COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-13063 | |
Entity Registrant Name | SCIENTIFIC GAMES CORPORATION | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 81-0422894 | |
Entity Address, Address Line One | 6601 Bermuda Road | |
Entity Address, City or Town | Las Vegas | |
Entity Address, State or Province | NV | |
Entity Address, Postal Zip Code | 89119 | |
City Area Code | 702 | |
Local Phone Number | 897-7150 | |
Title of 12(b) Security | Common Stock, $.001 par value | |
Trading Symbol | SGMS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 93,252,392 | |
Entity Central Index Key | 0000750004 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | ||
Revenue: | |||||
Total revenue | $ 855 | $ 821 | $ 2,537 | $ 2,478 | |
Operating Expenses: | |||||
Cost of services, cost of product sales and cost of instant products(2) | 317 | 301 | 945 | 914 | |
Selling, general and administrative | 175 | 170 | 535 | 515 | |
Research and development | 47 | 50 | 142 | 153 | |
Depreciation, amortization and impairments | 162 | 166 | 497 | 527 | |
Restructuring and other | 11 | 339 | 24 | 424 | |
Operating (loss) income | 143 | (205) | 394 | (55) | |
Other (expense) income: | |||||
Interest expense | (146) | (147) | (447) | (448) | |
Earnings from equity investments | 4 | 4 | 17 | 16 | |
Gain (Loss) on Extinguishment of Debt | 0 | 0 | (60) | (93) | |
Gain (loss) on remeasurement of debt | 19 | (4) | 21 | 29 | |
Other (expense) income, net | (5) | 0 | 2 | (2) | |
Total other expense, net | (128) | (147) | (467) | (498) | |
Net (loss) income before equity in income of subsidiaries and income taxes | 15 | (352) | (73) | (553) | |
Income tax benefit (expense) | 3 | 0 | (8) | (6) | |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 18 | (352) | (81) | (559) | |
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 4 | 0 | 6 | 0 | |
Net Income (Loss) Attributable to Noncontrolling Interest | 4 | 6 | |||
Net Income (Loss) Attributable to Parent | $ 14 | $ (352) | $ (87) | $ (559) | |
Basic and diluted net income (loss) attributable to SGC per share: | |||||
Basic (in dollars per share) | $ 0.15 | $ (3.85) | $ (0.94) | $ (6.15) | |
Diluted (in dollars per share) | $ 0.15 | $ (3.85) | $ (0.94) | $ (6.15) | |
Weighted average number of shares used in per share calculations: | |||||
Basic (in shares) | 93 | 91 | 93 | 91 | |
Diluted (in shares) | 94 | 91 | 93 | 91 | |
Services | |||||
Revenue: | |||||
Total revenue | $ 452 | $ 439 | $ 1,368 | $ 1,315 | |
Operating Expenses: | |||||
Cost of services, cost of product sales and cost of instant products(2) | [1] | 133 | 124 | 401 | 371 |
Product sales | |||||
Revenue: | |||||
Total revenue | 255 | 240 | 731 | 721 | |
Operating Expenses: | |||||
Cost of services, cost of product sales and cost of instant products(2) | [1] | 115 | 110 | 333 | 335 |
Instant products | |||||
Revenue: | |||||
Total revenue | 148 | 142 | 438 | 442 | |
Operating Expenses: | |||||
Cost of services, cost of product sales and cost of instant products(2) | [1] | $ 69 | $ 67 | $ 211 | $ 208 |
[1] | Exclusive of D&A |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 18 | $ (352) | $ (75) | $ (81) | $ (559) |
Other comprehensive loss: | |||||
Foreign currency translation loss, net of tax | (38) | (8) | (22) | (46) | |
Derivative financial instruments unrealized gain (loss), net of tax | 3 | 3 | (13) | 9 | |
Total comprehensive loss | (17) | (357) | (116) | (596) | |
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 4 | 0 | $ 2 | 6 | 0 |
Comprehensive (loss) income attributable to SGC | $ (21) | $ (357) | $ (122) | $ (596) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 363 | $ 168 |
Restricted cash | 46 | 39 |
Accounts receivable, net | 636 | 599 |
Notes receivable, net | 123 | 114 |
Inventories | 257 | 216 |
Prepaid expenses, deposits and other current assets | 226 | 233 |
Total current assets | 1,651 | 1,369 |
Non-current assets: | ||
Restricted cash | 12 | 13 |
Notes receivable, net | 52 | 40 |
Property and equipment, net | 516 | 547 |
Operating lease right-of-use assets | 107 | 0 |
Goodwill | 3,251 | 3,280 |
Intangible assets, net | 1,579 | 1,809 |
Software, net | 270 | 285 |
Equity investments | 266 | 298 |
Other assets | 203 | 77 |
Total assets | 7,907 | 7,718 |
Current liabilities: | ||
Current portion of long-term debt | 288 | 45 |
Accounts payable | 253 | 225 |
Accrued liabilities | 504 | 477 |
Total current liabilities | 1,045 | 747 |
Deferred income taxes | 106 | 108 |
Operating lease liabilities | 91 | 0 |
Operating lease liabilities | 308 | 334 |
Long-term debt, excluding current portion | 8,482 | 8,992 |
Total liabilities | 10,032 | 10,181 |
Commitments and contingencies (see Note 16) | ||
Stockholders’ deficit: | ||
Common Stock, Value, Outstanding | 1 | 1 |
Additional Paid in Capital, Common Stock | 1,197 | 835 |
Retained Earnings (Accumulated Deficit) | (2,911) | (2,824) |
Treasury Stock, Value | (175) | (175) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (335) | (300) |
Total SGC stockholders’ deficit | (2,223) | (2,463) |
Stockholders' Equity Attributable to Noncontrolling Interest | 98 | 0 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (2,125) | (2,463) |
Total liabilities and total stockholders’ (deficit) equity | $ 7,907 | $ 7,718 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jan. 10, 2018 | Sep. 30, 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) | 17,000,000 | 17,000,000 | ||
Shares of surviving corporation (in shares) | 1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (81) | $ (559) |
Adjustments to reconcile net loss to cash provided by operating activities | 597 | 678 |
Changes in working capital accounts, net of effects of acquisitions | (120) | 237 |
Changes in deferred income taxes and other | 7 | 0 |
Net cash provided by operating activities | 403 | 356 |
Cash flows from investing activities: | ||
Capital expenditures | (207) | (293) |
Acquisitions of businesses and assets, net of cash acquired | 0 | (274) |
Distributions of capital from equity investments | 18 | 24 |
Additions to equity method investments | 1 | 76 |
Net cash (used in) provided by investing activities | (190) | (619) |
Cash flows from financing activities: | ||
Proceeds from Lines of Credit | 40 | 185 |
Repayments under revolving credit facility | (365) | (490) |
Proceeds from issuance of senior notes and term loans | 1,100 | 2,512 |
Repayment of senior notes and term loans (inclusive of redemption premium) | (1,050) | (2,210) |
Repayment of assumed NYX debt | 0 | (288) |
Payments on long-term debt | (33) | (27) |
Payment of Deferred Financing Costs | (15) | (39) |
Payments on license obligations | (26) | (22) |
Sale of future revenue | 11 | 0 |
Proceeds from Issuance of Common Stock | 342 | 0 |
Payments of deferred SciPlay common stock offering costs | (9) | 0 |
Net redemptions of common stock under stock-based compensation plans and other | (6) | (24) |
Net cash provided by (used in) financing activities | (11) | (403) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1) | (2) |
Increase (decrease) in cash, cash equivalents and restricted cash | 201 | (668) |
Cash, cash equivalents and restricted cash, beginning of period | 220 | 834 |
Cash, cash equivalents and restricted cash, end of period | 421 | 166 |
Supplemental cash flow information: | ||
Cash paid for interest | 391 | 442 |
Income taxes paid | 28 | 25 |
Distributed earnings from equity investments | 24 | 24 |
Payment for Contingent Consideration Liability, Operating Activities | 23 | 0 |
Supplemental non-cash transactions: | ||
Non-cash rollover and refinancing of Term loans | 0 | 3,275 |
Non-cash interest expense | 19 | 19 |
NYX non-cash consideration transferred (including 2017 acquisition of ordinary shares) | $ 0 | $ 93 |
Description of the Business and
Description of the Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 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, SciPlay (formerly referred to as our Social business segment) 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, 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. SciPlay Initial Public Offering and Noncontrolling Interest On May 7, 2019, SciPlay completed an initial public offering (“IPO”) for an 18.0% minority interest in our Social gaming business, after giving effect to the underwriters’ partial exercise of their over-allotment option on June 4, 2019. 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 SGC to ten votes per share (for so long as the number of shares of SciPlay common stock beneficially owned by SGC 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. As of September 30, 2019 , SGC owned all of the outstanding Class B common stock, which represents approximately 82.0% 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, SGC continues to control shares representing a majority of the combined voting power in SciPlay and continues to have a controlling financial interest in and consolidate SciPlay, subsequent to the IPO. 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 IPO 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. We continue to maintain a full valuation allowance on certain of our U.S. net deferred tax assets, and we continue to monitor and assess positive and negative evidence with respect to our ability to realize our deferred tax assets. 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 SGC of 85% of the amount of tax benefits, if any, that SciPlay actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of assets of SciPlay Parent Company, LLC (“SciPlay Parent LLC”) (a) in connection with the SciPlay IPO, (b) resulting from any redemptions or exchanges of membership interests of SciPlay Parent LLC pursuant to the SciPlay Parent LLC Operating Agreement or (c) resulting from certain distributions (or deemed distributions) by SciPlay Parent LLC and (ii) certain other tax benefits related to SciPlay’s making of payments under the TRA. • An Intercompany Services Agreement, under which SGC provides to SciPlay certain corporate level general and administrative services, including but not limited to, finance, corporate development, human resources, legal (which could include liability related to litigation awards related to SciPlay), information technology and rental fees for shared assets. These expenses are charged to SciPlay and settled in cash. • An intellectual property license agreement (“IP License Agreement”), pursuant to which SciPlay acquired the following licenses from a restricted subsidiary of SGC for a one-time payment of $255 million : (i) an exclusive (subject to certain limited exceptions), perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming, Inc. (“Bally Gaming”) or its affiliates on or before the third anniversary of the date of the IP License Agreement (the date of the IP License Agreement, the “Effective Date”), in any of the Covered Games (defined as any of SciPlay’s currently available or future social games that are developed for mobile platforms, social media platforms, internet platforms or other interactive platforms and distributed solely via digital delivery); (ii) an exclusive (subject to certain limited exceptions and payment of royalties owed to third-party licensors for SciPlay’s use of third-party licensed property) license to use third-party intellectual property licensed to Bally Gaming or its affiliates on or before the third anniversary of the Effective Date, to the extent permitted to be sublicensed to SciPlay, in any of the Covered Games; (iii) a non-exclusive, perpetual, non-royalty bearing license to use intellectual property created or acquired by Bally Gaming or its affiliates after the third anniversary of the Effective Date, but only in SciPlay’s currently available games; and (iv) a non-exclusive license to use third-party intellectual property licensed to Bally Gaming or its affiliates after the third anniversary of the Effective Date, to the extent permitted to be sublicensed to SciPlay, but only in SciPlay’s currently available games. As a result of the IP License Agreement described above, SciPlay is no longer required to pay to Bally Gaming future royalties and or fees for use of intellectual property owned by Bally Gaming or its affiliates for SciPlay’s currently available games. Accordingly, and commencing with the effectiveness of the IP License Agreement as of May 7, 2019, our Gaming business segment AEBITDA no longer benefited from these charges, while our SciPlay business segment AEBITDA increased proportionately. There were no such IP charges for the three months ended September 30, 2019 , and the IP charges for the nine months ended September 30, 2019 were $10 million . Such IP charges for the three and nine months ended September 30, 2018 were $7 million and $19 million , respectively. The total amount of such IP charges 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”) that matures in May 2024 (see Note 11). As a result of these transactions, we received $312 million in net proceeds from the offering (net of $30 million used by SciPlay to pay the offering fees and balance retained for general corporate purposes), which enables us to make substantial payments to reduce our debt. The noncontrolling interest share of equity in SciPlay is reflected as a component of the noncontrolling interest in the accompanying consolidated balance sheets and was $98 million as of September 30, 2019 . 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 Income (Loss) Per Share Basic and diluted net income per share for the three months ended September 30, 2019 were computed by dividing net income attributable to SGC by the weighted average number of shares outstanding, and the weighted average number of shares outstanding adjusted to give effect to all potentially dilutive securities using the treasury stock method, respectively. Basic and diluted net loss per share were the same for the three months ended September 30, 2018 and the nine months ended September 30, 2019 and 2018 as all common stock equivalents during those periods would be anti-dilutive. We excluded 2 million of stock options from the diluted weighted-average common shares outstanding for the nine months ended September 30, 2019 and 3 million of stock options from the diluted weighted-average common shares outstanding for the three and nine months ended September 30, 2018 . We excluded 3 million of RSUs from the calculation of diluted weighted-average common shares outstanding for the three months ended September 30, 2018 and both the nine months ended September 30, 2019 and 2018 . New Accounting Guidance - Recently Adopted The 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 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 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. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Gaming Gaming operations $ 149 $ 159 $ 451 $ 481 Gaming machine sales 168 167 452 480 Gaming systems 77 70 218 229 Table products 60 52 182 172 Total $ 454 $ 448 $ 1,303 $ 1,362 Lottery Instant products $ 150 $ 142 $ 440 $ 442 Lottery systems 70 65 238 174 Total $ 220 $ 207 $ 678 $ 616 SciPlay Mobile $ 97 $ 83 $ 293 $ 232 Web and other 19 22 60 70 Total $ 116 $ 105 $ 353 $ 302 Digital Sports and platform $ 29 $ 21 $ 85 $ 67 Gaming and other 36 40 118 131 Total $ 65 $ 61 $ 203 $ 198 The amount of rental income revenue that is outside the scope of ASC 606 was $91 million and $282 million for the three and nine months ended September 30, 2019 , respectively, and $66 million and $202 million for the three and nine months ended September 30, 2018 , respectively. Contract Liabilities and Other Disclosures The following table summarizes the activity in our contract liabilities for the reporting period: Nine Months Ended September 30, 2019 Contract liability balance, beginning of period (1) $ 97 Liabilities recognized during the period 51 Amounts recognized in revenue from beginning balance (30 ) Contract liability balance, end of period (1) $ 118 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets. 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 sheets. 