
—
|
|
|
49
|
|
||||||
D&A
|
|
12
|
|
|
12
|
|
|
99
|
|
|
47
|
|
|
(5
|
)
|
|
165
|
|
||||||
Restructuring and other
|
|
1
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
7
|
|
||||||
Operating (loss) income
|
|
(48
|
)
|
|
33
|
|
|
73
|
|
|
63
|
|
|
2
|
|
|
123
|
|
||||||
Interest expense
|
|
—
|
|
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154
|
)
|
||||||
Gain on remeasurement of debt
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Other income (expense), net
|
|
20
|
|
|
132
|
|
|
(124
|
)
|
|
(22
|
)
|
|
—
|
|
|
6
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(28
|
)
|
|
16
|
|
|
(51
|
)
|
|
41
|
|
|
2
|
|
|
(20
|
)
|
||||||
Equity in income of subsidiaries
|
|
6
|
|
|
7
|
|
|
11
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(2
|
)
|
|
(5
|
)
|
|
13
|
|
|
(10
|
)
|
|
—
|
|
|
(4
|
)
|
||||||
Net (loss) income
|
|
$
|
(24
|
)
|
|
$
|
18
|
|
|
$
|
(27
|
)
|
|
$
|
31
|
|
|
$
|
(22
|
)
|
|
$
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income
|
|
51
|
|
|
9
|
|
|
2
|
|
|
71
|
|
|
(82
|
)
|
|
51
|
|
||||||
Comprehensive income (loss)
|
|
$
|
27
|
|
|
$
|
27
|
|
|
$
|
(25
|
)
|
|
$
|
102
|
|
|
$
|
(104
|
)
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
(2) Exclusive of D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
130
|
|
|
$
|
387
|
|
|
$
|
369
|
|
|
$
|
(74
|
)
|
|
$
|
812
|
|
Cost of services, cost of product sales and cost of instant products
(2)
|
|
—
|
|
|
86
|
|
|
118
|
|
|
154
|
|
|
(61
|
)
|
|
297
|
|
||||||
SG&A
|
|
38
|
|
|
11
|
|
|
58
|
|
|
79
|
|
|
(14
|
)
|
|
172
|
|
||||||
R&D
|
|
—
|
|
|
—
|
|
|
23
|
|
|
31
|
|
|
—
|
|
|
54
|
|
||||||
D&A
|
|
9
|
|
|
8
|
|
|
126
|
|
|
48
|
|
|
(3
|
)
|
|
188
|
|
||||||
Restructuring and other
|
|
26
|
|
|
1
|
|
|
1
|
|
|
24
|
|
|
—
|
|
|
52
|
|
||||||
Operating (loss) income
|
|
(73
|
)
|
|
24
|
|
|
61
|
|
|
33
|
|
|
4
|
|
|
49
|
|
||||||
Interest expense
|
|
—
|
|
|
(155
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(155
|
)
|
||||||
Loss on debt financing transactions
|
|
—
|
|
|
(93
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93
|
)
|
||||||
Other income (expense), net
|
|
15
|
|
|
136
|
|
|
(133
|
)
|
|
(15
|
)
|
|
—
|
|
|
3
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(58
|
)
|
|
(88
|
)
|
|
(72
|
)
|
|
18
|
|
|
4
|
|
|
(196
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(84
|
)
|
|
4
|
|
|
10
|
|
|
—
|
|
|
70
|
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(60
|
)
|
|
33
|
|
|
25
|
|
|
(4
|
)
|
|
—
|
|
|
(6
|
)
|
||||||
Net (loss) income
|
|
$
|
(202
|
)
|
|
$
|
(51
|
)
|
|
$
|
(37
|
)
|
|
$
|
14
|
|
|
$
|
74
|
|
|
$
|
(202
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss)
|
|
52
|
|
|
(17
|
)
|
|
22
|
|
|
73
|
|
|
(78
|
)
|
|
52
|
|
||||||
Comprehensive income (loss)
|
|
$
|
(150
|
)
|
|
$
|
(68
|
)
|
|
$
|
(15
|
)
|
|
$
|
87
|
|
|
$
|
(4
|
)
|
|
$
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes.
