Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 06, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SCIENTIFIC GAMES CORP | |
Entity Central Index Key | 0000750004 | |
Trading Symbol | SGMS | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 92,923,552 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Revenue: | |||
Total revenue | $ 837 | $ 812 | |
Operating expenses: | |||
Cost of services, cost of product sales and cost of instant products | 307 | 297 | |
Selling, general and administrative | 186 | 172 | |
Research and development | 49 | 54 | |
Depreciation, amortization and impairments | 165 | 188 | |
Restructuring and other | 7 | 52 | |
Operating (loss) income | 123 | 49 | |
Other (expense) income: | |||
Interest expense | (154) | (155) | |
Earnings from equity investments | 6 | 7 | |
Loss on debt financing transactions | 0 | (93) | |
Gain (loss) on remeasurement of debt | 5 | (1) | |
Other expense, net | 0 | (3) | |
Total other expense, net | (143) | (245) | |
Net income (loss) before income taxes | (20) | (196) | |
Income tax expense | (4) | (6) | |
Net (loss) income | (24) | (202) | |
Other comprehensive income (loss): | |||
Foreign currency translation gain, net of tax | 55 | 51 | |
Pension and post-retirement gain (loss), net of tax | 1 | (1) | |
Derivative financial instruments unrealized (loss) gain, net of tax | (5) | 2 | |
Other comprehensive income | 51 | 52 | |
Comprehensive income (loss) | $ 27 | $ (150) | |
Basic and diluted net loss per share: | |||
Basic (in dollars per share) | $ (0.26) | $ (2.24) | |
Diluted (in dollars per share) | $ (0.26) | $ (2.24) | |
Weighted average number of shares used in per share calculations: | |||
Basic (in shares) | 92 | 90 | |
Diluted (in shares) | 92 | 90 | |
Services | |||
Revenue: | |||
Total revenue | $ 459 | $ 438 | |
Operating expenses: | |||
Cost of services, cost of product sales and cost of instant products | [1] | 133 | 122 |
Product sales | |||
Revenue: | |||
Total revenue | 238 | 224 | |
Operating expenses: | |||
Cost of services, cost of product sales and cost of instant products | [1] | 107 | 105 |
Instant products | |||
Revenue: | |||
Total revenue | 140 | 150 | |
Operating expenses: | |||
Cost of services, cost of product sales and cost of instant products | [1] | $ 67 | $ 70 |
[1] | Exclusive of D&A |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | |
Current assets: | |||
Cash and cash equivalents | $ 1,213 | $ 168 | |
Restricted cash | 41 | 39 | |
Accounts receivable, net | 621 | 599 | |
Notes receivable, net | 104 | 114 | |
Inventories | 229 | 216 | |
Prepaid expenses, deposits and other current assets | 238 | 233 | |
Total current assets | 2,446 | 1,369 | |
Non-current assets: | |||
Restricted cash | 12 | 13 | |
Notes receivable, net | 33 | 40 | |
Property and equipment, net | 517 | 547 | |
Operating lease right-of-use assets | 118 | 0 | |
Goodwill | 3,301 | 3,280 | |
Intangible assets, net | 1,745 | 1,809 | |
Software, net | 277 | 285 | |
Equity investments | 296 | 298 | |
Other assets | 92 | 77 | |
Total assets | 8,837 | 7,718 | |
Current liabilities: | |||
Current portion of long-term debt | 1,046 | 45 | |
Accounts payable | 200 | 225 | |
Accrued liabilities | 540 | 477 | |
Total current liabilities | 1,786 | 747 | |
Deferred income taxes | 109 | 108 | |
Operating lease liabilities | 98 | 0 | |
Operating lease liabilities | 330 | 334 | |
Long-term debt, excluding current portion | 8,937 | 8,992 | |
Total liabilities | 11,260 | 10,181 | |
Commitments and contingencies (see Note 16) | |||
Stockholders’ deficit: | |||
Common stock, par value $0.001 per share: 199.3 shares authorized; [108.6] and 109.1 shares issued and [91.4] and 91.9 shares outstanding, respectively | [1] | 1 | 1 |
Additional paid-in capital | 848 | 835 | |
Accumulated loss | (2,848) | (2,824) | |
Treasury stock, at cost, 17 shares | (175) | (175) | |
Accumulated other comprehensive loss | (249) | (300) | |
Total stockholders’ deficit | (2,423) | (2,463) | |
Total liabilities and stockholders’ (deficit) equity | $ 8,837 | $ 7,718 | |
[1] | Following the consummation of the reincorporation merger on January 10, 2018, each authorized, issued and outstanding share of Class A common stock of SGC, par value $0.01 per share automatically converted into one share of common stock of the surviving corporation, par value $.001 per share. The change in par value had no impact on total number of authorized, issued and outstanding shares. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jan. 10, 2018 | Mar. 31, 2019 | Dec. 31, 2018 | Jan. 11, 2018 |
Statement of Financial Position [Abstract] | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 199,300,000 | 199,300,000 | ||
Common stock, shares issued (in shares) | 110,000,000 | 109,000,000 | ||
Common stock, shares outstanding (in shares) | 93,000,000 | 92,000,000 | ||
Treasury stock, at cost, shares held (in shares) | 17,200,000 | 17,200,000 | ||
Shares of surviving corporation (in shares) | 1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (24) | $ (202) |
Adjustments to reconcile net loss to cash provided by operating activities | 179 | 309 |
Changes in working capital accounts, net of effects of acquisitions | 6 | (78) |
Changes in deferred income taxes and other | 6 | 1 |
Net cash provided by operating activities | 167 | 30 |
Cash flows from investing activities: | ||
Capital expenditures | (67) | (88) |
Acquisitions of businesses and assets, net of cash acquired | 0 | (274) |
Distributions of capital from equity investments | 3 | 2 |
Net cash used in investing activities | (64) | (360) |
Cash flows from financing activities: | ||
Proceeds from Lines of Credit | 40 | 0 |
Repayments under revolving credit facility | (175) | (295) |
Proceeds from issuance of senior notes and term loans | 1,100 | 2,512 |
Repayment of senior notes and term loans (inclusive of redemption premium) | 0 | (2,210) |
Repayment of assumed NYX debt | 0 | (288) |
Payments on long-term debt | (12) | (2) |
Payment of Deferred Financing Costs | (14) | (39) |
Payments on license obligations | (7) | (7) |
Sale of future revenue | 11 | 0 |
Net redemptions of common stock under stock-based compensation plans and other | (1) | (17) |
Net cash provided by (used in) financing activities | 942 | (346) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | 2 |
Increase in cash, cash equivalents and restricted cash | 1,046 | (674) |
Cash, cash equivalents and restricted cash, beginning of period | 220 | 834 |
Cash, cash equivalents and restricted cash, end of period | 1,266 | 160 |
Supplemental cash flow information: | ||
Cash paid for interest | 80 | 161 |
Income taxes paid | 10 | 7 |
Distributed earnings from equity investments | 4 | 1 |
Supplemental non-cash transactions: | ||
Non-cash rollover and refinancing of Term loans | 0 | 3,275 |
Non-cash interest expense | 7 | 6 |
NYX non-cash consideration transferred (inclusive of 2017 acquisition of ordinary shares) | $ 0 | $ 93 |
Description of the Business and
Description of the Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business and Summary of Significant Accounting Policies | Description of the Business and Summary of Significant Accounting Policies Description of the Business We are a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digital gaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-management systems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lottery content and services to lottery operators; providing social casino solutions to retail consumers; and providing a comprehensive suite of digital RMG and sports wagering solutions, distribution platforms, content, products and services. We report our operations in four business segments—Gaming, Lottery, Social and Digital. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The accompanying condensed consolidated financial statements include the accounts of SGC and those subsidiaries in which we have a controlling financial interest. Investments in other entities in which we do not have a controlling financial interest but we exert significant influence are accounted for in our condensed consolidated financial statements using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of SGC and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results of operations and comprehensive loss and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2018 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year. Significant Accounting Policies There have been no changes to our significant accounting policies described within the Notes of our 2018 10-K other than adoption of ASC 842 described in Note 15. Computation of Basic and Diluted Net Loss Per Share Basic and diluted net loss per share were the same for all periods presented as all common stock equivalents would be anti-dilutive. We excluded 2 million and 3 million of stock options from the diluted weighted-average common shares outstanding for the three months ended March 31, 2019 and 2018 , respectively. We excluded 2 million and 3 million of RSUs from the calculation of diluted weighted-average common shares outstanding for the three months ended March 31, 2019 and 2018 , respectively. New Accounting Guidance - Recently Adopted T he FASB issued ASU No. 2016-02, Leases (Topic 842 ) in 2016. ASU 2016-02 combined with all subsequent amendments (collectively, “ASC 842”) requires balance sheet recognition for all leases with a lease term greater than one year to be recorded as a lease liability (on a discounted basis) with a corresponding right-of-use asset. This guidance also expands the required quantitative and qualitative disclosures for lease arrangements and gives rise to other changes impacting certain aspects of lessee and lessor accounting. We adopted ASC 842 as of January 1, 2019 using the optional transition method provided by ASU 2018-11, and applied both the lessee package of practical expedients and the available lessor practical expedients. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842 ) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. We have provided the related transition disclosures as of the beginning of 2019 in accordance with ASU 2019-1. See our 2018 10-K Note 1 for the impact on our consolidated financial statements and Note 15 in this Quarterly Report for our lease accounting policy and the quarterly impact of our adoption of ASC 842. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The standard allows companies to make an election to reclassify from Accumulated Other Comprehensive Income (AOCI) to retained earnings the stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. This ASU is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The amendments in this updated guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. corporate federal income tax rate in the Tax Act is recognized. We adopted this standard effective January 1, 2019. We elected not to reclassify the income tax effects of the Tax Cuts and Jobs Act from AOCI to retained earnings. The adoption of this guidance did not have an effect on our consolidated financial statements. New Accounting Guidance - Not Yet Adopted The FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) in 2016. The new guidance replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans and other financial instruments, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The new guidance will be effective for us beginning January 1, 2020. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of adopting this guidance. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement . The new guidance amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying, and adding certain disclosures on fair value measurements in ASC 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The new guidance will be effective for us beginning January 1, 2020, with early adoption permitted. We do not plan to early adopt this ASU, and we are currently evaluating the impact of adopting this guidance. We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. Subsequent Events - Social Gaming Business Initial Public Offering On May 7, 2019, our subsidiary SciPlay Corporation (“SciPlay”) completed an initial public offering (“IPO”) of a 17.4% minority interest in our Social gaming business. SciPlay has two classes of common stock - Class A common stock, which is traded on The NASDAQ Global Select Market under the symbol “SCPL,” and Class B common stock. On all matters submitted to a vote of SciPlay stockholders, Class B common stock entitles us to ten votes per share (for so long as the number of shares of SciPlay common stock beneficially owned by us represents at least 10% of SciPlay’s outstanding shares of common stock and, thereafter, one vote per share), and SciPlay Class A common stock entitles its owners to one vote per share. We own all of the outstanding Class B common stock, which represents approximately 82.6% of SciPlay’s total outstanding shares of common stock and approximately 97.9% of the combined voting power of both classes of SciPlay’s outstanding common stock. Accordingly, we continue to control shares representing a majority of the combined voting power in SciPlay and will continue to consolidate our Social gaming business. The corporate structure of the above transaction is commonly referred to as an “Up‑C” structure, which is often used by partnerships and limited liability companies when they undertake an initial public offering of their business. The Up‑C structure allows us to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for income tax purposes following the IPO. The Company currently maintains a full valuation allowance on its U.S. net deferred tax assets. We will continue to monitor and assess positive and negative evidence with respect to our ability to realize our deferred tax assets, and we recognize that this transaction could have an impact on the overall valuation allowance assessment, but these impacts are still being evaluated. Any taxable gain associated with the IPO transaction is expected to be fully offset by net operating loss carryforwards, resulting in a reduction of our valuation allowance by the same amount. In connection with the SciPlay IPO we also entered into the following transactions: • A tax receivable agreement (“TRA”), which provides for the payment by SciPlay to us of 85% of the amount of tax benefits, if any, that SciPlay actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of assets of SciPlay Parent Company, LLC (“SciPlay Parent LLC”) (a) in connection with the SciPlay IPO, (b) resulting from any redemptions or exchanges of membership interests of SciPlay Parent LLC pursuant to the SciPlay Parent LLC Operating Agreement or (c) resulting from certain distributions (or deemed distributions) by SciPlay Parent LLC and (ii) certain other tax benefits related to SciPlay’s making of payments under the TRA. • An Intercompany Services Agreement, under which we provide to the Social gaming business certain corporate level general and administrative services, including but not limited to, finance, corporate development, human resources, legal (which could include liability related to litigation awards related to SciPlay), information technology and rental fees for shared assets. These expenses will be charged to the Social gaming business and settled in cash. • An intellectual property license agreement (“IP License Agreement”), pursuant to which the Social gaming business acquired the following licenses from a restricted subsidiary of SGC for a one-time payment of $255 million : (i) an exclusive (subject to certain limited exceptions), perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming, Inc. (“Bally Gaming”) or its affiliates on or before the third anniversary of the date of the IP License Agreement (the date of the IP License Agreement, the “Effective Date”), in any of the Covered Games (defined as any of SciPlay’s currently available or future social games that are developed for mobile platforms, social media platforms, internet platforms or other interactive platforms and distributed solely via digital delivery); (ii) an exclusive (subject to certain limited exceptions and payment of royalties owed to third-party licensors for SciPlay's use of third-party licensed property) license to use third-party intellectual property licensed to Bally Gaming or its affiliates on or before the third anniversary of the Effective Date, to the extent permitted to be sublicensed to the Social gaming business, in any of the Covered Games; (iii) a non-exclusive, perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming or its affiliates after the third anniversary of the Effective Date, but only in the Social gaming business’ currently available games; and (iv) a non-exclusive license to use third-party intellectual property licensed to Bally Gaming or its affiliates after the third anniversary of the Effective Date, to the extent permitted to be sublicensed to the Social gaming business, but only in the Social gaming business’ currently available games. As a result of IP License Agreement described above, our Social gaming business will no longer be required to pay to Bally Gaming future royalties and or fees for use of intellectual property owned by Bally Gaming or its affiliates for the Social gaming business’ currently available games. Accordingly, and commencing with the effectiveness of the IP License Agreement as of May 7, 2019, our Gaming business segment AEBITDA will no longer benefit from these charges, while our Social gaming business segment AEBITDA will increase proportionately. The total amount of such IP charges for the three months ended March 31, 2019 and 2018 were $7.3 million and $6.2 million , respectively, and for the years ended December 31, 2018 and 2017 were $26 million and $24 million , respectively. • SciPlay Holding Company, LLC (“SciPlay Holding”), a subsidiary of SciPlay, entered into a $150 million revolving credit agreement (the “SciPlay Revolver”) by and among SciPlay Holding, as the borrower, SciPlay Parent LLC, as a guarantor, the subsidiary guarantors party thereto (which are all domestic entities that comprise our Social gaming business), the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent that matures in May 2024. The interest rate is either Adjusted LIBOR (as defined in the SciPlay Revolver) plus 2.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) or ABR (as defined in the SciPlay Revolver) plus 1.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) at the option of SciPlay Holding. SciPlay Holding is required to pay to the lenders a commitment fee of 0.500% per annum on the average daily unused portion of the revolving commitments through maturity, which fee varies based on the total net leverage ratio and is subject to a floor of 0.375% . The SciPlay Revolver provides for up to $15.0 million in letter of credit issuances, which requires customary issuance and administration fees, and a fronting fee of 0.125% . The SciPlay Revolver contains covenants that, among other things, restrict SciPlay Holding’s, SciPlay Parent LLC’s and the subsidiary guarantors’ ability to incur additional indebtedness; incur liens; sell, transfer or dispose of property and assets; invest; make dividends or distributions or other restricted payments; and engage in affiliate transactions, with the exception of certain payments under the TRA and payments in respect of certain tax distributions under the SciPlay Parent LLC Operating Agreement. We currently do not expect the Social gaming business to declare or pay any cash dividends to us, other than tax distributions and certain cash distributions related to the impact of taxes pursuant to the TRA. If the Social gaming business discontinues the payment of, or is unable to pay, cash dividends to us, this will reduce our available liquidity. Furthermore, the terms of indebtedness incurred by the Social gaming business may, and the terms of the SciPlay Revolver will, limit the ability of the Social gaming business to pay dividends or make other distributions to us, or to amend the agreements between the Social gaming business and us and our other subsidiaries. In addition, the SciPlay Revolver requires that SciPlay maintain a maximum total net leverage ratio not to exceed 2.50:1.00 and maintain a minimum fixed charge coverage ratio of no less than 4.00:1.00 . The SciPlay Revolver is secured by a (i) first priority pledge of the equity securities of SciPlay Holding, SciPlay Parent LLC’s restricted subsidiaries and each subsidiary guarantor party thereto and (ii) first priority security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee-owned real property of SciPlay Parent LLC, SciPlay Holding and each subsidiary guarantor party thereto, in each case, subject to customary exceptions. The entities that comprise our Social gaming business are unrestricted subsidiaries under our debt agreements and are therefore not subject to the covenants in our debt agreements. Conversely, only the entities that are parties to the SciPlay Revolver (which are all domestic entities that comprise our Social gaming business) and their respective restricted subsidiaries are subject to the covenants in the SciPlay Revolver. As a result, this will reduce our available liquidity and limit the ability of the Social gaming business to pay dividends or make other distributions to us, or to amend the agreements between the Social gaming business and us and our other subsidiaries. In 2018, the amount of dividends declared and paid by the Social gaming business to Bally Gaming, a wholly owned subsidiary of SGC, was $77 million . As a result of these transactions, we received net proceeds of $301 million , which enables us to make substantial payments to reduce our debt. |
