COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 04, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-11693 | |
Entity Registrant Name | LIGHT & WONDER, INC. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 81-0422894 | |
Entity Address, Address Line One | 6601 Bermuda Road | |
Entity Address, City or Town | Las Vegas | |
Entity Address, State or Province | NV | |
Entity Address, Postal Zip Code | 89119 | |
City Area Code | 702 | |
Local Phone Number | 897-7150 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 93,673,589 | |
Entity Central Index Key | 0000750004 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $.001 par value | |
Trading Symbol | LNW | |
Security Exchange Name | NASDAQ | |
Preferred Stock Purchase Rights | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock Purchase Rights | |
No Trading Symbol Flag | true | |
Security Exchange Name | NASDAQ |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue: | ||||
Total revenue | $ 648 | $ 539 | $ 1,830 | $ 1,572 |
Operating expenses: | ||||
Selling, general and administrative | 181 | 164 | 535 | 502 |
Research and development | 56 | 47 | 163 | 140 |
Depreciation, amortization and impairments | 102 | 96 | 317 | 289 |
Restructuring and other | 27 | 45 | 106 | 96 |
Operating income | 89 | 34 | 175 | 106 |
Other (expense) income: | ||||
Interest expense | (68) | (120) | (254) | (360) |
Loss on debt financing transactions | 0 | 0 | (147) | 0 |
Gain on remeasurement of debt and other | 0 | 12 | 27 | 30 |
Other income, net | 3 | 2 | 10 | 22 |
Total other expense, net | (65) | (106) | (364) | (308) |
Net income (loss) from continuing operations before income taxes | 24 | (72) | (189) | (202) |
Income tax (expense) benefit | (4) | 172 | (8) | 164 |
Net income (loss) from continuing operations | 20 | 100 | (197) | (38) |
Net income from discontinued operations, net of tax(2) | 315 | 87 | 3,855 | 329 |
Net income | 335 | 187 | 3,658 | 291 |
Less: Net income attributable to noncontrolling interest | 7 | 5 | 13 | 15 |
Net income attributable to L&W | $ 328 | $ 182 | $ 3,645 | $ 276 |
Per Share - Basic: | ||||
Net loss from continuing operations (in dollars per share) | $ 0.14 | $ 0.99 | $ (2.20) | $ (0.55) |
Net income from discontinued operations (in dollars per share) | 3.33 | 0.90 | 40.43 | 3.43 |
Net income (loss) attributable to SGC (in dollars per share) | 3.47 | 1.89 | 38.23 | 2.88 |
Per Share - Diluted: | ||||
Net loss from continuing operations (in dollars per share) | 0.14 | 0.96 | (2.20) | (0.55) |
Net income from discontinued operations (in dollars per share) | 3.28 | 0.88 | 40.43 | 3.43 |
Net income (loss) attributable to SGC (in dollars per share) | $ 3.42 | $ 1.84 | $ 38.23 | $ 2.88 |
Weighted average number of shares used in per share calculations: | ||||
Basic (in shares) | 94 | 96 | 95 | 96 |
Diluted (in shares) | 96 | 99 | 95 | 96 |
Services | ||||
Revenue: | ||||
Total revenue | $ 453 | $ 408 | $ 1,329 | $ 1,216 |
Operating expenses: | ||||
Cost of goods and services sold | 101 | 90 | 283 | 273 |
Product sales | ||||
Revenue: | ||||
Total revenue | 195 | 131 | 501 | 356 |
Operating expenses: | ||||
Cost of goods and services sold | $ 92 | $ 63 | $ 251 | $ 166 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Discontinued Operations | ||||
Gain on sale of discontinued operations before income taxes | $ 362 | $ 0 | $ 4,930 | $ 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 335 | $ 187 | $ 3,658 | $ 291 |
Foreign currency translation loss, net of tax | (105) | (21) | (183) | (20) |
Derivative financial instruments unrealized gain, net of tax | 24 | 5 | 29 | 14 |
Other comprehensive loss from continuing operations | (81) | (16) | (154) | (6) |
Other comprehensive income (loss) from discontinued operations | 12 | (11) | 0 | (2) |
Total comprehensive income | 266 | 160 | 3,504 | 283 |
Less: comprehensive income attributable to noncontrolling interest | 7 | 5 | 13 | 15 |
Comprehensive income attributable to L&W | $ 259 | $ 155 | $ 3,491 | $ 268 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,277 | $ 585 |
Restricted cash | 42 | 41 |
Receivables, net of allowance for credit losses $41 and $52, respectively | 426 | 423 |
Inventories | 137 | 98 |
Prepaid expenses, deposits and other current assets | 166 | 88 |
Assets of businesses held for sale | 0 | 497 |
Total current assets | 2,048 | 1,732 |
Non-current assets: | ||
Restricted cash | 7 | 9 |
Receivables, net of allowance for credit losses $2 and $2, respectively | 16 | 17 |
Property and equipment, net | 202 | 213 |
Operating lease right-of-use assets | 51 | 51 |
Goodwill | 2,865 | 2,892 |
Intangible assets, net | 767 | 946 |
Software, net | 130 | 117 |
Deferred income taxes | 92 | 349 |
Other assets | 68 | 80 |
Assets of businesses held for sale | 0 | 1,477 |
Total assets | 6,246 | 7,883 |
Current liabilities: | ||
Current portion of long-term debt | 24 | 44 |
Accounts payable | 176 | 204 |
Accrued liabilities | 352 | 428 |
Income taxes payable | 250 | 16 |
Liabilities of businesses held for sale | 0 | 282 |
Total current liabilities | 802 | 974 |
Deferred income taxes | 143 | 35 |
Operating lease liabilities | 39 | 40 |
Other long-term liabilities | 156 | 170 |
Long-term debt, excluding current portion | 3,874 | 8,646 |
Liabilities of businesses held for sale | 0 | 124 |
Total liabilities | 5,014 | 9,989 |
Commitments and contingencies (Note 16) | ||
Stockholders’ equity (deficit): | ||
Common stock, par value $0.001 per share, 199 shares authorized; 115 and 114 shares issued, respectively, and 94 and 97 shares outstanding, respectively | 1 | 1 |
Additional paid-in capital | 1,376 | 1,337 |
Retained earnings (accumulated loss) | 487 | (3,158) |
Treasury stock, at cost, 21 and 17 shares, respectively | (378) | (175) |
Accumulated other comprehensive loss | (415) | (261) |
Total L&W stockholders’ equity (deficit) | 1,071 | (2,256) |
Noncontrolling interest | 161 | 150 |
Total stockholders’ equity (deficit) | 1,232 | (2,106) |
Total liabilities and stockholders’ equity (deficit) | $ 6,246 | $ 7,883 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts Receivable, Allowance for Credit Loss, Current | $ 41 | $ 52 |
Accounts Receivable, Allowance for Credit Loss, Noncurrent | $ 2 | $ 2 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 199,000,000 | 199,000,000 |
Common stock, shares issued (in shares) | 115,000,000 | 114,000,000 |
Common stock, shares outstanding (in shares) | 94,000,000 | 97,000,000 |
Treasury stock, at cost, shares held (in shares) | 21,000,000 | 17,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 3,658 | $ 291 |
Less: Income from discontinued operations, net of tax | (3,855) | (329) |
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities from continuing operations | 488 | 358 |
Changes in working capital accounts, excluding the effects of acquisitions | (641) | 51 |
Changes in deferred income taxes and other | 4 | (172) |
Net cash (used in) provided by operating activities from continuing operations | (346) | 199 |
Net cash provided by operating activities from discontinued operations | 52 | 260 |
Net cash (used in) provided by operating activities | (294) | 459 |
Cash flows from investing activities: | ||
Capital expenditures | (158) | (118) |
Acquisitions of businesses, net of cash acquired | (118) | (40) |
Proceeds from settlement of cross-currency interest rate swaps | 50 | 0 |
Other, net | 2 | 10 |
Net cash used in investing activities from continuing operations | (224) | (148) |
Net cash provided by (used in) investing activities from discontinued operations(1) | 6,368 | (58) |
Net cash provided by (used in) investing activities | 6,144 | (206) |
Cash flows from financing activities: | ||
Borrowings under SGI revolving credit facility | 280 | 0 |
Repayments under SGI revolving credit facility | (280) | (400) |
Proceeds from issuance of senior notes and term loans | 2,200 | 0 |
Repayment of notes and term loans (including redemption premium) | (6,984) | 0 |
Payments on long-term debt | (103) | (32) |
Payments of debt issuance and deferred financing costs | (37) | (5) |
Payments on license obligations | (30) | (25) |
Purchase of treasury stock | (203) | 0 |
Purchase of SciPlay’s common stock | 18 | 0 |
Net redemptions of common stock under stock-based compensation plans and other | (35) | (22) |
Net cash used in financing activities from continuing operations | (5,210) | (484) |
Net cash used in financing activities from discontinued operations | (3) | (8) |
Net cash used in financing activities | (5,213) | (492) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (12) | (3) |
Increase (decrease) in cash, cash equivalents and restricted cash | 625 | (242) |
Cash, cash equivalents and restricted cash, end of period | 1,326 | 901 |
Less: Cash, cash equivalents and restricted cash of discontinued operations | 0 | 71 |
Cash, cash equivalents and restricted cash, beginning of period | 701 | 1,143 |
Cash, cash equivalents and restricted cash of continuing operations, end of period | 1,326 | 830 |
Supplemental cash flow information: | ||
Cash paid for interest | 271 | 349 |
Income taxes paid | 497 | 27 |
Distributed earnings from equity investments | 4 | 15 |
Supplemental non-cash transactions: | ||
Non-cash interest expense | 12 | 18 |
Fair value of securities received in sale of discontinued operations | $ 46 | $ 0 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Discontinued Operations | |
Proceeds from Divestiture of Businesses, Net of Cash Divested | $ 6,409 |
Description of the Business and
Description of the Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business and Summary of Significant Accounting Policies | Description of the Business We are a leading cross-platform global games company with a focus on content and digital markets. Our portfolio of revenue-generating activities in our continuing operations primarily includes supplying game content and gaming machines, CMSs and table game products and services to licensed gaming entities; providing social casino and other mobile games to retail customers, including casual gaming; and providing a comprehensive suite of digital RMG, distribution platforms, content, products and services to various gaming entities. Prior to the Divestitures, our discontinued operations portfolio of revenue-generating activities included providing instant and draw‑based lottery products, lottery systems and lottery content and services to lottery operators along with providing sports wagering solutions to various gaming entities. We report our results of continuing operations in three business segments—Gaming, SciPlay and iGaming—representing our different products and services. Unless otherwise noted, amounts and disclosures included herein relate to our continuing operations. Effective April 28, 2022, we changed our name to Light & Wonder, Inc. This change is in part due to the sale of the Lottery Business that will continue to use our previous name, Scientific Games, and also to align with our vision of becoming the leading cross-platform global games company. During the third quarter of 2022, we completed the divestiture of the Sports Betting Business and received $796 million in gross proceeds, consisting of $750 million in gross cash proceeds and $46 million in fair value of Class A common stock of Endeavor Group Holdings, Inc. (approximately 2.3 million shares). During the second quarter of 2022, we completed the divestiture of the Lottery Business and received $5.7 billion in gross cash proceeds. We have reflected the financial results of the Divested Businesses as discontinued operations in our consolidated statements of operations for all periods presented and reflected the assets and liabilities of these businesses as held for sale in our consolidated balance sheets as of December 31, 2021. Refer to Note 2 for further information. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of L&W, its wholly owned subsidiaries, and those subsidiaries in which we have a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of L&W and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results of operations, comprehensive income (loss) and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2021 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year. Significant Accounting Policies There have been no changes to our significant accounting policies described within the Notes of our 2021 10-K. Computation of Basic and Diluted Net Income Attributable to L&W Per Share Basic and diluted net income attributable to L&W per share is based upon net income attributable to L&W divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the effect of the assumed exercise of stock options and RSUs only in the periods in which such effect would have been dilutive to net income from continuing operations. Basic and diluted net income attributable to L&W per share were the same for the nine months ended September 30, 2022 and 2021, as all common stock equivalents would have been anti-dilutive for those periods. We excluded 2 million of stock options and 2 million of RSUs outstanding as of September 30, 2022 from the diluted weighted-average common shares outstanding for the nine months ended September 30, 2022. We excluded 2 million of stock options and 3 million of RSUs outstanding as of September 30, 2021 from the calculation of diluted weighted-average common shares outstanding for the nine months ended September 30, 2021. Acquisitions SciPlay Acquisition of Alictus Yazilim Anonim Şirketi (“Alictus”) On March 1, 2022, SciPlay acquired 80% of all issued and outstanding share capital of privately held Alictus, a Turkey-based hyper-casual game studio for approximately $109 million cash consideration, net of cash acquired. The remaining 20% will be acquired ratably for potential additional consideration payable annually based upon the achievement of specified revenue and earnings targets by Alictus during each of the five years following the acquisition date. Any future payments associated with the acquisition of the remaining 20% will represent a redeemable non-controlling interest, with a minimum payout of $0 million and a maximum payout of $200 million. The Alictus acquisition expands SciPlay’s business in the casual gaming market, growing its game pipeline and diversifying its revenue streams as it advances its strategy to be a diversified global game developer. Playzido Limited (“Playzido”) In April 2022, we acquired Playzido, a dynamic content creation platform provider and game supplier, which is expected to accelerate the pace at which we can partner with game studios and operators to expand our iGaming content offering. We accounted for these acquisitions using the acquisition method of accounting, allocating the total consideration transferred to acquired tangible and intangible assets and assumed liabilities based on estimated fair values. The estimated fair values of the acquired assets, assumed liabilities and resulting goodwill are subject to adjustment as we finalize our purchase price accounting. The following table summarizes an aggregate disclosure related to the acquisitions above and is based on the preliminary purchase price allocations expected to be finalized by the fourth quarter of 2022: Total Consideration Cash paid, net of cash acquired (1) Contingent consideration/Redeemable non-controlling interest (2) Allocation of purchase price to Intangible assets, net (3) Weighted average useful life of acquired intangible assets Excess purchase price allocated to Goodwill (4) $ 147 $ 115 $ 25 $ 40 6 Years $ 101 (1) Exclusive of $6 million acquired in short term investments. (2) Fair values were determined using an income approach primarily based on reaching certain revenue and earnings-based metrics, with discount rates ranging between 2% and 16% and a maximum payout of up to $213 million. (3) Intangible assets primarily consist of intellectual property, consisting of games technology and content platforms, and trade names. The fair value of these intangible assets was determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rates used in the valuation analyses ranged between 16% and 18%. Royalty rates used for the trade names as well as acquired game content and related technology ranged between 1% and 3% and 20% and 21%, respectively. (4) The factors contributing to the recognition of acquisition goodwill are based on game portfolio and platform diversification, expected synergies, assembled workforce and other strategic benefits. None of the resultant goodwill is expected to be deductible for income tax purposes. The revenue and earnings associated with the above acquisitions are immaterial to our current and historical consolidated financial statements. In October 2022, we acquired substantially all of the assets of House Advantage, LLC, a leading loyalty and marketing software and technology provider, which will expand our Gaming systems offering with enhanced loyalty capabilities. New Accounting Guidance - Recently Adopted The FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , in October 2021. The new guidance requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with revenue recognition guidance. We adopted this standard during the third quarter of 2022 on a retrospective basis for the current fiscal year. The adoption of this guidance did not have an effect on our consolidated financial statements. New Accounting Guidance - Not Yet Adopted The FASB issued ASUs No. 2020-04 and No. 2021-01, Reference Rate Reform (Topic 848) in March 2020 and January 2021, respectively. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, including derivative instruments impacted by changes in the interest rates used for discounting cash flows for computing variable margin settlements, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued by June 2023. The ASUs establish certain contract modification principles that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be applied prospectively. Based on our preliminary assessment completed to date, we do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements. We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | During the second quarter of 2022, we completed the divestiture of the Lottery Business, from which we received $5.7 billion in gross cash proceeds and recorded a pre-tax gain on the sale of the Lottery Business of $4.6 billion. During the third quarter of 2022, we completed the divestiture of the Sports Betting Business and received $796 million in gross proceeds, consisting of $750 million in gross cash proceeds and $46 million in fair value of Class A common stock of Endeavor Group Holdings, Inc. (approximately 2.3 million shares). The cash proceeds are subject to working capital adjustments expected to be finalized during the fourth quarter of 2022 or the first quarter of 2023. The fair value of the Class A common stock received was included in Prepaid expenses, deposits and other current assets in our consolidated balance sheet as of September 30, 2022. We recorded a pre-tax gain on the sale of the Sports Betting Business of $362 million. We have reflected the financial results of the Divested Businesses as discontinued operations in our consolidated statements of operations and reflected the related assets and liabilities as held for sale in our consolidated balance sheet as of December 31, 2021. The summarized results of our discontinued operations were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Total revenue $ 32 $ 285 $ 371 $ 860 Total cost of revenue (1) 9 148 177 431 Other operating expenses (2) 31 63 180 184 Operating (loss) income (8) 74 14 245 Total other income, net 2 16 10 90 Net (loss) income from discontinued operations before income taxes (6) 90 24 335 Gain on sale of discontinued operations before income taxes 362 — 4,930 — Total net income from discontinued operations before income taxes 356 90 4,954 335 Income tax expense (41) (3) (1,099) (6) Net income from discontinued operations, net of tax included in the consolidated statement of operations $ 315 $ 87 $ 3,855 $ 329 (1) Excludes D&A. (2) Includes D&A of $26 million and $79 million for the three and nine months ended September 30, 2021, respectively, along with stock-based compensation of $7 million and $18 million for the three and nine months ended September 30, 2022, respectively, and $7 million and $14 million for the three and nine months ended September 30, 2021, respectively. Due to the discontinued operations classification of the Divested Businesses as of the third quarter of 2021, D&A was ceased and none was included for the three and nine months ended September 30, 2022. The three and nine months ended September 30, 2022 also include $7 million and $85 million, respectively, related to direct transaction closing fees. The following table summarizes the major classes of assets and liabilities of businesses held for sale. As of December 31, 2021 ASSETS Cash and cash equivalents $ 44 Restricted cash 22 Receivables, net 214 Inventories 94 Prepaid expenses deposits and other current assets 123 Total current assets of businesses held for sale 497 Property and equipment, net 217 Intangible assets and software, net 304 Goodwill 623 Equity investments 251 Other assets 82 Total non-current assets of businesses held for sale 1,477 Total assets of businesses held for sale $ 1,974 LIABILITIES Accounts payable $ 95 Accrued liabilities and other 187 Total current liabilities of businesses held for sale 282 Operating lease liabilities 34 Other 90 Total non-current liabilities of businesses held for sale 124 Total liabilities of businesses held for sale $ 406 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | The following table disaggregates revenues by type within each of our business segments: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Gaming Gaming operations (1) $ 161 $ 151 $ 479 $ 445 Gaming machine sales 140 95 366 249 Gaming systems 70 52 181 146 Table products 48 41 137 109 Total $ 419 $ 339 $ 1,163 $ 949 SciPlay Mobile in-app purchases $ 149 $ 131 $ 426 $ 400 Web in-app purchases and other (2) 22 16 63 52 Total $ 171 $ 147 $ 489 $ 452 iGaming $ 58 $ 53 $ 178 $ 171 (1) Gaming operations revenue for the nine months ended September 30, 2021 benefited from $44 million U.K. Fixed Odds Betting Terminal VAT recovery (the “VAT recovery”) received from certain U.K. customers related to a 2020 U.K. court ruling associated with overcharging of VAT for gaming operators that consequently reduced our net gaming revenues related to these customers and arrangements. (2) Other primarily represents revenue generated from providing advertising platforms with access to SciPlay’s game software platform, which facilitates the placement of advertising inventory, which was not material in the periods presented. The amount of rental income revenue that is outside the scope of ASC 606 was $116 million and $347 million for the three and nine months ended September 30, 2022, respectively, and $88 million and $270 million for the three and nine months ended September 30, 2021, respectively. Contract Liabilities and Other Disclosures The following table summarizes the activity in our contract liabilities for the reporting period: Nine Months Ended September 30, 2022 Contract liability balance, beginning of period (1) $ 37 Liabilities recognized during the period 9 Amounts recognized in revenue from beginning balance (17) Contract liability balance, end of period (1) $ 29 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets. The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on our consolidated balance sheets. Other than contracts with customers with financing arrangements exceeding 12 months, revenue recognition is generally proximal to conversion to cash. The following table summarizes our balances in these accounts for the periods indicated (other than contract liabilities disclosed above): Receivables Contract Assets (1) Beginning of period balance $ 440 $ 19 End of period balance, September 30, 2022 442 23 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets. As of September 30, 2022, we did not have material unsatisfied performance obligations for contracts expected to be long-term or contracts for which we recognize revenue at an amount other than for which we have the right to invoice for goods or services delivered or performed. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Business Segments | We report our operations in three business segments—Gaming, SciPlay and iGaming—representing our different products and services. A detailed discussion regarding the products and services from which each reportable business segment derives its revenue is included in Notes 3 and 4 in our 2021 10-K. In evaluating financial performance, our Chief Operating Decision Maker focuses on AEBITDA as management’s primary segment measure of profit or loss, which is described in footnote (2) to the below table. The accounting policies of our business segments are the same as those described within the Notes in our 2021 10-K. The following tables present our segment information: Three Months Ended September 30, 2022 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 419 $ 171 $ 58 $ — $ 648 AEBITDA (2) 202 43 20 (30) $ 235 Reconciling items to Net income from continuing operations before income taxes: D&A (81) (6) (10) (5) (102) Restructuring and other (1) (1) — (25) (27) Interest expense (68) (68) Other income, net 1 1 Stock-based compensation (15) (15) Net income from continuing operations before income taxes $ 24 (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes. (2) AEBITDA is reconciled to net loss from continuing operations before income taxes with the following adjustments: (1) depreciation and amortization expense and impairment charges (including goodwill impairments); (2) restructuring and other, which includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii) restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition costs and other unusual items; (3) interest expense; (4) loss on debt refinancing transactions; (5) change in fair value of investments and remeasurement of debt and other; (6) other income, net, including foreign currency (gains) losses and earnings from equity investments; and (7) stock-based compensation. AEBITDA is presented as our primary segment measure of profit or loss. Three Months Ended September 30, 2021 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 339 $ 147 $ 53 $ — $ 539 AEBITDA (2) 172 45 18 (32) $ 203 Reconciling items to Net loss from continuing operations before income taxes: D&A (73) (4) (13) (6) (96) Restructuring and other (1) (2) (1) (41) (45) Interest expense (120) (120) Gain on remeasurement of debt and other 12 12 Stock-based compensation (26) (26) Net loss from continuing operations before income taxes $ (72) (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes. (2) AEBITDA is described in footnote (2) to the first table in this Note 4. Nine Months Ended September 30, 2022 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 1,163 $ 489 $ 178 $ — $ 1,830 AEBITDA (2) 552 128 61 (93) $ 648 Reconciling items to Net loss from continuing operations before income taxes: D&A (246) (16) (37) (18) (317) Restructuring and other (5) (4) (15) (82) (106) Interest expense (254) (254) Loss on debt refinancing transactions (147) (147) Gain on remeasurement of debt and other 27 27 Other income, net 7 7 Stock-based compensation (47) (47) Net loss from continuing operations before income taxes $ (189) (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net income from continuing operations before income taxes. (2) AEBITDA is described in footnote (2) to the first table in this Note 4. Nine Months Ended September 30, 2021 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 949 $ 452 $ 171 $ — $ 1,572 AEBITDA (2) 472 138 60 (93) $ 577 Reconciling items to Net loss from continuing operations before income taxes: D&A (220) (11) (38) (20) (289) Restructuring and other (7) (3) (1) (85) (96) Interest expense (360) (360) Gain on remeasurement of debt and other 30 30 Other income, net 17 17 Stock-based compensation (81) (81) Net loss from continuing operations before income taxes $ (202) (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes. (2) AEBITDA is described in footnote (2) to the first table in this Note 4. |
Restructuring and other
Restructuring and other | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and other | Restructuring and other includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii) restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition and disposition related costs and other unusual items. The following table summarizes pre-tax restructuring and other costs for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Employee severance and related $ 5 $ 3 $ 7 $ 3 Strategic review and related 14 31 68 57 Contingent acquisition consideration (1) — — 12 — Restructuring, integration and other 8 11 19 36 Total $ 27 $ 45 $ 106 $ 96 (1) Represents contingent consideration fair value adjustment (see Note 12). |
Receivables, Allowance for Cred
Receivables, Allowance for Credit Losses and Credit Quality of Receivables | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Receivables, Allowance for Credit Losses and Credit Quality of Receivables | Receivables The following table summarizes the components of current and long-term receivables, net: As of September 30, 2022 December 31, 2021 Current: Receivables $ 467 $ 475 Allowance for credit losses (41) (52) Current receivables, net 426 423 Long-term: Receivables 18 19 Allowance for credit losses (2) (2) Long-term receivables, net 16 17 Total receivables, net $ 442 $ 440 Allowance for Credit Losses We manage our receivable portfolios using both geography and delinquency as key credit quality indicators. The following summarizes geographical delinquencies of total receivables, net: As of September 30, 2022 Balances over 90 days past due December 31, 2021 Balances over 90 days past due Receivables: U.S. and Canada $ 298 $ 14 $ 321 $ 37 International 187 33 173 44 Total receivables 485 47 494 81 Receivables allowance: U.S. and Canada (21) (6) (18) (6) International (22) (22) (36) (19) Total receivables allowance (43) (28) (54) (25) Receivables, net $ 442 $ 19 $ 440 $ 56 Account balances are charged against the allowances after all internal and external collection efforts have been exhausted and the potential for recovery is considered remote. The activity in our allowance for receivable credit losses for each of the three and nine months ended September 30, 2022 and 2021 is as follows: 2022 2021 Total U.S. and Canada International Total Beginning allowance for credit losses $ (54) $ (18) $ (36) $ (81) Provision (3) (3) — 1 Charge-offs and recoveries 7 — 7 2 Allowance for credit losses as of March 31 (50) (21) (29) (78) Provision (1) (1) — (2) Charge-offs and recoveries 3 1 2 17 Allowance for credit losses as of June 30 $ (48) $ (21) $ (27) $ (63) Provision 4 — 4 (1) Charge-offs and recoveries 1 — 1 — Allowance for credit losses as of September 30 $ (43) $ (21) $ (22) $ (64) As of September 30, 2022, 4% of our total receivables, net, were past due by over 90 days compared to 13% as of December 31, 2021. Credit Quality of Receivables We have certain concentrations of outstanding receivables in international locations that impact our assessment of the credit quality of our receivables. We monitor the macroeconomic and political environment in each of these locations in our assessment of the credit quality of our receivables. The international customers with significant concentrations (generally deemed to be exceeding 10%) of our receivables with terms longer than one year are primarily in the Latin America region (“LATAM”) and are primarily comprised of Mexico, Peru and Argentina. The following table summarizes our LATAM receivables: As of September 30, 2022 Total Current or Not Yet Due Balances Over 90 days Past Due Receivables $ 72 $ 38 $ 34 Allowance for credit losses (22) (10) (12) Receivables, net $ 50 $ 28 $ 22 We continuously review receivables and as information concerning credit quality arise, reassess our expectations of future losses and record an incremental reserve if warranted at that time. Our current allowance for credit losses represents our current expectation of credit losses; however future expectations could change as international unrest or other macro-economic factors impact the financial stability of our customers. The fair value of receivables is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of September 30, 2022 and December 31, 2021, the fair value of receivables, net, approximated the carrying value due to contractual terms of receivables generally being less than 24 months. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: As of September 30, 2022 December 31, 2021 Parts and work-in-process $ 114 $ 70 Finished goods 23 28 Total inventories $ 137 $ 98 Parts and work-in-process include parts for gaming machines and our finished goods inventory primarily consists of gaming machines for sale. |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and equipment, net consisted of the following: As of September 30, 2022 December 31, 2021 Land $ 6 $ 6 Buildings and leasehold improvements 54 55 Gaming machinery and equipment 669 712 Furniture and fixtures 20 22 Construction in progress 13 9 Other property and equipment 89 84 Less: accumulated depreciation (649) (675) Total property and equipment, net $ 202 $ 213 Depreciation expense is excluded from Cost of services, Cost of product sales and Other operating expenses and is separately presented within D&A. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation expense $ 27 $ 29 $ 82 $ 90 |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net and Goodwill | Intangible Assets, net The following tables present certain information regarding our intangible assets as of September 30, 2022 and December 31, 2021: As of September 30, 2022 December 31, 2021 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 898 $ (493) $ 405 $ 911 $ (445) $ 466 Intellectual property 906 (690) 216 914 (670) 244 Licenses 441 (383) 58 472 (380) 92 Brand names 127 (104) 23 132 (97) 35 Trade names 162 (104) 58 158 (54) 104 Patents and other 14 (7) 7 12 (7) 5 Total intangible assets $ 2,548 $ (1,781) $ 767 $ 2,599 $ (1,653) $ 946 The following reflects intangible amortization expense included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amortization expense $ 60 $ 46 $ 180 $ 138 Goodwill The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2021 to September 30, 2022. Gaming (1) SciPlay iGaming Totals Balance as of December 31, 2021 $ 2,405 $ 126 $ 361 $ 2,892 Acquired goodwill — 93 8 101 Foreign currency adjustments (62) (6) (60) (128) Balance as of September 30, 2022 $ 2,343 $ 213 $ 309 $ 2,865 (1) Accumulated goodwill impairment charges for the Gaming segment as of September 30, 2022 were $989 million. |
Software, net
Software, net | 9 Months Ended |
Sep. 30, 2022 | |
Capitalized Computer Software, Net [Abstract] | |
Software, net | Software, net consisted of the following: As of September 30, 2022 December 31, 2021 Software $ 1,035 $ 996 Accumulated amortization (905) (879) Software, net $ 130 $ 117 The following reflects amortization of software included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amortization expense $ 15 $ 21 $ 55 $ 61 |
Long-Term and Other Debt
Long-Term and Other Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term and Other Debt | Outstanding Debt and Finance Leases The following table reflects our outstanding debt (in order of priority and maturity): As of September 30, 2022 December 31, 2021 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: SGI Term Loan B-5 2024 variable $ — $ — $ — $ 3,982 SciPlay Revolver 2024 variable — — — — SGI Revolver 2027 variable — — — — SGI Term Loan B 2029 variable 2,195 (31) 2,164 — SGI Senior Notes: 2025 Secured Notes 2025 5.000% — — — 1,240 2026 Secured Euro Notes 2026 3.375% — — — 364 2025 Unsecured Notes 2025 8.625% 550 (5) 545 544 2026 Unsecured Euro Notes 2026 5.500% — — — 280 2026 Unsecured Notes 2026 8.250% — — — 1,090 2028 Unsecured Notes 2028 7.000% 700 (7) 693 692 2029 Unsecured Notes 2029 7.250% 500 (6) 494 494 Other 2023 — 2 — 2 4 Total long-term debt outstanding $ 3,947 $ (49) $ 3,898 $ 8,690 Less: current portion of long-term debt (24) (44) Long-term debt, excluding current portion $ 3,874 $ 8,646 Fair value of debt (1) $ 3,813 (1) Fair value of our fixed rate and variable interest rate debt is classified within Level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities. April 2022 Refinancing On April 14, 2022, we completed a series of refinancing transactions, which, combined with other principal payments on the SGI Term Loan B-5 and SGI Revolver in April 2022, reduced the outstanding face value of our debt by $4,957 million, from $8,910 million as of March 31, 2022 to $3,953 million immediately after the completion of these transactions. As a part of these transactions, we entered into the new credit agreements, which contains the following debt facilities: • $2,200 million new term loan facility maturing in April 2029. The new term loan facility bears interest at either (i) Adjusted Term SOFR Rate (as defined in the credit agreement) plus 3.00% per annum or (ii) a base rate plus 2.00% per annum. The new term loan facility amortizes in quarterly installments in aggregate amounts of equal to 1.00% of the original principal amount per year; and • $750 million revolving credit facility maturing in April 2027. The new revolving credit facility bears interest at either (i) Adjusted Term SOFR Rate (or an alternative benchmark rate for non-US dollar borrowings) plus 2.00% per annum or (ii) a base rate plus 1.00% per annum, with one 0.25% per annum step-up and one 0.25% per annum step-down based on SGI’s first lien net leverage ratio at the end of future fiscal quarters. With the issuance of the new term loan facility and using the proceeds from the divestiture of the Lottery Business (see Note 1), we retired and redeemed the following outstanding debt and paid accrued and unpaid interest thereon plus related premiums, fees and expenses: Debt instrument Interest rate Maturity Face value as of March 31, 2022 Paid interest Premium, other fees and expenses SGI Term Loan B-5 (1) variable 2024 $ 4,008 $ 5 $ 33 Senior Secured Notes 5.000% 2025 1,250 31 31 Senior Secured Euro Notes 3.375% 2026 361 2 6 Senior Unsecured Euro Notes 5.500% 2026 278 3 8 Senior Unsecured Notes 8.250% 2026 1,100 7 45 Total $ 6,997 $ 48 $ 123 (1) Premium, other fees and expenses include fees associated with SGI Term Loan B. The new credit facilities are subject to customary affirmative covenants and negative covenants as well as a financial covenant. The financial covenant is solely for the benefit of the new revolving facility, is tested at the end of each fiscal quarter if the outstanding borrowings (excluding up to $5 million of undrawn letters of credit and any cash collateralized letters of credit) under the new revolving facility exceed 30% of the commitments under the new revolving facility, and requires that the Company not be in excess of a maximum consolidated net first lien leverage ratio of 4.50:1.00. We were in compliance with the financial covenants under all debt agreements as of September 30, 2022 (for information regarding our financial covenants of all debt agreements, see Note 15 in our 2021 10-K). Loss on Debt Refinancing Transactions The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for the nine months ended September 30, 2022. No such transactions occurred during the three months ended September 30, 2022, or the three and nine months ended September 30, 2021. Nine Months Ended Repayment of principal balance at premium $ 90 Unamortized debt (premium) discount and deferred financing costs, net 57 Total loss on debt refinancing transactions $ 147 For additional information regarding the terms of our credit facilities, Secured Notes and Unsecured Notes, which were unaffected by the April 2022 Refinancing transactions, see Note 15 in our 2021 10-K. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value Measurements | The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments, which are principally cash and cash equivalents, restricted cash, receivables, other current assets, accounts payable and accrued liabilities, approximates their recorded values. Our assets and liabilities measured at fair value on a recurring basis are described below. Derivative Financial Instruments As of and for the nine months ended September 30, 2022, we held the following derivative instruments that were accounted for pursuant to ASC 815: Interest Rate Swap Contracts We used interest rate swap contracts as described below to mitigate gains or losses associated with the change in expected cash flows due to fluctuations in interest rates on our variable rate debt. In February 2018, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt to effectively fix the interest rate that we pay. These interest rate swap contracts were designated as cash flow hedges under ASC 815. We paid interest at a weighted-average fixed rate of 2.4418% and received interest at a variable rate equal to one-month LIBOR. The total notional amount of interest rate swaps was $800 million. These hedges matured in February 2022. In April 2022, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our new variable rate debt to effectively fix the interest rate that we pay. These interest rate swap contracts were designated as cash flow hedges under ASC 815. We pay interest at a weighted-average fixed rate of 2.8320% and receive interest at a variable rate equal to one-month Chicago Mercantile Exchange Term SOFR. The total notional amount of interest rate swaps was $700 million as of September 30, 2022. These hedges mature in April 2027. All gains and losses from these hedges were recorded in Other comprehensive income (loss) until the future underlying payment transactions occur. Any realized gains or losses resulting from the hedges were recognized (together with the hedged transaction) as Interest expense. We estimated the fair value of our interest rate swap contracts by discounting the future cash flows of both the fixed rate and variable rate interest payments based on market yield curves. The inputs used to measure the fair value of our interest rate swap contracts were categorized as Level 2 in the fair value hierarchy as established by ASC 820. The following table shows the Gain and Interest expense recognized on our interest rate swap contracts: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Gain recorded in accumulated other comprehensive loss, net of tax $ 24 $ 5 $ 29 $ 14 Interest expense recorded related to interest rate swap contracts 2 5 8 14 We do not expect to reclassify material amounts from Accumulated other comprehensive loss to interest expense in the next twelve months. The following table shows the effect of interest rate swap contracts designated as cash flow hedges on interest expense in the consolidated statements of operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Total interest expense which reflects the effects of cash flow hedges $ (68) $ (120) $ (254) $ (360) Hedged item (5) (5) (12) (14) Derivative designated as hedging instrument 3 — 4 — Cross-Currency Interest Rate Swaps We entered into certain cross-currency interest rate swap agreements to achieve more beneficial interest rates by effectively converting $460 million of our fixed-rate U.S. Dollar-denominated 2025 Secured Notes to variable rates. We had previously designated these cross-currency interest rate swap agreements as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency and used the spot method to measure the effectiveness of our net investment hedge. As a result, the change in the fair value of the $460 million cross-currency interest rate swaps was reported in Foreign currency translation gain (loss) in Accumulated other comprehensive loss until their settlement as part of the April 2022 Refinancing, in which we settled these for approximately $50 million in cash proceeds. The following table shows the fair value of our hedges: As of Balance Sheet Line Item September 30, 2022 December 31, 2021 Interest rate swaps (1)(2) Accrued liabilities $ — $ 3 Interest rate swaps (1)(3)(4) Other assets 32 — Cross-currency interest rate swaps (1)(5) Other assets — 42 (1) The inputs used to measure the fair value of our interest rate swap contracts were categorized as Level 2 in the fair value hierarchy. (2) Contracts matured in February 2022. (3) Contracts mature in April 2027. (4) Gains of $31 million and $32 million for the three and nine months ended September 30, 2022, respectively, are reflected in Derivative financial instrument unrealized gain (loss) in Other comprehensive income (loss). (5) Gain of $4 million for the nine months ended September 30, 2022, and gains of $12 million and $25 million for the three and nine months ended September 30, 2021, respectively, are reflected in Foreign currency translation gain (loss) in Other comprehensive income (loss). Net Investment Non-derivative Hedge — 2026 Secured Euro Notes As a result of the April 2022 Refinancing described above, we redeemed all of 2026 Secured Euro Notes and no longer have a designated net investment hedge. Contingent Acquisition Consideration Liabilities In connection with our acquisitions, we have recorded certain contingent consideration liabilities (including redeemable non-controlling interest), of which the values are primarily based on reaching certain earnings-based metrics. The related liabilities were recorded at fair value on their respective acquisition dates as a part of the consideration transferred and are remeasured each reporting period (other than for redeemable non-controlling interest, which is measured based on its redemption value). The inputs used to measure the fair value of our liabilities are categorized as Level 3 in the fair value hierarchy. The table below reconciles the change in the contingent acquisition consideration liabilities (including deferred purchase price) for the period from December 31, 2021 to September 30, 2022. Total Included in Accrued Liabilities Included in Other Long-Term Liabilities Balance as of December 31, 2021 $ 51 $ 3 $ 48 Additions 27 Payments (3) Fair value adjustments (1) 12 Balance as of September 30, 2022 $ 87 $ 37 $ 50 (1) Amount included in Restructuring and other (see Note 5). Marketable Securities As part of our divestiture of the Sports Betting Business, we received approximately 2.3 million shares of Class A common stock of Endeavor Group Holdings, Inc., with a fair value of $46 million. The inputs used to measure the fair value of these shares were categorized as Level 1 in the fair value hierarchy, as quoted prices in an active market were available at the measurement date. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Compensation Related Costs [Abstract] | |
Stockholders' Deficit | Changes in Stockholders’ Equity (Deficit) The following tables present certain information regarding our stockholders’ equity (deficit) as of September 30, 2022 and 2021: Nine Months Ended September 30, 2022 Common Stock Additional Paid in Capital Retained Earnings (Accumulated Loss) Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2022 $ 1 $ 1,337 $ (3,158) $ (175) $ (261) $ 150 $ (2,106) Settlement of liability awards and other, net — 43 — — — — 43 Vesting of RSUs, net of tax withholdings — (31) — — — — (31) Purchase of treasury stock — — — (51) — — (51) Stock-based compensation — 17 — — — — 17 Net income — — 26 — — 2 28 Other comprehensive loss — — — — (37) — (37) March 31, 2022 $ 1 $ 1,366 $ (3,132) $ (226) $ (298) $ 152 $ (2,137) Vesting of RSUs, net of tax withholdings and other — — — — — — — Purchase of treasury stock — — — (152) — — (152) Purchase of SciPlay common stock — (6) — — — (1) (7) Stock-based compensation — 15 — — — — 15 Net income — — 3,291 — — 4 3,295 Other comprehensive loss (1) — — — — (48) — (48) June 30, 2022 $ 1 $ 1,375 $ 159 $ (378) $ (346) $ 155 $ 966 Vesting of RSUs, net of tax withholdings and other — (3) — — — — (3) Purchase of SciPlay common stock — (10) — — — (1) (11) Stock-based compensation — 14 — — — — 14 Net income — — 328 — — 7 335 Other comprehensive loss (1) — — — — (69) — (69) September 30, 2022 $ 1 $ 1,376 $ 487 $ (378) $ (415) $ 161 $ 1,232 (1) Includes reclassifications of $51 million and $74 million for the three and nine months ended September 30, 2022, respectively, from accumulated other comprehensive loss into income due to the sales of discontinued operations (see Note 2). Nine Months Ended September 30, 2021 Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2021 $ 1 $ 1,268 $ (3,529) $ (175) $ (218) $ 129 $ (2,524) Vesting of RSUs, net of tax withholdings and other — (13) — — — — (13) Stock-based compensation — 17 — — — — 17 Net (loss) income — — (15) — — 6 (9) Other comprehensive income — — — — 8 — 8 March 31, 2021 $ 1 $ 1,272 $ (3,544) $ (175) $ (210) $ 135 $ (2,521) Vesting of RSUs, net of tax withholdings and other — (4) — — — — (4) Stock-based compensation — 31 — — — — 31 Net income — — 109 — — 4 113 Other comprehensive income — — — — 11 — 11 June 30, 2021 $ 1 $ 1,299 $ (3,435) $ (175) $ (199) $ 139 $ (2,370) Vesting of RSUs, net of tax withholdings and other — (3) — — — — (3) Stock-based compensation — 22 — — — — 22 Net income — — 182 — — 5 187 Other comprehensive loss — — — — (27) — (27) September 30, 2021 $ 1 $ 1,318 $ (3,253) $ (175) $ (226) $ 144 $ (2,191) Stock Based Compensation The following reflects total stock-based compensation expense recognized under all programs in our continuing operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Related to L&W stock options $ — $ 3 $ 1 $ 25 Related to L&W RSUs 12 23 39 51 Related to SciPlay RSUs 3 — 7 5 Total $ 15 $ 26 $ 47 $ 81 Restricted Stock Units A summary of the changes in RSUs outstanding under our equity-based compensation plans during the nine months ended September 30, 2022 is presented below: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Unvested RSUs as of December 31, 2021 2.7 $ 32.03 Granted 1.7 $ 57.26 Vested (1.9) $ 38.75 Cancelled (0.7) $ 37.75 Unvested RSUs as of September 30, 2022 1.8 $ 46.50 The weighted-average grant date fair value of RSUs granted during the nine months ended September 30, 2022 and 2021 was $57.26 and $55.01, respectively. The fair value of each RSU grant is based on the market value of our common stock at the time of grant. As of September 30, 2022, we had $54 million in total unrecognized stock-based compensation expense relating to unvested RSUs that will be amortized over a weighted-average period of approximately two years. The fair value at vesting date of RSUs vested during the nine months ended September 30, 2022 and 2021 was $71.6 million and $74.1 million, respectively. Share Repurchase Programs As described in Note 17 within our 2021 10-K and in our Current Report on Form 8-K filed with the SEC on March 1, 2022, our Board of Directors approved a share repurchase program under which the Company is authorized to repurchase, from time to time through February 25, 2025, up to an aggregate amount of $750 million of our outstanding common stock. During the nine months ended September 30, 2022, we repurchased 3.7 million shares of common stock under the program at an aggregate cost of $203 million and an average of $55.39 per share. Subsequent to September 30, 2022 and through November 4, 2022, we purchased an additional 0.7 million shares of common stock at an aggregate cost of $38 million. On May 9, 2022, SciPlay’s Board of Directors approved a share repurchase program under which it is authorized to repurchase, from time to time through May 9, 2024, up to an aggregate amount of $60 million of its outstanding Class A common stock. During the nine months ended September 30, 2022, SciPlay repurchased 1.4 million shares of Class A common stock under the program at an aggregate cost of $18 million and an average of $13.13 per share. Subsequent to September 30, 2022 and through November 4, 2022, SciPlay purchased an additional 0.7 million shares of common stock at an aggregate cost of $10 million. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | We consider new evidence (both positive and negative) at each reporting date that could affect our view of the future realization of deferred tax assets. We evaluate information such as historical financial results, historical taxable income, projected future taxable income, expected timing of the reversals of existing temporary differences and available prudent and feasible tax planning strategies in our analysis. Based on the available evidence, valuation allowances in certain U.S. and non-U.S. jurisdictions remain consistent as of September 30, 2022. Our income tax expense (including discrete items) was $4 million and $8 million for the three and nine months ended September 30, 2022, respectively, and income tax benefit was $172 million and $164 million for the three and nine months ended September 30, 2021, respectively. In 2022, our effective tax rate differs from the U.S. statutory rate of 21% primarily as a result of not benefiting year to date losses in continuing operations in accordance with the intra-period tax expense/benefit allocation rules as generally prescribed under ASC 740-20. In all periods, we recorded tax expense relative to pre-tax earnings in jurisdictions without valuation allowances, including our 19% noncontrolling interest in SciPlay. The Divestitures are estimated to generate approximately $685 million of net cash taxes, after usage of tax attributes. Of this amount, $465 million was paid in the three months ended September 30, 2022 with the remainder expected to be paid in December 2022 and April 2023. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | Our total operating lease expense for the three and nine months ended September 30, 2022 was $6 million and $16 million, respectively, and $6 million and $16 million for the three and nine months ended September 30, 2021, respectively. The total amount of variable and short-term lease payments was immaterial for all periods presented. Supplemental balance sheet and cash flow information related to operating leases is as follows: As of September 30, 2022 December 31, 2021 Operating lease right-of-use assets $ 51 $ 51 Accrued liabilities 17 16 Operating lease liabilities 39 40 Total operating lease liabilities $ 56 $ 56 Weighted average remaining lease term, units in years 4 4 Weighted average discount rate 5 % 5 % Nine Months Ended September 30, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 15 $ 15 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 17 $ 6 Lease liability maturities: Remainder of 2022 2023 2024 2025 2026 Thereafter Less Imputed Interest Total Operating leases $ 5 $ 18 $ 15 $ 11 $ 8 $ 5 $ (6) $ 56 As of September 30, 2022, we did not have material additional operating leases that have not yet commenced. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | We are involved in various legal proceedings, which are described below. We record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss can be reasonably estimated (although, as discussed below, there may be an exposure to loss in excess of the accrued liability). We evaluate our accruals for legal contingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect (1) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments, (2) the advice and analyses of counsel and (3) the assumptions and judgment of management. Legal costs associated with our legal proceedings are expensed as incurred. We had accrued liabilities of $3 million and $27 million for all of our legal matters that were contingencies as of September 30, 2022 and December 31, 2021, respectively. Substantially all of our legal contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss involves a series of complex judgments about future events. Consequently, the ultimate outcomes of our legal contingencies could result in losses in excess of amounts we have accrued. We may be unable to estimate a range of possible losses for some matters pending against us or our subsidiaries, even when the amount of damages claimed against us or our subsidiaries is stated because, among other things: (1) the claimed amount may be exaggerated or unsupported; (2) the claim may be based on a novel legal theory or involve a large number of parties; (3) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (4) there may be uncertainty as to the outcome of pending appeals or motions; (5) the matter may not have progressed sufficiently through discovery or there may be significant factual or legal issues to be resolved or developed; and/or (6) there may be uncertainty as to the enforceability of legal judgments and outcomes in certain jurisdictions. Other matters have progressed sufficiently that we are able to estimate a range of possible loss. For those legal contingencies disclosed herein as well as those related to the previously disclosed settlement agreement entered into in February 2015 with SNAI S.p.a., as to which a loss is reasonably possible, whether in excess of a related accrued liability or where there is no accrued liability, and for which we are able to estimate a range of possible loss, the current estimated range is up to approximately $12 million in excess of the accrued liabilities (if any) related to those legal contingencies. This aggregate range represents management’s estimate of additional possible loss in excess of the accrued liabilities (if any) with respect to these matters based on currently available information, including any damages claimed by the plaintiffs, and is subject to significant judgment and a variety of assumptions and inherent uncertainties. For example, at the time of making an estimate, management may have only preliminary, incomplete, or inaccurate information about the facts underlying a claim; its assumptions about the future rulings of the court or other tribunal on significant issues, or the behavior and incentives of adverse parties, regulators, indemnitors or co‑defendants, may prove to be wrong; and the outcomes it is attempting to predict are often not amenable to the use of statistical or other quantitative analytical tools. In addition, from time to time an outcome may occur that management had not accounted for in its estimate because it had considered that outcome to be remote. Furthermore, as noted above, the aggregate range does not include any matters for which we are not able to estimate a range of possible loss. Accordingly, the estimated aggregate range of possible loss does not represent our maximum loss exposure. Any such losses could have a material adverse impact on our results of operations, cash flows or financial condition. The legal proceedings underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. Colombia litigation Our subsidiary, SGI, owned a minority interest in Wintech de Colombia S.A., or Wintech (now liquidated), which formerly operated the Colombian national lottery under a contract with Empresa Colombiana de Recursos para la Salud, S.A. (together with its successors, “Ecosalud”), an agency of the Colombian government. The contract provided for a penalty against Wintech, SGI and the other shareholders of Wintech of up to $5.0 million if certain levels of lottery sales were not achieved. In addition, SGI delivered to Ecosalud a $4.0 million surety bond as a further guarantee of performance under the contract. Wintech started the instant lottery in Colombia but, due to difficulties beyond its control, including, among other factors, social and political unrest in Colombia, frequently interrupted telephone service and power outages, and competition from another lottery being operated in a province of Colombia that we believe was in violation of Wintech’s exclusive license from Ecosalud, the projected sales level was not met for the year ended June 30, 1993. In 1993, Ecosalud issued a resolution declaring that the contract was in default. In 1994, Ecosalud issued a liquidation resolution asserting claims for compensation and damages against Wintech, SGI and other shareholders of Wintech for, among other things, realization of the full amount of the penalty, plus interest, and the amount of the bond. SGI filed separate actions opposing each resolution with the Tribunal Contencioso of Cundinamarca in Colombia (the “Tribunal”), which upheld both resolutions. SGI appealed each decision to the Council of State. In May 2012, the Council of State upheld the contract default resolution, which decision was notified to us in August 2012. In October 2013, the Council of State upheld the liquidation resolution, which decision was notified to us in December 2013. In July 1996, Ecosalud filed a lawsuit against SGI in the U.S. District Court for the Northern District of Georgia asserting many of the same claims asserted in the Colombia proceedings, including breach of contract, and seeking damages. In March 1997, the District Court dismissed Ecosalud’s claims. Ecosalud appealed the decision to the U.S. Court of Appeals for the Eleventh Circuit. The Court of Appeals affirmed the District Court’s decision in 1998. In June 1999, Ecosalud filed a collection proceeding against SGI to enforce the liquidation resolution and recover the claimed damages. In May 2013, the Tribunal denied SGI’s merit defenses to the collection proceeding and issued an order of payment of approximately 90 billion Colombian pesos, or approximately $30.2 million, plus default interest (potentially accrued since 1994 at a 12% statutory interest rate). SGI filed an appeal to the Council of State, and on December 10, 2020, the Council of State issued a ruling affirming the Tribunal’s decision. On December 16, 2020, SGI filed a motion for clarification of the Council of State’s ruling, which was denied on April 15, 2021. On April 22, 2021, SGI filed a motion for reconsideration relating to that decision, which the Council of State denied on February 21, 2022. On May 24, 2022, the case was transferred from the Council of State to the Tribunal for further proceedings. On August 18, 2022, SGI filed a constitutional challenge to the Council of State’s December 10, 2020 decision with that court, which is pending. SGI believes it has various defenses, including on the merits, against Ecosalud’s claims. Although we believe these claims will not result in a material adverse effect on our consolidated results of operations, cash flows or financial position, it is not feasible to predict the final outcome, and we cannot assure that these claims will not ultimately be resolved adversely to us or result in material liability. Washington State Matter The Washington State matter settlement previously accrued in the amount of $25 million (as described in Note 20 in our 2021 10-K) was fully paid and settled by SciPlay during the third quarter of 2022. TCS John Huxley Matter On March 15, 2019, TCS John Huxley America, Inc., TCS John Huxley Europe Ltd., TCS John Huxley Asia Ltd., and Taiwan Fulgent Enterprise Co., Ltd. brought a civil action in the United States District Court for the Northern District of Illinois against L&W, Bally Technologies, Inc. and SG Gaming. In the complaint, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. and South African patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold to regulated casinos in the United States. On April 10, 2019, the defendants filed a motion to dismiss the plaintiffs’ complaint with prejudice. On April 25, 2019, the district court denied the defendants’ motion to dismiss without prejudice pursuant to the court’s local rules, after the plaintiffs advised that they intended to file an amended complaint. The plaintiffs filed their amended complaint on May 3, 2019, and on May 22, 2019, the defendants filed a motion to dismiss the plaintiffs’ amended complaint with prejudice. On March 20, 2020, the district court denied the defendants’ motion to dismiss the plaintiffs’ amended complaint, and defendants filed an answer to Plaintiffs’ amended complaint on June 19, 2020. On June 3, 2020, the trial court granted the defendants’ request to bifurcate proceedings in the case, with discovery to occur first into the statute of limitations and release defenses asserted by the defendants in their motion to dismiss, before proceeding into broader discovery. The trial court set a September 18, 2020, deadline for the parties to complete discovery relating to the statute of limitations and release defenses. On October 28, 2020, the court issued an order extending until January 15, 2021 the deadline for the parties to complete discovery relating to the statute of limitations defense. On February 9, 2021, the defendants filed a motion for summary judgment on their statute of limitations defense, addressing whether plaintiffs had actual knowledge of their claims prior to the start of the limitations period. The district court denied that motion for summary judgment on September 20, 2021. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit and intend to vigorously defend against them. Tonkawa Tribe Matter On September 3, 2020, the Tonkawa Tribe of Indians of Oklahoma d/b/a Tonkawa Enterprises filed a putative class action complaint in the United States District Court for the District of Nevada against L&W, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. On October 5, 2020, the plaintiff filed a first amended complaint to add Cow Creek Band of Umpqua Tribe of Indians and the Umpqua Indian Development Corp., d/b/a Seven Feathers Casino as a plaintiff. On October 26, 2020, the plaintiffs filed a second amended complaint. In the complaint, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for card shufflers sold or leased to regulated casinos in the United States. The plaintiffs seek to represent a putative class of all regulated United States casinos directly leasing or purchasing card shufflers from the defendants on or after April 1, 2009. The complaint seeks unspecified money damages, the award of plaintiff’s costs of suit, including reasonable attorneys’ fees and expert fees, and the award of pre-judgment and post-judgment interest. On November 19, 2020, the defendants filed a motion to dismiss plaintiffs’ second amended complaint or, in the alternative, to compel arbitration of plaintiffs’ claims. On November 20, 2020, Plaintiffs filed a motion for partial summary judgment, seeking a finding that defendants are collaterally estopped from re-litigating issues litigated in the 2018 litigation versus Shuffle Tech International Corp., Aces Up Gaming, and Poydras-Talrick Holdings. On August 27, 2021, the Nevada district court entered an order transferring the lawsuit to the United States District Court for the Northern District of Illinois. On May 19, 2022, the Illinois district court granted defendants’ motion to compel arbitration of plaintiffs’ individual claims; stayed all proceedings in the lawsuit pending resolution of the arbitral process; and accordingly dismissed all pending motions without prejudice as moot. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit, and intend to vigorously defend against them. Giuliano and Rancho’s Club Casino Matter On September 4, 2020, Alfred T. Giuliano, as liquidation trustee for RIH Acquisition NJ, LLC d/b/a The Atlantic Club Casino Hotel filed a putative class action complaint in the United States District Court for the Northern District of Illinois against L&W, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. In the complaint, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold or leased in the United States. The plaintiffs seek to represent a putative class of all persons and entities that directly purchased or leased automatic card shufflers within the United States from the Defendants, or any predecessor, subsidiary, or affiliate thereof, at any time between April 1, 2009, and the present. The complaint seeks unspecified money damages, which the complaint asks the court to treble, the award of plaintiff’s costs of suit, including attorneys’ fees, and the award of pre-judgment and post-judgment interest. On September 8, 2020, Rancho’s Club Casino, Inc., d/b/a Magnolia House Casino filed a putative class action complaint in the United States District Court for the Northern District of Illinois against L&W, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. In the complaint, the plaintiff asserts federal antitrust claims arising from the defendants’ procurement of particular U.S. patents. The plaintiff alleges that the defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold or leased in the United States. The plaintiff seeks to represent a putative class of all persons and entities that directly purchased or leased automatic card shufflers within the United States from the defendants, or any predecessor, subsidiary, or affiliate thereof, at any time between April 1, 2009, and the present. The complaint seeks unspecified money damages, which the complaint asks the court to treble, the award of plaintiff’s costs of suit, including attorneys’ fees, and the award of pre-judgment and post-judgment interest. On October 29, 2020, the trial court consolidated the Giuliano and Rancho’s Club Casino matters. On October 30, 2020, the plaintiffs in the consolidated action filed a first amended consolidated complaint. On November 9, 2020, the defendants filed a motion to dismiss the plaintiffs’ first amended consolidated complaint, and also filed a motion to compel arbitration of plaintiff Alfred T. Giuliano’s individual claims. On May 19, 2022, the Illinois district court granted defendants’ motion to compel arbitration; stayed all proceedings in the lawsuit pending resolution of the arbitral process; and accordingly dismissed all pending motions without prejudice. On May 31, 2022, defendants filed a motion to lift the stay of the lawsuit for the limited purpose of amending the court’s May 19, 2022 order to confirm that plaintiff Alfred T. Giuliano must proceed to arbitration on an individual basis rather than a class-wide basis. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the consolidated lawsuit are without merit, and intend to vigorously defend against them. Casino Queen Matter On April 2, 2021, Casino Queen, Inc. and Casino Queen Marquette, Inc. filed a putative class action complaint in the United States District Court for the Northern District of Illinois against L&W, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. In the complaint, the plaintiffs assert federal antitrust claims arising from the defendants’ procurement of particular U.S. patents. The plaintiffs allege that the defendants used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold or leased in the United States. The plaintiffs seek to represent a putative class of all persons and entities that directly purchased or leased automatic card shufflers within the United States from the defendants, or any predecessor, subsidiary, or affiliate thereof, at any time between April 1, 2009, and the present. The complaint seeks unspecified money damages, which the complaint asks the court to treble, the award of plaintiffs’ costs of suit, including attorneys’ fees, and the award of pre-judgment and post-judgment interest. On June 11, 2021, the defendants filed a motion to dismiss plaintiffs’ complaint, which the court denied on May 19, 2022. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the lawsuit are without merit, and intend to vigorously defend against them. Mohawk Gaming Enterprises Matter On November 9, 2020, Mohawk Gaming Enterprises LLC, d/b/a Akwesasne Mohawk Casino Resort, filed a demand for a putative class arbitration before the American Arbitration Association against L&W, Bally Technologies, Inc. and SG Gaming, f/k/a Bally Gaming, Inc. (“Respondents”). In the complaint, the claimant asserts federal antitrust claims arising from the respondents’ procurement of particular U.S. patents. The claimant alleges that the respondents used those patents to create an allegedly illegal monopoly in the market for automatic card shufflers sold or leased in the United States. The claimant seeks to represent a putative class of all persons and entities that directly purchased or leased automatic card shufflers within the United States from the respondents, or any predecessor, subsidiary, or affiliate thereof, at any time between April 1, 2009, and the present. The complaint seeks unspecified money damages, which the complaint asks the arbitration panel to treble, and the award of claimant’s costs of suit, including attorneys’ fees. Respondents filed their answering statement on December 9, 2020. On October 29, 2021, the claimant filed a memorandum in support of class arbitration, which Respondents opposed on December 3, 2021. On February 8, 2022, the Arbitrator issued a clause construction award, finding that the arbitration could proceed on behalf of a class or classes. On February 11, 2022, Respondents filed a petition to vacate the award in the New York Supreme Court. The Court denied Respondents’ petition on August 9, 2022, and on August 16, 2022, Respondents appealed to the New York Appellate Division, First Department. On April 15, 2022, Respondents filed a motion to dismiss the claimant’s complaint, which the Arbitrator denied on July 26, 2022. We are currently unable to determine the likelihood of an outcome or estimate a range of reasonably possible losses, if any. We believe that the claims in the arbitration demand are without merit, and intend to vigorously defend against them. Boorn Matter On September 15, 2022, plaintiff Hannelore Boorn filed a putative class action against L&W, SciPlay Corporation, and Appchi Media Ltd. in the Fayette Circuit Court of the Commonwealth of Kentucky. In her complaint, plaintiff seeks to represent a putative class of all persons in Kentucky who, within the past five years, purchased and allegedly lost $5.00 or more worth of chips, in a 24-hour period, playing SciPlay’s online social casino games. The complaint asserts claims for alleged violations of Kentucky’s “recovery of gambling losses” statute and for unjust enrichment, and seeks unspecified money damages, the award of reasonable attorneys’ fees and costs, pre- and post-judgment interest, and injunctive and/or other declaratory relief. On October 18, 2022, defendants removed the action to the United States District Court for the Eastern District of Kentucky. On October 26, 2022, the plaintiff filed a notice voluntarily dismissing the lawsuit without prejudice. On October 27, 2022, the district court entered an order dismissing the lawsuit. For additional information regarding our pending litigation matters, see Note 20 in our 2021 10-K. |
Description of the Business a_2
Description of the Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of L&W, its wholly owned subsidiaries, and those subsidiaries in which we have a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. |
Principles of Consolidation | In the opinion of L&W and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results of operations, comprehensive income (loss) and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2021 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year. |
Significant Accounting Policies | There have been no changes to our significant accounting policies described within the Notes of our 2021 10-K. |
Computation of Basic and Diluted Net Income Attributable to L&W Per Share | Basic and diluted net income attributable to L&W per share is based upon net income attributable to L&W divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the effect of the assumed exercise of stock options and RSUs only in the periods in which such effect would have been dilutive to net income from continuing operations. |
Acquisitions | We accounted for these acquisitions using the acquisition method of accounting, allocating the total consideration transferred to acquired tangible and intangible assets and assumed liabilities based on estimated fair values. The estimated fair values of the acquired assets, assumed liabilities and resulting goodwill are subject to adjustment as we finalize our purchase price accounting. |
New Accounting Guidance | New Accounting Guidance - Recently Adopted The FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , in October 2021. The new guidance requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with revenue recognition guidance. We adopted this standard during the third quarter of 2022 on a retrospective basis for the current fiscal year. The adoption of this guidance did not have an effect on our consolidated financial statements. New Accounting Guidance - Not Yet Adopted The FASB issued ASUs No. 2020-04 and No. 2021-01, Reference Rate Reform (Topic 848) in March 2020 and January 2021, respectively. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships, including derivative instruments impacted by changes in the interest rates used for discounting cash flows for computing variable margin settlements, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued by June 2023. The ASUs establish certain contract modification principles that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be applied prospectively. Based on our preliminary assessment completed to date, we do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements. We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements. |
Discontinued Operations (Polici
Discontinued Operations (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | We have reflected the financial results of the Divested Businesses as discontinued operations in our consolidated statements of operations and reflected the related assets and liabilities as held for sale in our consolidated balance sheet as of December 31, 2021. |
Revenue Recognition (Policies)
Revenue Recognition (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on our consolidated balance sheets. Other than contracts with customers with financing arrangements exceeding 12 months, revenue recognition is generally proximal to conversion to cash. |
Business Segments (Policies)
