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 2020 Notes and the 2019 Notes are fully and unconditionally and jointly and severally guaranteed by Scientific Games Corporation (the “Parent Company”) and 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.

Presented below is condensed consolidated financial information for (i) the Parent Company, (ii) SGI, (iii) the Guarantor Subsidiaries and (iv) our 100%-owned foreign subsidiaries and our non-100%-owned U.S. and foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) as of December 31, 2012 and December 31, 2011 and for the years ended December 31, 2012, 2011 and 2010. The condensed consolidating financial information has been presented to show the nature of assets held, 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 2020 Notes, the 2019 Notes and the 2018 Notes were in effect at the beginning of the periods presented.

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

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

(in thousands)



	Parent Company		SGI			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	27,159	$	201		$	—	$	82,834	$	(1,179	)	$	109,015
Accounts receivable, net	—		63,944			29,156		117,045		—			210,145
Restricted Cash	—		—			—		30,398		—			30,398
Inventories	—		25,411			16,063		29,781		—			71,255
Note receivable	10,298					—		—		—			10,298
Other current assets	9,693		3,809			6,773		33,507		—			53,782
Property and equipment, net	5,727		154,243			32,957		183,950		—			376,877
Investment in subsidiaries	520,969		802,425			—		855,801		(2,179,195		)	—
Goodwill	—		253,928			76,741		470,429		—			801,098
Intangible assets, net	—		42,000			20,367		21,924		—			84,291
Intercompany balances	79,735		—			302,396		—		(382,131		)	—
Other assets	6,479		74,923			7,507		353,455		(2,615		)	439,749
Total assets	$	660,060	$	1,420,884		$	491,960	$	2,179,124	$	(2,565,120	)	$	2,186,908
Liabilities and stockholders' equity
Current installments of long-term debt	$	—	$	6,280		$	—	$	10,178	$	—		$	16,458
Other current liabilities	28,485		58,473			35,436		118,682		(1,187		)	239,889
Long-term debt, excluding current installments	250,000		1,199,247			—		2,461		—			1,451,708
Other non-current liabilities	16,784		25,560			12,174		59,544		—			114,062
Intercompany balances	—		136,402			—		245,748		(382,150		)	—
Stockholders' equity	364,791		(5,078		)	444,350		1,742,511		(2,181,783		)	364,791
Total liabilities and stockholders' equity	$	660,060	$	1,420,884		$	491,960	$	2,179,124	$	(2,565,120	)	$	2,186,908

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

(in thousands)



	Parent Company		SGI		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	24,042	$	56	$	—	$	81,482	$	(1,178	)	$	104,402
Accounts receivable, net	—		53,531		41,238		87,698		—			182,467
Inventories	—		23,714		16,884		39,144		—			79,742
Note receivable	—		—		—		—		—			—
Other current assets	8,699		3,409		5,117		21,720		—			38,945
Property and equipment, net	3,522		166,637		36,028		220,301		—			426,488
Investment in subsidiaries	551,256		721,909		—		909,379		(2,182,544		)	—
Goodwill	—		273,656		78,618		416,119		—			768,393
Intangible assets, net	—		41,520		25,849		19,490		—			86,859
Intercompany balances	125,440		—		231,357		—		(356,797		)	—
Other assets	17,002		82,748		12,265		368,701		(6,101		)	474,615
Total assets	$	729,961	$	1,367,180	$	447,356	$	2,164,034	$	(2,546,620	)	$	2,161,911
Liabilities and stockholders' equity
Current installments of long-term debt	$	—	$	6,280	$	—	$	19,911	$	—		$	26,191
Other current liabilities	31,231		56,050		30,140		94,692		(1,211		)	210,902
Long-term debt, excluding current installments	250,000		1,104,884		—		9,592		—			1,364,476
Other non-current liabilities	5,016		38,772		13,427		59,413		—			116,628
Intercompany balances	—		71,603		—		285,162		(356,765		)	—
Stockholders' equity	443,714		89,591		403,789		1,695,264		(2,188,644		)	443,714
Total liabilities and stockholders' equity	$	729,961	$	1,367,180	$	447,356	$	2,164,034	$	(2,546,620	)	$	2,161,911

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Year Ended December 31, 2012

(in thousands)



