Nevada
|
|
81-0422894
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(State or other jurisdiction of
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|
(I.R.S. Employer Identification No.)
|
incorporation or organization)
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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
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SGMS
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Nasdaq Global Select Market
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Large accelerated filer
|
☒
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Accelerated filer
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☐
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Non-accelerated filer
|
☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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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
|
|
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
|
2022 Secured Notes
|
|
7.000% senior secured notes due 2022 issued by SGI
|
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
|
|
depreciation, amortization and impairments (excluding goodwill)
|
FASB
|
|
Financial Accounting Standards Board
|
Guarantor Subsidiaries
|
|
substantially all of SGC’s 100%-owned U.S. subsidiaries other than SGC’s 82% stake in SciPlay
|
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
|
SciPlay
|
|
SciPlay Corporation, formerly referred to as our Social business segment
|
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, collectively
|
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;
|
•
|
SciPlay’s dependence on certain key providers;
|
•
|
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 via the SciPlay initial public offering, including the possibility that the anticipated benefits of the initial public offering are not realized;
|
•
|
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, 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
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Services
|
$
|
457
|
|
|
$
|
438
|
|
|
$
|
916
|
|
|
$
|
876
|
|
Product sales
|
238
|
|
|
257
|
|
|
476
|
|
|
481
|
|
||||
Instant products
|
150
|
|
|
150
|
|
|
290
|
|
|
300
|
|
||||
Total revenue
|
845
|
|
|
845
|
|
|
1,682
|
|
|
1,657
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of services(1)
|
135
|
|
|
124
|
|
|
268
|
|
|
246
|
|
||||
Cost of product sales(1)
|
111
|
|
|
121
|
|
|
218
|
|
|
226
|
|
||||
Cost of instant products(1)
|
75
|
|
|
71
|
|
|
142
|
|
|
141
|
|
||||
Selling, general and administrative
|
174
|
|
|
174
|
|
|
360
|
|
|
346
|
|
||||
Research and development
|
46
|
|
|
49
|
|
|
95
|
|
|
103
|
|
||||
Depreciation, amortization and impairments
|
170
|
|
|
173
|
|
|
335
|
|
|
361
|
|
||||
Restructuring and other
|
6
|
|
|
34
|
|
|
13
|
|
|
86
|
|
||||
Operating income
|
128
|
|
|
99
|
|
|
251
|
|
|
148
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(147
|
)
|
|
(146
|
)
|
|
(301
|
)
|
|
(301
|
)
|
||||
Earnings from equity investments
|
7
|
|
|
5
|
|
|
13
|
|
|
12
|
|
||||
Loss on debt financing transactions
|
(60
|
)
|
|
—
|
|
|
(60
|
)
|
|
(93
|
)
|
||||
(Loss) gain on remeasurement of debt
|
(3
|
)
|
|
34
|
|
|
2
|
|
|
33
|
|
||||
Other income (expense), net
|
7
|
|
|
2
|
|
|
7
|
|
|
(1
|
)
|
||||
Total other expense, net
|
(196
|
)
|
|
(105
|
)
|
|
(339
|
)
|
|
(350
|
)
|
||||
Net loss before income taxes
|
(68
|
)
|
|
(6
|
)
|
|
(88
|
)
|
|
(202
|
)
|
||||
Income tax expense
|
(7
|
)
|
|
—
|
|
|
(11
|
)
|
|
(6
|
)
|
||||
Net loss
|
(75
|
)
|
|
(6
|
)
|
|
(99
|
)
|
|
(208
|
)
|
||||
Less: Net income attributable to noncontrolling interest
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Net loss attributable to SGC
|
$
|
(77
|
)
|
|
$
|
(6
|
)
|
|
$
|
(101
|
)
|
|
$
|
(208
|
)
|
Basic and diluted net loss attributable to SGC per share:
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
(0.83
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(1.09
|
)
|
|
$
|
(2.29
|
)
|
Diluted
|
$
|
(0.83
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(1.09
|
)
|
|
$
|
(2.29
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares used in per share calculations:
|
|
|
|
|
|
|
|
|
|
||||||
Basic shares
|
93
|
|
|
91
|
|
|
93
|
|
|
91
|
|
||||
Diluted shares
|
93
|
|
|
91
|
|
|
93
|
|
|
91
|
|
||||
(1) Excludes D&A.
|
|||||||||||||||
See accompanying notes to condensed consolidated financial statements.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(75
|
)
|
|
$
|
(6
|
)
|
|
$
|
(99
|
)
|
|
$
|
(208
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation (loss) gain, net of tax
|
(39
|
)
|
|
(88
|
)
|
|
16
|
|
|
(37
|
)
|
||||
Pension and post-retirement (loss) gain, net of tax
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Derivative financial instruments unrealized (loss) gain, net of tax
|
(11
|
)
|
|
4
|
|
|
(16
|
)
|
|
6
|
|
||||
Total comprehensive loss
|
(126
|
)
|
|
(89
|
)
|
|
(99
|
)
|
|
(239
|
)
|
||||
Less: comprehensive income attributable to noncontrolling interest
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Comprehensive loss attributable to SGC
|
$
|
(128
|
)
|
|
$
|
(89
|
)
|
|
$
|
(101
|
)
|
|
$
|
(239
|
)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
369
|
|
|
$
|
168
|
|
Restricted cash
|
44
|
|
|
39
|
|
||
Accounts receivable, net
|
616
|
|
|
599
|
|
||
Notes receivable, net
|
120
|
|
|
114
|
|
||
Inventories
|
238
|
|
|
216
|
|
||
Prepaid expenses, deposits and other current assets
|
198
|
|
|
233
|
|
||
Total current assets
|
1,585
|
|
|
1,369
|
|
||
Non-current assets:
|
|
|
|
||||
Restricted cash
|
12
|
|
|
13
|
|
||
Notes receivable, net
|
42
|
|
|
40
|
|
||
Property and equipment, net
|
532
|
|
|
547
|
|
||
Operating lease right-of-use assets
|
113
|
|
|
—
|
|
||
Goodwill
|
3,279
|
|
|
3,280
|
|
||
Intangible assets, net
|
1,660
|
|
|
1,809
|
|
||
Software, net
|
265
|
|
|
285
|
|
||
Equity investments
|
273
|
|
|
298
|
|
||
Other assets
|
171
|
|
|
77
|
|
||
Total assets
|
$
|
7,932
|
|
|
$
|
7,718
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
45
|
|
|
$
|
45
|
|
Accounts payable
|
201
|
|
|
225
|
|
||
Accrued liabilities
|
487
|
|
|
477
|
|
||
Total current liabilities
|
733
|
|
|
747
|
|
||
Deferred income taxes
|
108
|
|
|
108
|
|
||
Operating lease liabilities
|
95
|
|
|
—
|
|
||
Other long-term liabilities
|
312
|
|
|
334
|
|
||
Long-term debt, excluding current portion
|
8,802
|
|
|
8,992
|
|
||
Total liabilities
|
10,050
|
|
|
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
|
1,187
|
|
|
835
|
|
||
Accumulated loss
|
(2,925
|
)
|
|
(2,824
|
)
|
||
Treasury stock, at cost, 17 shares
|
(175
|
)
|
|
(175
|
)
|
||
Accumulated other comprehensive loss
|
(300
|
)
|
|
(300
|
)
|
||
Total SGC stockholders’ deficit
|
(2,212
|
)
|
|
(2,463
|
)
|
||
Noncontrolling interest
|
94
|
|
|
—
|
|
||
Total stockholders’ deficit
|
(2,118
|
)
|
|
(2,463
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
7,932
|
|
|
$
|
7,718
|
|
See accompanying notes to condensed consolidated financial statements.