Business Segments (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | We report our operations in three business segments—Gaming, SciPlay and iGaming—representing our different products and services. A detailed discussion regarding the products and services from which each reportable business segment derives its revenue is included in Notes 3 and 4 in our 2021 10-K. In evaluating financial performance, our Chief Operating Decision Maker focuses on AEBITDA as management’s primary segment measure of profit or loss, which is described in footnote (2) to the below table. The accounting policies of our |
Income Taxes (Policies)
Income Taxes (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | We consider new evidence (both positive and negative) at each reporting date that could affect our view of the future realization of deferred tax assets. We evaluate information such as historical financial results, historical taxable income, projected future taxable income, expected timing of the reversals of existing temporary differences and available prudent and feasible tax planning strategies in our analysis. Based on the available evidence, valuation allowances in certain U.S. and non-U.S. jurisdictions remain consistent as of September 30, 2022. |
Litigation (Policies)
Litigation (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | We record an accrual for legal contingencies when it is both probable that a liability has been incurred and the amount or range of the loss can be reasonably estimated (although, as discussed below, there may be an exposure to loss in excess of the accrued liability). We evaluate our accruals for legal contingencies at least quarterly and, as appropriate, establish new accruals or adjust existing accruals to reflect (1) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments, (2) the advice and analyses of counsel and (3) the assumptions and judgment of management. Legal costs associated with our legal proceedings are expensed as incurred. We had accrued liabilities of $3 million and $27 million for all of our legal matters that were contingencies as of September 30, 2022 and December 31, 2021, respectively. Substantially all of our legal contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss involves a series of complex judgments about future events. Consequently, the ultimate outcomes of our legal contingencies could result in losses in excess of amounts we have accrued. We may be unable to estimate a range of possible losses for some matters pending against us or our subsidiaries, even when the amount of damages claimed against us or our subsidiaries is stated because, among other things: (1) the claimed amount may be exaggerated or unsupported; (2) the claim may be based on a novel legal theory or involve a large number of parties; (3) there may be uncertainty as to the likelihood of a class being certified or the ultimate size of the class; (4) there may be uncertainty as to the outcome of pending appeals or motions; (5) the matter may not have progressed sufficiently through discovery or there may be significant factual or legal issues to be resolved or developed; and/or (6) there may be uncertainty as to the enforceability of legal judgments and outcomes in certain jurisdictions. Other matters have progressed sufficiently that we are able to estimate a range of possible loss. For those legal contingencies disclosed herein as well as those related to the previously disclosed settlement agreement entered into in February 2015 with SNAI S.p.a., as to which a loss is reasonably possible, whether in excess of a related accrued liability or where there is no accrued liability, and for which we are able to estimate a range of possible loss, the current estimated range is up to approximately $12 million in excess of the accrued liabilities (if any) related to those legal contingencies. This aggregate range represents management’s estimate of additional possible loss in excess of the accrued liabilities (if any) with respect to these matters based on currently available information, including any damages claimed by the plaintiffs, and is subject to significant judgment and a variety of assumptions and inherent |
Description of the Business a_3
Description of the Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table summarizes an aggregate disclosure related to the acquisitions above and is based on the preliminary purchase price allocations expected to be finalized by the fourth quarter of 2022: Total Consideration Cash paid, net of cash acquired (1) Contingent consideration/Redeemable non-controlling interest (2) Allocation of purchase price to Intangible assets, net (3) Weighted average useful life of acquired intangible assets Excess purchase price allocated to Goodwill (4) $ 147 $ 115 $ 25 $ 40 6 Years $ 101 (1) Exclusive of $6 million acquired in short term investments. (2) Fair values were determined using an income approach primarily based on reaching certain revenue and earnings-based metrics, with discount rates ranging between 2% and 16% and a maximum payout of up to $213 million. (3) Intangible assets primarily consist of intellectual property, consisting of games technology and content platforms, and trade names. The fair value of these intangible assets was determined using an income approach method and level 3 inputs in the hierarchy as established by ASC 820. The discount rates used in the valuation analyses ranged between 16% and 18%. Royalty rates used for the trade names as well as acquired game content and related technology ranged between 1% and 3% and 20% and 21%, respectively. (4) The factors contributing to the recognition of acquisition goodwill are based on game portfolio and platform diversification, expected synergies, assembled workforce and other strategic benefits. None of the resultant goodwill is expected to be deductible for income tax purposes. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The summarized results of our discontinued operations were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Total revenue $ 32 $ 285 $ 371 $ 860 Total cost of revenue (1) 9 148 177 431 Other operating expenses (2) 31 63 180 184 Operating (loss) income (8) 74 14 245 Total other income, net 2 16 10 90 Net (loss) income from discontinued operations before income taxes (6) 90 24 335 Gain on sale of discontinued operations before income taxes 362 — 4,930 — Total net income from discontinued operations before income taxes 356 90 4,954 335 Income tax expense (41) (3) (1,099) (6) Net income from discontinued operations, net of tax included in the consolidated statement of operations $ 315 $ 87 $ 3,855 $ 329 (1) Excludes D&A. (2) Includes D&A of $26 million and $79 million for the three and nine months ended September 30, 2021, respectively, along with stock-based compensation of $7 million and $18 million for the three and nine months ended September 30, 2022, respectively, and $7 million and $14 million for the three and nine months ended September 30, 2021, respectively. Due to the discontinued operations classification of the Divested Businesses as of the third quarter of 2021, D&A was ceased and none was included for the three and nine months ended September 30, 2022. The three and nine months ended September 30, 2022 also include $7 million and $85 million, respectively, related to direct transaction closing fees. The following table summarizes the major classes of assets and liabilities of businesses held for sale. As of December 31, 2021 ASSETS Cash and cash equivalents $ 44 Restricted cash 22 Receivables, net 214 Inventories 94 Prepaid expenses deposits and other current assets 123 Total current assets of businesses held for sale 497 Property and equipment, net 217 Intangible assets and software, net 304 Goodwill 623 Equity investments 251 Other assets 82 Total non-current assets of businesses held for sale 1,477 Total assets of businesses held for sale $ 1,974 LIABILITIES Accounts payable $ 95 Accrued liabilities and other 187 Total current liabilities of businesses held for sale 282 Operating lease liabilities 34 Other 90 Total non-current liabilities of businesses held for sale 124 Total liabilities of businesses held for sale $ 406 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenues by Type | The following table disaggregates revenues by type within each of our business segments: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Gaming Gaming operations (1) $ 161 $ 151 $ 479 $ 445 Gaming machine sales 140 95 366 249 Gaming systems 70 52 181 146 Table products 48 41 137 109 Total $ 419 $ 339 $ 1,163 $ 949 SciPlay Mobile in-app purchases $ 149 $ 131 $ 426 $ 400 Web in-app purchases and other (2) 22 16 63 52 Total $ 171 $ 147 $ 489 $ 452 iGaming $ 58 $ 53 $ 178 $ 171 (1) Gaming operations revenue for the nine months ended September 30, 2021 benefited from $44 million U.K. Fixed Odds Betting Terminal VAT recovery (the “VAT recovery”) received from certain U.K. customers related to a 2020 U.K. court ruling associated with overcharging of VAT for gaming operators that consequently reduced our net gaming revenues related to these customers and arrangements. (2) Other primarily represents revenue generated from providing advertising platforms with access to SciPlay’s game software platform, which facilitates the placement of advertising inventory, which was not material in the periods presented. |
Summary of Balances in Receivables and Contract Asset Accounts | The following table summarizes the activity in our contract liabilities for the reporting period: Nine Months Ended September 30, 2022 Contract liability balance, beginning of period (1) $ 37 Liabilities recognized during the period 9 Amounts recognized in revenue from beginning balance (17) Contract liability balance, end of period (1) $ 29 (1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets. Receivables Contract Assets (1) Beginning of period balance $ 440 $ 19 End of period balance, September 30, 2022 442 23 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets. |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Operating Information by Segment | The following tables present our segment information: Three Months Ended September 30, 2022 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 419 $ 171 $ 58 $ — $ 648 AEBITDA (2) 202 43 20 (30) $ 235 Reconciling items to Net income from continuing operations before income taxes: D&A (81) (6) (10) (5) (102) Restructuring and other (1) (1) — (25) (27) Interest expense (68) (68) Other income, net 1 1 Stock-based compensation (15) (15) Net income from continuing operations before income taxes $ 24 (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes. (2) AEBITDA is reconciled to net loss from continuing operations before income taxes with the following adjustments: (1) depreciation and amortization expense and impairment charges (including goodwill impairments); (2) restructuring and other, which includes charges or expenses attributable to: (i) employee severance; (ii) management restructuring and related costs; (iii) restructuring and integration; (iv) cost savings initiatives; (v) major litigation; and (vi) acquisition costs and other unusual items; (3) interest expense; (4) loss on debt refinancing transactions; (5) change in fair value of investments and remeasurement of debt and other; (6) other income, net, including foreign currency (gains) losses and earnings from equity investments; and (7) stock-based compensation. AEBITDA is presented as our primary segment measure of profit or loss. Three Months Ended September 30, 2021 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 339 $ 147 $ 53 $ — $ 539 AEBITDA (2) 172 45 18 (32) $ 203 Reconciling items to Net loss from continuing operations before income taxes: D&A (73) (4) (13) (6) (96) Restructuring and other (1) (2) (1) (41) (45) Interest expense (120) (120) Gain on remeasurement of debt and other 12 12 Stock-based compensation (26) (26) Net loss from continuing operations before income taxes $ (72) (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes. (2) AEBITDA is described in footnote (2) to the first table in this Note 4. Nine Months Ended September 30, 2022 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 1,163 $ 489 $ 178 $ — $ 1,830 AEBITDA (2) 552 128 61 (93) $ 648 Reconciling items to Net loss from continuing operations before income taxes: D&A (246) (16) (37) (18) (317) Restructuring and other (5) (4) (15) (82) (106) Interest expense (254) (254) Loss on debt refinancing transactions (147) (147) Gain on remeasurement of debt and other 27 27 Other income, net 7 7 Stock-based compensation (47) (47) Net loss from continuing operations before income taxes $ (189) (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net income from continuing operations before income taxes. (2) AEBITDA is described in footnote (2) to the first table in this Note 4. Nine Months Ended September 30, 2021 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 949 $ 452 $ 171 $ — $ 1,572 AEBITDA (2) 472 138 60 (93) $ 577 Reconciling items to Net loss from continuing operations before income taxes: D&A (220) (11) (38) (20) (289) Restructuring and other (7) (3) (1) (85) (96) Interest expense (360) (360) Gain on remeasurement of debt and other 30 30 Other income, net 17 17 Stock-based compensation (81) (81) Net loss from continuing operations before income taxes $ (202) (1) Includes amounts not allocated to the business segments (including corporate costs) and items to reconcile the total business segments AEBITDA to our consolidated net loss from continuing operations before income taxes. (2) AEBITDA is described in footnote (2) to the first table in this Note 4. |