Subsequent Events [Text Block] | Subsequent Events - Social Gaming Business Initial Public Offering On May 7, 2019, our subsidiary SciPlay Corporation (“SciPlay”) completed an initial public offering (“IPO”) of a 17.4% minority interest in our Social gaming business. SciPlay has two classes of common stock - Class A common stock, which is traded on The NASDAQ Global Select Market under the symbol “SCPL,” and Class B common stock. On all matters submitted to a vote of SciPlay stockholders, Class B common stock entitles us to ten votes per share (for so long as the number of shares of SciPlay common stock beneficially owned by us represents at least 10% of SciPlay’s outstanding shares of common stock and, thereafter, one vote per share), and SciPlay Class A common stock entitles its owners to one vote per share. We own all of the outstanding Class B common stock, which represents approximately 82.6% of SciPlay’s total outstanding shares of common stock and approximately 97.9% of the combined voting power of both classes of SciPlay’s outstanding common stock. Accordingly, we continue to control shares representing a majority of the combined voting power in SciPlay and will continue to consolidate our Social gaming business. The corporate structure of the above transaction is commonly referred to as an “Up‑C” structure, which is often used by partnerships and limited liability companies when they undertake an initial public offering of their business. The Up‑C structure allows us to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for income tax purposes following the IPO. The Company currently maintains a full valuation allowance on its U.S. net deferred tax assets. We will continue to monitor and assess positive and negative evidence with respect to our ability to realize our deferred tax assets, and we recognize that this transaction could have an impact on the overall valuation allowance assessment, but these impacts are still being evaluated. Any taxable gain associated with the IPO transaction is expected to be fully offset by net operating loss carryforwards, resulting in a reduction of our valuation allowance by the same amount. In connection with the SciPlay IPO we also entered into the following transactions: • A tax receivable agreement (“TRA”), which provides for the payment by SciPlay to us of 85% of the amount of tax benefits, if any, that SciPlay actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of assets of SciPlay Parent Company, LLC (“SciPlay Parent LLC”) (a) in connection with the SciPlay IPO, (b) resulting from any redemptions or exchanges of membership interests of SciPlay Parent LLC pursuant to the SciPlay Parent LLC Operating Agreement or (c) resulting from certain distributions (or deemed distributions) by SciPlay Parent LLC and (ii) certain other tax benefits related to SciPlay’s making of payments under the TRA. • An Intercompany Services Agreement, under which we provide to the Social gaming business certain corporate level general and administrative services, including but not limited to, finance, corporate development, human resources, legal (which could include liability related to litigation awards related to SciPlay), information technology and rental fees for shared assets. These expenses will be charged to the Social gaming business and settled in cash. • An intellectual property license agreement (“IP License Agreement”), pursuant to which the Social gaming business acquired the following licenses from a restricted subsidiary of SGC for a one-time payment of $255 million : (i) an exclusive (subject to certain limited exceptions), perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming, Inc. (“Bally Gaming”) or its affiliates on or before the third anniversary of the date of the IP License Agreement (the date of the IP License Agreement, the “Effective Date”), in any of the Covered Games (defined as any of SciPlay’s currently available or future social games that are developed for mobile platforms, social media platforms, internet platforms or other interactive platforms and distributed solely via digital delivery); (ii) an exclusive (subject to certain limited exceptions and payment of royalties owed to third-party licensors for SciPlay's use of third-party licensed property) license to use third-party intellectual property licensed to Bally Gaming or its affiliates on or before the third anniversary of the Effective Date, to the extent permitted to be sublicensed to the Social gaming business, in any of the Covered Games; (iii) a non-exclusive, perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming or its affiliates after the third anniversary of the Effective Date, but only in the Social gaming business’ currently available games; and (iv) a non-exclusive license to use third-party intellectual property licensed to Bally Gaming or its affiliates after the third anniversary of the Effective Date, to the extent permitted to be sublicensed to the Social gaming business, but only in the Social gaming business’ currently available games. As a result of IP License Agreement described above, our Social gaming business will no longer be required to pay to Bally Gaming future royalties and or fees for use of intellectual property owned by Bally Gaming or its affiliates for the Social gaming business’ currently available games. Accordingly, and commencing with the effectiveness of the IP License Agreement as of May 7, 2019, our Gaming business segment AEBITDA will no longer benefit from these charges, while our Social gaming business segment AEBITDA will increase proportionately. The total amount of such IP charges for the three months ended March 31, 2019 and 2018 were $7.3 million and $6.2 million , respectively, and for the years ended December 31, 2018 and 2017 were $26 million and $24 million , respectively. • SciPlay Holding Company, LLC (“SciPlay Holding”), a subsidiary of SciPlay, entered into a $150 million revolving credit agreement (the “SciPlay Revolver”) by and among SciPlay Holding, as the borrower, SciPlay Parent LLC, as a guarantor, the subsidiary guarantors party thereto (which are all domestic entities that comprise our Social gaming business), the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent that matures in May 2024. The interest rate is either Adjusted LIBOR (as defined in the SciPlay Revolver) plus 2.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) or ABR (as defined in the SciPlay Revolver) plus 1.250% (with one 0.250% leverage-based step-down to the margin and one 0.250% leverage-based step-up to the margin) at the option of SciPlay Holding. SciPlay Holding is required to pay to the lenders a commitment fee of 0.500% per annum on the average daily unused portion of the revolving commitments through maturity, which fee varies based on the total net leverage ratio and is subject to a floor of 0.375% . The SciPlay Revolver provides for up to $15.0 million in letter of credit issuances, which requires customary issuance and administration fees, and a fronting fee of 0.125% . The SciPlay Revolver contains covenants that, among other things, restrict SciPlay Holding’s, SciPlay Parent LLC’s and the subsidiary guarantors’ ability to incur additional indebtedness; incur liens; sell, transfer or dispose of property and assets; invest; make dividends or distributions or other restricted payments; and engage in affiliate transactions, with the exception of certain payments under the TRA and payments in respect of certain tax distributions under the SciPlay Parent LLC Operating Agreement. We currently do not expect the Social gaming business to declare or pay any cash dividends to us, other than tax distributions and certain cash distributions related to the impact of taxes pursuant to the TRA. If the Social gaming business discontinues the payment of, or is unable to pay, cash dividends to us, this will reduce our available liquidity. Furthermore, the terms of indebtedness incurred by the Social gaming business may, and the terms of the SciPlay Revolver will, limit the ability of the Social gaming business to pay dividends or make other distributions to us, or to amend the agreements between the Social gaming business and us and our other subsidiaries. In addition, the SciPlay Revolver requires that SciPlay maintain a maximum total net leverage ratio not to exceed 2.50:1.00 and maintain a minimum fixed charge coverage ratio of no less than 4.00:1.00 . The SciPlay Revolver is secured by a (i) first priority pledge of the equity securities of SciPlay Holding, SciPlay Parent LLC’s restricted subsidiaries and each subsidiary guarantor party thereto and (ii) first priority security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee-owned real property of SciPlay Parent LLC, SciPlay Holding and each subsidiary guarantor party thereto, in each case, subject to customary exceptions. The entities that comprise our Social gaming business are unrestricted subsidiaries under our debt agreements and are therefore not subject to the covenants in our debt agreements. Conversely, only the entities that are parties to the SciPlay Revolver (which are all domestic entities that comprise our Social gaming business) and their respective restricted subsidiaries are subject to the covenants in the SciPlay Revolver. As a result, this will reduce our available liquidity and limit the ability of the Social gaming business to pay dividends or make other distributions to us, or to amend the agreements between the Social gaming business and us and our other subsidiaries. In 2018, the amount of dividends declared and paid by the Social gaming business to Bally Gaming, a wholly owned subsidiary of SGC, was $77 million . As a result of these transactions, we received net proceeds of $301 million , |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The following table disaggregates revenues by type within each of our business segments: Three Months Ended March 31, 2019 2018 Gaming Gaming operations $ 152 $ 161 Gaming machine sales 136 145 Gaming systems 74 75 Table products 60 62 Total $ 422 $ 443 Lottery Instant products $ 140 $ 150 Lottery systems 87 52 Total $ 227 $ 202 Social Mobile $ 97 $ 73 Web and other 21 24 Total $ 118 $ 97 Digital Sports and platform $ 30 $ 26 Gaming and other 40 44 Total $ 70 $ 70 The amount of rental income revenue that is outside the scope of ASC 606 was $96 million and $67 million for the three months ended March 31, 2019 and 2018 , respectively. Contract Liabilities and Other Disclosures The following table summarizes the activity in our contract liabilities for the reporting period: Three Months Ended March 31, 2019 Contract liability balance, beginning of period (1) $ 97 Liabilities recognized during the period 26 Amounts recognized in revenue from beginning balance (22 ) Contract liability balance, end of period (1) $ 101 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our March 31, 2019 consolidated balance sheet. The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on our consolidated balance sheet. Other than contracts with customers with financing arrangements exceeding 12 months, revenue recognition is generally proximal to conversion to cash, except for Lottery instant products sold under POS contracts. Revenue is recognized for such contracts upon delivery to our customers, while conversion to cash is based on the retail sale of the underlying ticket to end consumers. As a result, revenue recognition under ASC 606 does not approximate conversion to cash in any periods post-adoption. Total revenue recognized under such contracts was $23 million and $34 million in the three months ended March 31, 2019 and 2018 , respectively. The following table summarizes our balances in these accounts for the periods indicated (other than contract liabilities disclosed above): Receivables Contract Assets (1) Beginning of period balance $ 753 $ 114 End of period balance, March 31, 2019 758 114 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our March 31, 2019 consolidated balance sheet. As of March 31, 2019 , we did not have material unsatisfied performance obligations for contracts expected to be long-term or contracts for which we recognize revenue at an amount other than for which we have the right to invoice for goods or services delivered or performed. |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments We report our operations in four business segments—Gaming, Lottery, Social and Digital—representing our different products and services. A detailed discussion regarding the products and services from which each reportable business segment derives its revenue is included in Notes 2 and 3 in our 2018 10-K. In evaluating financial performance, our Chief Operating Decision Maker focuses on AEBITDA as management’s segment measure of profit or loss, which is described in Note 3 in our 2018 10-K. As a result of the on-going initial public offering of a minority interest in our Social gaming business, which was subsequently completed during the second quarter of 2019, we changed our calculation of Social business segment AEBITDA beginning with the first quarter of 2019. Social business segment AEBITDA now reflects intercompany charges settled in cash for corporate services and certain royalties paid for by our Social business segment to other segments or to Corporate (included in the “Unallocated and Reconciling Items” column in the tables below). Business segment information for the three months ended March 31, 2018 has been recast to reflect these changes. Additionally, see Note 1 for a description of the IP License Agreement executed in conjunction with the SciPlay IPO that will impact our Gaming business segment and Social business segment AEBITDA commencing with the effectiveness of the IP License Agreement as of May 7, 2019 . The accounting policies of our business segments are the same as those described within the Notes in our 2018 10-K. The following tables present our segment information: Three Months Ended March 31, 2019 Gaming Lottery Social (2) Digital Unallocated and Reconciling Items (1) Total Total revenue $ 422 $ 227 $ 118 $ 70 $ — $ 837 AEBITDA 215 104 25 13 (29 ) $ 328 Reconciling items to consolidated net loss before income taxes: D&A (112 ) (19 ) (2 ) (19 ) (13 ) (165 ) Restructuring and other (2 ) — (1 ) (3 ) (1 ) (7 ) EBITDA from equity investments (17 ) (17 ) Earnings from equity investments 6 6 Interest expense (154 ) (154 ) Gain on remeasurement of debt 5 5 Other expense, net (2 ) (2 ) Stock-based compensation (14 ) (14 ) Net loss before income taxes $ (20 ) (1) Includes amounts not allocated to the business segments (including corporate costs) and reconciling items to reconcile the total business segments AEBITDA to our consolidated net loss before income taxes. (2) Our Social business segment information represents SciPlay operations (see Note 1), and starting with the second quarter of 2019 we will refer to our Social business segment as SciPlay. Three Months Ended March 31, 2018 Gaming Lottery Social (2) Digital Unallocated and Reconciling Items (1) Total Total revenue $ 443 $ 202 $ 97 $ 70 $ — $ 812 AEBITDA 218 94 23 17 (32 ) $ 320 Reconciling items to consolidated net loss before income taxes: D&A (139 ) (14 ) (7 ) (16 ) (12 ) (188 ) Restructuring and other (1 ) (1 ) (18 ) (6 ) (26 ) (52 ) EBITDA from equity investments (19 ) (19 ) Earnings from equity investments 7 7 Interest expense (155 ) (155 ) Loss on debt financing transactions (93 ) (93 ) Loss on remeasurement of debt (1 ) (1 ) Other expense, net (6 ) (6 ) Stock-based compensation (9 ) (9 ) Net loss before income taxes $ (196 ) (1) Includes amounts not allocated to the business segments (including corporate costs) and reconciling items to reconcile the total business segments AEBITDA to our consolidated net loss before income taxes. (2) Our Social business segment information represents SciPlay operations (see Note 1), and starting with the second quarter of 2019 we will refer to our Social business segment as SciPlay. |
Restructuring and other