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(99
|
)
|
|
$
|
(208
|
)
|
Adjustments to reconcile net loss to cash provided by operating activities
|
440
|
|
|
482
|
|
||
Changes in working capital accounts, net of effects of acquisitions
|
(86
|
)
|
|
(138
|
)
|
||
Changes in deferred income taxes and other
|
7
|
|
|
(4
|
)
|
||
Net cash provided by operating activities
|
262
|
|
|
132
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(132
|
)
|
|
(200
|
)
|
||
Acquisitions of businesses and assets, net of cash acquired
|
—
|
|
|
(274
|
)
|
||
Distributions of capital from equity investments
|
18
|
|
|
23
|
|
||
Additions to equity method investments
|
(1
|
)
|
|
(75
|
)
|
||
Net cash used in investing activities
|
(115
|
)
|
|
(526
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under revolving credit facility
|
40
|
|
|
185
|
|
||
Repayments under revolving credit facility
|
(320
|
)
|
|
(380
|
)
|
||
Proceeds from issuance of senior notes and term loans
|
1,100
|
|
|
2,512
|
|
||
Repayment of senior notes and term loans (inclusive of redemption premium)
|
(1,050
|
)
|
|
(2,210
|
)
|
||
Repayment of assumed NYX debt
|
—
|
|
|
(288
|
)
|
||
Payments on long-term debt
|
(23
|
)
|
|
(14
|
)
|
||
Payments of debt issuance and deferred financing costs
|
(15
|
)
|
|
(39
|
)
|
||
Payments on license obligations
|
(13
|
)
|
|
(14
|
)
|
||
Sale of future revenue
|
11
|
|
|
—
|
|
||
Net proceeds from the sale of SciPlay common stock
|
342
|
|
|
—
|
|
||
Payments of deferred SciPlay common stock offering costs
|
(8
|
)
|
|
—
|
|
||
Net redemptions of common stock under stock-based compensation plans and other
|
(7
|
)
|
|
(21
|
)
|
||
Net cash provided by (used in) financing activities
|
57
|
|
|
(269
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
1
|
|
|
(3
|
)
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
205
|
|
|
(666
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
220
|
|
|
834
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
425
|
|
|
$
|
168
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
270
|
|
|
$
|
366
|
|
Income taxes paid
|
18
|
|
|
15
|
|
||
Distributed earnings from equity investments
|
22
|
|
|
19
|
|
||
Supplemental non-cash transactions:
|
|
|
|
||||
Non-cash rollover and refinancing of Term loans
|
$
|
—
|
|
|
$
|
3,275
|
|
Non-cash interest expense
|
13
|
|
|
12
|
|
||
NYX non-cash consideration transferred (including 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 SGC 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 distributions (or deemed distributions) by SciPlay Parent LLC and (ii) certain other tax benefits related to SciPlay’s making of payments under the TRA.
|
•
|
An Intercompany Services Agreement, under which SGC provides to SciPlay 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 SciPlay and settled in cash.
|
•
|
An intellectual property license agreement (“IP License Agreement”), pursuant to which SciPlay 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 SciPlay, 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 SciPlay’s 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 SciPlay, but only in SciPlay’s currently available games.
|
•
|
SciPlay Holding Company, LLC (“SciPlay Holding”), a subsidiary of SciPlay, entered into a $150 million revolving credit agreement (the “SciPlay Revolver”) that matures in May 2024 (see Note 11).
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gaming
|
|
|
|
|
|
|
|
||||||||
Gaming operations
|
$
|
150
|
|
|
$
|
160
|
|
|
$
|
302
|
|
|
$
|
321
|
|
Gaming machine sales
|
148
|
|
|
168
|
|
|
284
|
|
|
313
|
|
||||
Gaming systems
|
67
|
|
|
84
|
|
|
141
|
|
|
159
|
|
||||
Table products
|
62
|
|
|
59
|
|
|
122
|
|
|
121
|
|
||||
Total
|
$
|
427
|
|
|
$
|
471
|
|
|
$
|
849
|
|
|
$
|
914
|
|
|
|
|
|
|
|
|
|
||||||||
Lottery
|
|
|
|
|
|
|
|
||||||||
Instant products
|
$
|
150
|
|
|
$
|
150
|
|
|
$
|
290
|
|
|
$
|
300
|
|
Lottery systems
|
81
|
|
|
57
|
|
|
168
|
|
|
109
|
|
||||
Total
|
$
|
231
|
|
|
$
|
207
|
|
|
$
|
458
|
|
|
$
|
409
|
|
|
|
|
|
|
|
|
|
||||||||
SciPlay
|
|
|
|
|
|
|
|
||||||||
Mobile
|
$
|
98
|
|
|
$
|
77
|
|
|
$
|
195
|
|
|
$
|
149
|
|
Web and other
|
20
|
|
|
23
|
|
|
41
|
|
|
48
|
|
||||
Total
|
$
|
118
|
|
|
$
|
100
|
|
|
$
|
236
|
|
|
$
|
197
|
|
|
|
|
|
|
|
|
|
||||||||
Digital
|
|
|
|
|
|
|
|
||||||||
Sports and platform
|
$
|
26
|
|
|
$
|
20
|
|
|
$
|
56
|
|
|
$
|
46
|
|
Gaming and other
|
43
|
|
|
47
|
|
|
83
|
|
|
91
|
|
||||
Total
|
$
|
69
|
|
|
$
|
67
|
|
|
$
|
139
|
|
|
$
|
137
|
|
|
Six Months Ended June 30,
|
||
|
2019
|
||
Contract liability balance, beginning of period(1)
|
$
|
97
|
|
Liabilities recognized during the period
|
33
|
|
|
Amounts recognized in revenue from beginning balance
|
(30
|
)
|
|
Contract liability balance, end of period(1)
|
$
|
100
|
|
(1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our June 30, 2019 consolidated balance sheet.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Current:
|
|
|
|
||||
Accounts receivable
|
$
|
629
|
|
|
$
|
615
|
|
Notes receivable
|
143
|
|
|
138
|
|
||
Allowance for doubtful accounts and notes
|
(36
|
)
|
|
(40
|
)
|
||
Current accounts and notes receivable, net
|
$
|
736
|
|
|
$
|
713
|
|
Long-term:
|
|
|
|
||||
Notes receivable, net of allowance
|
42
|
|
|
40
|
|
||
Total accounts and notes receivable, net
|
$
|
778
|
|
|
$
|
753
|
|
•
|
Mexico - Our notes receivable, net, from certain customers in Mexico at June 30, 2019 was $25 million. We collected $16 million of outstanding receivables from these customers during the six months ended June 30, 2019.
|
•
|
Peru - Our notes receivable, net, from certain customers in Peru at June 30, 2019 was $13 million. We collected $4 million of outstanding receivables from these customers during the six months ended June 30, 2019.
|
•
|
Argentina - Our notes receivable, net, from customers in Argentina at June 30, 2019 was $22 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 $9 million of outstanding receivables from customers in Argentina during the six months ended June 30, 2019.
