Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries

We conduct substantially all of our business through our U.S. and foreign subsidiaries. SGI’s obligations under the Credit Agreement, the 2021 Notes and the 2020 Notes are fully and unconditionally and jointly and severally guaranteed by Scientific Games Corporation (the “Parent Company”) and substantially all of our 100%-owned U.S. subsidiaries other than SGI (the “Guarantor Subsidiaries”). Our 2018 Notes, which were issued by the Parent Company, are fully and unconditionally and jointly and severally guaranteed by our 100% owned U.S. subsidiaries, including SGI. The guarantees of our 2018 Notes, 2020 Notes and 2021 Notes will terminate under 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 the Parent Company and SGI (or, in the case of the 2018 Notes, the release of the guarantor from any guarantees of indebtedness of the Parent Company); and (5) in the case of the 2020 Notes and 2021 Notes, the proper designation of the guarantor as an unrestricted subsidiary pursuant to the indenture governing the 2020 and 2021 Notes, respectively.

Presented below is condensed consolidated financial information for (1) the Parent Company, (2) SGI, (3) the Guarantor Subsidiaries and (4) our 100%-owned foreign subsidiaries and our non-100%-owned U.S. and foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014. The condensed consolidating financial information has been presented to show the nature of assets held by, and the results of operations and cash flows of, the Parent Company, SGI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming the guarantee structures of the Credit Agreement, the 2018 Notes, the 2020 Notes and the 2021 Notes were in effect at the beginning of the periods presented.

The condensed consolidating financial information reflects the investments of the Parent Company in the Guarantor and Non-Guarantor Subsidiaries using the equity method of accounting. They also reflect the investments of the Guarantor Subsidiaries in the Non-Guarantor Subsidiaries. Corporate interest and administrative expenses have not been allocated to the 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.

Subsequent to the filing of the December 31, 2014 Form 10-K, the Company identified certain corrections necessary to be made to the disclosure of condensed consolidating financial information. The below presentation of the condensed consolidating financial information reflects the following items which are corrections from the prior-year presentation: (1) the Guarantor Subsidiaries inclusion of their investment in the Non-Guarantor Subsidiaries in the accompanying Supplemental Condensed Consolidating Balance Sheet; (2) the pushdown of goodwill created in the Bally acquisition from the Guarantor Subsidiaries to the Non-Guarantor Subsidiaries in the accompanying Supplemental Condensed Consolidating Balance Sheet; (3) the recognition by the Guarantor Subsidiaries of equity in losses of Non-Guarantor Subsidiaries in the accompanying Supplemental Condensed Consolidating Statement of Operations and Comprehensive Loss; (4) the inclusion in the Eliminating Entries in the accompanying Supplemental Condensed Consolidating Financial Statements of all intercompany transactions between the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries and (5) the inclusion in the Eliminating Entries in the accompanying Supplemental Condensed Consolidating Financial Statements of all intercompany transactions between Parent and SGI.

The impact of these corrections increases the Guarantor Subsidiaries’ total assets and stockholders’ equity each by $546.0 million, as well as increases the Non-Guarantor Subsidiaries’ total assets and stockholders’ equity each by $466.3 million million, all as compared to amounts previously disclosed as of December 31, 2014. The corrections also decrease the net loss of the Guarantor Subsidiaries by $0.6 million, million and decrease the net income of the Non-Guarantor Subsidiaries by $4.0 million, for the three months ended March 31, 2014. The corrections had no impact on the condensed consolidating statement of cash flows for the three months ended March 31, 2014. The offsetting impact of these adjustments is reflected in the eliminating entries column as these corrections had no impact on our consolidated balance sheet, results of operations or cash flows for the prior periods presented. We believe the effects of the corrections are immaterial to our prior year condensed consolidating financial statements.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

As of March 31, 2015



	Parent Company			SGI			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	57.7		$	0.3		$	19.6	$	73.6	$	—		$	151.2
Restricted cash	—			—			27.4		0.1		—			27.5
Accounts receivable, net	—			67.2			219.8		176.8		—			463.8
Notes receivable, net	—			—			114.6		53.5		—			168.1
Inventories	—			33.8			123.6		122.2		(17.8		)	261.8
Other current assets	63.6			20.6			121.9		54.7		—			260.8
Property and equipment, net	0.4			117.4			636.7		222.2		(9.0		)	967.7
Investment in subsidiaries	4,482.3			864.1			950.0		—		(6,296.4		)	—
Goodwill	—			253.6			2,772.1		1,005.3		—			4,031.0
Intangible assets, net	160.5			41.7			1,725.1		276.4		—			2,203.7
Intercompany balances	—			6,610.2			—		—		(6,610.2		)	—
Software, net	16.3			29.5			443.4		72.1		—			561.3
Other assets	3.1			244.8			83.6		275.0		—			606.5
Total assets	$	4,783.9		$	8,283.2		$	7,237.8	$	2,331.9	$	(12,933.4	)	$	9,703.4
Liabilities and stockholders’ (deficit) equity
Debt payments due within one year	$	—		$	43.0		$	—	$	7.4	$	—		$	50.4
Other current liabilities	61.4			172.7			231.4		130.4		—			595.9
Long-term debt, excluding current installments	250.0			8,173.2			—		24.6		—			8,447.8
Other long-term liabilities	131.3			72.7			535.9		58.8		—			798.7
Intercompany balances	4,530.6			—			1,758.1		321.5		(6,610.2		)	—
Stockholders’ (deficit) equity	(189.4		)	(178.4		)	4,712.4		1,789.2		(6,323.2		)	(189.4		)
Total liabilities and stockholders’ (deficit) equity	$	4,783.9		$	8,283.2		$	7,237.8	$	2,331.9	$	(12,933.4	)	$	9,703.4

