☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR | ||||
OR | |||||
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended | December 31, |
OR | |||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
OR | |||||
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||||||||
Ordinary Shares, nominal value $0.10 | IGT | New York Stock Exchange |
ordinary shares, nominal value $0.10 per share |
Large accelerated filer | x | Accelerated filer | o | ||||||||
Non-accelerated filer | o | Emerging growth company | o |
U.S. GAAP | x | International Financial Reporting Standards as issued by the International Accounting Standards Board | o | Other | o |
Page | |||||||||||
Abbreviation/Term | Definition | |||||||
ADM | the Agenzia delle Dogane e Dei Monopoli, which regulates gaming in Italy | |||||||
Adjusted EBITDA or AEBITDA | EBITDA adjusted for foreign exchange gain (loss), net, other non-operating expenses, net, impairment losses, restructuring expenses, stock-based compensation, litigation expense (income) and certain other non-recurring items | |||||||
Adjusted Free cash flow | Free Cash Flow excluding the net of tax cash payments in connection with material litigation | |||||||
ASC | Accounting Standards Codification | |||||||
ASU | Accounting Standards Update | |||||||
B2B | business-to-business | |||||||
B2C | business-to-consumer | |||||||
BEAT | base-erosion and anti-abuse tax | |||||||
Board | the Board of Directors of International Game Technology PLC | |||||||
Brexit | the | |||||||
CEO | Chief Executive Officer | |||||||
CFO | Chief Financial Officer | |||||||
Company | the Parent together with its consolidated subsidiaries | |||||||
CA 2006 | Companies Act 2006, as amended | |||||||
Constant-currency | amounts calculated by applying the prior-year/period exchange rates to current financial data expressed in local currency | |||||||
De Agostini | De Agostini S.p.A. | |||||||
EBITDA | earnings before interest, taxes, depreciation and amortization | |||||||
EMEA | Europe, Middle East and Africa | |||||||
ESG | environmental, social and governance | |||||||
E.U. | European Union | |||||||
FMC | facilities management contract | |||||||
Free cash flow | cash flow from operations less capital expenditures and payments on license obligations | |||||||
GAAP | United States Generally Accepted Accounting Principles | |||||||
GDPR | E.U. General Data Protection Regulation (“E.U. GDPR”) and the E.U. GDPR as retained as law in England and Wales by the European Union (Withdrawal) Act (“U.K. GDPR”) | |||||||
GILTI | global intangible low-taxed income | |||||||
iGaming | real money digital (interactive) gaming | |||||||
IGT | the Parent together with its consolidated subsidiaries | |||||||
Latin America | ||||||||
LMA | ||||||||
Loyalty Plan | the terms and conditions related to the Special Voting Shares | |||||||
Loyalty Register | the register of ordinary shares for which holders thereof have validly elected to exercise the related Special Voting Shares | |||||||
Net debt | debt minus capitalized debt issuance costs and cash and cash equivalents, including cash and cash equivalents held for sale | |||||||
NYSE | New York Stock Exchange | |||||||
Parent | International Game Technology PLC | |||||||
R&D | research and development | |||||||
Same-store sales | wagers, at constant currency, recorded in lottery jurisdictions where we are the operator or facilities management supplier, using the same lottery jurisdictions and perimeter for comparison between periods | |||||||
SEC | United States Securities and Exchange Commission | |||||||
Special Voting Shares | the special voting shares in the Parent, worth U.S.$0.000001 each and carrying 0.9995 votes | |||||||
U.K. | United Kingdom | |||||||
U.S. | United States of America | |||||||
Wire Act | U.S. Interstate Wire Act of 1961 |
For the year ended December 31, | For the year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
($ thousands) | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | ($ in millions) | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||
Service revenue | Service revenue | 2,042,652 | 2,182,961 | 2,234,801 | |||||||||||||||||||||||||||||||||||||||||||||
Product sales | Product sales | 121,346 | 109,884 | 126,889 | |||||||||||||||||||||||||||||||||||||||||||||
Global Lottery | Global Lottery | 2,163,998 | 2,292,845 | 2,361,690 | |||||||||||||||||||||||||||||||||||||||||||||
Service revenue | Service revenue | 596,906 | 917,907 | 961,129 | |||||||||||||||||||||||||||||||||||||||||||||
Service revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Service revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Product sales | Product sales | 354,552 | 821,005 | 658,053 | |||||||||||||||||||||||||||||||||||||||||||||
Global Gaming | Global Gaming | 951,458 | 1,738,912 | 1,619,182 | |||||||||||||||||||||||||||||||||||||||||||||
Service revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Service revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Service revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Product sales | |||||||||||||||||||||||||||||||||||||||||||||||||
PlayDigital | |||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | Total revenue | 3,115,456 | 4,031,757 | 3,980,872 | |||||||||||||||||||||||||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue |
Location | Location | Square Feet | Use and Productive Capacity | Extent of Utilization | Holding Status | Location | Square Feet | Use and Productive Capacity | Extent of Utilization | Holding Status | ||||||||||||||||||
9295 Prototype Drive, Reno, NV* | 1,251,179 | Office; Warehouse, Game Studios; Hardware/Software Engineering; Global Production Center; Electronic Gaming Machine and Instant Ticket Vending Machine Production | 93 | % | Leased | |||||||||||||||||||||||
6355 S. Buffalo Drive, Las Vegas, NV* | 222,268 | U.S. Principal Operating Facility, Game Studio, Systems Software, Showroom | 100 | % | Leased | |||||||||||||||||||||||
9295 Prototype Drive, Reno, NV(1) | 9295 Prototype Drive, Reno, NV(1) | 1,251,179 | Office; Warehouse; Game Studios; Hardware/Software Engineering; Global Production Center; Electronic Gaming Machine | 80 | % | Leased | ||||||||||||||||||||||
6355 S. Buffalo Drive, Las Vegas, NV(2) | 6355 S. Buffalo Drive, Las Vegas, NV(2) | 222,268 | U.S. Principal Operating Facility; Game Studio; Systems Software; Showroom | 100 | % | Leased | ||||||||||||||||||||||
4000 South Frontage Road, Suite 101 Lakeland, FL | 4000 South Frontage Road, Suite 101 Lakeland, FL | 174,720 | Printing Plant: Printing facility; Storage and Distribution; Office | 100 | % | Leased | ||||||||||||||||||||||
55 Technology Way, West Greenwich, RI | 55 Technology Way, West Greenwich, RI | 170,000 | WG Technology Center: Office; Research and Testing; Storage and Distribution | 100 | % | Leased | 55 Technology Way, West Greenwich, RI | 170,000 | Office; Research and Testing; Storage and Distribution | 100 | % | Leased | ||||||||||||||||
4000 South Frontage Road, Suite 101 Lakeland, FL | 141,960 | Printing Plant: Printing facility; Storage and Distribution; Office | 100 | % | Leased | |||||||||||||||||||||||
10 Memorial Boulevard, Providence, RI | 10 Memorial Boulevard, Providence, RI | 124,769 | U.S. Principal Operating Facility | 100 | % | Leased | 10 Memorial Boulevard, Providence, RI | 124,769 | Administrative functional office; Lottery regional HQ | 80 | % | Leased | ||||||||||||||||
300 California Street, Floor 8, San Francisco, CA* | 15,457 | Office; PlayDigital HQ | 100 | % | Leased | |||||||||||||||||||||||
8520 Tuscany Way, Bldg. 6, Suite 100, Austin, TX | 8520 Tuscany Way, Bldg. 6, Suite 100, Austin, TX | 81,933 | Texas Warehouse and National Response Center: Contact Center; Storage and Distribution; Office | 95 | % | Leased | 8520 Tuscany Way, Bldg. 6, Suite 100, Austin, TX | 81,933 | Texas Warehouse and National Response Center: Contact Center; Storage and Distribution; Office | 95 | % | Leased | ||||||||||||||||
8200 Cameron Road, Suite E120, Austin, TX | 8200 Cameron Road, Suite E120, Austin, TX | 41,705 | Data Center of the Americas: Data Center; Network Operations; Office | 80 | % | Leased | 8200 Cameron Road, Suite E120, Austin, TX | 41,705 | Data Center of the Americas: Data Center; Network Operations; Office | 80 | % | Leased | ||||||||||||||||
5300 Riata Park Court, Bldg. E, Suite 100, Austin, TX | 5300 Riata Park Court, Bldg. E, Suite 100, Austin, TX | 25,000 | Austin Tech Campus: Research and Test; Office | 59 | % | Leased | 5300 Riata Park Court, Bldg. E, Suite 100, Austin, TX | 26,759 | Austin Tech Campus: Research and Test; Office | 80 | % | Leased | ||||||||||||||||
47 Technology Way, West Greenwich, RI | 47 Technology Way, West Greenwich, RI | 13,050 | Enterprise Data Center: Data Center; Network Operations | 100 | % | Owned | 47 Technology Way, West Greenwich, RI | 13,050 | Enterprise Data Center: Data Center; Network Operations | 100 | % | Owned | ||||||||||||||||
75 Baker Street, Providence, RI | 10,640 | RI National Response Center: Office; Contact Center | 100 | % | Leased | |||||||||||||||||||||||
5 Funston Avenue, San Francisco, CA | 5 Funston Avenue, San Francisco, CA | 4,072 | PlayDigital HQ: Office | 100 | % | Leased |
Location | Location | Square Feet | Use and Productive Capacity | Extent of Utilization | Holding Status | Location | Square Feet | Use and Productive Capacity | Extent of Utilization | Holding Status | ||||||||||||||||||
Viale del Campo Boario 56/D 00154 Roma, Italy | Viale del Campo Boario 56/D 00154 Roma, Italy | 174,526 | Principal Operating Facility in Italy; Office; Italy Data Center: Data Center; Network Operations | 100 | % | Leased | ||||||||||||||||||||||
Via delle Monachelle S.N.C. Pomezia, Rome, Italy | Via delle Monachelle S.N.C. Pomezia, Rome, Italy | 170,456 | Instant Ticket Warehouse; Instant Ticket Production | 100 | % | Leased | Via delle Monachelle S.N.C. Pomezia, Rome, Italy | 129,167 | Instant Ticket Warehouse; Instant Ticket Distribution | 100 | % | Leased | ||||||||||||||||
Galwin 2 1046 AW Amsterdam, Netherlands | 125,128 | Electronic Gaming Machine Production; Gaming Distribution/Repair; Research and Test; Office | 90 | % | Leased | |||||||||||||||||||||||
Viale del Campo Boario 56/D 00154 Roma, Italy | 123,740 | Principal Operating Facility in Italy: Office Italy Data Center: Data Center; Network Operations | 100 | % | Leased | |||||||||||||||||||||||
328 Urquhart Ave, Moncton, New Brunswick, Canada | 328 Urquhart Ave, Moncton, New Brunswick, Canada | 113,000 | Canada HQ; Office; Research and Testing; VLT Production | 100 | % | Owned | 328 Urquhart Ave, Moncton, New Brunswick, Canada | 113,000 | Canada HQ; Office; Research and Testing; Gaming Production | 100 | % | Owned | ||||||||||||||||
Viale del Campo Boario 19 00154 Roma, Italy | 96,840 | Office; Software Development | 95 | % | Leased | |||||||||||||||||||||||
Seering 13-14, Unterpremstatten, Austria | Seering 13-14, Unterpremstatten, Austria | 73,750 | Austria Gaming HQ; Office; Research and Test | 90 | % | Leased | Seering 13-14, Unterpremstatten, Austria | 78,082 | Austria Gaming HQ; Office; Research and Test | 90 | % | Leased | ||||||||||||||||
29 Suzhoujie Street, Viva Plaza, Haidian District, Room No. 1-20, 11th and 18th Floors, Beijing 100080, China | 54,058 | Game Studio; Systems Software; Office | 85 | % | Leased | |||||||||||||||||||||||
Al. Jerozolimskie, 92 Brama Building, Warsaw, Poland | ||||||||||||||||||||||||||||
Al. Jerozolimskie, 92 Brama Building, Warsaw, Poland | ||||||||||||||||||||||||||||
Al. Jerozolimskie, 92 Brama Building, Warsaw, Poland | Al. Jerozolimskie, 92 Brama Building, Warsaw, Poland | 71,904 | Global Tech Hub; Office; Research and Test | 95 | % | Leased | 48,283 | Global Tech Hub; Office; Research and Test | 95 | % | Leased | |||||||||||||||||
USCE Tower Bulevar Mihajla, Pupina No. 6 Belgrade, Serbia | USCE Tower Bulevar Mihajla, Pupina No. 6 Belgrade, Serbia | 42,764 | Software Development Office, Lottery and Gaming Products | 95 | % | Leased | USCE Tower Bulevar Mihajla, Pupina No. 6 Belgrade, Serbia | 42,764 | Software Development Office; Lottery; Gaming Products | 95 | % | Leased | ||||||||||||||||
2310 Szigetszentmiklós Leshegy u. 30 Budapest, Hungary | 2310 Szigetszentmiklós Leshegy u. 30 Budapest, Hungary | 34,661 | Warehousing; Gaming Production and Parts Distribution for EMEA Region; Office | 100 | % | Leased | ||||||||||||||||||||||
11 Talavera Rd. Building B, Sydney, Australia | 11 Talavera Rd. Building B, Sydney, Australia | 27,432 | Office; Sales & Marketing; Financial Support | 100 | % | Leased | 11 Talavera Rd. Building B, Sydney, Australia | 27,432 | Office; Sales & Marketing; Financial Support | 100 | % | Leased | ||||||||||||||||
10 Finsbury Square, 3rd Floor London EC2A 1AD, United Kingdom | 17,340 | Global Management HQ, Play Digital | 100 | % | Leased | |||||||||||||||||||||||
Marble Arch House, 66 Seymour Street, 2nd Floor, London W1H 5BT, United Kingdom | 11,495 | Registered Global Headquarters of the Parent | 75 | % | Leased | |||||||||||||||||||||||
10 Finsbury Square, 3rd Floor London EC2A 1AD, United Kingdom(1) | 10 Finsbury Square, 3rd Floor London EC2A 1AD, United Kingdom(1) | 17,340 | Registered Global Headquarters of the Parent; Global Management HQ, PlayDigital | 100 | % | Leased |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Total service revenue | 3,347 | 78 | 3,359 | 79 | (12) | — | ||||||||||||||||||||||||||||||||
Total product sales | 963 | 22 | 866 | 21 | 96 | 11 | ||||||||||||||||||||||||||||||||
Total revenue | 4,310 | 100 | 4,225 | 100 | 85 | 2 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Service Revenue | $ | % of Service Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of services | 1,630 | 49 | 1,671 | 50 | (40) | (2) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Product Revenue | $ | % of Product Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of product sales | 573 | 59 | 554 | 64 | 19 | 3 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Selling, general and administrative | 834 | 19 | 814 | 19 | 20 | 3 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Research and development | 234 | 5 | 255 | 6 | (21) | (8) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Interest expense, net | 285 | 7 | 289 | 7 | (4) | (1) | ||||||||||||||||||||||||||||||||
Foreign exchange loss, net | 75 | 2 | 36 | 1 | 38 | 105 | ||||||||||||||||||||||||||||||||
Other non-operating expense, net | 12 | — | 7 | — | 5 | 62 | ||||||||||||||||||||||||||||||||
Total non-operating expenses | 372 | 9 | 333 | 8 | 39 | 12 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Provision for income taxes | 322 | 7 | 175 | 4 | 147 | 84 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Operating and facilities management contracts | 2,306 | 2,181 | 125 | 6 | ||||||||||||||||||||||
Systems, software, and other | 53 | 255 | (202) | (79) | ||||||||||||||||||||||
Total service revenue | 2,359 | 2,436 | (77) | (3) | ||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||
(% on a constant-currency basis) | 2023 | 2022 | ||||||||||||||||||||||||
Global same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 1.9 | % | (3.9) | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | 5.8 | % | 15.3 | % | ||||||||||||||||||||||
Total | 2.3 | % | (2.2) | % | ||||||||||||||||||||||
North America & Rest of world same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 0.6 | % | (2.4) | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | 5.8 | % | 15.3 | % | ||||||||||||||||||||||
Total | 1.2 | % | (0.4) | % | ||||||||||||||||||||||
Italy same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 6.6 | % | (8.5) | % |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Lottery products | 171 | 157 | 14 | 9 | ||||||||||||||||||||||
Total product sales | 171 | 157 | 14 | 9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 1,173 | 1,186 | (13) | (1) | ||||||||||||||||||||||
% of service revenue | 50 | % | 49 | % | 100 | bps | ||||||||||||||||||||
Product | 60 | 38 | 22 | 58 | ||||||||||||||||||||||
% of product sales | 35 | % | 24 | % | 1100 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 913 | 909 | 4 | — | ||||||||||||||||||||||
Operating margin | 36 | % | 35 | % | 100 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions, except yields) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Gaming terminal services | 520 | 483 | 37 | 8 | ||||||||||||||||||||||
Systems, software, and other | 242 | 232 | 10 | 4 | ||||||||||||||||||||||
Total service revenue | 762 | 714 | 47 | 7 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2023 | 2022 | Units / $ | % | |||||||||||||||||||||||
Installed base units | ||||||||||||||||||||||||||
Total installed base units | 53,906 | 49,586 | 4,320 | 9 | ||||||||||||||||||||||
Total yields(1) | $29.68 | $29.89 | $(0.21) | (1) |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Gaming terminals | 571 | 501 | 70 | 14 | ||||||||||||||||||||||
Gaming other | 220 | 208 | 12 | 6 | ||||||||||||||||||||||
Total product sales | 791 | 709 | 82 | 12 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2023 | 2022 | Units / $ | % | |||||||||||||||||||||||
Global machine units sold | ||||||||||||||||||||||||||
Total machine units sold | 35,090 | 32,820 | 2,270 | 7 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 427 | 411 | 16 | 4 | ||||||||||||||||||||||
% of service revenue | 56 | % | 58 | % | (200) | bps | ||||||||||||||||||||
Product | 336 | 280 | 56 | 20 | ||||||||||||||||||||||
% of product sales | 43 | % | 40 | % | 300 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 313 | 242 | 71 | 29 | ||||||||||||||||||||||
Operating margin | 20 | % | 17 | % | 320 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
PlayDigital services | 227 | 209 | 18 | 9 | ||||||||||||||||||||||
Total service revenue | 227 | 209 | 18 | 9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 163 | 139 | 25 | 18 | ||||||||||||||||||||||
% of service revenue | 72 | % | 67 | % | 500 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 65 | 50 | 16 | 32 | ||||||||||||||||||||||
Operating margin | 29 | % | 24 | % | 490 | bps |
December 31, | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Revolving Credit Facilities | 1,234 | 1,822 | ||||||||||||
Cash and cash equivalents | 572 | 590 | ||||||||||||
Total Liquidity | 1,805 | 2,412 |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
($ in millions) | $ | % | $ | % | ||||||||||||||||||||||
Euros | 310 | 54 | 312 | 53 | ||||||||||||||||||||||
U.S. dollars | 137 | 24 | 147 | 25 | ||||||||||||||||||||||
Other currencies | 125 | 22 | 131 | 22 | ||||||||||||||||||||||
Total Cash and cash equivalents | 572 | 100 | 590 | 100 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash provided by operating activities from continuing operations | 1,040 | 899 | 142 | 16 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (393) | 42 | (435) | > 200.0 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash used in financing activities | (638) | (1,065) | 428 | 40 |
For the year ended December 31, | ||||||||||||||||||||
($ in millions) | 2023 | 2022 | 2021 | |||||||||||||||||
Global Lottery | (138) | (157) | (152) | |||||||||||||||||
Global Gaming | (243) | (147) | (68) | |||||||||||||||||
PlayDigital | (10) | (6) | (13) | |||||||||||||||||
Business Segment Total | (391) | (310) | (232) | |||||||||||||||||
Corporate and Other | (8) | (6) | (6) | |||||||||||||||||
(399) | (317) | (238) |
Payments due by period | ||||||||||||||||||||||||||||||||
($ in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||||||||||||||
Long-term debt (1) | 5,699 | — | 2,521 | 2,428 | 750 | |||||||||||||||||||||||||||
Jackpot liabilities (2) | 188 | 38 | 38 | 25 | 88 | |||||||||||||||||||||||||||
Operating leases (3) | 324 | 56 | 95 | 70 | 104 | |||||||||||||||||||||||||||
Licenses of Intellectual Property(4) | 367 | 29 | 150 | 36 | 151 | |||||||||||||||||||||||||||
Total | 6,578 | 122 | 2,803 | 2,559 | 1,093 |
($ in millions) | Letters of Credit Outstanding (1) | Weighted- Average Annual Cost | ||||||||||||||||||||||||
December 31, 2023 | 121 | 1.11 | % | |||||||||||||||||||||||
December 31, 2022 | 118 | 1.26 | % |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Total service revenue | 3,347 | 78 | 3,359 | 79 | (12) | — | ||||||||||||||||||||||||||||||||
Total product sales | 963 | 22 | 866 | 21 | 96 | 11 | ||||||||||||||||||||||||||||||||
Total revenue | 4,310 | 100 | 4,225 | 100 | 85 | 2 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Service Revenue | $ | % of Service Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of services | 1,630 | 49 | 1,671 | 50 | (40) | (2) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Product Revenue | $ | % of Product Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of product sales | 573 | 59 | 554 | 64 | 19 | 3 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Selling, general and administrative | 834 | 19 | 814 | 19 | 20 | 3 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Research and development | 234 | 5 | 255 | 6 | (21) | (8) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Interest expense, net | 285 | 7 | 289 | 7 | (4) | (1) | ||||||||||||||||||||||||||||||||
Foreign exchange loss, net | 75 | 2 | 36 | 1 | 38 | 105 | ||||||||||||||||||||||||||||||||
Other non-operating expense, net | 12 | — | 7 | — | 5 | 62 | ||||||||||||||||||||||||||||||||
Total non-operating expenses | 372 | 9 | 333 | 8 | 39 | 12 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Provision for income taxes | 322 | 7 | 175 | 4 | 147 | 84 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Operating and facilities management contracts | 2,306 | 2,181 | 125 | 6 | ||||||||||||||||||||||
Systems, software, and other | 53 | 255 | (202) | (79) | ||||||||||||||||||||||
Total service revenue | 2,359 | 2,436 | (77) | (3) | ||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||
(% on a constant-currency basis) | 2023 | 2022 | ||||||||||||||||||||||||
Global same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 1.9 | % | (3.9) | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | 5.8 | % | 15.3 | % | ||||||||||||||||||||||
Total | 2.3 | % | (2.2) | % | ||||||||||||||||||||||
North America & Rest of world same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 0.6 | % | (2.4) | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | 5.8 | % | 15.3 | % | ||||||||||||||||||||||
Total | 1.2 | % | (0.4) | % | ||||||||||||||||||||||
Italy same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 6.6 | % | (8.5) | % |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Lottery products | 171 | 157 | 14 | 9 | ||||||||||||||||||||||
Total product sales | 171 | 157 | 14 | 9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 1,173 | 1,186 | (13) | (1) | ||||||||||||||||||||||
% of service revenue | 50 | % | 49 | % | 100 | bps | ||||||||||||||||||||
Product | 60 | 38 | 22 | 58 | ||||||||||||||||||||||
% of product sales | 35 | % | 24 | % | 1100 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 913 | 909 | 4 | — | ||||||||||||||||||||||
Operating margin | 36 | % | 35 | % | 100 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions, except yields) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Gaming terminal services | 520 | 483 | 37 | 8 | ||||||||||||||||||||||
Systems, software, and other | 242 | 232 | 10 | 4 | ||||||||||||||||||||||
Total service revenue | 762 | 714 | 47 | 7 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2023 | 2022 | Units / $ | % | |||||||||||||||||||||||
Installed base units | ||||||||||||||||||||||||||
Total installed base units | 53,906 | 49,586 | 4,320 | 9 | ||||||||||||||||||||||
Total yields(1) | $29.68 | $29.89 | $(0.21) | (1) |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Gaming terminals | 571 | 501 | 70 | 14 | ||||||||||||||||||||||
Gaming other | 220 | 208 | 12 | 6 | ||||||||||||||||||||||
Total product sales | 791 | 709 | 82 | 12 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2023 | 2022 | Units / $ | % | |||||||||||||||||||||||
Global machine units sold | ||||||||||||||||||||||||||
Total machine units sold | 35,090 | 32,820 | 2,270 | 7 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 427 | 411 | 16 | 4 | ||||||||||||||||||||||
% of service revenue | 56 | % | 58 | % | (200) | bps | ||||||||||||||||||||
Product | 336 | 280 | 56 | 20 | ||||||||||||||||||||||
% of product sales | 43 | % | 40 | % | 300 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 313 | 242 | 71 | 29 | ||||||||||||||||||||||
Operating margin | 20 | % | 17 | % | 320 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
PlayDigital services | 227 | 209 | 18 | 9 | ||||||||||||||||||||||
Total service revenue | 227 | 209 | 18 | 9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 163 | 139 | 25 | 18 | ||||||||||||||||||||||
% of service revenue | 72 | % | 67 | % | 500 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 65 | 50 | 16 | 32 | ||||||||||||||||||||||
Operating margin | 29 | % | 24 | % | 490 | bps |
December 31, | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Revolving Credit Facilities | 1,234 | 1,822 | ||||||||||||
Cash and cash equivalents | 572 | 590 | ||||||||||||
Total Liquidity | 1,805 | 2,412 |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
($ in millions) | $ | % | $ | % | ||||||||||||||||||||||
Euros | 310 | 54 | 312 | 53 | ||||||||||||||||||||||
U.S. dollars | 137 | 24 | 147 | 25 | ||||||||||||||||||||||
Other currencies | 125 | 22 | 131 | 22 | ||||||||||||||||||||||
Total Cash and cash equivalents | 572 | 100 | 590 | 100 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash provided by operating activities from continuing operations | 1,040 | 899 | 142 | 16 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (393) | 42 | (435) | > 200.0 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash used in financing activities | (638) | (1,065) | 428 | 40 |
For the year ended December 31, | ||||||||||||||||||||
($ in millions) | 2023 | 2022 | 2021 | |||||||||||||||||
Global Lottery | (138) | (157) | (152) | |||||||||||||||||
Global Gaming | (243) | (147) | (68) | |||||||||||||||||
PlayDigital | (10) | (6) | (13) | |||||||||||||||||
Business Segment Total | (391) | (310) | (232) | |||||||||||||||||
Corporate and Other | (8) | (6) | (6) | |||||||||||||||||
(399) | (317) | (238) |
Payments due by period | ||||||||||||||||||||||||||||||||
($ in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||||||||||||||
Long-term debt (1) | 5,699 | — | 2,521 | 2,428 | 750 | |||||||||||||||||||||||||||
Jackpot liabilities (2) | 188 | 38 | 38 | 25 | 88 | |||||||||||||||||||||||||||
Operating leases (3) | 324 | 56 | 95 | 70 | 104 | |||||||||||||||||||||||||||
Licenses of Intellectual Property(4) | 367 | 29 | 150 | 36 | 151 | |||||||||||||||||||||||||||
Total | 6,578 | 122 | 2,803 | 2,559 | 1,093 |
($ in millions) | Letters of Credit Outstanding (1) | Weighted- Average Annual Cost | ||||||||||||||||||||||||
December 31, 2023 | 121 | 1.11 | % | |||||||||||||||||||||||
December 31, 2022 | 118 | 1.26 | % |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2020 | December 31, 2019 | Change | ||||||||||||||||||||||||||||||||||||
($ thousands) | $ | % of Revenue | $ | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Service revenue by segment | ||||||||||||||||||||||||||||||||||||||
Global Lottery | 2,042,652 | 65.6 | 2,182,961 | 54.1 | (140,309) | (6.4) | ||||||||||||||||||||||||||||||||
Global Gaming | 596,906 | 19.2 | 917,907 | 22.8 | (321,001) | (35.0) | ||||||||||||||||||||||||||||||||
Total service revenue | 2,639,558 | 84.7 | 3,100,868 | 76.9 | (461,310) | (14.9) | ||||||||||||||||||||||||||||||||
Product sales by segment | ||||||||||||||||||||||||||||||||||||||
Global Lottery | 121,346 | 3.9 | 109,884 | 2.7 | 11,462 | 10.4 | ||||||||||||||||||||||||||||||||
Global Gaming | 354,552 | 11.4 | 821,005 | 20.4 | (466,453) | (56.8) | ||||||||||||||||||||||||||||||||
Total product sales | 475,898 | 15.3 | 930,889 | 23.1 | (454,991) | (48.9) | ||||||||||||||||||||||||||||||||
Total revenue | 3,115,456 | 100.0 | 4,031,757 | 100.0 | (916,301) | (22.7) | ||||||||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||||
Cost of services | 1,633,899 | 52.4 | 1,777,225 | 44.1 | (143,326) | (8.1) | ||||||||||||||||||||||||||||||||
Cost of product sales | 345,800 | 11.1 | 558,011 | 13.8 | (212,211) | (38.0) | ||||||||||||||||||||||||||||||||
Selling, general and administrative | 706,895 | 22.7 | 849,620 | 21.1 | (142,725) | (16.8) | ||||||||||||||||||||||||||||||||
Research and development | 190,948 | 6.1 | 266,241 | 6.6 | (75,293) | (28.3) | ||||||||||||||||||||||||||||||||
Restructuring | 45,045 | 1.4 | 24,855 | 0.6 | 20,190 | 81.2 | ||||||||||||||||||||||||||||||||
Goodwill impairment | 296,000 | 9.5 | 99,000 | 2.5 | 197,000 | 199.0 | ||||||||||||||||||||||||||||||||
Other operating expense (income), net | 4,334 | 0.1 | (21,111) | (0.5) | 25,445 | 120.5 | ||||||||||||||||||||||||||||||||
Total operating expenses | 3,222,921 | 103.4 | 3,553,841 | 88.1 | (330,920) | (9.3) | ||||||||||||||||||||||||||||||||
Operating (loss) income | (107,465) | (3.4) | 477,916 | 11.9 | (585,381) | (122.5) | ||||||||||||||||||||||||||||||||
Interest expense, net | (397,916) | (12.8) | (410,875) | (10.2) | 12,959 | 3.2 | ||||||||||||||||||||||||||||||||
Foreign exchange (loss) gain, net | (308,898) | (9.9) | 39,874 | 1.0 | (348,772) | > 200.0 | ||||||||||||||||||||||||||||||||
Other (expense) income, net | (33,428) | (1.1) | 21,092 | 0.5 | (54,520) | > 200.0 | ||||||||||||||||||||||||||||||||
Total non-operating expenses | (740,242) | (23.8) | (349,909) | (8.7) | (390,333) | (111.6) | ||||||||||||||||||||||||||||||||
(Loss) income from continuing operations before provision for income taxes | (847,707) | (27.2) | 128,007 | 3.2 | (975,714) | > 200.0 | ||||||||||||||||||||||||||||||||
Provision for income taxes | 27,698 | 0.9 | 130,757 | 3.2 | (103,059) | (78.8) | ||||||||||||||||||||||||||||||||
Loss from continuing operations | (875,405) | (28.1) | (2,750) | (0.1) | (872,655) | > 200.0 | ||||||||||||||||||||||||||||||||
Income from discontinued operations, net of tax | 36,681 | 1.2 | 114,408 | 2.8 | (77,727) | (67.9) | ||||||||||||||||||||||||||||||||
Net (loss) income | (838,724) | (26.9) | 111,658 | 2.8 | (950,382) | > 200.0 | ||||||||||||||||||||||||||||||||
Less: Net income attributable to non-controlling interests from continuing operations | 63,926 | 2.1 | 126,144 | 3.1 | (62,218) | (49.3) | ||||||||||||||||||||||||||||||||
Less: Net (loss) income attributable to non-controlling interests from discontinued operations | (4,760) | (0.2) | 4,539 | 0.1 | (9,299) | > 200.0 | ||||||||||||||||||||||||||||||||
Net loss attributable to IGT PLC | (897,890) | (28.8) | (19,025) | (0.5) | (878,865) | > 200.0 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Total service revenue | 3,347 | 78 | 3,359 | 79 | (12) | — | ||||||||||||||||||||||||||||||||
Total product sales | 963 | 22 | 866 | 21 | 96 | 11 | ||||||||||||||||||||||||||||||||