Restructuring and other | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and other | Restructuring and other Restructuring and other includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii) restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition costs and other unusual items. The following table summarizes pre-tax restructuring and other costs for the periods presented: Three Months Ended March 31, 2019 2018 Employee severance (1) $ 3 $ 5 Acquisitions and related costs — 8 Contingent consideration adjustment — 18 Legal and related — 16 Restructuring, integration and other 4 5 Total $ 7 $ 52 (1) Includes employee severance and termination costs associated with restructuring and integration activities. |
Accounts and Notes Receivable a
Accounts and Notes Receivable and Credit Quality of Receivables | 3 Months Ended |
Mar. 31, 2019 | |
Receivables [Abstract] | |
Accounts and Notes Receivable and Credit Quality of Receivables | Accounts and Notes Receivable and Credit Quality of Receivables Accounts and Notes Receivable The following table summarizes the components of current and long-term accounts and notes receivable, net: March 31, 2019 December 31, 2018 Current: Accounts receivable $ 636 $ 615 Notes receivable 127 138 Allowance for doubtful accounts and notes (38 ) (40 ) Current accounts and notes receivable, net $ 725 $ 713 Long-term: Notes receivable, net of allowance 33 40 Total accounts and notes receivable, net $ 758 $ 753 Credit Quality of Receivables The interest rates on our outstanding receivables bearing interest ranged from 3% to 10% at March 31, 2019 and December 31, 2018 . We have certain concentrations of outstanding accounts and notes receivable in international locations that impact our assessment of the credit quality of those receivables. We monitor the macroeconomic and political environment in each of these locations in our assessment of the credit quality of our receivables. We have not identified changes in the aforementioned factors during the three months ended March 31, 2019 that require a reassessment of our receivable balances. The international locations with significant concentrations (generally deemed to be exceeding 10% ) of our accounts and notes receivable are as follows: • Mexico - Our notes receivable, net, from certain customers in Mexico at March 31, 2019 was $24 million . We collected $8 million of outstanding receivables from these customers during the three months ended March 31, 2019 . • Peru - Our notes receivable, net, from certain customers in Peru at March 31, 2019 was $15 million . We collected $2 million of outstanding receivables from these customers during the three months ended March 31, 2019 . • Argentina - Our notes receivable, net, from customers in Argentina at March 31, 2019 was $16 million denominated in USD. Our customers are required to, and have continued to, pay us in pesos at the spot exchange rate on the date of payment. We collected $6 million of outstanding receivables from customers in Argentina during the three months ended March 31, 2019 . In addition to the macroeconomic and political factors noted above, we also evaluated recent payments, receivables aging, any additional security or collateral we had (bills of exchange, pledge agreements, etc.) and other facts and circumstances relevant to our customers' ability to pay. The following summarizes the components of total notes receivable, net: March 31, 2019 Balances over 90 days past due December 31, 2018 Balances over 90 days past due Notes receivable: Domestic $ 61 $ 8 $ 55 $ 6 International 99 26 123 25 Total notes receivable 160 34 178 31 Notes receivable allowance Domestic (6 ) (6 ) (6 ) (6 ) International (17 ) (17 ) (18 ) (18 ) Total notes receivable allowance (23 ) (23 ) (24 ) (24 ) Notes receivable, net $ 137 $ 11 $ 154 $ 7 At March 31, 2019 , 8% of our total notes receivable, net, was past due by over 90 days, compared to 4% at December 31, 2018 . We evaluate our exposure to credit loss on notes receivable on both a collective and individual basis. In addition, we evaluate such notes receivable on a geographic basis and take into account any other factors (such as general economic conditions, other macroeconomic considerations, etc.) that could impact our collectability of notes receivable individually or in the aggregate. Accordingly, notes receivable may be evaluated under multiple methodologies, and the resulting allowance is not determined based on one specific methodology taking all factors into consideration. The activity in our allowance for notes receivable for each of the three month periods ended March 31, 2019 and 2018 is as follows: Three Months Ended March 31, 2019 2018 Beginning allowance for notes receivable $ (24 ) $ (21 ) Provision (2 ) (3 ) Charge-offs and recoveries 3 1 Ending allowance for notes receivable $ (23 ) $ (23 ) The fair value of notes receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of March 31, 2019 and December 31, 2018 , the fair value of notes receivable, net, approximated the carrying value due to contractual terms of notes receivable generally being under 24 months. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following as of the dates presented below: March 31, 2019 December 31, 2018 Parts and work-in-process $ 139 $ 131 Finished goods 90 85 Total inventories $ 229 $ 216 Parts and work-in-process include parts for gaming machines, lottery terminals and instant lottery ticket materials, as well as labor and overhead costs for work-in-process associated with the manufacturing of instant lottery games and lottery terminals. Our finished goods inventory primarily consists of gaming machines for sale, instant products primarily for our Participation arrangements and our licensed branded merchandise. |
Property and Equipment, net
Property and Equipment, net | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net consisted of the following: March 31, 2019 December 31, 2018 Land $ 15 $ 15 Buildings and leasehold improvements 130 128 Gaming and lottery machinery and equipment 1,034 1,041 Furniture and fixtures 28 27 Construction in progress 15 17 Other property and equipment 245 240 Less: accumulated depreciation (950 ) (921 ) Total property and equipment, net $ 517 $ 547 Depreciation expense is excluded from Cost of services, Cost of product sales, Cost of instant products and Other operating expenses and is separately presented within D&A. Three Months Ended March 31, 2019 2018 Depreciation expense $ 58 $ 53 As of March 31, 2019 and December 31, 2018 , we had $36 million of assets held for sale, which are included within Prepaid expense, deposits and other current assets. |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net and Goodwill | Intangible Assets, net and Goodwill Intangible Assets, net The following tables present certain information regarding our intangible assets as of March 31, 2019 and December 31, 2018 . March 31, 2019 December 31, 2018 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 1,092 $ (321 ) $ 771 $ 1,084 $ (299 ) $ 785 Intellectual property 935 (485 ) 450 931 (453 ) 478 Licenses 549 (273 ) 276 546 (253 ) 293 Brand names 124 (62 ) 62 123 (59 ) 64 Trade names 108 (25 ) 83 108 (23 ) 85 Patents and other 23 (14 ) 9 23 (13 ) 10 2,831 (1,180 ) 1,651 2,815 (1,100 ) 1,715 Non-amortizable intangible assets: Trade names 96 (2 ) 94 96 (2 ) 94 Total intangible assets $ 2,927 $ (1,182 ) $ 1,745 $ 2,911 $ (1,102 ) $ 1,809 The following reflects intangible amortization expense included within D&A: Three Months Ended March 31, 2019 2018 Amortization expense $ 77 $ 77 Goodwill In conjunction with integrating our recent Digital acquisitions, the implementation of ERP systems in the Digital segment and recent management changes, during the first quarter of 2019, in our Digital business segment, we reviewed our Digital operating segment in accordance with ASC 350 to determine if additional reporting units exist based on the availability of discrete financial information that is regularly reviewed by segment management. We determined that in our Digital operating segment we now have two reporting units: (1) Digital sports and platform and (2) Digital gaming and other. The change in the Digital business segment reporting units resulted in the allocation of the previous Digital reporting unit goodwill balance as follows: $230 million to the new Digital sports and platform reporting unit and $134 million to the new Digital gaming and other reporting unit, which allocation was determined based on the relative fair value approach prescribed by ASC 350. As a result of this change we now have ten reporting units: Instant Products, U.S. Lottery Systems, International Lottery Systems, SG Gaming, legacy U.K. Gaming, Casino Management Systems, Table Products, Social Gaming, Digital Sports and Platform and Digital Gaming and Other. The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2018 to March 31, 2019 . Goodwill Gaming Lottery Social Digital Totals Balance as of December 31, 2018 $ 2,449 $ 352 $ 115 $ 364 $ 3,280 Foreign currency adjustments 13 (1 ) — 9 21 Balance as of March 31, 2019 $ 2,462 $ 351 $ 115 $ 373 $ 3,301 |
Software, net
Software, net | 3 Months Ended |
Mar. 31, 2019 | |
Capitalized Computer Software, Net [Abstract] | |
Software, net | Software, net Software, net consisted of the following: March 31, 2019 December 31, 2018 Software $ 1,126 $ 1,101 Accumulated amortization (849 ) (816 ) Software, net $ 277 $ 285 The following reflects amortization of software included within D&A: Three Months Ended March 31, 2019 2018 Amortization expense $ 30 $ 39 |
Equity Investments
Equity Investments | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Investments | Equity Investments Equity investments total ed $296 million and $298 million as of March 31, 2019 and December 31, 2018 , respectively. We received distributions and dividends totaling $7 million and $3 million during the three months ended March 31, 2019 and 2018 , respectively. |
Long-Term and Other Debt
Long-Term and Other Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term and Other Debt | Long-Term and Other Debt 2026 Unsecured Notes On March 19, 2019, SGI issued $1,100 million in aggregate principal amount of its new 2026 Unsecured Notes at an issue price of 100.000% in a private offering. We used the net proceeds of the 2026 Unsecured Notes offering to redeem $1,000 million of our outstanding 2022 Unsecured Notes and pay accrued and unpaid interest thereon plus related premiums, fees, and costs, which redemption was completed on April 4, 2019, and pay related fees and expenses of the 2026 Unsecured Notes offering. The redemption of the 2022 Unsecured Notes will result in an approximate $60 million loss on debt financing transactions during the second quarter of 2019. The 2026 Unsecured Notes were issued pursuant to an indenture dated as of March 19, 2019 (the “2026 Unsecured Notes Indenture”). SGI may redeem some or all of the 2026 Unsecured Notes at any time prior to March 15, 2022 at a redemption price equal to 100% of the principal amount of the 2026 Unsecured Notes plus accrued and unpaid interest, if any, to the date of the redemption plus a “make whole” premium. SGI may redeem some or all of the 2026 Unsecured Notes at any time on or after March 15, 2022 at the prices specified in the 2026 Unsecured Notes Indenture. The 2026 Unsecured Notes are senior unsecured obligations of SGI, rank equally to all SGI’s existing and future senior debt and rank senior to all of SGI’s existing and future senior subordinated debt. The 2026 Unsecured Notes are guaranteed on a senior unsecured basis by SGC and all of its wholly owned U.S. subsidiaries (other than SGI, the unrestricted social gaming business entities and certain immaterial subsidiaries). The 2026 Unsecured Notes are structurally subordinated to all of the liabilities of our non-guarantor subsidiaries. In connection with the 2026 Unsecured Notes offering, we reflected $16 million in financing costs presented primarily as a reduction to long-term debt. Outstanding Debt and Finance Leases The following table reflects our outstanding debt: As of March 31, 2019 December 31, 2018 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: Revolver, varying interest rate 2020 variable $ 190 $ — $ 190 $ 325 Term Loan B-5 2024 variable 4,133 (69 ) 4,064 4,071 Senior Notes: 2025 Secured Notes (2) 2025 5.000 % 1,250 (17 ) 1,233 1,233 2026 Secured Euro Notes (3) 2026 3.375 % 367 (5 ) 362 367 2022 Unsecured Notes (4) 2022 10.000 % 2,200 (22 ) 2,178 2,176 2026 Unsecured Euro Notes (3) 2026 5.500 % 282 (4 ) 278 282 2026 Unsecured Notes 2026 8.250 % 1,100 (16 ) 1,084 — Subordinated Notes: 2020 Notes 2020 6.250 % 244 (1 ) 243 242 2021 Notes 2021 6.625 % 341 (3 ) 338 337 Finance lease obligations as of March 31, 2019 payable monthly through 2019 and other (5) 2019 3.900 % 13 — 13 4 Total long-term debt outstanding $ 10,120 $ (137 ) $ 9,983 $ 9,037 Less: current portion of long-term debt (4) (1,046 ) (45 ) Long-term debt, excluding current portion $ 8,937 $ 8,992 Fair value of debt (1) $ 10,197 (1) Fair value of our fixed rate and variable interest rate debt is classified within level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities. (2) Includes cross-currency interest rate swap agreements that we entered into in 2018 in the amount of $460 million U.S. Dollar-denominated 2025 Secured Notes to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946% (see Note 16 in our 2018 10-K). (3) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 12 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $63 million , of which a $5 million gain was recognized on remeasurement of debt in the Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2019 . (4) Includes $1,000 million of the principal balance of the 2022 Unsecured Notes that were redeemed on April 4, 2019. (5) Includes $11 million related to certain revenue transactions presented as debt in accordance with ASC 470-10-25. We were in compliance with the financial covenants under all debt agreements as of March 31, 2019 . For additional information regarding the terms of our credit agreements, Secured Notes, Unsecured Notes and Subordinated Notes, see Note 16 in our 2018 10-K. For additional information regarding the SciPlay Revolver that we entered into on May 7, 2019 in connection with the SciPlay IPO, see Note 1. Loss on Debt Financing Transactions The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 2018 Repayment and cancellation of principal balance at premium $ — $ 110 Unamortized debt (premium) discount and deferred financing costs, net — (30 ) Third party debt issuance fees — 13 Total loss on debt financing transactions $ — $ 93 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments, which are principally cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and accrued liabilities, approximates their recorded values. Our assets and liabilities measured at fair value on a recurring basis are described below. Derivative Financial Instruments We record derivative financial instruments on the balance sheet at their respective fair values. As of March 31, 2019 , we held the following derivative instruments that were accounted for pursuant to ASC 815: Interest Rate Swap Contracts We currently use interest rate swap contracts as described below to mitigate gains or losses associated with the change in expected cash flows due to fluctuations in interest rates on our variable rate debt. In February 2018, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt to effectively fix the interest rate that we pay. These interest rate swap contracts are designated as cash flow hedges under ASC 815. We pay interest at a weighted-average fixed rate of 2.4418% and receive interest at a variable rate equal to one-month LIBOR. The total notional amount of interest rate swaps outstanding was $800 million as of March 31, 2019 . These hedges mature in February 2022. These hedges are highly effective in offsetting changes in our future expected cash flows due to the fluctuation in the one-month LIBOR rate associated with our variable rate debt. We qualitatively monitor the effectiveness of these hedges on a quarterly basis. As a result of the effective matching of the critical terms on our variable rate interest expense being hedged to the hedging instruments being used, we expect these hedges to remain highly effective. All gains and losses from these hedges are recorded in Other comprehensive income (loss) until the future underlying payment transactions occur. Any realized gains or losses resulting from the hedges are recognized (together with the hedged transaction) as interest expense. We estimate the fair value of our interest rate swap contracts by discounting the future cash flows of both the fixed rate and variable rate interest payments based on market yield curves. The inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820. The following table shows the gains (loss) and interest expense recognized on our interest rate swap contracts: Three Months Ended March 31, 2019 2018 (Loss) gain recorded in accumulated other comprehensive income (loss), net of tax $ (5 ) $ 2 Interest expense recorded related to interest rate swap contracts — 1 We do not expect to reclassify material amounts from Accumulated other comprehensive loss to interest expense in the next twelve months. The following table shows the effect of interest rate swap contracts designated as cash flow hedges on the consolidated statements of operations and comprehensive loss: Three Months Ended March 31, 2019 2018 Interest expense Total amounts of expense line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded $ (154 ) $ (155 ) Hedged item (5 ) (2 ) Derivative designated as hedging instrument 5 1 Cross-Currency Interest Rate Swaps In connection with the February 2018 Refinancing described in Note 16 of our 2018 10-K, we entered into certain cross-currency interest rate swap agreements to achieve more beneficial interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946% . We have designated these cross-currency interest rate swap agreements as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the changes in foreign currency exchange rates of the Euro relative to the U.S. Dollar. We use the spot method to measure the effectiveness of our net investment hedge. Under this method, for each reporting period, the change in the fair value of the $460 million cross-currency interest rate swaps is reported in foreign currency translation gain (loss) in Accumulated other comprehensive loss. The cross-currency basis spread (along with other components of the cross-currency swap’s fair value excluded from the spot method effectiveness assessment) are amortized and recorded to interest expense. We evaluate the effectiveness of our net investment hedge at the beginning of each quarter. The following table shows the fair value of our hedges: Balance Sheet Line Item March 31, 2019 December 31, 2018 Interest rate swaps (1)(3) Other liabilities $ 6 $ — Cross-currency interest rate swaps (2)(3) Other assets 34 18 (1) The loss of $6 million for the three months ended March, 31 2019 is reflected in Derivative financial instrument unrealized gross loss in Other comprehensive income. (2) The gain of $16 million for the three months ended March, 31 2019 is reflected in Foreign currency translation loss in Other comprehensive income. Net Investment Non-derivative Hedge - 2026 Secured Euro Notes For the first quarter of 2019 , we designated $255 million of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our results caused by the changes in foreign currency exchange rates of the Euro relative to the U.S. Dollar. We use the spot method to measure the effectiveness of our net investment non-derivative hedge. Under this method, for each reporting period, the change in the hedged portion of the carrying value of the 2026 Secured Euro Notes due to remeasurement is reported in Foreign currency translation gain (loss) in Other comprehensive income, and the remaining remeasurement change is recognized in Gain (loss) on remeasurement of debt in our consolidated statements of operations and comprehensive loss. We evaluate the effectiveness of our net investment non-derivative hedge at the beginning of each quarter, and the inputs used to measure the fair value of this non-derivative hedge are categorized as Level 2 in the fair value hierarchy. Contingent Consideration Liabilities In connection with our 2017 acquisitions, we have recorded certain contingent consideration liabilities, of which the values are primarily based on reaching certain earnings-based metrics, with a maximum payout of up to $39 million . The related liabilities were recorded at fair value on the acquisition date as part of the consideration transferred and are remeasured each reporting period. The inputs used to measure the fair value of our liabilities are categorized as Level 3 in the fair value hierarchy. Contingent consideration liabilities as of March 31, 2019 and December 31, 2018 were $45 million of which $22 million as of March 31, 2019 is included in Accrued liabilities with the remaining balance included in Other long-term liabilities. We did not have assets and liabilities measured at fair value on a non-recurring basis as of March 31, 2019 . |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2019 | |
