8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 16, 2018

SCIENTIFIC GAMES CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	81-0422894
(State of incorporation)	(IRS Employer
	Identification No.)

0-13063

(Commission File Number)

6601 Bermuda Road, Las Vegas, Nevada 89119

(Address of principal executive offices) (Zip Code)

(702) 897-7150

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐  Emerging growth company

☐  If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Transition and Appointment of Group Chief Executive, Lottery

On December 17, 2018, Scientific Games Corporation (the “Company”) announced that Patrick J. McHugh, currently the Company’s Senior Vice President, Global Lottery Systems will, effective as of January 1, 2019, succeed James C. Kennedy as Executive Vice President and Group Chief Executive, Lottery.  Mr. Kennedy will remain with the Company, serving as Chairman, Lottery.

Mr. McHugh has worked in the lottery industry for more than 25 years, with the last 14 of them being with the Company, where he also serves on the leadership executive team.  As a result of his experience, Mr. McHugh has unparalleled gaming systems technology expertise in markets around the world directing complex technology deployments, operations, new business initiatives and strategic product development.  Mr. McHugh has also led many of the Company’s strategic industry firsts, including expanded distribution channels, cashless payments, sports betting, new network technology, iLottery and other digital platforms.

Amendment to Mr. Kennedy’s Employment Agreement

On December 16, 2018, the Company’s wholly owned subsidiary, Scientific Games International, Inc. (“SGI”) entered into an amendment to its employment agreement with Mr. Kennedy to reflect his transition to the role of Chairman, Lottery.  In consideration for his services in such role, the amendment provides that Mr. Kennedy will receive: (i) an award of 15,000 restricted stock units to be granted no later than January 11, 2019, which will vest in three equal installments on the first three anniversaries of the grant date; and (ii) on or prior to March 31, 2019, a cash bonus in an amount, net of taxes, equal to $26,000.

The amendment provides that, if Mr. Kennedy’s employment is terminated by SGI upon the expiration of his employment agreement, he will receive:  (i) continued payment of his base salary; (ii) payment of COBRA premiums if Mr. Kennedy elects to continue medical coverage under the Company’s group health plan in accordance with COBRA, in the cases of (i) and (ii), for a period of up to 18 months; (iii) a cash payment paid over 12 months equal to the highest annual bonus received by Mr. Kennedy in the prior 2 years (but not more than his target annual bonus opportunity); and (iv) continued vesting of all his outstanding equity awards.

Except as provided above, the terms of Mr. Kennedy’s employment agreement generally remain unchanged.

Amendment to Mr. Quartieri’s Employment Agreement

On December 17, 2018, the Company entered into an amendment to its employment agreement with Michael A. Quartieri, the Company’s Executive Vice President, Chief Financial Officer, Treasurer and Corporate Secretary. Pursuant to the amendment, Mr. Quartieri’s base salary was increased to $675,000.  In addition, the term of Mr. Quartieri’s employment agreement was extended to December 31, 2021, subject to extension for an additional year at the end of the term and each anniversary thereof unless timely notice of non-renewal is given.  If Mr. Quartieri’s employment is terminated by the Company upon the expiration of his employment agreement and Mr. Quartieri elects to continue medical coverage under the Company’s group health plan in accordance with COBRA, Mr. Quartieri will receive, in addition to other severance benefits to which he may be entitled, payment of COBRA premiums for a period of up to 12 months.

Except as provided above, the terms of Mr. Quartieri’s employment agreement generally remain unchanged.

 Item 7.01.  Regulation FD Disclosure.

On December 17, 2018, the Company issued a press release announcing that Mr. McHugh will succeed Mr. Kennedy as Executive Vice President and Group Chief Executive, Lottery.  A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Item 7.01 as well as in Exhibit 99.1 is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of Scientific Games Corporation, dated December 17, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SCIENTIFIC GAMES CORPORATION
Date:  December 17, 2018	By:	/s/ Michael A. Quartieri
		Name:  Michael A. Quartieri
		Title:    Executive Vice President, Chief Financial Officer,
		Treasurer and Corporate Secretary

EX-99.1

Exhibit 99.1

 

Scientific Games Elevates Key Executives

SG Lottery Group Chief Executive and Industry Leader Jim Kennedy Elevated to Chairman, Lottery

25 Year Lottery Industry Veteran Patrick McHugh to become SG’s New EVP and Group Chief Executive, Lottery

Jordan Levin, who Launched SG Interactive and Led Acquisition and Integration of NYX, to be SG’s New EVP and Group Chief Executive, Digital

LAS VEGAS and ATLANTA, Dec. 17, 2018 /PRNewswire/ -- Scientific Games Corporation (NASDAQ: SGMS) (“Scientific Games” or the “Company”) announced three executive promotions to solidify the Company’s leadership team going into 2019. Jim Kennedy, currently Executive Vice President and Group Chief Executive, Lottery, will become Chairman, Lottery and Patrick (“Pat”) McHugh, who currently serves as Senior Vice President Global Lottery Systems, has been appointed the Lottery’s new Executive Vice President and Group Chief Executive. In addition, Jordan Levin has been named the new Executive Vice President and Group Chief Executive, Digital. Levin has extensive experience in interactive, digital gaming and sports betting, and is currently Senior Vice President for Corporate Development, where he led the acquisition and integration of NYX Gaming Group and previously launched and served as President of SG Interactive.

Barry Cottle, Scientific Games’ President and CEO, said, “These globally-respected leaders and longtime members of our SG family are the best people to continue our growth trajectory, deliver operational excellence and inspire our employees. Pat will leverage his in-depth Lottery experience and proven success at Scientific Games to provide strong operational leadership and innovation. He will work with Jim to continue to execute our global growth strategies. For SG Digital, Jordan’s digital experience will prove immensely valuable, as he formally takes over our rapidly accelerating digital gaming and sports betting businesses.”

McHugh has a wealth of lottery experience, having been in the industry for more than 25 years.  He has been with Scientific Games for the past 14 years and serves on the leadership executive team as Senior Vice President Global Lottery Systems. McHugh has unparalleled expertise in gaming systems technology in markets around the world directing complex technology deployments, operations, new business initiatives and strategic product development.

As Executive Vice President and Group Chief Executive, Lottery, McHugh will be responsible for the globallottery business and will work with Kennedy to service existing relationships and grow the lottery business in the U.S. and around the world. McHugh has led many of Scientific Games’ strategic industry firsts, including expanded distribution channels, cashless payments, sports betting, new network technology, iLottery and other digital platforms.

Jim Kennedy, SG’s new Lottery Chairman said, “I’m incredibly proud of what we have built at Scientific Games which I believe is the number one lottery company in the world. We provide our lottery customers the best games, products and services in the industry. I look forward to continuing to help our customers drive record growth for their states and countries as Chairman of the lottery business. Pat has been an invaluable leader in our lottery team and is respected across our industry. His years of experience, relentless work ethic and commitment to the highest quality products and services for our customers in the U.S. and around the world will ensure that we continue to execute our growth strategy for our existing lottery customers as well grow in new areas, including iLottery and sports betting. I look forward to working with him, the entire team, and our customers to continue to lead our industry into the future.”

 

Since joining Scientific Games in 2006, Jordan Levin has been a driving force behind the Company’s interactive and digital strategies, new business development and operations. A proven leader with more than 12 years in the industry, Levin has deepened the Company’s portfolio of digital professionals, products and technologies for iGaming, iLottery and sports betting.

As SG’s Executive Vice President and Group Chief Executive, Digital, Levin will be responsible for defining the business group’s overall strategic direction and overseeing all functions of the business. Levin will leverage his executive management and leadership expertise, business acumen, in-depth knowledge of digital gaming and sports betting, and ability to foster a culture of success to help the Company capitalize on new opportunities and markets. With the integration of NYX now fully complete, Levin will officially take the reins from former NYX CEO Matt Davey at the end of the year.

About Scientific Games  Scientific Games Corporation (NASDAQ: SGMS) is a world leader in entertainment offering dynamic games, systems and services for casino, lottery, social gaming, online gaming and sports betting. Scientific Games offers the gaming industry’s broadest and most integrated portfolio of game content, advanced systems, cutting-edge platforms and professional services. Committed to responsible gaming, Scientific Games delivers what customers and players value most: trusted security, engaging entertainment content, operating efficiencies and innovative technology. For more information, please visit scientificgames.com.

The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

COMPANY CONTACTS Media Relations Susan Cartwright +1 702-532-7981 Vice President, Corporate Communications susan.cartwright@scientificgames.com

Investor Relations Mike Quartieri +1 702-532-7658 Executive Vice President and Chief Financial Officer

All ® notices signify marks registered in the United States. © 2018 Scientific Games Corporation. All Rights Reserved.

 

Forward-Looking Statements

Forward-Looking Statements in this press release, Scientific Games makes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “will,” “may,” and “should.” These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including those factors described in our filings with the SEC, including the Company’s current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K filed with the SEC on March 1, 2018 (including under the headings “Forward Looking Statements” and “Risk Factors”). Forward-looking statements speak only as of the date they are made and, except for Scientific Games’ ongoing obligations under the U.S. federal securities laws, Scientific Games undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.