Total revenue | 4,310 | 100 | 4,225 | 100 | 85 | 2 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Service Revenue | $ | % of Service Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of services | 1,630 | 49 | 1,671 | 50 | (40) | (2) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Product Revenue | $ | % of Product Revenue | $ | % | ||||||||||||||||||||||||||||||||
Cost of product sales | 573 | 59 | 554 | 64 | 19 | 3 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Selling, general and administrative | 834 | 19 | 814 | 19 | 20 | 3 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Research and development | 234 | 5 | 255 | 6 | (21) | (8) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Interest expense, net | 285 | 7 | 289 | 7 | (4) | (1) | ||||||||||||||||||||||||||||||||
Foreign exchange loss, net | 75 | 2 | 36 | 1 | 38 | 105 | ||||||||||||||||||||||||||||||||
Other non-operating expense, net | 12 | — | 7 | — | 5 | 62 | ||||||||||||||||||||||||||||||||
Total non-operating expenses | 372 | 9 | 333 | 8 | 39 | 12 |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | Change | ||||||||||||||||||||||||||||||||||||
($ in millions) | $ | % of Total Revenue | $ | % of Total Revenue | $ | % | ||||||||||||||||||||||||||||||||
Provision for income taxes | 322 | 7 | 175 | 4 | 147 | 84 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands) | 2020 | 2019 | $ | % | ||||||||||||||||||||||
Service revenue | ||||||||||||||||||||||||||
Operating and facilities management contracts | 1,743,916 | 1,930,761 | (186,845) | (9.7) | ||||||||||||||||||||||
Systems, software, and other | 298,736 | 252,200 | 46,536 | 18.5 | ||||||||||||||||||||||
2,042,652 | 2,182,961 | (140,309) | (6.4) | |||||||||||||||||||||||
Product sales | ||||||||||||||||||||||||||
Lottery products | 121,346 | 109,884 | 11,462 | 10.4 | ||||||||||||||||||||||
121,346 | 109,884 | 11,462 | 10.4 | |||||||||||||||||||||||
Global Lottery segment revenue | 2,163,998 | 2,292,845 | (128,847) | (5.6) | ||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||
(% on a constant-currency basis) | 2020 | 2019 | ||||||||||||||||||||||||
Global same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 1.6 | % | 4.1 | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | (17.0) | % | (18.3) | % | ||||||||||||||||||||||
Total | 0.1 | % | 1.7 | % | ||||||||||||||||||||||
North America & Rest of world same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 7.3 | % | 5.2 | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | (17.0) | % | (18.3) | % | ||||||||||||||||||||||
Total | 4.7 | % | 2.0 | % | ||||||||||||||||||||||
Italy same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | (16.1) | % | 0.8 | % |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Operating and facilities management contracts | 2,306 | 2,181 | 125 | 6 | ||||||||||||||||||||||
Systems, software, and other | 53 | 255 | (202) | (79) | ||||||||||||||||||||||
Total service revenue | 2,359 | 2,436 | (77) | (3) | ||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||
(% on a constant-currency basis) | 2023 | 2022 | ||||||||||||||||||||||||
Global same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 1.9 | % | (3.9) | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | 5.8 | % | 15.3 | % | ||||||||||||||||||||||
Total | 2.3 | % | (2.2) | % | ||||||||||||||||||||||
North America & Rest of world same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 0.6 | % | (2.4) | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | 5.8 | % | 15.3 | % | ||||||||||||||||||||||
Total | 1.2 | % | (0.4) | % | ||||||||||||||||||||||
Italy same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 6.6 | % | (8.5) | % |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Lottery products | 171 | 157 | 14 | 9 | ||||||||||||||||||||||
Total product sales | 171 | 157 | 14 | 9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands, except yields) | 2020 | 2019 | $ | % | ||||||||||||||||||||||
Service revenue | ||||||||||||||||||||||||||
Gaming terminal services | 297,418 | 567,849 | (270,431) | (47.6) | ||||||||||||||||||||||
Systems, software, and other | 299,488 | 350,058 | (50,570) | (14.4) | ||||||||||||||||||||||
596,906 | 917,907 | (321,001) | (35.0) | |||||||||||||||||||||||
Product sales | ||||||||||||||||||||||||||
Gaming terminals | 205,289 | 581,017 | (375,728) | (64.7) | ||||||||||||||||||||||
Gaming other | 149,263 | 239,988 | (90,725) | (37.8) | ||||||||||||||||||||||
354,552 | 821,005 | (466,453) | (56.8) | |||||||||||||||||||||||
Global Gaming segment revenue | 951,458 | 1,738,912 | (787,454) | (45.3) | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2020 | 2019 | Units / $ | % | |||||||||||||||||||||||
Installed base units | ||||||||||||||||||||||||||
Total installed base units | 49,300 | 50,834 | (1,534) | (3.0) | ||||||||||||||||||||||
Total yields | $18.06 | $31.45 | $(13.39) | (42.6) | ||||||||||||||||||||||
Global machine units sold | ||||||||||||||||||||||||||
Total machine units sold | 14,662 | 42,076 | (27,414) | (65.2) |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 1,173 | 1,186 | (13) | (1) | ||||||||||||||||||||||
% of service revenue | 50 | % | 49 | % | 100 | bps | ||||||||||||||||||||
Product | 60 | 38 | 22 | 58 | ||||||||||||||||||||||
% of product sales | 35 | % | 24 | % | 1100 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands) | 2020 | 2019 | $ | % | ||||||||||||||||||||||
Operating (loss) income | ||||||||||||||||||||||||||
Global Lottery | 641,930 | 697,267 | (55,337) | (7.9) | ||||||||||||||||||||||
Global Gaming | (205,657) | 179,548 | (385,205) | > 200.0 | ||||||||||||||||||||||
Corporate and Other | (543,738) | (398,899) | (144,839) | (36.3) | ||||||||||||||||||||||
(107,465) | 477,916 | (585,381) | (122.5) | |||||||||||||||||||||||
Operating margin - Global Lottery | 29.7 | % | 30.4 | % | ||||||||||||||||||||||
Operating margin - Global Gaming | (21.6) | % | 10.3 | % |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 913 | 909 | 4 | — | ||||||||||||||||||||||
Operating margin | 36 | % | 35 | % | 100 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions, except yields) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Gaming terminal services | 520 | 483 | 37 | 8 | ||||||||||||||||||||||
Systems, software, and other | 242 | 232 | 10 | 4 | ||||||||||||||||||||||
Total service revenue | 762 | 714 | 47 | 7 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2023 | 2022 | Units / $ | % | |||||||||||||||||||||||
Installed base units | ||||||||||||||||||||||||||
Total installed base units | 53,906 | 49,586 | 4,320 | 9 | ||||||||||||||||||||||
Total yields(1) | $29.68 | $29.89 | $(0.21) | (1) |
For the year ended | ||||||||||||||||||||||||||||||||||||||
December 31, 2019 | December 31, 2018 | Change | ||||||||||||||||||||||||||||||||||||
($ thousands) | $ | % of Revenue | $ | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
Service revenue by segment | ||||||||||||||||||||||||||||||||||||||
Global Lottery | 2,182,961 | 54.1 | 2,234,801 | 56.1 | (51,840) | (2.3) | ||||||||||||||||||||||||||||||||
Global Gaming | 917,907 | 22.8 | 961,129 | 24.1 | (43,222) | (4.5) | ||||||||||||||||||||||||||||||||
Total service revenue | 3,100,868 | 76.9 | 3,195,930 | 80.3 | (95,062) | (3.0) | ||||||||||||||||||||||||||||||||
Product sales by segment | ||||||||||||||||||||||||||||||||||||||
Global Lottery | 109,884 | 2.7 | 126,889 | 3.2 | (17,005) | (13.4) | ||||||||||||||||||||||||||||||||
Global Gaming | 821,005 | 20.4 | 658,053 | 16.5 | 162,952 | 24.8 | ||||||||||||||||||||||||||||||||
Total product sales | 930,889 | 23.1 | 784,942 | 19.7 | 145,947 | 18.6 | ||||||||||||||||||||||||||||||||
Total revenue | 4,031,757 | 100.0 | 3,980,872 | 100.0 | 50,885 | 1.3 | ||||||||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||||
Cost of services | 1,777,225 | 44.1 | 1,772,224 | 44.5 | 5,001 | 0.3 | ||||||||||||||||||||||||||||||||
Cost of product sales | 558,011 | 13.8 | 491,030 | 12.3 | 66,981 | 13.6 | ||||||||||||||||||||||||||||||||
Selling, general and administrative | 849,620 | 21.1 | 845,503 | 21.2 | 4,117 | 0.5 | ||||||||||||||||||||||||||||||||
Research and development | 266,241 | 6.6 | 263,279 | 6.6 | 2,962 | 1.1 | ||||||||||||||||||||||||||||||||
Restructuring | 24,855 | 0.6 | 14,781 | 0.4 | 10,074 | 68.2 | ||||||||||||||||||||||||||||||||
Goodwill impairment | 99,000 | 2.5 | 118,000 | 3.0 | (19,000) | (16.1) | ||||||||||||||||||||||||||||||||
Other (income) expense, net | (21,111) | (0.5) | 2,458 | 0.1 | (23,569) | > 200.0 | ||||||||||||||||||||||||||||||||
Total operating expenses | 3,553,841 | 88.1 | 3,507,275 | 88.1 | 46,566 | 1.3 | ||||||||||||||||||||||||||||||||
Operating income | 477,916 | 11.9 | 473,597 | 11.9 | 4,319 | 0.9 | ||||||||||||||||||||||||||||||||
Interest expense, net | (410,875) | (10.2) | (417,383) | (10.5) | 6,508 | 1.6 | ||||||||||||||||||||||||||||||||
Foreign exchange gain, net | 39,874 | 1.0 | 129,086 | 3.2 | (89,212) | (69.1) | ||||||||||||||||||||||||||||||||
Other income (expense), net | 21,092 | 0.5 | (51,432) | (1.3) | 72,524 | 141.0 | ||||||||||||||||||||||||||||||||
Total non-operating expenses | (349,909) | (8.7) | (339,729) | (8.5) | (10,180) | (3.0) | ||||||||||||||||||||||||||||||||
Income from continuing operations before provision for income taxes | 128,007 | 3.2 | 133,868 | 3.4 | (5,861) | (4.4) | ||||||||||||||||||||||||||||||||
Provision for income taxes | 130,757 | 3.2 | 144,164 | 3.6 | (13,407) | (9.3) | ||||||||||||||||||||||||||||||||
Loss from continuing operations | (2,750) | (0.1) | (10,296) | (0.3) | 7,546 | 73.3 | ||||||||||||||||||||||||||||||||
Income from discontinued operations, net of tax | 114,408 | 2.8 | 124,943 | 3.1 | (10,535) | (8.4) | ||||||||||||||||||||||||||||||||
Net income | 111,658 | 2.8 | 114,647 | 2.9 | (2,989) | (2.6) | ||||||||||||||||||||||||||||||||
Less: Net income attributable to non-controlling interests from continuing operations | 126,144 | 3.1 | 108,758 | 2.7 | 17,386 | 16.0 | ||||||||||||||||||||||||||||||||
Less: Redeemable non-controlling interests in income from continuing operations | — | — | 20,326 | 0.5 | (20,326) | (100.0) | ||||||||||||||||||||||||||||||||
Less: Net income attributable to non-controlling interests from discontinued operations | 4,539 | 0.1 | 6,913 | 0.2 | (2,374) | (34.3) | ||||||||||||||||||||||||||||||||
Net loss attributable to IGT PLC | (19,025) | (0.5) | (21,350) | (0.5) | 2,325 | 10.9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Gaming terminals | 571 | 501 | 70 | 14 | ||||||||||||||||||||||
Gaming other | 220 | 208 | 12 | 6 | ||||||||||||||||||||||
Total product sales | 791 | 709 | 82 | 12 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2023 | 2022 | Units / $ | % | |||||||||||||||||||||||
Global machine units sold | ||||||||||||||||||||||||||
Total machine units sold | 35,090 | 32,820 | 2,270 | 7 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 427 | 411 | 16 | 4 | ||||||||||||||||||||||
% of service revenue | 56 | % | 58 | % | (200) | bps | ||||||||||||||||||||
Product | 336 | 280 | 56 | 20 | ||||||||||||||||||||||
% of product sales | 43 | % | 40 | % | 300 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 313 | 242 | 71 | 29 | ||||||||||||||||||||||
Operating margin | 20 | % | 17 | % | 320 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
PlayDigital services | 227 | 209 | 18 | 9 | ||||||||||||||||||||||
Total service revenue | 227 | 209 | 18 | 9 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Gross margin | ||||||||||||||||||||||||||
Service | 163 | 139 | 25 | 18 | ||||||||||||||||||||||
% of service revenue | 72 | % | 67 | % | 500 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ / bps | % | ||||||||||||||||||||||
Operating income | 65 | 50 | 16 | 32 | ||||||||||||||||||||||
Operating margin | 29 | % | 24 | % | 490 | bps |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands) | 2019 | 2018 | $ | % | ||||||||||||||||||||||
Service revenue | ||||||||||||||||||||||||||
Operating and facilities management contracts | 1,930,761 | 2,007,261 | (76,500) | (3.8) | ||||||||||||||||||||||
Systems, software, and other | 252,200 | 227,540 | 24,660 | 10.8 | ||||||||||||||||||||||
2,182,961 | 2,234,801 | (51,840) | (2.3) | |||||||||||||||||||||||
Product sales | ||||||||||||||||||||||||||
Lottery products | 109,884 | 126,889 | (17,005) | (13.4) | ||||||||||||||||||||||
109,884 | 126,889 | (17,005) | (13.4) | |||||||||||||||||||||||
Global Lottery segment revenue | 2,292,845 | 2,361,690 | (68,845) | (2.9) | ||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||
(% on a constant-currency basis) | 2019 | 2018 | ||||||||||||||||||||||||
Global same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 4.1 | % | 4.1 | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | (18.3) | % | 25.1 | % | ||||||||||||||||||||||
Total | 1.7 | % | 6.1 | % | ||||||||||||||||||||||
North America & Rest of world same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 5.2 | % | 4.1 | % | ||||||||||||||||||||||
Multi-jurisdiction jackpots | (18.3) | % | 25.1 | % | ||||||||||||||||||||||
Total | 2.0 | % | 6.7 | % | ||||||||||||||||||||||
Italy same-store sales growth (%) | ||||||||||||||||||||||||||
Instant ticket & draw games | 0.8 | % | 4.1 | % |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands, except yields) | 2019 | 2018 | $ | % | ||||||||||||||||||||||
Service revenue | ||||||||||||||||||||||||||
Gaming terminal services | 567,849 | 601,536 | (33,687) | (5.6) | ||||||||||||||||||||||
Systems, software, and other | 350,058 | 359,593 | (9,535) | (2.7) | ||||||||||||||||||||||
917,907 | 961,129 | (43,222) | (4.5) | |||||||||||||||||||||||
Product sales | ||||||||||||||||||||||||||
Gaming terminals | 581,017 | 454,884 | 126,133 | 27.7 | ||||||||||||||||||||||
Gaming other | 239,988 | 203,169 | 36,819 | 18.1 | ||||||||||||||||||||||
821,005 | 658,053 | 162,952 | 24.8 | |||||||||||||||||||||||
Global Gaming segment revenue | 1,738,912 | 1,619,182 | 119,730 | 7.4 | ||||||||||||||||||||||
For the year ended December 31, | Change | |||||||||||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||||||||||||
Installed base units | ||||||||||||||||||||||||||
Total installed base units | 50,834 | 54,494 | (3,660) | (6.7) | ||||||||||||||||||||||
Total yields | $31.45 | $31.07 | $0.38 | 1.2 | ||||||||||||||||||||||
Global machine units sold | ||||||||||||||||||||||||||
Total machine units sold | 42,076 | 32,557 | 9,519 | 29.2 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands) | 2019 | 2018 | $ | % | ||||||||||||||||||||||
Operating income (loss) | ||||||||||||||||||||||||||
Global Lottery | 697,267 | 763,799 | (66,532) | (8.7) | % | |||||||||||||||||||||
Global Gaming | 179,548 | 143,340 | 36,208 | 25.3 | % | |||||||||||||||||||||
Corporate and Other | (398,899) | (433,542) | 34,643 | 8.0 | % | |||||||||||||||||||||
477,916 | 473,597 | 4,319 | 0.9 | % | ||||||||||||||||||||||
Operating margin - Global Lottery | 30.4 | % | 32.3 | % | ||||||||||||||||||||||
Operating margin - Global Gaming | 10.3 | % | 8.9 | % |
December 31, | ||||||||||||||
($ thousands) | 2020 | 2019 | ||||||||||||
Revolving Credit Facilities due July 2024 | 1,816,938 | 1,752,125 | ||||||||||||
Cash and cash equivalents | 907,015 | 654,628 | ||||||||||||
Total Liquidity | 2,723,953 | 2,406,753 |
December 31, | ||||||||||||||
($ in millions) | 2023 | 2022 | ||||||||||||
Revolving Credit Facilities | 1,234 | 1,822 | ||||||||||||
Cash and cash equivalents | 572 | 590 | ||||||||||||
Total Liquidity | 1,805 | 2,412 |
December 31, 2020 | December 31, 2019 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ thousands) | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | ($ in millions) | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Euros | Euros | 659,509 | 72.7 | 390,888 | 59.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. dollars | U.S. dollars | 134,876 | 14.9 | 179,608 | 27.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other currencies | Other currencies | 112,630 | 12.4 | 84,132 | 12.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Cash | 907,015 | 100.0 | 654,628 | 100.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Cash and cash equivalents |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ thousands) | 2020 | 2019 | $ | % | ||||||||||||||||||||||
Net cash provided by operating activities from continuing operations | 594,802 | 907,340 | (312,538) | (34.4) | ||||||||||||||||||||||
Net cash used in investing activities from continuing operations | (233,287) | (247,542) | 14,255 | 5.8 | ||||||||||||||||||||||
Net cash used in financing activities | (437,859) | (376,274) | (61,585) | (16.4) | ||||||||||||||||||||||
Net cash flows of continuing operations | (76,344) | 283,524 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash provided by operating activities from continuing operations | 1,040 | 899 | 142 | 16 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash (used in) provided by investing activities from continuing operations | (393) | 42 | (435) | > 200.0 |
For the year ended December 31, | Change | |||||||||||||||||||||||||
($ in millions) | 2023 | 2022 | $ | % | ||||||||||||||||||||||
Net cash used in financing activities | (638) | (1,065) | 428 | 40 |
For the year ended December 31, | For the year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
($ thousands) | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | ($ in millions) | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||
Global Lottery | Global Lottery | (176,111) | (198,588) | (234,585) | |||||||||||||||||||||||||||||||||||||||||||||
Global Gaming | Global Gaming | (75,578) | (169,233) | (226,717) | |||||||||||||||||||||||||||||||||||||||||||||
PlayDigital | |||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Total | Business Segment Total | (251,689) | (367,821) | (461,302) | |||||||||||||||||||||||||||||||||||||||||||||
Corporate and Other | Corporate and Other | (3,000) | (9,427) | (10,976) | |||||||||||||||||||||||||||||||||||||||||||||
(254,689) | (377,248) | (472,278) |
Payments due by period | Payments due by period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | more than 5 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | ($ in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt (1) | Long-term debt (1) | 8,299,006 | 392,672 | 3,158,909 | 1,713,550 | 3,033,875 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jackpot liabilities (2) | Jackpot liabilities (2) | 251,695 | 71,143 | 52,046 | 34,193 | 94,313 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating leases (3) | Operating leases (3) | 422,817 | 63,964 | 104,473 | 83,212 | 171,168 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance leases (4) | 47,834 | 12,729 | 16,661 | 10,294 | 8,150 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Licenses of Intellectual Property(4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | Total | 9,021,352 | 540,508 | 3,332,089 | 1,841,249 | 3,307,506 |
($ in millions) | Letters of Credit Outstanding (1) | Weighted- Average Annual Cost | ||||||||||||||||||||||||
December 31, 2023 | 121 | 1.11 | % | |||||||||||||||||||||||
December 31, 2022 | 118 | 1.26 | % |
Letters of Credit Outstanding | ||||||||||||||||||||||||||
($ thousands) | Not under the Revolving Credit Facilities | Under the Revolving Credit Facilities | Total | Weighted- Average Annual Cost | ||||||||||||||||||||||
December 31, 2020 | 426,740 | — | 426,740 | 1.06 | % | |||||||||||||||||||||
December 31, 2019 | 402,300 | — | 402,300 | 1.02 | % |
Name | Age | Position | ||||||||||||
Marco Sala | 64 | Executive Chair of the Board; Executive Director |
Name | Age | Position | ||||||||||||
James F. McCann | 72 | Vice-Chairperson of the Board; Lead Independent Director; Non-executive Director |
Name | Age | Position | ||||||||||||
Massimiliano Chiara | 55 | Executive Vice President and Chief Financial Officer; Executive Director |
Name | Age | Position | ||||||||||||
Alberto Dessy | 71 | Independent Non-executive Director |
Name | Age | Position | ||||||||||||
Marco Drago | 78 | Non-executive Director |
Name | Age | Position | ||||||||||||
Ashley M. Hunter | 44 | Independent Non-executive Director |
Name | Age | Position | ||||||||||||
Heather J. McGregor | 61 | Independent Non-executive Director |
Name | Age | Position | ||||||||||||
Lorenzo Pellicioli | 72 | Non-executive Director |
Name | Age | Position | ||||||||||||
Maria Pinelli | 61 | Independent Non-executive Director |
Name | Age | Position | ||||||||||||
Samantha F. Ravich |
Name | Age | Position | ||||||||||||
Vincent L. Sadusky | 58 | Chief Executive Mr. Pellicioli started his career as a journalist for the newspaper Giornale Di Bergamo and afterwards he became Bergamo TV Programmes Vice President. From 1978 to 1984, he held different posts in the sector of the Italian private television for Manzoni Pubblicità, Publikompass up to his nomination as Rete4 General Manager. In 1984, he joined the Gruppo Mondadori Espresso, the first Italian publishing group. He was initially appointed General Manager for Advertising Sales and Mondadori Periodici (magazines) Vice General Manager and afterwards President and CEO of Manzoni & C. S.p.A, advertising rep of the Group. From 1990 to 1997, he was appointed first President and CEO of Costa Cruise Lines in Miami, being part of Costa Crociere Group operating in the North American market (USA, Canada and Mexico) and then became Worldwide General Manager of Costa Crociere S.p.A., based in Genoa. From 1995 to 1997 he was also appointed President and CEO of the Compagnie Francaise de Croisières (Costa-Paquet), the Paris-based subsidiary of Costa Crociere. In 1997, he took part to the privatization of SEAT Pagine Gialle purchased by a group of financial investors. After the acquisition he was appointed CEO of SEAT. In February 2000, he also managed the “Internet Business Unit” of the Telecom Italia Group following the sale of SEAT. In September 2001, following the acquisition of Telecom Italia by the Pirelli Group, he resigned. Since November 2005 he has been CEO of the De Agostini Group, an Italian financial group with ownership in the publishing sector (De Agostini Editore), games and lotteries (IGT PLC), media and communications (Atresmedia - Spanish television leader, Banijay Group - a leading company in the production and distribution of television and media content) and financial investments (DeA Capital). He is also Chairman of the Board of Directors of DeA Capital, a member of the Board of Directors of Assicurazioni Generali S.p.A., and a member of the Advisory Board of Palamon Capital Partners. He was formerly also a member of the Boards of Directors of Enel, INA-Assitalia, and Toro Assicurazioni and of the Advisory Board of Lehman Brothers Merchant Banking. On April 3, 2017 he was honored with the title of | ||||||||||||
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Gianmario Tondato Da Ruos | 64 | Independent Non-executive Director |
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Renato Ascoli | 62 | Chief Executive Officer, Global Lottery |
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Fabio Celadon | 52 | Executive Vice President, |
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Senior Vice President, |
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Enrico Drago | ||||||||||||||
Chief Executive Officer, |
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Scott Gunn | 57 | Senior Vice President, |
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Wendy Montgomery | 61 | Senior Vice President, Marketing, Communications and Sustainability |
Higher National Diploma in Business Studies Queen’s University, Kingston, Canada Executive Leadership Program
–Notable Roles •Oversees Accounting and Tax, including developing and maintaining systems and internal controls over financial reporting, and the preparation of the Company’s consolidated annual reporting in accordance with generally accepted accounting principles. •Previously served as Vice President & Corporate Controller of the Company from 2017 to 2023. •Prior to joining the Company, served as Senior Manager at PricewaterhouseCoopers LLP. •Member of the American Institute of Certified Public Accountants. –20 total years of professional experience. –On December 14, 2023, the Company announced that Mr. Rishton would retire at the end of 2024 and that David Morgan would assume the role of Senior Vice President, Chief Accounting Officer effective on January 1, 2024. During 2024, Mr. Rishton will support this leadership transition. Education and Professional Credentials University of New Hampshire, Durham, New Hampshire Bachelor of Science, Accounting Massachusetts Board of Public Accountancy Certified Public Accountant
Professional Experience –Notable Roles •Leads the Company’s global legal strategy and function, including managing the internal legal team and outside legal advisors, providing counsel to the Board of Directors and executive leadership team and managing corporate governance, compliance, litigation, mergers and acquisitions, intellectual property licensing, commercial and operational issues and other global subject matter areas. •Previously served in a series of roles of increasing responsibility at Caterpillar Inc., including as Deputy General Counsel with responsibility for global commercial law matters, corporate governance and mergers and acquisitions. –30 total years of professional experience. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
University of Kentucky, J. David Rosenberg College of Law, Lexington, Kentucky Juris Doctor University of Kentucky, Gatton College of Business and Economics, Lexington, Kentucky Master of Business Administration Berea College, Berea, Kentucky Bachelor of Science, Business Administration
•Previously served as Senior Vice President, Chief Accounting Officer where he oversaw Accounting and Tax, including developing and maintaining systems and internal controls over financial reporting, and the preparation of •Served as the Company’s interim Chief Financial Officer from January 2020 through April 2020. –35 total years of professional experience. –On December 14, 2023, the Company announced that Mr. Rishton would retire at the end of 2024 and that David Morgan would assume the role of Senior Vice President, Chief Accounting Office effective on January 1, 2024. During 2024, Mr. Rishton will support this leadership transition. Education and Professional Credentials University of Rhode Island, Kingston, Rhode Island Bachelor of Science, Accounting Senior Consultant
Professional Experience –Notable Roles •Assumed honorary role in 2019 as: Chairperson for the primary operating subsidiary of the U.S. lottery business and represents the Company when interacting with global customers, current and potential partners, and government officials; and senior counselor to the Chief Executive Officer and the Company’s senior leadership team. •Previously served as the Company’s Executive Vice President for Administrative Services and External Relations, overseeing global external and internal corporate communications, media relations, branding, social responsibility programs, information security, global procurement, real estate/facilities, food services, environmental health and safety and facility security and monitoring. •Serves on the Boards of the University of Rhode Island Foundation, Rhode Island Hospital Foundation, Family Services of Rhode Island, the University of Rhode Island Foundation 2004-2023, the Greater Providence Chamber of Commerce, the Providence Performing Arts Center, and the University of Rhode Island Harrington School of Communication. Education and Professional Credentials University of Rhode Island, Kingston, Rhode Island Bachelor of Arts, Political Science Except for the relationship between Marco Drago, Enrico Drago, and Lorenzo Pellicioli described above, there are no familial relationships among any of the Parent’s directors, senior managers, or the senior 60 Separation & Divestiture In connection with the Separation & Divestiture, Marco Sala will continue to serve as Executive Chair of the Board. Vincent Sadusky will continue to serve as Chief Executive Officer until the Closing, and the Board will conduct a search for the Parent’s next Chief Executive Officer. Massimiliano Chiara will continue in his role as Chief Financial Officer of the Parent, and the Parent’s remaining executive leadership will remain unchanged with the exception that Renato Ascoli will serve as Chief Executive Officer of the Parent’s Global Lottery business. After Closing, the Parent’s Chief Executive Officer, Vincent Sadusky, will serve as Chief Executive Officer of the Combined Company, with Fabio Celadon, the Parent’s Executive Vice President, Strategy and Corporate Development, assuming the role of Chief Financial Officer of the Combined Company. The Parent will appoint Vincent Sadusky, James McCann and one other to the Board of Directors of the Combined Company while De Agostini will appoint Marco Sala, Enrico Drago and a third individual to be named later. The balance of the directors of the Combined Company will be appointed by Everi. B. Compensation Non-Executive Director Compensation The Parent’s compensation policy for non-executive directors is to provide an annual cash retainer payable in quarterly tranches as well as equity awards typically in the form of a restricted The number of RSUs covered by each Annual Compensation
(1) All fees are established in USD but paid quarterly in GBP, with the amount paid converted from USD to GBP based on the exchange rate in effect on the date of processing the payment. (2) The number of RSUs granted is calculated by dividing the grant value listed in this column by the closing price of an ordinary share The following table sets forth the approximate compensation received or earned, calculated in accordance with the
(1) 62 Executive Officer Compensation Total Executive Officer Compensation The following table sets forth the approximate
(1)Effective March 1, 2023, Mr. Sala’s annual salary (2) (3) (4) Mr. Sala’s, Mr. Sadusky’s, and Mr. Chiara’s equity awards compensation represents 145% achievement of the 2021-2023 performance conditions for performance share units (“PSUs”) granted in 2021 and 2022, which will vest 50% in 2024 and 2025, respectively, based on their continued service. Other executive officers’ equity awards compensation represents a weighted-average 95% achievement of the 2021-2023 performance conditions for PSUs granted in 2021, which will vest 50% in 2024 and 2025, respectively, based on their continued service. The amount of compensation reflects the total number of (5) Mr. Sala’s equity awards compensation also includes 100% achievement of the Co-investment Plan performance conditions for certain PSUs Short-Term Incentive Compensation The Company's 2023 short-term incentive (“STI”) compensation plans are performance-based and designed to For purposes of the 63 Company's executive officers. All STI objectives had a mix of financial and individual metrics, which is presented in the table below.