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, for such contracts revenue recognition under ASC 606 does not approximate conversion to cash. Total revenue recognized under such contracts for the three and nine months ended September 30, 2019 was $20 million and $69 million , respectively, and was $26 million and $84 million for the three and nine months ended September 30, 2018 , respectively. The following table summarizes our receivables and contract asset balances for the periods indicated: Receivables Contract Assets (1) Beginning of period balance $ 753 $ 114 End of period balance, September 30, 2019 811 136 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets. As of September 30, 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 | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments We report our operations in four business segments—Gaming, Lottery, SciPlay 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 IPO of a minority interest in our Social gaming business, which was completed on May 7, 2019, we now refer to our Social business segment as our SciPlay business segment, and we also changed our calculation of SciPlay business segment AEBITDA beginning with the first quarter of 2019. SciPlay business segment AEBITDA now reflects intercompany charges settled in cash for corporate services and certain royalties paid for by our SciPlay 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 and nine months ended September 30, 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 impacts our Gaming business segment and SciPlay 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 September 30, 2019 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 454 $ 220 $ 116 $ 65 $ — $ 855 AEBITDA 226 99 32 17 (30 ) $ 344 Reconciling items to consolidated net income before income taxes: D&A (110 ) (14 ) (1 ) (18 ) (19 ) (162 ) Restructuring and other (5 ) — — (5 ) (1 ) (11 ) EBITDA from equity investments (15 ) (15 ) Earnings from equity investments 4 4 Interest expense (146 ) (146 ) Gain on remeasurement of debt 19 19 Other expense, net (9 ) (9 ) Stock-based compensation (9 ) (9 ) Net income before income taxes $ 15 (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 income before income taxes. Three Months Ended September 30, 2018 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 448 $ 207 $ 105 $ 61 $ — $ 821 AEBITDA 233 92 24 12 (35 ) $ 326 Reconciling items to consolidated net loss before income taxes: D&A (120 ) (15 ) (2 ) (16 ) (13 ) (166 ) Restructuring and other (4 ) (3 ) (9 ) (4 ) (319 ) (339 ) EBITDA from equity investments (14 ) (14 ) Earnings from equity investments 4 4 Interest expense (147 ) (147 ) Loss on remeasurement of debt (4 ) (4 ) Other expense, net (2 ) (2 ) Stock-based compensation (10 ) (10 ) Net loss before income taxes $ (352 ) (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. Nine Months Ended September 30, 2019 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 1,303 $ 678 $ 353 $ 203 $ — $ 2,537 AEBITDA (2) 656 306 90 42 (87 ) $ 1,007 Reconciling items to consolidated net loss before income taxes: D&A (336 ) (53 ) (5 ) (56 ) (47 ) (497 ) Restructuring and other (9 ) (1 ) (2 ) (9 ) (3 ) (24 ) EBITDA from equity investments (50 ) (50 ) Earnings from equity investments 17 17 Interest expense (447 ) (447 ) Loss on debt refinancing transactions (60 ) (60 ) Gain on remeasurement of debt 21 21 Other expense, net (7 ) (7 ) Stock-based compensation (33 ) (33 ) Net loss before income taxes $ (73 ) (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) Gaming AEBITDA decreased and SciPlay AEBITDA increased compared to prior periods as IP charges are no longer charged to SciPlay per the IP License Agreement discussed in Note 1. The nine months ended September 30, 2019 includes $10 million in such IP charges paid by the SciPlay business segment. Nine Months Ended September 30, 2018 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 1,362 $ 616 $ 302 $ 198 $ — $ 2,478 AEBITDA 686 286 70 42 (98 ) $ 986 Reconciling items to consolidated net loss before income taxes: D&A (380 ) (43 ) (15 ) (49 ) (40 ) (527 ) Restructuring and other (7 ) — (28 ) (14 ) (375 ) (424 ) EBITDA from equity investments (49 ) (49 ) Earnings from equity investments 16 16 Interest expense (448 ) (448 ) Loss on debt financing transactions (93 ) (93 ) Gain on remeasurement of debt 29 29 Other expense, net (9 ) (9 ) Stock-based compensation (34 ) (34 ) Net loss before income taxes $ (553 ) (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. |
Restructuring and other
Restructuring and other | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Employee severance (1) $ 3 $ 11 $ 8 $ 32 Acquisitions and related costs — — — 7 Contingent consideration adjustment — 8 2 26 Legal and related — 310 — 336 Restructuring, integration and other 8 10 14 23 Total $ 11 $ 339 $ 24 $ 424 (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 | 9 Months Ended |
Sep. 30, 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: September 30, 2019 December 31, 2018 Current: Accounts receivable $ 650 $ 615 Notes receivable 146 138 Allowance for doubtful accounts and notes (37 ) (40 ) Current accounts and notes receivable, net $ 759 $ 713 Long-term: Notes receivable, net of allowance 52 40 Total accounts and notes receivable, net $ 811 $ 753 Credit Quality of Receivables The interest rates on our outstanding receivables bearing interest ranged from 3% to 10% at September 30, 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 nine months ended September 30, 2019 that require a reassessment of our receivable balances. The international locations with significant concentrations (generally deemed to be exceeding 10% ) of our notes receivable are as follows: • Mexico - Our notes receivable, net, from certain customers in Mexico at September 30, 2019 was $26 million . We collected $23 million of outstanding receivables from these customers during the nine months ended September 30, 2019 . • Peru - Our notes receivable, net, from certain customers in Peru at September 30, 2019 was $12 million . We collected $5 million of outstanding receivables from these customers during the nine months ended September 30, 2019 . • Argentina - Our notes receivable, net, from customers in Argentina at September 30, 2019 was $17 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 $15 million of outstanding receivables from customers in Argentina during the nine months ended September 30, 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: September 30, 2019 Balances over 90 days past due December 31, 2018 Balances over 90 days past due Notes receivable: Domestic $ 84 $ 13 $ 55 $ 6 International 114 19 123 25 Total notes receivable 198 32 178 31 Notes receivable allowance Domestic (5 ) (5 ) (6 ) (6 ) International (18 ) (18 ) (18 ) (18 ) Total notes receivable allowance (23 ) (23 ) (24 ) (24 ) Notes receivable, net $ 175 $ 9 $ 154 $ 7 At September 30, 2019 , 5% 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, but takes all factors into consideration. The activity in our allowance for notes receivable for each of the nine month periods ended September 30, 2019 and 2018 is as follows: Nine Months Ended September 30, 2019 2018 Beginning allowance for notes receivable $ (24 ) $ (21 ) Provision (3 ) (4 ) Charge-offs and recoveries 4 2 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 September 30, 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 | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following as of the dates presented below: September 30, 2019 December 31, 2018 Parts and work-in-process $ 154 $ 131 Finished goods 103 85 Total inventories $ 257 $ 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 | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net consisted of the following: September 30, 2019 December 31, 2018 Land $ 20 $ 15 Buildings and leasehold improvements 152 128 Gaming and lottery machinery and equipment 1,023 1,041 Furniture and fixtures 29 27 Construction in progress 25 17 Other property and equipment 257 240 Less: accumulated depreciation (990 ) (921 ) Total property and equipment, net $ 516 $ 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 Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (1) Depreciation expense $ 51 $ 51 $ 173 $ 178 (1) Includes assets held for sale impairment charges of $19 million. During the second quarter of 2019, we reclassified $27 million of assets held for sale to assets held and used due to the assets no longer meeting the assets held for sale criteria. We recorded a $9 million |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 9 Months Ended |
Sep. 30, 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 September 30, 2019 and December 31, 2018 . September 30, 2019 December 31, 2018 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 1,077 $ (360 ) $ 717 $ 1,084 $ (299 ) $ 785 Intellectual property 924 (537 ) 387 931 (453 ) 478 Licenses 553 (315 ) 238 546 (253 ) 293 Brand names 123 (68 ) 55 123 (59 ) 64 Trade names 106 (28 ) 78 108 (23 ) 85 Patents and other 24 (14 ) 10 23 (13 ) 10 2,807 (1,322 ) 1,485 2,815 (1,100 ) 1,715 Non-amortizable intangible assets: Trade names 96 (2 ) 94 96 (2 ) 94 Total intangible assets $ 2,903 $ (1,324 ) $ 1,579 $ 2,911 $ (1,102 ) $ 1,809 The following reflects intangible amortization expense included within D&A: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Amortization expense $ 78 $ 73 $ 230 $ 226 Goodwill In conjunction with integrating our Digital acquisitions, the implementation of ERP systems in the Digital segment and 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, SciPlay, 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 September 30, 2019 . Goodwill Gaming Lottery SciPlay Digital Totals Balance as of December 31, 2018 $ 2,449 $ 352 $ 115 $ 364 $ 3,280 Foreign currency adjustments (14 ) (4 ) — (11 ) (29 ) Balance as of September 30, 2019 $ 2,435 $ 348 $ 115 $ 353 $ 3,251 |
Software, net
Software, net | 9 Months Ended |
Sep. 30, 2019 | |
Capitalized Computer Software, Net [Abstract] | |
Software, net | Software, net Software, net consisted of the following: September 30, 2019 December 31, 2018 Software $ 1,184 $ 1,101 Accumulated amortization (914 ) (816 ) Software, net $ 270 $ 285 The following reflects amortization of software included within D&A: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Amortization expense $ 33 $ 42 $ 94 $ 123 |
Equity Investments
Equity Investments | 9 Months Ended |
Sep. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Investments | Equity Investments Equity investments total ed $266 million and $298 million as of September 30, 2019 and December 31, 2018 , respectively. We received distributions and dividends totaling $43 million and $49 million during the nine months ended September 30, 2019 and 2018 , respectively, primarily related to our LNS equity investment. |
Long-Term and Other Debt
Long-Term and Other Debt | 9 Months Ended |
Sep. 30, 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 paid related fees and expenses of the 2026 Unsecured Notes offering. 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 business entities comprising our SciPlay business segment 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. SciPlay Revolver SciPlay Holding, a subsidiary of SciPlay, entered into the SciPlay Revolver, a $150 million revolving credit agreement that matures in May 2024, 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 SciPlay business segment), the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent. 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 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, restricts SciPlay’s 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 and intercompany services under the SciPlay Parent LLC Operating Agreement. 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. Outstanding Debt and Finance Leases The following table reflects our outstanding debt: As of September 30, 2019 December 31, 2018 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: Revolver 2020 variable $ — $ — $ — $ 325 Term Loan B-5 2024 variable 4,112 (63 ) 4,049 4,071 SciPlay Revolver 2024 variable — — — — Senior Notes: 2025 Secured Notes (1) 2025 5.000% 1,250 (16 ) 1,234 1,233 2026 Secured Euro Notes (2) 2026 3.375% 355 (5 ) 350 367 2022 Unsecured Notes 2022 10.000% 1,200 (10 ) 1,190 2,176 2026 Unsecured Euro Notes (2) 2026 5.500% 273 (4 ) 269 282 2026 Unsecured Notes 2026 8.250% 1,100 (15 ) 1,085 — Subordinated Notes: 2020 Notes 2020 6.250% 244 (1 ) 243 242 2021 Notes 2021 6.625% 341 (2 ) 339 337 Finance lease obligations as of September 30, 2019 payable monthly through 2019 and other (3) 2019 3.900% 11 — 11 4 Total long-term debt outstanding $ 8,886 $ (116 ) $ 8,770 $ 9,037 Less: current portion of long-term debt (288 ) (45 ) Long-term debt, excluding current portion $ 8,482 $ 8,992 Fair value of debt (4) $ 9,056 (1) Includes cross-currency interest rate swap agreements that we entered into in 2018, which converted $460 million of 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). (2) 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 $85 million , of which gains of $19 million and $21 million were recognized on remeasurement of debt in the Consolidated Statements of Operations for the three and nine months ended September 30, 2019 , respectively. (3) Includes $9 million related to certain revenue transactions presented as debt in accordance with ASC 470. (4) 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. We were in compliance with the financial covenants under all debt agreements as of September 30, 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. Loss on Debt Financing Transactions The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for the nine months ended September 30, 2019 and 2018 , none of which were incurred during the three-month periods: Nine Months Ended September 30, 2019 2018 Repayment and cancellation of principal balance at premium $ 50 $ 110 Unamortized debt (premium) discount and deferred financing costs, net 10 (30 ) Third party debt issuance fees — 13 Total loss on debt financing transactions $ 60 $ 93 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 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 Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Gain (loss) recorded in accumulated other comprehensive loss, net of tax $ 3 $ 3 $ (13 ) $ 9 Interest expense recorded related to interest rate swap contracts — — — 2 We do no t expect to reclassify material amounts from Accumulated other comprehensive income (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: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest expense Interest expense Total interest expense which reflects the effects of cash flow hedges $ (146 ) $ (147 ) $ (447 ) $ (448 ) Hedged item (5 ) (5 ) (15 ) (12 ) Derivative designated as hedging instrument 5 4 15 9 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 income (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 September 30, 2019 December 31, 2018 Interest rate swaps (1)(3) Other liabilities $ 19 $ — Cross-currency interest rate swaps (2)(3) Other assets 55 18 (1) Losses of $2 million and $19 million for the three and nine months ended September 30, 2019, respectively, are reflected in Derivative financial instrument unrealized (loss) gain in Other comprehensive loss. (2) Gain of $26 million and $37 million for the three and nine months ended September 30, 2019, respectively, are reflected in Foreign currency translation gain (losses) in Other comprehensive loss. (3) Inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy. Net Investment Non-derivative Hedge - 2026 Secured Euro Notes We designated $180 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 loss, and the remaining remeasurement change is recognized in Gain (loss) on remeasurement of debt in our consolidated statements of operations. 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. 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 September 30, 2019 are $19 million of which $9 million is included in Accrued liabilities with the remainder included in Other long-term liabilities. Contingent consideration liabilities as of December 31, 2018 were $45 million of which $22 million was included in Accrued liabilities with the remainder included in Other long-term liabilities. We did not have assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2019 other than disclosed in Note 7. |
Stockholders' Deficit
Stockholders' Deficit | 9 Months Ended |