|
|
June 30, 2019
|
|
Balances over 90 days past due
|
|
December 31, 2018
|
|
Balances over 90 days past due
|
||||||||
Notes receivable:
|
|
|
|
|
|
|
|
||||||||
Domestic
|
$
|
71
|
|
|
$
|
12
|
|
|
$
|
55
|
|
|
$
|
6
|
|
International
|
114
|
|
|
23
|
|
|
123
|
|
|
25
|
|
||||
Total notes receivable
|
185
|
|
|
35
|
|
|
178
|
|
|
31
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Notes receivable allowance
|
|
|
|
|
|
|
|
||||||||
Domestic
|
(5
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
International
|
(18
|
)
|
|
(18
|
)
|
|
(18
|
)
|
|
(18
|
)
|
||||
Total notes receivable allowance
|
(23
|
)
|
|
(23
|
)
|
|
(24
|
)
|
|
(24
|
)
|
||||
Notes receivable, net
|
$
|
162
|
|
|
$
|
12
|
|
|
$
|
154
|
|
|
$
|
7
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Beginning allowance for notes receivable
|
|
$
|
(24
|
)
|
|
$
|
(21
|
)
|
Provision
|
|
(3
|
)
|
|
(3
|
)
|
||
Charge-offs and recoveries
|
|
4
|
|
|
1
|
|
||
Ending allowance for notes receivable
|
|
$
|
(23
|
)
|
|
$
|
(23
|
)
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Parts and work-in-process
|
|
$
|
146
|
|
|
$
|
131
|
|
Finished goods
|
|
92
|
|
|
85
|
|
||
Total inventories
|
|
$
|
238
|
|
|
$
|
216
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Land
|
$
|
20
|
|
|
$
|
15
|
|
Buildings and leasehold improvements
|
152
|
|
|
128
|
|
||
Gaming and lottery machinery and equipment
|
1,034
|
|
|
1,041
|
|
||
Furniture and fixtures
|
29
|
|
|
27
|
|
||
Construction in progress
|
21
|
|
|
17
|
|
||
Other property and equipment
|
251
|
|
|
240
|
|
||
Less: accumulated depreciation
|
(975
|
)
|
|
(921
|
)
|
||
Total property and equipment, net
|
$
|
532
|
|
|
$
|
547
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018(1)
|
||||||||
Depreciation expense
|
$
|
64
|
|
|
$
|
55
|
|
|
$
|
122
|
|
|
$
|
127
|
|
(1) Includes assets held for sale impairment charges of $19 million.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Balance
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Balance
|
||||||||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
1,084
|
|
|
$
|
(341
|
)
|
|
$
|
743
|
|
|
$
|
1,084
|
|
|
$
|
(299
|
)
|
|
$
|
785
|
|
Intellectual property
|
931
|
|
|
(512
|
)
|
|
419
|
|
|
931
|
|
|
(453
|
)
|
|
478
|
|
||||||
Licenses
|
547
|
|
|
(291
|
)
|
|
256
|
|
|
546
|
|
|
(253
|
)
|
|
293
|
|
||||||
Brand names
|
123
|
|
|
(65
|
)
|
|
58
|
|
|
123
|
|
|
(59
|
)
|
|
64
|
|
||||||
Trade names
|
107
|
|
|
(27
|
)
|
|
80
|
|
|
108
|
|
|
(23
|
)
|
|
85
|
|
||||||
Patents and other
|
24
|
|
|
(14
|
)
|
|
10
|
|
|
23
|
|
|
(13
|
)
|
|
10
|
|
||||||
|
2,816
|
|
|
(1,250
|
)
|
|
1,566
|
|
|
2,815
|
|
|
(1,100
|
)
|
|
1,715
|
|
||||||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
96
|
|
|
(2
|
)
|
|
94
|
|
|
96
|
|
|
(2
|
)
|
|
94
|
|
||||||
Total intangible assets
|
$
|
2,912
|
|
|
$
|
(1,252
|
)
|
|
$
|
1,660
|
|
|
$
|
2,911
|
|
|
$
|
(1,102
|
)
|
|
$
|
1,809
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization expense
|
$
|
75
|
|
|
$
|
76
|
|
|
$
|
152
|
|
|
$
|
153
|
|
Goodwill
|
|
Gaming
|
|
Lottery
|
|
SciPlay
|
|
Digital
|
|
Totals
|
||||||||||
Balance as of December 31, 2018
|
|
$
|
2,449
|
|
|
$
|
352
|
|
|
$
|
115
|
|
|
$
|
364
|
|
|
$
|
3,280
|
|
Foreign currency adjustments
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Balance as of June 30, 2019
|
|
$
|
2,449
|
|
|
$
|
351
|
|
|
$
|
115
|
|
|
$
|
364
|
|
|
$
|
3,279
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Software
|
|
$
|
1,146
|
|
|
$
|
1,101
|
|
Accumulated amortization
|
|
(881
|
)
|
|
(816
|
)
|
||
Software, net
|
|
$
|
265
|
|
|
$
|
285
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization expense
|
|
$
|
31
|
|
|
$
|
42
|
|
|
$
|
61
|
|
|
$
|
81
|
|
|
As of
|
||||||||||||||||||
|
June 30, 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
|
2020
|
|
variable
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
45
|
|
|
$
|
325
|
|
Term Loan B-5
|
2024
|
|
variable
|
|
4,122
|
|
|
(66
|
)
|
|
4,056
|
|
|
4,071
|
|
||||
SciPlay Revolver
|
2024
|
|
variable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Senior Notes:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2025 Secured Notes(2)
|
2025
|
|
5.000%
|
|
1,250
|
|
|
(16
|
)
|
|
1,234
|
|
|
1,233
|
|
||||
2026 Secured Euro Notes(3)
|
2026
|
|
3.375%
|
|
370
|
|
|
(5
|
)
|
|
365
|
|
|
367
|
|
||||
2022 Unsecured Notes
|
2022
|
|
10.000%
|
|
1,200
|
|
|
(11
|
)
|
|
1,189
|
|
|
2,176
|
|
||||
2026 Unsecured Euro Notes(3)
|
2026
|
|
5.500%
|
|
285
|
|
|
(4
|
)
|
|
281
|
|
|
282
|
|
||||
2026 Unsecured Notes
|
2026
|
|
8.250%
|
|
1,100
|
|
|
(15
|
)
|
|
1,085
|
|
|
—
|
|
||||
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 June 30, 2019 payable monthly through 2019 and other(4)
|
2019
|
|
3.900%
|
|
11
|
|
|
—
|
|
|
11
|
|
|
4
|
|
||||
Total long-term debt outstanding
|
|
|
|
|
$
|
8,968
|
|
|
$
|
(121
|
)
|
|
$
|
8,847
|
|
|
$
|
9,037
|
|
Less: current portion of long-term debt
|
|
|
|
|
|
|
|
|
(45
|
)
|
|
(45
|
)
|
||||||
Long-term debt, excluding current portion
|
|
|
|
|
|
|
|
|
$
|
8,802
|
|
|
$
|
8,992
|
|
||||
Fair value of debt(1)
|
|
|
|
|
$
|
9,066
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Repayment and cancellation of principal balance at premium
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
110
|
|
Unamortized debt (premium) discount and deferred financing costs, net
|
10
|
|
|
—
|
|
|
10
|
|
|
(30
|
)
|
||||
Third party debt issuance fees
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Total loss on debt financing transactions
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
93
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(Loss) gain recorded in accumulated other comprehensive loss, net of tax
|
$
|
(11
|
)
|
|
$
|
4
|
|
|
$
|
(16
|
)
|
|
$
|
6
|
|
Interest expense recorded related to interest rate swap contracts
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Interest expense
|
|
Interest expense
|
||||||||||||
Total interest expense which reflects the effects of cash flow hedges
|
$
|
(147
|
)
|
|
$
|
(146
|
)
|
|
$
|
(301
|
)
|
|
$
|
(301
|
)
|
Hedged item
|
(5
|
)
|
|
(5
|
)
|
|
(10
|
)
|
|
(7
|
)
|
||||
Derivative designated as hedging instrument
|
5
|
|
|
4
|
|
|
10
|
|
|
5
|
|
|
Common Stock
|
|
Additional Paid in Capital
|
|
Accumulated Loss
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interest
|
|
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
|
)
|
Net proceeds of common stock in connection with stock options and RSUs and other
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
||||||||