All financial objectives were established by the Compensation Committee Long-Term Incentive Compensation Plans The Company’s The principal purposes of granting LTI awards are to assist the Company in attracting and retaining executive officers, to provide a market-competitive total compensation package, and to motivate recipients to increase shareholder value by enabling them to participate in the value created, thus aligning their interests with those of the Company’s shareholders. Grants of PSUs were granted in 2023 that will vest 50% in 2026 and 2027, respectively, based on cumulative performance over the 2023-2025 period and continued service through the applicable vesting date. The awards provide for full vesting in the event of the participant’s death, and pro rata vesting in the event of disability. The vesting of the PSUs granted in 2023 is tied to the following performance metrics: –Cumulative Consolidated Adjusted Free Cash Flow; –Cumulative Consolidated AEBITDA, Cumulative Global Lottery AEBITDA less Capital Expenditures, or Cumulative Global Gaming AEBITDA less Capital Expenditures, depending on the employee’s respective business unit; and –Relative Total Shareholder Return (“TSR”) performance against the Russell 3000 Mid Cap Market Index. AEBITDA and TSR were selected as performance measures to provide a strong focus on profit and alignment to shareholder returns, respectively. Adjusted Free Cash Flow is designed to focus on deleveraging and reducing the Net Debt. AEBITDA and Adjusted Free Cash Flow performance are independently scored using separate payout curves; the outcomes of which could result in vested shares that are greater than, equal to, or less than the original amount of total target shares. The performance factor is the product of the individual AEBITDA and Adjusted Free Cash Flow payout curves, multiplied by the relative TSR performance factor. Actual vesting under the award can range from 0% to 145% of target if all maximum performance targets are met. Financial objectives were established by the Compensation Committee and reviewed by the Board, consistent with the authorization provided by the Company’s shareholders. The table below sets forth the
64 The
PSU Performance Results A portion of the compensation included in the
(2) (3) PlayDigital executive officers are included in the Global Gaming LTI plan. Marco Sala’s Co-Investment Plan In 2021, the Company entered into a Co-Investment Plan with Marco Sala. Mr. Sala’s appointment to executive chair of the Board, effective January 24, 2022, did not impact any of the vesting conditions for awards granted under the plan.The Co-Investment Plan is intended to align Mr. Sala’s interests with those of the Company’s shareholders. Under the Co-Investment Plan, the Company matched Mr. Sala’s commitment to hold his ordinary shares on a 1:1 basis (up to 470,000 shares), comprising a matching grant of up to 345,000 shares, awarded half in PSUs and half in stock options on May 11, 2021, and a matching grant of up to 125,000 shares awarded in PSUs on July 28, 2021. 65 The vesting of certain PSUs and options awarded under the Co-Investment Plan is dependent upon achievement of certain performance conditions for the measurement period ended December 31, 2023 and continued service until May 2024. Upon shareholders’ approval of the Company’s 2023 financial statements at the AGM in May 2024, these shares will vest at target:
(1) The PSUs and stock options subject to the Absolute TSR financial metric were excluded since the measurement period ends upon approval of the Company’s 2023 financial statements at the 2024 AGM. (2) The deleverage achievement metric is above target at 88% of the Company’s target Leverage Ratio at December 31, 2023. Amounts accrued for pensions and similar benefits At December 31, Severance Arrangements Certain executive officers of the Company are entitled to severance payments and benefits if such executive officer’s employment is terminated other than for cause under either individual employment agreements or pursuant to provisions of national collective agreements for executives of the industry. The employment agreements with United States-based executive officers (i.e., Messrs. Celadon, Chiara, Gunn, Rishton, Sadusky, and Spears and Mses. Costa and Montgomery) generally provide for the following benefits upon a termination other than for “cause”: •18 months of base salary; •18 months of •18 months tax preparation; •any accrued but unpaid STI earned for the prior fiscal year; •a prorated STI for the current fiscal year based on actual performance; •18 months of health and welfare benefits continuation; and •18 months following termination of employment to exercise vested stock options, unless the options otherwise expire under the original terms and conditions of the In addition, upon the United •18 months of base salary; •18 months of STI compensation (based upon a three-year average) and perquisites; •18 months of tax preparation; •any accrued but unpaid STI earned for the prior fiscal year; •a prorated STI for the current fiscal year based on actual performance; •24 months of health and welfare benefits continuation; and •18 months following termination of employment to exercise vested stock options, unless the options otherwise expire under the original terms and conditions of the 66 Upon Pursuant to the terms of the Italian national collective agreement for executives of the industry (Contratto Collettivo Nazionale di Lavoro per i Dirigenti di Aziende produttrici di beni e servizi), •severance pay determined under the collective agreement; •any accrued but unpaid STI earned for the prior fiscal year; and •a notice indemnity equal to a minimum of six and a maximum of 12 months of total base salary and STI compensation. Mr. Sala’s base salary as Executive Chair of the Board is Mr. Sala’s service agreement with the Parent (70% of employment) can be terminated by either party on the giving of six months’ notice, if not, immediately for cause. Mr. Sala cannot resign without prior approval from the Board. Following termination of employment, for a period of 24 months thereafter, Mr. Sala is subject to certain restrictive covenants, including restrictions on soliciting or providing goods or services to certain customers, employing or enticing away from the group certain persons employed by any group company or being involved with any business in competition with any group company, among others. As consideration for compliance with the post-employment restrictive covenants, Mr. Sala is entitled to a According to a severance agreement entered into between the Company and Mr. Sala, In the event of a change in control, the 67 C. Board Practices As of The directors are responsible for the management of the Company’s business, for which purpose they may exercise all of the powers of the Parent whether relating to the management of the business or not. As described above in section “Item 6.A. Directors and Senior Management,” as of The Board such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The chairperson of each committee is appointed by the Board. The Audit Committee The Parent’s Audit Committee is primarily responsible for, among other things, assisting the Board’s oversight of: •the integrity of the Parent’s financial •the Parent’s compliance with legal and regulatory requirements; •the independent registered public accounting firm’s qualifications and independence; •the performance of the Parent’s internal audit function and independent registered public accounting firm; and •the Parent’s internal controls over financial reporting and systems of disclosure controls and The Audit Committee oversees risk assessment and risk management, including financial, compliance, strategic and operational risk exposures, including sustainability and climate-related risk, cybersecurity, and information security. The Audit Committee and managementmaymake recommendations to the Board for any changes, amendments, and modifications to the Parent’s ethical codes of practice, such as the Code of Conduct and the Code of Ethics, and promptly disclosing any waivers for directors or executive officers, as required by applicable law. The Board reviews the adequacy and effectiveness of the Company’s enterprise risk management program, including the approval of risk appetites for the Company’s key risks. The Audit Committee receives periodic reports from management, reviews updates to the Company’s principal and emerging risks, and conducts deep dive reviews of risk management activities. Since 2022, the Audit Committee also holds dedicated sessions to receive and discuss updates and demonstrations on data protection and cybersecurity and engages with management on the Company’s incident prevention plans and policies, threat-detection measures and prompt response to malicious activity and attacks to ensure the Company is well placed to meet the evolving risks and external threats in this area. The Audit Committee regularly meets with the external auditor, the CFO, the General Counsel, the CAO, the Chief Compliance Officer and Internal Audit in separate, closed sessions. The Audit Committee regularly reports to the Board on the matters for which it has oversight responsibility. As of 68 Audit Committee Financial The Compensation Committee The •ensuring that provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (U.K.), are fulfilled; •producing a report of the Parent’s remuneration policy and practices to be included in the Parent’s U.K. •reviewing management recommendations and advising management on broad compensation policies, such as salary ranges, deferred compensation, incentive programs, pension, and executive stock plans; •reviewing and approving goals and objectives relevant to the CEO’s compensation, evaluating the CEO’s performance in light of those goals and objectives and reviewing the results of such evaluations with the Board, and setting the CEO’s compensation level based on this evaluation; • •making recommendations to the Board with respect to non-CEO executive officer (excluding the Executive Chair) compensation, incentive compensation plans and equity-based plans that are subject to Board approval; •monitoring issues associated with succession and management development of the CEO and other senior executives; •monitoring and assessing performance conditions applicable to any long- and short-term incentive plans adopted by the Company; •reviewing and recommending •creating, modifying, amending, terminating, and monitoring compliance with • •overseeing the design, review, and amendment of the Company’s policies relating to anti-harassment and coercion, as appropriate, and providing oversight of the enforcement of such policies by People & Transformation; •exercising any discretion or judgment on compensation issues in accordance with the remuneration policies of the Company, including any clawback and malus policies adopted by the Company; •overseeing, in conjunction with other Board committees delegated with such authority (if any), engagement with investors/shareholders and proxy advisory firms on executive compensation matters; and •together with the Audit Committee, evaluating risks associated with the Company’s employees and employee-benefit related risks, including the Company’s compensation and benefits policies, plans, and programs and discussing with management procedures to identify and mitigate such risks. The Compensation Committee also reviews, monitors, and makes recommendations to the Board on talent tracking, development, and retention through customized training and career progression plans, and succession planning. Workplace safety and employee health and well-being ranked to the level of the Compensation Committee’s attention. As of The Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee is responsible for, among other things: •recommending to the Board, consistent with criteria approved by the Board, the names of qualified persons to be nominated for election or re-election as directors (including, in consultation with the Compensation Committee, the CEO’s successor) and the membership and chairperson of each Board committee; 69 •reviewing each •reviewing, at least annually, the appropriate skills and characteristics required of Board members in the context of the current composition of the Board and its committees; •periodically reviewing the size, composition (including diversity), and leadership of the Board and committees thereof and recommending any proposed changes to the Board; •reviewing directorships in other public companies held by or offered to directors •reviewing and reassessing from time to time the Parent’s Corporate Governance Guidelines and recommending any changes to the Board; •determining, at least annually, the independence of each director under the independence requirements of the NYSE and any other regulatory requirements and report such findings to the Board; •overseeing, at least annually, the evaluation of the performance of the Board and each Board committee, as well as individual directors where appropriate; •assisting the Parent in making the periodic disclosures related to the Nominating and Corporate Governance Committee and required by rules issued or enforced by the SEC, the •periodically reviewing and making recommendations to the Board concerning CEO emergency succession plans; •giving due consideration to the Parent’s legal obligations in the context of nominations and corporate governance, including any changes in applicable law and to recommendations and associated guidance from advisors, professional bodies, and proxy advisory firms; •overseeing the Company’s strategy on sustainability and monitoring implementation of the Company’s sustainability program, including review of the Company’s public disclosures regarding ESG matters; and •overseeing, The Nominating and Corporate Governance Committee periodically reviews: (i) the size, composition (including from a personal and professional diversity standpoint), working and leadership of the Board and its committees; and (ii) key attributes of directors (including eligibility, independence, and Audit Committee members’ financial literacy/expertise) to As of The charters for each of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee are available at www.igt.com; information contained thereon, including each committee charter, is not included in, or incorporated by reference into, this annual report on Form 20-F. Indemnification of Members of the Board The Parent has committed, to the fullest extent permitted under applicable law, to indemnify and hold harmless (and advance any expenses incurred, provided that the person receiving such advancement undertakes to repay such advances if it is ultimately determined such person was not entitled to indemnification), each of the Parent’s and its subsidiaries’ present and former directors, officers, and employees against all costs and expenses (including attorneys’ fees), judgments, fines, losses, claims, damages, liabilities, and settlement amounts paid in connection with any claim, action, suit, proceeding, or investigation arising out of or related to such person’s service as a director, officer, or employee of the Parent or any of its subsidiaries. D. Employees As of December 31, 70 distribution, and services (CCNL Terziario, della Distribuzione e dei Servizi). Relations with the Company’s executives in Italy are subject to the national collective bargaining agreement for executives in the industry companies producing services (CCNL Dirigenti Industria). Human Capital IGT recognizes human capital development as a critical strategic process and actively builds employee skills and capabilities in an agile and outcome-focused way. In addition to offering well-structured and competitive reward and benefit packages designed to attract and retain the employees, the Company invests in training and career development opportunities to support its employees in their careers and strives to create a fair and inclusive culture that values unity, diversity, and belonging in its people, players, customers, and communities. Career development is a partnership between each employee, their manager, and the Company and requires a conscious choice to grow and stretch individual capabilities and further a professional career. Employees and managers have a responsibility to drive their individual growth and development, with IGT providing the resources necessary to achieve these goals. New capabilities are developed through learning experiences, specific trainings, coaching, mentoring, and feedback. Individual Development Plans, aligned to personal growth goals and business objectives, enable employees to develop the most needed skills to reach individual goals. To support development, IGT has designed upskilling and reskilling plans to ensure people’s employability and to keep the Company competitive in the market. Diversity, Equity, and Inclusion IGT understands that its employees’ unique backgrounds, experiences, and perspectives should reflect its global customers and the local communities where the Company operates. Diversity must be supported by a fair and inclusive culture that enables all employees to feel valued, respected, engaged, and empowered to contribute to the business. The Company Employees by Segment
The •The Company had 60, 101, and 93 interns and temporary employees at December 31, As of December 31, In 71 E. S Executive Stock Ownership Requirements On July 28, 2015, the Board approved share ownership guidelines for Senior Vice Presidents and above. These executive share ownership guidelines were most recently amended on October 25, 2023. Below is a summary of the guidelines.
*Additional Holding Requirement only applicable to Covered Executives who are not Executive Directors. 72 Director Stock Ownership Requirements Beginning November 10, 2020 (or five years after joining the Board if such date is subsequent to November 10, 2020), each non-executive director is expected to hold, for as long as they remain on the Board, ordinary shares of the Parent that have a fair market value equal to at least three (3) times the base annual retainer amount then in effect for non-executive directors. The current base annual retainer amount is $100,000. Non-compliant non-executive directors are prohibited from selling shares of the Parent until they have met their applicable target level of share ownership, excluding any shares sold to cover any applicable tax withholding requirements, the exercise price of any share options, nominal value of shares, or broker fees (if any). The following table sets forth information, as of •each member of the Board; •each executive officer and senior consultant of the Parent; and •all members of the Board, executive officers, and senior consultant, taken together. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, the Parent believes that each shareholder identified in the table possesses sole voting and investment power over all ordinary shares of the Parent shown as beneficially owned by that shareholder. Percentage of beneficial ownership is based on approximately
(1) 73 The table below sets forth the options on the Parent’s ordinary shares granted to Mr. Sala that were outstanding as of
(1) The options will expire on the fourth anniversary of the vesting date, which is the date on which the audited financial statements for the Company’s fiscal year ended December 31, 2023 are approved by the shareholders of the Company at its annual general meeting, which is expected to occur on May 14, 2024. For a further discussion of stock-based employee compensation, please see “Notes to the Consolidated Financial Statements— F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. Item 7.Major Shareholders and Related Party Transactions A. Major Shareholders At The following table sets forth information with respect to beneficial ownership of the Parent’s ordinary shares by persons known by the Parent to beneficially own 5% or more of voting rights as a result of their ownership of ordinary shares,
(1) (2) At Significant Changes in Ownership On May 22, 2018, De Agostini entered into a variable forward transaction (the “Variable Forward Transaction”) with Credit Suisse International (subsequently assigned to Credit Suisse Bank (Europe) S.A. (formerly known as Credit Suisse Securities, De Agostini elected, effective as of May 25, 2018, to place all of its owned ordinary shares, including the Variable Forward Transaction Shares, on the Loyalty Register, thereby gaining the power to exercise the votes of the related Special Voting 74 Shares. In April 2020, De Agostini pledged the Variable Forward Transaction Shares to Credit Suisse as part of the Variable Forward Transaction and, as a result, removed the Variable Forward Transaction Shares from the Loyalty Register. As of Credit Suisse has, in the event of a De Agostini default The Variable Forward Transaction is equally divided into four tranches, with each tranche settled at De Agostini’s election either: (i) in cash; or (ii) by physical delivery of shares, subject to certain conditions. To satisfy their obligations, De Agostini completed the final two settlement transactions with Credit Suisse by physically delivering 4,500,000 ordinary shares on May 25, 2023 and November 29, 2023, respectively. Voting Rights De Agostini controls the Parent but does not have different voting rights from the Parent’s other shareholders, aside from the election to exercise the votes of the Special Voting Shares related to the shares owned by De Agostini. However, through its voting rights, De Agostini has the ability to control the Company and significantly influence the decisions submitted to a vote of the Parent’s shareholders, including approval of annual dividends, the election and removal of directors, mergers or other business combinations, the acquisition or disposition of assets, and issuances of equity, and the incurrence of indebtedness. Additional Share Information The Parent’s ordinary shares are listed on the NYSE under the symbol “IGT” and can be traded •beneficial interests in the Parent’s ordinary shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in the register of shareholders in the name of Cede & Co., as DTC’s nominee; and •in certificated All of the Parent’s ordinary shares are held on the U.S. registry. At The Parent’s Special Voting Shares are not listed on the NYSE and will be transferable only in very limited circumstances. For more information regarding the Special Voting Shares, please see “Item 10.B Memorandum and Articles of B. Related Party Transactions The Company engages in business transactions with certain related parties, which 75 pursuant to which De Agostini The Company generally carries out transactions with related parties on commercial terms that are normal in their respective markets, considering the characteristics of the goods or services involved. For a further discussion of transactions with related parties, including transactions with De Agostini and companies in which we have strategic investments that develop software, hardware, and other technologies or provide services supporting the Company’s technologies, please see “Notes to the Consolidated Financial C. Interests of Experts and Counsel Not applicable. Item 8.Financial Information A. Consolidated Statements and Other Financial Information See “Item 18. Financial Statements” for the Company’s Consolidated Financial Statements including the Notes thereto and report of its independent registered accounting firm. The Company has not yet implemented a formal policy on dividend distributions. B. Significant Changes Item 9.The Offer and Listing A. Offer and Listing Details The Parent’s ordinary shares are listed on the NYSE under the symbol “IGT.” B. Plan of Distribution Not applicable. C. Markets The Parent’s outstanding ordinary shares are listed on the NYSE under the symbol “IGT.” D. Selling Shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the Issue Not applicable. 76 Item 10. Additional Information A. Share Capital Not applicable. B. Memorandum and Articles of Association The Parent is a public limited company registered in England and Wales under company number 09127533. Its objects are unrestricted, in line with the default position under the The Directors’ interests Except as otherwise provided in the Articles, a director may not vote on or be counted in the quorum in relation to a resolution of the directors or committee of the directors concerning a matter •the giving of a guarantee, security, or indemnity in respect of money lent or obligations incurred by •the giving of a guarantee, security, or indemnity in respect of a debt or obligation of the Parent or any of its subsidiary undertakings for which the director has assumed responsibility in whole or in part, either alone or jointly with others, under a guarantee or indemnity or by the giving of security; •a transaction or arrangement concerning an offer of shares, debentures, or other securities of the Parent or any of its subsidiary undertakings for subscription or purchase, in which offer •a transaction or arrangement to which the Parent is or is to be a party concerning another company (including a subsidiary undertaking of the Parent) in which •a transaction or arrangement for the benefit of the employees of the Parent or any of its subsidiary undertakings (including any pension fund or retirement, death or disability scheme) which does not award •a transaction or arrangement concerning the purchase or maintenance of any insurance policy for the benefit of directors or for the benefit of persons including directors. Directors’ borrowing powers The directors may exercise all the powers of the Parent to borrow money and to mortgage or charge all or part of the undertaking, property, and assets (present or future) and uncalled capital of the Parent and, subject to the CA 2006, to issue debentures and other securities, whether outright or as collateral security for a debt, liability, or obligation of the Parent or of a third party. Directors’ shareholding requirements A director need not hold shares in the Parent to qualify to serve as a director. 77 Age limit There is no age limit applicable to directors in the Articles. Compliance with NYSE Rules For as long as the Parent’s ordinary shares are listed on the NYSE, the Parent Classes of shares The Parent has three (3) classes of shares in issue. This includes (i) ordinary shares of U.S. $0.10 each; (ii) Special Voting Shares of U.S. $0.000001 each; and (iii) sterling non-voting shares of £1.00 each (the “Sterling Non-Voting Shares”). Dividends and distributions Subject to the CA 2006, the Parent’s shareholders may declare a dividend on the Parent’s ordinary shares by ordinary resolution, and the Board may decide to pay an interim dividend to holders of the Parent’s ordinary shares in accordance with their respective rights and interests in the Parent, and may fix the time for payment of such dividend. Under English law, dividends may only be paid out of distributable reserves, defined as accumulated realized profits (so far as not previously utilized by distribution or capitalization) less accumulated realized losses (so far as not previously written off in a reduction or reorganization of capital duly made), and not out of share capital, which includes the share premium account. The Special Voting Shares and Sterling Non-Voting Shares do not entitle their holders to dividends. If The Articles also permit a scrip dividend scheme under which the directors may, with the prior authority of an ordinary resolution of the Parent, allot to those holders of a particular class of shares who have elected to receive them further shares of that class or ordinary shares in either case credited as fully paid instead of cash in respect of all or part of a dividend or dividends specified by the resolution. Voting rights Subject to any rights or restrictions as to voting attached to any class of shares and subject to disenfranchisement in the event of non-payment of any call or other sum due and payable in respect of any shares not fully paid, the voting rights of shareholders of the Parent in a general meeting are as follows: 1.On a show of hands, a.the shareholder of the Parent who (being an individual) is present in person or (being a corporation) is present by a duly authorized corporate representative at a general meeting of the Parent will have one vote; and b.every person present who has been appointed by a shareholder as a proxy will have one vote, except where: i.that proxy has been appointed by more than one shareholder entitled to vote on the resolution; and ii.the proxy has been instructed: A.by one or more of those shareholders to vote for the resolution and by one or more of those shareholders to vote against the resolution; or B.by one or more of those shareholders to vote in the same way on the resolution (whether for or against) and one or more of those shareholders has permitted the proxy discretion as to how to vote, in which case, the proxy has one vote for and one vote against the resolution. 2.On a poll taken at a meeting, every shareholder present and entitled to vote on the resolution has one vote for every ordinary share of the Parent Under the Articles, a poll on a resolution may be demanded by the chairperson, the directors, five (5) or more people having the right to vote on the resolution, or a shareholder or shareholders (or their duly appointed proxies) having not less than 10% of 78 either the total voting rights or the total paid up share capital. Once a resolution is declared, such persons may demand the poll both in advance of, and during, a general meeting, either before or immediately after a show of hands on such resolution. In the case of joint holders, only the vote of the senior holder who votes (or any proxy duly appointed by him) may be counted by the Parent. The necessary quorum for a general shareholder meeting is the shareholders who together represent at least a majority of the voting rights of all the shareholders entitled to vote at the meeting, present in person or by proxy, save that if the Parent only has one (1) shareholder entitled to attend and vote at the general meeting, one (1) shareholder present in person or by proxy at the meeting and entitled to vote is a quorum. In case of a meeting requisitioned by the shareholders, where the quorum is not met the meeting is dissolved. In case of other meetings, where the quorum is not met, the meeting is adjourned. If a meeting is adjourned for lack of quorum, the quorum of the adjourned meeting will be one shareholder present in person or by proxy. The Sterling Non-Voting Shares carry no voting rights (save where required by law). Winding up On a return of capital of the Parent on a winding up or otherwise, the holders of the Parent’s ordinary shares (and any other shares outstanding at the relevant time which rank equally with such shares) will share equally, on a share for share basis, in the Parent’s assets available for distribution, after paying: •the holders of the Special Voting Shares who will be entitled to receive out of the assets of the Parent available for distribution to its shareholders the sum of, in aggregate, U.S. $1.00 but shall not be entitled to any further participation in the assets of the Parent; and •the holders of the Sterling Non-Voting Shares who will be entitled to receive out of the assets of the Parent available for distribution to its shareholders the sum of, in aggregate, £1.00 but shall not be entitled to any further participation in the assets of the Parent. Redemption provisions The Parent’s ordinary shares are not redeemable. The Special Voting Shares may be redeemed by the Parent for nil consideration in certain circumstances (as set out in the Articles). The Sterling Non-Voting Shares may be redeemed by the Parent for nil consideration at any time. Sinking fund provisions None of the Parent’s shares are subject to any sinking fund provision under the Articles or as a matter of English law. Liability to further calls No holder of any share in the Parent is liable to make additional contributions of capital in respect of its shares. Discriminating provisions There are no provisions discriminating against a shareholder because of Variation of class rights The Articles treat the Parent’s ordinary shares and the Special Voting Shares as a single class for the purposes of voting. Any special rights attached to any shares in the Parent’s capital may (unless otherwise provided by the terms of issue of the shares of that class) be varied or abrogated, either while the Parent is a going concern or during or in contemplation of a winding up, with the consent in writing of those entitled to attend and vote at general meetings of the Parent representing 75% of the voting rights attaching to the Parent’s ordinary shares and the Special Voting Shares, in aggregate, which may be exercised at such meetings, or with the sanction of 75% of those votes attaching to the Parent’s ordinary shares and the Special Voting Shares, in aggregate, 79 cast on a special resolution proposed at a separate general meeting of all those entitled to attend and vote at the Parent’s general meetings, but not otherwise. The CA 2006 allows an English company to vary class rights of shares by a resolution of 75% of the shareholders of the class in question. A resolution to vary any class rights relating to the giving, variation, revocation, or renewal of any authority of the directors to allot shares or relating to a reduction of the Parent’s capital may only be varied or abrogated in accordance with the CA 2006 but not otherwise. The rights attached to a class of shares are not, unless otherwise expressly provided for in the rights attaching to those shares, deemed to be varied by the creation, allotment, or issue of further shares ranking pari passu with or subsequent to them or by the purchase or redemption by the Parent of its own shares in accordance with the CA 2006. General meetings and notices The Board has the power to call a general meeting of shareholders at any time. The Board shall determine whether a general meeting (including an annual general meeting) is to be held as a physical general meeting or an electronic general meeting (or a combination thereof). In addition, the Board must convene such a meeting if it has received requests to do so from shareholders representing at least 5% of the paid-up share capital of the Parent as carries voting rights at general meetings in accordance with Section 303 of the CA 2006. An annual general meeting must be called by not less than 21 clear days’ notice (i.e., excluding the date of receipt or deemed receipt of the notice and the date of the meeting itself). All other general meetings will be called by not less than 14 clear days’ notice. A general meeting may be called by shorter notice if it is agreed to by a majority in number of the shareholders having the right to attend and vote at the meeting, being a majority who together hold not less than 95% in nominal value of the shares giving that right. At least seven (7) clear days’ notice is required for any meeting adjourned for 28 days or more or for an indefinite period. The notice of a general meeting will be given to the shareholders (other than any who, under the provisions of the Articles or the terms of allotment or issue of shares, are not entitled to receive notice), to the Board, to the beneficial owners nominated to enjoy information rights under the CA 2006, and to the auditors. The shareholders entitled to receive notice of and attend a general meeting are those on the share register at the close of business on a day determined by the directors. Under English law, the Parent is required to hold an annual general meeting within six months from the day following the end of its fiscal year and, subject to the foregoing, the meeting may be held at a time and place (whether physical or electronic or a combination thereof) determined by the Board whether within or outside of the U.K. The notice of general meeting must specify a time (which must not be more than 48 hours, excluding any part of a day that is not a working day, before the time fixed for the meeting) by which a person must be entered on the share register in order to have the right to attend or vote at the meeting. Only such persons or their duly appointed proxies have the right to attend and vote at the meeting of shareholders. Limitations on rights to own shares There are no limitations imposed by the Articles or the applicable laws of England & Wales on the rights to own shares, including the right of non-residents or foreign persons to hold or vote the Parent’s shares, other than limitations that would generally apply to all shareholders. Change of control There is no specific provision in the Articles that directly would have an effect of delaying, deferring, or preventing a change in control of the Parent and that would operate only with respect to a merger, acquisition, or corporate restructuring involving the Parent or any of its subsidiaries. However, the loyalty voting structure may make it more difficult for a third party to acquire, or attempt to acquire, control of the Parent. As a result of the loyalty voting structure, it is possible that a relatively large portion of the voting rights of the Parent could be concentrated in a relatively small number of holders who would have significant influence over the Parent. Such shareholders participating in the loyalty voting structure could reduce the likelihood of change of control transactions that may otherwise benefit holders of the Parent’s ordinary shares. For a discussion of this risk, see “Item 3. Key Information - D. Risk 80 Disclosure of ownership interests in shares Under the Articles, shareholders must comply with the notification obligations to the Parent contained in Chapter 5 (Vote Holder and Issuer Notification Rules) of the Disclosure Guidance and Transparency Rules (“DTR”) (including, without limitation, the provisions of DTR 5.1.2) as if the Section 793 of the CA 2006 gives the Parent the power to require persons whom it knows have, or whom it has reasonable cause to believe have, or within the previous three (3) years have had, any ownership interest in any shares of the Parent to disclose specified information regarding those shares. Failure to provide the information requested within the prescribed period (or knowingly or recklessly providing false information) after the date the notice is sent can result in criminal or civil sanctions being imposed against the person in default. Under the Articles, if any shareholder, or any other person appearing to be interested in the Parent’s shares held by such shareholder, fails to give the Parent the information required by a Section 793 notice, then the Board may withdraw voting rights and place restrictions on the rights to receive dividends, and transfer of such shares (including any shares allotted or issued after the date of the Section 793 notice in respect of those shares). Changes in share capital The Articles authorize the Company to allot (with or without conferring rights of renunciation), issue, grant options over or otherwise deal with or dispose of shares in the capital of the Company and to grant rights to subscribe for, or to convert any security into, shares in the capital of the Company to such persons, at such times and upon such terms as the directors may decide, provided that no share may be issued at a discount. Pursuant to a shareholder resolution passed on (i) allot ordinary shares in the Parent, or to grant rights to subscribe for or to convert or exchange any security into shares in the Parent, up to an aggregate nominal amount (i.e., par value) of U.S. (ii) allot Special Voting Shares and to grant rights to subscribe for, or to convert any security into, Special Voting Shares, up to a maximum aggregate nominal amount of (iii) exclude pre-emption rights: first, in relation to offers of equity securities by way of rights issue; second, in relation to the allotment of equity securities for cash up to an aggregate nominal amount (i.e., par value) of U.S. These provisions are more restrictive than required under English law which does not prescribe a limit for the maximum amounts for allotment of shares or exclusion of pre-emption rights. Pursuant to a shareholder resolution passed on (i)the maximum aggregate number of the Parent’s ordinary shares authorized to be purchased equals (ii) the minimum price (exclusive of expenses) which may be paid by the Company for each ordinary share shall be U.S. $0.10; and (iii)the maximum price (exclusive of expenses) which may be paid to purchase an ordinary share of the Parent is 105% of the average market value of an ordinary share for the five business days prior to the day the purchase is made (subject to any further price restrictions contained in any share repurchase contract). These provisions are more restrictive than required under English law which does not prescribe a limit for the maximum aggregate number or price paid for an "off market" repurchase of shares. 