Sep. 30, 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 September 30, 2019 and September 30, 2018 : Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2019 $ 1 $ 835 $ (2,824 ) $ (175 ) $ (300 ) $ — $ (2,463 ) Net proceeds of common stock in connection with stock options and RSUs — 2 — — — — 2 Stock-based compensation — 11 — — — — 11 Net loss — — (24 ) — — — (24 ) Other comprehensive income — — — — 51 — 51 March 31, 2019 $ 1 $ 848 $ (2,848 ) $ (175 ) $ (249 ) $ — $ (2,423 ) Net proceeds of common stock in connection with stock options and RSUs and other — 2 — — — — 2 Sale of SciPlay common stock and related transactions — 328 — — — 91 419 Stock-based compensation — 9 — — — 1 10 Net loss — — (77 ) — — 2 (75 ) Other comprehensive loss — — — — (51 ) — (51 ) June 30, 2019 $ 1 $ 1,187 $ (2,925 ) $ (175 ) $ (300 ) $ 94 $ (2,118 ) Net proceeds of common stock in connection with stock options, RSUs and other — 1 — — — — 1 Stock-based compensation — 9 — — — — 9 Net income — — 14 — — 4 18 Other comprehensive loss — — — — (35 ) — (35 ) September 30, 2019 $ 1 $ 1,197 $ (2,911 ) $ (175 ) $ (335 ) $ 98 $ (2,125 ) Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Total January 1, 2018 $ 1 $ 808 $ (2,461 ) $ (175 ) $ (200 ) $ (2,027 ) Net proceeds of common stock in connection with stock options and RSUs — (15 ) — — — (15 ) Stock-based compensation — 7 — — — 7 Net loss — — (202 ) — — (202 ) Adoption impact of ASC 606 — — (11 ) — — (11 ) Other comprehensive income — — — — 52 52 March 31, 2018 $ 1 $ 800 $ (2,674 ) $ (175 ) $ (148 ) $ (2,196 ) Net proceeds of common stock in connection with stock options and RSUs — 2 — — — 2 Stock-based compensation — 15 — — — 15 Net loss — — (6 ) — — (6 ) Other comprehensive loss — — — — (83 ) (83 ) June 30, 2018 $ 1 $ 817 $ (2,680 ) $ (175 ) $ (231 ) $ (2,268 ) Net proceeds of common stock in connection with stock options and RSUs — (3 ) — — — (3 ) Stock-based compensation — 9 — — — 9 Net loss — — (352 ) — — (352 ) Other comprehensive loss — — — — (5 ) (5 ) September 30, 2018 $ 1 $ 823 $ (3,032 ) $ (175 ) $ (236 ) $ (2,619 ) SciPlay Stock Based Compensation During the second quarter of 2019, SciPlay adopted the SciPlay Long-Term Incentive Plan (“SciPlay LTIP”). The SciPlay LTIP authorizes the issuance of up to 6.5 million shares of SciPlay’s Class A common stock to be granted in connection with awards of incentive and nonqualified stock options, restricted stock and stock units, stock appreciation rights and performance-based awards. As of September 30, 2019 , there were 4.0 million of total time-based and performance-based SciPlay restricted stock units issued with an average grant price of $15.30 per share. The following reflects total stock-based compensation expense recognized under all programs: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Related to SGC stock options $ 1 $ 3 $ 4 $ 11 Related to SGC RSUs 6 7 23 23 Related to SciPlay RSUs 2 — 6 — Total $ 9 $ 10 $ 33 $ 34 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 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 certain of our U.S. operations as of September 30, 2019 . We also maintain other valuation allowances for certain non-U.S. jurisdictions with cumulative losses. The effective income tax rates for the three and nine months ended September 30, 2019 were (20)% and (11)% , respectively, and 0% and ( 1% ) for the three and nine months ended September 30, 2018 , 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 certain U.S. net deferred tax assets, the effective tax rates for the three and nine months ended September 30, 2019 and 2018 generally do not include the benefits of the U.S. tax losses; however, we recorded an overall tax benefit in continuing operations for the three months ended September 30, 2019 primarily as a result of other comprehensive income gains in certain of our U.S. operations, which continues to generate losses in continuing operations and maintain a full valuation allowance. The tax benefit in continuing operations is offset by a tax expense booked in other comprehensive income, pursuant to applicable intraperiod allocation rules. We recorded an overall tax expense for the nine months ended September 30, 2019 and 2018 due to foreign pre-tax earnings, and the change in effective tax rates related primarily to the overall mix of income in our foreign jurisdictions. |
Leases
Leases | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2019 were $9 million and $28 million , respectively, and were $8 million and $23 million for the three and nine months ended September 30, 2018 , respectively. The total amount of variable and short term lease payments were immaterial for all periods presented. Supplemental balance sheet and cash flow information related to operating leases is as follows: September 30, 2019 Operating lease right-of-use assets $ 107 Accrued liabilities 25 Operating lease liabilities 91 Total operating lease liabilities $ 116 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases for the nine months period $ 25 Weighted average remaining lease term, years 5 Weighted average discount rate 5 % Lease liability maturities: Remainder of 2019 2020 2021 2022 2023 Thereafter Less Imputed Interest Total Operating leases $ 8 $ 30 $ 26 $ 20 $ 15 $ 33 $ (16 ) $ 116 As of September 30, 2019 , we did not have material additional operating leases that have not yet commenced. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 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 $3 million and $4 million for all of our legal matters that were contingencies as of September 30, 2019 and December 31, 2018 , respectively. 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 $13 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, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. and South African patents. The plaintiffs allege that the 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 the plaintiffs advised that they intended to file an amended complaint. The plaintiffs filed their amended complaint on May 3, 2019, and on May 22, 2019, the defendants filed a motion to dismiss the plaintiffs’ amended complaint with prejudice, which has not yet been ruled upon by the district court. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible loss. SciPlay IPO Matter (New York) On or about October 14, 2019, the Police Retirement System of St. Louis filed a putative class action complaint in New York state court against SciPlay, certain of its executives and directors, and SciPlay’s underwriters with respect to its initial public offering. The plaintiff seeks to represent a class of all persons or entities who acquired Class A common stock of SciPlay pursuant and/or traceable to the Registration Statement filed and issued in connection with SciPlay’s initial public offering on or about May 3, 2019. The complaint asserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages of at least $144.7 million , and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible loss, if any. We believe that the claims in the lawsuit are without merit, and intend to vigorously defend against them. Sylebra Matter On October 23, 2019, Sylebra Capital Partners Master Fund, Limited and P Sylebra, Limited (together, “Sylebra”) filed a complaint in Delaware Chancery Court against SGC, Bally Gaming, Inc., and certain of SGC’s current and former executives and directors. The complaint asserts claims for alleged breaches of fiduciary duty and alleged aiding and abetting of such alleged breaches of fiduciary duty; for alleged unjust enrichment; for alleged anticipatory breach of Sylebra’s alleged rights under SGC’s prior Restated Certificate of Incorporation (“prior Charter”) and for alleged breach of that prior Charter; for alleged violations of certain Delaware statutes; and for alleged tortious interference with contract. The complaint seeks injunctive relief, declaratory relief, money damages, and the award of the plaintiffs’ costs and expenses incurred in the action. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit, and intend to vigorously defend against them. SciPlay IPO Matter (Nevada) On or about November 4, 2019, plaintiff John Good filed a putative class action complaint in Nevada state court against SciPlay, certain of its executives and directors, SGC, and SciPlay’s underwriters with respect to SciPlay’s initial public offering. The plaintiff seeks to represent a class of all persons who purchased Class A common stock of SciPlay in or traceable to SciPlay’s initial public offering that it completed on or about May 7, 2019. The complaint asserts claims for alleged violations of Sections 11 and 15 of the Securities Act, 15 U.S.C. § 77, and seeks certification of the putative class; compensatory damages, and the award of the plaintiff’s and the class’s reasonable costs and expenses incurred in the action. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit, and intend to vigorously defend against them. 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 | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 2019 and December 31, 2018 and for the three and nine months ended September 30, 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, the Guarantor Subsidiaries and the 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 September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Assets Cash and cash equivalents $ 194 $ — $ — $ 170 $ (1 ) $ 363 Restricted cash — 1 37 8 — 46 Accounts receivable, net — 105 193 338 — 636 Notes receivable, net — — 110 13 — 123 Inventories — 53 114 103 (13 ) 257 Prepaid expenses, deposits and other current assets 6 57 70 92 1 226 Property and equipment, net 32 95 223 197 (31 ) 516 Operating lease right-of-use asset 1 24 32 50 — 107 Investment in subsidiaries 3,147 992 1,162 — (5,301 ) — Goodwill — 240 1,897 1,114 — 3,251 Intangible assets, net 34 34 1,137 374 — 1,579 Intercompany balances — 5,871 70 — (5,941 ) — Software, net 59 36 98 77 — 270 Other assets (2) 105 436 45 385 (438 ) 533 Total assets $ 3,578 $ 7,944 $ 5,188 $ 2,921 $ (11,724 ) $ 7,907 Liabilities and stockholders’ (deficit) equity Current portion of long-term debt $ — $ 285 $ 2 $ 1 $ — $ 288 Other current liabilities 79 215 250 246 (33 ) 757 Long-term debt, excluding current portion — 8,474 8 — — 8,482 Operating lease liabilities 1 20 27 43 — 91 Other long-term liabilities 92 25 593 174 (470 ) 414 Intercompany balances 5,629 — — 312 (5,941 ) — Total SGC stockholders’ (deficit) equity (2,223 ) (1,075 ) 4,308 2,047 (5,280 ) (2,223 ) Noncontrolling interest — — — 98 — 98 Total liabilities and total stockholders’ (deficit) equity $ 3,578 $ 7,944 $ 5,188 $ 2,921 $ (11,724 ) $ 7,907 (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 ) — Total SGC stockholders’ (deficit) equity (2,463 ) (1,161 ) 4,252 1,797 (4,888 ) (2,463 ) Total liabilities and total stockholders’ (deficit) equity $ 3,158 $ 8,042 $ 5,186 $ 2,781 $ (11,449 ) $ 7,718 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Includes $12 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 139 $ 376 $ 419 $ (79 ) $ 855 Cost of services, cost of product sales and cost of instant products (2) — 93 119 170 (65 ) 317 SG&A 34 9 55 88 (11 ) 175 R&D — 1 22 24 — 47 D&A 16 8 99 44 (5 ) 162 Restructuring and other — 1 2 8 — 11 Operating (loss) income (50 ) 27 79 85 2 143 Interest expense — (146 ) — — — (146 ) Gain on remeasurement of debt — 19 — — — 19 Other income (expense), net 14 129 (117 ) (27 ) — (1 ) Net (loss) income before equity in income of subsidiaries and income taxes (36 ) 29 (38 ) 58 2 15 Equity in income of subsidiaries 36 9 22 — (67 ) — Income tax benefit (expense) 14 (8 ) 8 (11 ) — 3 Net income (loss) 14 30 (8 ) 47 (65 ) 18 Less: Net income attributable to noncontrolling interest — — — 4 — 4 Net income (loss) attributable to SGC $ 14 $ 30 $ (8 ) $ 43 $ (65 ) $ 14 Net income (loss) $ 14 $ 30 $ (8 ) $ 47 $ (65 ) $ 18 Other comprehensive (loss) income (35 ) 30 (1 ) (61 ) 32 (35 ) Total comprehensive (loss) income (21 ) 60 (9 ) (14 ) (33 ) (17 ) Less: comprehensive income attributable to noncontrolling interest — — — 4 — 4 Comprehensive (loss) income attributable to SGC $ (21 ) $ 60 $ (9 ) $ (18 ) $ (33 ) $ (21 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Excludes D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended September 30, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 138 $ 404 $ 361 $ (82 ) $ 821 Cost of services, cost of product sales and cost of instant products (2) — 90 119 160 (68 ) 301 SG&A 38 12 57 76 (13 ) 170 R&D — — 21 29 — 50 D&A 11 9 106 45 (5 ) 166 Restructuring and other 320 3 4 12 — 339 Operating (loss) income (369 ) 24 97 39 4 (205 ) Interest expense — (147 ) — — — (147 ) Gain on remeasurement of debt — (4 ) — — — (4 ) Other income (expense), net 16 130 (123 ) (19 ) — 4 Net (loss) income before equity in income of subsidiaries and income taxes (353 ) 3 (26 ) 20 4 (352 ) Equity in income (loss) of subsidiaries — 4 (10 ) — 6 — Income tax benefit (expense) 1 (1 ) 6 (6 ) — — Net (loss) income $ (352 ) $ 6 $ (30 ) $ 14 $ 10 $ (352 ) Other comprehensive (loss) income (5 ) 11 (10 ) (2 ) 1 (5 ) Comprehensive (loss) income $ (357 ) $ 17 $ (40 ) $ 12 $ 11 $ (357 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Excludes D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Nine Months Ended September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 444 $ 1,092 $ 1,211 $ (210 ) $ 2,537 Cost of services, cost of product sales and cost of instant products (2) — 288 329 498 (170 ) 945 SG&A 100 29 162 276 (32 ) 535 R&D — 3 64 75 — 142 D&A 40 33 302 136 (14 ) 497 Restructuring and other 2 2 5 15 — 24 Operating (loss) income (142 ) 89 230 211 6 394 Interest expense — (447 ) — — — (447 ) Loss on debt financing transactions — (60 ) — — — (60 ) Gain on remeasurement of debt — 21 — — — 21 Other income (expense), net 50 392 (360 ) (63 ) — 19 Net (loss) income before equity in income of subsidiaries and income taxes (92 ) (5 ) (130 ) 148 6 (73 ) Equity in income of subsidiaries 12 18 45 — (75 ) — Income tax (expense) benefit (7 ) 1 30 (32 ) — (8 ) Net (loss) income (87 ) 14 (55 ) 116 (69 ) (81 ) Less: Net income attributable to noncontrolling interest — — — 6 — 6 Net (loss) income attributable to SGC $ (87 ) $ 14 $ (55 ) $ 110 $ (69 ) $ (87 ) Net (loss) income $ (87 ) $ 14 $ (55 ) $ 116 $ (69 ) $ (81 ) Other comprehensive (loss) income (35 ) 24 (2 ) (56 ) 34 (35 ) Total comprehensive (loss) income (122 ) 38 (57 ) 60 (35 ) (116 ) Less: comprehensive income attributable to noncontrolling interest — — — 6 — 6 Comprehensive (loss) income attributable to SGC $ (122 ) $ 38 $ (57 ) $ 54 $ (35 ) $ (122 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Excludes D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Nine Months Ended September 30, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 404 $ 1,196 $ 1,107 $ (229 ) $ 2,478 Cost of services, cost of product sales and cost of instant products (2) — 263 369 472 (190 ) 914 SG&A 119 32 166 238 (40 ) 515 R&D — 1 66 85 1 153 D&A 32 24 339 143 (11 ) 527 Restructuring and other 375 — 8 42 (1 ) 424 Operating (loss) income (526 ) 84 248 127 12 (55 ) Interest expense — (448 ) — — — (448 ) Loss on debt financing transactions — (93 ) — — — (93 ) Gain on remeasurement of debt — 29 — — — 29 Other income (expense), net 49 399 (375 ) (59 ) — 14 Net (loss) income before equity in income of subsidiaries and income taxes (477 ) (29 ) (127 ) 68 12 (553 ) Equity in (loss) income of subsidiaries (60 ) 22 (17 ) — 55 — Income tax (expense) benefit (22 ) 7 27 (18 ) — (6 ) Net (loss) income $ (559 ) $ — $ (117 ) $ 50 $ 67 $ (559 ) Other comprehensive (loss) income (37 ) 23 (23 ) (48 ) 48 (37 ) Comprehensive (loss) income $ (596 ) $ 23 $ (140 ) $ 2 $ 115 $ (596 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Excludes D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Nine Months Ended September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (36 ) $ 77 $ 146 $ 216 $ — $ 403 Cash flows from investing activities: Capital expenditures (17 ) (22 ) (85 ) (83 ) — (207 ) Distributions of capital from equity investments — — — 18 — 18 Additions to equity method investments — (1 ) — — — (1 ) Other, principally change in intercompany investing activities — 268 (61 ) — (207 ) — Net cash (used in) provided by investing activities (17 ) 245 (146 ) (65 ) (207 ) (190 ) Cash flows from financing activities: Payments of long-term debt, net of proceeds — (306 ) — (2 ) — (308 ) Payments of debt issuance and deferred financing costs — (14 ) — (1 ) — (15 ) Payments on license obligations (20 ) (1 ) (5 ) — — (26 ) Sale of future revenue — — 11 — — 11 Net proceeds from the sale of SciPlay common stock — — — 342 — 342 Payments of deferred SciPlay common stock offering costs — — — (9 ) — (9 ) Net redemptions of common stock under stock-based compensation plans and other — (2 ) (2 ) (2 ) — (6 ) Other, principally change in intercompany financing activities 193 — — (400 ) 207 — Net cash provided by (used in) financing activities 173 (323 ) 4 (72 ) 207 (11 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — (1 ) — (1 ) Increase (decrease) in cash, cash equivalents and restricted cash 120 (1 ) 4 78 — 201 Cash, cash equivalents and restricted cash, beginning of period 74 2 44 101 (1 ) 220 Cash, cash equivalents and restricted cash, end of period $ 194 $ 1 $ 48 $ 179 $ (1 ) $ 421 (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 Nine Months Ended September 30, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (56 ) $ 30 $ 153 $ 231 $ (2 ) $ 356 Cash flows from investing activities: Capital expenditures (30 ) (57 ) (122 ) (84 ) — (293 ) Acquisitions of businesses and assets, net of cash acquired — — (10 ) (264 ) — (274 ) Distributions of capital from equity investments — — — 24 — 24 Additions to equity method investments — (2 ) — (74 ) — (76 ) Other, principally change in intercompany investing activities — 91 (15 ) — (76 ) — Net cash (used in) provided by investing activities (30 ) 32 (147 ) (398 ) (76 ) (619 ) Cash flows from financing activities: Proceeds net of payments on long-term debt — (24 ) — (6 ) — (30 ) Repayment of assumed NYX debt — — — (288 ) — (288 ) Payments of debt issuance and deferred financing costs — (39 ) — — — (39 ) Payments on license obligations (20 ) — (2 ) — — (22 ) Net redemptions of common stock under stock-based compensation plans and other (22 ) — (2 ) — — (24 ) Other, principally change in intercompany financing activities (565 ) — — 489 76 — Net cash (used in) provided by financing activities (607 ) (63 ) (4 ) 195 76 (403 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — (2 ) — (2 ) (Decrease) increase in cash, cash equivalents and restricted cash (693 ) (1 ) 2 26 (2 ) (668 ) Cash, cash equivalents and restricted cash, beginning of period 732 1 44 60 (3 ) 834 Cash, cash equivalents and restricted cash end of period $ 39 $ — $ 46 $ 86 $ (5 ) $ 166 (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) | 9 Months Ended |