Sale of SciPlay common stock and related transactions
|
—
|
|
|
328
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|
419
|
|
|||||||
Stock-based compensation
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
10
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(75
|
)
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(51
|
)
|
|||||||
June 30, 2019
|
$
|
1
|
|
|
$
|
1,187
|
|
|
$
|
(2,925
|
)
|
|
$
|
(175
|
)
|
|
$
|
(300
|
)
|
|
$
|
94
|
|
|
$
|
(2,118
|
)
|
|
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 proceeds 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
|
)
|
Net proceeds of common stock in connection with stock options and RSUs
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Stock-based compensation
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||
Other Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
|
(83
|
)
|
||||||
June 30, 2018
|
$
|
1
|
|
|
$
|
817
|
|
|
$
|
(2,680
|
)
|
|
$
|
(175
|
)
|
|
$
|
(231
|
)
|
|
$
|
(2,268
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Related to SGC stock options
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
8
|
|
Related to SGC RSUs
|
5
|
|
|
8
|
|
|
17
|
|
|
16
|
|
||||
Related to SciPlay RSUs
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Total
|
$
|
10
|
|
|
$
|
15
|
|
|
$
|
24
|
|
|
$
|
24
|
|
|
June 30, 2019
|
||
Operating lease right-of-use assets
|
$
|
113
|
|
Accrued liabilities
|
26
|
|
|
Operating lease liabilities
|
95
|
|
|
Total operating lease liabilities
|
$
|
121
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
5
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|||
Operating cash flows from operating leases for the six months period
|
$
|
17
|
|
Weighted average remaining lease term, years
|
6
|
|
|
Weighted average discount rate
|
5
|
%
|
|
Remainder of 2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Less Imputed Interest
|
|
Total
|
||||||||||||||||
Operating leases
|
$
|
16
|
|
|
$
|
30
|
|
|
$
|
25
|
|
|
$
|
19
|
|
|
$
|
16
|
|
|
$
|
34
|
|
|
$
|
(19
|
)
|
|
$
|
121
|
|
|
|
SGC (Parent)
|
|
SGI (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
235
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
141
|
|
|
$
|
(7
|
)
|
|
$
|
369
|
|
Restricted cash
|
|
—
|
|
|
1
|
|
|
35
|
|
|
8
|
|
|
—
|
|
|
44
|
|
||||||
Accounts receivable, net
|
|
—
|
|
|
100
|
|
|
195
|
|
|
321
|
|
|
—
|
|
|
616
|
|
||||||
Notes receivable, net
|
|
—
|
|
|
—
|
|
|
104
|
|
|
16
|
|
|
—
|
|
|
120
|
|
||||||
Inventories
|
|
—
|
|
|
47
|
|
|
99
|
|
|
103
|
|
|
(11
|
)
|
|
238
|
|
||||||
Prepaid expenses, deposits and other current assets
|
|
—
|
|
|
61
|
|
|
61
|
|
|
75
|
|
|
1
|
|
|
198
|
|
||||||
Property and equipment, net
|
|
34
|
|
|
96
|
|
|
231
|
|
|
204
|
|
|
(33
|
)
|
|
532
|
|
||||||
Operating lease right-of-use asset
|
|
1
|
|
|
25
|
|
|
33
|
|
|
54
|
|
|
—
|
|
|
113
|
|
||||||
Investment in subsidiaries
|
|
3,136
|
|
|
1,163
|
|
|
1,427
|
|
|
—
|
|
|
(5,726
|
)
|
|
—
|
|
||||||
Goodwill
|
|
—
|
|
|
240
|
|
|
1,897
|
|
|
1,142
|
|
|
—
|
|
|
3,279
|
|
||||||
Intangible assets, net
|
|
37
|
|
|
34
|
|
|
1,186
|
|
|
403
|
|
|
—
|
|
|
1,660
|
|
||||||
Intercompany balances
|
|
—
|
|
|
5,868
|
|
|
67
|
|
|
—
|
|
|
(5,935
|
)
|
|
—
|
|
||||||
Software, net
|
|
48
|
|
|
36
|
|
|
109
|
|
|
72
|
|
|
—
|
|
|
265
|
|
||||||
Other assets(2)
|
|
95
|
|
|
419
|
|
|
41
|
|
|
376
|
|
|
(433
|
)
|
|
498
|
|
||||||
Total assets
|
|
$
|
3,586
|
|
|
$
|
8,090
|
|
|
$
|
5,485
|
|
|
$
|
2,915
|
|
|
$
|
(12,144
|
)
|
|
$
|
7,932
|
|
Liabilities and stockholders’ (deficit) equity
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current portion of long-term debt
|
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
45
|
|
Other current liabilities
|
|
52
|
|
|
173
|
|
|
242
|
|
|
255
|
|
|
(34
|
)
|
|
688
|
|
||||||
Long-term debt, excluding current portion
|
|
—
|
|
|
8,793
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
8,802
|
|
||||||
Operating lease liabilities
|
|
1
|
|
|
21
|
|
|
28
|
|
|
45
|
|
|
—
|
|
|
95
|
|
||||||
Other long-term liabilities
|
|
96
|
|
|
23
|
|
|
605
|
|
|
168
|
|
|
(472
|
)
|
|
420
|
|
||||||
Intercompany balances
|
|
5,649
|
|
|
—
|
|
|
—
|
|
|
286
|
|
|
(5,935
|
)
|
|
—
|
|
||||||
Total SGC stockholders’ (deficit) equity
|
|
(2,212
|
)
|
|
(962
|
)
|
|
4,600
|
|
|
2,065
|
|
|
(5,703
|
)
|
|
(2,212
|
)
|
||||||
Noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
||||||
Total liabilities and total stockholders’ (deficit) equity
|
|
$
|
3,586
|
|
|
$
|
8,090
|
|
|
$
|
5,485
|
|
|
$
|
2,915
|
|
|
$
|
(12,144
|
)
|
|
$
|
7,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(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 (Issuer1)
|
|
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
|
)
|
|
—
|
|
||||||
Total SGC stockholders’ (deficit) equity
|
|
(2,463
|
)
|
|
(1,161
|
)
|
|
4,252
|
|
|
1,797
|
|
|
(4,888
|
)
|
|
(2,463
|
)
|
||||||
Total liabilities and total 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 March 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 (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
147
|
|
|
$
|
358
|
|
|
$
|
407
|
|
|
$
|
(67
|
)
|
|
$
|
845
|
|
Cost of services, cost of product sales and cost of instant products(2)
|
|
—
|
|
|
94
|
|
|
108
|
|
|
176
|
|
|
(57
|
)
|
|
321
|
|
||||||
SG&A
|
|
31
|
|
|
9
|
|
|
48
|
|
|
94
|
|
|
(8
|
)
|
|
174
|
|
||||||
R&D
|
|
—
|
|
|
1
|
|
|
19
|
|
|
26
|
|
|
—
|
|
|
46
|
|
||||||
D&A
|
|
12
|
|
|
13
|
|
|
104
|
|
|
45
|
|
|
(4
|
)
|
|
170
|
|
||||||
Restructuring and other
|
|
1
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
6
|
|
||||||
Operating (loss) income
|
|
(44
|
)
|
|
29
|
|
|
78
|
|
|
63
|
|
|
2
|
|
|
128
|
|
||||||
Interest expense
|
|
—
|
|
|
(147
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147
|
)
|
||||||
Loss on debt financing transactions
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60
|
)
|
||||||
Loss on remeasurement of debt
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||||
Other income (expense), net
|
|
16
|
|
|
131
|
|
|
(119
|
)
|
|
(14
|
)
|
|
—
|
|
|
14
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(28
|
)
|
|
(50
|
)
|
|
(41
|
)
|
|
49
|
|
|
2
|
|
|
(68
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(30
|
)
|
|
2
|
|
|
12
|
|
|
—
|
|
|
16
|
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(19
|
)
|
|
14
|
|
|
9
|
|
|
(11
|
)
|
|
—
|
|
|
(7
|
)
|
||||||
Net (loss) income
|
|
(77
|
)
|
|
(34
|
)
|
|
(20
|
)
|
|
38
|
|
|
18
|
|
|
(75
|
)
|
||||||
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Net (loss) income attributable to SGC
|
|
$
|
(77
|
)
|
|
$
|
(34
|
)
|
|
$
|
(20