81 Loyalty Plan Scope The Parent has implemented a Loyalty Plan, the purpose of which is to reward long-term ownership of the Parent’s ordinary shares and promote stability of the Parent’s shareholder base by granting long-term shareholders, subject to certain terms and conditions, with the equivalent of 1.9995 votes for each ordinary share that they hold. The Loyalty Plan is governed by the provisions of the Articles and the Loyalty Plan Terms and Conditions from time to time adopted by the Board, a copy of which is available on the Company’s website, together with some Frequently Asked Questions. Characteristics of Special Voting Shares Each Special Voting Share carries 0.9995 votes. The Special Voting Shares and ordinary shares will be treated as if they are a single class of shares and not divided into separate classes for voting purposes (save upon a resolution in respect of any proposed termination of the Loyalty Plan). The Special Voting Shares have only minimal economic entitlements. Such economic entitlements are designed to comply with English law but are immaterial for investors. Issue The number of Special Voting Shares on issue equals the number of ordinary shares on issue. A nominee appointed by the Parent (the “Nominee”), which is currently Computershare Company Nominees Limited, holds the Special Voting Shares on behalf of the shareholders of the Parent as a whole, and will exercise the voting rights attached to those shares in accordance with the Articles. Participation in the Loyalty Plan In order to become entitled to elect to participate in the Loyalty Plan, a person must maintain ownership in accordance with the Loyalty Plan for a continuous period of three (3) years or more (an “Eligible Person”). An Eligible Person within the Loyalty Plan Terms and Conditions may elect to participate in the Loyalty Plan by submitting a validly completed and signed election form (the “Election Form”) and, if applicable, the requisite custodial documentation, to the Parent’s designated agent (the “Agent”). The Election Form is available on the Company’s website. Upon receipt of a valid Election Form and, if applicable, custodial documentation, the Agent will register the relevant ordinary shares on a separate register (the “Loyalty Register”). In order for an Eligible Person’s ordinary shares to remain on the Loyalty Register, they may not be sold, disposed of, transferred, pledged or subjected to any lien, fixed or floating charge or other encumbrance, except in very limited circumstances. Voting arrangements The Nominee will exercise the votes attaching to the Special Voting Shares held by it from time to time at a general meeting or a class meeting: (a) in respect of any Special Voting Shares associated with ordinary shares held by an Eligible Person, in the same manner as the Eligible Person exercises the votes attaching to those IGT The proxy or voting instruction form in respect of an Eligible Person’s ordinary shares will contain an instruction and authorization in favor of the Nominee to exercise the votes attaching to the Special Voting Shares associated with those ordinary shares in the same manner as that Eligible Person exercises the votes attaching to those ordinary shares. Transfer or withdrawal If, at any time and for any reason, one (1) or more ordinary shares are de-registered from the Loyalty Register, or any ordinary shares held by an Eligible Person on the Loyalty Register are sold, disposed of, transferred (other than with the benefit of a waiver in respect of certain permitted transfers), pledged or subjected to any lien, fixed or floating charge or other encumbrance, the Special Voting Shares associated with those ordinary shares will cease to confer on the Eligible Person any voting rights (or any other rights) in connection with those Special Voting Shares and such person will cease to be an Eligible Person in respect of those Special Voting Shares. 82 A shareholder may request the de-registration of their ordinary shares from the Loyalty Register at any time by submitting a validly completed Withdrawal Form to the Agent. The Agent will release the ordinary shares from the Loyalty Register within three (3) business days thereafter. Upon de-registration from the Loyalty Register, such ordinary shares will be freely transferable. From the date on which the Withdrawal Form is processed by the Agent, the relevant shareholder will be considered to have waived their rights in respect of the relevant Special Voting Shares. Termination of the Plan The Loyalty Plan may be terminated at any time with immediate effect by a resolution passed on a poll taken at a general meeting with the approval of members representing 75% or more of the total voting rights attaching to the ordinary shares of members who, being entitled to vote on that resolution, do so in person or by proxy. For the avoidance of doubt, the votes attaching to the Special Voting Shares will not be exercisable upon such resolution. Upon termination of the Loyalty Plan, the directors may elect to redeem or repurchase the Special Voting Shares from the Nominee for nil consideration Transfer The Special Voting Shares may not be transferred, except in exceptional circumstances, e.g., for transfers between Loyalty Plan nominees. Repurchase or redemption Special Voting Shares may only be purchased or redeemed by the Parent in limited circumstances, including to reduce the number of Special Voting Shares held by the Nominee in order to align the aggregate number of ordinary shares and Special Voting Shares in issue from time to time or upon termination of the Loyalty Plan. Special Voting Shares may be redeemed or repurchased for nil consideration. C. Material Contracts Definitive Agreements for the Separation & Divestiture The definitive agreements entered into by the Parent and/or SpinCo in connection with the Separation & Divestiture include: (i) a Separation and Distribution Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Separation Agreement”);(ii) the Merger Agreement; (iii) an Employee Matters Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Employee Matters Agreement”); (iv) a Real Estate Matters Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Real Estate Matters Agreement”); (v) a Tax Matters Agreement by and among the Parent, SpinCo, Gaming HoldCo and Everi (the “Tax Matters Agreement”), and (vi) a Commitment Letter by and among Everi, SpinCo, Deutsche Bank AG New York Branch (together with its affiliates, “DB”) and Macquarie Capital (USA) Inc. (together with its affiliates, “Macquarie”) (the “Commitment Letter”) and (vii) a Voting and Support Agreement by and among the Parent, SpinCo, Everi and De Agostini (the “Voting Agreement”), each dated as of February 28, 2024. In addition, on February 28, 2024, Everi and De Agostini entered into an Investor Rights Agreement (the “Investor Rights Agreement”). Separation Agreement The Separation Agreement sets forth the terms and conditions regarding, among other things, the Separation, the SpinCo Contribution and the Distribution. The terms and conditions include, among other things, the restructuring and the transfer of assets and assumption of liabilities by the Parent and SpinCo and their respective subsidiaries in accordance with the separation plan as provided in the Separation Agreement to result in SpinCo owning substantially all of the assets and assuming substantially all of the liabilities of the SpinCo Business, and the Parent owning substantially all of the assets and assuming substantially all of the liabilities of the Parent’s business other than the SpinCo Business. In connection with such Separation, the Parent will effect the SpinCo Contribution in exchange for SpinCo issuing additional SpinCo Units such that the total number of SpinCo Units held by the Parent shall be equal to the number of the Parent’s ordinary shares outstanding as of the record date. The parties will procure satisfaction of SpinCo and the Parent’s existing credit support instrument release conditions at the Distribution, as applicable, and may be required to provide further cash or collateral to existing credit support beneficiaries. 83 The Separation Agreement also governs the rights and obligations of the parties regarding the Distribution. Consummation of the Distribution is subject to various conditions under the Separation Agreement, including the completion of the Separation and satisfaction or waiver of certain conditions to the Closing under the Merger Agreement. Prior to the Distribution, Gaming HoldCo will issue to the Parent the Intercompany Note in an amount equal to the Cash Payment, and immediately following the effective time of the Second Step Merger, to the extent not paid with proceeds of the Financing, Everi will cause Gaming HoldCo to make the Cash Payment to the Parent in satisfaction of the Intercompany Note. The “Cash Payment” will be an amount equal to $2.6 billion, as adjusted by the pre-Distribution estimates of SpinCo’s and Everi’s respective cash, debt, working capital, and expenses, as more fully set forth in the Separation Agreement. SpinCo will incur $3.7 billion of indebtedness in connection with the Financing, the proceeds of which will be used to make the Cash Payment. At least one day prior to the Merger Effective Time, Everi may declare a dividend, payable as a cash dividend and/or a right to receive a cash dividend, with a payment date as specified in the Separation Agreement, payable to holders of outstanding Everi common stock as of such declaration in accordance with the terms specified in the Separation Agreement. The Separation Agreement also governs certain aspects of the relationship between the Parent, SpinCo, and Everi after the Distribution, including, among other things, provisions with respect to the release of claims, indemnification, restrictive covenants, guarantees, insurance, access to information and record retention. Both the Parent and Everi will be subject to two years of mutual non-solicitation obligations. The parties will have ongoing indemnification obligations under the Separation Agreement from and after the Distribution with respect to the liabilities related to SpinCo assumed by Everi through SpinCo, and the liabilities related to the Parent agreed to be retained by the Parent, as applicable. The Separation Agreement provides that, following the effectiveness of the Distribution, Everi will guarantee to the Parent the obligations of SpinCo under the transaction documents which pursuant to their terms arise at or after the Closing with respect to obligations to be performed after the effectiveness of the Distribution. This description is qualified in its entirety by reference to the Separation Agreement, which is filed as Exhibit 4.11 to this annual report on Form 20-F. Merger Agreement The Merger Agreement provides for, among other things, the merger of Merger Sub with and into SpinCo, with SpinCo as the surviving company, and the merger of SpinCo with and into Gaming HoldCo, with Gaming HoldCo as the surviving corporation. As a result of the Second Step Merger, Gaming HoldCo would become a direct wholly owned subsidiary of Everi. In addition, prior to the Closing, it is contemplated that the Parent will effect the Separation, SpinCo Contribution, and the Distribution pursuant to the Separation Agreement as further described below. In the Merger, holders of SpinCo Units will be entitled to receive for each SpinCo Unit a number of shares of newly issued Everi common stock equal to the exchange ratio specified in the Merger Agreement. Prior to the adjustments provided in the Merger Agreement, the Merger Agreement provides that the exchange ratio is equal to the quotient of (A) 103,379,870 shares of Everi common stock by (B) the number of SpinCo Units issued and outstanding immediately prior to the effective time of the Merger (the “Merger Effective Time”). Prior to giving effect to any customary adjustments of the exchange ratio in the event of stock or interest splits, divisions or subdivisions of shares, stock dividends, reverse stock splits, combinations of shares, reclassifications, recapitalizations or other similar transactions with respect to Everi common stock, the exchange ratio is designed to result in the outstanding Everi common stock, immediately following the Merger, being owned approximately 54% by former holders of SpinCo Units and approximately 46% by the stockholders of Everi immediately prior to the Merger. The Merger Agreement also provides that, effective as of immediately following the Merger Effective Time, Everi shall cause its board of directors (the “Everi Board”) to be comprised of 11 members, with (a) six nominated by the Parent (the “IGT Nominated Directors”), three of whom will be nominated by De Agostini pursuant to the Investor Rights Agreement and (b) five nominated by Everi (the “Everi Nominated Directors”). The directors will be appointed to the classes of the Everi Board as specified in the Investor Rights Agreement and the Merger Agreement, and at least three of each of the IGT Nominated Directors and the Everi Nominated Directors will be subject to independence and other qualifications. Consummation of the Merger is subject to various and customary conditions, including, among other things: the accuracy of representations and warranties and compliance with covenants, subject to certain customary exceptions; the effectiveness of registration statements to be filed by SpinCo and Everi with the SEC in connection with the Separation & Divestiture; approval by the stockholders of Everi and the shareholders of the Parent; the consummation of the Separation, the SpinCo Contribution and the Distribution; the receipt of the Intercompany Note by the Parent and the receipt of the Cash Payment by the Parent concurrently with the receipt by Everi of proceeds of the Financing (as defined in the Merger Agreement); the receipt of regulatory approvals; and the approval of the NYSE of the listing on the NYSE of the newly issued shares of Everi common 84 stock in the Merger. The Merger Agreement provides that the parties will use their reasonable best efforts and take other actions to obtain the specified regulatory approvals for the proposed transaction, subject to certain exceptions as set forth in the Merger Agreement. The Parent, SpinCo, Everi, and Merger Sub each make certain customary representations, warranties and covenants, as applicable, in the Merger Agreement, including covenants with respect to the conduct of the SpinCo Business and the business of Everi and its subsidiaries, as applicable, during the period between signing and the earlier of the termination of the Merger Agreement and the Merger Effective Time. Each of the Parent and Everi also covenants, among other things, that neither party nor any of its subsidiaries will (i) solicit certain alternative transactions or (ii) enter into discussions concerning, or provide information or data in connection with, such alternative transactions (except under limited circumstances described in the Merger Agreement, including where such party’s board of directors has received an unsolicited proposal that could reasonably be expected to lead to a superior proposal and failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law, subject to certain notice conditions); provided that the Parent may solicit or enter into discussions concerning, or provide information or data in connection with, transactions with respect to the business of the Parent excluding the SpinCo Business. The Merger Agreement also provides for each of the Parent’s and Everi’s board of directors to recommend that its shareholders and stockholders, respectively, vote in favor of the Separation & Divestiture, subject to certain exceptions described in the Merger Agreement. The Merger Agreement contains specified termination rights for the Parent and Everi, including, among other things, that either party may terminate the Merger Agreement if either the Parent’s or Everi’s board adopts, approves, endorses, declares advisable or recommends to its stockholders an acquisition proposal other than the contemplated transaction, and under other circumstances as set forth in the Merger Agreement. The Merger Agreement further provides that in connection with a termination of the Merger Agreement under specified circumstances, each of the Parent and Everi may be obligated to pay a termination fee of $80 million and/or reimburse the other party for Commitment Fees (as defined in the Merger Agreement) and expenses in connection with any securities offering in connection with the Financing paid by the other party. This description is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 4.10 to this annual report on Form 20-F. Employee Matters Agreement The Employee Matters Agreement, among other things, allocates among the parties the pre- and post-Closing liabilities in respect of the current and former employees of the SpinCo Business (including liabilities in respect of employee compensation and benefit plans covering such employees). Subject to various exceptions, SpinCo will generally assume liabilities in respect of the current and former employees of the SpinCo Business and any assets dedicated thereto, and the Parent will generally retain employee liabilities and assets related to the Parent. This description is qualified in its entirety by reference to the Employee Matters Agreement, which is filed as Exhibit 4.12 to this annual report on Form 20-F. Real Estate Matters Agreement The Real Estate Matters Agreement governs the allocation and transfer of real estate between the Parent and SpinCo. Pursuant to the Real Estate Matters Agreement, the Parent may transfer to, or share with, SpinCo certain leased property associated with the SpinCo Business. The Real Estate Matters Agreement describes the manner in which the Parent will conduct an internal feasibility review to determine the suitability of certain leased property for a sublease or license to SpinCo. Following such review, the Parent and SpinCo may agree to (i) enter into a sublease or license of a portion of a leased property, or (ii) secure an alternative location and/or remote work arrangement for employees and operations which would otherwise have continued at such leased property. This description is qualified in its entirety by reference to the Real Estate Matters Agreement, which is filed as Exhibit 4.13 to this annual report on Form 20-F. Tax Matters Agreement The Tax Matters Agreement sets forth, among other things, the parties’ respective rights, responsibilities and obligations with respect to taxes of SpinCo, the Parent, Everi and their respective subsidiaries (including taxes arising in the ordinary course of business and taxes imposed in connection with the Separation & Divestiture), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters. Generally, the 85 Parent will be responsible for taxes incurred by the SpinCo Business prior to the date of the Distribution, and SpinCo (and Everi through its ownership of SpinCo) will be responsible for taxes incurred by SpinCo following the date of the Distribution. The Parent will also be responsible for any taxes imposed on SpinCo in connection with the Separation & Divestiture. This description is qualified in its entirety by reference to the Tax Matters Agreement, which is filed as Exhibit 4.14 to this annual report on Form 20-F. Financing Arrangements In connection with the Merger Agreement, on February 28, 2024, SpinCo entered into the Commitment Letter and related fee letters and engagement letter with DB, Macquarie, and Everi, pursuant to which, and subject to the terms and conditions set forth therein, DB and Macquarie committed to provide up to $4.22 billion in senior secured credit facilities consisting of (i) a $500 million revolving credit facility (the “Revolving Credit Facility”), (ii) a term loan facility (the “Term Loan Facility” and together with the Revolving Credit Facility, the “Credit Facilities”) and (iii) a bridge facility (the “Bridge Facility” and, collectively with the Credit Facilities, the “Facilities”). Pursuant to the engagement letter related to the Commitment Letter, SpinCo and Everi have engaged DB and Macquarie with respect to an issuance of “Rule 144A-for-life” senior secured notes that may be issued in lieu of all or a portion of the Bridge Facility. The proceeds of the loans under the Facilities may be used by Everi to (i) consummate the refinancing of certain existing third party debt for borrowed money of Everi and its subsidiaries, pursuant to which such debt will be repaid, redeemed, defeased, discharged, refinanced or terminated and all commitments to extend credit under such debt agreements will be terminated and any security interests and guarantees in connection therewith shall be terminated and/or released, (ii) repay the Intercompany Note and (iii) to pay fees and expenses in connection with the Separation & Divestiture and otherwise consummate the Separation & Divestiture. If the Separation & Divestiture is consummated, the indebtedness contemplated by the Commitment Letter will become indebtedness of Everi and/or a wholly-owned subsidiary of Everi. This description is qualified in its entirety by reference to the Commitment Letter, which is filed as Exhibit 2.19 to this annual report on Form 20-F. The Voting Agreement The Voting Agreement contains, among other things, an agreement by De Agostini to vote or cause to be voted all shares of capital stock of the Parent owned or subsequently acquired by De Agostini (the “Covered Shares”) (i) for the approval of the Distribution, the transaction documents and the Separation & Divestiture, and (ii) against any alternative proposal to acquire SpinCo or actions that are intended to, or would reasonably be expected to, impede, interfere with or materially and adversely affect the consummation of the Separation & Divestiture. The Voting Agreement also contains certain restrictions on the transfer of the Covered Shares and a requirement to make and not withdraw certain regulatory filings and to provide information in support of the Financing and filings with the SEC necessary in connection with the consummation of the Separation & Divestiture. The Voting Agreement automatically terminates upon the earliest of the Closing, the valid termination of the Merger Agreement, a change in recommendation of the Separation & Divestiture by the Parent and any amendment to the Merger Agreement that decreases the exchange ratio without the prior written consent of De Agostini. This description is qualified in its entirety by reference to the Voting Agreement, which is filed as Exhibit 3.1 to this annual report on Form 20-F. Exclusive License Agreement with Sony On June 1, 2023, the Company entered into a ten-year licensing agreement with Sony, which grants the Company the exclusive rights to the Wheel of Fortune brand across gaming, lottery, iGaming and iLottery and includes the rights to distribute Wheel of Fortune content for free-to-play social casinos. The contract will run from January 1, 2025 to December 31, 2034, with minimum license fees of $312.5 million over the term, and extends the Company’s partnership with Sony dating back to 1996. This description is qualified in its entirety by reference to the licensing agreement, which is filed as Exhibit 4.9 to this annual report on Form 20-F. Share Sale and Purchase Agreement with On 86 restricted cash transferred and €23 million of selling costs, was €479 million and Observer Agreement with De Agostini On May 16, 2018, the Parent’s directors approved the observer agreement (the “Observer Agreement”) between De Agostini and the Company permitting De Agostini to appoint an observer to attend meetings of the Parent’s directors. On November Related Party Agreements For a discussion of the Company’s related party transactions, including additional transactions with De Agostini, please see “Notes to the Consolidated Financial Statements— Compensation Arrangements For a description of compensation arrangements with the Parent’s directors and executive officers, please see “Item 6. Directors, Senior Management, and Employees — B. Financing For a description of the Company’s outstanding financing agreements, please see section “Item 5.B. Liquidity and Capital D. Exchange Controls Other than applicable taxation, anti-money laundering, and counter-terrorist financing law and regulations and certain economic sanctions which may be in force from time to time, there are currently no English laws or regulations, or any provision of the Articles, which would prevent the transfer of capital or remittance of dividends, interest, and other payments to holders of the Parent’s securities who are not residents of the U.K. on a general basis. E. Taxation Material United States Federal Income Tax Considerations This section summarizes certain material U.S. federal income tax considerations regarding the ownership and disposition of the Parent’s ordinary shares by a U.S. holder (as defined below) Distribution and Merger. This summary is based on U.S. federal income tax law, including the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury regulations promulgated thereunder, administrative guidance and court decisions in effect on the date hereof, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. No ruling from the Internal Revenue Service (the “IRS”) has been sought with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. The discussion assumes that the Parent’s shareholders hold their ordinary shares, as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion further assumes that all items or transactions identified as debt will be respected as such for U.S. federal income tax purposes. This summary does not constitute tax advice and does not address all aspects of U.S. federal income taxation that may be relevant to the Parent’s shareholders in light of their personal circumstances, including any tax consequences arising under the tax on certain investment income pursuant to the Health Care and Education Reconciliation Act of 2010 or arising under the U.S. Foreign Account Tax Compliance Act (or any Treasury regulations or administrative guidance promulgated thereunder, any intergovernmental agreement entered into in connection therewith or any non-U.S. laws, rules or directives implementing or relating to any of the foregoing), or to shareholders subject to special treatment under the Code, including (but not limited to): •banks, thrifts, mutual funds, and other financial institutions; 87 •regulated investment companies; •real estate investment trusts; •traders in securities that elect to apply a mark-to-market method of accounting; •broker-dealers; •tax-exempt organizations and pension funds; •U.S. holders that own (directly, indirectly, or constructively) 10% or more of the Company’s stock (by vote or value); •insurance companies; •dealers or brokers in securities or foreign currency; •individual retirement and other deferred accounts; •U.S. holders whose functional currency is not the U.S. dollar; •U.S. expatriates; •“passive foreign investment companies” or “controlled foreign corporations”; •persons subject to the alternative minimum tax; •U.S. holders that hold their shares as part of a straddle, hedging, conversion, constructive sale or other risk reduction transaction; •U.S. holders that received their shares through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan. This discussion does not address any non-income tax considerations or any state, local or •an individual who is a citizen or resident of the United States; •a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia; •an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or •a trust This discussion does not purport to be a comprehensive analysis or description of all potential U.S. federal income tax considerations. Each of the Parent’s shareholders is urged to consult with such shareholder’s tax advisor with respect to the particular tax consequences of the ownership and disposition of the Parent’s ordinary shares to such shareholder. If a partnership, including for this purpose any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, holds the Parent’s ordinary shares, the tax treatment of a partner therein will generally depend upon the status of such partner, the activities of the partnership and certain determinations made at the partner level. Any such holder that is a partnership and the partners in such partnership should consult their tax advisors about the U.S. federal income tax consequences of the ownership and disposition of their ordinary shares. Ownership and Disposition of the Parent’s Ordinary Shares The following discusses certain material U.S. federal income tax consequences of the ownership and disposition of the Parent's ordinary shares by U.S. holders and assumes that the Parent will be a resident exclusively of the U.K. for all tax purposes. Taxation of Distributions Subject to the discussion below under “Passive Foreign Investment Company Considerations,” the gross amount of distributions with respect to the Parent’s ordinary shares (including the amount of any non-U.S. withholding taxes) will be taxable as dividends, to the extent that they are paid out of the Parent’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such dividends will be includable in a U.S. holder’s gross income as ordinary dividend income on the day actually or constructively received by the U.S. holder. Such dividends will not be eligible for the dividends-received deduction allowed to corporations under the Code. The gross amount of the dividends paid by the Parent to non-corporate U.S. holders may be eligible to be taxed at reduced rates of U.S. federal income tax applicable to “qualified dividend income.” Recipients of dividends from non-U.S. corporations will be taxed at this rate, provided that certain holding period requirements are satisfied and certain other requirements are met, if the dividends are received from “qualified foreign corporations,” which generally include corporations eligible for the benefits of an income tax treaty with the United States that the U.S. Secretary of the Treasury determines is satisfactory and includes an 88 information exchange program. The U.S. Department of the Treasury and the IRS have determined that the U.K.- U.S. Income Tax Treaty is satisfactory for these purposes and the Parent believes that it is eligible for benefits under such treaty. Dividends paid with respect to stock of a foreign corporation which stock is readily tradable on an established securities market in the United States will also be treated as having been received from a “qualified foreign corporation.” The U.S. Department of the Treasury and the IRS have determined that common stock is considered readily tradable on an established securities market if it is listed on an established securities market in the United States, such as the NYSE. Non-corporate U.S. holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss, or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code, will not be eligible for the reduced rates of taxation regardless of the Parent’s status as a qualified foreign corporation. In addition, even if the minimum holding period requirement has been met, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. Each U.S. holder should consult its own tax advisors regarding the application of these rules given its particular circumstances. To the extent that the amount of any distribution exceeds the Parent’s current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the excess will first be treated as a tax-free return of capital to the extent of each U.S. holder’s adjusted tax basis in the Parent’s ordinary shares and will reduce such U.S. holder’s basis accordingly. The balance of the excess, if any, will be taxed as capital gain, which would be long-term capital gain if the holder has held the Parent’s ordinary shares for more than one year at the time the distribution is received. Long-term capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at reduced rates. The deduction of capital losses is subject to limitations. The amount of any distribution paid in foreign currency will be the U.S. dollar value of the foreign currency distributed by the Parent, calculated by reference to the exchange rate in effect on the date the distribution is includable in the U.S. holder’s income, regardless of whether the payment is in fact converted into U.S. dollars on the date of receipt. Generally, a U.S. holder would not recognize any foreign currency gain or loss if the foreign currency is converted into U.S. dollars on the date the payment is received. However, any gain or loss resulting from currency exchange fluctuations during the period from the date the U.S. holder includes the distribution payment in income to the date such U.S. holder actually converts the payment into U.S. dollars will generally be treated as ordinary income or loss. Sale, Exchange, or Other Taxable Disposition Subject to the discussion below under “Passive Foreign Investment Company Considerations,” a U.S. holder will generally recognize taxable gain or loss on the sale, exchange or other taxable disposition of the Parent’s ordinary shares in an amount equal to the difference, if any, between the amount realized on the sale, exchange, or other taxable disposition and the U.S. holder’s tax basis in such Parent’s ordinary shares. Such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the ordinary shares have been held for more than one year. Long-term capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at reduced rates. The deduction of capital losses is subject to limitations. Passive Foreign Investment Company Considerations A Passive Foreign Investment Company (“PFIC”) is any foreign corporation if, after the application of certain “look-through” rules, (a) at least 75% of its gross income is “passive income” as that term is defined in the relevant provisions of the Code, or (b) at least 50% of the average value of its assets produces “passive income” or is held for the production of “passive income.” The determination as to PFIC status is a fact-intensive determination that includes ascertaining the fair market value (or, in certain circumstances, tax basis) of all the Parent’s assets on a quarterly basis and the character of each item of income, and cannot be completed until the close of a taxable year. If a U.S. holder is treated as owning PFIC stock, such U.S. holder will be subject to special rules generally intended to reduce or eliminate the benefit of the deferral of U.S. federal income tax that results from investing in a foreign corporation that does not distribute all of its earnings on a current basis. These rules may adversely affect the tax treatment to a U.S. holder of distributions paid by the Parent and of sales, exchanges, and other dispositions of the Parent’s ordinary shares, and may result in other adverse U.S. federal income tax consequences. The Parent believes that the ordinary shares should not be treated as shares of a PFIC in the current taxable year, and the Parent does not expect that it will become a PFIC in the future. However, there can be no assurance that the IRS will not successfully challenge this position or that the Parent will not become a PFIC at some future time as a result of changes in the Parent’s assets, income, or business operations. 89 Each U.S. holder is urged to consult its tax advisor concerning the U.S. federal income tax consequences of acquiring, owning or disposing of the Parent’s ordinary shares if the Parent is or becomes classified as a PFIC, including the possibility of making a mark-to-market election. The remainder of the discussion below assumes that the Parent is not a PFIC, has not been a PFIC and will not become a PFIC in the future. Information Reporting U.S. individuals and certain entities with interests in “specified foreign financial assets” (including, among other assets, the Parent’s ordinary shares, unless such shares were held on such U.S. holder’s behalf through certain financial institutions) with values in excess of certain thresholds are required to file an information report with the IRS. Taxpayers that fail to file the information report when required are subject to penalties. U.S. holders should consult their own tax advisors as to the possible obligation to file such information reports in light of their particular circumstances. Special Voting Shares NO STATUTORY, JUDICIAL OR ADMINISTRATIVE AUTHORITY DIRECTLY DISCUSSES HOW THE RECEIPT, OWNERSHIP, OR LOSS OF ENTITLEMENT TO INSTRUCT THE NOMINEE ON HOW TO VOTE IN RESPECT OF SPECIAL VOTING SHARES SHOULD BE TREATED FOR U.S. FEDERAL INCOME TAX PURPOSES AND AS A RESULT, THE U.S. FEDERAL INCOME TAX CONSEQUENCES THEREOF ARE UNCERTAIN. ACCORDINGLY, U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP, AND LOSS OF ENTITLEMENT TO INSTRUCT THE NOMINEE ON HOW TO VOTE IN RESPECT OF SPECIAL VOTING SHARES. While the tax consequences of the receipt, ownership, and loss of entitlement to instruct the nominee on how to vote in respect of Special Voting Shares are unclear, such receipt, ownership, and loss is not expected to constitute a separate transaction from ownership of the ordinary shares for U.S. federal income tax purposes. As such, neither the receipt of the Special Voting Shares nor the loss of entitlement to instruct the nominee on how to vote the Special Voting Shares is expected to give rise to a taxable event for U.S. federal income tax purposes. U.S. Federal Income Tax Consequences of the Distribution and Merger The following is a general discussion of certain material U.S. federal income tax consequences to U.S. holders (i) who receive SpinCo Units in the Distribution and (ii) whose SpinCo Units are exchanged for shares of Everi common stock pursuant to the Merger, assuming the Distribution and Merger are completed as set forth in the section above labeled “Separation & Divestiture of the Global Gaming and PlayDigital Businesses”. This discussion is subject to the discussion above under “Ownership and Disposition of the Parent’s Ordinary Shares—Passive Foreign Investment Company Considerations”. No ruling from the IRS has been or will be sought with respect to any aspect of the Separation & Divestiture, and no opinion of counsel will be rendered in connection with the transactions comprising the Separation & Divestiture. Accordingly, the discussion below neither binds the IRS nor precludes it from adopting a contrary position. The tax treatment of the Separation & Divestiture to Parent’s shareholders will vary depending on their particular situations. This summary is for the general information of U.S. holders only and does not purport to be a complete analysis of all potential tax effects of the Separation & Divestiture. Accordingly, U.S. holders should consult their own tax advisors with respect to the particular tax consequences to them of the Separation & Divestiture. Parent intends to report the Distribution as a taxable distribution of SpinCo Units for U.S. federal income tax purposes. Assuming such treatment is correct, the tax consequences described above in “Ownership and Disposition of the Parent’s Ordinary Shares—Taxation of Distributions” would generally apply to the Distribution. Specifically, a U.S. holder will be required to include the fair market value of the SpinCo Units in gross income as a dividend to the extent of Parent’s current or accumulated earnings and profits (as increased to reflect any gain recognized by Parent on a taxable distribution). A dividend paid by Parent to non-corporate U.S. holders may be eligible to be taxed at reduced rates of U.S. federal income tax applicable to “qualified dividend income”. The amount of Parent’s current or accumulated earnings and profits as of the date of the Distribution will not be known until after the Distribution. Accordingly, Parent is not able to determine the portion of the Distribution that will be reported as a dividend as of the date hereof. To the extent that the fair market value of the Distribution exceeds Parent’s current and accumulated earnings and profits, such excess will first be treated as a tax-free return of capital to the extent of a U.S. holder’s adjusted tax basis in Parent’s ordinary 90 shares and will reduce such U.S. holder’s basis accordingly. The balance of the excess, if any, will be taxed as capital gain, which would be long-term capital gain if the U.S. holder has held Parent’s ordinary shares for more than one year at the time the SpinCo Units are received. Long-term capital gain of certain non-corporate U.S. holders, including individuals, is generally taxed at reduced rates. A U.S. holder’s basis in the SpinCo Units will be equal to the fair market value of the SpinCo Units received in the Distribution. Based on the tax treatment of the Distribution described above, a U.S. holder would not recognize further gain or loss as a result of the Merger because even though the Merger is expected to be a taxable transaction, the fair market value of the Everi common stock received by such U.S. holder would equal the adjusted basis of the SpinCo Units exchanged by such U.S. holder in the Merger. A U.S. holder’s holding period for the Everi common stock received in the Merger will begin on the day after the Merger closes. Notwithstanding Parent’s intended reporting of the Distribution, it is possible that the Distribution could alternatively be viewed as tax-free under Section 355 of the Code, in which case the U.S. federal income tax consequences of the Distribution would generally be the following: •a U.S. holder would not recognize any gain or loss, and would not include any amount in income, upon receiving the SpinCo Units in the Distribution; •each U.S. holder’s aggregate basis in Parent’s ordinary shares and the SpinCo Units received in the Distribution would equal the aggregate basis the U.S. holder had in Parent’s ordinary shares immediately prior to the Distribution, allocated in proportion to the fair market value of each; and •each U.S. holder’s holding period in the SpinCo Units received in the Distribution would include the U.S. holder’s holding period in its Parent ordinary shares on which the Distribution was made. In this circumstance, the Merger would still be expected to be a taxable transaction, however, and a U.S. holder would be expected to recognize capital gain or loss equal to the difference between the Everi common stock received in the Merger and such U.S. holder’s adjusted basis in the SpinCo Units received in the Distribution (as described above). Such capital gain or loss would be long-term capital gain or loss if the U.S. holder’s holding period for the SpinCo Units (as described above) is more than one year as of the effective time of the Merger.A U.S. holder’s holding period for the Everi common stock received in the Merger would begin on the day after the Merger closes. In light of the foregoing, the Distribution and Merger, together, may result in materially different U.S. federal income tax consequences depending on whether only the Merger, or both the Distribution and the Merger are taxable for U.S. federal income tax purposes. U.S. holders should consult their own tax advisors as to the tax consequences to them of the Distribution and Merger. Material U.K. Tax Considerations The following summary is intended to apply only as a general guide to certain U.K. tax considerations, and is based on current U.K. tax law and current published practice of Any shareholder or potential investor should obtain advice from his or her own investment or taxation advisor. Dividends The Parent will not be required to withhold U.K. tax at the source from dividend payments it makes. U.K. resident individual shareholders All dividends received by an individual shareholder from the Parent or from other sources will form part of that shareholder’s total income for income tax purposes and will constitute the top slice of that income. For the tax year 91 the dividends they receive (whether from the Parent or other companies) exceed the tax free dividend allowance (£ U.K. resident corporate shareholders A corporate shareholder resident in the U.K. for tax purposes which is a “small company” for the purposes of Chapter 2 of Part 9A of the Corporation Tax Act 2009 will not be subject to U.K. corporation tax on any dividend received from the Parent provided that certain conditions are met (including an anti-avoidance condition). Other corporate shareholders resident in the U.K. for tax purposes will not be subject to U.K. corporation tax on any dividend received from the Parent so long as the dividends fall within an exempt class and certain conditions are met. For example, If the conditions for exemption are not met or cease to be satisfied, if anti-avoidance provisions apply, or if such a corporate shareholder elects an otherwise exempt dividend to be taxable, the shareholder will be subject to U.K. corporation tax on dividends received from the Parent, at the rate of corporation tax applicable to that corporate shareholder (currently, Non-U.K. resident shareholders A shareholder resident outside the U.K. for tax purposes and who holds the Parent’s ordinary shares as investments will not generally be liable to tax in the U.K. on any dividend received from the Parent unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the A non-U.K. resident shareholder may also be subject to taxation on dividend income under local law. A shareholder who is not solely resident in the U.K. for tax purposes should consult his or her own tax advisors concerning his or her tax liabilities (in the U.K. and any other country) on dividends received from the Parent, whether he or she is entitled to claim any part of the tax credit and, if so, the procedure for doing so, and whether any double taxation relief is due in any country in which he or she is subject to tax. Taxation of Capital Gains Disposal of the Parent’s Ordinary Shares A disposal or deemed disposal of the Parent's ordinary shares by a shareholder who is resident in the U.K. for tax purposes may, depending upon the shareholder’s circumstances and subject to any available exemptions and reliefs (such as the annual exempt amount for individuals), give rise to a chargeable gain or an allowable loss for the purposes of U.K. taxation of capital gains. If an individual shareholder If a corporate shareholder becomes liable to U.K. corporation tax on the disposal (or deemed disposal) of ordinary shares, the main rate of U.K. corporation tax 92 departure) and who disposes of the Parent’s ordinary shares during that period of temporary non-residence may be liable on his return to the U.K. (or upon ceasing to be regarded as resident outside the U.K. for purposes of double taxation relief) to U.K. taxation on any capital gain realized (subject to any available exemption or relief). Diverted Profits Tax The U.K. diverted profits tax (“DPT”) is currently separate from U.K. corporation tax and is charged at a higher rate of 31% (subject to certain limited exceptions). It is an anti-avoidance measure aimed at protecting the U.K. tax base against the artificial diversion of profits that are being earned by activities carried out in the U.K. but which are not otherwise being taxed in the U.K., in particular as a result of arrangements amongst companies in the same multinational group. The U.K.’s network of double tax treaties does not currently offer protection from a DPT charge. In the event that the rules apply to certain arrangements, then upfront payment of HMRC’s estimate of the deemed tax liability may be required. If any of our U.K. or non-U.K. companies is liable for DPT as a result of intra-group arrangements, this could have a material adverse effect on the Company’s and/or the Parent’s results. HMRC’s response to the June 19, 2023 consultation to reform U.K. law in relation to transfer pricing, permanent establishment, and DPT, published on January 16, 2024, proposes to remove DPT’s status as a separate tax and bring in an equivalent charge to U.K. corporation tax. Broadly, the reform is intended to clarify the relationship between DPT and transfer pricing and will provide access to treaty benefits for DPT. The U.K. government will hold a technical consultation on draft legislation in 2024. Inheritance Tax The Parent’s ordinary shares will be assets situated in the U.K. for the purposes of U.K. inheritance tax. A gift or settlement of such assets by, or on the death of, an individual holder of such assets may (subject to certain exemptions and reliefs and depending upon the shareholder’s circumstances) give rise to a liability to U.K. inheritance tax even if the holder is not a resident of or domiciled in the U.K. for tax purposes. For inheritance tax purposes, a transfer of assets at less than market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some benefit. A charge to inheritance tax may arise in certain circumstances where the Parent’s ordinary shares are held by close companies and by trustees of settlements. Shareholders should consult an appropriate tax advisor as to any inheritance tax implications if they intend to make a gift or transfer at less than market value or intend to hold the Parent’s ordinary shares through a close company or trust arrangement. Shareholders and/or potential investors who are in any doubt as to their tax position, or who are subject to tax in any jurisdiction other than the U.K., should consult a suitable professional advisor. UK Tax Consequences of the Distribution The Distribution by Parent of the SpinCo Units will be treated as a taxable dividend in the hands of UK shareholders, subject to certain exemptions. Liability to tax on dividends will depend upon the individual circumstances of that shareholder. The Distribution received by a UK resident individual shareholder will form part of that shareholder’s total income for income tax purposes and will constitute the top slice of that income. UK resident individual shareholders are subject to tax on dividends in accordance with their personal tax bands (as described above). A U.K. resident corporate shareholder which is a “small company” for the purposes of Chapter 2 of Part 9A of the Corporation Tax Act 2009 will not be subject to U.K. corporation tax on the Distribution provided that certain conditions are met (including an anti-avoidance condition). Other UK resident corporate shareholders will be liable to U.K. corporation tax (currently at a rate of 25%) on the Distribution unless the dividend falls within an exempt class and certain conditions are met. U.K. resident corporate shareholders should seek advice from their own professional advisers in considering whether they are within the scope of an exempt class. A non-UK resident shareholder will not generally be liable to tax in the U.K. on the Distribution unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the U.K. through a branch or agency (or, in the case of a corporate holder of ordinary shares where the dividend exemption does not apply, through a permanent establishment) to which the ordinary shares are attributable. A non-U.K. resident shareholder may also be subject to taxation on dividend income under local law, and should consult his or her own tax advisors concerning his or her tax liabilities (in the U.K. and any other country) on the Distribution of SpinCo Units from Parent. Parent is not required to withhold tax when distributing the Spinco Units. The Distribution should otherwise be tax neutral for Parent. 93 UK Tax Consequences of the Merger The Merger should be treated as a disposal of the Units of SpinCo shares by the UK resident shareholders and depending upon the shareholder’s circumstances, and subject to any available exemptions and reliefs (such as the annual exempt amount for individuals), may give rise to a chargeable gain or an allowable loss for the purposes of U.K. taxation of capital gains. The UK resident shareholders are expected to have market value basis in the SpinCo Units following the Distribution such that, provided the Merger occurs shortly after the Distribution, any gain for the UK shareholders on the deemed disposal of Units of SpinCo should be minimal. UK resident individual shareholders are subject to capital gains tax on the disposal of the Units of SpinCo in accordance with their personal tax bands (as described above). ). A U.K. resident corporate shareholder will be liable to U.K. corporation tax on the disposal at the main rate of U.K. corporation tax (currently at a rate of 25%), subject to any exemptions, reliefs and/or allowable losses. A non-U.K. resident shareholder should not normally be liable to U.K. taxation on chargeable gains on the disposal of SpinCo Units unless the person is carrying on (whether solely or in a partnership) a trade, profession or vocation in the U.K. through a branch or agency (or, in the case of a corporate holder of ordinary shares, through a permanent establishment) to which the ordinary shares are attributable. Special rules may apply to individual non-UK resident shareholders who have ceased to be resident in the UK for tax purposes and who make a disposition of their Units of SpinCo whilst UK non-resident before becoming once again resident in the UK for tax purposes within five years from departure. UK resident and non-UK resident shareholders should consult their own tax advisors concerning their tax liabilities (in the U.K. and any other country) on the disposal of the Units of SpinCo. F. Dividends and Paying Agents Not applicable. G. Statement Not applicable. H. Documents on Display The Parent files reports, including annual reports on Form 20-F, furnishes current reports on Form 6-K, and discloses other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. These may be accessed by visiting the SEC’s website at www.sec.gov. I. Subsidiary Information Not applicable J. Annual Report to Security Holders Not applicable. 94 Item 11. Quantitative and Qualitative Disclosures About Market Risk The Company’s activities expose it to a variety of market risks including interest rate risk and foreign currency exchange rate risk. The Company’s overall risk management strategy focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on its performance through ongoing operational and finance activities. The Company monitors and manages its exposure to such risks both centrally and at the local level, as appropriate, as part of its overall risk management program with the objective of seeking to reduce the potential adverse effects of such risks on its results of operations and financial position. Depending upon the risk assessment, the Company uses selected derivative hedging instruments, including principally interest rate swaps and foreign currency forward contracts, for the purposes of managing interest rate risk and currency risks arising from its operations and sources of financing. The Company’s policy is not to enter into such contracts for speculative purposes. The following section provides qualitative and quantitative disclosures on the effects that these risks may have. The quantitative data reported below does not have any predictive value and does not reflect the complexity of the markets or reactions which may result from any changes that are assumed to have taken place. Interest Rate Risk Indebtedness The Company’s exposure to changes in market interest rates relates primarily to its cash and financial liabilities which bear floating interest rates. The Company’s policy is to manage interest cost using a mix of fixed and variable rate debt. The Company has historically used various techniques to mitigate the risks associated with future changes in interest rates, including entering into interest rate swap and treasury rate lock agreements. At December 31, A hypothetical Costs to Fund Jackpot Liabilities Fluctuations in prime, treasury, and agency rates due to changes in market and other economic conditions directly impact the Company’s cost to fund jackpots and corresponding gaming operating income. If interest rates decline, jackpot cost increases and operating income decreases. The Company estimates a hypothetical decline of one percentage point in applicable interest rates would have reduced operating income by approximately Foreign Currency Exchange Rate Risk The Company operates on an international basis across a number of geographical locations. The Company is exposed to (i) transactional foreign exchange risk when an entity enters into transactions in a currency other than its functional currency, and (ii) translation foreign exchange risk which arises when the Company translates the financial statements of its foreign entities into U.S. dollars for the preparation of the Transactional Risk The Company’s subsidiaries generally execute their operating activities in their respective functional currencies. In circumstances where the Company enters into transactions in a currency other than the functional currency of the relevant entity, the Company seeks to minimize its exposure by (i) sharing risk with its customers (for example, in limited circumstances, but whenever possible, the Company negotiates clauses into its contracts that allows for price adjustments should a material change in foreign exchange rates occur), (ii) creating a natural hedge by netting receipts and payments, (iii) utilizing foreign currency borrowings, and (iv) where applicable, by entering into foreign currency forward and option contracts. 95 The principal foreign currency to which the Company is exposed is the euro. A hypothetical 10% decrease in the year end U.S. dollar to euro exchange rate, with all other variables held constant, would have resulted in lower income from continuing operations before provision for income taxes of approximately From time to time, the Company enters into foreign currency forward and option contracts to reduce the exposure associated with certain firm commitments, variable service revenues, and certain assets and liabilities denominated in foreign currencies. These contracts generally have average maturities of 12 months or less, and are regularly renewed to provide continuing coverage throughout the year. It is the Company’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximize hedge effectiveness. At December 31, At December 31, Translation Risk Certain of the Company’s subsidiaries are located in countries that are outside of the United States, in particular the Eurozone. As the Company’s reporting currency is the U.S. dollar, the income statements of those entities are converted into U.S. dollars using the average exchange rate for the period, and while revenues and costs are unchanged in local currency, changes in exchange rates may lead to effects on the converted balances of revenues, costs, and the result in U.S. dollars. The monetary assets and liabilities of consolidated entities that have a reporting currency other than the U.S. dollar are translated into U.S. dollars at the period-end foreign exchange rate. The effects of these changes in foreign exchange rates are recognized directly in the The Company’s foreign currency exposure primarily arises from changes between the U.S. dollar and the euro. A hypothetical 10% decrease in the U.S. dollar to euro exchange rate, with all other variables held constant, would have Item 12.Description of Securities Other than Equity Securities Not applicable. PART II Item 13.Defaults, None. Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds See the description of the Loyalty Plan in “Item 10. Additional Information—B. Memorandum and Articles of Item 15.Controls and Procedures Disclosure Controls and Procedures As required by Rule 13a-15(b) under the Exchange Act, an evaluation of the effectiveness of the Management’s Report on Internal Control over Financial Reporting The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. •pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; •provide reasonable assurance that transactions are recorded, as necessary, to permit preparation of financial statements in accordance with generally accepted accounting •provide reasonable assurance that unauthorized acquisition, use or disposition of the Company’s assets, that could have a material effect on the financial statements, would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in business conditions or Changes in Internal Control over Financial Reporting There have been no changes in internal control over financial reporting during the year ended December 31, Item 16A. Audit Committee Financial Expert The Parent’s Board of Directors has determined that Item 16B. Code of Ethics Item PricewaterhouseCoopers LLP (“PwC US”) has been serving as the Company’s independent auditor since 2015. Aggregate fees for professional services and other services rendered by PwC US and its foreign entities belonging to the PwC network in
•Audit fees consist of professional services performed in connection with the annual financial statements. •Tax fees consist of professional services for tax planning and compliance. The 2023 tax fees include professional services incurred for our Separation & Divestiture activities, as defined in “Notes to the Consolidated Financial Statements—3. Business Acquisitions and Divestitures” included in “Item 18. Financial Statements.” •Audit-related fees consist of assurance and related services that are reasonably related to the performance of the audit or review of the financial statements and agreed upon procedures for certain financial statement areas. The 2023 audit-related fees include amounts incurred for our Separation & Divestiture activities. •All other fees, other than those reported above, mainly consist of services in relation to 98 Audit Committee’s Pre-Approval Policies and Procedures The Audit Committee pre-approves engagements of the Company’s independent registered public accounting firm to audit the Company’s Item 16D. Exemptions from the Listing Standards for Audit Committees None. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers The Company did not execute any share repurchase transactions during the year ended December Item 16F.Change in Registrant’s Certifying Accountant None. Item 16G.Corporate Governance The Parent is a public limited company incorporated under the laws of England and Wales and qualifies as a foreign private issuer under the rules and regulations of the SEC and the listing standards of the NYSE. In accordance with the NYSE listing rules related to corporate governance, listed companies that are foreign private issuers are permitted to follow home-country practice in some circumstances in lieu of the provisions of the corporate governance rules contained in Section 303A of the NYSE Listed Company Manual that are otherwise applicable to listed companies. However, for as long as the Parent’s ordinary shares are listed on the NYSE, the Company Item 16H. Mine Safety Disclosure Not applicable. Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. Item 16J. Insider Trading Policies Not applicable. 99 Item 16K. Cybersecurity Cybersecurity Risk Management Processes As discussed in Part I, Item 3D – Risk Factors, the Company faces an evolving cybersecurity and information security risk landscape that could impact the achievement of strategic, financial and operational objectives. While it is not possible to identify or anticipate every cybersecurity and information security risk, the Company has developed, implemented, and maintained cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. These include processes for assessing, identifying, and managing material risks from cyber and information security threats, which are incorporated into the Company’s enterprise risk management program, and we test, evaluate, and evolve our processes, security measures, and incident response, as appropriate. To operate the business and provide products and services to our customers, the Company owns and maintains or works with third parties to employ various information systems, or electronic information resources. These information systems include physical or virtual infrastructure controlled by such information resources (or components thereof), organized and overseen by the Global Information Security (“GIS”) team in collaboration with the business to collect, process, maintain, use, share, disseminate or dispose of the Company’s information to maintain and support operations. The Chief Information Officer (the “CIO”) leads the GIS function of the Company. GIS maintains information and cyber security risk management practices and processes designed to identify, analyze, evaluate and address various cybersecurity threats faced by the Company. Any potential cybersecurity incident could adversely affect the confidentiality, integrity or availability of our information systems or any information residing therein, and these threats include external attempts to breach and compromise systems, social engineering, insider threats, mishandling of or failure to comply with security policies and not adhering to published guidance on how to operate in accordance with cybersecurity practices. To mitigate our cybersecurity risk, GIS has designed various cybersecurity processes to prevent, detect, report, mitigate and remediate threats and vulnerabilities and protect the confidentiality, integrity and availability of information. As the functional lead of GIS, the Chief Information Security Officer (the “CISO”) oversees the Company’s information security programs maintained throughout the organization and ensures the integration of policies, procedures and controls into business processes. GIS, including the Global Security Operations Center and Cyber Threat Intelligence Center (“CTIC”), performs certain operational aspects of the information and cyber security program by partnering with business units and senior management to conduct ongoing impact and risk assessment. The Global Security Operations Center serves as the Company’s first level of information and cyber security defense monitoring, with responsibility for identifying and escalating cybersecurity incidents pursuant to established internal procedures. When a cybersecurity incident occurs, the CTIC coordinates and provides timely, organized, and informed responses to mitigate the damage or loss to the Company’s IT systems, network and data and to minimize economic, reputational and other harms to the Company and its customers, employees and partners. Cybersecurity Governance and Oversight Responsibilities To support the effectiveness of the information and cyber security risk management practices, the Company has implemented a program and governance model that describes the roles, responsibilities and expectations for relevant segments and functions across the Company: •Board and Audit Committee: The Board reviews the adequacy and effectiveness of the Company’s cyber and information security program, including the various policies, practices, and internal controls. The Audit Committee holds dedicated sessions to receive and discuss updates on data protection and cybersecurity and engages with management on the Company’s incident prevention plans and policies, threat-detection measures and prompt response to malicious activity and attacks. Through the Audit Committee, the Board receives periodic updates on cyber security risk oversight and related matters, including the receipt of annual reports on cyber and information security from the CIO, CISO, and Audit Committee. •Information and Cyber Security Program Owners: The Senior Vice President, Chief Information Officer, and Vice President, CISO own the GIS Information and Cyber Security Program. The Company’s CISO has over 30 years of technical skills and experience designing, implementing, and maintaining global information security frameworks and communications networks for companies. The Company’s CIO has over 35 years of technical skills and experience developing global systems and processes. The CISO operates the Company’s cyber and information security program under the direct supervision of the CIO, and the CIO reports directly into the Company’s Chief Financial Officer. •Information and Security Governance Committee (or the “ISGC”): The ISGC, comprised of senior management and led by the CISO, reviews GIS policies, standards and other governance documents at least annually, or upon need of a significant change. Decisions and recommendations from the committee are communicated to the Executive Management Team and Board, as appropriate, by the CISO. 100 •Cybersecurity Incident Response Committee (or the “CIRC”): The Company has established a cross-functional CIRC charged with reviewing significant cybersecurity incidents escalated by the CISO to complete a materiality analysis to support the identification of appropriate steps, which may include disclosure in accordance with applicable SEC rules and regulation and other law. •Senior Management: Senior management within Lottery, Gaming, PlayDigital and corporate services are responsible for collaborating with GIS to implement information and cyber security processes into their business segments or functional areas. Cybersecurity and Our Gaming Products and Services Customers entrust the Company to safeguard their data, and GIS ensures that trust with teams dedicated to maintaining that confidentiality, integrity, and availability of customer data. GIS identifies cybersecurity risks and tracks mitigation activities, testing and monitoring of the operational effectiveness of controls to ensure business commitments are achieved. In addition to internal management of data security controls, GIS undergoes third-party assessments each year to validate that controls are suitably designed and operating effectively. These independent assessments include: (i) internal risk assessments; (ii) System and Organizational Controls (“SOC”) 1, SOC 2, and SOC 3 audits; (iii) Payment Card Industry assessments; (iv) World Lottery Association assessments; and (v) ISO 27001 certification audits. GIS has incorporated secure practices into the software development lifecycle, which includes risk assessments of projects, rigorous testing of application and network changes, issue tracking to resolution prior to deployment of changes, governance over our environment and providing a structured, measurable process to ensure solutions are managed and sustainable with a security focus. IGT’s Global Information Security Management System (“ISMS”) addresses security concerns related to safeguarding customer data by guiding the management of the overall information security management framework and developing information security documentation, including security policies, security standards and protocols or procedures. The goals pursued by ISMS include: •Complying with business, legal, and regulatory requirements to maintain the confidentiality, integrity and availability of IGT information assets and services; •Implementing industry best practices at the program, process and system levels; •Maintaining IGT’s ability to continue services in the face of events and major disruptions; •Implementing controls to protect IGT information against theft, abuse and other forms of harm or loss; and •Designing and implementing a system of internal controls designed to protect IGT and its stakeholders. IGT’s CTIC focuses on early detection of risks, including cybersecurity threats, through a variety of testing methods that are selected and implemented to align with industry best practices, which include penetration and vulnerability scanning of systems and environments. Findings from these tests are tracked to remediation and reported to executive management (including the Chief Financial Officer, General Counsel, Chief Accounting Officer and Head of Internal Audit) and the Audit Committee. In addition to CTIC’s monitoring capabilities, internal and external parties can also escalate a suspected information or cyber security threat to the CTIC through an automated reporting system. As needed, the CTIC coordinates a response with other departments (including the Legal department and executive team) by way of the CISO. If management deems a cybersecurity incident material, the Company will report the cybersecurity incident consistent with applicable rules and regulations, including those of the SEC. GIS also introduced the Third-Party Risk Assessments program to evaluate the potential impact of IGT vendors on the business from various security threat vectors and monitors the overall cyber security health of IGT’s critical vendors. Information security monitoring of vendors is managed through GIS, in collaboration with the Company’s procurement team. 101 PART III Item 17.Financial Statements Not applicable. Item 18.Financial Statements The audited Consolidated Financial Statements as required under Item 18 are attached hereto starting on page F-1 of this annual report on Form 20-F. Item 19.Exhibits A list of exhibits included as part of this annual report on Form 20-F is set forth in the Index to Exhibits immediately following this Item 19. INDEX TO EXHIBITS 104 105
SIGNATURE The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.