Sep. 30, 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, 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 The 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 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 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. |
Revenue From Contract With Cust
Revenue From Contract With Customer (Policies) | 9 Months Ended |
Sep. 30, 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 sheets. 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, for such contracts revenue recognition under ASC 606 does not approximate conversion to cash. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Gaming Gaming operations $ 149 $ 159 $ 451 $ 481 Gaming machine sales 168 167 452 480 Gaming systems 77 70 218 229 Table products 60 52 182 172 Total $ 454 $ 448 $ 1,303 $ 1,362 Lottery Instant products $ 150 $ 142 $ 440 $ 442 Lottery systems 70 65 238 174 Total $ 220 $ 207 $ 678 $ 616 SciPlay Mobile $ 97 $ 83 $ 293 $ 232 Web and other 19 22 60 70 Total $ 116 $ 105 $ 353 $ 302 Digital Sports and platform $ 29 $ 21 $ 85 $ 67 Gaming and other 36 40 118 131 Total $ 65 $ 61 $ 203 $ 198 |
Summary of Balances in Receivables and Contract Asset Accounts | The following table summarizes the activity in our contract liabilities for the reporting period: Nine Months Ended September 30, 2019 Contract liability balance, beginning of period (1) $ 97 Liabilities recognized during the period 51 Amounts recognized in revenue from beginning balance (30 ) Contract liability balance, end of period (1) $ 118 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets. Receivables Contract Assets (1) Beginning of period balance $ 753 $ 114 End of period balance, September 30, 2019 811 136 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets. |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Operating Information by Segment | The following tables present our segment information: Three Months Ended September 30, 2019 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 454 $ 220 $ 116 $ 65 $ — $ 855 AEBITDA 226 99 32 17 (30 ) $ 344 Reconciling items to consolidated net income before income taxes: D&A (110 ) (14 ) (1 ) (18 ) (19 ) (162 ) Restructuring and other (5 ) — — (5 ) (1 ) (11 ) EBITDA from equity investments (15 ) (15 ) Earnings from equity investments 4 4 Interest expense (146 ) (146 ) Gain on remeasurement of debt 19 19 Other expense, net (9 ) (9 ) Stock-based compensation (9 ) (9 ) Net income before income taxes $ 15 (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 income before income taxes. Three Months Ended September 30, 2018 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 448 $ 207 $ 105 $ 61 $ — $ 821 AEBITDA 233 92 24 12 (35 ) $ 326 Reconciling items to consolidated net loss before income taxes: D&A (120 ) (15 ) (2 ) (16 ) (13 ) (166 ) Restructuring and other (4 ) (3 ) (9 ) (4 ) (319 ) (339 ) EBITDA from equity investments (14 ) (14 ) Earnings from equity investments 4 4 Interest expense (147 ) (147 ) Loss on remeasurement of debt (4 ) (4 ) Other expense, net (2 ) (2 ) Stock-based compensation (10 ) (10 ) Net loss before income taxes $ (352 ) (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. Nine Months Ended September 30, 2019 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 1,303 $ 678 $ 353 $ 203 $ — $ 2,537 AEBITDA (2) 656 306 90 42 (87 ) $ 1,007 Reconciling items to consolidated net loss before income taxes: D&A (336 ) (53 ) (5 ) (56 ) (47 ) (497 ) Restructuring and other (9 ) (1 ) (2 ) (9 ) (3 ) (24 ) EBITDA from equity investments (50 ) (50 ) Earnings from equity investments 17 17 Interest expense (447 ) (447 ) Loss on debt refinancing transactions (60 ) (60 ) Gain on remeasurement of debt 21 21 Other expense, net (7 ) (7 ) Stock-based compensation (33 ) (33 ) Net loss before income taxes $ (73 ) (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) Gaming AEBITDA decreased and SciPlay AEBITDA increased compared to prior periods as IP charges are no longer charged to SciPlay per the IP License Agreement discussed in Note 1. The nine months ended September 30, 2019 includes $10 million in such IP charges paid by the SciPlay business segment. Nine Months Ended September 30, 2018 Gaming Lottery SciPlay Digital Unallocated and Reconciling Items (1) Total Total revenue $ 1,362 $ 616 $ 302 $ 198 $ — $ 2,478 AEBITDA 686 286 70 42 (98 ) $ 986 Reconciling items to consolidated net loss before income taxes: D&A (380 ) (43 ) (15 ) (49 ) (40 ) (527 ) Restructuring and other (7 ) — (28 ) (14 ) (375 ) (424 ) EBITDA from equity investments (49 ) (49 ) Earnings from equity investments 16 16 Interest expense (448 ) (448 ) Loss on debt financing transactions (93 ) (93 ) Gain on remeasurement of debt 29 29 Other expense, net (9 ) (9 ) Stock-based compensation (34 ) (34 ) Net loss before income taxes $ (553 ) (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. |
Restructuring and other (Tables
Restructuring and other (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Employee severance (1) $ 3 $ 11 $ 8 $ 32 Acquisitions and related costs — — — 7 Contingent consideration adjustment — 8 2 26 Legal and related — 310 — 336 Restructuring, integration and other 8 10 14 23 Total $ 11 $ 339 $ 24 $ 424 (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) | 9 Months Ended |
Sep. 30, 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: September 30, 2019 December 31, 2018 Current: Accounts receivable $ 650 $ 615 Notes receivable 146 138 Allowance for doubtful accounts and notes (37 ) (40 ) Current accounts and notes receivable, net $ 759 $ 713 Long-term: Notes receivable, net of allowance 52 40 Total accounts and notes receivable, net $ 811 $ 753 |
Summary of Components of Notes Receivable, Net | The following summarizes the components of total notes receivable, net: September 30, 2019 Balances over 90 days past due December 31, 2018 Balances over 90 days past due Notes receivable: Domestic $ 84 $ 13 $ 55 $ 6 International 114 19 123 25 Total notes receivable 198 32 178 31 Notes receivable allowance Domestic (5 ) (5 ) (6 ) (6 ) International (18 ) (18 ) (18 ) (18 ) Total notes receivable allowance (23 ) (23 ) (24 ) (24 ) Notes receivable, net $ 175 $ 9 $ 154 $ 7 |
Schedule of Allowance for Notes Receivable Activity | The activity in our allowance for notes receivable for each of the nine month periods ended September 30, 2019 and 2018 is as follows: Nine Months Ended September 30, 2019 2018 Beginning allowance for notes receivable $ (24 ) $ (21 ) Provision (3 ) (4 ) Charge-offs and recoveries 4 2 Ending allowance for notes receivable $ (23 ) $ (23 ) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consisted of the following as of the dates presented below: September 30, 2019 December 31, 2018 Parts and work-in-process $ 154 $ 131 Finished goods 103 85 Total inventories $ 257 $ 216 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Components of Property and Equipment | Property and equipment, net consisted of the following: September 30, 2019 December 31, 2018 Land $ 20 $ 15 Buildings and leasehold improvements 152 128 Gaming and lottery machinery and equipment 1,023 1,041 Furniture and fixtures 29 27 Construction in progress 25 17 Other property and equipment 257 240 Less: accumulated depreciation (990 ) (921 ) Total property and equipment, net $ 516 $ 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 Nine Months Ended September 30, September 30, 2019 2018 2019 2018 (1) Depreciation expense $ 51 $ 51 $ 173 $ 178 (1) Includes assets held for sale impairment charges of $19 million. |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2019 and December 31, 2018 . September 30, 2019 December 31, 2018 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 1,077 $ (360 ) $ 717 $ 1,084 $ (299 ) $ 785 Intellectual property 924 (537 ) 387 931 (453 ) 478 Licenses 553 (315 ) 238 546 (253 ) 293 Brand names 123 (68 ) 55 123 (59 ) 64 Trade names 106 (28 ) 78 108 (23 ) 85 Patents and other 24 (14 ) 10 23 (13 ) 10 2,807 (1,322 ) 1,485 2,815 (1,100 ) 1,715 Non-amortizable intangible assets: Trade names 96 (2 ) 94 96 (2 ) 94 Total intangible assets $ 2,903 $ (1,324 ) $ 1,579 $ 2,911 $ (1,102 ) $ 1,809 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within D&A: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Amortization expense $ 78 $ 73 $ 230 $ 226 The following reflects amortization of software included within D&A: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Amortization expense $ 33 $ 42 $ 94 $ 123 |
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 September 30, 2019 . Goodwill Gaming Lottery SciPlay Digital Totals Balance as of December 31, 2018 $ 2,449 $ 352 $ 115 $ 364 $ 3,280 Foreign currency adjustments (14 ) (4 ) — (11 ) (29 ) Balance as of September 30, 2019 $ 2,435 $ 348 $ 115 $ 353 $ 3,251 |
Software, net (Tables)
Software, net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Capitalized Computer Software, Net [Abstract] | |
Schedule of Software, net | Software, net consisted of the following: September 30, 2019 December 31, 2018 Software $ 1,184 $ 1,101 Accumulated amortization (914 ) (816 ) Software, net $ 270 $ 285 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within D&A: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Amortization expense $ 78 $ 73 $ 230 $ 226 The following reflects amortization of software included within D&A: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Amortization expense $ 33 $ 42 $ 94 $ 123 |
Long-Term and Other Debt (Table
Long-Term and Other Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The following table reflects our outstanding debt: As of September 30, 2019 December 31, 2018 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: Revolver 2020 variable $ — $ — $ — $ 325 Term Loan B-5 2024 variable 4,112 (63 ) 4,049 4,071 SciPlay Revolver 2024 variable — — — — Senior Notes: 2025 Secured Notes (1) 2025 5.000% 1,250 (16 ) 1,234 1,233 2026 Secured Euro Notes (2) 2026 3.375% 355 (5 ) 350 367 2022 Unsecured Notes 2022 10.000% 1,200 (10 ) 1,190 2,176 2026 Unsecured Euro Notes (2) 2026 5.500% 273 (4 ) 269 282 2026 Unsecured Notes 2026 8.250% 1,100 (15 ) 1,085 — Subordinated Notes: 2020 Notes 2020 6.250% 244 (1 ) 243 242 2021 Notes 2021 6.625% 341 (2 ) 339 337 Finance lease obligations as of September 30, 2019 payable monthly through 2019 and other (3) 2019 3.900% 11 — 11 4 Total long-term debt outstanding $ 8,886 $ (116 ) $ 8,770 $ 9,037 Less: current portion of long-term debt (288 ) (45 ) Long-term debt, excluding current portion $ 8,482 $ 8,992 Fair value of debt (4) $ 9,056 (1) Includes cross-currency interest rate swap agreements that we entered into in 2018, which converted $460 million of 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). (2) 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 $85 million , of which gains of $19 million and $21 million were recognized on remeasurement of debt in the Consolidated Statements of Operations for the three and nine months ended September 30, 2019 , respectively. (3) Includes $9 million related to certain revenue transactions presented as debt in accordance with ASC 470. |
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 the nine months ended September 30, 2019 and 2018 , none of which were incurred during the three-month periods: Nine Months Ended September 30, 2019 2018 Repayment and cancellation of principal balance at premium $ 50 $ 110 Unamortized debt (premium) discount and deferred financing costs, net 10 (30 ) Third party debt issuance fees — 13 Total loss on debt financing transactions $ 60 $ 93 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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 Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Gain (loss) recorded in accumulated other comprehensive loss, net of tax $ 3 $ 3 $ (13 ) $ 9 Interest expense recorded related to interest rate swap contracts — — — 2 |
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: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest expense Interest expense Total interest expense which reflects the effects of cash flow hedges $ (146 ) $ (147 ) $ (447 ) $ (448 ) Hedged item (5 ) (5 ) (15 ) (12 ) Derivative designated as hedging instrument 5 4 15 9 |
Fair value of liabilities measured on recurring basis | The following table shows the fair value of our hedges: Balance Sheet Line Item September 30, 2019 December 31, 2018 Interest rate swaps (1)(3) Other liabilities $ 19 $ — Cross-currency interest rate swaps (2)(3) Other assets 55 18 (1) Losses of $2 million and $19 million for the three and nine months ended September 30, 2019, respectively, are reflected in Derivative financial instrument unrealized (loss) gain in Other comprehensive loss. (2) Gain of $26 million and $37 million for the three and nine months ended September 30, 2019, respectively, are reflected in Foreign currency translation gain (losses) in Other comprehensive loss. (3) Inputs used to measure the fair value of our interest rate swap contracts are categorized as Level 2 in the fair value hierarchy. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Schedule of Stockholders' Deficit | The following tables present certain information regarding our stockholders’ deficit as of September 30, 2019 and September 30, 2018 : Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2019 $ 1 $ 835 $ (2,824 ) $ (175 ) $ (300 ) $ — $ (2,463 ) Net proceeds of common stock in connection with stock options and RSUs — 2 — — — — 2 Stock-based compensation — 11 — — — — 11 Net loss — — (24 ) — — — (24 ) Other comprehensive income — — — — 51 — 51 March 31, 2019 $ 1 $ 848 $ (2,848 ) $ (175 ) $ (249 ) $ — $ (2,423 ) Net proceeds of common stock in connection with stock options and RSUs and other — 2 — — — — 2 Sale of SciPlay common stock and related transactions — 328 — — — 91 419 Stock-based compensation — 9 — — — 1 10 Net loss — — (77 ) — — 2 (75 ) Other comprehensive loss — — — — (51 ) — (51 ) June 30, 2019 $ 1 $ 1,187 $ (2,925 ) $ (175 ) $ (300 ) $ 94 $ (2,118 ) Net proceeds of common stock in connection with stock options, RSUs and other — 1 — — — — 1 Stock-based compensation — 9 — — — — 9 Net income — — 14 — — 4 18 Other comprehensive loss — — — — (35 ) — (35 ) September 30, 2019 $ 1 $ 1,197 $ (2,911 ) $ (175 ) $ (335 ) $ 98 $ (2,125 ) Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Total January 1, 2018 $ 1 $ 808 $ (2,461 ) $ (175 ) $ (200 ) $ (2,027 ) Net proceeds of common stock in connection with stock options and RSUs — (15 ) — — — (15 ) Stock-based compensation — 7 — — — 7 Net loss — — (202 ) — — (202 ) Adoption impact of ASC 606 — — (11 ) — — (11 ) Other comprehensive income — — — — 52 52 March 31, 2018 $ 1 $ 800 $ (2,674 ) $ (175 ) $ (148 ) $ (2,196 ) Net proceeds of common stock in connection with stock options and RSUs — 2 — — — 2 Stock-based compensation — 15 — — — 15 Net loss — — (6 ) — — (6 ) Other comprehensive loss — — — — (83 ) (83 ) June 30, 2018 $ 1 $ 817 $ (2,680 ) $ (175 ) $ (231 ) $ (2,268 ) Net proceeds of common stock in connection with stock options and RSUs — (3 ) — — — (3 ) Stock-based compensation — 9 — — — 9 Net loss — — (352 ) — — (352 ) Other comprehensive loss — — — — (5 ) (5 ) September 30, 2018 $ 1 $ 823 $ (3,032 ) $ (175 ) $ (236 ) $ (2,619 ) |
Schedule of Stock-based Compensation Expense Recognized | The following reflects total stock-based compensation expense recognized under all programs: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Related to SGC stock options $ 1 $ 3 $ 4 $ 11 Related to SGC RSUs 6 7 23 23 Related to SciPlay RSUs 2 — 6 — Total $ 9 $ 10 $ 33 $ 34 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Operating Lease Information | Supplemental balance sheet and cash flow information related to operating leases is as follows: September 30, 2019 Operating lease right-of-use assets $ 107 Accrued liabilities 25 Operating lease liabilities 91 Total operating lease liabilities $ 116 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases for the nine months period $ 25 Weighted average remaining lease term, years 5 Weighted average discount rate 5 % |
