Pension and Other Post-Retirement Plans (Tables)

12 Months Ended

Dec. 31, 2012

Pension and Other Post-Retirement Plans

Schedule of combined funded status of the pension plans and their reconciliation with the related amounts recognized in balance sheet

The following table sets forth the combined funded status of the pension plans and their reconciliation with the related amounts recognized in our Consolidated Financial Statements at our December 31 measurement dates:

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except per share amounts)

(17) Pension and Other Post-Retirement Plans (Continued)

	December 31,
	2012			2011
Change in benefit obligation:
Benefit obligation at beginning of year	$	91,270		$	88,873
Service cost	2,128			2,097
Interest cost	4,719			4,576
Prior Service Cost	(2,518		)	—
Participant contributions	1,192			1,079
Curtailments	—			—
Actuarial (gain) loss	8,082			794
Benefits paid	(2,536		)	(2,440		)
Settlement payments	—			(3,101		)
Other, principally foreign exchange	3,516			(608		)
Benefit obligation at end of year	105,853			91,270
Change in plan assets:
Fair value of plan assets at beginning of year	73,196			73,200
Business sale	—			—
Actual gain (loss) on plan assets	9,765			(876		)
Employer contributions	3,620			2,859
Participant contributions	1,192			1,079
Benefits paid	(2,536		)	(2,440		)
Settlement payments	—			—
Other, principally foreign exchange	2,803			(626		)
Fair value of assets at end of year	88,040			73,196
Amounts recognized in the consolidated balance sheets:
Funded status (current)	—			—
Funded status (non-current)	(17,813		)	(18,074		)
Accumulated other comprehensive income (pre-tax):
Unrecognized actuarial loss	19,905			16,537
Unrecognized prior service cost	(3,444		)	(1,088		)
Net amount recognized	$	(1,352	)	$	(2,625	)

Schedule of components of net periodic pension cost

The following are the components of our net periodic pension cost:

	December 31,
	2012			2011			2010
Components of net periodic pension benefit cost:
Service cost	$	2,128		$	2,097		$	1,750
Interest cost	4,719			4,576			4,799
Expected return on plan assets	(5,176		)	(5,170		)	(4,767		)
Amortization of actuarial gains/losses	788			382			503
Curtailments	—			—			1,692
Amortization of unrecognized prior service cost	(211		)	(79		)	(51		)
Net periodic cost	$	2,248		$	1,806		$	3,926

Schedule of amounts included in accumulated other comprehensive income expected to be recognized as components of net periodic pension cost during the next fiscal year

The amounts included in accumulated other comprehensive income as of December 31, 2012 expected to be recognized as components of net periodic pension cost during the fiscal year ending December 31, 2013 are as follows:

Net (gain) or loss	$	(260	)
Net prior service cost	1,044
Net amount expected to be recognized	$	784

Schedule of changes in fair value of pension assets valued using significant unobservable inputs (Level 3)

The change in fair value of the pension assets valued using significant unobservable inputs (Level 3) was due to the following:

	General Account
Beginning balance at December 31, 2011	$	9,356
Purchases	192
Unrealized gain on asset still held at December 31, 2012	883
Ending balance at December 31, 2012	$	10,431

Schedule of weighted-average actuarial assumptions used to determine the benefit obligation and net periodic benefit cost

The table below provides the weighted-average actuarial assumptions used to determine the benefit obligation and net periodic benefit cost for the U.K. Plan and the Canadian Plan.

	U.K. Plan						Canadian Plan
	2012		2011		2010		2012		2011		2010
Discount rates:
Benefit obligation	4.50	%	4.80	%	5.40	%	4.50	%	5.30	%	5.50	%
Net periodic pension cost	4.80	%	5.40	%	5.80	%	5.30	%	5.50	%	6.40	%
Rate of compensation increase	2.00	%	3.50	%	4.00	%	3.25	%	3.25	%	3.25	%
Expected return on assets	6.80	%	7.50	%	7.80	%	6.50	%	7.00	%	7.00	%

Schedule of future pension benefit payments expected to be paid

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Year	U.K. Plan		Canadian Plan
2013	$	894	$	1,507
2014	$	910	$	1,537
2015	$	926	$	1,637
2016	$	942	$	1,707
2017	$	959	$	1,853
2018 - 2022	$	5,085	$	12,210