Dated: March ITEM 18. FINANCIAL STATEMENTS INTERNATIONAL GAME TECHNOLOGY PLC INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1 Report of Independent Registered Public Accounting Firm To theBoard of Directors and Shareholders of International Game Technology PLC Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of International Game Technology PLC and its subsidiaries (the “Company”) as of December 31, In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. F-2 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit Revenue Recognition – Identifying and Evaluating Contractual Terms and Conditions As described in Notes 2 and 4 to the consolidated financial statements, the Company generated service and product revenues of The principal considerations for our determination that performing procedures relating to revenue recognition, specifically identifying and evaluating contractual terms and conditions, is a critical audit matter are the significant judgment by management in identifying and evaluating contractual terms and conditions that impact the identification of performance obligations and the pattern of revenue recognition, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate whether terms and conditions in contracts were appropriately identified and evaluated by management. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to revenue recognition, including controls related to the identification and evaluation of contractual terms and conditions impacting the identification of performance obligations and the pattern of revenue recognition. These procedures also included, among others, (i) evaluating and testing management’s process for identifying performance obligations and assessing the pattern of revenue recognition, and (ii) evaluating, on a test basis, the completeness and accuracy of the contractual terms and conditions identified in contracts with customers. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts March We have served as the Company’s auditor since 2015. International Game Technology PLC Consolidated Balance Sheets ($
The accompanying notes are an integral part of these International Game Technology PLC Consolidated Statements of Operations ($ and shares in
The accompanying notes are an integral part of these International Game Technology PLC Consolidated Statements of Comprehensive ($
The accompanying notes are an integral part of these International Game Technology PLC
Consolidated Statements of Cash Flows ($
F-7 International Game Technology PLC Consolidated Statements of Cash Flows ($ in millions)
The accompanying notes are an integral part of these International Game Technology PLC Consolidated ($
The accompanying notes are an integral part of these International Game Technology PLC Notes to the Consolidated Financial Statements 1. Description of Business International Game Technology PLC (the “Parent”), together with its consolidated subsidiaries (collectively referred to as “IGT PLC,” the “Company,” “we,” “our,” or “us”), is a global leader in gaming that delivers entertaining and responsible gaming experiences for players across all channels and regulated segments, from We report our financial performance based on three business segments: Global Lottery, Global Gaming, and PlayDigital. Through our three business segments, we operate and provide an integrated portfolio of innovative gaming technology products and services 2. Summary of Significant Accounting Policies Basis of Preparation Our Consolidated Financial Statements and accompanying Principles of Consolidation The Investments in which we have the ability to exercise significant influence, but do not control, and with respect to which we are not the primary beneficiary, are accounted for using the equity method of accounting. Equity investments in which we have no ability to exercise significant influence that do not have a readily determinable fair value and do not have a Net Asset Value per share are measured at cost, less impairment, plus or minus changes resulting from observable price changes. Equity method investments and equity investments in which we have no ability to exercise significant influence are included within other non-current assets Use of Estimates The preparation of our New Accounting Standards - Recently Adopted In March 2022, the F-10 troubled debt restructuring (“TDR”) recognition and measurement accounting model, and instead entities will evaluate the In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). The amendments create an exception to the general recognition and measurement principal in ASC 805, Business Combinations to measure assets and liabilities acquired in a business combination at fair value. Instead, an acquirer in a business combination will be required to apply ASC 606 to recognize and measure contract assets and contract liabilities that result from contracts accounted for under ASC 606 on the New Accounting Standards - Not Yet Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments create additional disclosure requirements with respect to segment financial information. In addition to disclosing the specific segment expenses already required by In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures. The amendments create additional disclosure requirements with respect to income tax information. Entities must disclose certain categories in the income tax rate reconciliation of the effective and There are no additional new accounting standards not yet adopted for the year ended December 31, 2023 with a significant effect on the Consolidated Financial Statements. Revenue We account for a contract with a customer when: F-11 or the Company with a significant benefit of financing, in which case the contract contains a significant financing component. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) performance obligations for which we recognize variable revenue at the amount that we have the right to invoice for services performed, (iii) contracts for which variable consideration is accounted for in accordance with sales-based or usage-based royalty guidance, and (iv) wholly unperformed contracts. Additional information on revenue recognition is included in Note 4.- Revenue Recognition. Significant Judgments and Estimates Revenue recognition is impacted by our ability to determine when a contract is probable of collection and to estimate variable consideration, including, for example, rebates, volume discounts, service-level penalties, and performance bonuses. We consider various factors when making these judgments, including a review of specific transactions, historical experience and market and economic conditions. Evaluations are conducted each quarter to assess the adequacy of the estimates. Our contracts with customers often include promises to transfer multiple products and services to a customer. Specifically, complex arrangements with nonstandard terms and conditions may Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. The SSP is the price at which we would sell a promised product or service separately to a customer. In some instances, we are able to establish SSP based on the observable prices of services or products sold separately in comparable circumstances to a similar customer. We typically establish an SSP range for our products and services that are reassessed on a periodic basis or when facts and circumstances change. In other instances, we may not be able to establish an SSP range based on observable prices, and we estimate the SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives, and pricing practices. Determining whether we are acting as a principal or an agent for subcontractor services or third-party vendor services Contract Costs Certain eligible, non-recurring costs incurred in the initial phases of service contracts are capitalized and amortized ratably over the expected period of benefit, which includes anticipated contract renewals or extensions. Recurring operating costs in these contracts are recognized as incurred. Advertising Advertising costs are expensed as incurred. Advertising expense was $28 million, $28 million, and $33 million for the years ended December 31, 2023, 2022, and 2021, respectively. Research and Development Costs Research and development costs (“R&D”), which principally include employee compensation costs, are expensed as incurred, except certain costs incurred related to capitalized software development as described below in the Capitalized Software Development Costs policy. F-12 Cash and Cash Equivalents Cash and cash equivalents consist primarily of highly liquid investments purchased with an original maturity of three months or less at the date of acquisition, such as bank deposits, money market funds, and interest bearing bank accounts with insignificant interest rate risk. The fair value of cash and cash equivalents approximates the carrying amount. Restricted Cash and Cash Equivalents Under our Italian Lotto and Italian Scratch & Win contracts, we deposit wagers, net of prizes paid and retailer commissions retained by the retailer at point of sale, into bank accounts, the use of which is restricted based on the contract with our customer. Restricted cash is also maintained for interactive digital player deposits and in certain jurisdictions where we are required by gaming regulations to maintain sufficient reserves in restricted cash accounts to be used for the purpose of funding payments to WAP jackpot winners. These amounts are restricted based on the contracts with our customers or local regulations. Allowance for Expected Credit Losses We maintain an allowance for expected credit losses on receivables resulting from the expected failure or inability of our customers to make required payments. The allowance is regularly reviewed by considering factors such as the creditworthiness of our customers, historical experience, aging of receivables, current market and economic conditions, as well as management’s expectations of future conditions. The allowance is deducted from the amortized cost basis of the receivable to present the net amount expected to be collected. We estimate expected credit losses on receivables on a collective (pool) basis when similar risk characteristics exist. Trade and other receivables and customer financing receivables represent the initial pools which are segregated further by business segment, geography, internal risk rating, and aging. The risk of loss is assessed over the contractual life of the receivables and we adjust historical loss rates for current and future conditions based on qualitative considerations. The expected loss rate for each receivable pool is applied to the aggregate receivable balance to determine the allowance requirement. Receivables are written off against the allowance in the period they are determined to be uncollectible. We determine delinquency based on the contractual payment terms. An account may be considered delinquent if there are unpaid balances remaining on the account the day after the contractual due date. For amounts due from certain government customers in the Global Lottery business segment, we have not established an allowance as we have no expectation of loss based on a long history of no credit losses and the explicit guarantee of a sovereign entity. Inventories Inventories are stated at the lower of cost (applying the first in, first out method) and net realizable value. Allowances are made for defective, obsolete, or excess inventory. Upfront License Fees We periodically make long-term investments in contracts with customers and obtain licenses to supply products and services to our customers. As consideration, we pay license fees, which are classified as other non-current assets in the Consolidated Balance Sheets. We recognize the amortization of the license fees as a reduction of service revenue over the estimated economic life of the license term. This method reflects the pattern in which economic benefits are expected to be realized. The recoverability of each payment is subject to significant estimates about future revenues related to the contracts’ future cash flows. We evaluate these assets for impairment and update amortization rates on an agreement by agreement basis. The assets are reviewed for impairment whenever events or changes in circumstances indicate their carrying amount may not be recoverable. In periods in which payments are made to the customer, we classify the payment as a cash outflow from operating activities in the Consolidated Statements of Cash Flows. Fair Value Measurements We account for certain financial assets and liabilities at fair value. Financial assets and liabilities are categorized, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to the use of observable inputs and the lowest priority to the use of unobservable inputs. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest F-13 level input that is significant to the fair value measurement. These levels are as follows: •Level 1 - inputs are based upon unadjusted quoted prices for identical instruments in active markets •Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the instruments •Level 3 - inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability Derivative Financial Instruments We use derivative financial instruments for the management of foreign currency risks. We do not enter into derivatives for speculative purposes. Derivatives are recognized as either assets or liabilities in the Consolidated Balance Sheets at fair value. All derivatives are recorded gross, except netting of foreign exchange contracts and counterparty netting of interest receivable and payable related to interest rate swaps, as applicable. The accounting for changes in the fair value of a derivative depends on the nature of the hedge and the hedge effectiveness. Derivative gains and losses are reported in the Consolidated Statements of Cash Flows consistent with the classification of the cash flows from the underlying hedged items. For derivative instruments designated as cash flow hedges, gains and losses are recorded in other comprehensive income (loss) and are subsequently reclassified when the hedged item affects earnings. At that time, the amount is reclassified from other comprehensive income (loss) to the same income statement line as the earnings effect of the hedged item. Derivative instruments not designated as hedges are recognized in the Consolidated Balance Sheets at fair value with the changes in fair value recorded in foreign exchange loss (gain), net in the Consolidated Statements of Operations. Systems, Equipment and Other Assets Related to Contracts, Net and Property, Plant and Equipment, Net We have two categories of fixed assets: systems, equipment and other assets related to contracts (“Systems & Equipment”) and property, plant and equipment (“PPE”). Systems & Equipment are assets that primarily support our operating contracts, FMCs, and WAP systems (collectively, the “Contracts”) and are principally composed of lottery and gaming assets, including those that are accounted for as operating leases with our customers. PPE are assets we use internally, not associated with Contracts, primarily related to production and assembly, selling, general and administration, and R&D. Systems & Equipment and PPE are stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Costs incurred for Systems & Equipment and PPE not yet placed into service are classified as construction in progress and are not depreciated until placed in service. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets. Repair and maintenance costs are expensed as incurred, whereas major improvements that increase asset values and extend useful lives are capitalized. Systems & Equipment and PPE are tested for impairment whenever events or changes in circumstances indicate the carrying amount of those assets may not be recoverable. An impairment loss is recognized only if the carrying amount is not recoverable and exceeds its fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted forecasted cash flows resulting from the use and eventual disposition of such asset. An impairment loss is measured as the amount by which the carrying amount exceeds its fair value. Leases We determine whether a contract is or contains a lease at inception. As a lessee, we recognize right-of-use (“ROU”) assets and lease liabilities on the lease commencement date based on the present value of lease payments over the lease term. ROU assets also include any upfront lease payments or initial direct costs and are adjusted for lease incentives received. We consider renewal and termination options, including whether they are reasonably certain to be exercised, in determining the lease term and establishing the ROU assets and lease liabilities. ROU assets and lease liabilities are calculated using our incremental borrowing rate, which is based on the lease currency and length of the lease, unless the implicit rate is determinable. F-14 Most of our lease contracts contain both lease and non-lease components. As a lessee, we combine lease and non-lease components into a single lease component for all classes of underlying assets except certain communication equipment. For certain communication equipment, we allocate the consideration between lease and non-lease components based on relative standalone price. Lease expense is recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred except for certain rent payments that depend on an index, which are included in lease payments using the index rate in effect as of the lease commencement date. Short-term leases, which are leases with an initial term of 12 months or less with no purchase options that are reasonably certain of exercise, are not recognized on the balance sheet. The rental payments are recognized as lease expense on a straight-line basis over the lease term. Certain of our long term lottery and commercial gaming service arrangements include leases for equipment installed at customer locations. As the lessor, we combine lease and non-lease components for all classes of underlying assets in arrangements that involve operating leases. The single combined component is accounted for under ASC 842, Leases, or ASC 606, Revenue from Contracts with Customers (“ASC 606”), depending on which component is the predominant component in the arrangement. If a component cannot be combined, the consideration is allocated between the lease component and the non-lease component based on relative standalone selling price. Goodwill The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses, and is stated at cost less accumulated impairment losses. Goodwill is tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The goodwill impairment test compares the fair value of a reporting unit with its carrying amount and an impairment loss is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. Goodwill has been allocated to and is tested for impairment at the reporting unit level, which is the same level as our operating segments. We evaluate our reporting units annually and if necessary, reassign goodwill using a relative fair value approach. We have three reporting units: Global Lottery, Global Gaming, and PlayDigital. Capitalized Software Development Costs Costs incurred in the development of our externally-sold software products are expensed as incurred, except certain costs incurred subsequent to establishing technological feasibility and through the general release of the software products which are capitalized. Capitalized costs are amortized over the products’ estimated useful life to cost of product sales in the Consolidated Statements of Operations. Costs incurred during the application development phase of software for services provided to customers are capitalized as internal-use software and amortized over the useful life to cost of services in the Consolidated Statements of Operations. Costs incurred during the application development of software for internal use, and not for use in services provided to customers, are capitalized and amortized over the useful life to selling, general and administrative expenses in the Consolidated Statements of Operations. Intangible Assets Intangible assets, which include indefinite-lived and definite-lived intangible assets, are stated at cost, less accumulated amortization and accumulated impairment losses. Indefinite-lived intangible assets are composed of trademarks for which there is no foreseeable limit of the period over which they are expected to generate net cash inflows. Definite-lived intangible assets, which are primarily composed of customer relationships, licenses, and computer software and game library, are capitalized and amortized on a straight-line basis over their estimated useful lives. Estimated useful lives are determined considering the period the assets are expected to contribute to future cash flows. Amortization of intangibles is included in cost of services, cost of product sales, or selling, general and administrative expenses in the Consolidated Statements of Operations depending on the use and nature of the asset. F-15 Indefinite-lived intangible assets, other than goodwill, are tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount and whether the quantitative analysis is necessary. The quantitative analysis compares the fair value of indefinite-lived intangible assets to their carrying amount and an impairment loss is recognized when the carrying amount exceeds the fair value. Income Taxes Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using the enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enacted or substantively enacted date. Accounting for uncertainty in income taxes recognized in the Consolidated Financial Statements is in accordance with accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more likely than not” to be sustained, the tax position is then assessed to determine the amount of the benefit to recognize in the Consolidated Financial Statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. We recognize interest and penalties related to unrecognized tax benefits in provision for income taxes in the consolidated statement of operations. Accrued interest and penalties are included within other non-current liabilities in the Consolidated Balance Sheets. We use the period cost method for global intangible low-taxed income (“GILTI”) provisions and therefore have not recorded deferred taxes for basis differences expected to reverse in future periods. A provision for foreign withholding taxes has not been recorded on undistributed profits of the company’s subsidiaries that are determined to be indefinitely reinvested. If management intentions change in the future, there may be a significant impact on the provision for income taxes in the period the change occurs. WAP Jackpot Accounting We incur costs to fund jackpots and accrue jackpot liabilities with every wager on devices connected to a WAP system. Jackpot liabilities are estimated based on the size of the jackpot, the number of WAP units in service, variations and volume of play, and interest rate movements. Jackpots are generally payable to winners immediately, in the case of instant wins, or in equal annual installments over 19 to 25 years. Winners may elect to receive a lump sum payment for the present value of the jackpot discounted at applicable interest rates in lieu of periodic annual installments. Jackpot liabilities are composed of payments due to previous winners, and amounts due to future winners of jackpots not yet won. Liabilities due to previous winners for periodic payments are carried at the accreted cost of a qualifying U.S. government or agency annuity investment for those in which purchases were made at the time of the jackpot win. All other periodic liabilities are discounted and accreted using the risk-free rate at the time of the jackpot win. Liabilities due to future winners are recorded at the present value of the estimated amount of jackpots not yet won. We estimate the present value of these liabilities using current market rates, weighted with historical lump sum payout election ratios. Based on the most recent historical patterns, approximately 80% of winners will elect the lump sum payment option. The current portion of these liabilities are estimated based on historical experience with winner payment elections, in conjunction with the theoretical projected number of jackpots. Process for Disclosure and Recording of Liabilities Related to Legal Proceedings Many lawsuits and claims involve highly complex legal and related issues, including issues relating to causation, evidence, and alleged actual damages, all of which are otherwise subject to substantial uncertainties. Assessments of lawsuits and claims can F-16 involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. When making determinations about recording liabilities related to legal proceedings, the Company complies with the requirements of ASC 450, Contingencies, and related guidance, and records liabilities in those instances where it can reasonably estimate the amount of the loss and when the loss is probable. Where the reasonable estimate of the probable loss is a range, the Company records as an accrual in its financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate. The Company either discloses the amount of a possible loss or range of loss in excess of established accruals if estimable, or states that such an estimate cannot be made. The Company discloses significant legal proceedings even where liability is not probable or the amount of the liability is not estimable, or both, if the Company believes there is at least a reasonable possibility that a loss may be incurred. All legal costs are expensed as incurred. Because legal proceedings are subject to inherent uncertainties, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of presently recorded liabilities. Many of the matters described are at preliminary stages or seek an indeterminate amount of damages. It is not uncommon for claims to be resolved over many years. A future adverse ruling, settlement, unfavorable development, or increase in accruals for one or more of these matters could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each quarterly period, and whether it is able to estimate a liability previously determined to be not estimable and/or not probable. Where appropriate, the Company makes additions to or adjustments of its estimated liabilities. As a result, the current estimates of the potential impact on the Company’s consolidated financial position, results of operations, and cash flows for the legal proceedings and claims pending against the Company could change in the future. Treasury Stock We account for treasury stock acquisitions using the cost method. We account for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in capital in the Consolidated Balance Sheets. Foreign Currency Translation and Foreign Currency Transactions The financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars, with the resulting translation adjustments recorded as a component of accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expense items are translated using the average exchange rates during the period. Subsidiaries with monetary assets and liabilities denominated in a currency other than the functional currency of the subsidiary are subject to remeasurement, the impact of which is recorded in foreign exchange loss (gain), net in the Consolidated Statements of Operations. Stock-Based Compensation Stock-based compensation expense represents the cost related to stock-based awards granted to directors and employees. Stock-based compensation cost is measured at the grant date or modification date, based on the estimated fair value of the award and recognized as expense, net of estimated forfeitures, over the vesting periods. For awards subject to cliff vesting, compensation cost is recognized by way of a straight-line method over the award’s expected vesting period. For awards subject to graded vesting, compensation cost is recognized by way of an accelerated attribution method over the entire awards’ expected vesting periods. 3.Business Acquisitions and Divestitures Business Acquisitions On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of up to €4 million. The Company funded the acquisition through a combination of cash on hand and utilization of its revolving credit facility. The acquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase. F-17 The major classes of assets and liabilities to which the Company has allocated the purchase price based on information as of the acquisition date and available at December 31, 2022 were as follows:
Divestitures There were no divestitures that closed during the year ended December 31, 2023. On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL, for a purchase price of €700 million. The consideration received, net of €198 million cash and restricted cash transferred and €23 million of selling costs, was €479 million and resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax) which is classified within Other non-operating (income) expense, net. The disposal group was a component of continuing operations within our Global Lottery segment through the closing date. The funds received at closing were used to pay transaction expenses and fund the partial tenders of the 3.500% Senior Secured Euro Notes due July 2024 (which were subsequently redeemed in full on October 27, 2023) and 6.500% Senior Secured U.S. Dollar Notes due February 2025. Refer to Note 15 - Debt for further information. The Company has continuing involvement with the business sold via a transition services agreement (“TSA”). As part of the TSA, the Company provides various telecommunications, information technology, and back-office services for which the Company receives compensation. These services generally expire after no more than four (4) years. Announced Divestitures On February 29, 2024, the Company announced that IGT PLC entered into definitive agreements with Everi for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to Note 26. - Subsequent Events for further information. Separation and Divestiture Costs Separation and divestiture costs, are a type of transaction cost, that consist primarily of financial advisory, legal, accounting, tax, consulting, and other professional advisory fees associated with the activities required to perform the review of strategic alternatives for the Company’s Global Gaming and PlayDigital segments announced on June 8, 2023 and preparing the Global Gaming and PlayDigital segments for spin-off. Total Separation and divestiture costs for the year ended December 31, 2023 were $24 million. Discontinued Operations On May 10, 2021, the Company completed the sale of its Italian B2C businesses, which were previously reported under the Global Gaming segment and met the criteria to be reported as a discontinued operation during the fourth quarter of 2020, for a cash purchase price of €950 million (of which the final €125 million payment was received on July 13, 2022). The sale resulted in a pre-tax gain on sale of $396 million ($391 million net of tax) in the year ended December 31, 2021. F-18 Summarized financial information for discontinued operations is shown below (there are no discontinued operations during 2023 and 2022):
(1) There was no depreciation and amortization in 2021. The Company has continuing involvement with the businesses via a TSA. As part of the TSA, the Company provides various telecommunications and information technology for which the Company receives compensation. These services generally expired after one year. 4. Revenue Recognition Disaggregation of Revenue The following tables summarize revenue disaggregated by business segment and the source of the revenue for the years ended December 31, 2023, 2022, and 2021:
F-19
Sources of Revenue Service Revenue Service revenue is derived from the following sources: •Operating and •Gaming terminal services; •PlayDigital services; and • Operating and Our revenue from operating contracts is derived primarily from long-term exclusive operating licenses in Italy. Under operating contracts, we manage all the activities along the lottery value chain including collecting wagers, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance, and supplying materials for the game. In most cases, the arrangement is accounted for as a single performance obligation composed of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). Under operating contracts, we typically satisfy the performance obligation and recognize revenue over time because the customer simultaneously receives and consumes the benefits provided as we perform the services. The amount of consideration to which we are typically entitled is variable based on a percentage of sales. Revenue is typically recognized in the amount that we have the right to invoice the customer as this corresponds directly with the value to the customer of our performance completed to date. In arrangements where we are performing services on behalf of the government and the government is F-20 considered our customer, revenue is recognized net of prize payments, taxes, retailer commissions, and remittances to state authorities. Under operating contracts, we are generally required to pay an upfront license fee. Refer to the Upfront License Our revenue from services that are substantially the same and that have the same pattern of transfer. Under FMCs, we typically satisfy the performance obligation and recognize revenue over time because the customer simultaneously receives and consumes the benefits provided as we perform the services. The amount of transaction price to which we are entitled is typically variable based on a percentage of sales, although under certain of its agreements, the Company receives fees based on a fixed fee arrangement. Revenue is typically recognized in the amount that we have the right to invoice the customer, as this corresponds directly with the value to the customer of our completed performance. Gaming terminal services – Global Gaming Our revenue from gaming terminal services is generated by providing customers with proprietary land-based gaming systems and equipment under a variety of recurring revenue or lease arrangements, including a percentage of amounts wagered, a percentage of net win, or a fixed daily/monthly fee. Included in gaming terminal services are In some arrangements, there is a single performance obligation composed of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The amount of transaction price to which we are entitled typically is variable based on a percentage of wagers. This results in revenue recognition that corresponds with the value to the customer for the services transferred in the amount that we have the right to invoice. In other arrangements where the end customer is the player, we record revenue net of prize payouts once the wagering outcome has been determined. PlayDigital services – PlayDigital We generate revenue from our iGaming solutions by providing gaming operators a license to offer IGT remote game server games on the operator websites and mobile applications. We typically offer customers a usage-based license under which we receive a fee based on the net gaming revenue derived by the operator attributable to the IGT remote game server games. Revenue is typically recognized when the usage occurs. We provide sports betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in the U.S. In the service contracts to our U.S. licensed sportsbook operators, we host a sports betting platform and a variety of services including installation, configuration and integration services where we generally recognize a percentage of net sports revenue over the contractual term. For customers who want to have an outsourcing model, we also offer trading services with the inclusion of odds setting and risk management. Under these contracts, we generally recognize a percentage of net sports revenue as the services are provided. Systems, software, and other – Global Lottery Our lottery contracts generally include other services, including telephone support, software maintenance, hardware maintenance, and the right to receive unspecified upgrades or enhancements on a when-and-if-available basis, and other professional services including software development. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period). F-21 We also develop technology to enable lotteries to offer commercial services over their existing lottery infrastructure or over standalone networks separate from the lottery. Leveraging our distribution network and secure transaction processing, we offer high-volume processing of commercial transactions Systems, software, and other – Global Gaming Our gaming contracts generally include other services, including telephone support, software maintenance, content licensing, royalty fees, hardware maintenance, and the right to receive unspecified updates or enhancements on a when-and-if-available basis, and other professional services. We also generate revenue from other services, including video central system monitoring, system support, and sales or usage-based licensing of intellectual property. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period). Stock-based compensation expense represents the cost related to stock-based awards granted to directors and employees. Stock-based compensation cost is measured at the grant date or modification date, based on the estimated fair value of the award and recognized as expense, net of estimated forfeitures, over the vesting periods. For awards subject to cliff vesting, compensation cost is recognized by way of a straight-line method over the award’s expected vesting period. For awards subject to graded vesting, compensation cost is recognized by way of an accelerated attribution method over the entire awards’ expected vesting periods. 3.Business Acquisitions and Divestitures Business Acquisitions On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of up to €4 million. The Company funded the acquisition through a combination of cash on hand and utilization of its revolving credit facility. The acquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase. F-17 The major classes of assets and liabilities to which the Company has allocated the purchase price based on information as of the acquisition date and available at December 31, 2022 were as follows:
Divestitures There were no divestitures that closed during the year ended December 31, 2023. On September 14, 2022, the Company completed the sale of 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT Lottery S.p.A. that conducted the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio Destinato IMEL, for a purchase price of €700 million. The consideration received, net of €198 million cash and restricted cash transferred and €23 million of selling costs, was €479 million and resulted in a pre-tax gain on sale of $278 million, ($276 million net of tax) which is classified within Other non-operating (income) expense, net. The disposal group was a component of continuing operations within our Global Lottery segment through the closing date. The funds received at closing were used to pay transaction expenses and fund the partial tenders of the 3.500% Senior Secured Euro Notes due July 2024 (which were subsequently redeemed in full on October 27, 2023) and 6.500% Senior Secured U.S. Dollar Notes due February 2025. Refer to Note 15 - Debt for further information. The Company has continuing involvement with the business sold via a transition services agreement (“TSA”). As part of the TSA, the Company provides various telecommunications, information technology, and back-office services for which the Company receives compensation. These services generally expire after no more than four (4) years. Announced Divestitures On February 29, 2024, the Company announced that IGT PLC entered into definitive agreements with Everi for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to Note 26. - Subsequent Events for further information. Separation and Divestiture Costs Separation and divestiture costs, are a type of transaction cost, that consist primarily of financial advisory, legal, accounting, tax, consulting, and other professional advisory fees associated with the activities required to perform the review of strategic alternatives for the Company’s Global Gaming and PlayDigital segments announced on June 8, 2023 and preparing the Global Gaming and PlayDigital segments for spin-off. Total Separation and divestiture costs for the year ended December 31, 2023 were $24 million. Discontinued Operations On May 10, 2021, the Company completed the sale of its Italian B2C businesses, which were previously reported under the Global Gaming segment and met the criteria to be reported as a discontinued operation during the fourth quarter of 2020, for a cash purchase price of €950 million (of which the final €125 million payment was received on July 13, 2022). The sale resulted in a pre-tax gain on sale of $396 million ($391 million net of tax) in the year ended December 31, 2021. F-18 Summarized financial information for discontinued operations is shown below (there are no discontinued operations during 2023 and 2022):
(1) There was no depreciation and amortization in 2021. The Company has continuing involvement with the businesses via a TSA. As part of the TSA, the Company provides various telecommunications and information technology for which the Company receives compensation. These services generally expired after one year. 4. Revenue Recognition Disaggregation of Revenue The following tables summarize revenue disaggregated by business segment and the source of the revenue for the years ended December 31, 2023, 2022, and 2021:
F-19
Sources of Revenue Service Revenue Service revenue is derived from the following sources: • •Gaming • •Systems, software, and other Our revenue from operating contracts is derived primarily from long-term exclusive operating licenses in Italy. Under operating contracts, we manage all the Under operating contracts, we typically considered our customer, revenue is recognized net of prize payments, taxes, retailer commissions, and remittances to state authorities. Under operating contracts, we are generally required to pay an upfront license fee. Refer to the Upfront License Fees policy above for further details. Gaming terminal services – Global Gaming Our revenue from gaming terminal services is generated by providing customers with proprietary land-based gaming systems and equipment under a variety of recurring revenue or lease arrangements, including a percentage of amounts wagered, a percentage of net win, or a fixed daily/monthly fee. Included in gaming terminal services are WAP systems. WAP systems consist of linked slot machines located in multiple casino properties, connected to a central computer system. WAP systems include a Company-sponsored progressive jackpot that increases with every wager until a player wins the top award combination. Casinos with WAP machines pay a percentage of amounts wagered for services related to the design, assembly, installation, operation, maintenance, and marketing of the WAP systems, as well as funding and administration of Company-sponsored progressive jackpots. A portion of the total fee collected is allocated to the WAP jackpot. Since the jackpot is a payment to the customer, the portion allocated to the jackpot is classified as a reduction of revenue. In some arrangements, there is a single performance obligation composed of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The amount of transaction price to which we are entitled typically is variable based on a percentage of wagers. This results in revenue recognition that corresponds with the value to the customer for the services transferred in the amount that we have the right to invoice. In other arrangements where the end customer is the player, we record revenue net of prize payouts once the wagering outcome has been determined. PlayDigital services – PlayDigital We generate revenue from our iGaming solutions by providing gaming operators a license to offer IGT remote game server games on the operator websites and mobile applications. We typically offer customers a usage-based license under which we receive a fee based on the net gaming revenue derived by the operator attributable to the IGT remote game server games. Revenue is typically recognized when the usage occurs. We provide sports betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in the U.S. In the service contracts to our U.S. licensed sportsbook operators, we host a sports betting platform and a variety of services including installation, configuration and integration services where we generally recognize a percentage of net sports revenue over the contractual term. For customers who want to have an outsourcing model, we also offer trading services with the inclusion of odds setting and risk management. Under these contracts, we generally recognize a percentage of net sports revenue as the services are provided. Systems, software, and other – Global Lottery Our lottery contracts generally include other services, including telephone support, software maintenance, hardware maintenance, and the right to receive unspecified upgrades or enhancements on a when-and-if-available basis, and other professional services including software development. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period). F-21 We also develop technology to enable lotteries to offer commercial services over their existing lottery infrastructure or over standalone networks separate from the lottery. Leveraging our distribution network and secure transaction processing, we offer high-volume processing of commercial transactions including prepaid cellular telephone recharges, bill payments, e-vouchers and retail-based programs, electronic tax payments, stamp duty services, prepaid card recharges, and money transfers. These services are primarily offered outside of North America. In most cases, these arrangements are considered to be short in duration. The amount of transaction price that we are typically entitled to is variable based on the number of transactions processed. Revenue is typically recognized in the amount that we have the right to invoice the customer as this corresponds directly with the value to the customer of our completed performance. Systems, software, and other – Global Gaming Our gaming contracts generally include other services, including telephone support, software maintenance, content licensing, royalty fees, hardware maintenance, and the right to receive unspecified updates or enhancements on a when-and-if-available basis, and other professional services. We also generate revenue from other services, including video central system monitoring, system support, and sales or usage-based licensing of intellectual property. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period). Intangible Assets Indefinite-lived intangible assets are composed of trademarks for which there is no foreseeable limit of the period over which they are expected to generate net cash inflows. Definite-lived intangible assets, which are primarily composed of customer relationships, licenses, and computer software and game library, are capitalized and amortized on a straight-line basis over their estimated Estimated useful lives are determined considering the period the assets are expected to contribute to future cash flows.