|
)
|
|
$
|
36
|
|
|
$
|
18
|
|
|
$
|
(77
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net (loss) income
|
|
$
|
(77
|
)
|
|
$
|
(34
|
)
|
|
$
|
(20
|
)
|
|
$
|
38
|
|
|
$
|
18
|
|
|
$
|
(75
|
)
|
Other comprehensive loss
|
|
(51
|
)
|
|
(15
|
)
|
|
(3
|
)
|
|
(66
|
)
|
|
84
|
|
|
(51
|
)
|
||||||
Total comprehensive loss
|
|
(128
|
)
|
|
(49
|
)
|
|
(23
|
)
|
|
(28
|
)
|
|
102
|
|
|
(126
|
)
|
||||||
Less: comprehensive income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Comprehensive loss attributable to SGC
|
|
$
|
(128
|
)
|
|
$
|
(49
|
)
|
|
$
|
(23
|
)
|
|
$
|
(30
|
)
|
|
$
|
102
|
|
|
$
|
(128
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
(2) Excludes D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
136
|
|
|
$
|
405
|
|
|
$
|
376
|
|
|
$
|
(72
|
)
|
|
$
|
845
|
|
Cost of services, cost of product sales and cost of instant products (2)
|
|
—
|
|
|
86
|
|
|
132
|
|
|
159
|
|
|
(61
|
)
|
|
316
|
|
||||||
SG&A
|
|
44
|
|
|
9
|
|
|
51
|
|
|
83
|
|
|
(13
|
)
|
|
174
|
|
||||||
R&D
|
|
—
|
|
|
1
|
|
|
22
|
|
|
26
|
|
|
—
|
|
|
49
|
|
||||||
D&A
|
|
12
|
|
|
7
|
|
|
107
|
|
|
50
|
|
|
(3
|
)
|
|
173
|
|
||||||
Restructuring and other
|
|
30
|
|
|
(3
|
)
|
|
2
|
|
|
5
|
|
|
—
|
|
|
34
|
|
||||||
Operating (loss) income
|
|
(86
|
)
|
|
36
|
|
|
91
|
|
|
53
|
|
|
5
|
|
|
99
|
|
||||||
Interest expense
|
|
—
|
|
|
(146
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(146
|
)
|
||||||
Gain on remeasurement of debt
|
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||||
Other income (expense), net
|
|
17
|
|
|
132
|
|
|
(119
|
)
|
|
(23
|
)
|
|
—
|
|
|
7
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(69
|
)
|
|
56
|
|
|
(28
|
)
|
|
30
|
|
|
5
|
|
|
(6
|
)
|
||||||
Equity in income (loss) of subsidiaries
|
|
26
|
|
|
13
|
|
|
(17
|
)
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
||||||
Income tax benefit (expense)
|
|
37
|
|
|
(26
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||||
Net (loss) income
|
|
$
|
(6
|
)
|
|
$
|
43
|
|
|
$
|
(49
|
)
|
|
$
|
23
|
|
|
$
|
(17
|
)
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive (loss) income
|
|
(83
|
)
|
|
30
|
|
|
(36
|
)
|
|
(119
|
)
|
|
125
|
|
|
(83
|
)
|
||||||
Comprehensive (loss) income
|
|
$
|
(89
|
)
|
|
$
|
73
|
|
|
$
|
(85
|
)
|
|
$
|
(96
|
)
|
|
$
|
108
|
|
|
$
|
(89
|
)
|
(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) Excludes D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
305
|
|
|
$
|
716
|
|
|
$
|
792
|
|
|
$
|
(131
|
)
|
|
$
|
1,682
|
|
Cost of services, cost of product sales and cost of instant products(2)
|
|
—
|
|
|
195
|
|
|
210
|
|
|
328
|
|
|
(105
|
)
|
|
628
|
|
||||||
SG&A
|
|
66
|
|
|
20
|
|
|
107
|
|
|
188
|
|
|
(21
|
)
|
|
360
|
|
||||||
R&D
|
|
—
|
|
|
2
|
|
|
42
|
|
|
51
|
|
|
—
|
|
|
95
|
|
||||||
D&A
|
|
24
|
|
|
25
|
|
|
203
|
|
|
92
|
|
|
(9
|
)
|
|
335
|
|
||||||
Restructuring and other
|
|
2
|
|
|
1
|
|
|
3
|
|
|
7
|
|
|
—
|
|
|
13
|
|
||||||
Operating (loss) income
|
|
(92
|
)
|
|
62
|
|
|
151
|
|
|
126
|
|
|
4
|
|
|
251
|
|
||||||
Interest expense
|
|
—
|
|
|
(301
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(301
|
)
|
||||||
Loss on debt financing transactions
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60
|
)
|
||||||
Gain on remeasurement of debt
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Other income (expense), net
|
|
36
|
|
|
263
|
|
|
(243
|
)
|
|
(36
|
)
|
|
—
|
|
|
20
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(56
|
)
|
|
(34
|
)
|
|
(92
|
)
|
|
90
|
|
|
4
|
|
|
(88
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(24
|
)
|
|
9
|
|
|
23
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(21
|
)
|
|
9
|
|
|
22
|
|
|
(21
|
)
|
|
—
|
|
|
(11
|
)
|
||||||
Net (loss) income
|
|
(101
|
)
|
|
(16
|
)
|
|
(47
|
)
|
|
69
|
|
|
(4
|
)
|
|
(99
|
)
|
||||||
Less: Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Net (loss) income attributable to SGC
|
|
$
|
(101
|
)
|
|
$
|
(16
|
)
|
|
$
|
(47
|
)
|
|
$
|
67
|
|
|
$
|
(4
|
)
|
|
$
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net (loss) income
|
|
$
|
(101
|
)
|
|
$
|
(16
|
)
|
|
$
|
(47
|
)
|
|
$
|
69
|
|
|
$
|
(4
|
)
|
|
$
|
(99
|
)
|
Other comprehensive (loss) income
|
|
—
|
|
|
(6
|
)
|
|
(1
|
)
|
|
5
|
|
|
2
|
|
|
—
|
|
||||||
Total comprehensive loss
|
|
(101
|
)
|
|
(22
|
)
|
|
(48
|
)
|
|
74
|
|
|
(2
|
)
|
|
(99
|
)
|
||||||
Less: comprehensive income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||
Comprehensive (loss) income attributable to SGC
|
|
$
|
(101
|
)
|
|
$
|
(22
|
)
|
|
$
|
(48
|
)
|
|
$
|
72
|
|
|
$
|
(2
|
)
|
|
$
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
(2) Excludes D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Revenue
|
|
$
|
—
|
|
|
$
|
266
|
|
|
$
|
792
|
|
|
$
|
745
|
|
|
$
|
(146
|
)
|
|
$
|
1,657
|
|
Cost of services, cost of product sales and cost of instant products (2)
|
|
—
|
|
|
172
|
|
|
250
|
|
|
313
|
|
|
(122
|
)
|
|
613
|
|
||||||
SG&A
|
|
82
|
|
|
20
|
|
|
109
|
|
|
162
|
|
|
(27
|
)
|
|
346
|
|
||||||
R&D
|
|
—
|
|
|
1
|
|
|
45
|
|
|
57
|
|
|
—
|
|
|
103
|
|
||||||
D&A
|
|
21
|
|
|
15
|
|
|
233
|
|
|
98
|
|
|
(6
|
)
|
|
361
|
|
||||||
Restructuring and other
|
|
56
|
|
|
(2
|
)
|
|
3
|
|
|
29
|
|
|
—
|
|
|
86
|
|
||||||
Operating (loss) income
|
|
(159
|
)
|
|
60
|
|
|
152
|
|
|
86
|
|
|
9
|
|
|
148
|
|
||||||
Interest expense
|
|
—
|
|
|
(301
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(301
|
)
|
||||||
Loss on debt financing transactions
|
|
—
|
|
|
(93
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93
|
)
|
||||||
Gain on remeasurement of debt
|
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||||
Other income (expense), net
|
|
33
|
|
|
269
|
|
|
(252
|
)
|
|
(39
|
)
|
|
—
|
|
|
11
|
|
||||||
Net (loss) income before equity in income of subsidiaries and income taxes
|
|
(126
|
)
|
|
(32
|
)
|
|
(100
|
)
|
|
47
|
|
|
9
|
|
|
(202
|
)
|
||||||
Equity in (loss) income of subsidiaries
|
|
(58
|
)
|
|
17
|
|
|
(7
|
)
|
|
—
|
|
|
48
|
|
|
—
|
|
||||||
Income tax (expense) benefit
|
|
(24
|
)
|
|
8
|
|
|
21
|
|
|
(11
|
)
|
|
—
|
|
|
(6
|
)
|
||||||
Net (loss) income
|
|
$
|
(208
|
)
|
|
$
|
(7
|
)
|
|
$
|
(86
|
)
|
|
$
|
36
|
|
|
$
|
57
|
|
|
$
|
(208
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive (loss) income
|
|
(31
|
)
|
|
12
|
|
|
(13
|
)
|
|
(46
|
)
|
|
47
|
|
|
(31
|
)
|
||||||
Comprehensive (loss) income
|
|
$
|
(239
|
)
|
|
$
|
5
|
|
|
$
|
(99
|
)
|
|
$
|
(10
|
)
|
|
$
|
104
|
|
|
$
|
(239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(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) Excludes D&A.