(2) 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
|
|
$
|
(15
|
)
|
|
$
|
55
|
|
|
$
|
63
|
|
|
$
|
65
|
|
|
$
|
(1
|
)
|
|
$
|
167
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital expenditures
|
|
(3
|
)
|
|
(10
|
)
|
|
(25
|
)
|
|
(29
|
)
|
|
—
|
|
|
(67
|
)
|
||||||
Distributions of capital from equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
(986
|
)
|
|
(47
|
)
|
|
—
|
|
|
1,033
|
|
|
—
|
|
||||||
Net cash used in investing activities
|
|
(3
|
)
|
|
(996
|
)
|
|
(72
|
)
|
|
(26
|
)
|
|
1,033
|
|
|
(64
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from long-term debt, net of payments
|
|
—
|
|
|
955
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
953
|
|
||||||
Payments of debt issuance and deferred financing costs
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Payments on license obligations
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||
Sale of future revenue
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||
Net redemptions of common stock under stock-based compensation plans and other
|
|
1
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
1,069
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
(1,033
|
)
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
|
1,063
|
|
|
941
|
|
|
9
|
|
|
(38
|
)
|
|
(1,033
|
)
|
|
942
|
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Increase in cash, cash equivalents and restricted cash
|
|
1,045
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
1,046
|
|
||||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
74
|
|
|
2
|
|
|
44
|
|
|
101
|
|
|
(1
|
)
|
|
220
|
|
||||||
Cash, cash equivalents and restricted cash end of period
|
|
$
|
1,119
|
|
|
$
|
2
|
|
|
$
|
44
|
|
|
$
|
103
|
|
|
$
|
(2
|
)
|
|
$
|
1,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
|
|
|
SGC (Parent)
|
|
SGI (Issuer
1
)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(32
|
)
|
|
$
|
(25
|
)
|
|
$
|
34
|
|
|
$
|
55
|
|
|
$
|
(2
|
)
|
|
$
|
30
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital expenditures
|
|
(8
|
)
|
|
(17
|
)
|
|
(45
|
)
|
|
(18
|
)
|
|
—
|
|
|
(88
|
)
|
||||||
Acquisitions of businesses and assets, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(265
|
)
|
|
—
|
|
|
(274
|
)
|
||||||
Distributions of capital from equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
74
|
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|
—
|
|
||||||
Net cash (used in) provided by investing activities
|
|
(8
|
)
|
|
57
|
|
|
(54
|
)
|
|
(281
|
)
|
|
(74
|
)
|
|
(360
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds net of payments on long-term debt
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
5
|
|
||||||
Repayment of assumed NYX debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(288
|
)
|
|
—
|
|
|
(288
|
)
|
||||||
Payments of debt issuance and deferred financing costs
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
||||||
Payments on license obligations
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||
Net redemptions of common stock under stock-based compensation plans and other
|
|
(15
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
(630
|
)
|
|
—
|
|
|
22
|
|
|
534
|
|
|
74
|
|
|
—
|
|
||||||
Net cash (used in) provided by financing activities
|
|
(652
|
)
|
|
(32
|
)
|
|
20
|
|
|
244
|
|
|
74
|
|
|
(346
|
)
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
(Decrease) increase in cash, cash equivalents and restricted cash
|
|
(692
|
)
|
|
—
|
|
|
—
|
|
|
20
|
|
|
(2
|
)
|
|
(674
|
)
|
||||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
732
|
|
|
1
|
|
|
44
|
|
|
60
|
|
|
(3
|
)
|
|
834
|
|
||||||
Cash, cash equivalents and restricted cash end of period
|
|
$
|
40
|
|
|
$
|
1
|
|
|
$
|
44
|
|
|
$
|
80
|
|
|
$
|
(5
|
)
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes.
|
•
|
On March 19, 2019, we completed a private offering of
$1,100 million
of the 2026 Unsecured Notes. We used the net proceeds of the 2026 Unsecured Notes offering to redeem
$1,000 million
of our outstanding 2022 Unsecured Notes, which redemption was completed on April 4, 2019. The 2026 Unsecured Notes offering allowed us to extend the maturity of
$1,000 million
of our debt from 2022 to 2026 and reduce expected future cash paid for interest.
|
•
|
On May 7, 2019, we completed an initial public offering of a
17.4%
minority interest in our Social gaming business, the “SciPlay IPO”, which we believe will provide greater flexibility to pursue additional growth initiatives specifically designed for our Social gaming business. SGC received
$301 million
in proceeds from the offering, which enables us to make substantial payments to reduce our debt.