F-15 Indefinite-lived intangible assets, other than goodwill, are tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of indefinite-lived intangible assets are less than their carrying amount and whether the quantitative analysis is necessary. The quantitative analysis compares the fair value of indefinite-lived intangible assets to their carrying amount and an impairment loss is recognized when the carrying amount exceeds the fair value. Income Taxes Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using the enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is Accounting for uncertainty in income taxes recognized in the Consolidated Financial Statements is in accordance with accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more likely than not” to be sustained, the tax position is then assessed to determine the amount of the benefit to recognize in the Consolidated Financial Statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. We recognize interest and penalties related to unrecognized tax benefits in provision for income taxes in the consolidated statement of operations. Accrued interest and penalties are included within other non-current liabilities in the Consolidated Balance Sheets. We use the period cost method for global intangible low-taxed income (“GILTI”) provisions and therefore have not recorded deferred taxes for basis differences expected to reverse in future periods. A provision for foreign withholding taxes has not been recorded on undistributed profits of the company’s subsidiaries that are determined to be indefinitely reinvested. If management intentions change in the future, there may be a significant impact on the provision for income taxes in the period the change occurs. WAP Jackpot Accounting We incur costs to fund jackpots and accrue jackpot liabilities with every wager on devices connected to a WAP system. Jackpot liabilities are estimated based on the size of the jackpot, the number of WAP units in service, variations and volume of play, and interest rate movements. Jackpots are generally payable to winners immediately, in the case of instant wins, or in equal annual installments over 19 to 25 years. Winners may elect to receive a lump sum payment for the present value of the jackpot discounted at applicable interest rates in lieu of periodic annual installments. Jackpot liabilities are composed of payments due to previous winners, and amounts due to future winners of jackpots not yet won. Liabilities due to previous winners for periodic payments are carried at the accreted cost of a qualifying U.S. government or agency annuity investment for those in which purchases were made at the time of the jackpot win. All other periodic liabilities are discounted and accreted using the risk-free rate at the time of the jackpot win. Liabilities due to future winners are recorded at the present value of the estimated amount of jackpots not yet won. We estimate the present value of these liabilities using current market rates, weighted with historical lump sum payout election ratios. Based on the most recent historical patterns, approximately 80% of winners will elect the lump sum payment option. The current portion of these liabilities are estimated based on historical experience with winner payment elections, in conjunction with the theoretical projected number of jackpots. Process for Disclosure and Recording of Liabilities Related to Legal Proceedings Many lawsuits and claims involve highly complex legal and related issues, including issues relating to causation, evidence, and alleged actual damages, all of which are otherwise subject to substantial uncertainties. Assessments of lawsuits and claims can F-16 involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. When making determinations about recording liabilities related to legal proceedings, the Company complies with the requirements of ASC 450, Because legal proceedings are subject to inherent uncertainties, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of presently recorded liabilities. Many of the matters described are at preliminary stages or seek an indeterminate amount of damages. It is not uncommon for claims to be resolved over many years. A future adverse ruling, settlement, unfavorable development, or increase in accruals for one or more of these matters could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each quarterly period, and whether it is able to estimate a liability previously determined to be not estimable and/or not probable. Where appropriate, the Company makes additions to or adjustments of its estimated liabilities. As a result, the current estimates of the potential impact on the Company’s consolidated financial position, results of operations, and cash flows for the legal proceedings and claims pending against the Company could change in the future. Treasury Stock We account for treasury stock acquisitions using the cost method. We account for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in capital in the Consolidated Balance Sheets. Foreign Currency Translation and Foreign Currency Transactions The financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars, with the resulting translation adjustments recorded as a component of accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expense items are translated using the average exchange rates during the period. Subsidiaries with monetary assets and liabilities denominated in a currency other than the functional currency of the subsidiary are subject to remeasurement, the impact of which is recorded in foreign exchange loss (gain), net in the Consolidated Statements of Operations. Capitalized Software Development Costs Costs incurred in the development of our externally-sold software products are expensed as incurred, except certain Costs incurred during the application development phase of software for services provided to customers are capitalized as internal-use software and amortized over the useful life to cost of Costs incurred during the application development of software for internal use, and not for use in services provided to customers, are capitalized and amortized over the useful life to selling, general and administrative expenses in the Intangible assets, which include indefinite-lived and Indefinite-lived intangible assets are composed of trademarks for which F-15 Indefinite-lived intangible assets, other than goodwill, are tested for impairment Income Taxes Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using the enacted tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enacted or substantively enacted date. Accounting for uncertainty in income taxes recognized in the We recognize interest and penalties related to unrecognized tax benefits We use the period cost method for global intangible low-taxed income (“GILTI”) provisions and therefore have not recorded deferred taxes for basis differences expected to reverse in future periods. A provision for foreign withholding taxes has not been recorded on undistributed profits of the company’s subsidiaries that are determined to be indefinitely reinvested. If management intentions change in the future, there may be a significant impact on the provision for income taxes in the period the change occurs. WAP Jackpot Accounting We incur costs to fund jackpots and accrue jackpot liabilities with every wager on devices connected to a WAP system. Jackpot liabilities are estimated based on the size of the jackpot, the number of WAP units in service, variations and volume of play, and interest rate movements. Jackpots are generally payable to winners immediately, in the case of instant wins, or in equal annual installments over 19 to 25 years. Winners may elect to receive a lump sum payment for the present value of the jackpot discounted at applicable interest rates in lieu of periodic annual installments. Jackpot liabilities are composed of payments due to previous winners, and amounts due to future winners of jackpots not yet won. Liabilities due to previous winners for periodic payments are carried at the accreted cost of a qualifying U.S. government or agency annuity investment for those in which purchases were made at the time of the jackpot win. All other periodic liabilities are discounted and accreted using the risk-free rate at the time of the jackpot win. Liabilities due to future winners are recorded at the present value of the estimated amount of jackpots not yet won. We estimate the present value of these liabilities using current market rates, weighted with historical lump sum payout election ratios. Based on the most recent historical patterns, approximately 80% of winners will elect the lump sum payment option. The current portion of these liabilities are estimated based on historical experience with winner payment elections, in conjunction with the theoretical projected number of jackpots. Process for Disclosure and Recording of Liabilities Related to Legal Proceedings Many lawsuits and claims involve highly complex legal and related issues, including issues relating to causation, evidence, and alleged actual damages, all of which are otherwise subject to substantial uncertainties. Assessments of lawsuits and claims can F-16 involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. When making determinations about recording liabilities related to legal proceedings, the Company complies with the requirements of ASC 450, Contingencies, and related guidance, and records liabilities in those instances where it can reasonably estimate the amount of the loss and when the loss is probable. Where the reasonable estimate of the probable loss is a range, the Company records as an accrual in its financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate. The Company either discloses the amount of a possible loss or range of loss in excess of established accruals if estimable, or states that such an estimate cannot be made. The Company discloses significant legal proceedings even where liability is not probable or the amount of the liability is not estimable, or both, if the Company believes there is at least a reasonable possibility that a loss may be incurred. All legal costs are expensed as incurred. Because legal proceedings are subject to inherent uncertainties, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of presently recorded liabilities. Many of the matters described are at preliminary stages or seek an indeterminate amount of damages. It is not uncommon for claims to be resolved over many years. A future adverse ruling, settlement, unfavorable development, or increase in accruals for one or more of these matters could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded. Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each quarterly period, and whether it is able to estimate a liability previously determined to be not estimable and/or not probable. Where appropriate, the Company makes additions to or adjustments of its estimated liabilities. As a result, the current estimates of the potential impact on the Company’s consolidated financial position, results of operations, and cash flows for the legal proceedings and claims pending against the Company could change in the future. Treasury Stock We account for treasury stock acquisitions using the cost method. We account for the retirement of treasury stock by deducting its par value from common stock and reflecting any excess of cost over par value as a deduction from additional paid-in capital in the Consolidated Balance Sheets. Foreign Currency Translation and Foreign Currency Transactions The financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars, with the resulting translation adjustments recorded as a component of accumulated other comprehensive income (“AOCI”) within shareholders’ equity. Assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expense items are translated using the average exchange rates during the period. Stock-Based Compensation 3. Business Acquisitions On July 1, 2022, the Company completed the acquisition of iSoftBet by purchasing 100% of the equity interests in certain entities of the iSoftBet group for cash consideration of €162 million (inclusive of €20 million deposited into an escrow account) and contingent consideration of up to €4 million. The Company funded the acquisition through a combination of cash on hand and utilization of its revolving credit facility. The acquisition of iSoftBet provides market-tested proprietary digital content, advanced game aggregation capabilities, scalable promotional tools, analytics, and creative talent to the PlayDigital segment. The financial results of iSoftBet have been included within our PlayDigital segment in our Consolidated Financial Statements since the date of purchase. F-17 The major classes of assets and liabilities to which the Company has allocated the purchase price based on information as of the acquisition date and available at December
Divestitures There were no divestitures that closed during the On September 14, 2022, the Company completed the sale of 100% of the share capital of
The Company Announced Divestitures On February 29, 2024, the Company announced that IGT PLC entered into definitive agreements with Everi for the Separation & Divestiture of the Global Gaming and PlayDigital segments. Refer to Note 26. - Subsequent Events for further information. Separation and Divestiture Costs Separation and divestiture costs, are a type of transaction cost, that consist primarily of financial advisory, legal, accounting, tax, consulting, and other professional advisory fees associated with the activities required to perform the review of strategic alternatives for the Company’s Global Gaming and PlayDigital segments announced on June 8, 2023 and preparing the Global Gaming and PlayDigital segments for spin-off. Total Separation and divestiture costs for the year ended December 31, 2023 were $24 million. Discontinued Operations On May 10, 2021, the Company completed the sale of its Italian B2C businesses, which were previously reported under the Global Gaming segment and met the criteria to be reported as a discontinued operation during the fourth quarter of 2020, for a cash purchase price of €950 million (of which the final €125 million payment was received on July 13, 2022). The sale resulted in a pre-tax gain on sale of $396 million ($391 million net of tax) in the year ended December 31, 2021. F-18 Summarized financial information for discontinued operations is shown below (there are no discontinued operations during 2023 and 2022):
(1) There was no depreciation and amortization in 2021. The
4. Revenue Recognition Disaggregation of Revenue The following tables summarize revenue disaggregated by business segment and the source of the revenue for the years ended December 31,
Sources of Revenue Service Revenue Service revenue is derived from the following sources: •Operating and facilities management contracts; •Gaming terminal services; •PlayDigital services; and •Systems, software, and other Operating and facilities management contracts – Global Lottery Our revenue from operating contracts is derived primarily from long-term exclusive operating licenses in Italy. Under operating contracts, we manage all the activities along the lottery value chain including collecting wagers, paying out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating data transmission networks and processing centers, training staff, providing retailers with assistance, and supplying materials for the game. In most cases, the arrangement is accounted for as a single performance obligation composed of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service). Under operating contracts, we typically satisfy the performance obligation and recognize revenue over time because the customer simultaneously receives and consumes the benefits provided as we perform the services. The amount of consideration to which we are typically entitled is variable based on a percentage of sales. Revenue is typically recognized in the amount that we have the right to invoice the customer as this corresponds directly with the value to the customer of our performance completed to date. In arrangements where we are performing services on behalf of the government and the government is F-20 considered our customer, revenue is recognized net of prize payments, taxes, retailer commissions, and remittances to state authorities. Under operating contracts, we are generally required to pay an upfront license fee. Refer to the Upfront License Fees policy above for further details. Our revenue from FMCs is generated by assembling, installing, and operating the online lottery system and related point-of-sale equipment. Under a typical FMC, we maintain ownership of the technology and are responsible for capital investments throughout the duration of the contract. FMCs typically include a wide range of support services that are provided throughout the contract and are part of the integrated solution that the customer has contracted to obtain. In most cases, the arrangement is accounted for as a single performance obligation composed of a series of distinct services that are substantially the same and that have the same pattern of transfer. Under FMCs, we typically satisfy the performance obligation and recognize revenue over time because the customer simultaneously receives and consumes the benefits provided as we perform the services. The amount of transaction price to which we are entitled is typically variable based on a percentage of sales, although under certain of its agreements, the Company receives fees based on a fixed fee arrangement. Revenue is typically recognized in the amount that we have the right to invoice the customer, as this corresponds directly with the value to the customer of our completed performance. Gaming terminal services – Global Gaming Our revenue from gaming terminal services is generated by providing customers with proprietary land-based gaming systems and equipment under a variety of recurring revenue or lease arrangements, including a percentage of amounts wagered, a percentage of net win, or a fixed daily/monthly fee. Included in gaming terminal services are WAP systems. WAP systems consist of linked slot machines located in multiple casino properties, connected to a central computer system. WAP systems include a Company-sponsored progressive jackpot that increases with every wager until a player wins the top award combination. Casinos with WAP machines pay a percentage of amounts wagered for services related to the design, assembly, installation, operation, maintenance, and marketing of the WAP systems, as well as funding and administration of Company-sponsored progressive jackpots. A portion of the total fee collected is allocated to the WAP jackpot. Since the jackpot is a payment to the customer, the portion allocated to the jackpot is classified as a reduction of revenue. In some arrangements, there is a single performance obligation composed of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The amount of transaction price to which we are entitled typically is variable based on a percentage of wagers. This results in revenue recognition that corresponds with the value to the customer for the services transferred in the amount that we have the right to invoice. In other arrangements where the end customer is the player, we record revenue net of prize payouts once the wagering outcome has been determined. PlayDigital services – PlayDigital We generate revenue from our iGaming solutions by providing gaming operators a license to offer IGT remote game server games on the operator websites and mobile applications. We typically offer customers a usage-based license under which we receive a fee based on the net gaming revenue derived by the operator attributable to the IGT remote game server games. Revenue is typically recognized when the usage occurs. We provide sports betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in the U.S. In the service contracts to our U.S. licensed sportsbook operators, we host a sports betting platform and a variety of services including installation, configuration and integration services where we generally recognize a percentage of net sports revenue over the contractual term. For customers who want to have an outsourcing model, we also offer trading services with the inclusion of odds setting and risk management. Under these contracts, we generally recognize a percentage of net sports revenue as the services are provided. Systems, software, and other – Global Lottery Our lottery contracts generally include other services, including telephone support, software maintenance, hardware maintenance, and the right to receive unspecified upgrades or enhancements on a when-and-if-available basis, and other professional services including software development. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period). F-21 We also develop technology to enable lotteries to offer commercial services over their existing lottery infrastructure or over standalone networks separate from the lottery. Leveraging our distribution network and secure transaction processing, we offer high-volume processing of commercial transactions including prepaid cellular telephone recharges, bill payments, e-vouchers and retail-based programs, electronic tax payments, stamp duty services, prepaid card recharges, and money transfers. These services are primarily offered outside of North America. In most cases, these arrangements are considered to be short in duration. The amount of transaction price that we are typically entitled to is variable based on the number of transactions processed. Revenue is typically recognized in the amount that we have the right to invoice the customer as this corresponds directly with the value to the customer of our completed performance. Systems, software, and other – Global Gaming Our gaming contracts generally include other services, including telephone support, software maintenance, content licensing, royalty fees, hardware maintenance, and the right to receive unspecified updates or enhancements on a when-and-if-available basis, and other professional services. We also generate revenue from other services, including video central system monitoring, system support, and sales or usage-based licensing of intellectual property. Fees earned for other services are generally recognized as service revenue in the period the service is performed (i.e., over the support period). Product Sales Product sales are derived from the following sources: •Lottery products; •Gaming terminals; and •Other Lottery products – Global Lottery Lottery products revenue primarily includes the sale of lottery equipment, lottery systems and printed products. Our revenue from the sale or sales-type lease of lottery systems and equipment typically includes multiple performance obligations, where we assemble, sell, deliver, and install a turnkey system (inclusive of point-of-sale terminals, if applicable) or deliver equipment and license the computer software for a fixed price, and the customer subsequently operates the system or equipment. Our credit terms are predominantly short-term in nature. We also grant extended payment terms under contracts where the sale is typically secured by the related equipment sold. Revenue from the sale of lottery systems and equipment is recognized based upon the contractual terms of each arrangement. These arrangements generally include customer acceptance provisions and general rights to terminate the contract if we are in breach of the contract or at the convenience of the customer. In some arrangements, the performance obligation is satisfied over time if the customer controls the asset as it is created (i.e., when the asset is built at the customer site) or if our performance does not create an asset with an alternative use and we have an enforceable right to payment plus a reasonable profit for performance completed to date. If revenue is not recognized over time, it is generally recognized upon transfer of physical possession of the goods or the satisfaction of customer acceptance provisions. If the transaction includes multiple performance obligations, it is accounted for under arrangements with multiple performance obligations, discussed below. Our other lottery product sales are primarily derived from the production and sales of instant ticket games under multi-year contracts. In these arrangements, the performance obligation is generally satisfied at a point in time (i.e., upon transfer of control of the game tickets to the customer) based on the contractual terms of each arrangement. Gaming terminals – Global Gaming Our revenue from the sale or sales-type lease of gaming terminals includes embedded game content, machine related equipment, licensing and royalty fees, and component parts. Our credit terms are predominantly short-term in nature. We also grant extended payment terms under contracts where the sale is typically secured by the related equipment sold. Revenue from the sale of gaming machines is recognized based upon the contractual terms of each arrangement, but predominantly upon transfer of physical possession of the goods or the lapse of customer acceptance provisions. If the sale of gaming machines includes multiple performance obligations, these arrangements are accounted for under arrangements with multiple performance obligations, discussed below. F-22 Other – Global Gaming Other gaming product revenue is primarily comprised of gaming system sales, content licensing, perpetual or long-term software licenses, non-machine related equipment and component parts (including game themes and electronic conversion kits). Our revenue from the sale of gaming systems typically includes multiple performance obligations, where we sell, deliver, and install a turnkey system or deliver equipment and license the computer software for a fixed price, and the customer subsequently operates the system. These arrangements generally include customer acceptance provisions and general rights to terminate the contract if we are in breach of the contract. Such arrangements include hardware, software, and professional services. In these arrangements, the performance obligation is generally satisfied upon transfer of physical possession of the goods or the satisfaction of customer acceptance provisions. Other – PlayDigital Other PlayDigital product revenue is primarily comprised of perpetual software licenses, the sale of equipment, and component parts. Contract Balances Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The amount of contract liabilities, which is
The amount of revenue recognized during the Transaction Price Allocated to Remaining Performance Obligations At December 31, 5. Trade and Other Receivables, net Trade and other receivables are recorded at amortized cost, net of allowance for credit losses, and represent a contractual right to receive money on demand or on fixed or determinable dates that are typically short-term with payment due within 90 days or less.