|
|
|
SGC (Parent)
|
|
SGI (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(35
|
)
|
|
$
|
55
|
|
|
$
|
101
|
|
|
$
|
147
|
|
|
$
|
(6
|
)
|
|
$
|
262
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital expenditures
|
|
(9
|
)
|
|
(16
|
)
|
|
(56
|
)
|
|
(51
|
)
|
|
—
|
|
|
(132
|
)
|
||||||
Distributions of capital from equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
||||||
Additions to equity method investments
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
228
|
|
|
(52
|
)
|
|
—
|
|
|
(176
|
)
|
|
—
|
|
||||||
Net cash (used in) provided by investing activities
|
|
(9
|
)
|
|
211
|
|
|
(108
|
)
|
|
(33
|
)
|
|
(176
|
)
|
|
(115
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Payments of long-term debt, net of proceeds
|
|
—
|
|
|
(251
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(253
|
)
|
||||||
Payments of debt issuance and deferred financing costs
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(15
|
)
|
||||||
Payments on license obligations
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
||||||
Sale of future revenue
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||
Net proceeds from the sale of SciPlay common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|
—
|
|
|
342
|
|
||||||
Payments of deferred SciPlay common stock offering costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
||||||
Net redemptions of common stock under stock-based compensation plans and other
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
(7
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
219
|
|
|
—
|
|
|
—
|
|
|
(395
|
)
|
|
176
|
|
|
—
|
|
||||||
Net cash provided by (used in) financing activities
|
|
205
|
|
|
(267
|
)
|
|
9
|
|
|
(66
|
)
|
|
176
|
|
|
57
|
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
161
|
|
|
(1
|
)
|
|
2
|
|
|
49
|
|
|
(6
|
)
|
|
205
|
|
||||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
74
|
|
|
2
|
|
|
44
|
|
|
101
|
|
|
(1
|
)
|
|
220
|
|
||||||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
235
|
|
|
$
|
1
|
|
|
$
|
46
|
|
|
$
|
150
|
|
|
$
|
(7
|
)
|
|
$
|
425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
|
|
|
SGC (Parent)
|
|
SGI (Issuer1)
|
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiaries |
|
Eliminating
Entries |
|
Consolidated
|
||||||||||||
Net cash (used in) provided by operating activities
|
|
$
|
(51
|
)
|
|
$
|
(59
|
)
|
|
$
|
85
|
|
|
$
|
164
|
|
|
$
|
(7
|
)
|
|
$
|
132
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital expenditures
|
|
(22
|
)
|
|
(46
|
)
|
|
(89
|
)
|
|
(43
|
)
|
|
—
|
|
|
(200
|
)
|
||||||
Acquisitions of businesses and assets, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(264
|
)
|
|
—
|
|
|
(274
|
)
|
||||||
Distributions of capital from equity investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||||
Additions to equity method investments
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(74
|
)
|
|
—
|
|
|
(75
|
)
|
||||||
Other, principally change in intercompany investing activities
|
|
—
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
||||||
Net cash (used in) provided by investing activities
|
|
(22
|
)
|
|
1
|
|
|
(99
|
)
|
|
(358
|
)
|
|
(48
|
)
|
|
(526
|
)
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds net of payments on long-term debt
|
|
—
|
|
|
97
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
93
|
|
||||||
Repayment of assumed NYX debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(288
|
)
|
|
—
|
|
|
(288
|
)
|
||||||
Payments of debt issuance and deferred financing costs
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
||||||
Payments on license obligations
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Net redemptions of common stock under stock-based compensation plans and other
|
|
(19
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
||||||
Other, principally change in intercompany financing activities
|
|
(581
|
)
|
|
—
|
|
|
15
|
|
|
518
|
|
|
48
|
|
|
—
|
|
||||||
Net cash (used in) provided by financing activities
|
|
(614
|
)
|
|
58
|
|
|
13
|
|
|
226
|
|
|
48
|
|
|
(269
|
)
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
(Decrease) increase in cash, cash equivalents and restricted cash
|
|
(687
|
)
|
|
—
|
|
|
(1
|
)
|
|
29
|
|
|
(7
|
)
|
|
(666
|
)
|
||||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
733
|
|
|
—
|
|
|
44
|
|
|
60
|
|
|
(3
|
)
|
|
834
|
|
||||||
Cash, cash equivalents and restricted cash end of period
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
43
|
|
|
$
|
89
|
|
|
$
|
(10
|
)
|
|
$
|
168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(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 April 4, 2019, we redeemed $1,000 million of our outstanding 2022 Unsecured Notes with a portion of the proceeds from the issuance of 2026 Unsecured Notes.
|
•
|
On May 7, 2019, SciPlay completed an IPO for an 18.0% minority interest in our Social business segment, after giving effect to the underwriters’ partial exercise of their over-allotment option on June 4, 2019 (see Note 1).
|
◦
|
We believe the IPO will provide greater flexibility to pursue additional growth initiatives specifically designed for SciPlay. We received $312 million in net proceeds from the offering (net of $30 million used by SciPlay to pay the Offering fees and balance retained for general corporate purposes) which enables us to make substantial payments to reduce our debt.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
($ in millions)
|
Revenue
|
|
% Consolidated Revenue
|
|
Revenue
|
|
% Consolidated Revenue
|
|
Revenue
|
|
% Consolidated Revenue
|
|
Revenue
|
|
% Consolidated Revenue
|
||||||||||||
Foreign Currency:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
British Pound Sterling
|
$
|
78
|
|
|
9
|
%
|
|
$
|
80
|
|
|
10
|
%
|
|
$
|
163
|
|
|
10
|
%
|
|
$
|
163
|
|
|
10
|
%
|
Euro
|
61
|
|
|
7
|
%
|
|
59
|
|
|
7
|
%
|
|
117
|
|
|
7
|
%
|
|
113
|
|
|
7
|
%
|
||||
Australian Dollar
|
26
|
|
|
3
|
%
|
|
28
|
|
|
3
|
%
|
|
42
|
|
|
2
|
%
|
|
53
|
|
|
3
|
%
|
|
Three Months Ended
June 30, |
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Total revenue
|
$
|
845
|
|
|
$
|
845
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
1,682
|
|
|
$
|
1,657
|
|
|
$
|
25
|
|
|
2
|
%
|
Total operating expenses
|
717
|
|
|
746
|
|
|
(29
|
)
|
|
(4
|
)%
|
|
1,431
|
|
|
1,509
|
|
|
(78
|
)
|
|
(5
|
)%
|
||||||
Operating income
|
128
|
|
|
99
|
|
|
29
|
|
|
29
|
%
|
|
251
|
|
|
148
|
|
|
103
|
|
|
70
|
%
|
||||||
Net loss before income taxes
|
(68
|
)
|
|
(6
|
)
|
|
(62
|
)
|
|
nm
|
|
|
(88
|
)
|
|
(202
|
)
|
|
114
|
|
|
(56
|
)%
|
||||||
Net loss
|
(75
|
)
|
|
(6
|
)
|
|
(69
|
)
|
|
nm
|
|
|
(99
|
)
|
|
(208
|
)
|
|
109
|
|
|
(52
|
)%
|
||||||
Net loss attributable to SGC
|
$
|
(77
|
)
|
|
$
|
(6
|
)
|
|
$
|
(71
|
)
|
|
nm
|
|
|
$
|
(101
|
)
|
|
$
|
(208
|
)
|
|
$
|
107
|
|
|
(51
|
)%
|
nm = not meaningful.
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Gaming
|
$
|
427
|
|
|
$
|
471
|
|
|
$
|
(44
|
)
|
|
(9
|
)%
|
|
$
|
849
|
|
|
$
|
914
|
|
|
$
|
(65
|
)
|
|
(7
|
)%
|
Lottery
|
231
|
|
|
207
|
|
|
24
|
|
|
12
|
%
|
|
458
|
|
|
409
|
|
|
49
|
|
|
12
|
%
|
||||||
SciPlay
|
118
|
|
|
100
|
|
|
18
|
|
|
18
|
%
|
|
236
|
|
|
197
|
|
|
39
|
|
|
20
|
%
|
||||||
Digital
|
69
|
|
|
67
|
|
|
2
|
|
|
3
|
%
|
|
139
|
|
|
137
|
|
|
2
|
|
|
1
|
%
|
||||||
Total revenue
|
$
|
845
|
|
|
$
|
845
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
1,682
|
|
|
$
|
1,657
|
|
|
$
|
25
|
|
|
2
|
%
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of services
|
$
|
135
|
|
|
$
|
124
|
|
|
$
|
11
|
|
|
9
|
%
|
|
$
|
268
|
|
|
$
|
246
|
|
|
$
|
22
|
|
|
9
|
%
|
Cost of product sales
|
111
|
|
|
121
|
|
|
(10
|
)
|
|
(8
|
)%
|
|
218
|
|
|
226
|
|
|
(8
|
)
|
|
(4
|
)%
|
||||||
Cost of instant products
|
75
|
|
|
71
|
|
|
4
|
|
|
6
|
%
|
|
142
|
|
|
141
|
|
|
1
|
|
|
1
|
%
|
||||||
SG&A
|
174
|
|
|
174
|
|
|
—
|
|
|
—
|
%
|
|
360
|
|
|
346
|
|
|
14
|
|
|
4
|
%
|
||||||
R&D
|
46
|
|
|
49
|
|
|
(3
|
)
|
|
(6
|
)%
|
|
95
|
|
|
103
|
|
|
(8
|
)
|
|
(8
|
)%
|
||||||
D&A
|
170
|
|
|
173
|
|
|
(3
|
)
|
|
(2
|
)%
|
|
335
|
|
|
361
|
|
|
(26
|
)
|
|
(7
|
)%
|
||||||
Restructuring and other
|
6
|
|
|
34
|
|
|
(28
|
)
|
|
(82
|
)%
|
|
13
|
|
|
86
|
|
|
(73
|
)
|
|
(85
|
)%
|
||||||
Total operating expenses
|
$
|
717
|
|
|
$
|
746
|
|
|
$
|
(29
|
)
|
|
(4
|
)%
|
|
$
|
1,431
|
|
|
$
|
1,509
|
|
|
$
|
(78
|
)
|
|
(5
|
)%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Factors Affecting Net Loss Attributable to SGC
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||
Loss on debt financing transactions
|
$
|
(60
|
)
|
|
$
|
—
|
|
|
$
|
(60
|
)
|
|
$
|
(93
|
)
|
|
Loss on debt financing transactions consummated during the second quarter of 2019 includes a $50 million premium charge associated with the redemption of $1,000 million of the 2022 Unsecured Notes (see Note 11).