U.K. Plan

Pension and Other Post-Retirement Plans

Schedule of fair value of defined benefit pension plan assets by asset category

The fair value of our U.K. Plan assets at December 31, 2012 by asset category is as follows:

Asset Category	Market Value at 12/31/2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities in U.K. companies (a)	$	10,950	$	—	$	10,950	$	—
Equity securities in non-U.K. companies (a)	7,490		—		7,490		—
Global Return Fund (a)	17,660		—		17,660		—
Corporate bonds (a)	5,215		—		5,215		—
Real estate	10,431		—		—		10,431
Cash (b)	374		374		—		—
Total pension assets	$	52,120	$	374	$	41,315	$	10,431

_______________________________________________________________________________

(a) The assets are invested through managed funds that are valued using inputs derived principally from quoted prices in active markets for the underlying assets in the fund.

(b) The fair value of cash equals its book value.

The fair value of our U.K. Plan assets at December 31, 2011 by asset category is as follows:

Asset Category	Market Value at 12/31/2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities in U.K. companies (a)	$	7,056	$	—	$	7,056	$	—
Equity securities in non-U.K. companies (a)	6,326		—		6,326		—
Global Return Fund (a)	15,386		—		15,386		—
Corporate bonds (a)	4,243		—		4,243		—
Real estate	9,356		—		—		9,356
Cash (b)	171		171		—		—
Total pension assets	$	42,538	$	171	$	33,011	$	9,356

_______________________________________________________________________________

(a) The assets are invested through managed funds that are valued using inputs derived principally from quoted prices in active markets for the underlying assets in the fund.

(b) The fair value of cash equals its book value.

Schedule of changes in fair value of pension assets valued using significant unobservable inputs (Level 3)

The change in fair value of the pension assets valued using significant unobservable inputs (Level 3) was due to the following:

	General Account
Beginning balance at December 31, 2010	2,416
Purchases	6,616
Unrealized gain on asset still held at December 31, 2011	324
Ending balance at December 31, 2011	9,356

Canadian Plan

Pension and Other Post-Retirement Plans

Schedule of fair value of defined benefit pension plan assets by asset category

The fair value of our Canadian Plan assets at December 31, 2011 by asset category is as follows:

Asset Category	Market Value at 12/31/2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities in Canadian companies (a)	$	9,759	$	9,049	$	710	$	—
Equity securities in non-Canadian companies (a)	9,169		4,773		4,396		—
Government bonds	4,629		4,629		—		—
Corporate bonds	6,470		6,470		—		—
Corporate bonds in non-Canadian companies	—		—		—		—
Other short-term investment (b)	377		—		377		—
Cash and cash equivalents (c)	254		254		—		—
Total pension assets	$	30,658	$	25,175	$	5,483	$	—

_______________________________________________________________________________

(a) Direct investments in equity securities are valued at quoted prices in active markets for identical assets. Equity securities invested through pooled funds are valued using inputs derived principally from the quoted prices in active markets for the underlying assets in the pool.

(b) Other short-term investments are investments in pooled money market funds that are valued using inputs derived principally from the quoted prices in active markets for the underlying assets in the pool.

(c) The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments.

The fair value of our Canadian Plan assets at December 31, 2012 by asset category is as follows:

Asset Category	Market Value at 12/31/2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities in Canadian companies (a)	$	6,908	$	6,908	$	—	$	—
Equity securities in non-Canadian companies (a)	15,348		15,348		—		—
Government bonds	5,690		—		5,690		—
Corporate bonds	6,778		—		6,778		—
Corporate bonds in non-Canadian companies	118		—		118		—
Other short-term investment (b)	839		839		—		—
Cash and cash equivalents (c)	240		240		—		—
Total pension assets	$	35,921	$	23,335	$	12,586	$	—

_______________________________________________________________________________

(a) Direct investments in equity securities are valued at quoted prices in active markets for identical assets. Equity securities invested through pooled funds are valued using inputs derived principally from the quoted prices in active markets for the underlying assets in the pool.

(b) Other short-term investments are investments in pooled money market funds that are valued using inputs derived principally from the quoted prices in active markets for the underlying assets in the pool.

(c) The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments.