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 2021 Notes, 2020 Notes and 2018 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 September 30, 2014 and December 31, 2013 and for the three and nine months ended September 30, 2014 and 2013. 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 2021 Notes, the 2020 Notes and the 2018 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. 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. This is a correction from the prior-year presentation that reflected all changes in intercompany due to/due from accounts as financing activities in the Supplemental Condensed Consolidating Statements of Cash Flows. This correction had no impact on our consolidated results of operations for the periods presented.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

As of September 30, 2014



	Parent Company		SGI		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	36.4	$	0.3	$	11.3	$	84.5	$	—		$	132.5
Restricted cash	—		—		12.0		0.1		—			12.1
Accounts receivable, net	—		62.3		117.1		117.9		—			297.3
Notes receivable, net	—		—		71.5		56.6		—			128.1
Inventories	—		40.7		60.1		70.1		—			170.9
Other current assets	14.6		14.4		51.6		28.5		—			109.1
Property and equipment, net	0.5		125.7		410.2		203.2		—			739.6
Investment in subsidiaries	1,849.5		952.6		—		—		(2,802.1		)	—
Goodwill	—		253.6		480.5		434.6		—			1,168.7
Intangible assets, net	161.1		42.4		284.8		12.0		—			500.3
Intercompany balances	—		1,413.0		343.4		—		(1,756.4		)	—
Software, net	12.7		33.2		211.2		49.7		—			306.8
Other assets	3.1		116.4		26.3		327.7		—			473.5
Total assets	$	2,077.9	$	3,054.6	$	2,080.0	$	1,384.9	$	(4,558.5	)	$	4,038.9
Liabilities and stockholders’ equity
Debt payments due within one year	$	—	$	23.0	$	—	$	7.9	$	—		$	30.9
Other current liabilities	39.7		77.5		117.0		127.0		—			361.2
Long-term debt, excluding current installments	250.0		2,897.6		—		30.8		—			3,178.4
Other long-term liabilities	179.8		45.9		69.7		67.3		—			362.7
Intercompany balances	1,502.7		—		—		253.7		(1,756.4		)	—
Stockholders’ equity	105.7		10.6		1,893.3		898.2		(2,802.1		)	105.7
Total liabilities and stockholders’ equity	$	2,077.9	$	3,054.6	$	2,080.0	$	1,384.9	$	(4,558.5	)	$	4,038.9

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2013



	Parent Company		SGI			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminating Entries			Consolidated
Assets
Cash and cash equivalents	$	56.0	$	—		$	24.4	$	73.3	$	—		$	153.7
Restricted cash	—		—			10.9		—		—			10.9
Accounts receivable, net	—		66.9			135.4		143.7		—			346.0
Notes receivable, net	—		—			90.9		67.8		—			158.7
Inventories	—		28.2			59.6		50.0		—			137.8
Other current assets	13.9		10.5			95.0		30.9		—			150.3
Property and equipment, net	1.1		137.3			441.8		192.9		—			773.1
Investment in subsidiaries	1,962.5		796.5			—		—		(2,759.0		)	—
Goodwill	—		251.7			465.4		466.0		—			1,183.1
Intangible assets, net	1.9		42.0			340.6		26.6		—			411.1
Intercompany balances	—		1,430.1			296.3		—		(1,726.4		)	—
Software, net	9.4		31.7			251.4		51.0		—			343.5
Other assets	6.0		147.7			42.2		372.3		—			568.2
Total assets	$	2,050.8	$	2,942.6		$	2,253.9	$	1,474.5	$	(4,485.4	)	$	4,236.4
Liabilities and stockholders’ equity
Debt payments due within one year	$	—	$	23.0		$	—	$	7.4	$	—		$	30.4
Other current liabilities	30.4		63.2			176.2		151.4		—			421.2
Long-term debt, excluding current installments	250.0		2,912.2			—		—		—			3,162.2
Other long-term liabilities	20.8		37.8			121.2		67.8		—			247.6
Intercompany balances	1,374.6		—			—		351.8		(1,726.4		)	—
Stockholders’ equity	375.0		(93.6		)	1,956.5		896.1		(2,759.0		)	375.0
Total liabilities and stockholders’ equity	$	2,050.8	$	2,942.6		$	2,253.9	$	1,474.5	$	(4,485.4	)	$	4,236.4