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	421,944		$	45,003		$	478,128		$	(4,473	)	$	940,602
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			136,254			138,517			262,791			(8,853		)	528,709
Selling, general and administrative expenses	65,048			55,986			12,157			58,782			(3,160		)	188,813
Employee termination and restructuring costs	—			—			—			11,502			—			11,502
Depreciation and amortization	598			36,670			23,965			112,137			—			173,370
Operating (loss) income	(65,646		)	193,034			(129,636		)	32,916			7,540			38,208
Interest expense	(21,223		)	(77,575		)	—			(1,210		)	—			(100,008		)
Other income (expense)	29,009			(193,019		)	170,193			15,151			(7,540		)	13,794
Net (loss) income before equity in income of subsidiaries, and income taxes	(57,860		)	(77,560		)	40,557			46,857			—			(48,006		)
Equity in income (loss) of subsidiaries	(60,490		)	39,991			—			—			20,499			—
Income tax expense	(55,723		)	58,319			—			12,025			—			14,621
Net (loss) income	(62,627		)	(95,888		)	40,557			34,832			20,499			(62,627		)

Other comprehensive income (loss)	29,840			1,062			—			28,661			(29,723		)	29,840
Comprehensive (loss) income	$	(32,787	)	$	(94,826	)	$	40,557		$	63,493		$	(9,224	)	$	(32,787	)

_______________________________________________________________________________


(1)	Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Year Ended December 31, 2011

(in thousands)



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	395,007		$	59,426		$	425,729		$	(1,440	)	$	878,722
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			130,166			140,230			225,400			(4,517		)	491,279
Selling, general and administrative expenses	61,537			52,655			10,235			58,623			(28		)	183,022
Employee termination and restructuring costs	—			—			—			1,997			—			1,997
Depreciation and amortization	531			29,854			19,000			69,218			—			118,603
Operating (loss) income	(62,068		)	182,332			(110,039		)	70,491			3,105			83,821
Interest expense	(21,487		)	(81,536		)	—			(1,680		)	—			(104,703		)
Other income (expense)	17,200			(184,604		)	173,990			20,814			(3,105		)	24,295
Net (loss) income before equity in income of subsidiaries, and income taxes	(66,355		)	(83,808		)	63,951			89,625			—			3,413
Equity in income (loss) of subsidiaries	55,352			64,691			—			—			(120,043		)	—
Income tax expense	1,567			(522		)	11			14,927			—			15,983
Net (loss) income	(12,570		)	(18,595		)	63,940			74,698			(120,043		)	(12,570		)

Other comprehensive (loss) income	(15,290		)	2,972			—			(17,316		)	14,344			(15,290		)
Comprehensive (loss) income	$	(27,860	)	$	(15,623	)	$	63,940		$	57,382		$	(105,699	)	$	(27,860	)

_______________________________________________________________________________


(1)	Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME

Year Ended December 31, 2010

(in thousands)



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	378,523		$	52,344		$	453,118		$	(1,486	)	$	882,499
Cost of instant ticket revenue, cost of services and cost of sales (1)	—			120,771			140,467			255,254			(1,626		)	514,866
Selling, general and administrative expenses	46,922			53,711			10,831			46,860			176			158,500
Write-down of assets held for sale	—			—			—			8,029			—			8,029
Employee termination and restructuring costs	—			—			—			602			—			602
Depreciation and amortization	501			53,696			18,337			69,232			—			141,766
Operating (loss) income	(47,423		)	150,345			(117,291		)	73,141			(36		)	58,736
Interest expense	(16,817		)	(82,005		)	—			(2,791		)	—			(101,613		)
Other (expense) income	(12,198		)	(164,573		)	202,489			11,810			36			37,564
Net (loss) income before equity in income of subsidiaries, and income taxes	(76,438		)	(96,233		)	85,198			82,160			—			(5,313		)
Equity in income (loss) of subsidiaries	19,167			81,454			—			—			(100,621		)	—
Income tax expense	91,930			15,849			12			36,097			—			143,888
Net (loss) income	(149,201		)	(30,628		)	85,186			46,063			(100,621		)	(149,201		)

Other comprehensive (loss) income	(14,943		)	1,290			2,468			(14,044		)	10,286			(14,943		)
Comprehensive (loss) income	$	(164,144	)	$	(29,338	)	$	87,654		$	32,019		$	(90,335	)	$	(164,144	)