The following table presents the activity in the allowance for credit losses:
F-23 We enter into various factoring agreements with third-party financial institutions to sell certain of our trade receivables. We factored trade receivables of 6. Inventories, net
The following table presents the activity in the obsolescence reserve:
7. Other Assets Other Current Assets
Other Non-Current Assets
Upfront License Fees The upfront license fees are being amortized on a straight-line basis as follows:
Customer Financing Receivables Customers' payment terms for customer financing receivables are confirmed with a written financing contract, lease contract, or promissory note and a security agreement is typically signed by the parties granting the Company a security interest in the related products sold or leased. Customer financing interest income is recognized based on market rates prevailing at issuance. Customer financing receivables are recorded at amortized cost, net of any allowance for credit losses, and are classified in the
The following table presents the activity in the allowance for credit losses:
The Company’s customer financing receivable portfolio is composed of customers primarily within the Global Gaming The customer financing receivables at amortized cost by year of origination and the geography credit quality indicator at December 31,
The past due balance, which represents installments that are one day or more past their contractual due date, of customer financing receivables at amortized cost and the geography credit quality indicator at December 31,
8. Fair Value Measurements Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial Assets and Liabilities Not Carried at Fair Value The carrying amounts and fair value hierarchy classification of our significant financial assets and liabilities not carried at fair value as of December 31,
F-26
(1) Level 3 equity investments are measured at cost, less impairment, plus or minus changes resulting from observable price changes, which approximates fair value. 9. Derivative Financial Instruments We use Cash Flow Hedges The notional amount of foreign currency forward contracts, designated as cash flow hedges, outstanding at December 31, Derivatives Not Designated as Hedging Instruments The notional amount of foreign currency forward contracts, not designated as hedging instruments, outstanding at December 31, Refer to Note 10. Systems, Equipment and Other Assets Related to Contracts, net and Property, Plant and Equipment, net Systems & Equipment and PPE, net consist of the following:
The estimated useful lives of Systems & Equipment and PPE are as follows:
Leasehold improvements are amortized over the shorter of the corresponding lease term or estimated useful life. 11. Leases Lessee We have operating and finance leases for real estate (warehouses, office space, data centers), vehicles, communication equipment, and other equipment. Many of our real estate leases include one or more options to renew, while some include termination options. Certain vehicle and equipment leases include residual value guarantees and options to purchase the leased asset. Many of our real estate leases include variable payments for maintenance, real estate taxes, and insurance that are determined based on the actual costs incurred by the landlord. The classification of our operating and finance leases in the
(1) Finance ROU assets are recorded net of accumulated amortization of Weighted-average lease terms and discount rates are as follows:
F-28 Components of lease expense are as follows:
(1) (2) Maturities of operating and finance lease liabilities at December 31,
(1)The maturities above exclude leases that have not yet Cash flow information and non-cash activity related to leases is as follows:
Lessor We have various arrangements for lottery and Our lease arrangements typically have lease terms ranging from one month to 4 years. These leases generally meet the criteria for operating lease classification, as the lease payments are typically variable based on a percentage of sales, a percentage of amounts wagered, net win, or a daily fee per active gaming terminal. Our leases generally do not contain variable payments that are dependent on an index or rate (such as the Consumer Price Index or a market interest rate). We provide lessees with the option to extend the lease, which is considered when evaluating lease classification. Lease income Our sales-type lease arrangements typically have lease terms ranging from one year to 10 years. We provide lessees with the option to extend the lease, which is considered when evaluating lease classification. Lease income from sales-type leases is included within product sales in the Consolidated Statements of Operations. Total sales-type lease income was approximately 1% of total revenue for each of the years ended December 31, 2023, 2022, and 2021. Sales-type lease receivables are included within customer financing receivables, net, which are a component of other current assets and other non-current assets within F-29 the Consolidated Balance Sheets. Additional information on customer financing receivables is included in Note 7 – Other Assets. 12. Restructuring During In connection with the Rollforward of Restructuring Liability The following table presents the activity in the restructuring
Restructuring Expense The following table summarizes consolidated restructuring expense by segment and type of cost:
13. Goodwill In connection with the divestiture of our Italian commercial services business previously discussed in Changes in the carrying amount of goodwill consist of the following:
14. Intangible Assets, net Intangible assets at December 31,
F-31 Intangible asset amortization expense of In connection with the July 2022 acquisition of iSoftBet, previously discussed in Note 3 - Business Acquisitions and Divestitures, the Company allocated $58 million (€59 million) of the purchase price to the intangible assets acquired (primarily acquired developed technologies of €51 million and customer relationships of €8 million). The estimated useful life of the assets are 6 to 15 years with a weighted average amortization period of 9.2 years. In connection with the September 2022 sale of Lis Holding S.p.A., the Company recorded a €12 million reduction in net book value of intangible assets (principally patents and trademarks) related to the divestiture. In December 2022, the Company entered into a $75 million multi-year license agreement of intellectual property with payments due under the agreement commencing in 2023. In June 2023, the Company entered into a ten-year licensing agreement with Sony that grants the Company exclusive rights to the Wheel of Fortune® brand across gaming, lottery, iGaming, and iLottery and non-exclusive rights to distribute Wheel of Fortune® content for free-to-play social casinos. Minimum guaranteed payments of $313 million under the agreement are included as a licensed IP asset within intangible assets, net with a corresponding licensing obligation payable within other non-current liabilities. Payments due under the agreement commence in 2025. Payments made after the first 90 days following execution of these agreements are classified as payments on license obligations within the financing section of the Consolidated Statements of Cash Flows. Amortization expense on intangible assets for the next five years is expected to be as follows ($
The Company’s long-term debt obligations consist of the following:
F-32
At December 31,
The principal amount of long-term debt maturing over the next five years and thereafter as of December 31,
Senior Secured Notes The key terms of our senior secured notes (the “Notes”), all of which
F-33 repurchase all of the Interest on the Notes is payable semi-annually in arrears. The Notes are guaranteed by certain subsidiaries of the Parent and secured by ownership interests in certain subsidiaries of the Parent, certain intercompany loans with principal balances in excess of $10 million, and certain accounts receivable. The Notes contain customary covenants and events of default. At December 31, On On February 28, 2023, the Parent exercised the right to redeem: (i) €188 million of the 3.500% Senior Secured Euro Notes due July 2024 on March 16, 2023 for a redemption price of 100% of the principal amount and a make-whole call premium consistent with the terms of the indenture governing such notes, together with accrued and unpaid interest, and (ii) $200 million of the 6.500% Senior Secured U.S. Dollar Notes due February 2025 on March 16, 2023 for a redemption price of $1,012.54 per $1,000.00 of principal amount, together with accrued and unpaid interest. In January 2023, International Game Technology redeemed the 5.350% Senior Secured U.S. Dollar Notes due October 2023 issued by International Game Technology in full pursuant to the exercise of the make-whole call option for $61 million, excluding interest. In September 2022, the Parent used the proceeds from the sale of Lis Holdings S.p.A. to repurchase €200 million ($197 million) of the 3.500% Senior Secured Euro Notes due July 2024 for total consideration, excluding interest, of €201 million ($198 million) and $400 million of the 6.500% Senior Secured U.S. Dollar Notes due February 2025 for total consideration, excluding interest, of $406 million. The Company recorded a The
Interest on the Euro Term Loan The Euro Term Loan million and certain accounts receivable. Upon the occurrence of certain events, the The In November 2023, the lenders under the TLF Agreement agreed that each principal prepayment by a borrower be applied to the next repayment installments due from such borrower in order of maturity instead of being applied to all repayment installments due from such borrower pro rata. In July 2022, the Parent entered into an amendment to the TLF Agreement pursuant to which, among other changes, (i) the annual permitted acquisition limit was increased from 10% to 15% of consolidated total assets and the lifetime permitted acquisition limit was increased from $2.25 billion to $2.5 billion; and (ii) the annual limit on dividends and share repurchases was increased from $300 million to $400 million based on our public debt ratings at the time and to $550 million if any two of our public debt ratings are equal to or higher than Ba1/BB+ and eliminated if any two of our public debt ratings are equal to or higher than Baa3/BBB-. Revolving Credit Facilities The Parent and certain of its subsidiaries are
At December 31, 2023, the Interest on the Revolving Credit Facilities is payable between one and six months in arrears at rates equal to the applicable F-35 Euro borrowings, plus a margin based on The RCF Agreement provides that the following fees, which are recorded in interest expense, net in the •Commitment fees - payable on the aggregate undrawn and un-cancelled amount of the Revolving Credit Facilities •Utilization fees - payable on the aggregate drawn amount of the Revolving Credit Facilities at a rate ranging from The Revolving Credit Facilities are guaranteed by the Parent and certain of its subsidiaries and are secured by ownership interests in certain subsidiaries of the Parent, million and certain accounts receivable. Upon the occurrence of certain events, the borrowers may be required to repay the Revolving Credit Facilities and the lenders may have the right to cancel their commitments. The RCF Agreement limits the aggregate amount that the Parent can pay with respect to dividends and repurchases of ordinary shares in each year to $400 million if any two of our public debt ratings by Fitch, Moody’s, and S&P are lower than Ba1/BB+ and $550 million if any two of our public debt ratings by Fitch, Moody’s, and S&P are equal to or higher than Ba1/BB+, and provides that such limit is eliminated if any two of our public debt ratings by Fitch, Moody’s, and S&P are equal to or higher than Baa3/BBB-. The RCF Agreement also contains customary covenants (including maintaining a minimum ratio of EBITDA to net interest costs and a maximum ratio of total net debt to EBITDA) and events of default. At December 31, In July 2022, the Parent entered into an Amendment and Restatement Agreement (the “RCF Amendment and Restatement Agreement”) with respect to the RCF Agreement, pursuant to which, among other changes, (i) the aggregate revolving facility A commitments of the lenders were decreased from $1.05 billion to $820 million; (ii) the aggregate revolving facility B commitments of the lenders were increased from €625 million to €1.0 billion; (iii) the final maturity date was extended from July 31, 2024 to July 31, 2027; (iv) LIBOR was replaced as a reference rate with the SOFR or SONIA rate, in each case subject to a credit adjustment spread, for borrowings in U.S. Dollars and Pounds Sterling, respectively; (v) the margins based on public debt ratings were reduced by at least 0.25% (0.40% at current public debt ratings) subject to a maximum of 0.075% increase or decrease based on the group's ESG rating; (vi) the annual permitted acquisition limit was increased from 10% to 15% of consolidated total assets and the lifetime permitted acquisition limit was increased from $2.25 billion to $2.5 billion; and (vii) the annual limit on dividends and share repurchases was increased from $300 million to $400 million based on our public debt ratings at the time and to $550 million if any two of our public debt ratings are equal to or higher than Ba1/BB+, and eliminated if any two of our public debt ratings are equal to or higher than Baa3/BBB-. TLF Agreement and RCF Agreement Amendments - Announced Separation & Divestiture In November 2023 and February 2024, the Parent entered into amendments to the TLF Agreement and RCF Agreement to permit the divestiture of the Global Gaming and PlayDigital segments via a sale, spin-off, or spin-off with a merger. Effective immediately upon the divestiture’s closing, the amendments: •Reduce the Revolving Credit Facility A commitment from $820 million to $650 million; •Reduce the Revolving Credit Facility B commitment from €1 billion to €800 million; •Mandate the first $2 billion of net proceeds be used to pay down debt within six months of the closing date, which shall include the full repayment of the Parent’s Euro Term Loan facility within one month of the closing date (this excludes the Euro Term Loan facility principal held by IGT Lottery Holdings B.V.); •Permit shareholder distributions and/or share buy backs to the extent that the net proceeds exceed $2 billion; and •Make certain adjustments to the debt covenants, such as the subsidiaries guaranteeing the Facilities. In the event of a spin-off or spin-off with a merger, net proceeds may include, but is not limited to, repaid intercompany debt. F-36 Other Credit Facilities The Parent and certain of its subsidiaries may borrow under senior unsecured uncommitted demand credit facilities made available by several financial institutions. At December 31, Letters of Credit The Parent and certain of its subsidiaries
Interest Expense, Net
16.Other Liabilities Other Current Liabilities
Other Non-Current Liabilities
17.Other Non-Operating Expense, Net
18. Income Taxes The components of
The provision for income taxes consists of:
Income taxes paid, net of refunds, were At December 31, 2023, undistributed profits of subsidiaries of approximately $1.1 billion are considered indefinitely reinvested. Foreign withholding taxes on these undistributed earnings would be approximately $65 million. The Parent is a tax resident in the United Kingdom (the “U.K.”). A reconciliation of the provision for income taxes,
(1) Includes the effects of foreign subsidiaries’ earnings taxed at rates other than the U.K. statutory rate The components of deferred tax assets and liabilities are as follows:
Our net deferred income taxes are recorded in the
Net Operating Loss Carryforwards We have a Valuation Allowance A reconciliation of the valuation allowance is as follows:
The valuation allowance primarily relates to Accounting for Uncertainty in Income Taxes A reconciliation of the unrecognized tax benefits is as follows:
At December 31, We recognize interest We file income tax returns in various jurisdictions of which the United Kingdom, United States, and Italy represent the major tax jurisdictions. All years prior to 2017 are closed with the Internal Revenue Service. As of December 31, Mexico Tax Audit Based on a 2006 tax examination, the Company’s Mexican subsidiary, GTECH Mexico S.A. de C.V., was issued an income tax assessment of approximately Mexican peso (“MXN”) Italy Tax Audits Pillar Two Global Minimum Tax Framework - Legislative Upd In December 2021, the Organization for Economic Cooperation and committed to adopting Pillar Two, which establishes a global minimum tax of 15% and Commitments Jackpot Commitments Jackpot liabilities are recorded as current and non-current liabilities as follows:
Future jackpot liabilities as of December 31, 2023 are due as follows:
Performance and other bonds Certain contracts require us to provide a surety bond as a guarantee of performance for the benefit of customers; bid and litigation bonds for the benefit of potential customers; and WAP bonds that are used to secure our financial liability when a player elects to have their WAP jackpot winnings paid over an extended period of time. These bonds give beneficiaries the right to obtain payment and/or performance from the issuer of the bond if certain specified events occur. In the case of performance bonds, which generally have a term of one year, such events include our failure to perform our obligations under the applicable contracts. In general, we would only be liable for these guarantees in the event of default in our performance of our obligations under each contract, the probability of which we believe is remote. Accordingly, no liability has been recorded as of December 31, Legal Proceedings From time to time, the Parent and/or one or more of its subsidiaries are party to legal, regulatory, or administrative proceedings regarding, among other matters, claims by and against us, and injunctions by third parties arising out of the ordinary course of F-42 Texas Fun 5’s Instant Ticket Game (a)Steele, James et al. v. GTECH Corp., filed on December 9, 2014 in Travis County (No. D1GN145114). Through intervenor actions, over 1,200 plaintiffs claim damages in excess of We dispute the claims made in each of these cases and continue to defend against these lawsuits. The Company will continue to monitor these matters and may adjust its disclosure and accrual in accordance with its Process for Disclosure and Recording of Liabilities Related to Legal Proceedings as described in Note 2 - Summary of Significant Accounting Policies, herein. Disposition of Previously Disclosed Matters On International Game Technology acquired Double Down Interactive LLC (“DDI”) in 2012 and, effective June 1, 2017, sold DDI to DoubleU Diamond LLC (“DoubleU”) pursuant to a purchase agreement (the “Purchase Agreement”). At all times relevant, DDI was the sole operator of the Double Down Casino, and International Game Technology asserts, among other defenses, that it has no liability for the actions of a bona fide subsidiary. On May 10, 2018, DDI and DoubleU sent a claim notice (the “DDI Claim Notice”) to International Game Technology seeking indemnification and reimbursement of defense costs for all claims against DoubleU and its affiliates (the “DoubleU Entities”) in F-43 the Benson Matter, pursuant to the Purchase Agreement. On June 7, 2018, International Game Technology responded to the DDI Claim Notice, rejecting any obligation to indemnify or pay defense costs of the DoubleU Entities, and sent a claim notice to DoubleU for indemnification and reimbursement of defense costs for all claims against International Game Technology in the Benson Matter pursuant to the terms of certain agreements with DoubleU. On June 17, 2021, IGT U.S. Gaming OpCo sent a claim notice to DoubleU for indemnification and reimbursement of defense costs for all claims against IGT U.S. Gaming OpCo in the Benson Matter pursuant to the terms of certain agreements with DoubleU. On August 29, 2022, the Company and DoubleDown Interactive Co., Ltd., parent company of DDI, announced an agreement in principle to settle the lawsuit and associated proceedings. Under the terms of the settlement, which would take effect only after final court approval of the proposed class settlement, a total of $415 million will be paid into a settlement fund, of which the Company’s subsidiaries will contribute $270 million and DDI will contribute $145 million. Subject to final court approval of the settlement in the Benson Matter, International Game Technology, IGT U.S. Gaming OpCo, and the DoubleU Entities have also resolved all indemnification and other claims between themselves and their respective subsidiaries and affiliates relating to the Benson Matter. On November 14, 2022, the court granted preliminary approval of the settlement. As a result of the settlement agreement, the Company accrued $270 million of other non-operating expense, net for the year ended December 31, 2022, respectively, related to the loss associated with the Benson Matter and related claims between the Company and the DoubleU Entities. In November, 2022, the Company placed $50 million in escrow, resulting in $220 million recorded as DDI / Benson Matter provision as of December 31, 2022 in the Consolidated Balance Sheets. The cash flows relating to this payment are reported in operating activities in the Consolidated Statements of Cash Flows. On June 1, 2023, the Court granted the Motion for Final Approval of Settlement and dismissed the case. The Company paid the $270 million agreed upon settlement amount (including the $50 million placed in escrow in November 2022) on June 13, 2023. In 2022, the Company realized a deferred tax benefit of $66 million (with no cash benefit). In 2023, the Company recognized a cash tax benefit of $36 million and will recognize the remaining cash tax benefit in future periods. 20. Shareholders’ Equity Shares Authorized and Outstanding The Board Ordinary shares outstanding were as follows:
Share Repurchase Program On November 15, 2021, the Parent’s Board of Directors authorized a share repurchase program (the “Program”) pursuant to which the Company may repurchase up to $300 million of the Parent’s outstanding ordinary shares during a period of four years commencing on November 18, 2021. At the Parent’s 2023 annual general meeting, the Parent’s shareholders granted authority to repurchase, subject to a maximum repurchase price, The Parent F-44 paid to repurchase such shares have been recorded as treasury stock in our Consolidated Balance Sheets until they are reissued or Dividends We declared a $0.20 cash dividend per share The Accumulated Other Comprehensive Income The following table details the changes in AOCI:
(1) Foreign currency translation of approximately $19 million was reclassified into gain on sale of discontinued operations, net of tax on the Consolidated Statements of Operations for the year ended December 31, 2021. Other foreign currency translation adjustments
21.
Incentive Awards Stock-based incentive awards are provided to directors and employees under the terms of our 2015 and 2021 Equity Incentive Stock Options Stock options are awards that allow the employee to purchase shares of our stock at a fixed price. Stock options are granted F-45 under the Stock Awards Stock awards are principally made in the form of performance share units (“PSUs”) and restricted share units (“RSUs”). PSUs are stock awards where the number of shares ultimately received by the employee depends on the Company’s performance against specified targets, which may include Adjusted EBITDA, Adjusted RSUs are stock awards Stock Option Activity A summary of our stock option activity and related information is as follows:
Fair Value of Stock Options Granted We estimate the fair value of stock options at the date of grant using a valuation model that incorporates key inputs and assumptions as detailed in the table below. The weighted-average grant date fair value of stock options granted during
F-46 The expected volatility assumes the historical volatility is indicative of future trends, which may not be the actual outcome. The expected option term is based on historical data and is not necessarily indicative of exercise patterns that may occur. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of our original estimates of fair value. Stock Award Activity A summary of our stock award activity and related information is as follows:
(1) Unless otherwise noted, the number of PSUs granted are based on the target number of shares. Based on specified targets, actual performance may result in additional shares vesting, up to a maximum 145% payout achievement. (2) Includes 517 thousand PSUs for vestings above the target thresholds. These PSUs were granted in prior years and either vested in 2023 or will vest in 2024 upon achievement of normal service requirements. The total vest-date fair value of PSUs vested was Fair Value of Stock Awards Granted We estimated the fair value of PSUs at the date of grant using a Monte Carlo simulation valuation model, as the awards include a market condition. The market condition is based on the Company’s TSR relative to the Russell Midcap Market Index. During
Stock-Based Compensation Expense Total compensation cost
In 2021, the Company established a synthetic equity award program (the “PlayDigital Equity Award Program”) designed to align the incentives of certain employees of the Company’s PlayDigital segment with the growth in the valuation of such business. The amount of compensation paid to an employee will depend on the valuation of the PlayDigital segment on each applicable vesting date and requires the employee’s continued service through each vesting date. Awards under the PlayDigital Equity Award Program vest in three tranches, with certain specified percentages (the “Tranche Percentages”) of the award scheduled to vest three, four, and five years after the grant date. The first vesting date is subject to acceleration in the event of a separate public listing of the PlayDigital business, while the remaining two vesting dates shall not be affected. PlayDigital synthetic equity awards provide that on each applicable vesting date, the employee shall be entitled to an amount (payable in a combination of equity and cash) equal to a certain percentage (the “Synthetic SAR Percentage”) of the appreciation, if any, in the valuation of the PlayDigital business at each vesting date over the contractually agreed initial valuation. Additionally, the employee shall be entitled to an amount (payable in a combination of equity and cash) equal to a certain percentage (the “Synthetic RSU Percentage”) of the valuation of the PlayDigital business as of each vesting date. At December 31, 2023, $2 million of estimated unrecognized compensation expense attributable to PlayDigital synthetic equity awards will be recognized as compensation expense over a weighted average period of 2.5 years. F-48 22. Earnings Per Share The following table presents the computation of basic and diluted
Certain stock options to purchase common shares were outstanding, but were excluded from the computation of diluted earnings per share, because the exercise price of the options was greater than the average market price of the common shares for the full year, and therefore, the effect would have been antidilutive. During years when we are in a net loss position, certain outstanding stock options and unvested restricted stock awards are excluded from the computation of diluted earnings per share because including them would have had an antidilutive effect. For the years ended December 31, 23.Variable Interest Entities We hold ownership interests in and consolidate the following variable interest entities (“VIEs”):
(1) Northstar New Jersey Holding Company LLC, of which we are a 71.12% shareholder, holds the 76.64% ownership in Northstar NJ. Lottoitalia holds a license to operate the Lotto game in Italy through November 2025. LN holds a license to operate the Scratch & Win instant lottery game in Italy through September 2028. Northstar NJ manages a wide range of the lottery’s day-to-day operations in the State of New Jersey, as well as provides marketing and sales services under a license valid through June 2029. RI VLT manages VLT operations and holds the exclusive technology provider license in the State of Rhode Island through June 2043. We are the principal operating partner fulfilling the requirements under the licenses held by the VIEs. As such, we have the power to direct the activities that significantly affect the VIEs’ economic performance, along with the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIEs. As a result, we concluded we are the primary beneficiary of the VIEs and they have been consolidated. Accordingly, the balance sheet and operating activity of the VIEs are F-49 included in our Consolidated Financial Statements and we adjust the net income in our Consolidated Statements of Operations to exclude the non-controlling interests’ proportionate share of results. We present the proportionate share of non-controlling interests as equity in the Consolidated Balance Sheets. The carrying amounts and classification of these VIEs’ assets and liabilities in our Consolidated Balance Sheets at December 31, 2023 and 2022 are as follows:
The balances presented above are net of intercompany balances and transactions that are eliminated in our Consolidated Financial Statements. Additionally, IGT holds a 50.00% ownership interest in a consortium, Mineria da Sorte Loteria SPE LTDA (“Brazil Lottery”), formed in June 2023 which holds an exclusive 20-year license to operate instants and passive lottery in the State of Minas Gerais, Brazil. We determined that the consortium is a VIE, but we are not the primary beneficiary of the VIE. Therefore, as of December 31, 2023 the joint venture was unconsolidated and accounted for under the equity method. 24.Segment Information We report our financial performance based on three business segments: Global Lottery, Global Gaming, and PlayDigital, and analyze revenue by segment as well as operating income as the measure of segment profitability. Through our three business segments, we operate and provide an integrated portfolio of innovative gaming technology products and services including online and instant lottery systems, iLottery, instant ticket printing, lottery management services, gaming systems, electronic gaming machines, iGaming, and sports betting. The Global Lottery segment has full responsibility for the worldwide traditional lottery and iLottery business, including sales, operations, product development, technology, and support. The Global Gaming segment has full responsibility for the worldwide land-based gaming business, including sales, product management, studios, global manufacturing, operations, and technology. The PlayDigital segment has full responsibility for the worldwide iGaming and sports betting business, including sales, operations, studios, technology, and support. Our three business segments are supported by central corporate support functions, including finance, people and transformation, legal, marketing and communications, corporate public affairs, and strategy and corporate development. Certain support costs that are identifiable and that benefit our business segments are allocated to them. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Corporate support function expenses that are not allocated to the business segments, which are principally composed of selling, general and administrative expenses, are reported as Corporate and Other expenses, along with goodwill impairment and the depreciation and amortization of acquired tangible and intangible assets in connection with acquired companies. Segment assets are not reported to, or used by, the chief operating decision maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed. Global Lottery Our Global Lottery segment provides lottery products and services primarily to governmental organizations through operating contracts, FMCs, LMAs, and product sales contracts. As part of our lottery product and services, we provide instant and draw-based lottery products, point-of-sale machines, central processing systems, software, commercial services, instant ticket printing services, and other related equipment and support services. We categorize revenue from operating contracts, FMCs, and LMAs as “Operating and facilities management contracts” and revenue from commercial services, software hosting, software maintenance, and other services not included within operating F-50 contracts, FMCs, or LMAs as service revenue from “Systems, software, and other”. Revenue included within “Operating and facilities management contracts” include all services required by the contract, including iLottery and instant ticket printing. We categorize sales or sales-type leases of lottery terminals, lottery systems, fixed-fee software licenses, and instant tickets not part of “Operating and facilities management contracts” as product sales from “Lottery products”. Global Gaming Our Global Gaming segment provides gaming products and services including software and game content, casino gaming management systems, video lottery terminals (“VLTs”), VLT central systems, and other related equipment and support services to commercial and tribal casino operators. We categorize revenue from WAP services, and operating leases for VLTs and other gaming machines as service revenue from “Gaming terminal services”. We categorize sales or usage-based royalties promised in exchange for software intellectual property licenses, and systems as service revenue from “Systems, software, and other”. Revenue from the sale or sales-type lease of gaming machines, systems, component parts, and other miscellaneous equipment and services are categorized as product sales from “Gaming terminals” and revenue from systems, fixed-fee software licenses, casino gaming management systems, game content, and spare parts as product sales from “Other”. PlayDigital Our PlayDigital segment provides iGaming systems and digital platforms offering customers a remote game server solution, which is a fast gateway to extensive casino content, and digital gaming services that enhance player experiences and create marketing opportunities around either the Company’s games or third-party games via our aggregation capabilities. The segment also provides sports betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in the U.S. We categorize revenue from iGaming and sports betting as service revenue from “PlayDigital services”. Segment information is as follows:
(1) Depreciation and amortization excludes amortization of upfront license fees of $200 million.
(1) Depreciation and amortization excludes amortization of upfront license fees of $193 million. F-51
(1) Depreciation and amortization excludes amortization of upfront license fees of $216 million. Geographical Information Revenue from external customers, which is based on the geographical location of our customers, is as follows:
Revenue from one customer in the Global Lottery segment represented approximately 20%, 18%, and 23% of consolidated revenue in 2023, 2022, and 2021, respectively. Long-lived assets, which are comprised of Systems & Equipment and PPE, are based on the geographical location of the assets as follows:
25. Related Party Transactions We engage in business transactions with certain related parties which include (i) De Agostini S.p.A. (“De Agostini”) or entities directly or indirectly controlled by De Agostini, (ii) other entities and individuals capable of exercising control, joint control, or significant influence over us, and (iii) our unconsolidated subsidiaries or joint ventures. Members of the Board, executives with authority for planning, directing, and controlling the activities of the Company and such Directors’ and executives’ close family members are also considered related parties. We may make investments in such entities, enter into transactions with such entities, or both. De Agostini Group F-52 ordinary shares pursuant to the Loyalty Plan, a voting interest of approximately 59.7% of the total voting rights (excluding treasury shares). Amounts receivable from De Agostini and subsidiaries of De Agostini Related party
PlayDigital Synthetic Equity Award Program On March 9, 2022, Enrico Drago, Chief Executive Officer, PlayDigital, an immediate family member of Marco Drago, a member of the Parent’s board of directors, was granted a synthetic equity award pursuant to the PlayDigital Equity Award Program with Tranche Percentages of 35%, 25%, and 40%, a Synthetic SAR Percentage of 1.275%, and a Synthetic RSU Percentage of 0.225%. At December 31, 2023, $1 million of estimated unrecognized compensation expense attributable to the synthetic equity award granted to Mr. Drago will be recognized as compensation expense over a weighted average period of 2.6 years. Unconsolidated Subsidiaries, Partnerships and Joint Ventures From time to time, we make strategic investments in publicly traded and privately held companies that develop software, hardware, and other technologies or provide services supporting its technologies. We may also purchase from or make sales to these organizations. Ringmaster S.r.l. We have a 50% interest in Ringmaster S.r.l. (“Ringmaster”), an Italian joint venture, that is accounted for using the equity method of accounting. Ringmaster provides software development services for our interactive gaming business pursuant to an agreement dated December 7, 2011. Our investment in Ringmaster was We incurred Connect Ventures One LP and Connect Ventures Two LP We Our investment in Connect Ventures One LP was 26. Subsequent Events On February 28, 2024, the Parent entered into definitive agreements with Everi Holdings Inc. (“Everi”), pursuant to which the Parent will separate its Global Gaming and PlayDigital businesses by way of a taxable spin-off to the Parent’s shareholders and then immediately combine such businesses with Everi, (the “Separation & Divestiture”) resulting in the “Combined Company”. Under the terms of the agreements, the Parent’s shareholders are expected to own at closing approximately 54%, and Everi stockholders are expected to own approximately 46% of the shares in the combined company. In connection with the Separation & Divestiture, the Parent will receive approximately $2.6 billion in cash that will be funded with the proceeds of debt incurred by the Combined Company. The Parent expects to allocate approximately $2 billion to debt repayment. After closing, Everi will change its name to International Game Technology, Inc. and will trade on the NYSE under the ticker IGT. The Parent will change its name and continue to trade on the NYSE under a new ticker symbol. The transaction is expected to close in late 2024 or early 2025, subject to receipt of all regulatory approvals, shareholders approvals, and other customary closing conditions. Revenue information relative to the Global Gaming and PlayDigital segments is included in Note 4. - Revenue Recognition. Due to factors such as the nature of the transaction and underlying approvals, the business is not considered held for sale as of December 31, 2023. F-54 |