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2014



	Parent Company		SGI			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	37.9	$	0.1		$	28.8	$	105.0	$	—		$	171.8
Restricted cash	—		—			27.1		0.1		—			27.2
Accounts receivable, net	—		61.8			212.9		193.7		—			468.4
Notes receivable, net	—		—			136.6		52.1		—			188.7
Inventories	—		35.2			133.8		124.4		(27.8		)	265.6
Other current assets	65.4		20.2			114.7		56.0		—			256.3
Property and equipment, net	0.5		119.5			660.4		241.7		(9.3		)	1,012.8
Investment in subsidiaries	4,730.7		953.4			975.2		—		(6,659.3		)	—
Goodwill	—		253.6			2,781.6		1,073.1		—			4,108.3
Intangible assets, net	162.0		42.2			1,761.8		285.6		—			2,251.6
Intercompany balances	—		6,580.0			—		—		(6,580.0		)	—
Software, net	15.6		32.9			467.3		76.9		—			592.7
Other assets	2.8		255.4			96.8		296.8		—			651.8
Total assets	$	5,014.9	$	8,354.3		$	7,397.0	$	2,505.4	$	(13,276.4	)	$	9,995.2
Liabilities and stockholders’ equity
Debt payments due within one year	$	—	$	43.0		$	—	$	7.6	$	—		$	50.6
Other current liabilities	68.9		119.8			247.2		173.8		—			609.7
Long-term debt, excluding current installments	250.0		8,187.7			—		27.7		—			8,465.4
Other long-term liabilities	136.2		74.0			593.7		61.7		—			865.6
Intercompany balances	4,555.9		(0.1		)	1,637.9		386.3		(6,580.0		)	—
Stockholders’ equity	3.9		(70.1		)	4,918.2		1,848.3		(6,696.4		)	3.9
Total liabilities and stockholders’ equity	$	5,014.9	$	8,354.3		$	7,397.0	$	2,505.4	$	(13,276.4	)	$	9,995.2

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF

OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31, 2015



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	111.3		$	432.3		$	208.7		$	(93.6	)	$	658.7
Cost of services, cost of product sales and cost of instant games (1)	—			81.3			145.4			122.3			(93.6		)	255.4
Selling, general and administrative	14.9			16.2			74.3			40.5			—			145.9
Research and development	—			1.4			37.8			7.7			—			46.9
Employee termination and restructuring	1.8			0.2			4.5			1.7			—			8.2
Depreciation and amortization	7.8			9.9			128.7			37.8			—			184.2
Operating income (loss)	(24.5		)	2.3			41.6			(1.3		)	—			18.1
Interest income (expense)	1.4			(36.2		)	(129.6		)	0.1			—			(164.3		)
Other (expense) income, net	11.7			17.6			(39.8		)	8.0			—			(2.5		)
Net (loss) income before equity in income of subsidiaries and income taxes	(11.4		)	(16.3		)	(127.8		)	6.8			—			(148.7		)
Equity in (loss) income of subsidiaries	(138.3		)	6.6			(6.3		)	—			138.0			—
Income tax benefit (expense)	63.3			(0.1		)	—			(0.9		)	—			62.3
Net (loss) income	$	(86.4	)	$	(9.8	)	$	(134.1	)	$	5.9		$	138.0		$	(86.4	)

Other comprehensive (loss) income	(110.3		)	(13.1		)	16.9			(119.6		)	115.8			(110.3		)
Comprehensive loss	$	(196.7	)	$	(22.9	)	$	(117.2	)	$	(113.7	)	$	253.8		$	(196.7	)