Loss on debt financing transactions from our refinancing transactions consummated during the first quarter of 2018 includes a $110 million premium charge associated with the redemption of the 2022 Secured Notes.
|
(Loss) gain on remeasurement of debt
|
(3
|
)
|
|
34
|
|
|
2
|
|
|
33
|
|
|
(Losses) and gains are attributable to remeasurement of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes and reflect changes in the Euro vs. the U.S. Dollar foreign exchange rates between the comparable periods.
|
||||
Income tax expense
|
(7
|
)
|
|
—
|
|
|
(11
|
)
|
|
(6
|
)
|
|
The increase is primarily due to the overall mix of income in our foreign jurisdictions.
|
||||
Net income attributable to noncontrolling interest
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
The three and six month periods for 2019 reflect SciPlay noncontrolling interest (see Note 1).
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Total revenue
|
$
|
427
|
|
|
$
|
471
|
|
|
$
|
(44
|
)
|
|
(9
|
)%
|
|
$
|
849
|
|
|
$
|
914
|
|
|
$
|
(65
|
)
|
|
(7
|
)%
|
Total operating expenses
|
334
|
|
|
363
|
|
|
(29
|
)
|
|
(8
|
)%
|
|
663
|
|
|
734
|
|
|
(71
|
)
|
|
(10
|
)%
|
||||||
AEBITDA(1)
|
215
|
|
|
236
|
|
|
(21
|
)
|
|
(9
|
)%
|
|
430
|
|
|
454
|
|
|
(24
|
)
|
|
(5
|
)%
|
||||||
(1) The three and six months ended June 30, 2019 include $3 million and $10 million, respectively, in intellectual property royalties paid by the SciPlay business segment, which are no longer being paid as of May 7, 2019 in connection with the IP License Agreement described in Note 1. The IP charges for the three and six months ended June 30, 2018 were $6 million and $13 million, respectively.
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gaming operations
|
$
|
150
|
|
|
$
|
160
|
|
|
$
|
(10
|
)
|
|
(6
|
)%
|
|
$
|
302
|
|
|
$
|
321
|
|
|
$
|
(19
|
)
|
|
(6
|
)%
|
Gaming machine sales
|
148
|
|
|
168
|
|
|
(20
|
)
|
|
(12
|
)%
|
|
284
|
|
|
313
|
|
|
(29
|
)
|
|
(9
|
)%
|
||||||
Gaming systems
|
67
|
|
|
84
|
|
|
(17
|
)
|
|
(20
|
)%
|
|
141
|
|
|
159
|
|
|
(18
|
)
|
|
(11
|
)%
|
||||||
Table products
|
62
|
|
|
59
|
|
|
3
|
|
|
5
|
%
|
|
122
|
|
|
121
|
|
|
1
|
|
|
1
|
%
|
||||||
Total revenue
|
$
|
427
|
|
|
$
|
471
|
|
|
$
|
(44
|
)
|
|
(9
|
)%
|
|
$
|
849
|
|
|
$
|
914
|
|
|
$
|
(65
|
)
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
F/X impact on revenue
|
$
|
(4
|
)
|
|
$
|
4
|
|
|
|
|
|
|
|
|
$
|
(8
|
)
|
|
$
|
13
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
KPIs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
U.S. and Canadian units(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Installed base at period end
|
32,056
|
|
|
35,170
|
|
|
(3,114
|
)
|
|
(9
|
)%
|
|
32,056
|
|
|
35,170
|
|
|
(3,114
|
)
|
|
(9
|
)%
|
||||||
Average daily revenue per unit
|
$
|
38.98
|
|
|
$
|
38.75
|
|
|
$
|
0.23
|
|
|
1
|
%
|
|
$
|
38.71
|
|
|
$
|
38.57
|
|
|
$
|
0.14
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
International units(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Installed base at period end
|
34,112
|
|
|
33,329
|
|
|
783
|
|
|
2
|
%
|
|
34,112
|
|
|
33,329
|
|
|
783
|
|
|
2
|
%
|
||||||
Average daily revenue per unit
|
$
|
11.24
|
|
|
$
|
11.75
|
|
|
$
|
(0.51
|
)
|
|
(4
|
)%
|
|
$
|
11.33
|
|
|
$
|
12.04
|
|
|
$
|
(0.71
|
)
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gaming machine unit sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
U.S. and Canadian new unit shipments
|
4,671
|
|
|
5,749
|
|
|
(1,078
|
)
|
|
(19
|
)%
|
|
9,472
|
|
|
10,416
|
|
|
(944
|
)
|
|
(9
|
)%
|
||||||
International new unit shipments
|
2,730
|
|
|
2,492
|
|
|
238
|
|
|
10
|
%
|
|
4,813
|
|
|
4,693
|
|
|
120
|
|
|
3
|
%
|
||||||
Total new unit shipments
|
7,401
|
|
|
8,241
|
|
|
(840
|
)
|
|
(10
|
)%
|
|
14,285
|
|
|
15,109
|
|
|
(824
|
)
|
|
(5
|
)%
|
||||||
Average sales price per new unit
|
$
|
17,436
|
|
|
$
|
17,699
|
|
|
$
|
(263
|
)
|
|
(1
|
)%
|
|
$
|
17,288
|
|
|
$
|
17,710
|
|
|
$
|
(422
|
)
|
|
(2
|
)%
|
(1) Effective the first quarter of 2019, we changed our gaming operation KPIs, which now reflect the installed base and average daily revenue broken down into two categories: U.S. and Canadian and International. This change reflects how the management team views the business and provides a clear representation of what drives our operating results.