Maturities of Lease Liabilities | ease liability maturities: Remainder of 2019 2020 2021 2022 2023 Thereafter Less Imputed Interest Total Operating leases $ 8 $ 30 $ 26 $ 20 $ 15 $ 33 $ (16 ) $ 116 |
Financial Information for Gua_2
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Assets Cash and cash equivalents $ 194 $ — $ — $ 170 $ (1 ) $ 363 Restricted cash — 1 37 8 — 46 Accounts receivable, net — 105 193 338 — 636 Notes receivable, net — — 110 13 — 123 Inventories — 53 114 103 (13 ) 257 Prepaid expenses, deposits and other current assets 6 57 70 92 1 226 Property and equipment, net 32 95 223 197 (31 ) 516 Operating lease right-of-use asset 1 24 32 50 — 107 Investment in subsidiaries 3,147 992 1,162 — (5,301 ) — Goodwill — 240 1,897 1,114 — 3,251 Intangible assets, net 34 34 1,137 374 — 1,579 Intercompany balances — 5,871 70 — (5,941 ) — Software, net 59 36 98 77 — 270 Other assets (2) 105 436 45 385 (438 ) 533 Total assets $ 3,578 $ 7,944 $ 5,188 $ 2,921 $ (11,724 ) $ 7,907 Liabilities and stockholders’ (deficit) equity Current portion of long-term debt $ — $ 285 $ 2 $ 1 $ — $ 288 Other current liabilities 79 215 250 246 (33 ) 757 Long-term debt, excluding current portion — 8,474 8 — — 8,482 Operating lease liabilities 1 20 27 43 — 91 Other long-term liabilities 92 25 593 174 (470 ) 414 Intercompany balances 5,629 — — 312 (5,941 ) — Total SGC stockholders’ (deficit) equity (2,223 ) (1,075 ) 4,308 2,047 (5,280 ) (2,223 ) Noncontrolling interest — — — 98 — 98 Total liabilities and total stockholders’ (deficit) equity $ 3,578 $ 7,944 $ 5,188 $ 2,921 $ (11,724 ) $ 7,907 (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 ) — Total SGC stockholders’ (deficit) equity (2,463 ) (1,161 ) 4,252 1,797 (4,888 ) (2,463 ) Total liabilities and total stockholders’ (deficit) equity $ 3,158 $ 8,042 $ 5,186 $ 2,781 $ (11,449 ) $ 7,718 (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Includes $12 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively. |
Supplemental Condensed Consolidating Statement of Income | SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 139 $ 376 $ 419 $ (79 ) $ 855 Cost of services, cost of product sales and cost of instant products (2) — 93 119 170 (65 ) 317 SG&A 34 9 55 88 (11 ) 175 R&D — 1 22 24 — 47 D&A 16 8 99 44 (5 ) 162 Restructuring and other — 1 2 8 — 11 Operating (loss) income (50 ) 27 79 85 2 143 Interest expense — (146 ) — — — (146 ) Gain on remeasurement of debt — 19 — — — 19 Other income (expense), net 14 129 (117 ) (27 ) — (1 ) Net (loss) income before equity in income of subsidiaries and income taxes (36 ) 29 (38 ) 58 2 15 Equity in income of subsidiaries 36 9 22 — (67 ) — Income tax benefit (expense) 14 (8 ) 8 (11 ) — 3 Net income (loss) 14 30 (8 ) 47 (65 ) 18 Less: Net income attributable to noncontrolling interest — — — 4 — 4 Net income (loss) attributable to SGC $ 14 $ 30 $ (8 ) $ 43 $ (65 ) $ 14 Net income (loss) $ 14 $ 30 $ (8 ) $ 47 $ (65 ) $ 18 Other comprehensive (loss) income (35 ) 30 (1 ) (61 ) 32 (35 ) Total comprehensive (loss) income (21 ) 60 (9 ) (14 ) (33 ) (17 ) Less: comprehensive income attributable to noncontrolling interest — — — 4 — 4 Comprehensive (loss) income attributable to SGC $ (21 ) $ 60 $ (9 ) $ (18 ) $ (33 ) $ (21 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes. (2) Excludes D&A. SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME Three Months Ended September 30, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Revenue $ — $ 138 $ 404 $ 361 $ (82 ) $ 821 Cost of services, cost of product sales and cost of instant products (2) — 90 119 160 (68 ) 301 SG&A 38 12 57 76 (13 ) 170 R&D — — 21 29 — 50 D&A 11 9 106 45 (5 ) 166 Restructuring and other 320 3 4 12 — 339 Operating (loss) income (369 ) 24 97 39 4 (205 ) Interest expense — (147 ) — — — (147 ) Gain on remeasurement of debt — (4 ) — — — (4 ) Other income (expense), net 16 130 (123 ) (19 ) — 4 Net (loss) income before equity in income of subsidiaries and income taxes (353 ) 3 (26 ) 20 4 (352 ) Equity in income (loss) of subsidiaries — 4 (10 ) — 6 — Income tax benefit (expense) 1 (1 ) 6 (6 ) — — Net (loss) income $ (352 ) $ 6 $ (30 ) $ 14 $ 10 $ (352 ) Other comprehensive (loss) income (5 ) 11 (10 ) (2 ) 1 (5 ) Comprehensive (loss) income $ (357 ) $ 17 $ (40 ) $ 12 $ 11 $ (357 ) (1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes. (2) Excludes D&A. |
Supplemental Condensed Consolidating Statement of Cash Flows | SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Nine Months Ended September 30, 2019 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (36 ) $ 77 $ 146 $ 216 $ — $ 403 Cash flows from investing activities: Capital expenditures (17 ) (22 ) (85 ) (83 ) — (207 ) Distributions of capital from equity investments — — — 18 — 18 Additions to equity method investments — (1 ) — — — (1 ) Other, principally change in intercompany investing activities — 268 (61 ) — (207 ) — Net cash (used in) provided by investing activities (17 ) 245 (146 ) (65 ) (207 ) (190 ) Cash flows from financing activities: Payments of long-term debt, net of proceeds — (306 ) — (2 ) — (308 ) Payments of debt issuance and deferred financing costs — (14 ) — (1 ) — (15 ) Payments on license obligations (20 ) (1 ) (5 ) — — (26 ) Sale of future revenue — — 11 — — 11 Net proceeds from the sale of SciPlay common stock — — — 342 — 342 Payments of deferred SciPlay common stock offering costs — — — (9 ) — (9 ) Net redemptions of common stock under stock-based compensation plans and other — (2 ) (2 ) (2 ) — (6 ) Other, principally change in intercompany financing activities 193 — — (400 ) 207 — Net cash provided by (used in) financing activities 173 (323 ) 4 (72 ) 207 (11 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — (1 ) — (1 ) Increase (decrease) in cash, cash equivalents and restricted cash 120 (1 ) 4 78 — 201 Cash, cash equivalents and restricted cash, beginning of period 74 2 44 101 (1 ) 220 Cash, cash equivalents and restricted cash, end of period $ 194 $ 1 $ 48 $ 179 $ (1 ) $ 421 (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 Nine Months Ended September 30, 2018 SGC (Parent) SGI (Issuer 1 ) Guarantor Non-Guarantor Eliminating Consolidated Net cash (used in) provided by operating activities $ (56 ) $ 30 $ 153 $ 231 $ (2 ) $ 356 Cash flows from investing activities: Capital expenditures (30 ) (57 ) (122 ) (84 ) — (293 ) Acquisitions of businesses and assets, net of cash acquired — — (10 ) (264 ) — (274 ) Distributions of capital from equity investments — — — 24 — 24 Additions to equity method investments — (2 ) — (74 ) — (76 ) Other, principally change in intercompany investing activities — 91 (15 ) — (76 ) — Net cash (used in) provided by investing activities (30 ) 32 (147 ) (398 ) (76 ) (619 ) Cash flows from financing activities: Proceeds net of payments on long-term debt — (24 ) — (6 ) — (30 ) Repayment of assumed NYX debt — — — (288 ) — (288 ) Payments of debt issuance and deferred financing costs — (39 ) — — — (39 ) Payments on license obligations (20 ) — (2 ) — — (22 ) Net redemptions of common stock under stock-based compensation plans and other (22 ) — (2 ) — — (24 ) Other, principally change in intercompany financing activities (565 ) — — 489 76 — Net cash (used in) provided by financing activities (607 ) (63 ) (4 ) 195 76 (403 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — (2 ) — (2 ) (Decrease) increase in cash, cash equivalents and restricted cash (693 ) (1 ) 2 26 (2 ) (668 ) Cash, cash equivalents and restricted cash, beginning of period 732 1 44 60 (3 ) 834 Cash, cash equivalents and restricted cash end of period $ 39 $ — $ 46 $ 86 $ (5 ) $ 166 (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 Initial Public Offering - (Details) - USD ($) $ in Millions | May 07, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Document Period End Date | Sep. 30, 2019 | |||||||
Net proceeds from the sale of SciPlay common stock | $ 342 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ (2,125) | $ (2,118) | (2,125) | $ (2,463) | ||||
Proceeds from Lines of Credit | 40 | $ 185 | ||||||
IPO [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Debt Instrument, Fronting Fee | 0.125% | |||||||
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] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Letters of Credit Outstanding, Amount | $ 15 | 15 | ||||||
IPO [Member] | London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | ||||||||
Subsidiary, Sale of Stock [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] | ||||||||
Subsidiary, Sale of Stock [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] | ||||||||
Subsidiary, Sale of Stock [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] | ||||||||
Subsidiary, Sale of Stock [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] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | |||||||
IPO [Member] | Secured Debt [Member] | Revolving Credit Facility | SciPlay Revolver, Maturing 2024 [Member] [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Principal debt amount | $ 150 | 150 | ||||||
Additional Paid in Capital | IPO [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net proceeds from the sale of SciPlay common stock | $ 312 | 328 | ||||||
Noncontrolling Interest | IPO [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net proceeds from the sale of SciPlay common stock | $ 30 | $ 91 | ||||||
Subsidiaries [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ 98 | 98 | ||||||
Subsidiaries [Member] | IPO [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 18.00% | |||||||
Noncontrolling Interest, Ownership Percentage by Parent | 97.90% | |||||||
Income Tax Benefit, Percentage Realized | 85.00% | |||||||
Subsidiaries [Member] | IPO [Member] | Common Class B [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Noncontrolling Interest, Ownership Percentage By Parent, Threshold | 10.00% | |||||||
Noncontrolling Interest, Ownership Percentage by Parent | 82.00% | |||||||
Subsidiaries [Member] | IPO [Member] | Intellectual property | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Proceeds from Sale of Productive Assets | $ 255 | $ 7 | $ 10 | $ 19 | $ 26 | $ 24 |
Description of the Business a_4
Description of the Business and Summary of Significant Accounting Policies (Details) shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019shares | Sep. 30, 2018shares | Sep. 30, 2019Segmentshares | Sep. 30, 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) | 0 | 3 | 2 | 3 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities (in shares) | 3 | 3 | 3 | 3 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenue by Type (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Rental income revenue outside scope of new revenue standard | $ 91 | $ 66 | $ 282 | $ 202 |
Total revenue | 855 | 821 | 2,537 | 2,478 |
Instant products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 148 | 142 | 438 | 442 |
Gaming | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 454 | 448 | 1,362 | |
Gaming | Gaming operations | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 149 | 159 | 451 | 481 |
Gaming | Gaming machine sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 168 | 167 | 452 | 480 |
Gaming | Gaming systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 77 | 70 | 218 | 229 |
Gaming | Table products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 60 | 52 | 182 | 172 |
Lottery | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 220 | 207 | 616 | |
Lottery | Instant products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 150 | 142 | 440 | 442 |
Lottery | Lottery systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 70 | 65 | 238 | 174 |
SciPlay | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 116 | 105 | 353 | 302 |
SciPlay | Mobile | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 97 | 83 | 293 | 232 |
SciPlay | Web and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 19 | 22 | 60 | 70 |
Digital | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 65 | 61 | 198 | |
Digital | Sports and platform | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 29 | 21 | 85 | 67 |
Digital | Gaming and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 36 | $ 40 | $ 118 | $ 131 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue from External Customer [Line Items] | ||||
Rental income revenue outside scope of new revenue standard | $ 91 | $ 66 | $ 282 | $ 202 |
Amounts recognized in revenue | 30 | |||
Lottery | Instant products | Accounting Standards Update 2014-09 [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Amounts recognized in revenue | $ 20 | $ 26 | $ 69 | $ 84 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Contract Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Change In Contract Liabilities [Roll Forward] | ||||
Contract liability balance, beginning of period | $ 97 | |||
Liabilities recognized during the period | 51 | |||
Amounts recognized in revenue from beginning balance | (30) | |||
Contract liability balance, end of period | $ 118 | 118 | ||
Accounting Standards Update 2014-09 [Member] | Lottery | Instant products | ||||
Change In Contract Liabilities [Roll Forward] | ||||
Amounts recognized in revenue from beginning balance | $ (20) | $ (26) | $ (69) | $ (84) |
Revenue Recognition - Balances
Revenue Recognition - Balances in Receivables and Contract Asset Accounts (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 811 | $ 753 |
Contract Assets | $ 136 | $ 114 |
Business Segments - Additional
Business Segments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 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 | May 07, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | |||||||
Document Period End Date | Sep. 30, 2019 | ||||||
Total revenue | $ 855 | $ 821 | $ 2,537 | $ 2,478 | |||
AEBITDA | 344 | 326 | 1,007 | 986 | |||
Reconciling items to consolidated net income before income taxes: | |||||||
D&A | (162) | (166) | (497) | (527) | |||
Restructuring and other | (11) | (339) | (24) | (424) | |||
EBITDA from equity investments | (15) | (14) | (50) | (49) | |||
Earnings from equity investments | 4 | 4 | 17 | 16 | |||
Interest expense | (146) | (147) | (447) | (448) | |||
Gain (Loss) on Extinguishment of Debt | 0 | 0 | (60) | (93) | |||
Gain on remeasurement of debt | 19 | (4) | 21 | 29 | |||
Other expense, net | (9) | (2) | (7) | (9) | |||
Stock-based compensation | (9) | (10) | (33) | (34) | |||
Net (loss) income before equity in income of subsidiaries and income taxes | 15 | (352) | (73) | (553) | |||
Unallocated and Reconciling Items | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 0 | 0 | 0 | 0 | |||
AEBITDA | (30) | (35) | (87) | (98) | |||
Reconciling items to consolidated net income before income taxes: | |||||||
D&A | (19) | (13) | (47) | (40) | |||
Restructuring and other | (1) | (319) | (3) | (375) | |||
Gaming | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 454 | 448 | 1,362 | ||||
Gaming | Operating Segments | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 454 | 448 | 1,303 | 1,362 | |||
AEBITDA | 226 | 233 | 656 | 686 | |||
Reconciling items to consolidated net income before income taxes: | |||||||
D&A | (110) | (120) | (336) | (380) | |||
Restructuring and other | (5) | (4) | (9) | (7) | |||
Lottery | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 220 | 207 | 616 | ||||
Lottery | Operating Segments | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 220 | 207 | 678 | 616 | |||
AEBITDA | 99 | 92 | 306 | 286 | |||
Reconciling items to consolidated net income before income taxes: | |||||||
D&A | (14) | (15) | (53) | (43) | |||
Restructuring and other | 0 | (3) | (1) | 0 | |||
SciPlay | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 116 | 105 | 353 | 302 | |||
SciPlay | Operating Segments | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 116 | 105 | 353 | 302 | |||
AEBITDA | 32 | 24 | 90 | 70 | |||
Reconciling items to consolidated net income before income taxes: | |||||||
D&A | (1) | (2) | (5) | (15) | |||
Restructuring and other | 0 | (9) | (2) | (28) | |||
Digital | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 65 | 61 | 198 | ||||
Digital | Operating Segments | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenue | 65 | 61 | 203 | 198 | |||
AEBITDA | 17 | 12 | 42 | 42 | |||
Reconciling items to consolidated net income before income taxes: | |||||||
D&A | (18) | (16) | (56) | (49) | |||
Restructuring and other | $ (5) | (4) | (9) | (14) | |||
Subsidiaries [Member] | Intellectual property | IPO [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Proceeds from Sale of Productive Assets | $ 255 | $ 7 | $ 10 | $ 19 | $ 26 | $ 24 |
Restructuring and other (Detail
Restructuring and other (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | $ 11 | $ 339 | $ 24 | $ 424 |
Employee severance | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 3 | 11 | 8 | 32 |