Compensation Related Costs [Abstract] | |
Stockholders' Deficit | Stockholders’ Deficit Changes in Stockholders’ Deficit The following tables present certain information regarding our stockholders' deficit as of March 31, 2019 and March 31, 2018 . Three Months Ended March 31, 2019 Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Total January 1, 2019 $ 1 $ 835 $ (2,824 ) $ (175 ) $ (300 ) $ (2,463 ) Net proceeds of common stock in connection with stock options and RSUs — 2 — — — 2 Stock-based compensation — 11 — — — 11 Net loss — — (24 ) — — (24 ) Other Comprehensive income — — — — 51 51 March 31, 2019 $ 1 $ 848 $ (2,848 ) $ (175 ) $ (249 ) $ (2,423 ) Three Months Ended March 31, 2018 Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Total January 1, 2018 $ 1 $ 808 $ (2,461 ) $ (175 ) $ (200 ) $ (2,027 ) Net redemption of common stock in connection with stock options and RSUs — (15 ) — — — (15 ) Stock-based compensation — 7 — — — 7 Net loss — — (202 ) — — (202 ) Adoption impact of ASC 606 — — (11 ) — — (11 ) Other Comprehensive income — — — — 52 52 March 31, 2018 $ 1 $ 800 $ (2,674 ) $ (175 ) $ (148 ) $ (2,196 ) Stock Based Compensation The following reflects total stock-based compensation expense recognized under all programs: Three Months Ended March 31, 2019 2018 Related to stock options $ 2 $ 2 Related to RSUs 12 7 Total $ 14 $ 9 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We consider new evidence (both positive and negative) at each reporting date that could affect our view of the future realization of deferred tax assets. Based upon the evaluation of all available evidence, and considering the projected U.S. pre-tax losses for 2019 , we maintain a valuation allowance for our U.S. operations as of March 31, 2019 . We maintained other valuation allowances for certain non-U.S. jurisdictions with cumulative losses. The effective income tax rates for the three months ended March 31, 2019 and 2018 were ( 18% ) and ( 3% ), respectively, and were determined using an estimated annual effective tax rate after considering any discrete items for such periods. Due to the aforementioned valuation allowance against our U.S. deferred tax assets, the effective tax rates for the three months ended March 31, 2019 and 2018 do not include the benefits of the U.S. tax losses, and we recorded an overall tax expense in both periods due to foreign pre-tax earnings. The change in the effective tax rates relates primarily to the overall mix of income in our foreign jurisdictions. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases On January 1, 2019, we adopted ASC 842 using the optional transition method provided by ASU 2018-11. Our operating leases primarily consist of real estate leases such as offices, warehouses, and research and development facilities. Our leases have remaining lease terms ranging from 1 year to 11 years , some of which include options to extend the leases for up to 5 years or to terminate the leases within 1 year . Our finance leases are immaterial. Our total operating lease expenses for the three months ended March 31, 2019 and 2018 were $9 million and $7 million , respectively. The total amount of variable and short term lease payments incurred during the three months ended March 31, 2019 are immaterial. Supplemental balance sheet and cash flow information related to operating leases is as follows: March 31, 2019 Operating lease right-of-use assets (1) $ 118 Accrued liabilities 26 Operating lease liabilities 98 Total operating lease liabilities $ 124 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8 Weighted average remaining lease term, years 6 Weighted average discount rate 5 % (1) Right-of use assets obtained in exchange for lease obligations during the first quarter of 2019 were immaterial. Lease liability maturities: 2019 2020 2021 2022 2023 Thereafter Less Imputed Interest Total Operating leases $ 24 $ 28 $ 24 $ 19 $ 15 $ 34 $ (20 ) $ 124 As of March 31, 2019 , we did not have material additional operating leases that have not yet commenced. |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation We are involved in various routine and other specific legal proceedings, including the following which are described in Note 22 within our 2018 10-K: Colombia litigation, SNAI litigation, Washington State Matter, and the Raqqa Matter . There have been no material changes to these matters since the 2018 10-K was filed with the SEC, except as described below. We record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss can be reasonably estimated (although, as discussed below, there may be an exposure to loss in excess of the accrued liability). We evaluate our accruals for legal contingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect (1) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments, (2) the advice and analyses of counsel and (3) the assumptions and judgment of management. Legal costs associated with our legal proceedings are expensed as incurred. We had accrued liabilities of $4 million for all of our legal matters that were contingencies as of March 31, 2019 and December 31, 2018 . Substantially all of our legal contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss involves a series of complex judgments about future events. Consequently, the ultimate outcomes of our legal contingencies could result in losses in excess of amounts we have accrued. We may be unable to estimate a range of possible losses for some matters pending against us or our subsidiaries, even when the amount of damages claimed against us or our subsidiaries is stated because, among other things: (1) the claimed amount may be exaggerated or unsupported; (2) the claim may be based on a novel legal theory or involve a large number of parties; (3) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (4) there may be uncertainty as to the outcome of pending appeals or motions; (5) the matter may not have progressed sufficiently through discovery or there may be significant factual or legal issues to be resolved or developed; and/or (6) there may be uncertainty as to the enforceability of legal judgments and outcomes in certain jurisdictions. Other matters have progressed sufficiently that we are able to estimate a range of possible loss. For those legal contingencies disclosed in Note 22 in our 2018 10-K and this Note 16 as well as those related to the previously disclosed settlement agreement entered into in February 2015 with SNAI S.p.a., as to which a loss is reasonably possible, whether in excess of a related accrued liability or where there is no accrued liability, and for which we are able to estimate a range of possible loss, the current estimated range is up to approximately $14 million in excess of the accrued liabilities (if any) related to those legal contingencies. This aggregate range represents management’s estimate of additional possible loss in excess of the accrued liabilities (if any) with respect to these matters based on currently available information, including any damages claimed by the plaintiffs, and is subject to significant judgment and a variety of assumptions and inherent uncertainties. For example, at the time of making an estimate, management may have only preliminary, incomplete, or inaccurate information about the facts underlying a claim; its assumptions about the future rulings of the court or other tribunal on significant issues, or the behavior and incentives of adverse parties, regulators, indemnitors or co‑defendants, may prove to be wrong; and the outcomes it is attempting to predict are often not amenable to the use of statistical or other quantitative analytical tools. In addition, from time to time an outcome may occur that management had not accounted for in its estimate because it had considered that outcome to be remote. Furthermore, as noted above, the aggregate range does not include any matters for which we are not able to estimate a range of possible loss. Accordingly, the estimated aggregate range of possible loss does not represent our maximum loss exposure. Any such losses could have a material adverse impact on our results of operations, cash flows or financial condition. The legal proceedings underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. TCS John Huxley Matter On March 15, 2019, TCS John Huxley America, Inc., TCS John Huxley Europe Ltd., TCS John Huxley Asia Ltd., and Taiwan Fulgent Enterprise Co., Ltd. brought a civil action in the United States District Court for the Northern District of Illinois against SGC, Bally Technologies, Inc. and Bally Gaming, Inc. In the complaint, plaintiffs assert federal antitrust claims arising from defendants' procurement of particular U.S. and South African patents. Plaintiffs allege that defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold to regulated casinos in the United States. On April 10, 2019, the defendants filed a motion to dismiss the plaintiffs’ complaint with prejudice. On April 25, 2019, the district court denied the defendants’ motion to dismiss without prejudice pursuant to the court’s local rules, after plaintiffs advised that they intended to file an amended complaint. Plaintiffs filed their amended complaint on May 3, 2019, and the district court has set a status hearing for May 8, 2019 to discuss the matter further. Due to the early nature of this litigation, we are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible loss. For additional information regarding our pending litigation matters, see Note 22 in our 2018 10-K. |
Financial Information for Guara
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries | 3 Months Ended |
Mar. 31, 2019 | |
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries [Abstract] | |
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries | Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries We conduct substantially all of our business through our U.S. and foreign subsidiaries. As of March 31, 2019 , SGI’s obligations under the Secured Notes (other than the 2022 Secured Notes, which were redeemed in March 2018), the Unsecured Notes and the Subordinated Notes were fully and unconditionally and jointly and severally guaranteed by SGC and the Guarantor Subsidiaries other than SGI, and certain immaterial subsidiaries of SGC. The guarantees of our Secured Notes (other than the 2022 Secured Notes, which were redeemed in March 2018), Unsecured Notes and Subordinated Notes will terminate under the following customary circumstances: (1) the sale or disposition of the capital stock of the guarantor (including by consolidation or merger of the guarantor into another person); (2) the liquidation or dissolution of the guarantor; (3) the defeasance or satisfaction and discharge of the notes; (4) the release of the guarantor from any guarantees of indebtedness of SGC and SGI; and (5) the proper designation of the guarantor as an unrestricted subsidiary pursuant to the indenture governing the respective notes. Presented below is condensed consolidating financial information for (1) SGC, (2) SGI, (3) the Guarantor Subsidiaries and (4) the Non-Guarantor Subsidiaries as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018 . The condensed consolidating financial information has been presented to show the nature of assets held, results of operations and cash flows of SGC, SGI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming the current guarantee structures of the Secured Notes (other than the 2022 Secured Notes, which were redeemed in March 2018), the Unsecured Notes and the Subordinated Notes were in effect at the beginning of the periods presented. The condensed consolidating financial information reflects the investments of SGC in SGI and in the Guarantor Subsidiaries and Non-Guarantor Subsidiaries using the equity method of accounting. They also reflect the investments of the Guarantor Subsidiaries in the Non-Guarantor Subsidiaries. Net changes in intercompany due from/due to accounts are reported in the accompanying Supplemental Condensed Consolidating Statements of Cash Flows as investing activities if the applicable entities have a net investment (asset) in intercompany accounts and as a financing activity if the applicable entities have a net intercompany borrowing (liability) balance. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET As of March 31, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Assets Cash and cash equivalents $ 1,119 $ 1 $ — $ 95 $ (2 ) $ 1,213 Restricted cash — 1 33 7 — 41 Accounts receivable, net — 102 204 315 — 621 Notes receivable, net — — 89 15 — 104 Inventories — 45 89 109 (14 ) 229 Prepaid expenses, deposits and other current assets 3 60 95 79 1 238 Property and equipment, net 31 99 208 215 (36 ) 517 Operating lease right-of-use asset 1 24 35 58 — 118 Investment in subsidiaries 2,896 959 1,216 — (5,071 ) — Goodwill — 240 1,897 1,164 — 3,301 Intangible assets, net 40 34 1,239 432 — 1,745 Intercompany balances — 7,096 74 — (7,170 ) — Software, net 53 37 118 69 — 277 Other assets (2) 113 412 37 309 (438 ) 433 Total assets $ 4,256 $ 9,110 $ 5,334 $ 2,867 $ (12,730 ) $ 8,837 Liabilities and stockholders’ (deficit) equity Current portion of long-term debt $ — $ 1,042 $ 3 $ 1 $ — $ 1,046 Other current liabilities 58 224 235 258 (35 ) 740 Long-term debt, excluding current portion — 8,928 8 1 — 8,937 Operating lease liabilities 1 20 30 47 — 98 Other long-term liabilities 104 13 637 176 (491 ) 439 Intercompany balances 6,516 — — 654 (7,170 ) — Stockholders’ (deficit) equity (2,423 ) (1,117 ) 4,421 1,730 (5,034 ) (2,423 ) Total liabilities and stockholders’ (deficit) equity $ 4,256 $ 9,110 $ 5,334 $ 2,867 $ (12,730 ) $ 8,837 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Includes $11 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminating Entries Consolidated Assets Cash and cash equivalents $ 74 $ 1 $ — $ 94 $ (1 ) $ 168 Restricted cash — 1 32 6 — 39 Accounts receivable, net — 79 205 315 — 599 Notes receivable, net — — 101 13 — 114 Inventories — 40 82 111 (17 ) 216 Prepaid expenses, deposits and other current assets 6 63 92 72 — 233 Property and equipment, net 31 112 219 218 (33 ) 547 Investment in subsidiaries 2,836 975 1,093 — (4,904 ) — Goodwill — 240 1,897 1,143 — 3,280 Intangible assets, net 43 34 1,291 441 — 1,809 Intercompany balances — 6,054 — — (6,054 ) — Software, net 58 39 128 60 — 285 Other assets (2) 110 404 46 308 (440 ) 428 Total assets $ 3,158 $ 8,042 $ 5,186 $ 2,781 $ (11,449 ) $ 7,718 Liabilities and stockholders’ (deficit) equity Current portion of long-term debt $ — $ 42 $ — $ 3 $ — $ 45 Other current liabilities 64 162 248 254 (26 ) 702 Long-term debt, excluding current portion — 8,991 — 1 — 8,992 Other long-term liabilities 106 8 637 172 (481 ) 442 Intercompany balances 5,451 — 49 554 (6,054 ) — Stockholders’ (deficit) equity (2,463 ) (1,161 ) 4,252 1,797 (4,888 ) (2,463 ) Total liabilities and stockholders’ (deficit) equity $ 3,158 $ 8,042 $ 5,186 $ 2,781 $ (11,449 ) $ 7,718 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until February 2019) and the Secured Notes. (2) Includes $12 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended March 31, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 158 $ 358 $ 385 $ (64 ) $ 837 Cost of services, cost of product sales and cost of instant products (2) — 101 102 152 (48 ) 307 SG&A 35 11 59 94 (13 ) 186 R&D — 1 23 25 — 49 D&A 12 12 99 47 (5 ) 165 Restructuring and other 1 — 2 4 — 7 Operating (loss) income (48 ) 33 73 63 2 123 Interest expense — (154 ) — — — (154 ) Gain on remeasurement of debt — 5 — — — 5 Other income (expense), net 20 132 (124 ) (22 ) — 6 Net (loss) income before equity in income of subsidiaries and income taxes (28 ) 16 (51 ) 41 2 (20 ) Equity in income of subsidiaries 6 7 11 — (24 ) — Income tax (expense) benefit (2 ) (5 ) 13 (10 ) — (4 ) Net (loss) income $ (24 ) $ 18 $ (27 ) $ 31 $ (22 ) $ (24 ) Other comprehensive income 51 9 2 71 (82 ) 51 Comprehensive income (loss) $ 27 $ 27 $ (25 ) $ 102 $ (104 ) $ 27 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Exclusive of D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Three Months Ended March 31, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 130 $ 387 $ 369 $ (74 ) $ 812 Cost of services, cost of product sales and cost of instant products (2) — 86 118 154 (61 ) 297 SG&A 38 11 58 79 (14 ) 172 R&D — — 23 31 — 54 D&A 9 8 126 48 (3 ) 188 Restructuring and other 26 1 1 24 — 52 Operating (loss) income (73 ) 24 61 33 4 49 Interest expense — (155 ) — — — (155 ) Loss on debt financing transactions — (93 ) — — — (93 ) Other income (expense), net 15 136 (133 ) (15 ) — 3 Net (loss) income before equity in income of subsidiaries and income taxes (58 ) (88 ) (72 ) 18 4 (196 ) Equity in (loss) income of subsidiaries (84 ) 4 10 — 70 — Income tax (expense) benefit (60 ) 33 25 (4 ) — (6 ) Net (loss) income $ (202 ) $ (51 ) $ (37 ) $ 14 $ 74 $ (202 ) Other comprehensive income (loss) 52 (17 ) 22 73 (78 ) 52 Comprehensive income (loss) $ (150 ) $ (68 ) $ (15 ) $ 87 $ (4 ) $ (150 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Exclusive of D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended March 31, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (15 ) $ 55 $ 63 $ 65 $ (1 ) $ 167 Cash flows from investing activities: Capital expenditures (3 ) (10 ) (25 ) (29 ) — (67 ) Distributions of capital from equity investments — — — 3 — 3 Other, principally change in intercompany investing activities — (986 ) (47 ) — 1,033 — Net cash used in investing activities (3 ) (996 ) (72 ) (26 ) 1,033 (64 ) Cash flows from financing activities: Proceeds from long-term debt, net of payments — 955 — (2 ) — 953 Payments of debt issuance and deferred financing costs — (14 ) — — — (14 ) Payments on license obligations (7 ) — — — — (7 ) Sale of future revenue — — 11 — — 11 Net redemptions of common stock under stock-based compensation plans and other 1 — (2 ) — — (1 ) Other, principally change in intercompany financing activities 1,069 — — (36 ) (1,033 ) — Net cash provided by (used in) financing activities 1,063 941 9 (38 ) (1,033 ) 942 Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 1 — 1 Increase in cash, cash equivalents and restricted cash 1,045 — — 2 (1 ) 1,046 Cash, cash equivalents and restricted cash, beginning of period 74 2 44 101 (1 ) 220 Cash, cash equivalents and restricted cash end of period $ 1,119 $ 2 $ 44 $ 103 $ (2 ) $ 1,266 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended March 31, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (32 ) $ (25 ) $ 34 $ 55 $ (2 ) $ 30 Cash flows from investing activities: Capital expenditures (8 ) (17 ) (45 ) (18 ) — (88 ) Acquisitions of businesses and assets, net of cash acquired — — (9 ) (265 ) — (274 ) Distributions of capital from equity investments — — — 2 — 2 Other, principally change in intercompany investing activities — 74 — — (74 ) — Net cash (used in) provided by investing activities (8 ) 57 (54 ) (281 ) (74 ) (360 ) Cash flows from financing activities: Proceeds net of payments on long-term debt — 7 — (2 ) — 5 Repayment of assumed NYX debt — — — (288 ) — (288 ) Payments of debt issuance and deferred financing costs — (39 ) — — — (39 ) Payments on license obligations (7 ) — — — — (7 ) Net redemptions of common stock under stock-based compensation plans and other (15 ) — (2 ) — — (17 ) Other, principally change in intercompany financing activities (630 ) — 22 534 74 — Net cash (used in) provided by financing activities (652 ) (32 ) 20 244 74 (346 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 2 — 2 (Decrease) increase in cash, cash equivalents and restricted cash (692 ) — — 20 (2 ) (674 ) Cash, cash equivalents and restricted cash, beginning of period 732 1 44 60 (3 ) 834 Cash, cash equivalents and restricted cash end of period $ 40 $ 1 $ 44 $ 80 $ (5 ) $ 160 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. |
Description of the Business a_2
Description of the Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of SGC and those subsidiaries in which we have a controlling financial interest. Investments in other entities in which we do not have a controlling financial interest but we exert significant influence are accounted for in our condensed consolidated financial statements using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of SGC and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results of operations and comprehensive loss and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2018 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year. |
New Accounting Guidance | New Accounting Guidance - Recently Adopted T he FASB issued ASU No. 2016-02, Leases (Topic 842 ) in 2016. ASU 2016-02 combined with all subsequent amendments (collectively, “ASC 842”) requires balance sheet recognition for all leases with a lease term greater than one year to be recorded as a lease liability (on a discounted basis) with a corresponding right-of-use asset. This guidance also expands the required quantitative and qualitative disclosures for lease arrangements and gives rise to other changes impacting certain aspects of lessee and lessor accounting. We adopted ASC 842 as of January 1, 2019 using the optional transition method provided by ASU 2018-11, and applied both the lessee package of practical expedients and the available lessor practical expedients. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842 ) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. We have provided the related transition disclosures as of the beginning of 2019 in accordance with ASU 2019-1. See our 2018 10-K Note 1 for the impact on our consolidated financial statements and Note 15 in this Quarterly Report for our lease accounting policy and the quarterly impact of our adoption of ASC 842. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . The standard allows companies to make an election to reclassify from Accumulated Other Comprehensive Income (AOCI) to retained earnings the stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. This ASU is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The amendments in this updated guidance should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. corporate federal income tax rate in the Tax Act is recognized. We adopted this standard effective January 1, 2019. We elected not to reclassify the income tax effects of the Tax Cuts and Jobs Act from AOCI to retained earnings. The adoption of this guidance did not have an effect on our consolidated financial statements. New Accounting Guidance - Not Yet Adopted The FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) in 2016. The new guidance replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans and other financial instruments, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The new guidance will be effective for us beginning January 1, 2020. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of adopting this guidance. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement . The new guidance amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying, and adding certain disclosures on fair value measurements in ASC 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The new guidance will be effective for us beginning January 1, 2020, with early adoption permitted. We do not plan to early adopt this ASU, and we are currently evaluating the impact of adopting this guidance. |
Revenue From Contract With Cust
Revenue From Contract With Customer (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue, Performance Obligation [Abstract] | |
Revenue from Contract with Customer [Policy Text Block] | The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on our consolidated balance sheet. Other than contracts with customers with financing arrangements exceeding 12 months, revenue recognition is generally proximal to conversion to cash, except for Lottery instant products sold under POS contracts. Revenue is recognized for such contracts upon delivery to our customers, while conversion to cash is based on the retail sale of the underlying ticket to end consumers. As a result, revenue recognition under ASC 606 does not approximate conversion to cash in any periods post-adoption. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenues by Type | The following table disaggregates revenues by type within each of our business segments: Three Months Ended March 31, 2019 2018 Gaming Gaming operations $ 152 $ 161 Gaming machine sales 136 145 Gaming systems 74 75 Table products 60 62 Total $ 422 $ 443 Lottery Instant products $ 140 $ 150 Lottery systems 87 52 Total $ 227 $ 202 Social Mobile $ 97 $ 73 Web and other 21 24 Total $ 118 $ 97 Digital Sports and platform $ 30 $ 26 Gaming and other 40 44 Total $ 70 $ 70 |
Summary of Balances in Receivables and Contract Asset Accounts | The following table summarizes the activity in our contract liabilities for the reporting period: Three Months Ended March 31, 2019 Contract liability balance, beginning of period (1) $ 97 Liabilities recognized during the period 26 Amounts recognized in revenue from beginning balance (22 ) Contract liability balance, end of period (1) $ 101 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our March 31, 2019 consolidated balance sheet. The following table summarizes our balances in these accounts for the periods indicated (other than contract liabilities disclosed above): Receivables Contract Assets (1) Beginning of period balance $ 753 $ 114 End of period balance, March 31, 2019 758 114 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our March 31, 2019 consolidated balance sheet. |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Operating Information by Segment | The following tables present our segment information: Three Months Ended March 31, 2019 Gaming Lottery Social (2) Digital Unallocated and Reconciling Items (1) Total Total revenue $ 422 $ 227 $ 118 $ 70 $ — $ 837 AEBITDA 215 104 25 13 (29 ) $ 328 Reconciling items to consolidated net loss before income taxes: D&A (112 ) (19 ) (2 ) (19 ) (13 ) (165 ) Restructuring and other (2 ) — (1 ) (3 ) (1 ) (7 ) EBITDA from equity investments (17 ) (17 ) Earnings from equity investments 6 6 Interest expense (154 ) (154 ) Gain on remeasurement of debt 5 5 Other expense, net (2 ) (2 ) Stock-based compensation (14 ) (14 ) Net loss before income taxes $ (20 ) (1) Includes amounts not allocated to the business segments (including corporate costs) and reconciling items to reconcile the total business segments AEBITDA to our consolidated net loss before income taxes. (2) Our Social business segment information represents SciPlay operations (see Note 1), and starting with the second quarter of 2019 we will refer to our Social business segment as SciPlay. Three Months Ended March 31, 2018 Gaming Lottery Social (2) Digital Unallocated and Reconciling Items (1) Total Total revenue $ 443 $ 202 $ 97 $ 70 $ — $ 812 AEBITDA 218 94 23 17 (32 ) $ 320 Reconciling items to consolidated net loss before income taxes: D&A (139 ) (14 ) (7 ) (16 ) (12 ) (188 ) Restructuring and other (1 ) (1 ) (18 ) (6 ) (26 ) (52 ) EBITDA from equity investments (19 ) (19 ) Earnings from equity investments 7 7 Interest expense (155 ) (155 ) Loss on debt financing transactions (93 ) (93 ) Loss on remeasurement of debt (1 ) (1 ) Other expense, net (6 ) (6 ) Stock-based compensation (9 ) (9 ) Net loss before income taxes $ (196 ) (1) Includes amounts not allocated to the business segments (including corporate costs) and reconciling items to reconcile the total business segments AEBITDA to our consolidated net loss before income taxes. (2) Our Social business segment information represents SciPlay operations (see Note 1), and starting with the second quarter of 2019 we will refer to our Social business segment as SciPlay. |
Restructuring and other (Tables
Restructuring and other (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Other Costs | The following table summarizes pre-tax restructuring and other costs for the periods presented: Three Months Ended March 31, 2019 2018 Employee severance (1) $ 3 $ 5 Acquisitions and related costs — 8 Contingent consideration adjustment — 18 Legal and related — 16 Restructuring, integration and other 4 5 Total $ 7 $ 52 (1) Includes employee severance and termination costs associated with restructuring and integration activities. |
Accounts and Notes Receivable_2
Accounts and Notes Receivable and Credit Quality of Receivables (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Receivables [Abstract] | |
Summary of Components of Accounts and Notes Receivable, Net | The following table summarizes the components of current and long-term accounts and notes receivable, net: March 31, 2019 December 31, 2018 Current: Accounts receivable $ 636 $ 615 Notes receivable 127 138 Allowance for doubtful accounts and notes (38 ) (40 ) Current accounts and notes receivable, net $ 725 $ 713 Long-term: Notes receivable, net of allowance 33 40 Total accounts and notes receivable, net $ 758 $ 753 |
Summary of Components of Notes Receivable, Net | The following summarizes the components of total notes receivable, net: March 31, 2019 Balances over 90 days past due December 31, 2018 Balances over 90 days past due Notes receivable: Domestic $ 61 $ 8 $ 55 $ 6 International 99 26 123 25 Total notes receivable 160 34 178 31 Notes receivable allowance Domestic (6 ) (6 ) (6 ) (6 ) International (17 ) (17 ) (18 ) (18 ) Total notes receivable allowance (23 ) (23 ) (24 ) (24 ) Notes receivable, net $ 137 $ 11 $ 154 $ 7 |
Schedule of Allowance for Notes Receivable Activity | The activity in our allowance for notes receivable for each of the three month periods ended March 31, 2019 and 2018 is as follows: Three Months Ended March 31, 2019 2018 Beginning allowance for notes receivable $ (24 ) $ (21 ) Provision (2 ) (3 ) Charge-offs and recoveries 3 1 Ending allowance for notes receivable $ (23 ) $ (23 ) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consisted of the following as of the dates presented below: March 31, 2019 December 31, 2018 Parts and work-in-process $ 139 $ 131 Finished goods 90 85 Total inventories $ 229 $ 216 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Components of Property and Equipment | Property and equipment, net consisted of the following: March 31, 2019 December 31, 2018 Land $ 15 $ 15 Buildings and leasehold improvements 130 128 Gaming and lottery machinery and equipment 1,034 1,041 Furniture and fixtures 28 27 Construction in progress 15 17 Other property and equipment 245 240 Less: accumulated depreciation (950 ) (921 ) Total property and equipment, net $ 517 $ 547 Depreciation expense is excluded from Cost of services, Cost of product sales, Cost of instant products and Other operating expenses and is separately presented within D&A. Three Months Ended March 31, 2019 2018 Depreciation expense $ 58 $ 53 |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite and Indefinite-lived Intangible Assets | The following tables present certain information regarding our intangible assets as of March 31, 2019 and December 31, 2018 . March 31, 2019 December 31, 2018 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 1,092 $ (321 ) $ 771 $ 1,084 $ (299 ) $ 785 Intellectual property 935 (485 ) 450 931 (453 ) 478 Licenses 549 (273 ) 276 546 (253 ) 293 Brand names 124 (62 ) 62 123 (59 ) 64 Trade names 108 (25 ) 83 108 (23 ) 85 Patents and other 23 (14 ) 9 23 (13 ) 10 2,831 (1,180 ) 1,651 2,815 (1,100 ) 1,715 Non-amortizable intangible assets: Trade names 96 (2 ) 94 96 (2 ) 94 Total intangible assets $ 2,927 $ (1,182 ) $ 1,745 $ 2,911 $ (1,102 ) $ 1,809 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within D&A: Three Months Ended March 31, 2019 2018 Amortization expense $ 77 $ 77 The following reflects amortization of software included within D&A: Three Months Ended March 31, 2019 2018 Amortization expense $ 30 $ 39 |
Reconciliation of the Carrying Amount of Goodwill, by Business Segment | The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2018 to March 31, 2019 . Goodwill Gaming Lottery Social Digital Totals Balance as of December 31, 2018 $ 2,449 $ 352 $ 115 $ 364 $ 3,280 Foreign currency adjustments 13 (1 ) — 9 21 Balance as of March 31, 2019 $ 2,462 $ 351 $ 115 $ 373 $ 3,301 |
Software, net (Tables)
Software, net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Capitalized Computer Software, Net [Abstract] | |
Schedule of Software, net | Software, net consisted of the following: March 31, 2019 December 31, 2018 Software $ 1,126 $ 1,101 Accumulated amortization (849 ) (816 ) Software, net $ 277 $ 285 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within D&A: Three Months Ended March 31, 2019 2018 Amortization expense $ 77 $ 77 The following reflects amortization of software included within D&A: Three Months Ended March 31, 2019 2018 Amortization expense $ 30 $ 39 |
Long-Term and Other Debt (Table
Long-Term and Other Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The following table reflects our outstanding debt: As of March 31, 2019 December 31, 2018 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: Revolver, varying interest rate 2020 variable $ 190 $ — $ 190 $ 325 Term Loan B-5 2024 variable 4,133 (69 ) 4,064 4,071 Senior Notes: 2025 Secured Notes (2) 2025 5.000 % 1,250 (17 ) 1,233 1,233 2026 Secured Euro Notes (3) 2026 3.375 % 367 (5 ) 362 367 2022 Unsecured Notes (4) 2022 10.000 % 2,200 (22 ) 2,178 2,176 2026 Unsecured Euro Notes (3) 2026 5.500 % 282 (4 ) 278 282 2026 Unsecured Notes 2026 8.250 % 1,100 (16 ) 1,084 — Subordinated Notes: 2020 Notes 2020 6.250 % 244 (1 ) 243 242 2021 Notes 2021 6.625 % 341 (3 ) 338 337 Finance lease obligations as of March 31, 2019 payable monthly through 2019 and other (5) 2019 3.900 % 13 — 13 4 Total long-term debt outstanding $ 10,120 $ (137 ) $ 9,983 $ 9,037 Less: current portion of long-term debt (4) (1,046 ) (45 ) Long-term debt, excluding current portion $ 8,937 $ 8,992 Fair value of debt (1) $ 10,197 (1) Fair value of our fixed rate and variable interest rate debt is classified within level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities. (2) Includes cross-currency interest rate swap agreements that we entered into in 2018 in the amount of $460 million U.S. Dollar-denominated 2025 Secured Notes to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946% (see Note 16 in our 2018 10-K). (3) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 12 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $63 million , of which a $5 million gain was recognized on remeasurement of debt in the Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2019 . (4) Includes $1,000 million of the principal balance of the 2022 Unsecured Notes that were redeemed on April 4, 2019. (5) Includes $11 million related to certain revenue transactions presented as debt in accordance with ASC 470-10-25. |
Schedule of Components of Extinguishment and Modification of Debt | The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 2018 Repayment and cancellation of principal balance at premium $ — $ 110 Unamortized debt (premium) discount and deferred financing costs, net — (30 ) Third party debt issuance fees — 13 Total loss on debt financing transactions $ — $ 93 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of gains (loss) on interest rate swap contracts | The following table shows the gains (loss) and interest expense recognized on our interest rate swap contracts: Three Months Ended March 31, 2019 2018 (Loss) gain recorded in accumulated other comprehensive income (loss), net of tax $ (5 ) $ 2 Interest expense recorded related to interest rate swap contracts — 1 |
Schedule of the effect of interest rate swap contracts designated as cash flow hedges | The following table shows the effect of interest rate swap contracts designated as cash flow hedges on the consolidated statements of operations and comprehensive loss: Three Months Ended March 31, 2019 2018 Interest expense Total amounts of expense line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded $ (154 ) $ (155 ) Hedged item (5 ) (2 ) Derivative designated as hedging instrument 5 1 |