_______________________________________________________________________________


(1)	Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2012

(in thousands)



	Parent Company			SGI			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net (loss) income	$	(62,627	)	$	(95,888	)	$	40,557		$	34,832		$	20,499		$	(62,627	)
Depreciation and amortization	598			36,670			23,965			112,137			—			173,370
Change in deferred income taxes	(46,399		)	61,748			(9,320		)	1,848			—			7,877
Equity in income of subsidiaries	60,490			(39,991		)	—			—			(20,499		)	—
Non-cash interest expense	730			7,058			—			—			—			7,788
Undistributed earnings from equity investments	—			2,564			5,225			(2,168		)	4,380			10,001
Stock-based compensation	24,159			—			—			—			—			24,159
Early extinguishment of debt	—			15,464			—			—			—			15,464
Changes in working capital and other	2,508			(9,696		)	6,545			(14,284		)	(4,355		)	(19,282		)
Net cash provided by (used in) operating activities	(20,541		)	(22,071		)	66,972			132,365			25			156,750
Cash flows from investing activities:
Capital and wagering systems expenditures	(2,824		)	(30,174		)	(17,039		)	(61,295		)	—			(111,332		)
Investments in subsidiaries	—			(37,142		)	—			85,422			(48,280		)	—
Equity method investments	—			1,003			156			23,732			—			24,891
Restricted Cash	—			—			—			(29,401		)	—			(29,401		)
Business acquisitions, net of cash acquired	—			(1,000		)	—			(23,824		)	—			(24,824		)
Other assets and investments	(418		)	(126		)	—			(632		)	—			(1,176		)
Net cash (used in) investing activities	(3,242		)	(67,439		)	(16,883		)	(5,998		)	(48,280		)	(141,842		)
Cash flows from financing activities:
Net proceeds/payments on long-term debt	—			93,720			—			(17,050		)	—			76,670
Tax effect from equity-based compensation plans	31			—			—			362			—			393
Payments of financing fees	—			(14,002		)	—			—			—			(14,002		)
Net proceeds from stock issue	(4,713		)	—			—			(48,315		)	48,314			(4,714		)
Purchase of treasury stock	(68,457		)	—			—			—			—			(68,457		)
Other, principally intercompany balances	100,042			9,862			(50,089		)	(59,757		)	(58		)	—
Net cash provided by (used in) financing activities	26,903			89,580			(50,089		)	(124,760		)	48,256			(10,110		)
Effect of exchange rate changes on cash	—			74			—			(259		)	—			(185		)
Increase (decrease) in cash and cash equivalents	3,120			144			—			1,348			1			4,613
Cash and cash equivalents, beginning of period	24,041			57			2,378			77,926			—			104,402
Cash and cash equivalents, end of year	$	27,161		$	201		$	2,378		$	79,274		$	1		$	109,015

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2011

(in thousands)



	Parent Company			SGI			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net (loss) income	$	(12,570	)	$	(18,595	)	$	63,940		$	74,698		$	(120,043	)	$	(12,570	)
Depreciation and amortization	531			29,854			19,000			69,218			—			118,603
Change in deferred income taxes	3,960			4,301			(9,320		)	978			—			(81		)
Equity in income of subsidiaries	(55,351		)	(64,692		)	—			—			120,043			—
Non-cash interest expense	720			7,387			—			—			—			8,107
Undistributed earnings from equity investments	—			22,918			1,581			(21,828		)	3,105			5,776
Stock-based compensation	21,538			—			—			—			—			21,538
Early extinguishment of debt	—			4,185			—			—			—			4,185
Changes in working capital and other	10,125			27,241			(7,895		)	(786		)	(3,165		)	25,520
Net cash provided by (used in) operating activities	(31,047		)	12,599			67,306			122,280			(60		)	171,078
Cash flows from investing activities:
Capital and wagering systems expenditures	(2,110		)	(37,044		)	(13,660		)	(39,070		)	—			(91,884		)
Investments in subsidiaries	—			13,552			—			(473,220		)	459,668			—
Equity method investments	—			(11,092		)	(1,072		)	(7,229		)	—			(19,393		)
Business acquisitions, net of cash acquired	—			—			—			(52,953		)	—			(52,953		)
Other assets and investments	2,683			(75		)	217			266			—			3,091
Net cash provided by (used in) investing activities	573			(34,659		)	(14,515		)	(572,206		)	459,668			(161,139		)
Cash flows from financing activities:
Net proceeds/payments on long-term debt	—			(6,280		)	—			(1,526		)	—			(7,806		)
Tax effect from equity-based compensation plans	—			—			—			139			—			139
Payments of financing fees	(122		)	(14,498		)	—			—			—			(14,620		)
Net proceeds from stock issue	(2,354		)	—			28			459,393			(459,421		)	(2,354		)
Purchase of treasury stock	—			—			—			—			—			—
Other, principally intercompany balances	(4,925		)	44,298			(52,719		)	13,147			199			—
Net cash provided by (used in) financing activities	(7,401		)	23,520			(52,691		)	471,153			(459,222		)	(24,641		)
Effect of exchange rate changes on cash	(721		)	(1,555		)	—			(2,515		)	(386		)	(5,177		)
Increase (decrease) in cash and cash equivalents	(38,596		)	(95		)	100			18,712			—			(19,879		)
Cash and cash equivalents, beginning of period	$	62,637		$	152		$	2,278		$	59,214		$	—		$	124,281
Cash and cash equivalents, end of year	$	24,041		$	57		$	2,378		$	77,926		$	—		$	104,402