Acquisitions and related costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 0 | 0 | 0 | 7 |
Contingent consideration adjustment | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 0 | 8 | 2 | 26 |
Legal and related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 0 | 310 | 0 | 336 |
Restructuring, integration and other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | $ 8 | $ 10 | $ 14 | $ 23 |
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 | Sep. 30, 2019 | Dec. 31, 2018 |
Current: | ||
Accounts receivable | $ 650 | $ 615 |
Notes receivable | 146 | 138 |
Allowance for doubtful accounts and notes | (37) | (40) |
Current accounts and notes receivable, net | 759 | 713 |
Long-term: | ||
Notes receivable, net of allowance | 52 | 40 |
Total accounts and notes receivable, net | $ 811 | $ 753 |
Accounts and Notes Receivable_4
Accounts and Notes Receivable and Credit Quality of Receivables - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | $ 811 | $ 753 |
Contractual term of notes receivable | 24 months | |
Notes receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | $ 175 | $ 154 |
Percentage of total notes receivable over 90 days past due | 5.00% | 4.00% |
Mexico | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | $ 26 | |
Proceeds from collection of accounts and notes receivable, net | 23 | |
Peru | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | 12 | |
Proceeds from collection of accounts and notes receivable, net | 5 | |
Argentina | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and notes receivable, net | 17 | |
Proceeds from collection of accounts and notes receivable, net | $ 15 | |
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 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Total accounts and notes receivable, net | $ 811 | $ 753 | ||
Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable | 198 | 178 | ||
Notes receivable allowance | (23) | (24) | $ (23) | $ (21) |
Total accounts and notes receivable, net | 175 | 154 | ||
Domestic | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable | 84 | 55 | ||
Notes receivable allowance | (5) | (6) | ||
International | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable | 114 | 123 | ||
Notes receivable allowance | (18) | (18) | ||
Balances over 90 days past due | Notes receivable | ||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||
Notes receivable over 90 days past due | 32 | 31 | ||
Notes receivable allowance for balances over 90 days past due | (23) | (24) | ||
Notes receivable, net, balances over 90 days past due | 9 | 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 | 13 | 6 | ||
Notes receivable allowance for balances over 90 days past due | (5) | (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 | 19 | 25 | ||
Notes receivable allowance for balances over 90 days past due | $ (18) | $ (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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Allowance for notes receivable | ||
Beginning allowance for notes receivable | $ (24) | $ (21) |
Provision | (3) | (4) |
Charge-offs and recoveries | 4 | 2 |
Ending allowance for notes receivable | $ (23) | $ (23) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Parts and work-in-process | $ 154 | $ 131 |
Finished goods | 103 | 85 |
Total inventories | $ 257 | $ 216 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||||||
Less: accumulated depreciation | $ (990) | $ (990) | $ (921) | |||
Total property and equipment, net | 516 | 516 | 547 | |||
Depreciation expense | 51 | $ 51 | 173 | $ 178 | ||
Impaired Long-Lived Assets Held and Used, Income Statement Classification | $ 27 | |||||
Impairment of Long-Lived Assets Held-for-use | $ 9 | |||||
Depreciation, amortization and impairments | 162 | $ 166 | 497 | $ 527 | ||
Land | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, gross | 20 | 20 | 15 | |||
Buildings and leasehold improvements | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, gross | 152 | 152 | 128 | |||
Gaming and lottery machinery and equipment | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, gross | 1,023 | 1,023 | 1,041 | |||
Furniture and fixtures | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, gross | 29 | 29 | 27 | |||
Construction in progress | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, gross | 25 | 25 | 17 | |||
Other property and equipment | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, gross | $ 257 | 257 | $ 240 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Depreciation, amortization and impairments | $ 19 |
Intangible Assets, net and Go_3
Intangible Assets, net and Goodwill - Schedule of Finite and Indefinite-lived Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | $ 2,807 | $ 2,815 |
Amortizable intangible assets, accumulated amortization | (1,322) | (1,100) |
Amortizable intangible assets, net balance | 1,485 | 1,715 |
Non-amortizable intangible assets: | ||
Total intangible assets, gross carrying value | 2,903 | 2,911 |
Total intangible assets, accumulated amortization (excluding goodwill) | (1,324) | (1,102) |
Total intangible assets, net | 1,579 | 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 | 1,077 | 1,084 |
Amortizable intangible assets, accumulated amortization | (360) | (299) |
Amortizable intangible assets, net balance | 717 | 785 |
Intellectual property | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 924 | 931 |
Amortizable intangible assets, accumulated amortization | (537) | (453) |
Amortizable intangible assets, net balance | 387 | 478 |
Licenses | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 553 | 546 |
Amortizable intangible assets, accumulated amortization | (315) | (253) |
Amortizable intangible assets, net balance | 238 | 293 |
Brand names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 123 | 123 |
Amortizable intangible assets, accumulated amortization | (68) | (59) |
Amortizable intangible assets, net balance | 55 | 64 |
Trade names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 106 | 108 |
Amortizable intangible assets, accumulated amortization | (28) | (23) |
Amortizable intangible assets, net balance | 78 | 85 |
Patents and other | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 24 | 23 |
Amortizable intangible assets, accumulated amortization | (14) | (13) |
Amortizable intangible assets, net balance | $ 10 | $ 10 |
Intangible Assets, net and Go_4
Intangible Assets, net and Goodwill - Intangible Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 78 | $ 73 | $ 230 | $ 226 |
Intangible Assets, net and Go_5
Intangible Assets, net and Goodwill - Reconciliation of the Carrying Amount of Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 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 | (29) |
Balance at the end of the period | 3,251 |
Gaming | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 2,449 |
Foreign currency adjustments | (14) |
Balance at the end of the period | 2,435 |
Lottery | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 352 |
Foreign currency adjustments | (4) |
Balance at the end of the period | 348 |
SciPlay | |
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 | (11) |
Balance at the end of the period | 353 |
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 | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Capitalized Computer Software, Net [Abstract] | |||||
Software | $ 1,184 | $ 1,184 | $ 1,101 | ||
Accumulated amortization | (914) | (914) | (816) | ||
Software, net | 270 | 270 | $ 285 | ||
Amortization expense | $ 33 | $ 42 | $ 94 | $ 123 |
Equity Investments (Details)
Equity Investments (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |||
Equity investments | $ 266 | $ 298 | |
Distributed earnings from equity investments | $ 43 | $ 49 |
Long-Term and Other Debt - Addi
Long-Term and Other Debt - Additional Information (Details) - USD ($) | Mar. 19, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Debt Instrument | |||||
Document Period End Date | Sep. 30, 2019 | ||||
Gain (Loss) on Extinguishment of Debt | $ 0 | $ 0 | $ (60,000,000) | $ (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 | ||||
IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Line of Credit Facility, Commitment Fee Percentage | 0.50% | ||||
Debt Instrument, Leverage Ratio | 0.375% | ||||
Debt Instrument, Fronting Fee | 0.125% | ||||
IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Letter of Credit [Member] | |||||
Debt Instrument | |||||
Letters of Credit Outstanding, Amount | $ 15,000,000 | 15,000,000 | |||
IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Principal debt amount | $ 150,000,000 | $ 150,000,000 | |||
London Interbank Offered Rate (LIBOR) [Member] | IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | ||||
London Interbank Offered Rate (LIBOR), Leveraged Base Step Down [Member] | IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | ||||
London Interbank Offered Rate (LIBOR), Leveraged Base Step Up [Member] | IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | ||||
Base Rate [Member] | IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | ||||
Base Rate, Step Down [Member] | IPO [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% |
Long-Term and Other Debt - Sche
Long-Term and Other Debt - Schedule of Outstanding Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2019 | Mar. 19, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | |
Debt Instrument | |||||
Document Period End Date | Sep. 30, 2019 | ||||
Face value | $ 8,886,000,000 | $ 8,886,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (116,000,000) | (116,000,000) | |||
Total long-term debt outstanding | 8,770,000,000 | 8,770,000,000 | $ 9,037,000,000 | ||
Less: current portion of long-term debt | (288,000,000) | (288,000,000) | (45,000,000) | ||
Long-term debt, excluding current portion | 8,482,000,000 | 8,482,000,000 | 8,992,000,000 | ||
Fair value of debt | 9,056,000,000 | 9,056,000,000 | |||
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 | 85,000,000 | ||||
Gain (loss) on remeasurement of debt | $ 19,000,000 | $ 21,000,000 | |||
Senior Notes | 2025 Secured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 5.00% | 5.00% | 2.946% | ||
Face value | $ 1,250,000,000 | $ 1,250,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (16,000,000) | (16,000,000) | |||
Total long-term debt outstanding | $ 1,234,000,000 | $ 1,234,000,000 | 1,233,000,000 | ||
Principal debt amount | $ 460,000,000 | ||||
Senior Notes | 2026 Secured Euro Notes | |||||
Debt Instrument | |||||
Debt interest rate | 3.375% | 3.375% | |||
Face value | $ 355,000,000 | $ 355,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (5,000,000) | (5,000,000) | |||
Total long-term debt outstanding | $ 350,000,000 | $ 350,000,000 | 367,000,000 | ||
Senior Notes | 2022 Unsecured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 10.00% | 10.00% | |||
Face value | $ 1,200,000,000 | $ 1,200,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (10,000,000) | (10,000,000) | |||
Total long-term debt outstanding | $ 1,190,000,000 | $ 1,190,000,000 | 2,176,000,000 | ||
Senior Notes | 2026 Unsecured Euro Notes | |||||
Debt Instrument | |||||
Debt interest rate | 5.50% | 5.50% | |||
Face value | $ 273,000,000 | $ 273,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (4,000,000) | (4,000,000) | |||
Total long-term debt outstanding | $ 269,000,000 | $ 269,000,000 | 282,000,000 | ||
Senior Notes | 2026 Unsecured Notes | |||||
Debt Instrument | |||||
Debt interest rate | 8.25% | 8.25% | |||
Face value | $ 1,100,000,000 | $ 1,100,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (15,000,000) | (15,000,000) | |||
Total long-term debt outstanding | $ 1,085,000,000 | $ 1,085,000,000 | 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% | 6.25% | |||
Face value | $ 244,000,000 | $ 244,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (1,000,000) | (1,000,000) | |||
Total long-term debt outstanding | $ 243,000,000 | $ 243,000,000 | 242,000,000 | ||
Subordinated Notes | 2021 Notes | |||||
Debt Instrument | |||||
Debt interest rate | 6.625% | 6.625% | |||
Face value | $ 341,000,000 | $ 341,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (2,000,000) | (2,000,000) | |||
Total long-term debt outstanding | 339,000,000 | 339,000,000 | 337,000,000 | ||
Subordinated Notes | Capital lease obligations as of March 31, 2019 payable monthly through 2019 and other | |||||
Debt Instrument | |||||
Face value | 11,000,000 | 11,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | 0 | |||
Total long-term debt outstanding | $ 11,000,000 | $ 11,000,000 | |||
Capital Lease Obligations | Capital lease obligations as of March 31, 2019 payable monthly through 2019 and other | |||||
Debt Instrument | |||||
Debt interest rate | 3.90% | 3.90% | |||
Total long-term debt outstanding | 4,000,000 | ||||
Revenue transactions presented as debt | $ 9,000,000 | $ 9,000,000 | |||
Revolving Credit Facility [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument | |||||
Face value | 0 | 0 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | 0 | |||
Total long-term debt outstanding | 0 | 0 | 325,000,000 | ||
Revolving Credit Facility [Member] | Secured Debt [Member] | Term Loan B-5 | |||||
Debt Instrument | |||||
Face value | 4,112,000,000 | 4,112,000,000 | |||
Unamortized debt discount/premium and deferred financing costs, net | (63,000,000) | (63,000,000) | |||
Total long-term debt outstanding | 4,049,000,000 | 4,049,000,000 | |||
Revolving Credit Facility [Member] | Secured Debt [Member] | SciPlay Revolver, Maturing 2024 [Member] [Member] | |||||
Debt Instrument | |||||
Face value | 0 | 0 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | 0 | |||
Total long-term debt outstanding | $ 0 | $ 0 | 0 | ||
Term Loan Facility | Secured Debt [Member] | Term Loan B-5 | |||||
Debt Instrument | |||||
Total long-term debt outstanding | $ 4,071,000,000 |
Long-Term and Other Debt - Loss
Long-Term and Other Debt - Loss on Debt Financing Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt Disclosure [Abstract] | ||||
Repayment and cancellation of principal balance at premium | $ 50 | $ 110 | ||
Unamortized debt (premium) discount and deferred financing costs, net | 10 | (30) | ||
Third party debt issuance fees | 0 | 13 | ||
Total loss on debt financing transactions | $ 0 | $ 0 | $ 60 | $ 93 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | |
Derivative [Line Items] | |||
Amount expected to be reclassified during next 12 months | $ 0 | ||
Contingent consideration | 19,000,000 | $ 45,000,000 | |
Accrued Liabilities | |||
Derivative [Line Items] | |||
Contingent consideration | $ 9,000,000 | $ 22,000,000 | |
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 | $ 180,000,000 | ||
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 | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recorded in accumulated other comprehensive loss, net of tax | $ (5) | $ (4) | $ (15) | $ (9) |
Interest rate swap | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recorded in accumulated other comprehensive loss, net of tax | 3 | 3 | (13) | 9 |
Interest expense recorded related to interest rate swap contracts | $ 0 | $ 0 | $ 0 | $ 2 |
Fair Value Measurements - Effec
Fair Value Measurements - Effect of Interest Rate Swap Contracts (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Total interest expense which reflects the effects of cash flow hedges | $ (146) | $ (147) | $ (447) | $ (448) |
Hedged item | (5) | (5) | (15) | (12) |
Derivative designated as hedging instrument | $ 5 | $ 4 | $ 15 | $ 9 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | |||||
Gain (loss) recorded in other comprehensive income | $ (5) | $ (4) | $ (15) | $ (9) | |
Interest rate swap | |||||
Derivatives, Fair Value [Line Items] | |||||
Gain (loss) recorded in other comprehensive income | 3 | $ 3 | (13) | $ 9 | |
Interest rate swap | Other liabilities | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative fair value | 19 | 19 | $ 0 | ||
Gain (loss) recorded in other comprehensive income | 2 | 19 | |||
Interest rate swap | Other assets | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative fair value | 55 | 55 | $ 18 | ||
Cross-currency interest rate swaps | Other assets | |||||
Derivatives, Fair Value [Line Items] | |||||
Gain (loss) recorded in other comprehensive income | $ (26) | $ (37) |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | May 07, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | $ (2,223) | $ (2,423) | $ (2,619) | $ (2,196) | $ (2,268) | $ (2,223) | $ (2,619) | $ (2,463) | $ (2,027) | ||
Net proceeds of common stock in connection with stock options and RSUs | 1 | 2 | 3 | 15 | $ 2 | (2) | |||||
Net proceeds from the sale of SciPlay common stock | 342 | ||||||||||
Gain (Loss) on Disposition of Stock in Subsidiary | 419 | ||||||||||
Stock-based compensation | 9 | 11 | 9 | 7 | 10 | 15 | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 18 | (352) | (75) | (81) | (559) | ||||||