(1) Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF

OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31, 2014



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	100.4		$	206.2		$	138.5		$	(57.0	)	$	388.1
Cost of services, cost of product sales and cost of instant games (1)	—			75.2			83.7			80.9			(57.0		)	182.8
Selling, general and administrative	15.1			16.6			40.3			19.8			—			91.8
Research and development	—			0.5			21.5			3.9			—			25.9
Employee termination and restructuring	—			0.2			1.6			3.8			—			5.6
Depreciation and amortization	3.7			10.2			58.1			22.1			—			94.1
Operating income (loss)	(18.8		)	(2.3		)	1.0			8.0			—			(12.1		)
Interest expense	(5.4		)	(42.1		)	(0.2		)	(0.2		)	—			(47.9		)
Other (expense) income, net	(15.3		)	15.7			(2.3		)	24.7			0.1			22.9
Net (loss) income before equity in income of subsidiaries and income taxes	(39.5		)	(28.7		)	(1.5		)	32.5			0.1			(37.1		)
Equity in (loss) income of subsidiaries	(0.1		)	14.5			(3.5		)	—			(10.9		)	—
Income tax expense	(5.4		)	—			—			(2.5		)	—			(7.9		)
Net (loss) income	$	(45.0	)	$	(14.2	)	$	(5.0	)	$	30.0		$	(10.8	)	$	(45.0	)

Other comprehensive (loss) income	(0.5		)	7.9			(0.3		)	0.4			(8.0		)	(0.5		)
Comprehensive (loss) income	$	(45.5	)	$	(6.3	)	$	(5.3	)	$	30.4		$	(18.8	)	$	(45.5	)

(1) Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2015



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net cash provided by (used in) operating activities	$	59.9		$	45.8		$	(163.4	)	$	135.5		$	—		$	77.8
Cash flows from investing activities:																—
Capital expenditures	(5.9		)	(3.1		)	(50.5		)	(12.6		)	—			(72.1		)
Distributions of capital on equity investments	—			—			—			3.8			—			3.8
Other	—			—			—			—			—			—
Intercompany balances	—			(26.2		)	—			—			26.2			—
Net cash used in investing activities	(5.9		)	(29.3		)	(50.5		)	(8.8		)	26.2			(68.3		)
Cash flows from financing activities:
Net proceeds/payments on long-term debt	—			(15.8		)	—			(1.2		)	—			(17.0		)
Payments on license obligations	(7.5		)	—			(1.5		)	—			—			(9.0		)
Net redemptions of common stock under stock-based compensation plans	(0.7		)	—			—			—			—			(0.7		)
Intercompany balances	(26.0		)	—			206.2			(154.0		)	(26.2		)	—
Net cash provided by (used in) financing activities	(34.2		)	(15.8		)	204.7			(155.2		)	(26.2		)	(26.7		)
Effect of exchange rate changes on cash	—			(0.5		)	—			(2.9		)	—			(3.4		)
(Decrease) increase in cash and cash equivalents	19.8			0.2			(9.2		)	(31.4		)	—			(20.6		)
Cash and cash equivalents, beginning of period	37.9			0.1			28.8			105.0			—			171.8
Cash and cash equivalents, end of period	$	57.7		$	0.3		$	19.6		$	73.6		$	—		$	151.2

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2014



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net cash provided by (used in) operating activities	$	(36.1	)	$	(7.1	)	$	56.7		$	69.8		$	—		$	83.3
Cash flows from investing activities:
Capital and wagering systems expenditures	(2.9		)	(7.7		)	(38.0		)	(11.0		)	—			(59.6		)
Equity method investments	—			—			—			(17.7		)	—			(17.7		)
Distributions of capital on equity investments	—			1.1			—			21.3			—			22.4
Proceeds on sale of equity interest	—			—			—			44.9			—			44.9
Other	—			—			(0.8		)	(0.2		)	—			(1.0		)
Intercompany balances	—			19.7			(30.5		)	—			10.8			—
Net cash provided by (used in) investing activities	(2.9		)	13.1			(69.3		)	37.3			10.8			(11.0		)
Cash flows from financing activities:
Net proceeds (payments) on long-term debt and financing fees	—			(5.8		)	—			(0.2		)	—			(6.0		)
Common stock repurchases	(29.5		)	—			—			—			—			(29.5		)
Contingent earnout payments	—			—			—			(1.8		)	—			(1.8		)
Net redemptions of common stock under stock-based compensation plans	(19.2		)	—			—			—			—			(19.2		)
Other, principally intercompany balances	74.4			—			—			(63.6		)	(10.8		)	—
Net cash provided by (used in) financing activities	25.7			(5.8		)	—			(65.6		)	(10.8		)	(56.5		)
Effect of exchange rate changes on cash	—			—			(0.4		)	—			—			(0.4		)
Increase (decrease) in cash and cash equivalents	(13.3		)	0.2			(13.0		)	41.5			—			15.4
Cash and cash equivalents, beginning of period	56.0			—			24.4			73.3			—			153.7
Cash and cash equivalents, end of period	$	42.7		$	0.2		$	11.4		$	114.8		$	—		$	169.1