|
|
Three Months Ended
|
||||||||||||
|
March 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
($ in millions)
|
Revenue
|
|
% Consolidated Revenue
|
|
Revenue
|
|
% Consolidated Revenue
|
||||||
Foreign Currency:
|
|
|
|
|
|
|
|
||||||
British Pound Sterling
|
$
|
85
|
|
|
10
|
%
|
|
$
|
83
|
|
|
10
|
%
|
Euro
|
56
|
|
|
7
|
%
|
|
54
|
|
|
7
|
%
|
||
Australian Dollar
|
16
|
|
|
2
|
%
|
|
25
|
|
|
3
|
%
|
|
|
Three Months Ended
March 31, |
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Total revenue
|
|
$
|
837
|
|
|
$
|
812
|
|
|
$
|
25
|
|
|
3
|
%
|
Total operating expenses
|
|
714
|
|
|
763
|
|
|
(49
|
)
|
|
(6
|
)%
|
|||
Operating income
|
|
123
|
|
|
49
|
|
|
74
|
|
|
151
|
%
|
|||
Net loss before income taxes
|
|
(20
|
)
|
|
(196
|
)
|
|
176
|
|
|
(90
|
)%
|
|||
Net loss
|
|
$
|
(24
|
)
|
|
$
|
(202
|
)
|
|
$
|
178
|
|
|
(88
|
)%
|
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Gaming
|
|
$
|
422
|
|
|
$
|
443
|
|
|
$
|
(21
|
)
|
|
(5
|
)%
|
Lottery
|
|
227
|
|
|
202
|
|
|
25
|
|
|
12
|
%
|
|||
Social
|
|
118
|
|
|
97
|
|
|
21
|
|
|
22
|
%
|
|||
Digital
|
|
70
|
|
|
70
|
|
|
—
|
|
|
—
|
%
|
|||
Total revenue
|
|
$
|
837
|
|
|
$
|
812
|
|
|
$
|
25
|
|
|
3
|
%
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
$
|
133
|
|
|
$
|
122
|
|
|
$
|
11
|
|
|
9
|
%
|
Cost of product sales
|
107
|
|
|
105
|
|
|
2
|
|
|
2
|
%
|
|||
Cost of instant products
|
67
|
|
|
70
|
|
|
(3
|
)
|
|
(4
|
)%
|
|||
SG&A
|
186
|
|
|
172
|
|
|
14
|
|
|
8
|
%
|
|||
R&D
|
49
|
|
|
54
|
|
|
(5
|
)
|
|
(9
|
)%
|
|||
D&A
|
165
|
|
|
188
|
|
|
(23
|
)
|
|
(12
|
)%
|
|||
Restructuring and other
|
7
|
|
|
52
|
|
|
(45
|
)
|
|
(87
|
)%
|
|||
Total operating expenses
|
$
|
714
|
|
|
$
|
763
|
|
|
$
|
(49
|
)
|
|
(6
|
)%
|
|
|
Three Months Ended March 31,
|
|
Factors Affecting Net Loss
|
||||||
(in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||
Loss on debt financing transactions
|
|
$
|
—
|
|
|
$
|
(93
|
)
|
|
Loss on debt financing transactions from our refinancing transactions consummated during the 2018 first quarter, including a $110 million premium charge associated with the redemption of the 2022 Secured Notes (see Note 11).
|
Gain (loss) on remeasurement of debt
|
|
5
|
|
|
(1
|
)
|
|
The three-month period gain is attributable to remeasurement of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes and reflects weakening of the Euro vs. the U.S. Dollar since December 31, 2018 (1.14 exchange rate at December 31, 2018 vs. 1.13 as of March 31, 2019).