Net Income (Loss) Attributable to Parent | 14 | (24) | (352) | (202) | (77) | (6) | (87) | (559) | |||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 4 | 0 | 2 | 6 | 0 | ||||||
Net Income (Loss) Attributable to Noncontrolling Interest | 4 | 6 | |||||||||
Other comprehensive loss | (35) | 51 | (5) | 52 | (51) | (83) | (37) | ||||
Common Stock, Value, Outstanding | 1 | 1 | 1 | 1 | |||||||
Additional Paid in Capital, Common Stock | 1,197 | 1,187 | 1,197 | 835 | |||||||
Retained Earnings (Accumulated Deficit) | (2,911) | (2,925) | (2,911) | (2,824) | |||||||
Treasury Stock, Value | 175 | 175 | 175 | 175 | |||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (335) | (300) | (335) | (300) | |||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 98 | 94 | 98 | 0 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (2,125) | (2,118) | (2,125) | (2,463) | |||||||
Share-based compensation expense | 9 | 10 | 33 | 34 | |||||||
Related to SGC stock options | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Share-based compensation expense | 1 | 3 | 4 | 11 | |||||||
Related to SGC RSUs | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Share-based compensation expense | 6 | 7 | 23 | 23 | |||||||
Common Stock | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | 1 | 1 | 1 | 1 | 1 | 1 | 1 | ||||
Additional Paid in Capital | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | 848 | 823 | 800 | 817 | 823 | 835 | 808 | ||||
Net proceeds of common stock in connection with stock options and RSUs | 1 | 2 | (3) | (15) | 2 | 2 | |||||
Stock-based compensation | 9 | 11 | 9 | 7 | 9 | 15 | |||||
Accumulated Loss | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | (2,848) | (3,032) | (2,674) | (2,680) | (3,032) | (2,824) | (2,461) | ||||
Net Income (Loss) Attributable to Parent | (24) | (352) | (202) | (6) | |||||||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | (11) | ||||||||||
Treasury Stock | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | (175) | (175) | (175) | (175) | (175) | (175) | (175) | ||||
Accumulated Other Comprehensive Loss | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | (249) | (236) | (148) | (231) | (236) | (300) | (200) | ||||
Other comprehensive loss | (35) | 51 | (5) | $ 52 | (51) | $ (83) | |||||
Noncontrolling Interest | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Stock-based compensation | 1 | ||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 0 | $ 0 | |||||||||
Accounting Standards Update 2014-09 [Member] | 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) | ||||||||||
SciPlay | Related to SGC RSUs | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Share-based compensation expense | $ 2 | $ 0 | $ 6 | $ 0 | |||||||
IPO [Member] | Additional Paid in Capital | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net proceeds from the sale of SciPlay common stock | $ 312 | 328 | |||||||||
IPO [Member] | Noncontrolling Interest | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net proceeds from the sale of SciPlay common stock | $ 30 | $ 91 | |||||||||
SciPlay Corporation Long-Term Incentive Plan [Member] [Domain] | Common Class A [Member] | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 6.5 | 6.5 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 4 | 4 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $ 15.30 | $ 15.30 |
Stockholders' Deficit stockhold
Stockholders' Deficit stockholders' equity (Details) - USD ($) $ in Millions | May 07, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Common Stock, Value, Outstanding | $ 1 | $ 1 | $ 1 | $ 1 | |||||||
Additional Paid in Capital, Common Stock | 1,197 | 1,187 | 1,197 | 835 | |||||||
Retained Earnings (Accumulated Deficit) | (2,911) | (2,925) | (2,911) | (2,824) | |||||||
Treasury Stock, Value | 175 | 175 | 175 | 175 | |||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax | (335) | (300) | (335) | (300) | |||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 98 | 94 | 98 | 0 | |||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (2,125) | (2,118) | (2,125) | (2,463) | |||||||
Total liabilities and total stockholders’ (deficit) equity | (2,223) | $ (2,423) | $ (2,619) | $ (2,196) | $ (2,268) | (2,223) | $ (2,619) | (2,463) | $ (2,027) | ||
Redemption Premium | (1) | (2) | (3) | (15) | (2) | 2 | |||||
Stock-based compensation | 9 | 11 | 9 | 7 | 10 | 15 | |||||
Net Income (Loss) Attributable to Parent | 14 | (24) | (352) | (202) | (77) | (6) | (87) | (559) | |||
Other comprehensive loss | (35) | 51 | (5) | 52 | (51) | (83) | (37) | ||||
Net proceeds from the sale of SciPlay common stock | 342 | ||||||||||
Gain (Loss) on Disposition of Stock in Subsidiary | 419 | ||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 4 | 0 | 2 | 6 | 0 | ||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 18 | (352) | (75) | $ (81) | (559) | ||||||
Common Stock | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | 1 | 1 | 1 | 1 | 1 | 1 | 1 | ||||
Additional Paid in Capital | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | 848 | 823 | 800 | 817 | 823 | 835 | 808 | ||||
Redemption Premium | (1) | (2) | 3 | 15 | (2) | (2) | |||||
Stock-based compensation | 9 | 11 | 9 | 7 | 9 | 15 | |||||
Accumulated Loss | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | (2,848) | (3,032) | (2,674) | (2,680) | (3,032) | (2,824) | (2,461) | ||||
Net Income (Loss) Attributable to Parent | (24) | (352) | (202) | (6) | |||||||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | (11) | ||||||||||
Accumulated Loss | Accounting Standards Update 2014-09 [Member] | |||||||||||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | (11) | ||||||||||
Treasury Stock | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | (175) | (175) | (175) | (175) | (175) | (175) | (175) | ||||
Accumulated Other Comprehensive Loss | |||||||||||
Total liabilities and total stockholders’ (deficit) equity | (249) | (236) | (148) | (231) | $ (236) | (300) | $ (200) | ||||
Other comprehensive loss | $ (35) | 51 | $ (5) | $ 52 | (51) | $ (83) | |||||
Noncontrolling Interest | |||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 0 | $ 0 | |||||||||
Stock-based compensation | 1 | ||||||||||
IPO [Member] | Additional Paid in Capital | |||||||||||
Net proceeds from the sale of SciPlay common stock | $ 312 | 328 | |||||||||
IPO [Member] | Noncontrolling Interest | |||||||||||
Net proceeds from the sale of SciPlay common stock | $ 30 | $ 91 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rates | (20.00%) | 0.00% | (11.00%) | 1.00% |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Range [Axis] [Line Items] | |||||
Operating Lease, Weighted Average Remaining Lease Term | 5 years | 5 years | |||
Lease extension option | 5 years | ||||
Option to terminate period | 1 year | ||||
Document Period End Date | Sep. 30, 2019 | ||||
Operating lease expenses | $ 9 | $ 8 | $ 28 | $ 23 | |
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 | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||
Document Period End Date | Sep. 30, 2019 | |
Operating lease right-of-use assets | $ 107 | $ 0 |
Accrued liabilities | 25 | |
Operating lease liabilities | 91 | $ 0 |
Operating lease liabilities | 116 | |
Operating Lease, Right-of-Use Asset, in Exchange for Lease Obligations | 7 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases for the nine months period | $ 25 | |
Operating Lease, Weighted Average Remaining Lease Term | 5 years | |
Weighted average discount rate | 5.00% |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 8 |
2020 | 30 |
2021 | 26 |
2022 | 20 |
2023 | 15 |
Thereafter | 33 |
Less Imputed Interest | (16) |
Total | $ 116 |
Litigation (Details)
Litigation (Details) - USD ($) $ in Millions | Oct. 14, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Range [Axis] [Line Items] | |||
Loss contingency accrual | $ 3 | $ 4 | |
Document Period End Date | Sep. 30, 2019 | ||
Contractual penalty | $ 13 | ||
Subsequent Event [Member] | SciPlay IPO Matter [Member] | |||
Range [Axis] [Line Items] | |||
Loss Contingency, Damages Sought, Value | $ 144.7 |
Financial Information for Gua_3
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries - Supplemental Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||||||||
Cash and cash equivalents | $ 363 | $ 168 | ||||||
Restricted cash | 46 | 39 | ||||||
Accounts receivable, net | 636 | 599 | ||||||
Notes receivable, net | 123 | 114 | ||||||
Inventories | 257 | 216 | ||||||
Prepaid expenses, deposits and other current assets | 226 | 233 | ||||||
Property and equipment, net | 516 | 547 | ||||||
Operating lease right-of-use assets | 107 | 0 | ||||||
Investment in subsidiaries | 0 | 0 | ||||||
Goodwill | 3,251 | 3,280 | ||||||
Intangible assets, net | 1,579 | 1,809 | ||||||
Intercompany balances | 0 | 0 | ||||||
Software, net | 270 | 285 | ||||||
Other assets | 533 | 428 | ||||||
Total assets | 7,907 | 7,718 | ||||||
Liabilities and stockholders’ (deficit) equity | ||||||||
Current portion of long-term debt | 288 | 45 | ||||||
Other current liabilities | 757 | 702 | ||||||
Long-term debt, excluding current portion | 8,482 | 8,992 | ||||||
Operating lease liabilities | 91 | 0 | ||||||
Other long-term liabilities | 414 | 442 | ||||||
Intercompany balances | 0 | 0 | ||||||
Total liabilities and total stockholders’ (deficit) equity | (2,223) | $ (2,423) | (2,463) | $ (2,619) | $ (2,268) | $ (2,196) | $ (2,027) | |
Stockholders' Equity Attributable to Noncontrolling Interest | 98 | $ 94 | 0 | |||||
Total liabilities and total stockholders’ (deficit) equity | 7,907 | 7,718 | ||||||
Non-current restricted cash | 12 | 13 | ||||||
Reportable Legal Entities | SGI (Issuer) | ||||||||
Assets | ||||||||
Cash and cash equivalents | 0 | 1 | ||||||
Restricted cash | 1 | 1 | ||||||
Accounts receivable, net | 105 | 79 | ||||||
Notes receivable, net | 0 | 0 | ||||||
Inventories | 53 | 40 | ||||||
Prepaid expenses, deposits and other current assets | 57 | 63 | ||||||
Property and equipment, net | 95 | 112 | ||||||
Operating lease right-of-use assets | 24 | |||||||
Investment in subsidiaries | 992 | 975 | ||||||
Goodwill | 240 | 240 | ||||||
Intangible assets, net | 34 | 34 | ||||||
Intercompany balances | 5,871 | 6,054 | ||||||
Software, net | 36 | 39 | ||||||
Other assets | 436 | 404 | ||||||
Total assets | 7,944 | 8,042 | ||||||
Liabilities and stockholders’ (deficit) equity | ||||||||
Current portion of long-term debt | 285 | 42 | ||||||
Other current liabilities | 215 | 162 | ||||||
Long-term debt, excluding current portion | 8,474 | 8,991 | ||||||
Operating lease liabilities | 20 | |||||||
Other long-term liabilities | 25 | 8 | ||||||
Intercompany balances | 0 | 0 | ||||||
Total liabilities and total stockholders’ (deficit) equity | (1,075) | (1,161) | ||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 0 | |||||||
Total liabilities and total stockholders’ (deficit) equity | 7,944 | 8,042 | ||||||
Reportable Legal Entities | SGC (Parent) | ||||||||
Assets | ||||||||
Cash and cash equivalents | 194 | 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 | 6 | 6 | ||||||
Property and equipment, net | 32 | 31 | ||||||
Operating lease right-of-use assets | 1 | |||||||
Investment in subsidiaries | 3,147 | 2,836 | ||||||
Goodwill | 0 | 0 | ||||||
Intangible assets, net | 34 | 43 | ||||||
Intercompany balances | 0 | 0 | ||||||
Software, net | 59 | 58 | ||||||
Other assets | 105 | 110 | ||||||
Total assets | 3,578 | 3,158 | ||||||
Liabilities and stockholders’ (deficit) equity | ||||||||
Current portion of long-term debt | 0 | 0 | ||||||
Other current liabilities | 79 | 64 | ||||||
Long-term debt, excluding current portion | 0 | 0 | ||||||
Operating lease liabilities | 1 | |||||||
Other long-term liabilities | 92 | 106 | ||||||
Intercompany balances | 5,629 | 5,451 | ||||||
Total liabilities and total stockholders’ (deficit) equity | (2,223) | (2,463) | ||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 0 | |||||||
Total liabilities and total stockholders’ (deficit) equity | 3,578 | 3,158 | ||||||
Reportable Legal Entities | Guarantor Subsidiaries | ||||||||
Assets | ||||||||
Cash and cash equivalents | 0 | 0 | ||||||
Restricted cash | 37 | 32 | ||||||
Accounts receivable, net | 193 | 205 | ||||||
Notes receivable, net | 110 | 101 | ||||||
Inventories | 114 | 82 | ||||||
Prepaid expenses, deposits and other current assets | 70 | 92 | ||||||
Property and equipment, net | 223 | 219 | ||||||
Operating lease right-of-use assets | 32 | |||||||
Investment in subsidiaries | 1,162 | 1,093 | ||||||
Goodwill | 1,897 | 1,897 | ||||||
Intangible assets, net | 1,137 | 1,291 | ||||||
Intercompany balances | 70 | 0 | ||||||
Software, net | 98 | 128 | ||||||
Other assets | 45 | 46 | ||||||
Total assets | 5,188 | 5,186 | ||||||
Liabilities and stockholders’ (deficit) equity | ||||||||
Current portion of long-term debt | 2 | 0 | ||||||
Other current liabilities | 250 | 248 | ||||||
Long-term debt, excluding current portion | 8 | 0 | ||||||
Operating lease liabilities | 27 | |||||||
Other long-term liabilities | 593 | 637 | ||||||
Intercompany balances | 0 | 49 | ||||||
Total liabilities and total stockholders’ (deficit) equity | 4,308 | 4,252 | ||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 0 | |||||||
Total liabilities and total stockholders’ (deficit) equity | 5,188 | 5,186 | ||||||
Non-current restricted cash | 11 | 12 | ||||||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||||||
Assets | ||||||||
Cash and cash equivalents | 170 | 94 | ||||||
Restricted cash | 8 | 6 | ||||||
Accounts receivable, net | 338 | 315 | ||||||
Notes receivable, net | 13 | 13 | ||||||
Inventories | 103 | 111 | ||||||
Prepaid expenses, deposits and other current assets | 92 | 72 | ||||||
Property and equipment, net | 197 | 218 | ||||||
Operating lease right-of-use assets | 50 | |||||||
Investment in subsidiaries | 0 | 0 | ||||||
Goodwill | 1,114 | 1,143 | ||||||
Intangible assets, net | 374 | 441 | ||||||
Intercompany balances | 0 | 0 | ||||||
Software, net | 77 | 60 | ||||||
Other assets | 385 | 308 | ||||||
Total assets | 2,921 | 2,781 | ||||||
Liabilities and stockholders’ (deficit) equity | ||||||||
Current portion of long-term debt | 1 | 3 | ||||||
Other current liabilities | 246 | 254 | ||||||
Long-term debt, excluding current portion | 0 | 1 | ||||||
Operating lease liabilities | 43 | |||||||
Other long-term liabilities | 174 | 172 | ||||||
Intercompany balances | 312 | 554 | ||||||
Total liabilities and total stockholders’ (deficit) equity | 2,047 | 1,797 | ||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 98 | |||||||
Total liabilities and total stockholders’ (deficit) equity | 2,921 | 2,781 | ||||||
Non-current restricted cash | 1 | 1 | ||||||
Eliminating Entries | ||||||||
Assets | ||||||||
Cash and cash equivalents | (1) | (1) | ||||||
Restricted cash | 0 | 0 | ||||||
Accounts receivable, net | 0 | 0 | ||||||
Notes receivable, net | 0 | 0 | ||||||
Inventories | (13) | (17) | ||||||
Prepaid expenses, deposits and other current assets | 1 | 0 | ||||||
Property and equipment, net | (31) | (33) | ||||||
Operating lease right-of-use assets | 0 | |||||||
Investment in subsidiaries | (5,301) | (4,904) | ||||||
Goodwill | 0 | 0 | ||||||
Intangible assets, net | 0 | 0 | ||||||
Intercompany balances | (5,941) | (6,054) | ||||||
Software, net | 0 | 0 | ||||||
Other assets | (438) | (440) | ||||||
Total assets | (11,724) | (11,449) | ||||||
Liabilities and stockholders’ (deficit) equity | ||||||||
Current portion of long-term debt | 0 | 0 | ||||||
Other current liabilities | (33) | (26) | ||||||
Long-term debt, excluding current portion | 0 | 0 | ||||||
Operating lease liabilities | 0 | |||||||
Other long-term liabilities | (470) | (481) | ||||||
Intercompany balances | (5,941) | (6,054) | ||||||
Total liabilities and total stockholders’ (deficit) equity | (5,280) | (4,888) | ||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 0 | |||||||
Total liabilities and total stockholders’ (deficit) equity | $ (11,724) | $ (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 | 6 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Financial Statements | ||||||||
Revenue | $ 855 | $ 821 | $ 2,537 | $ 2,478 | ||||
Cost of services, cost of product sales and cost of instant products(2) | 317 | 301 | 945 | 914 | ||||
Selling, general and administrative | 175 | 170 | 535 | 515 | ||||
Research and development | 47 | 50 | 142 | 153 | ||||
Depreciation, amortization and impairments | 162 | 166 | 497 | 527 | ||||
Restructuring and other | 11 | 339 | 24 | 424 | ||||
Operating (loss) income | 143 | (205) | 394 | (55) | ||||
Interest expense | (146) | (147) | (447) | (448) | ||||
Gain (Loss) on Extinguishment of Debt | 0 | 0 | (60) | (93) | ||||
Gain (loss) on remeasurement of debt | 19 | (4) | 21 | 29 | ||||
Other income (expense), net | (1) | 4 | 19 | 14 | ||||