Fair value of liabilities measured on recurring basis | The following table shows the fair value of our hedges: Balance Sheet Line Item March 31, 2019 December 31, 2018 Interest rate swaps (1)(3) Other liabilities $ 6 $ — Cross-currency interest rate swaps (2)(3) Other assets 34 18 (1) The loss of $6 million for the three months ended March, 31 2019 is reflected in Derivative financial instrument unrealized gross loss in Other comprehensive income. (2) The gain of $16 million for the three months ended March, 31 2019 is reflected in Foreign currency translation loss in Other comprehensive income. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Compensation Related Costs [Abstract] | |
Schedule of Stockholders' Deficit | The following tables present certain information regarding our stockholders' deficit as of March 31, 2019 and March 31, 2018 . Three Months Ended March 31, 2019 Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Total January 1, 2019 $ 1 $ 835 $ (2,824 ) $ (175 ) $ (300 ) $ (2,463 ) Net proceeds of common stock in connection with stock options and RSUs — 2 — — — 2 Stock-based compensation — 11 — — — 11 Net loss — — (24 ) — — (24 ) Other Comprehensive income — — — — 51 51 March 31, 2019 $ 1 $ 848 $ (2,848 ) $ (175 ) $ (249 ) $ (2,423 ) Three Months Ended March 31, 2018 Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Total January 1, 2018 $ 1 $ 808 $ (2,461 ) $ (175 ) $ (200 ) $ (2,027 ) Net redemption of common stock in connection with stock options and RSUs — (15 ) — — — (15 ) Stock-based compensation — 7 — — — 7 Net loss — — (202 ) — — (202 ) Adoption impact of ASC 606 — — (11 ) — — (11 ) Other Comprehensive income — — — — 52 52 March 31, 2018 $ 1 $ 800 $ (2,674 ) $ (175 ) $ (148 ) $ (2,196 ) |
Schedule of Stock-based Compensation Expense Recognized | The following reflects total stock-based compensation expense recognized under all programs: Three Months Ended March 31, 2019 2018 Related to stock options $ 2 $ 2 Related to RSUs 12 7 Total $ 14 $ 9 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Operating Lease Information | Supplemental balance sheet and cash flow information related to operating leases is as follows: March 31, 2019 Operating lease right-of-use assets (1) $ 118 Accrued liabilities 26 Operating lease liabilities 98 Total operating lease liabilities $ 124 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8 Weighted average remaining lease term, years 6 Weighted average discount rate 5 % (1) Right-of use assets obtained in exchange for lease obligations during the first quarter of 2019 were immaterial. |
Maturities of Lease Liabilities | ease liability maturities: 2019 2020 2021 2022 2023 Thereafter Less Imputed Interest Total Operating leases $ 24 $ 28 $ 24 $ 19 $ 15 $ 34 $ (20 ) $ 124 |
Financial Information for Gua_2
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries [Abstract] | |
Supplemental Condensed Consolidating Balance Sheet | SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET As of March 31, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Assets Cash and cash equivalents $ 1,119 $ 1 $ — $ 95 $ (2 ) $ 1,213 Restricted cash — 1 33 7 — 41 Accounts receivable, net — 102 204 315 — 621 Notes receivable, net — — 89 15 — 104 Inventories — 45 89 109 (14 ) 229 Prepaid expenses, deposits and other current assets 3 60 95 79 1 238 Property and equipment, net 31 99 208 215 (36 ) 517 Operating lease right-of-use asset 1 24 35 58 — 118 Investment in subsidiaries 2,896 959 1,216 — (5,071 ) — Goodwill — 240 1,897 1,164 — 3,301 Intangible assets, net 40 34 1,239 432 — 1,745 Intercompany balances — 7,096 74 — (7,170 ) — Software, net 53 37 118 69 — 277 Other assets (2) 113 412 37 309 (438 ) 433 Total assets $ 4,256 $ 9,110 $ 5,334 $ 2,867 $ (12,730 ) $ 8,837 Liabilities and stockholders’ (deficit) equity Current portion of long-term debt $ — $ 1,042 $ 3 $ 1 $ — $ 1,046 Other current liabilities 58 224 235 258 (35 ) 740 Long-term debt, excluding current portion — 8,928 8 1 — 8,937 Operating lease liabilities 1 20 30 47 — 98 Other long-term liabilities 104 13 637 176 (491 ) 439 Intercompany balances 6,516 — — 654 (7,170 ) — Stockholders’ (deficit) equity (2,423 ) (1,117 ) 4,421 1,730 (5,034 ) (2,423 ) Total liabilities and stockholders’ (deficit) equity $ 4,256 $ 9,110 $ 5,334 $ 2,867 $ (12,730 ) $ 8,837 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Includes $11 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET As of December 31, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminating Entries Consolidated Assets Cash and cash equivalents $ 74 $ 1 $ — $ 94 $ (1 ) $ 168 Restricted cash — 1 32 6 — 39 Accounts receivable, net — 79 205 315 — 599 Notes receivable, net — — 101 13 — 114 Inventories — 40 82 111 (17 ) 216 Prepaid expenses, deposits and other current assets 6 63 92 72 — 233 Property and equipment, net 31 112 219 218 (33 ) 547 Investment in subsidiaries 2,836 975 1,093 — (4,904 ) — Goodwill — 240 1,897 1,143 — 3,280 Intangible assets, net 43 34 1,291 441 — 1,809 Intercompany balances — 6,054 — — (6,054 ) — Software, net 58 39 128 60 — 285 Other assets (2) 110 404 46 308 (440 ) 428 Total assets $ 3,158 $ 8,042 $ 5,186 $ 2,781 $ (11,449 ) $ 7,718 Liabilities and stockholders’ (deficit) equity Current portion of long-term debt $ — $ 42 $ — $ 3 $ — $ 45 Other current liabilities 64 162 248 254 (26 ) 702 Long-term debt, excluding current portion — 8,991 — 1 — 8,992 Other long-term liabilities 106 8 637 172 (481 ) 442 Intercompany balances 5,451 — 49 554 (6,054 ) — Stockholders’ (deficit) equity (2,463 ) (1,161 ) 4,252 1,797 (4,888 ) (2,463 ) Total liabilities and stockholders’ (deficit) equity $ 3,158 $ 8,042 $ 5,186 $ 2,781 $ (11,449 ) $ 7,718 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until February 2019) and the Secured Notes. (2) Includes $12 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively. |
Supplemental Condensed Consolidating Statement of Income | SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended March 31, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 158 $ 358 $ 385 $ (64 ) $ 837 Cost of services, cost of product sales and cost of instant products (2) — 101 102 152 (48 ) 307 SG&A 35 11 59 94 (13 ) 186 R&D — 1 23 25 — 49 D&A 12 12 99 47 (5 ) 165 Restructuring and other 1 — 2 4 — 7 Operating (loss) income (48 ) 33 73 63 2 123 Interest expense — (154 ) — — — (154 ) Gain on remeasurement of debt — 5 — — — 5 Other income (expense), net 20 132 (124 ) (22 ) — 6 Net (loss) income before equity in income of subsidiaries and income taxes (28 ) 16 (51 ) 41 2 (20 ) Equity in income of subsidiaries 6 7 11 — (24 ) — Income tax (expense) benefit (2 ) (5 ) 13 (10 ) — (4 ) Net (loss) income $ (24 ) $ 18 $ (27 ) $ 31 $ (22 ) $ (24 ) Other comprehensive income 51 9 2 71 (82 ) 51 Comprehensive income (loss) $ 27 $ 27 $ (25 ) $ 102 $ (104 ) $ 27 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Exclusive of D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Three Months Ended March 31, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 130 $ 387 $ 369 $ (74 ) $ 812 Cost of services, cost of product sales and cost of instant products (2) — 86 118 154 (61 ) 297 SG&A 38 11 58 79 (14 ) 172 R&D — — 23 31 — 54 D&A 9 8 126 48 (3 ) 188 Restructuring and other 26 1 1 24 — 52 Operating (loss) income (73 ) 24 61 33 4 49 Interest expense — (155 ) — — — (155 ) Loss on debt financing transactions — (93 ) — — — (93 ) Other income (expense), net 15 136 (133 ) (15 ) — 3 Net (loss) income before equity in income of subsidiaries and income taxes (58 ) (88 ) (72 ) 18 4 (196 ) Equity in (loss) income of subsidiaries (84 ) 4 10 — 70 — Income tax (expense) benefit (60 ) 33 25 (4 ) — (6 ) Net (loss) income $ (202 ) $ (51 ) $ (37 ) $ 14 $ 74 $ (202 ) Other comprehensive income (loss) 52 (17 ) 22 73 (78 ) 52 Comprehensive income (loss) $ (150 ) $ (68 ) $ (15 ) $ 87 $ (4 ) $ (150 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Exclusive of D&A. |
Supplemental Condensed Consolidating Statement of Cash Flows | SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended March 31, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (15 ) $ 55 $ 63 $ 65 $ (1 ) $ 167 Cash flows from investing activities: Capital expenditures (3 ) (10 ) (25 ) (29 ) — (67 ) Distributions of capital from equity investments — — — 3 — 3 Other, principally change in intercompany investing activities — (986 ) (47 ) — 1,033 — Net cash used in investing activities (3 ) (996 ) (72 ) (26 ) 1,033 (64 ) Cash flows from financing activities: Proceeds from long-term debt, net of payments — 955 — (2 ) — 953 Payments of debt issuance and deferred financing costs — (14 ) — — — (14 ) Payments on license obligations (7 ) — — — — (7 ) Sale of future revenue — — 11 — — 11 Net redemptions of common stock under stock-based compensation plans and other 1 — (2 ) — — (1 ) Other, principally change in intercompany financing activities 1,069 — — (36 ) (1,033 ) — Net cash provided by (used in) financing activities 1,063 941 9 (38 ) (1,033 ) 942 Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 1 — 1 Increase in cash, cash equivalents and restricted cash 1,045 — — 2 (1 ) 1,046 Cash, cash equivalents and restricted cash, beginning of period 74 2 44 101 (1 ) 220 Cash, cash equivalents and restricted cash end of period $ 1,119 $ 2 $ 44 $ 103 $ (2 ) $ 1,266 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Three Months Ended March 31, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (32 ) $ (25 ) $ 34 $ 55 $ (2 ) $ 30 Cash flows from investing activities: Capital expenditures (8 ) (17 ) (45 ) (18 ) — (88 ) Acquisitions of businesses and assets, net of cash acquired — — (9 ) (265 ) — (274 ) Distributions of capital from equity investments — — — 2 — 2 Other, principally change in intercompany investing activities — 74 — — (74 ) — Net cash (used in) provided by investing activities (8 ) 57 (54 ) (281 ) (74 ) (360 ) Cash flows from financing activities: Proceeds net of payments on long-term debt — 7 — (2 ) — 5 Repayment of assumed NYX debt — — — (288 ) — (288 ) Payments of debt issuance and deferred financing costs — (39 ) — — — (39 ) Payments on license obligations (7 ) — — — — (7 ) Net redemptions of common stock under stock-based compensation plans and other (15 ) — (2 ) — — (17 ) Other, principally change in intercompany financing activities (630 ) — 22 534 74 — Net cash (used in) provided by financing activities (652 ) (32 ) 20 244 74 (346 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 2 — 2 (Decrease) increase in cash, cash equivalents and restricted cash (692 ) — — 20 (2 ) (674 ) Cash, cash equivalents and restricted cash, beginning of period 732 1 44 60 (3 ) 834 Cash, cash equivalents and restricted cash end of period $ 40 $ 1 $ 44 $ 80 $ (5 ) $ 160 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. |
Description of the Business a_3
Description of the Business and Summary of Significant Accounting Policies (Details) shares in Millions | 3 Months Ended | |
Mar. 31, 2019Segmentshares | Mar. 31, 2018shares | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of business segments | Segment | 4 | |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities (in shares) | 2 | 3 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities (in shares) | 2 | 3 |
Description of the Business a_4
Description of the Business and Summary of Significant Accounting Policies Initial Public Offering - Sub Event (Details) - USD ($) | May 07, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Subsequent Event [Line Items] | |||||
Proceeds from Lines of Credit | $ 40,000,000 | $ 0 | |||
Social | |||||
Subsequent Event [Line Items] | |||||
Dividends, Cash | $ 77,000,000 | ||||
IPO [Member] | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Proceeds from Issuance Initial Public Offering | $ 301,000,000 | ||||
IPO [Member] | Social | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 17.40% | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 97.90% | ||||
Income Tax Benefit, Percentage Realized | 85.00% | ||||
IPO [Member] | Common Class B [Member] | Social | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Noncontrolling Interest, Ownership Percentage By Parent, Threshold | 10.00% | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 82.60% | ||||
IPO [Member] | Intellectual property | Social | |||||
Subsequent Event [Line Items] | |||||
Proceeds from Sale of Productive Assets | $ 7,000,000 | $ 6,000,000 | $ 26,000,000 | $ 24,000,000 | |
IPO [Member] | Intellectual property | Social | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Proceeds from Sale of Productive Assets | $ 255,000,000 | ||||
IPO [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Fronting Fee | 0.125% | ||||
Principal debt amount | $ 150,000,000 | ||||
Line of Credit Facility, Commitment Fee Percentage | 0.50% | ||||
Debt Instrument, Leverage Ratio | 0.375% | ||||
IPO [Member] | Letter of Credit [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Letters of Credit Outstanding, Amount | $ 15,000,000 | ||||
IPO [Member] | London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | ||||
IPO [Member] | London Interbank Offered Rate (LIBOR), Leveraged Base Step Down [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | ||||
IPO [Member] | London Interbank Offered Rate (LIBOR), Leveraged Base Step Up [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | ||||
IPO [Member] | Base Rate [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | ||||
IPO [Member] | Base Rate, Step Down [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | ||||
IPO [Member] | Base Rate, Step Up [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenue by Type (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 837 | $ 812 |
Instant products | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 140 | 150 |
Gaming | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 422 | 443 |
Gaming | Gaming operations | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 152 | 161 |
Gaming | Gaming machine sales | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 136 | 145 |
Gaming | Gaming systems | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 74 | 75 |
Gaming | Table products | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 60 | 62 |
Lottery | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 227 | 202 |
Lottery | Instant products | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 140 | 150 |
Lottery | Lottery systems | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 87 | 52 |
Social | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 118 | 97 |
Social | Mobile | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 97 | 73 |
Social | Web and other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 21 | 24 |
Digital | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 70 | 70 |
Digital | Sports and platform | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 30 | 26 |
Digital | Gaming and other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 40 | $ 44 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from External Customer [Line Items] | ||
Rental income revenue outside scope of new revenue standard | $ 96 | $ 67 |
Amounts recognized in revenue | 22 | |
Lottery | Instant products | Accounting Standards Update 2014-09 | ||
Revenue from External Customer [Line Items] | ||
Amounts recognized in revenue | $ 23 | $ 34 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Contract Liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Change In Contract Liabilities [Roll Forward] | |
Contract liability balance, beginning of period | $ 97 |
Liabilities recognized during the period | 26 |
Amounts recognized in revenue from beginning balance | (22) |
Contract liability balance, end of period | $ 101 |
Revenue Recognition - Balances
Revenue Recognition - Balances in Receivables and Contract Asset Accounts (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 758 | $ 753 |
Contract Assets | $ 114 | $ 114 |
Business Segments - Additional
Business Segments - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019Segment | |
Segment Reporting [Abstract] | |
Number of business segments | 4 |
Business Segments - Schedule of
Business Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 837 | $ 812 |
AEBITDA | 328 | 320 |
Reconciling items to consolidated net loss before income taxes: | ||
D&A | (165) | (188) |
Restructuring and other | (7) | (52) |
EBITDA from equity investments | (17) | (19) |
Earnings from equity investments | 6 | 7 |
Interest expense | (154) | (155) |
Loss on debt financing transactions | 0 | (93) |
Gain on remeasurement of debt | 5 | (1) |
Other expense, net | (2) | (6) |
Stock-based compensation | (14) | (9) |
Net income (loss) before income taxes | (20) | (196) |
Unallocated and Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 0 | 0 |
AEBITDA | (29) | (32) |
Reconciling items to consolidated net loss before income taxes: | ||
D&A | (13) | (12) |
Restructuring and other | (1) | (26) |
Gaming | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 422 | 443 |
Gaming | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 422 | 443 |
AEBITDA | 215 | 218 |
Reconciling items to consolidated net loss before income taxes: | ||
D&A | (112) | (139) |
Restructuring and other | (2) | (1) |
Lottery | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 227 | 202 |
Lottery | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 227 | 202 |
AEBITDA | 104 | 94 |
Reconciling items to consolidated net loss before income taxes: | ||
D&A | (19) | (14) |
Restructuring and other | 0 | (1) |
Social | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 118 | 97 |
Social | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 118 | 97 |
AEBITDA | 25 | 23 |
Reconciling items to consolidated net loss before income taxes: | ||
D&A | (2) | (7) |
Restructuring and other | (1) | (18) |
Digital | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 70 | 70 |
Digital | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 70 | 70 |
AEBITDA | 13 | 17 |
Reconciling items to consolidated net loss before income taxes: | ||
D&A | (19) | (16) |
Restructuring and other | $ (3) | $ (6) |
Restructuring and other (Detail
Restructuring and other (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other | $ 7 | $ 52 |
Employee severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other | 3 | 5 |
Acquisitions and related costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other | 0 | 8 |
Contingent consideration adjustment | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other | 0 | 18 |
Legal and related | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other | 0 | 16 |
Restructuring, integration and other | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and other | $ 4 | $ 5 |
Accounts and Notes Receivable_3
Accounts and Notes Receivable and Credit Quality of Receivables - Components of Accounts and Notes Receivable, Net (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current: | ||
Accounts receivable | $ 636 | $ 615 |
Notes receivable | 127 | 138 |
Allowance for doubtful accounts and notes | (38) | (40) |
Current accounts and notes receivable, net | 725 | 713 |
Long-term: | ||
Notes receivable, net of allowance | 33 | 40 |
Total accounts and notes receivable, net | $ 758 | $ 753 |
Accounts and Notes Receivable_4
Accounts and Notes Receivable and Credit Quality of Receivables - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | $ 758 | $ 753 |
Contractual term of notes receivable | 24 months | |
Notes receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | $ 137 | $ 154 |
Percentage of total notes receivable over 90 days past due | 8.00% | 4.00% |
Mexico | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | $ 24 | |
Proceeds from collection of accounts and notes receivable, net | 8 | |
Peru | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | 15 | |
Proceeds from collection of accounts and notes receivable, net | 2 | |
Argentina | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | 16 | |
Proceeds from collection of accounts and notes receivable, net | $ 6 | |
Minimum [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivable with imputed interest, effective yield | 3.00% | |
Maximum [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivable with imputed interest, effective yield | 10.00% |
Accounts and Notes Receivable_5
Accounts and Notes Receivable and Credit Quality of Receivables - Components of Notes Receivable, Net (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Total accounts and notes receivable, net | $ 758 | $ 753 | ||
Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable | 160 | 178 | ||
Notes receivable allowance | (23) | (24) | $ (23) | $ (21) |
Total accounts and notes receivable, net | 137 | 154 | ||
Domestic | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable | 61 | 55 | ||
Notes receivable allowance | (6) | (6) | ||
International | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable | 99 | 123 | ||
Notes receivable allowance | (17) | (18) | ||
Balances over 90 days past due | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable over 90 days past due | 34 | 31 | ||
Notes receivable allowance for balances over 90 days past due | (23) | (24) | ||
Notes receivable, net, balances over 90 days past due | 11 | 7 | ||
Balances over 90 days past due | Domestic | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable over 90 days past due | 8 | 6 | ||
Notes receivable allowance for balances over 90 days past due | (6) | (6) | ||
Balances over 90 days past due | International | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable over 90 days past due | 26 | 25 | ||
Notes receivable allowance for balances over 90 days past due | $ (17) | $ (18) |
Accounts and Notes Receivable_6
Accounts and Notes Receivable and Credit Quality of Receivables - Allowance for Notes Receivable Activity (Details) - Notes receivable - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Allowance for notes receivable | ||
Beginning allowance for notes receivable | $ (24) | $ (21) |
Provision | (2) | (3) |
Charge-offs and recoveries | 3 | 1 |
Ending allowance for notes receivable | $ (23) | $ (23) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Parts and work-in-process | $ 139 | $ 131 |
Finished goods | 90 | 85 |
Total inventories | $ 229 | $ 216 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Less: accumulated depreciation | $ (950) | $ (921) | |
Total property and equipment, net | 517 | 547 | |
Depreciation expense | 58 | $ 53 | |
Assets held-for-sale | 36 | ||
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 15 | 15 | |
Buildings and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 130 | 128 | |
Gaming and lottery machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,034 | 1,041 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 28 | 27 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 15 | 17 | |
Other property and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 245 | $ 240 |
Intangible Assets, net and Go_3
Intangible Assets, net and Goodwill - Schedule of Finite and Indefinite-lived Intangible Assets (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | $ 2,831 | $ 2,815 |
Amortizable intangible assets, accumulated amortization | (1,180) | (1,100) |
Amortizable intangible assets, net balance | 1,651 | 1,715 |
Non-amortizable intangible assets: | ||
Total intangible assets, gross carrying value | 2,927 | 2,911 |
Total intangible assets, accumulated amortization (excluding goodwill) | (1,182) | (1,102) |
Total intangible assets, net | 1,745 | 1,809 |
Trade names | ||
Non-amortizable intangible assets: | ||
Non-amortizable intangible assets, Gross Carrying Value | 96 | 96 |
Non-amortizable intangible assets, Accumulated Amortization | (2) | (2) |
Non-amortizable intangible assets, Net Balance | 94 | 94 |
Customer relationships | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 1,092 | 1,084 |
Amortizable intangible assets, accumulated amortization | (321) | (299) |
Amortizable intangible assets, net balance | 771 | 785 |
Intellectual property | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 935 | 931 |
Amortizable intangible assets, accumulated amortization | (485) | (453) |
Amortizable intangible assets, net balance | 450 | 478 |
Licenses | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 549 | 546 |
Amortizable intangible assets, accumulated amortization | (273) | (253) |
Amortizable intangible assets, net balance | 276 | 293 |
Brand names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 124 | 123 |
Amortizable intangible assets, accumulated amortization | (62) | (59) |
Amortizable intangible assets, net balance | 62 | 64 |
Trade names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 108 | 108 |
Amortizable intangible assets, accumulated amortization | (25) | (23) |
Amortizable intangible assets, net balance | 83 | 85 |
Patents and other | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 23 | 23 |
Amortizable intangible assets, accumulated amortization | (14) | (13) |
Amortizable intangible assets, net balance | $ 9 | $ 10 |
Intangible Assets, net and Go_4
Intangible Assets, net and Goodwill - Intangible Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 77 | $ 77 |
Intangible Assets, net and Go_5
Intangible Assets, net and Goodwill - Reconciliation of the Carrying Amount of Goodwill (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($)unit | |
Goodwill [Line Items] | |
Number of reporting units | unit | 10 |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | $ 3,280 |
Foreign currency adjustments | 21 |
Balance at the end of the period | 3,301 |
Gaming | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 2,449 |
Foreign currency adjustments | 13 |
Balance at the end of the period | 2,462 |
Lottery | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 352 |
Foreign currency adjustments | (1) |
Balance at the end of the period | 351 |
Social | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 115 |
Foreign currency adjustments | 0 |
Balance at the end of the period | $ 115 |
Digital | |
Goodwill [Line Items] | |
Number of reporting units | unit | 2 |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | $ 364 |
Foreign currency adjustments | 9 |
Balance at the end of the period | 373 |
Digital Sports and Platform | Digital | |
Goodwill [Line Items] | |
Goodwill transfered | 230 |
Digital Gaming and Other | Digital | |
Goodwill [Line Items] | |
Goodwill transfered | $ 134 |
Software, net (Details)
Software, net (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Capitalized Computer Software, Net [Abstract] | |||
Software | $ 1,126 | $ 1,101 | |
Accumulated amortization | (849) | (816) | |
Software, net | 277 | $ 285 | |
Amortization expense | $ 30 | $ 39 |
Equity Investments (Details)
Equity Investments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |||
Equity investments | $ 296 | $ 298 | |
Distributed earnings from equity investments | $ 7 | $ 3 |
Long-Term and Other Debt - Addi
Long-Term and Other Debt - Additional Information (Details) - USD ($) | Apr. 04, 2019 | Mar. 19, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Debt Instrument | ||||
Loss on debt financing transactions | $ 0 | $ (93,000,000) | ||
2026 Unsecured Notes | Senior Notes | ||||
Debt Instrument | ||||
Principal debt amount | $ 1,100,000,000 | |||
Debt issuance price, percent of principal | 100.00% | |||
Outstanding debt redeemed | $ 1,000,000,000 | |||
Redemption price, percent of principal | 100.00% | |||
Financing costs | $ 16,000,000 | |||
Subsequent Event | ||||
Debt Instrument | ||||
Loss on debt financing transactions | $ (60,000,000) |
Long-Term and Other Debt - Sche
Long-Term and Other Debt - Schedule of Outstanding Debt (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2019 | Apr. 04, 2019 | Mar. 19, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | |
Debt Instrument | |||||
Face value | $ 10,120,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (137,000,000) | ||||
Total long-term debt outstanding | 9,983,000,000 | $ 9,037,000,000 | |||
Less: current portion of long-term debt | (1,046,000,000) | (45,000,000) | |||
Long-term debt, excluding current portion | 8,937,000,000 | 8,992,000,000 | |||
Fair value of debt | 10,197,000,000 | ||||
2025 Secured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 2.946% | ||||
Senior Secured and Unsecured Notes, Maturing 2026 | |||||
Debt Instrument | |||||
Reduction of debt due to change in foreign currency exchange rate | 63,000,000 | ||||
Gain (loss) on remeasurement of debt | $ 5,000,000 | ||||
Senior Notes | 2025 Secured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 5.00% | 2.946% | |||
Face value | $ 1,250,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (17,000,000) | ||||
Total long-term debt outstanding | $ 1,233,000,000 | 1,233,000,000 | |||
Principal debt amount | $ 460,000,000 | ||||
Senior Notes | 2026 Secured Euro Notes | |||||
Debt Instrument | |||||
Debt interest rate | 3.375% | ||||
Face value | $ 367,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (5,000,000) | ||||
Total long-term debt outstanding | $ 362,000,000 | 367,000,000 | |||
Senior Notes | 2022 Unsecured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 10.00% | ||||
Face value | $ 2,200,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (22,000,000) | ||||
Total long-term debt outstanding | $ 2,178,000,000 | 2,176,000,000 | |||
Senior Notes | 2026 Unsecured Euro Notes | |||||
Debt Instrument | |||||
Debt interest rate | 5.50% | ||||
Face value | $ 282,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (4,000,000) | ||||
Total long-term debt outstanding | $ 278,000,000 | 282,000,000 | |||
Senior Notes | 2026 Unsecured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 8.25% | ||||
Face value | $ 1,100,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (16,000,000) | ||||
Total long-term debt outstanding | $ 1,084,000,000 | 0 | |||
Principal debt amount | $ 1,100,000,000 | ||||
Outstanding debt redeemed | $ 1,000,000,000 | ||||
Subordinated Notes | 2020 Notes | |||||
Debt Instrument | |||||
Debt interest rate | 6.25% | ||||
Face value | $ 244,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (1,000,000) | ||||
Total long-term debt outstanding | $ 243,000,000 | 242,000,000 | |||
Subordinated Notes | 2021 Notes | |||||
Debt Instrument | |||||
Debt interest rate | 6.625% | ||||
Face value | $ 341,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (3,000,000) | ||||
Total long-term debt outstanding | $ 338,000,000 | 337,000,000 | |||
Capital Lease Obligations | Capital lease obligations as of March 31, 2019 payable monthly through 2019 and other | |||||
Debt Instrument | |||||
Debt interest rate | 3.90% | ||||
Face value | $ 13,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | 0 | ||||
Total long-term debt outstanding | 13,000,000 | 4,000,000 | |||
Revenue transactions presented as debt | 11,000,000 | ||||
Revolving Credit Facility | Senior Secured Credit Facilities | Revolver, varying interest rate | |||||
Debt Instrument | |||||
Face value | 190,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | 0 | ||||
Total long-term debt outstanding | 190,000,000 | 325,000,000 | |||
Term Loan Facility | Senior Secured Credit Facilities | Term Loan B-5 | |||||
Debt Instrument | |||||
Face value | 4,133,000,000 | ||||
Unamortized debt discount/premium and deferred financing costs, net | (69,000,000) | ||||
Total long-term debt outstanding | $ 4,064,000,000 | $ 4,071,000,000 | |||
Subsequent Event | Senior Notes | 2022 Unsecured Notes | |||||
Debt Instrument | |||||
Outstanding debt redeemed | $ 1,000,000,000 |
Long-Term and Other Debt - Loss
Long-Term and Other Debt - Loss on Debt Financing Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Repayment and cancellation of principal balance at premium | $ 0 | $ 110 |
Unamortized debt (premium) discount and deferred financing costs, net | 0 | (30) |
Third party debt issuance fees | 0 | 13 |
Total loss on debt financing transactions | $ 0 | $ 93 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Feb. 28, 2018 | Dec. 31, 2017 | |
Derivative [Line Items] | |||
Amount expected to be reclassified during next 12 months | $ 0 | ||
Contingent consideration | 45,000,000 | ||
Accrued Liabilities | |||
Derivative [Line Items] | |||
Contingent consideration | $ 22,000,000 | ||
Earnings Based Metrics | |||
Derivative [Line Items] | |||
Maximum contingent consideration | $ 38,500,000 | ||
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap | |||
Derivative [Line Items] | |||
Derivative average fixed interest rate | 2.4418% | ||
Total notional amount of swaps | $ 800,000,000 | ||
Senior Secured Notes, Maturing 2025 | |||
Derivative [Line Items] | |||
Debt interest rate | 2.946% | ||
Senior Secured Notes, Maturing 2025 | Senior Notes | |||
Derivative [Line Items] | |||
Debt interest rate | 5.00% | 2.946% | |
Senior Secured Notes, Maturing 2025 | Senior Notes | Cross-currency interest rate swaps | |||
Derivative [Line Items] | |||
Long-term debt | $ 460,000,000 | ||
Senior Secured Euro Notes, Maturing 2026 | Net Investment Hedging | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Designated as net investment non-derivative hedge | $ 255,000,000 | ||
Senior Secured Euro Notes, Maturing 2026 | Senior Notes | |||
Derivative [Line Items] | |||
Debt interest rate | 3.375% |
Fair Value Measurements - Gains
Fair Value Measurements - Gains (Loss) and Interest Expense on Interest Rate Swap Contracts (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) gain recorded in accumulated other comprehensive income (loss), net of tax | $ (5) | $ (1) |
Interest rate swap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
(Loss) gain recorded in accumulated other comprehensive income (loss), net of tax | (5) | 2 |
Interest expense recorded related to interest rate swap contracts | $ 0 | $ 1 |
Fair Value Measurements - Effec
Fair Value Measurements - Effect of Interest Rate Swap Contracts (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Total amounts of expense line item presented in the statements of operations and comprehensive loss in which the effects of cash flow hedges are recorded | $ (154) | $ (155) |
Hedged item | (5) | (2) |
Derivative designated as hedging instrument | $ 5 | $ 1 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | |||
Gain (loss) recorded in other comprehensive income | $ 5 | $ 1 | |
Interest rate swap | |||
Derivatives, Fair Value [Line Items] | |||
Gain (loss) recorded in other comprehensive income | 5 | $ (2) | |
Interest rate swap | Other liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative fair value | 6 | $ 0 | |
Gain (loss) recorded in other comprehensive income | (6) | ||
Cross-currency interest rate swaps | Other assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative fair value | 34 | $ 18 | |
Gain (loss) recorded in other comprehensive income | $ 16 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Stockholders' equity, beginning balance | $ (2,463) | $ (2,027) | |
Net proceeds of common stock in connection with stock options and RSUs | 2 | (15) | |
Stock-based compensation | 11 | 7 | |
Net loss | (24) | (202) | |
Other comprehensive income | 51 | 52 | |
Stockholders' equity, ending balance | (2,423) | (2,196) | |
Share-based compensation expense | 14 | 9 | |
Related to stock options | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Share-based compensation expense | 2 | 2 | |
Related to RSUs | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Share-based compensation expense | 12 | 7 | |
Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Stockholders' equity, beginning balance | 1 | 1 | |
Stockholders' equity, ending balance | 1 | 1 | |
Additional Paid in Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Stockholders' equity, beginning balance | 835 | 808 | |
Net proceeds of common stock in connection with stock options and RSUs | 2 | (15) | |
Stock-based compensation | 11 | 7 | |
Stockholders' equity, ending balance | 848 | 800 | |
Accumulated Loss | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Stockholders' equity, beginning balance | (2,824) | (2,461) | |
Net loss | (24) | (202) | |
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | $ (11) | ||
Stockholders' equity, ending balance | (2,848) | (2,674) | |
Treasury Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Stockholders' equity, beginning balance | (175) | (175) | |
Stockholders' equity, ending balance | (175) | (175) | |
Accumulated Other Comprehensive Loss | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Stockholders' equity, beginning balance | (300) | (200) | |
Other comprehensive income | 51 | 52 | |
Stockholders' equity, ending balance | $ (249) | $ (148) | |
Accounting Standards Update 2014-09 | Accumulated Loss | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | $ (11) |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rates | 17.70% | 3.20% |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Range [Axis] [Line Items] | |||
Operating Lease, Weighted Average Remaining Lease Term | 6 years | ||
Lease extension option | 5 years | ||
Option to terminate period | 1 year | ||
Operating lease expenses | $ 9 | $ 7 | |
Minimum [Member] | |||
Range [Axis] [Line Items] | |||
Operating Lease, Weighted Average Remaining Lease Term | 1 year | ||
Maximum [Member] | |||
Range [Axis] [Line Items] | |||
Operating Lease, Weighted Average Remaining Lease Term | 11 years |
Leases - Supplemental Operating
Leases - Supplemental Operating Lease Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 118 | $ 0 |
Accrued liabilities | 26 | |
Operating lease liabilities | 98 | $ 0 |
Operating lease liabilities | 124 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 8 | |
Operating Lease, Weighted Average Remaining Lease Term | 6 years | |
Weighted average discount rate | 5.00% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 24 |
2020 | 28 |
2021 | 24 |
2022 | 19 |
2023 | 15 |
Thereafter | 34 |
Less Imputed Interest | (20) |
Total | $ 124 |
Litigation (Details)
Litigation (Details) $ in Millions | Mar. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Loss contingency accrual | $ 4 |
Contractual penalty | $ 14 |
Financial Information for Gua_3
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries - Supplemental Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||||
Cash and cash equivalents | $ 1,213 | $ 168 | ||
Restricted cash | 41 | 39 | ||
Accounts receivable, net | 621 | 599 | ||
Notes receivable, net | 104 | 114 | ||
Inventories | 229 | 216 | ||
Prepaid expenses, deposits and other current assets | 238 | 233 | ||
Property and equipment, net | 517 | 547 | ||
Operating lease right-of-use assets | 118 | 0 | ||
Investment in subsidiaries | 0 | 0 | ||
Goodwill | 3,301 | 3,280 | ||
Intangible assets, net | 1,745 | 1,809 | ||
Intercompany balances | 0 | 0 | ||
Software, net | 277 | 285 | ||
Other assets | 433 | 428 | ||
Total assets | 8,837 | 7,718 | ||
Liabilities and stockholders’ (deficit) equity | ||||
Current portion of long-term debt | 1,046 | 45 | ||
Other current liabilities | 740 | 702 | ||
Long-term debt, excluding current portion | 8,937 | 8,992 | ||
Operating lease liabilities | 98 | 0 | ||
Other long-term liabilities | 439 | 442 | ||
Intercompany balances | 0 | 0 | ||
Stockholders’ (deficit) equity | (2,423) | (2,463) | $ (2,196) | $ (2,027) |
Total liabilities and stockholders’ (deficit) equity | 8,837 | 7,718 | ||
Non-current restricted cash | 12 | 13 | ||
Reportable Legal Entities | SGI (Issuer) | ||||
Assets | ||||
Cash and cash equivalents | 1 | 1 | ||
Restricted cash | 1 | 1 | ||
Accounts receivable, net | 102 | 79 | ||
Notes receivable, net | 0 | 0 | ||
Inventories | 45 | 40 | ||
Prepaid expenses, deposits and other current assets | 60 | 63 | ||
Property and equipment, net | 99 | 112 | ||
Operating lease right-of-use assets | 24 | |||
Investment in subsidiaries | 959 | 975 | ||
Goodwill | 240 | 240 | ||
Intangible assets, net | 34 | 34 | ||
Intercompany balances | 7,096 | 6,054 | ||
Software, net | 37 | 39 | ||
Other assets | 412 | 404 | ||
Total assets | 9,110 | 8,042 | ||
Liabilities and stockholders’ (deficit) equity | ||||
Current portion of long-term debt | 1,042 | 42 | ||
Other current liabilities | 224 | 162 | ||
Long-term debt, excluding current portion | 8,928 | 8,991 | ||
Operating lease liabilities | 20 | |||
Other long-term liabilities | 13 | 8 | ||
Intercompany balances | 0 | 0 | ||
Stockholders’ (deficit) equity | (1,117) | (1,161) | ||
Total liabilities and stockholders’ (deficit) equity | 9,110 | 8,042 | ||
Reportable Legal Entities | SGC (Parent) | ||||
Assets | ||||
Cash and cash equivalents | 1,119 | 74 | ||
Restricted cash | 0 | 0 | ||
Accounts receivable, net | 0 | 0 | ||
Notes receivable, net | 0 | 0 | ||
Inventories | 0 | 0 | ||
Prepaid expenses, deposits and other current assets | 3 | 6 | ||
Property and equipment, net | 31 | 31 | ||
Operating lease right-of-use assets | 1 | |||
Investment in subsidiaries | 2,896 | 2,836 | ||
Goodwill | 0 | 0 | ||
Intangible assets, net | 40 | 43 | ||
Intercompany balances | 0 | 0 | ||
Software, net | 53 | 58 | ||
Other assets | 113 | 110 | ||
Total assets | 4,256 | 3,158 | ||
Liabilities and stockholders’ (deficit) equity | ||||
Current portion of long-term debt | 0 | 0 | ||
Other current liabilities | 58 | 64 | ||
Long-term debt, excluding current portion | 0 | 0 | ||
Operating lease liabilities | 1 | |||
Other long-term liabilities | 104 | 106 | ||
Intercompany balances | 6,516 | 5,451 | ||
Stockholders’ (deficit) equity | (2,423) | (2,463) | ||
Total liabilities and stockholders’ (deficit) equity | 4,256 | 3,158 | ||
Reportable Legal Entities | Guarantor Subsidiaries | ||||
Assets | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 33 | 32 | ||
Accounts receivable, net | 204 | 205 | ||
Notes receivable, net | 89 | 101 | ||
Inventories | 89 | 82 | ||
Prepaid expenses, deposits and other current assets | 95 | 92 | ||
Property and equipment, net | 208 | 219 | ||
Operating lease right-of-use assets | 35 | |||
Investment in subsidiaries | 1,216 | 1,093 | ||
Goodwill | 1,897 | 1,897 | ||
Intangible assets, net | 1,239 | 1,291 | ||
Intercompany balances | 74 | 0 | ||
Software, net | 118 | 128 | ||
Other assets | 37 | 46 | ||
Total assets | 5,334 | 5,186 | ||
Liabilities and stockholders’ (deficit) equity | ||||
Current portion of long-term debt | 3 | 0 | ||
Other current liabilities | 235 | 248 | ||
Long-term debt, excluding current portion | 8 | 0 | ||
Operating lease liabilities | 30 | |||
Other long-term liabilities | 637 | 637 | ||
Intercompany balances | 0 | 49 | ||
Stockholders’ (deficit) equity | 4,421 | 4,252 | ||
Total liabilities and stockholders’ (deficit) equity | 5,334 | 5,186 | ||
Non-current restricted cash | 11 | 12 | ||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||
Assets | ||||
Cash and cash equivalents | 95 | 94 | ||
Restricted cash | 7 | 6 | ||
Accounts receivable, net | 315 | 315 | ||
Notes receivable, net | 15 | 13 | ||
Inventories | 109 | 111 | ||
Prepaid expenses, deposits and other current assets | 79 | 72 | ||
Property and equipment, net | 215 | 218 | ||
Operating lease right-of-use assets | 58 | |||
Investment in subsidiaries | 0 | 0 | ||
Goodwill | 1,164 | 1,143 | ||
Intangible assets, net | 432 | 441 | ||
Intercompany balances | 0 | 0 | ||
Software, net | 69 | 60 | ||
Other assets | 309 | 308 | ||
Total assets | 2,867 | 2,781 | ||
Liabilities and stockholders’ (deficit) equity | ||||
Current portion of long-term debt | 1 | 3 | ||
Other current liabilities | 258 | 254 | ||
Long-term debt, excluding current portion | 1 | 1 | ||
Operating lease liabilities | 47 | |||
Other long-term liabilities | 176 | 172 | ||
Intercompany balances | 654 | 554 | ||
Stockholders’ (deficit) equity | 1,730 | 1,797 | ||
Total liabilities and stockholders’ (deficit) equity | 2,867 | 2,781 | ||
Non-current restricted cash | 1 | 1 | ||
Eliminating Entries | ||||
Assets | ||||
Cash and cash equivalents | (2) | (1) | ||
Restricted cash | 0 | 0 | ||
Accounts receivable, net | 0 | 0 | ||
Notes receivable, net | 0 | 0 | ||
Inventories | (14) | (17) | ||
Prepaid expenses, deposits and other current assets | 1 | 0 | ||
Property and equipment, net | (36) | (33) | ||
Operating lease right-of-use assets | 0 | |||
Investment in subsidiaries | (5,071) | (4,904) | ||
Goodwill | 0 | 0 | ||
Intangible assets, net | 0 | 0 | ||
Intercompany balances | (7,170) | (6,054) | ||
Software, net | 0 | 0 | ||
Other assets | (438) | (440) | ||
Total assets | (12,730) | (11,449) | ||
Liabilities and stockholders’ (deficit) equity | ||||
Current portion of long-term debt | 0 | 0 | ||
Other current liabilities | (35) | (26) | ||
Long-term debt, excluding current portion | 0 | 0 | ||
Operating lease liabilities | 0 | |||
Other long-term liabilities | (491) | (481) | ||
Intercompany balances | (7,170) | (6,054) | ||
Stockholders’ (deficit) equity | (5,034) | (4,888) | ||
Total liabilities and stockholders’ (deficit) equity | $ (12,730) | $ (11,449) |
Financial Information for Gua_4
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries - Supplemental Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Condensed Financial Statements | ||
Revenue | $ 837 | $ 812 |
Cost of services, cost of product sales and cost of instant products | 307 | 297 |
Selling, general and administrative | 186 | 172 |
Research and development | 49 | 54 |
Depreciation, amortization and impairments | 165 | 188 |
Restructuring and other | 7 | 52 |
Operating (loss) income | 123 | 49 |
Interest expense | (154) | (155) |
Loss on debt financing transactions | 0 | (93) |
Gain (loss) on remeasurement of debt | 5 | (1) |
Other income (expense), net | 6 | 3 |
Net income (loss) before income taxes | (20) | (196) |
Equity in (loss) income of subsidiaries | 0 | 0 |
Income tax (expense) benefit | (4) | (6) |
Net (loss) income | (24) | (202) |
Other comprehensive income | 51 | 52 |
Comprehensive income (loss) | 27 | (150) |
Reportable Legal Entities | SGI (Issuer) | ||
Condensed Financial Statements | ||
Revenue | 158 | 130 |
Cost of services, cost of product sales and cost of instant products | 101 | 86 |
Selling, general and administrative | 11 | 11 |
Research and development | 1 | 0 |
Depreciation, amortization and impairments | 12 | 8 |
Restructuring and other | 0 | 1 |
Operating (loss) income | 33 | 24 |
Interest expense | (154) | (155) |
Loss on debt financing transactions | (93) | |
Gain (loss) on remeasurement of debt | 5 | |
Other income (expense), net | 132 | 136 |
Net income (loss) before income taxes | 16 | (88) |
Equity in (loss) income of subsidiaries | 7 | 4 |
Income tax (expense) benefit | (5) | 33 |
Net (loss) income | 18 | (51) |
Other comprehensive income | 9 | (17) |
Comprehensive income (loss) | 27 | (68) |
Reportable Legal Entities | SGC (Parent) | ||
Condensed Financial Statements | ||
Revenue | 0 | 0 |
Cost of services, cost of product sales and cost of instant products | 0 | 0 |
Selling, general and administrative | 35 | 38 |
Research and development | 0 | 0 |
Depreciation, amortization and impairments | 12 | 9 |
Restructuring and other | 1 | 26 |
Operating (loss) income | (48) | (73) |
Interest expense | 0 | 0 |
Loss on debt financing transactions | 0 | |
Gain (loss) on remeasurement of debt | 0 | |
Other income (expense), net | 20 | 15 |
Net income (loss) before income taxes | (28) | (58) |
Equity in (loss) income of subsidiaries | 6 | (84) |
Income tax (expense) benefit | (2) | (60) |
Net (loss) income | (24) | (202) |
Other comprehensive income | 51 | 52 |
Comprehensive income (loss) | 27 | (150) |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Condensed Financial Statements | ||
Revenue | 358 | 387 |
Cost of services, cost of product sales and cost of instant products | 102 | 118 |
Selling, general and administrative | 59 | 58 |
Research and development | 23 | 23 |
Depreciation, amortization and impairments | 99 | 126 |
Restructuring and other | 2 | 1 |
Operating (loss) income | 73 | 61 |
Interest expense | 0 | 0 |
Loss on debt financing transactions | 0 | |
Gain (loss) on remeasurement of debt | 0 | |
Other income (expense), net | (124) | (133) |
Net income (loss) before income taxes | (51) | (72) |
Equity in (loss) income of subsidiaries | 11 | 10 |
Income tax (expense) benefit | 13 | 25 |
Net (loss) income | (27) | (37) |
Other comprehensive income | 2 | 22 |
Comprehensive income (loss) | (25) | (15) |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Condensed Financial Statements | ||
Revenue | 385 | 369 |
Cost of services, cost of product sales and cost of instant products | 152 | 154 |
Selling, general and administrative | 94 | 79 |
Research and development | 25 | 31 |
Depreciation, amortization and impairments | 47 | 48 |
Restructuring and other | 4 | 24 |
Operating (loss) income | 63 | 33 |
Interest expense | 0 | 0 |
Loss on debt financing transactions | 0 | |
Gain (loss) on remeasurement of debt | 0 | |
Other income (expense), net | (22) | (15) |
Net income (loss) before income taxes | 41 | 18 |
Equity in (loss) income of subsidiaries | 0 | 0 |
Income tax (expense) benefit | (10) | (4) |
Net (loss) income | 31 | 14 |
Other comprehensive income | 71 | 73 |
Comprehensive income (loss) | 102 | 87 |
Eliminating Entries | ||
Condensed Financial Statements | ||
Revenue | (64) | (74) |
Cost of services, cost of product sales and cost of instant products | (48) | (61) |
Selling, general and administrative | (13) | (14) |
Research and development | 0 | 0 |
Depreciation, amortization and impairments | (5) | (3) |
Restructuring and other | 0 | 0 |
Operating (loss) income | 2 | 4 |
Interest expense | 0 | 0 |
Loss on debt financing transactions | 0 | |
Gain (loss) on remeasurement of debt | 0 | |
Other income (expense), net | 0 | 0 |
Net income (loss) before income taxes | 2 | 4 |
Equity in (loss) income of subsidiaries | (24) | 70 |
Income tax (expense) benefit | 0 | 0 |
Net (loss) income | (22) | 74 |
Other comprehensive income | (82) | (78) |
Comprehensive income (loss) | $ (104) | $ (4) |
Financial Information for Gua_5
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries - Supplemental Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | $ 167 | $ 30 |
Cash flows from investing activities: | ||
Capital expenditures | (67) | (88) |
Acquisitions of businesses and assets, net of cash acquired | 0 | (274) |
Distributions of capital from equity investments | 3 | 2 |
Other, principally change in intercompany investing activities | 0 | 0 |
Net cash used in investing activities | (64) | (360) |
Cash flows from financing activities: | ||
Proceeds from long-term debt, net of payments | 953 | 5 |
Repayment of assumed NYX debt | 0 | (288) |
Payments of debt issuance and deferred financing costs | (14) | (39) |
Payments on license obligations | (7) | (7) |
Proceeds from Sale of Finance Receivables | 11 | |
Net redemptions of common stock under stock-based compensation plans and other | (1) | (17) |
Other, principally change in intercompany financing activities | 0 | 0 |
Net cash provided by (used in) financing activities | 942 | (346) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | 2 |
Increase in cash, cash equivalents and restricted cash | 1,046 | (674) |
Cash, cash equivalents and restricted cash, beginning of period | 220 | 834 |
Cash, cash equivalents and restricted cash, end of period | 1,266 | 160 |
Reportable Legal Entities | SGI (Issuer) | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 55 | (25) |
Cash flows from investing activities: | ||
Capital expenditures | (10) | (17) |
Acquisitions of businesses and assets, net of cash acquired | 0 | |
Distributions of capital from equity investments | 0 | 0 |
Other, principally change in intercompany investing activities | (986) | 74 |
Net cash used in investing activities | (996) | 57 |
Cash flows from financing activities: | ||
Proceeds from long-term debt, net of payments | 955 | 7 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | (14) | (39) |
Payments on license obligations | 0 | 0 |
Proceeds from Sale of Finance Receivables | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | 0 | 0 |
Other, principally change in intercompany financing activities | 0 | 0 |
Net cash provided by (used in) financing activities | 941 | (32) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase in cash, cash equivalents and restricted cash | 0 | 0 |
Cash, cash equivalents and restricted cash, beginning of period | 2 | 1 |
Cash, cash equivalents and restricted cash, end of period | 2 | 1 |
Reportable Legal Entities | SGC (Parent) | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | (15) | (32) |
Cash flows from investing activities: | ||
Capital expenditures | (3) | (8) |
Acquisitions of businesses and assets, net of cash acquired | 0 | |
Distributions of capital from equity investments | 0 | 0 |
Other, principally change in intercompany investing activities | 0 | 0 |
Net cash used in investing activities | (3) | (8) |
Cash flows from financing activities: | ||
Proceeds from long-term debt, net of payments | 0 | 0 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | (7) | (7) |
Proceeds from Sale of Finance Receivables | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | 1 | (15) |
Other, principally change in intercompany financing activities | 1,069 | (630) |
Net cash provided by (used in) financing activities | 1,063 | (652) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase in cash, cash equivalents and restricted cash | 1,045 | (692) |
Cash, cash equivalents and restricted cash, beginning of period | 74 | 732 |
Cash, cash equivalents and restricted cash, end of period | 1,119 | 40 |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 63 | 34 |
Cash flows from investing activities: | ||
Capital expenditures | (25) | (45) |
Acquisitions of businesses and assets, net of cash acquired | (9) | |
Distributions of capital from equity investments | 0 | 0 |
Other, principally change in intercompany investing activities | (47) | 0 |
Net cash used in investing activities | (72) | (54) |
Cash flows from financing activities: | ||
Proceeds from long-term debt, net of payments | 0 | 0 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | 0 | 0 |
Proceeds from Sale of Finance Receivables | 11 | |
Net redemptions of common stock under stock-based compensation plans and other | (2) | (2) |
Other, principally change in intercompany financing activities | 0 | 22 |
Net cash provided by (used in) financing activities | 9 | 20 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase in cash, cash equivalents and restricted cash | 0 | 0 |
Cash, cash equivalents and restricted cash, beginning of period | 44 | 44 |
Cash, cash equivalents and restricted cash, end of period | 44 | 44 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 65 | 55 |
Cash flows from investing activities: | ||
Capital expenditures | (29) | (18) |
Acquisitions of businesses and assets, net of cash acquired | (265) | |
Distributions of capital from equity investments | 3 | 2 |
Other, principally change in intercompany investing activities | 0 | 0 |
Net cash used in investing activities | (26) | (281) |
Cash flows from financing activities: | ||
Proceeds from long-term debt, net of payments | (2) | (2) |
Repayment of assumed NYX debt | (288) | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | 0 | 0 |
Proceeds from Sale of Finance Receivables | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | 0 | 0 |
Other, principally change in intercompany financing activities | (36) | 534 |
Net cash provided by (used in) financing activities | (38) | 244 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1 | 2 |
Increase in cash, cash equivalents and restricted cash | 2 | 20 |
Cash, cash equivalents and restricted cash, beginning of period | 101 | 60 |
Cash, cash equivalents and restricted cash, end of period | 103 | 80 |
Eliminating Entries | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | (1) | (2) |
Cash flows from investing activities: | ||
Capital expenditures | 0 | 0 |
Acquisitions of businesses and assets, net of cash acquired | 0 | |
Distributions of capital from equity investments | 0 | 0 |
Other, principally change in intercompany investing activities | 1,033 | (74) |
Net cash used in investing activities | 1,033 | (74) |
Cash flows from financing activities: | ||
Proceeds from long-term debt, net of payments | 0 | 0 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | 0 | 0 |
Proceeds from Sale of Finance Receivables | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | 0 | 0 |
Other, principally change in intercompany financing activities | (1,033) | 74 |
Net cash provided by (used in) financing activities | (1,033) | 74 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase in cash, cash equivalents and restricted cash | (1) | (2) |
Cash, cash equivalents and restricted cash, beginning of period | (1) | (3) |
Cash, cash equivalents and restricted cash, end of period | $ (2) | $ (5) |