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||
U.S. and Canadian unit shipments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Replacement units
|
3,443
|
|
|
4,388
|
|
|
(945
|
)
|
|
(22
|
)%
|
|
6,637
|
|
|
8,131
|
|
|
(1,494
|
)
|
|
(18
|
)%
|
Casino opening and expansion units
|
1,228
|
|
|
1,361
|
|
|
(133
|
)
|
|
(10
|
)%
|
|
2,835
|
|
|
2,285
|
|
|
550
|
|
|
24
|
%
|
Total unit shipments
|
4,671
|
|
|
5,749
|
|
|
(1,078
|
)
|
|
(19
|
)%
|
|
9,472
|
|
|
10,416
|
|
|
(944
|
)
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
International unit shipments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Replacement units
|
2,674
|
|
|
2,492
|
|
|
182
|
|
|
7
|
%
|
|
4,757
|
|
|
4,432
|
|
|
325
|
|
|
7
|
%
|
Casino opening and expansion units
|
56
|
|
|
—
|
|
|
56
|
|
|
100
|
%
|
|
56
|
|
|
261
|
|
|
(205
|
)
|
|
(79
|
)%
|
Total unit shipments
|
2,730
|
|
|
2,492
|
|
|
238
|
|
|
10
|
%
|
|
4,813
|
|
|
4,693
|
|
|
120
|
|
|
3
|
%
|
|
Three Months Ended
June 30, |
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Total revenue
|
$
|
231
|
|
|
$
|
207
|
|
|
$
|
24
|
|
|
12
|
%
|
|
$
|
458
|
|
|
$
|
409
|
|
|
$
|
49
|
|
|
12
|
%
|
Total operating expenses
|
164
|
|
|
135
|
|
|
29
|
|
|
22
|
%
|
|
322
|
|
|
275
|
|
|
47
|
|
|
17
|
%
|
||||||
AEBITDA
|
103
|
|
|
99
|
|
|
4
|
|
|
4
|
%
|
|
207
|
|
|
193
|
|
|
14
|
|
|
7
|
%
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Instant products
|
$
|
150
|
|
|
$
|
150
|
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
290
|
|
|
$
|
300
|
|
|
$
|
(10
|
)
|
|
(3
|
)%
|
Lottery systems
|
81
|
|
|
57
|
|
|
24
|
|
|
42
|
%
|
|
168
|
|
|
109
|
|
|
59
|
|
|
54
|
%
|
||||||
Total revenue
|
$
|
231
|
|
|
$
|
207
|
|
|
$
|
24
|
|
|
12
|
%
|
|
$
|
458
|
|
|
$
|
409
|
|
|
$
|
49
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
F/X impact on revenue
|
$
|
(4
|
)
|
|
$
|
3
|
|
|
|
|
|
|
|
|
$
|
(6
|
)
|
|
$
|
6
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Total revenue
|
$
|
118
|
|
|
$
|
100
|
|
|
$
|
18
|
|
|
18
|
%
|
|
$
|
236
|
|
|
$
|
197
|
|
|
$
|
39
|
|
|
20
|
%
|
Operating expenses
|
92
|
|
|
81
|
|
|
11
|
|
|
14
|
%
|
|
191
|
|
|
179
|
|
|
12
|
|
|
7
|
%
|
||||||
AEBITDA(1)
|
33
|
|
|
23
|
|
|
10
|
|
|
44
|
%
|
|
58
|
|
|
46
|
|
|
12
|
|
|
26
|
%
|
||||||
(1) The three and six months ended June 30, 2019 include charges of $3 million and $10 million, respectively, for intellectual property royalties paid to the Gaming business segment, which are no longer being paid as of May 7, 2019 in connection with the IP License Agreement described in Note 1. The IP charges for the three and six months ended June 30, 2018 were $6 million and $13 million, respectively.
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mobile
|
$
|
98
|
|
|
$
|
77
|
|
|
$
|
21
|
|
|
27
|
%
|
|
$
|
195
|
|
|
$
|
149
|
|
|
$
|
46
|
|
|
31
|
%
|
Web and other
|
20
|
|
|
23
|
|
|
(3
|
)
|
|
(13
|
)%
|
|
41
|
|
|
48
|
|
|
(7
|
)
|
|
(15
|
)%
|
||||||
Total revenue
|
$
|
118
|
|
|
$
|
100
|
|
|
$
|
18
|
|
|
18
|
%
|
|
$
|
236
|
|
|
$
|
197
|
|
|
$
|
39
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
KPIs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
SciPlay business segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mobile Penetration(1)
|
83
|
%
|
|
77
|
%
|
|
6pp
|
|
|
nm
|
|
|
83
|
%
|
|
76
|
%
|
|
7pp
|
|
|
nm
|
|
||||||
Average MAU(2)
|
8.1
|
|
|
8.2
|
|
|
(0.1)
|
|
|
(1
|
)%
|
|
8.2
|
|
|
8.1
|
|
|
0.1
|
|
|
1
|
%
|
||||||
Average DAU(3)
|
2.7
|
|
|
2.6
|
|
|
0.1
|
|
|
4
|
%
|
|
2.7
|
|
|
2.6
|
|
|
0.1
|
|
|
4
|
%
|
||||||
ARPDAU(4)
|
$
|
0.48
|
|
|
$
|
0.42
|
|
|
$
|
0.06
|
|
|
14
|
%
|
|
$
|
0.48
|
|
|
$
|
0.42
|
|
|
$
|
0.06
|
|
|
14
|
%
|
nm = not meaningful.
pp = percentage points.
(1) Mobile penetration is defined as the percentage of B2C SciPlay business segment 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 OpenBetTM platform.
|
•
|
In April 2019, we announced a partnership with Wynn Resorts to support their launch of both iGaming and sports in the U.S.
|
•
|
In May 2019, we announced a partnership with Big Time Gaming to combine our growing portfolio of games with the popular MegawaysTM mechanic.
|
|
Three Months Ended
June 30, |
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Total revenue
|
$
|
69
|
|
|
$
|
67
|
|
|
$
|
2
|
|
|
3
|
%
|
|
$
|
139
|
|
|
$
|
137
|
|
|
$
|
2
|
|
|
1
|
%
|
Operating expenses
|
78
|
|
|
75
|
|
|
3
|
|
|
4
|
%
|
|
156
|
|
|
149
|
|
|
7
|
|
|
5
|
%
|
||||||
AEBITDA
|
12
|
|
|
13
|
|
|
(1
|
)
|
|
(8
|
)%
|
|
25
|
|
|
30
|
|
|
(5
|
)
|
|
(17
|
)%
|
|
Three Months Ended June 30,
|
|
Variance
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Sports and platform
|
$
|
26
|
|
|
$
|
20
|
|
|
$
|
6
|
|
|
30
|
%
|
|
$
|
56
|
|
|
$
|
46
|
|
|
$
|
10
|
|
|
22
|
%
|
Gaming and other
|
43
|
|
|
47
|
|
|
(4
|
)
|
|
(9
|
)%
|
|
83
|
|
|
91
|
|
|
(8
|
)
|
|
(9
|
)%
|
||||||
Total revenue
|
$
|
69
|
|
|
$
|
67
|
|
|
$
|
2
|
|
|
3
|
%
|
|
$
|
139
|
|
|
$
|
137
|
|
|
$
|
2
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
F/X impact on revenue
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
|
|
|
|
$
|
(8
|
)
|
|
$
|
2
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
KPIs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Gaming - Key Performance Indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Wagers processed through OGS (in billions)
|
$
|
9.3
|
|
|
$
|
9.2
|
|
|
$
|
0.10
|
|
|
1
|
%
|
|
$
|
18.2
|
|
|
$
|
18.1
|
|
|
$
|
0.10
|
|
|
1
|
%
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||
Net cash provided by operating activities
|
$
|
262
|
|
|
$
|
132
|
|
|
$
|
130
|
|
Net cash used in investing activities
|
(115
|
)
|
|
(526
|
)
|
|
411
|
|
|||
Net cash provided by (used in) financing activities
|
57
|
|
|
(269
|
)
|
|
326
|
|
|||
Effect of exchange rates on cash, cash equivalents and restricted cash
|
1
|
|
|
(3
|
)
|
|
4
|
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
205
|
|
|
$
|
(666
|
)
|
|
$
|
871
|
|
|
Six Months Ended June 30,
|
|
Variance
|
||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019 vs. 2018
|
||||||
Net loss
|
$
|
(99
|
)
|
|
$
|
(208
|
)
|
|
$
|
109
|
|
Adjustments to reconcile net loss to cash flows from operations
|
440
|
|
|
482
|
|
|
(42
|
)
|
|||
Changes in working capital accounts
|
(86
|
)
|
|
(138
|
)
|
|
52
|
|
|||
Changes in deferred income taxes and other
|
7
|
|
|
(4
|
)
|
|
11
|
|
Exhibit
Number
|
|
Description
|
3.1(a)
|
|
|
|
|
|
3.1(b)
|
|
|
|
|
|
3.1(c)
|
|
|
|
|
|
3.2
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.INS
|
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Definition Label Linkbase
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
104
|
|
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
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:
|
August 1, 2019
|
|
|
1.
|
Extension of Agreement Term. The Agreement is hereby amended by deleting the second sentence of Section 1 and replacing it with the following:
|
2.
|
Title Change. The Agreement is hereby amended by deleting the first two sentences of Section 2 and replacing them with the following:
|
3.
|
Increase in Base Salary. The Agreement is hereby amended by adding the following sentence to the end of Section 3(a):
|
4.
|
Eligibility for Incentive Compensation. The Agreement is hereby amended by deleting Section 3(b) and replacing it with the following:
|
5.
|
Termination by the Company without Cause or by Executive for Good Reason. The Agreement is hereby amended by deleting Sections (4)(e)(ii) and 4(e)(iii) and replacing them with the following:
|
6.
|
Expiration of Term of Agreement. The Agreement is hereby amended by deleting Sections 4(f)(ii) and 4(f)(iii) and replacing them with the following:
|
/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
|
|
August 1, 2019
|
|
/s/ Michael A. Quartieri
|
|
Michael A. Quartieri
|
|
Chief Financial Officer
|
|
August 1, 2019
|