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

Three Months Ended September 30, 2014



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries		Consolidated
Revenue	$	—		$	106.9		$	159.1		$	149.6		$	—	$	415.6
Cost of instant games, cost of services and cost of product sales (1)	—			29.7			82.2			87.3			—		199.2
Selling, general and administrative	19.5			16.8			40.4			18.9			—		95.6
Research and development	—			1.2			20.9			4.2			—		26.3
Employee termination and restructuring	(0.1		)	—			1.4			0.6			—		1.9
Depreciation and amortization	1.2			11.8			67.7			19.7			—		100.4
Operating (loss) income	(20.6		)	47.4			(53.5		)	18.9			—		(7.8		)
Interest expense	(0.2		)	(16.2		)	(29.1		)	(0.2		)	—		(45.7		)
Other (expense) income, net	(7.0		)	(55.4		)	41.4			10.1			—		(10.9		)
Net (loss) income before equity in income of subsidiaries and income taxes	(27.8		)	(24.2		)	(41.2		)	28.8			—		(64.4		)
Equity in (loss) income of subsidiaries	(38.8		)	16.3			—			—			22.5		—
Income tax expense	(3.2		)	(0.2		)	—			(2.0		)	—		(5.4		)
Net (loss) income from continuing operations	$	(69.8	)	$	(8.1	)	$	(41.2	)	$	26.8		$	22.5	$	(69.8	)

Net (loss) income	(69.8		)	(8.1		)	(41.2		)	26.8			22.5		(69.8		)

Other comprehensive (loss) income	(55.1		)	(5.4		)	—			(55.7		)	61.1		(55.1		)
Comprehensive (loss) income	$	(124.9	)	$	(13.5	)	$	(41.2	)	$	(28.9	)	$	83.6	$	(124.9	)

(1) Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

Three Months Ended September 30, 2013



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	100.6		$	20.3		$	113.9		$	(0.4	)	$	234.4
Cost of instant games, cost of services and cost of product sales (1)	—			30.2			38.1			59.8			(1.6		)	126.5
Selling, general and administrative	16.9			13.3			2.5			13.1			(0.2		)	45.6
Research and development	—			0.9			0.2			0.3			—			1.4
Employee termination and restructuring	—			—			—			—			—			—
Depreciation and amortization	0.2			9.8			5.6			19.6			—			35.2
Operating (loss) income	(17.1		)	46.4			(26.1		)	21.1			1.4			25.7
Interest expense	(5.3		)	(19.7		)	—			(0.2		)	—			(25.2		)
Other income (expense), net	1.3			(44.9		)	45.1			3.3			(1.4		)	3.4
Net (loss) income before equity in income of subsidiaries and income taxes	(21.1		)	(18.2		)	19.0			24.2			—			3.9
Equity in income (loss) of subsidiaries	23.6			18.8			—			—			(42.4		)	—
Income tax expense	(2.9		)	(0.1		)	—			(1.3		)	—			(4.3		)
Net (loss) income from continuing operations	$	(0.4	)	$	0.5		$	19.0		$	22.9		$	(42.4	)	$	(0.4	)

Net loss from discontinued operations	(0.1		)	—			—			(0.1		)	0.1			(0.1		)

Net (loss) income	(0.5		)	0.5			19.0			22.8			(42.3		)	(0.5		)

Other comprehensive (loss) income	39.2			(2.1		)	—			41.0			(38.9		)	39.2
Comprehensive (loss) income	$	38.7		$	(1.6	)	$	19.0		$	63.8		$	(81.2	)	$	38.7