|
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Total revenue
|
|
$
|
422
|
|
|
$
|
443
|
|
|
$
|
(21
|
)
|
|
(5
|
)%
|
Total operating expenses
|
|
329
|
|
|
371
|
|
|
(42
|
)
|
|
(11
|
)%
|
|||
AEBITDA
|
|
215
|
|
|
218
|
|
|
(3
|
)
|
|
(1
|
)%
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Gaming operations
|
$
|
152
|
|
|
$
|
161
|
|
|
$
|
(9
|
)
|
|
(6
|
)%
|
Gaming machine sales
|
136
|
|
|
145
|
|
|
(9
|
)
|
|
(6
|
)%
|
|||
Gaming systems
|
74
|
|
|
75
|
|
|
(1
|
)
|
|
(1
|
)%
|
|||
Table products
|
60
|
|
|
62
|
|
|
(2
|
)
|
|
(3
|
)%
|
|||
Total revenue
|
$
|
422
|
|
|
$
|
443
|
|
|
$
|
(21
|
)
|
|
(5
|
)%
|
|
|
|
|
|
|
|
|
|||||||
F/X impact on revenue
|
$
|
(4
|
)
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
KPIs:
|
|
|
|
|
|
|
|
|||||||
U.S. and Canadian units
(1)
:
|
|
|
|
|
|
|
|
|||||||
Installed base at period end
|
32,958
|
|
|
35,336
|
|
|
(2,378
|
)
|
|
(7
|
)%
|
|||
Average daily revenue per unit
|
$
|
38.46
|
|
|
$
|
38.39
|
|
|
$
|
0.07
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|||||||
International units
(1)
:
|
|
|
|
|
|
|
|
|||||||
Installed base at period end
|
33,950
|
|
|
33,075
|
|
|
875
|
|
|
3
|
%
|
|||
Average daily revenue per unit
|
$
|
11.43
|
|
|
$
|
12.33
|
|
|
$
|
(0.9
|
)
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Gaming machine unit sales:
|
|
|
|
|
|
|
|
|||||||
U.S. and Canadian new unit shipments
|
4,801
|
|
|
4,667
|
|
|
134
|
|
|
3
|
%
|
|||
International new unit shipments
|
2,083
|
|
|
2,201
|
|
|
(118
|
)
|
|
(5
|
)%
|
|||
Total new unit shipments
|
6,884
|
|
|
6,868
|
|
|
16
|
|
|
—
|
%
|
|||
Average sales price per new unit
|
$
|
17,140
|
|
|
$
|
17,722
|
|
|
$
|
(582
|
)
|
|
(3
|
)%
|
(1) Effective the first quarter of 2019, we changed our gaming operations KPIs, which now reflect installed base and average daily revenue per unit by geography, as we believe this presentation presents gaming operations units in categories that are more similar than previous presentations and aligns more closely with how management evaluates the operating performance of the business segment.
|
|
Three Months Ended March 31,
|
|
Variance
|
||||||||
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||
U.S. and Canadian unit shipments:
|
|
|
|
|
|
|
|
||||
Replacement units
|
3,194
|
|
|
3,743
|
|
|
(549
|
)
|
|
(15
|
)%
|
Casino opening and expansion units
|
1,607
|
|
|
924
|
|
|
683
|
|
|
74
|
%
|
Total unit shipments
|
4,801
|
|
|
4,667
|
|
|
134
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
||||
International unit shipments:
|
|
|
|
|
|
|
|
||||
Replacement units
|
2,083
|
|
|
1,940
|
|
|
143
|
|
|
7
|
%
|
Casino opening and expansion units
|
—
|
|
|
261
|
|
|
(261
|
)
|
|
(100
|
)%
|
Total unit shipments
|
2,083
|
|
|
2,201
|
|
|
(118
|
)
|
|
(5
|
)%
|
|
|
Three Months Ended
March 31, |
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Total revenue
|
|
$
|
227
|
|
|
$
|
202
|
|
|
$
|
25
|
|
|
12
|
%
|
Total operating expenses
|
|
158
|
|
|
141
|
|
|
17
|
|
|
12
|
%
|
|||
AEBITDA
|
|
104
|
|
|
94
|
|
|
10
|
|
|
11
|
%
|
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Instant products
|
|
$
|
140
|
|
|
$
|
150
|
|
|
$
|
(10
|
)
|
|
(7
|
)%
|
Lottery systems
|
|
87
|
|
|
52
|
|
|
35
|
|
|
67
|
%
|
|||
Total revenue
|
|
$
|
227
|
|
|
$
|
202
|
|
|
$
|
25
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
F/X impact on revenue
|
|
$
|
(2
|
)
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Total revenue
|
|
$
|
118
|
|
|
$
|
97
|
|
|
$
|
21
|
|
|
22
|
%
|
Operating expenses
|
|
98
|
|
|
100
|
|
|
(2
|
)
|
|
(2
|
)%
|
|||
AEBITDA
|
|
25
|
|
|
23
|
|
|
2
|
|
|
9
|
%
|
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Mobile
|
|
$
|
97
|
|
|
$
|
73
|
|
|
$
|
24
|
|
|
33
|
%
|
Web and other
|
|
21
|
|
|
24
|
|
|
(3
|
)
|
|
(13
|
)%
|
|||
Total revenue
|
|
$
|
118
|
|
|
$
|
97
|
|
|
$
|
21
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
KPIs:
|
|
|
|
|
|
|
|
|
|||||||
Social gaming:
|
|
|
|
|
|
|
|
|
|||||||
Mobile Penetration
(1)
|
|
82
|
%
|
|
75
|
%
|
|
7pp
|
|
|
nm
|
|
|||
Average MAU
(2)
|
|
8.4
|
|
|
8.1
|
|
|
0.3
|
|
|
4
|
%
|
|||
Average DAU
(3)
|
|
2.7
|
|
|
2.6
|
|
|
0.1
|
|
|
4
|
%
|
|||
ARPDAU
(4)
|
|
$
|
0.48
|
|
|
$
|
0.42
|
|
|
$
|
0.06
|
|
|
14
|
%
|
nm = not meaningful.
pp = percentage points.