Net (loss) income before equity in income of subsidiaries and income taxes | 15 | (352) | (73) | (553) | ||||
Equity in (loss) income of subsidiaries | 0 | 0 | 0 | 0 | ||||
Income tax benefit (expense) | 3 | 0 | (8) | (6) | ||||
Net income (loss) | 18 | (352) | $ (75) | (81) | (559) | |||
Less: Net income attributable to noncontrolling interest | 4 | 6 | ||||||
Net Income (Loss) Attributable to Parent | 14 | $ (24) | (352) | $ (202) | (77) | $ (6) | (87) | (559) |
Other comprehensive loss | (35) | $ 51 | (5) | $ 52 | (51) | $ (83) | (37) | |
Foreign currency translation gain, net of tax | (38) | (8) | (22) | (46) | ||||
Derivative financial instruments unrealized gain (loss), net of tax | 3 | 3 | (13) | 9 | ||||
Other Comprehensive Income (Loss), Net of Tax | (35) | (35) | ||||||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | (17) | (357) | (116) | (596) | ||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 4 | 0 | $ 2 | 6 | 0 | |||
Comprehensive (loss) income attributable to SGC | (21) | (357) | (122) | (596) | ||||
Reportable Legal Entities | SGI (Issuer) | ||||||||
Condensed Financial Statements | ||||||||
Revenue | 139 | 138 | 444 | 404 | ||||
Cost of services, cost of product sales and cost of instant products(2) | 93 | 90 | 288 | 263 | ||||
Selling, general and administrative | 9 | 12 | 29 | 32 | ||||
Research and development | 1 | 0 | 3 | 1 | ||||
Depreciation, amortization and impairments | 8 | 9 | 33 | 24 | ||||
Restructuring and other | 1 | 3 | 2 | 0 | ||||
Operating (loss) income | 27 | 24 | 89 | 84 | ||||
Interest expense | (146) | (147) | (447) | (448) | ||||
Gain (Loss) on Extinguishment of Debt | (60) | (93) | ||||||
Gain (loss) on remeasurement of debt | 19 | (4) | 21 | 29 | ||||
Other income (expense), net | 129 | 130 | 392 | 399 | ||||
Net (loss) income before equity in income of subsidiaries and income taxes | 29 | 3 | (5) | (29) | ||||
Equity in (loss) income of subsidiaries | 9 | 4 | 18 | 22 | ||||
Income tax benefit (expense) | (8) | (1) | 1 | 7 | ||||
Net income (loss) | 30 | 14 | ||||||
Less: Net income attributable to noncontrolling interest | 0 | 0 | ||||||
Net Income (Loss) Attributable to Parent | 30 | 6 | 14 | 0 | ||||
Other comprehensive loss | 11 | 23 | ||||||
Other Comprehensive Income (Loss), Net of Tax | 30 | 24 | ||||||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | 60 | 38 | ||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 0 | 0 | ||||||
Comprehensive (loss) income attributable to SGC | 60 | 17 | 38 | 23 | ||||
Reportable Legal Entities | SGC (Parent) | ||||||||
Condensed Financial Statements | ||||||||
Revenue | 0 | 0 | 0 | 0 | ||||
Cost of services, cost of product sales and cost of instant products(2) | 0 | 0 | 0 | 0 | ||||
Selling, general and administrative | 34 | 38 | 100 | 119 | ||||
Research and development | 0 | 0 | 0 | 0 | ||||
Depreciation, amortization and impairments | 16 | 11 | 40 | 32 | ||||
Restructuring and other | 0 | 320 | 2 | 375 | ||||
Operating (loss) income | (50) | (369) | (142) | (526) | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Gain (Loss) on Extinguishment of Debt | 0 | 0 | ||||||
Gain (loss) on remeasurement of debt | 0 | 0 | 0 | 0 | ||||
Other income (expense), net | 14 | 16 | 50 | 49 | ||||
Net (loss) income before equity in income of subsidiaries and income taxes | (36) | (353) | (92) | (477) | ||||
Equity in (loss) income of subsidiaries | 36 | 0 | 12 | (60) | ||||
Income tax benefit (expense) | 14 | 1 | (7) | (22) | ||||
Net income (loss) | 14 | (87) | ||||||
Less: Net income attributable to noncontrolling interest | 0 | 0 | ||||||
Net Income (Loss) Attributable to Parent | 14 | (352) | (87) | (559) | ||||
Other comprehensive loss | (5) | (37) | ||||||
Other Comprehensive Income (Loss), Net of Tax | (35) | (35) | ||||||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | (21) | (122) | ||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 0 | 0 | ||||||
Comprehensive (loss) income attributable to SGC | (21) | (357) | (122) | (596) | ||||
Reportable Legal Entities | Guarantor Subsidiaries | ||||||||
Condensed Financial Statements | ||||||||
Revenue | 376 | 404 | 1,092 | 1,196 | ||||
Cost of services, cost of product sales and cost of instant products(2) | 119 | 119 | 329 | 369 | ||||
Selling, general and administrative | 55 | 57 | 162 | 166 | ||||
Research and development | 22 | 21 | 64 | 66 | ||||
Depreciation, amortization and impairments | 99 | 106 | 302 | 339 | ||||
Restructuring and other | 2 | 4 | 5 | 8 | ||||
Operating (loss) income | 79 | 97 | 230 | 248 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Gain (Loss) on Extinguishment of Debt | 0 | 0 | ||||||
Gain (loss) on remeasurement of debt | 0 | 0 | 0 | 0 | ||||
Other income (expense), net | (117) | (123) | (360) | (375) | ||||
Net (loss) income before equity in income of subsidiaries and income taxes | (38) | (26) | (130) | (127) | ||||
Equity in (loss) income of subsidiaries | 22 | (10) | 45 | (17) | ||||
Income tax benefit (expense) | 8 | 6 | 30 | 27 | ||||
Net income (loss) | (8) | (55) | ||||||
Less: Net income attributable to noncontrolling interest | 0 | 0 | ||||||
Net Income (Loss) Attributable to Parent | (8) | (30) | (55) | (117) | ||||
Other comprehensive loss | (10) | (23) | ||||||
Other Comprehensive Income (Loss), Net of Tax | (1) | (2) | ||||||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | (9) | (57) | ||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 0 | 0 | ||||||
Comprehensive (loss) income attributable to SGC | (9) | (40) | (57) | (140) | ||||
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||||||||
Condensed Financial Statements | ||||||||
Revenue | 419 | 361 | 1,211 | 1,107 | ||||
Cost of services, cost of product sales and cost of instant products(2) | 170 | 160 | 498 | 472 | ||||
Selling, general and administrative | 88 | 76 | 276 | 238 | ||||
Research and development | 24 | 29 | 75 | 85 | ||||
Depreciation, amortization and impairments | 44 | 45 | 136 | 143 | ||||
Restructuring and other | 8 | 12 | 15 | 42 | ||||
Operating (loss) income | 85 | 39 | 211 | 127 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Gain (Loss) on Extinguishment of Debt | 0 | 0 | ||||||
Gain (loss) on remeasurement of debt | 0 | 0 | 0 | 0 | ||||
Other income (expense), net | (27) | (19) | (63) | (59) | ||||
Net (loss) income before equity in income of subsidiaries and income taxes | 58 | 20 | 148 | 68 | ||||
Equity in (loss) income of subsidiaries | 0 | 0 | 0 | 0 | ||||
Income tax benefit (expense) | (11) | (6) | (32) | (18) | ||||
Net income (loss) | 47 | 116 | ||||||
Less: Net income attributable to noncontrolling interest | 4 | 6 | ||||||
Net Income (Loss) Attributable to Parent | 43 | 14 | 110 | 50 | ||||
Other comprehensive loss | (2) | (48) | ||||||
Other Comprehensive Income (Loss), Net of Tax | (61) | (56) | ||||||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | (14) | 60 | ||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 4 | 6 | ||||||
Comprehensive (loss) income attributable to SGC | (18) | 12 | 54 | 2 | ||||
Eliminating Entries | ||||||||
Condensed Financial Statements | ||||||||
Revenue | (79) | (82) | (210) | (229) | ||||
Cost of services, cost of product sales and cost of instant products(2) | (65) | (68) | (170) | (190) | ||||
Selling, general and administrative | (11) | (13) | (32) | (40) | ||||
Research and development | 0 | 0 | 0 | 1 | ||||
Depreciation, amortization and impairments | (5) | (5) | (14) | (11) | ||||
Restructuring and other | 0 | 0 | 0 | (1) | ||||
Operating (loss) income | 2 | 4 | 6 | 12 | ||||
Interest expense | 0 | 0 | 0 | 0 | ||||
Gain (Loss) on Extinguishment of Debt | 0 | 0 | ||||||
Gain (loss) on remeasurement of debt | 0 | 0 | 0 | 0 | ||||
Other income (expense), net | 0 | 0 | 0 | 0 | ||||
Net (loss) income before equity in income of subsidiaries and income taxes | 2 | 4 | 6 | 12 | ||||
Equity in (loss) income of subsidiaries | (67) | 6 | (75) | 55 | ||||
Income tax benefit (expense) | 0 | 0 | 0 | 0 | ||||
Net income (loss) | (65) | (69) | ||||||
Less: Net income attributable to noncontrolling interest | 0 | 0 | ||||||
Net Income (Loss) Attributable to Parent | (65) | 10 | (69) | 67 | ||||
Other comprehensive loss | 1 | 48 | ||||||
Other Comprehensive Income (Loss), Net of Tax | 32 | 34 | ||||||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | (33) | (35) | ||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 0 | 0 | ||||||
Comprehensive (loss) income attributable to SGC | $ (33) | $ 11 | $ (35) | $ 115 |
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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | $ 403 | $ 356 |
Cash flows from investing activities: | ||
Capital expenditures | (207) | (293) |
Acquisitions of businesses and assets, net of cash acquired | 0 | (274) |
Distributions of capital from equity investments | 18 | 24 |
Additions to equity method investments | 1 | 76 |
Payments for (Proceeds from) Other Investing Activities | 76 | |
Other, principally change in intercompany investing activities | 0 | 0 |
Net cash (used in) provided by investing activities | (190) | (619) |
Cash flows from financing activities: | ||
Payments of long-term debt, net of proceeds | (308) | (30) |
Repayment of assumed NYX debt | 0 | (288) |
Payments of debt issuance and deferred financing costs | (15) | (39) |
Payments on license obligations | (26) | (22) |
Sale of future revenue | 11 | |
Net proceeds from the sale of SciPlay common stock | 342 | |
Payments of deferred SciPlay common stock offering costs | (9) | 0 |
Net redemptions of common stock under stock-based compensation plans and other | (6) | (24) |
Other, principally change in intercompany financing activities | 0 | 0 |
Net cash provided by (used in) financing activities | (11) | (403) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1) | (2) |
Increase (decrease) in cash, cash equivalents and restricted cash | 201 | (668) |
Cash, cash equivalents and restricted cash, beginning of period | 220 | 834 |
Cash, cash equivalents and restricted cash, end of period | 421 | 166 |
Reportable Legal Entities | SGI (Issuer) | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 77 | 30 |
Cash flows from investing activities: | ||
Capital expenditures | (22) | (57) |
Acquisitions of businesses and assets, net of cash acquired | 0 | |
Distributions of capital from equity investments | 0 | 0 |
Additions to equity method investments | 1 | |
Payments for (Proceeds from) Other Investing Activities | 2 | |
Other, principally change in intercompany investing activities | 268 | 91 |
Net cash (used in) provided by investing activities | 245 | 32 |
Cash flows from financing activities: | ||
Payments of long-term debt, net of proceeds | (306) | (24) |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | (14) | (39) |
Payments on license obligations | (1) | 0 |
Sale of future revenue | 0 | |
Net proceeds from the sale of SciPlay common stock | 0 | |
Payments of deferred SciPlay common stock offering costs | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | (2) | 0 |
Other, principally change in intercompany financing activities | 0 | 0 |
Net cash provided by (used in) financing activities | (323) | (63) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase (decrease) in cash, cash equivalents and restricted cash | (1) | (1) |
Cash, cash equivalents and restricted cash, beginning of period | 2 | 1 |
Cash, cash equivalents and restricted cash, end of period | 1 | 0 |
Reportable Legal Entities | SGC (Parent) | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | (36) | (56) |
Cash flows from investing activities: | ||
Capital expenditures | (17) | (30) |
Acquisitions of businesses and assets, net of cash acquired | 0 | |
Distributions of capital from equity investments | 0 | 0 |
Additions to equity method investments | 0 | |
Payments for (Proceeds from) Other Investing Activities | 0 | |
Other, principally change in intercompany investing activities | 0 | 0 |
Net cash (used in) provided by investing activities | (17) | (30) |
Cash flows from financing activities: | ||
Payments of long-term debt, net of proceeds | 0 | 0 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | (20) | (20) |
Sale of future revenue | 0 | |
Net proceeds from the sale of SciPlay common stock | 0 | |
Payments of deferred SciPlay common stock offering costs | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | 0 | (22) |
Other, principally change in intercompany financing activities | 193 | (565) |
Net cash provided by (used in) financing activities | 173 | (607) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase (decrease) in cash, cash equivalents and restricted cash | 120 | (693) |
Cash, cash equivalents and restricted cash, beginning of period | 74 | 732 |
Cash, cash equivalents and restricted cash, end of period | 194 | 39 |
Reportable Legal Entities | Guarantor Subsidiaries | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 146 | 153 |
Cash flows from investing activities: | ||
Capital expenditures | (85) | (122) |
Acquisitions of businesses and assets, net of cash acquired | (10) | |
Distributions of capital from equity investments | 0 | 0 |
Additions to equity method investments | 0 | |
Payments for (Proceeds from) Other Investing Activities | 0 | |
Other, principally change in intercompany investing activities | (61) | (15) |
Net cash (used in) provided by investing activities | (146) | (147) |
Cash flows from financing activities: | ||
Payments of long-term debt, net of proceeds | 0 | 0 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | (5) | (2) |
Sale of future revenue | 11 | |
Net proceeds from the sale of SciPlay common stock | 0 | |
Payments of deferred SciPlay common stock offering costs | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | (2) | (2) |
Other, principally change in intercompany financing activities | 0 | 0 |
Net cash provided by (used in) financing activities | 4 | (4) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase (decrease) in cash, cash equivalents and restricted cash | 4 | 2 |
Cash, cash equivalents and restricted cash, beginning of period | 44 | 44 |
Cash, cash equivalents and restricted cash, end of period | 48 | 46 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 216 | 231 |
Cash flows from investing activities: | ||
Capital expenditures | (83) | (84) |
Acquisitions of businesses and assets, net of cash acquired | (264) | |
Distributions of capital from equity investments | 18 | 24 |
Additions to equity method investments | 0 | |
Payments for (Proceeds from) Other Investing Activities | 74 | |
Other, principally change in intercompany investing activities | 0 | 0 |
Net cash (used in) provided by investing activities | (65) | (398) |
Cash flows from financing activities: | ||
Payments of long-term debt, net of proceeds | (2) | (6) |
Repayment of assumed NYX debt | (288) | |
Payments of debt issuance and deferred financing costs | (1) | 0 |
Payments on license obligations | 0 | 0 |
Sale of future revenue | 0 | |
Net proceeds from the sale of SciPlay common stock | 342 | |
Payments of deferred SciPlay common stock offering costs | (9) | |
Net redemptions of common stock under stock-based compensation plans and other | (2) | 0 |
Other, principally change in intercompany financing activities | (400) | 489 |
Net cash provided by (used in) financing activities | (72) | 195 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1) | (2) |
Increase (decrease) in cash, cash equivalents and restricted cash | 78 | 26 |
Cash, cash equivalents and restricted cash, beginning of period | 101 | 60 |
Cash, cash equivalents and restricted cash, end of period | 179 | 86 |
Eliminating Entries | ||
Condensed Financial Statements | ||
Net cash (used in) provided by operating activities | 0 | (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 |
Additions to equity method investments | 0 | |
Payments for (Proceeds from) Other Investing Activities | 0 | |
Other, principally change in intercompany investing activities | (207) | (76) |
Net cash (used in) provided by investing activities | (207) | (76) |
Cash flows from financing activities: | ||
Payments of long-term debt, net of proceeds | 0 | 0 |
Repayment of assumed NYX debt | 0 | |
Payments of debt issuance and deferred financing costs | 0 | 0 |
Payments on license obligations | 0 | 0 |
Sale of future revenue | 0 | |
Net proceeds from the sale of SciPlay common stock | 0 | |
Payments of deferred SciPlay common stock offering costs | 0 | |
Net redemptions of common stock under stock-based compensation plans and other | 0 | 0 |
Other, principally change in intercompany financing activities | 207 | 76 |
Net cash provided by (used in) financing activities | 207 | 76 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 0 |
Increase (decrease) in cash, cash equivalents and restricted cash | 0 | (2) |
Cash, cash equivalents and restricted cash, beginning of period | (1) | (3) |
Cash, cash equivalents and restricted cash, end of period | $ (1) | $ (5) |