(1) Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

Nine Months Ended September 30, 2014



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries		Consolidated
Revenue	$	—		$	317.1		$	475.4		$	428.1		$	—	$	1,220.6
Cost of instant games, cost of services and cost of product sales (1)	—			93.5			243.8			237.1			—		574.4
Selling, general and administrative	51.6			50.9			122.5			57.6			—		282.6
Research and development	—			2.3			62.5			12.2			—		77.0
Employee termination and restructuring	1.9			0.2			5.5			4.8			—		12.4
Depreciation and amortization	6.7			32.1			187.5			64.2			—		290.5
Operating (loss) income	(60.2		)	138.1			(146.4		)	52.2			—		(16.3		)
Interest expense	(2.5		)	(62.7		)	(77.0		)	(0.7		)	—		(142.9		)
Other (expense) income, net	(39.6		)	(150.7		)	132.8			47.5			—		(10.0		)
Net (loss) income before equity in income of subsidiaries and income taxes	(102.3		)	(75.3		)	(90.6		)	99.0			—		(169.2		)
Equity in (loss) income of subsidiaries	(71.7		)	51.4			—			—			20.3		—
Income tax expense	(13.2		)	(0.3		)	—			(4.5		)	—		(18.0		)
Net (loss) income from continuing operations	$	(187.2	)	$	(24.2	)	$	(90.6	)	$	94.5		$	20.3	$	(187.2	)

Net (loss) income	(187.2		)	(24.2		)	(90.6		)	94.5			20.3		(187.2		)

Other comprehensive (loss) income	(51.4		)	(2.4		)	(0.3		)	(45.6		)	48.3		(51.4		)
Comprehensive (loss) income	$	(238.6	)	$	(26.6	)	$	(90.9	)	$	48.9		$	68.6	$	(238.6	)

(1) Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

Nine Months Ended September 30, 2013



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Revenue	$	—		$	308.4		$	42.2		$	340.5		$	(2.1	)	$	689.0
Cost of instant games, cost of services and cost of product sales (1)	—			97.1			107.2			185.8			(5.5		)	384.6
Selling, general and administrative	52.2			38.1			7.6			42.0			(0.8		)	139.1
Research and development	—			3.1			0.5			1.1			—			4.7
Employee termination and restructuring	—			—			—			0.3			—			0.3
Depreciation and amortization	0.5			28.4			16.7			65.5			—			111.1
Operating (loss) income	(52.7		)	141.7			(89.8		)	45.8			4.2			49.2
Interest expense	(15.9		)	(58.8		)	—			(0.6		)	—			(75.3		)
Other income (expense), net	4.5			(131.7		)	134.6			9.0			(4.2		)	12.2
Net (loss) income before equity in income of subsidiaries and income taxes	(64.1		)	(48.8		)	44.8			54.2			—			(13.9		)
Equity in income (loss) of subsidiaries	45.5			44.6			—			—			(90.1		)	—
Income tax expense	(6.5		)	(0.3		)	—			(4.4		)	—			(11.2		)
Net (loss) income from continuing operations	$	(25.1	)	$	(4.5	)	$	44.8		$	49.8		$	(90.1	)	$	(25.1	)

Net loss from discontinued operations	(1.6		)	—			—			(1.6		)	1.6			(1.6		)

Net (loss) income	(26.7		)	(4.5		)	44.8			48.2			(88.5		)	(26.7		)

Other comprehensive (loss) income	1.9			(1.9		)	—			3.6			(1.7		)	1.9
Comprehensive (loss) income	$	(24.8	)	$	(6.4	)	$	44.8		$	51.8		$	(90.2	)	$	(24.8	)

(1) Exclusive of depreciation and amortization.