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(21) Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries (Continued)

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2010

(in thousands)



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net (loss) income	$	(149,201	)	$	(30,628	)	$	85,186		$	46,063		$	(100,621	)	$	(149,201	)
Depreciation and amortization	501			53,696			18,337			69,232			—			141,766
Change in deferred income taxes	58,650			17,963			(730		)	48,260			—			124,143
Equity in income of subsidiaries	(19,167		)	(81,454		)	—			—			100,621			—
Non-cash interest expense	886			6,277			—			—			—			7,163
Undistributed earnings from equity investments	—			(7,576		)	(764		)	(6,339		)	—			(14,679		)
Stock-based compensation	22,807			—			—			—			—			22,807
Early extinguishment of debt	2,260			672			—			—			—			2,932
Restructuring and write-down of assets	3,532			985			—			5,922			(2,049		)	8,390
Changes in working capital and other	6,223			22,256			(2,783		)	1,527			29			27,252
Net cash provided by (used in) operating activities	(73,509		)	(17,809		)	99,246			164,665			(2,020		)	170,573
Cash flows from investing activities:
Capital and wagering systems expenditures	(101		)	(25,325		)	(4,357		)	(42,495		)	—			(72,278		)
Investments in subsidiaries	(57,163		)	(59,609		)	—			(160,938		)	277,710			—
Equity method investments	—			(3,817		)	(343		)	(199,635		)	—			(203,795		)
Proceeds from sale of Racing Business	35,942			—			—			—			—			35,942
Business acquisitions, net of cash acquired	—			—			(6,556		)	(5,937		)	—			(12,493		)
Other assets and investments	28,936			(14,813		)	(13,338		)	(35,741		)	(5		)	(34,961		)
Net cash provided by (used in) investing activities	7,614			(103,564		)	(24,594		)	(444,746		)	277,705			(287,585		)
Cash flows from financing activities:
Net proceeds/payments on long-term debt	52,982			31,135			—			(52,429		)	—			31,688
Excess tax benefit from equity-based compensation plans	435			—			—			67			—			502
Payments of financing fees	(6,686		)	(6,969		)	—			—			—			(13,655		)
Net proceeds from stock issue	(1,995		)	103,940			4,879			166,844			(275,663		)	(1,995		)
Purchase of treasury stock	(26,335		)	—			—			—			—			(26,335		)
Other, principally intercompany balances	(40,019		)	(6,465		)	(80,531		)	126,860			155			—
Net cash provided by (used in) financing activities	(21,618		)	121,641			(75,652		)	241,342			(275,508		)	(9,795		)
Effect of exchange rate changes on cash	2,930			(253		)	—			(11,543		)	(177		)	(9,043		)
Increase (decrease) in cash and cash equivalents	(84,583		)	15			(1,000		)	(50,282		)	—			(135,850		)
Cash and cash equivalents, beginning of period	$	147,220		$	137		$	3,278		$	109,496		$	—		$	260,131
Cash and cash equivalents, end of year	$	62,637		$	152		$	2,278		$	59,214		$	—		$	124,281