(1) Mobile penetration is defined as the 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 is 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 January 2019, New Zealand Racing Board launched a sportsbook with our
OpenBet
platform.
|
•
|
In April 2019, we announced a partnership with Wynn Resorts to support their launch of both iGaming and sports in the U.S.
|
|
|
Three Months Ended
March 31, |
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Total revenue
|
|
$
|
70
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
—
|
%
|
Operating expenses
|
|
78
|
|
|
74
|
|
|
4
|
|
|
5
|
%
|
|||
AEBITDA
|
|
13
|
|
|
17
|
|
|
(4
|
)
|
|
(24
|
)%
|
|
|
Three Months Ended March 31,
|
|
Variance
|
|||||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
Sports and platform
|
|
$
|
30
|
|
|
$
|
26
|
|
|
$
|
4
|
|
|
15
|
%
|
Gaming and other
|
|
40
|
|
|
44
|
|
|
(4
|
)
|
|
(9
|
)%
|
|||
Total revenue
|
|
$
|
70
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
F/X impact on revenue
|
|
$
|
(4
|
)
|
|
$
|
2
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
KPIs:
|
|
|
|
|
|
|
|
|
|||||||
Gaming - Key Performance Indicators:
|
|
|
|
|
|
|
|
|
|||||||
Wagers processed through OGS (in billions)
|
|
$
|
8.9
|
|
|
$
|
8.9
|
|
|
$
|
—
|
|
|
—
|
%
|
|
|
As of
|
||||||
($ in millions)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
(1)
|
|
$
|
1,213
|
|
|
$
|
168
|
|
Revolver capacity
|
|
621
|
|
|
621
|
|
||
Revolver capacity drawn or committed to letters of credit
|
|
(215
|
)
|
|
(350
|
)
|
||
Total
|
|
$
|
1,619
|
|
|
$
|
439
|
|
(1) Includes $1,084 million that was used for the 2022 Unsecured Notes redemption on April 4, 2019.
|
|
|
Three Months Ended March 31,
|
|
Variance
|
||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||
Net cash provided by operating activities
|
|
$
|
167
|
|
|
$
|
30
|
|
|
$
|
137
|
|
Net cash used in investing activities
|
|
(64
|
)
|
|
(360
|
)
|
|
296
|
|
|||
Net cash provided by (used in) financing activities
|
|
942
|
|
|
(346
|
)
|
|
1,288
|
|
|||
Effect of exchange rates on cash, cash equivalents and restricted cash
|
|
1
|
|
|
2
|
|
|
(1
|
)
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
1,046
|
|
|
$
|
(674
|
)
|
|
$
|
1,720
|
|
|
|
Three Months Ended March 31,
|
|
Variance
|
||||||||
($ in millions)
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||
Net loss
|
|
$
|
(24
|
)
|
|
$
|
(202
|
)
|
|
$
|
178
|
|
Adjustments to reconcile net loss to cash flows from operations
|
|
179
|
|
|
309
|
|
|
(130
|
)
|
|||
Changes in working capital accounts
|
|
6
|
|
|
(78
|
)
|
|
84
|
|
|||
Changes in deferred income taxes and other
|
|
6
|
|
|
1
|
|
|
5
|
|
Exhibit
Number
|
|
Description
|
3.1(a)
|
|
|
|
|
|
3.1(b)
|
|
|
|
|
|
3.1(c)
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
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
|
|
|
SCIENTIFIC GAMES CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
By:
|
/s/ Michael A. Quartieri
|
|
|
Name:
|
Michael A. Quartieri
|
|
|
Title:
|
Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary
|
|
|
|
|
|
|
By:
|
/s/ Michael F. Winterscheidt
|
|
|
Name:
|
Michael F. Winterscheidt
|
|
|
Title:
|
Senior Vice President and Chief Accounting Officer
|
Dated:
|
May 7, 2019
|
|
|
/s/ Barry L. Cottle
|
Barry L. Cottle
|
Chief Executive Officer
|
/s/ Michael A. Quartieri
|
Michael A. Quartieri
|
Chief Financial Officer
|
|
/s/ Barry L. Cottle
|
|
Barry L. Cottle
|
|
Chief Executive Officer
|
|
May 7, 2019
|
|
/s/ Michael A. Quartieri
|
|
Michael A. Quartieri
|
|
Chief Financial Officer
|
|
May 7, 2019
|