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2014



	Parent Company			SGI			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net cash (used in) provided by operating activities	$	(79.2	)	$	19.8		$	160.0		$	132.8		$	—		$	233.4
Cash flows from investing activities:																—
Additions to property and equipment	(2.3		)	(2.1		)	(22.1		)	(5.9		)	—			(32.4		)
Lottery and gaming services expenditures	(0.1		)	(9.7		)	(41.3		)	(22.0		)	—			(73.1		)
Intangible assets and software expenditures	(6.0		)	(12.1		)	(49.9		)	(2.8		)	—			(70.8		)
Additions to equity method investments	—			—			—			(43.3		)	—			(43.3		)
Distributions of capital on equity investments	—			(1.3		)	—			46.7			—			45.4
Proceeds on sale of equity interest	—			—			—			44.9			—			44.9
Other	(9.6		)	29.2			(0.6		)	16.1			(35.7		)	(0.6		)
Intercompany balances	—			18.8			(44.9		)	—			26.1			—
Net cash provided by (used in) investing activities	(18.0		)	22.8			(158.8		)	33.7			(9.6		)	(129.9		)
Cash flows from financing activities:
Net payments on long-term debt	—			(19.5		)	—			(9.9		)	—			(29.4		)
Payments of financing fees	—			(22.8		)	—			—			—			(22.8		)
Payments on license obligations	—			—			(7.0		)	—			—			(7.0		)
Common stock repurchases	(29.5		)	—			—			—			—			(29.5		)
Contingent earnout payments	—			—			(7.0		)	(3.2		)	—			(10.2		)
Net redemptions of common stock under stock-based compensation plans	(19.1		)	—			—			(35.7		)	35.7			(19.1		)
Other, principally intercompany balances	126.2			—			—			(100.1		)	(26.1		)	—
Net cash provided by (used in) financing activities	77.6			(42.3		)	(14.0		)	(148.9		)	9.6			(118.0		)
Effect of exchange rate changes on cash	—			—			(0.3		)	(6.4		)	—			(6.7		)
Increase (decrease) in cash and cash equivalents	(19.6		)	0.3			(13.1		)	11.2			—			(21.2		)
Cash and cash equivalents, beginning of period	56.0			—			24.4			73.3			—			153.7
Cash and cash equivalents, end of period	$	36.4		$	0.3		$	11.3		$	84.5		$	—		$	132.5

SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2013



	Parent Company			SGI			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminating Entries			Consolidated
Net cash (used in) provided by operating activities	$	(44.7	)	$	(16.1	)	$	43.3		$	113.1		$	—		$	95.6
Cash flows from investing activities:
Additions to property and equipment	(3.3		)	(1.8		)	(12.2		)	(5.6		)	—			(22.9		)
Lottery and gaming services expenditures	(0.2		)	(6.4		)	(0.4		)	(44.3		)	—			(51.3		)
Intangible assets and software expenditures	(2.1		)	(12.2		)	(11.7		)	(12.1		)	—			(38.1		)
Business acquisitions, net of cash acquired	—			—			—			(0.4		)	—			(0.4		)
Other assets and investments	9.9			14.0			—			36.3			(64.3		)	(4.1		)
Other, principally intercompany balances	32.3			—			(23.4		)	—			(8.9		)	—
Net cash (used in) provided by investing activities	36.6			(6.4		)	(47.7		)	(26.1		)	(73.2		)	(116.8		)
Cash flows from financing activities:
Net payments on long-term debt	—			(4.7		)	—			(4.8		)	—			(9.5		)
Net redemptions of common stock under stock-based compensation plans	(2.1		)	—			—			(64.3		)	64.3			(2.1		)
Payment of financing fees	—			(2.0		)	—			—			—			(2.0		)
Other, principally intercompany balances	—			29.0			—			(37.9		)	8.9			—
Net cash provided by (used in) financing activities	(2.1		)	22.3			—			(107.0		)	73.2			(13.6		)
Effect of exchange rate changes on cash	—			0.2			—			(0.9		)	—			(0.7		)
Decrease in cash and cash equivalents	(10.2		)	—			(4.4		)	(20.9		)	—			(35.5		)
Cash and cash equivalents, beginning of period	27.2			0.2			2.4			79.2			—			109.0
Cash and cash equivalents, end of period	$	17.0		$	0.2		$	(2.0	)	$	58.3		$	—		$	73.5