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Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries
 3 Months Ended
Mar. 31, 2019
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries [Abstract]  
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries
Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries
We conduct substantially all of our business through our U.S. and foreign subsidiaries. As of March 31, 2019, SGI’s obligations under the Secured Notes (other than the 2022 Secured Notes, which were redeemed in March 2018), the Unsecured Notes and the Subordinated Notes were fully and unconditionally and jointly and severally guaranteed by SGC and the Guarantor Subsidiaries other than SGI, and certain immaterial subsidiaries of SGC. The guarantees of our Secured Notes (other than the 2022 Secured Notes, which were redeemed in March 2018), Unsecured Notes and Subordinated Notes will terminate under the following customary circumstances: (1) the sale or disposition of the capital stock of the guarantor (including by consolidation or merger of the guarantor into another person); (2) the liquidation or dissolution of the guarantor; (3) the defeasance or satisfaction and discharge of the notes; (4) the release of the guarantor from any guarantees of indebtedness of SGC and SGI; and (5) the proper designation of the guarantor as an unrestricted subsidiary pursuant to the indenture governing the respective notes.
Presented below is condensed consolidating financial information for (1) SGC, (2) SGI, (3) the Guarantor Subsidiaries and (4) the Non-Guarantor Subsidiaries as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018. The condensed consolidating financial information has been presented to show the nature of assets held, results of operations and cash flows of SGC, SGI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries assuming the current guarantee structures of the Secured Notes (other than the 2022 Secured Notes, which were redeemed in March 2018), the Unsecured Notes and the Subordinated Notes were in effect at the beginning of the periods presented.
     The condensed consolidating financial information reflects the investments of SGC in SGI and in the Guarantor Subsidiaries and Non-Guarantor Subsidiaries using the equity method of accounting. They also reflect the investments of the Guarantor Subsidiaries in the Non-Guarantor Subsidiaries. Net changes in intercompany due from/due to accounts are reported in the accompanying Supplemental Condensed Consolidating Statements of Cash Flows as investing activities if the applicable entities have a net investment (asset) in intercompany accounts and as a financing activity if the applicable entities have a net intercompany borrowing (liability) balance.    

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2019
 
 
SGC (Parent)
 
SGI (Issuer1)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminating
Entries
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,119

 
$
1

 
$
—

 
$
95

 
$
(2
)
 
$
1,213

Restricted cash
 
—

 
1

 
33

 
7

 
—

 
41

Accounts receivable, net
 
—

 
102

 
204

 
315

 
—

 
621

Notes receivable, net
 
—

 
—

 
89

 
15

 
—

 
104

Inventories
 
—

 
45

 
89

 
109

 
(14
)
 
229

Prepaid expenses, deposits and other current assets
 
3

 
60

 
95

 
79

 
1

 
238

Property and equipment, net
 
31

 
99

 
208

 
215

 
(36
)
 
517

Operating lease right-of-use asset
 
1

 
24

 
35

 
58

 
—

 
118

Investment in subsidiaries
 
2,896

 
959

 
1,216

 
—

 
(5,071
)
 
—

Goodwill
 
—

 
240

 
1,897

 
1,164

 
—

 
3,301

Intangible assets, net
 
40

 
34

 
1,239

 
432

 
—

 
1,745

Intercompany balances
 
—

 
7,096

 
74

 
—

 
(7,170
)
 
—

Software, net
 
53

 
37

 
118

 
69

 
—

 
277

Other assets(2)
 
113

 
412

 
37

 
309

 
(438
)
 
433

Total assets
 
$
4,256

 
$
9,110

 
$
5,334

 
$
2,867

 
$
(12,730
)
 
$
8,837

Liabilities and stockholders’ (deficit) equity
 
 
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
—

 
$
1,042

 
$
3

 
$
1

 
$
—

 
$
1,046

Other current liabilities
 
58

 
224

 
235

 
258

 
(35
)
 
740

Long-term debt, excluding current portion
 
—

 
8,928

 
8

 
1

 
—

 
8,937

Operating lease liabilities
 
1

 
20

 
30

 
47

 
—

 
98

Other long-term liabilities
 
104

 
13

 
637

 
176

 
(491
)
 
439

Intercompany balances
 
6,516

 
—

 
—

 
654

 
(7,170
)
 
—

Stockholders’ (deficit) equity
 
(2,423
)
 
(1,117
)
 
4,421

 
1,730

 
(5,034
)
 
(2,423
)
Total liabilities and stockholders’ (deficit) equity
 
$
4,256

 
$
9,110

 
$
5,334

 
$
2,867

 
$
(12,730
)
 
$
8,837

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
(2) Includes $11 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively.
SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2018
 
 
SGC (Parent)
 
SGI (Issuer1)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminating
Entries
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
74

 
$
1

 
$
—

 
$
94

 
$
(1
)
 
$
168

Restricted cash
 
—

 
1

 
32

 
6

 
—

 
39

Accounts receivable, net
 
—

 
79

 
205

 
315

 
—

 
599

Notes receivable, net
 
—

 
—

 
101

 
13

 
—

 
114

Inventories
 
—

 
40

 
82

 
111

 
(17
)
 
216

Prepaid expenses, deposits and other current assets
 
6

 
63

 
92

 
72

 
—

 
233

Property and equipment, net
 
31

 
112

 
219

 
218

 
(33
)
 
547

Investment in subsidiaries
 
2,836

 
975

 
1,093

 
—

 
(4,904
)
 
—

Goodwill
 
—

 
240

 
1,897

 
1,143

 
—

 
3,280

Intangible assets, net
 
43

 
34

 
1,291

 
441

 
—

 
1,809

Intercompany balances
 
—

 
6,054

 
—

 
—

 
(6,054
)
 
—

Software, net
 
58

 
39

 
128

 
60

 
—

 
285

Other assets(2)
 
110

 
404

 
46

 
308

 
(440
)
 
428

Total assets
 
$
3,158

 
$
8,042

 
$
5,186

 
$
2,781

 
$
(11,449
)
 
$
7,718

Liabilities and stockholders’ (deficit) equity
 
 
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
—

 
$
42

 
$
—

 
$
3

 
$
—

 
$
45

Other current liabilities
 
64

 
162

 
248

 
254

 
(26
)
 
702

Long-term debt, excluding current portion
 
—

 
8,991

 
—

 
1

 
—

 
8,992

Other long-term liabilities
 
106

 
8

 
637

 
172

 
(481
)
 
442

Intercompany balances
 
5,451

 
—

 
49

 
554

 
(6,054
)
 
—

Stockholders’ (deficit) equity
 
(2,463
)
 
(1,161
)
 
4,252

 
1,797

 
(4,888
)
 
(2,463
)
Total liabilities and stockholders’ (deficit) equity
 
$
3,158

 
$
8,042

 
$
5,186

 
$
2,781

 
$
(11,449
)
 
$
7,718

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until February 2019) and the Secured Notes.
(2) Includes $12 million and $1 million in non-current restricted cash for Guarantor Subsidiaries and Non-Guarantor Subsidiaries, respectively.


SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
Three Months Ended March 31, 2019
 
 
SGC (Parent)
 
SGI (Issuer1)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminating
Entries
 
Consolidated
Revenue
 
$
—

 
$
158

 
$
358

 
$
385

 
$
(64
)
 
$
837

Cost of services, cost of product sales and cost of instant products(2)
 
—

 
101

 
102

 
152

 
(48
)
 
307

SG&A
 
35

 
11

 
59

 
94

 
(13
)
 
186

R&D
 
—

 
1

 
23

 
25

 
—

 
49

D&A
 
12

 
12

 
99

 
47

 
(5
)
 
165

Restructuring and other
 
1

 
—

 
2

 
4

 
—

 
7

Operating (loss) income
 
(48
)
 
33

 
73

 
63

 
2

 
123

Interest expense
 
—

 
(154
)
 
—

 
—

 
—

 
(154
)
Gain on remeasurement of debt
 
—

 
5

 
—

 
—

 
—

 
5

Other income (expense), net
 
20

 
132

 
(124
)
 
(22
)
 
—

 
6

Net (loss) income before equity in income of subsidiaries and income taxes
 
(28
)
 
16

 
(51
)
 
41

 
2

 
(20
)
Equity in income of subsidiaries
 
6

 
7

 
11

 
—

 
(24
)
 
—

Income tax (expense) benefit
 
(2
)
 
(5
)
 
13

 
(10
)
 
—

 
(4
)
Net (loss) income
 
$
(24
)
 
$
18

 
$
(27
)
 
$
31

 
$
(22
)
 
$
(24
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income
 
51

 
9

 
2

 
71

 
(82
)
 
51

Comprehensive income (loss)
 
$
27

 
$
27

 
$
(25
)
 
$
102

 
$
(104
)
 
$
27

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
(2) Exclusive of D&A.
SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended March 31, 2018
 
 
SGC (Parent)
 
SGI (Issuer1)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminating
Entries
 
Consolidated
Revenue
 
$
—

 
$
130

 
$
387

 
$
369

 
$
(74
)
 
$
812

Cost of services, cost of product sales and cost of instant products (2)
 
—

 
86

 
118

 
154

 
(61
)
 
297

SG&A
 
38

 
11

 
58

 
79

 
(14
)
 
172

R&D
 
—

 
—

 
23

 
31

 
—

 
54

D&A
 
9

 
8

 
126

 
48

 
(3
)
 
188

Restructuring and other
 
26

 
1

 
1

 
24

 
—

 
52

Operating (loss) income
 
(73
)
 
24

 
61

 
33

 
4

 
49

Interest expense
 
—

 
(155
)
 
—

 
—

 
—

 
(155
)
Loss on debt financing transactions
 
—

 
(93
)
 
—

 
—

 
—

 
(93
)
Other income (expense), net
 
15

 
136

 
(133
)
 
(15
)
 
—

 
3

Net (loss) income before equity in income of subsidiaries and income taxes
 
(58
)
 
(88
)
 
(72
)
 
18

 
4

 
(196
)
Equity in (loss) income of subsidiaries
 
(84
)
 
4

 
10

 
—

 
70

 
—

Income tax (expense) benefit
 
(60
)
 
33

 
25

 
(4
)
 
—

 
(6
)
Net (loss) income
 
$
(202
)
 
$
(51
)
 
$
(37
)
 
$
14

 
$
74

 
$
(202
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss)
 
52

 
(17
)
 
22

 
73

 
(78
)
 
52

Comprehensive income (loss)
 
$
(150
)
 
$
(68
)
 
$
(15
)
 
$
87

 
$
(4
)
 
$
(150
)
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes.
(2) Exclusive of D&A.





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2019
 
 
SGC (Parent)
 
SGI (Issuer1)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminating
Entries
 
Consolidated
Net cash (used in) provided by operating activities
 
$
(15
)
 
$
55

 
$
63

 
$
65

 
$
(1
)
 
$
167

Cash flows from investing activities:
 
 

 
 

 
 

 
 

 
 

 
 
Capital expenditures
 
(3
)
 
(10
)
 
(25
)
 
(29
)
 
—

 
(67
)
Distributions of capital from equity investments
 
—

 
—

 
—

 
3

 
—

 
3

Other, principally change in intercompany investing activities
 
—

 
(986
)
 
(47
)
 
—

 
1,033

 
—

Net cash used in investing activities
 
(3
)
 
(996
)
 
(72
)
 
(26
)
 
1,033

 
(64
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt, net of payments
 
—

 
955

 
—

 
(2
)
 
—

 
953

Payments of debt issuance and deferred financing costs
 
—

 
(14
)
 
—

 
—

 
—

 
(14
)
Payments on license obligations
 
(7
)
 
—

 
—

 
—

 
—

 
(7
)
Sale of future revenue
 
—

 
—

 
11

 
—

 
—

 
11

Net redemptions of common stock under stock-based compensation plans and other
 
1

 
—

 
(2
)
 
—

 
—

 
(1
)
Other, principally change in intercompany financing activities
 
1,069

 
—

 
—

 
(36
)
 
(1,033
)
 
—

Net cash provided by (used in) financing activities
 
1,063

 
941

 
9

 
(38
)
 
(1,033
)
 
942

Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
—

 
—

 
—

 
1

 
—

 
1

Increase in cash, cash equivalents and restricted cash
 
1,045

 
—

 
—

 
2

 
(1
)
 
1,046

Cash, cash equivalents and restricted cash, beginning of period
 
74

 
2

 
44

 
101

 
(1
)
 
220

Cash, cash equivalents and restricted cash end of period
 
$
1,119

 
$
2

 
$
44

 
$
103

 
$
(2
)
 
$
1,266

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes and the Secured Notes.
SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2018

 
 
SGC (Parent)
 
SGI (Issuer1)
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminating
Entries
 
Consolidated
Net cash (used in) provided by operating activities
 
$
(32
)
 
$
(25
)
 
$
34

 
$
55

 
$
(2
)
 
$
30

Cash flows from investing activities:
 
 

 
 

 
 

 
 

 
 

 
 
Capital expenditures
 
(8
)
 
(17
)
 
(45
)
 
(18
)
 
—

 
(88
)
Acquisitions of businesses and assets, net of cash acquired
 
—

 
—

 
(9
)
 
(265
)
 
—

 
(274
)
Distributions of capital from equity investments
 
—

 
—

 
—

 
2

 
—

 
2

Other, principally change in intercompany investing activities
 
—

 
74

 
—

 
—

 
(74
)
 
—

Net cash (used in) provided by investing activities
 
(8
)
 
57

 
(54
)
 
(281
)
 
(74
)
 
(360
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds net of payments on long-term debt
 
—

 
7

 
—

 
(2
)
 
—

 
5

Repayment of assumed NYX debt
 
—

 
—

 
—

 
(288
)
 
—

 
(288
)
Payments of debt issuance and deferred financing costs
 
—

 
(39
)
 
—

 
—

 
—

 
(39
)
Payments on license obligations
 
(7
)
 
—

 
—

 
—

 
—

 
(7
)
Net redemptions of common stock under stock-based compensation plans and other
 
(15
)
 
—

 
(2
)
 
—

 
—

 
(17
)
Other, principally change in intercompany financing activities
 
(630
)
 
—

 
22

 
534

 
74

 
—

Net cash (used in) provided by financing activities
 
(652
)
 
(32
)
 
20

 
244

 
74

 
(346
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
—

 
—

 
—

 
2

 
—

 
2

(Decrease) increase in cash, cash equivalents and restricted cash
 
(692
)
 
—

 
—

 
20

 
(2
)
 
(674
)
Cash, cash equivalents and restricted cash, beginning of period
 
732

 
1

 
44

 
60

 
(3
)
 
834

Cash, cash equivalents and restricted cash end of period
 
$
40

 
$
1

 
$
44

 
$
80

 
$
(5
)
 
$
160

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Issuer of obligations under the Subordinated Notes, the Unsecured Notes (other than the 2026 Unsecured Notes, which were not issued until March 2019) and the Secured Notes.