Restructuring and other (Tables
Restructuring and other (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Other Costs | The following table summarizes pre-tax restructuring and other costs for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Employee severance and related $ 5 $ 3 $ 7 $ 3 Strategic review and related 14 31 68 57 Contingent acquisition consideration (1) — — 12 — Restructuring, integration and other 8 11 19 36 Total $ 27 $ 45 $ 106 $ 96 (1) Represents contingent consideration fair value adjustment (see Note 12). |
Receivables, Allowance for Cr_2
Receivables, Allowance for Credit Losses and Credit Quality of Receivables (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Summary of Components of Accounts and Notes Receivable, Net | The following table summarizes the components of current and long-term receivables, net: As of September 30, 2022 December 31, 2021 Current: Receivables $ 467 $ 475 Allowance for credit losses (41) (52) Current receivables, net 426 423 Long-term: Receivables 18 19 Allowance for credit losses (2) (2) Long-term receivables, net 16 17 Total receivables, net $ 442 $ 440 As of September 30, 2022 Balances over 90 days past due December 31, 2021 Balances over 90 days past due Receivables: U.S. and Canada $ 298 $ 14 $ 321 $ 37 International 187 33 173 44 Total receivables 485 47 494 81 Receivables allowance: U.S. and Canada (21) (6) (18) (6) International (22) (22) (36) (19) Total receivables allowance (43) (28) (54) (25) Receivables, net $ 442 $ 19 $ 440 $ 56 As of September 30, 2022 Total Current or Not Yet Due Balances Over 90 days Past Due Receivables $ 72 $ 38 $ 34 Allowance for credit losses (22) (10) (12) Receivables, net $ 50 $ 28 $ 22 |
Accounts Receivable, Allowance for Credit Loss | The activity in our allowance for receivable credit losses for each of the three and nine months ended September 30, 2022 and 2021 is as follows: 2022 2021 Total U.S. and Canada International Total Beginning allowance for credit losses $ (54) $ (18) $ (36) $ (81) Provision (3) (3) — 1 Charge-offs and recoveries 7 — 7 2 Allowance for credit losses as of March 31 (50) (21) (29) (78) Provision (1) (1) — (2) Charge-offs and recoveries 3 1 2 17 Allowance for credit losses as of June 30 $ (48) $ (21) $ (27) $ (63) Provision 4 — 4 (1) Charge-offs and recoveries 1 — 1 — Allowance for credit losses as of September 30 $ (43) $ (21) $ (22) $ (64) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consisted of the following: As of September 30, 2022 December 31, 2021 Parts and work-in-process $ 114 $ 70 Finished goods 23 28 Total inventories $ 137 $ 98 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Components of Property and Equipment | Property and equipment, net consisted of the following: As of September 30, 2022 December 31, 2021 Land $ 6 $ 6 Buildings and leasehold improvements 54 55 Gaming machinery and equipment 669 712 Furniture and fixtures 20 22 Construction in progress 13 9 Other property and equipment 89 84 Less: accumulated depreciation (649) (675) Total property and equipment, net $ 202 $ 213 Depreciation expense is excluded from Cost of services, Cost of product sales and Other operating expenses and is separately presented within D&A. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Depreciation expense $ 27 $ 29 $ 82 $ 90 |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite and Indefinite-lived Intangible Assets | The following tables present certain information regarding our intangible assets as of September 30, 2022 and December 31, 2021: As of September 30, 2022 December 31, 2021 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 898 $ (493) $ 405 $ 911 $ (445) $ 466 Intellectual property 906 (690) 216 914 (670) 244 Licenses 441 (383) 58 472 (380) 92 Brand names 127 (104) 23 132 (97) 35 Trade names 162 (104) 58 158 (54) 104 Patents and other 14 (7) 7 12 (7) 5 Total intangible assets $ 2,548 $ (1,781) $ 767 $ 2,599 $ (1,653) $ 946 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amortization expense $ 60 $ 46 $ 180 $ 138 The following reflects amortization of software included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amortization expense $ 15 $ 21 $ 55 $ 61 |
Reconciliation of the Carrying Amount of Goodwill, by Business Segment | The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2021 to September 30, 2022. Gaming (1) SciPlay iGaming Totals Balance as of December 31, 2021 $ 2,405 $ 126 $ 361 $ 2,892 Acquired goodwill — 93 8 101 Foreign currency adjustments (62) (6) (60) (128) Balance as of September 30, 2022 $ 2,343 $ 213 $ 309 $ 2,865 (1) Accumulated goodwill impairment charges for the Gaming segment as of September 30, 2022 were $989 million. |
Software, net (Tables)
Software, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Capitalized Computer Software, Net [Abstract] | |
Schedule of Software, net | Software, net consisted of the following: As of September 30, 2022 December 31, 2021 Software $ 1,035 $ 996 Accumulated amortization (905) (879) Software, net $ 130 $ 117 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amortization expense $ 60 $ 46 $ 180 $ 138 The following reflects amortization of software included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Amortization expense $ 15 $ 21 $ 55 $ 61 |
Long-Term and Other Debt (Table
Long-Term and Other Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The following table reflects our outstanding debt (in order of priority and maturity): As of September 30, 2022 December 31, 2021 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: SGI Term Loan B-5 2024 variable $ — $ — $ — $ 3,982 SciPlay Revolver 2024 variable — — — — SGI Revolver 2027 variable — — — — SGI Term Loan B 2029 variable 2,195 (31) 2,164 — SGI Senior Notes: 2025 Secured Notes 2025 5.000% — — — 1,240 2026 Secured Euro Notes 2026 3.375% — — — 364 2025 Unsecured Notes 2025 8.625% 550 (5) 545 544 2026 Unsecured Euro Notes 2026 5.500% — — — 280 2026 Unsecured Notes 2026 8.250% — — — 1,090 2028 Unsecured Notes 2028 7.000% 700 (7) 693 692 2029 Unsecured Notes 2029 7.250% 500 (6) 494 494 Other 2023 — 2 — 2 4 Total long-term debt outstanding $ 3,947 $ (49) $ 3,898 $ 8,690 Less: current portion of long-term debt (24) (44) Long-term debt, excluding current portion $ 3,874 $ 8,646 Fair value of debt (1) $ 3,813 (1) Fair value of our fixed rate and variable interest rate debt is classified within Level 2 in the fair value hierarchy and has been calculated based on the quoted market prices of our securities. |
Schedule of Retired and Redeemed Debt and Interest Payments | With the issuance of the new term loan facility and using the proceeds from the divestiture of the Lottery Business (see Note 1), we retired and redeemed the following outstanding debt and paid accrued and unpaid interest thereon plus related premiums, fees and expenses: Debt instrument Interest rate Maturity Face value as of March 31, 2022 Paid interest Premium, other fees and expenses SGI Term Loan B-5 (1) variable 2024 $ 4,008 $ 5 $ 33 Senior Secured Notes 5.000% 2025 1,250 31 31 Senior Secured Euro Notes 3.375% 2026 361 2 6 Senior Unsecured Euro Notes 5.500% 2026 278 3 8 Senior Unsecured Notes 8.250% 2026 1,100 7 45 Total $ 6,997 $ 48 $ 123 (1) Premium, other fees and expenses include fees associated with SGI Term Loan B. |
Schedule of Components of Extinguishment and Modification of Debt | The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for the nine months ended September 30, 2022. No such transactions occurred during the three months ended September 30, 2022, or the three and nine months ended September 30, 2021. Nine Months Ended Repayment of principal balance at premium $ 90 Unamortized debt (premium) discount and deferred financing costs, net 57 Total loss on debt refinancing transactions $ 147 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of gains (loss) on interest rate swap contracts | The following table shows the Gain and Interest expense recognized on our interest rate swap contracts: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Gain recorded in accumulated other comprehensive loss, net of tax $ 24 $ 5 $ 29 $ 14 Interest expense recorded related to interest rate swap contracts 2 5 8 14 |
Schedule of the effect of interest rate swap contracts designated as cash flow hedges | The following table shows the effect of interest rate swap contracts designated as cash flow hedges on interest expense in the consolidated statements of operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Total interest expense which reflects the effects of cash flow hedges $ (68) $ (120) $ (254) $ (360) Hedged item (5) (5) (12) (14) Derivative designated as hedging instrument 3 — 4 — |
Fair value of liabilities measured on recurring basis | The following table shows the fair value of our hedges: As of Balance Sheet Line Item September 30, 2022 December 31, 2021 Interest rate swaps (1)(2) Accrued liabilities $ — $ 3 Interest rate swaps (1)(3)(4) Other assets 32 — Cross-currency interest rate swaps (1)(5) Other assets — 42 (1) The inputs used to measure the fair value of our interest rate swap contracts were categorized as Level 2 in the fair value hierarchy. (2) Contracts matured in February 2022. (3) Contracts mature in April 2027. (4) Gains of $31 million and $32 million for the three and nine months ended September 30, 2022, respectively, are reflected in Derivative financial instrument unrealized gain (loss) in Other comprehensive income (loss). (5) Gain of $4 million for the nine months ended September 30, 2022, and gains of $12 million and $25 million for the three and nine months ended September 30, 2021, respectively, are reflected in Foreign currency translation gain (loss) in Other comprehensive income (loss). |
Asset Acquisition, Contingent Consideration | The table below reconciles the change in the contingent acquisition consideration liabilities (including deferred purchase price) for the period from December 31, 2021 to September 30, 2022. Total Included in Accrued Liabilities Included in Other Long-Term Liabilities Balance as of December 31, 2021 $ 51 $ 3 $ 48 Additions 27 Payments (3) Fair value adjustments (1) 12 Balance as of September 30, 2022 $ 87 $ 37 $ 50 (1) Amount included in Restructuring and other (see Note 5). |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Compensation Related Costs [Abstract] | |
Schedule of Stockholders' Deficit | The following tables present certain information regarding our stockholders’ equity (deficit) as of September 30, 2022 and 2021: Nine Months Ended September 30, 2022 Common Stock Additional Paid in Capital Retained Earnings (Accumulated Loss) Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2022 $ 1 $ 1,337 $ (3,158) $ (175) $ (261) $ 150 $ (2,106) Settlement of liability awards and other, net — 43 — — — — 43 Vesting of RSUs, net of tax withholdings — (31) — — — — (31) Purchase of treasury stock — — — (51) — — (51) Stock-based compensation — 17 — — — — 17 Net income — — 26 — — 2 28 Other comprehensive loss — — — — (37) — (37) March 31, 2022 $ 1 $ 1,366 $ (3,132) $ (226) $ (298) $ 152 $ (2,137) Vesting of RSUs, net of tax withholdings and other — — — — — — — Purchase of treasury stock — — — (152) — — (152) Purchase of SciPlay common stock — (6) — — — (1) (7) Stock-based compensation — 15 — — — — 15 Net income — — 3,291 — — 4 3,295 Other comprehensive loss (1) — — — — (48) — (48) June 30, 2022 $ 1 $ 1,375 $ 159 $ (378) $ (346) $ 155 $ 966 Vesting of RSUs, net of tax withholdings and other — (3) — — — — (3) Purchase of SciPlay common stock — (10) — — — (1) (11) Stock-based compensation — 14 — — — — 14 Net income — — 328 — — 7 335 Other comprehensive loss (1) — — — — (69) — (69) September 30, 2022 $ 1 $ 1,376 $ 487 $ (378) $ (415) $ 161 $ 1,232 (1) Includes reclassifications of $51 million and $74 million for the three and nine months ended September 30, 2022, respectively, from accumulated other comprehensive loss into income due to the sales of discontinued operations (see Note 2). Nine Months Ended September 30, 2021 Common Stock Additional Paid in Capital Accumulated Loss Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2021 $ 1 $ 1,268 $ (3,529) $ (175) $ (218) $ 129 $ (2,524) Vesting of RSUs, net of tax withholdings and other — (13) — — — — (13) Stock-based compensation — 17 — — — — 17 Net (loss) income — — (15) — — 6 (9) Other comprehensive income — — — — 8 — 8 March 31, 2021 $ 1 $ 1,272 $ (3,544) $ (175) $ (210) $ 135 $ (2,521) Vesting of RSUs, net of tax withholdings and other — (4) — — — — (4) Stock-based compensation — 31 — — — — 31 Net income — — 109 — — 4 113 Other comprehensive income — — — — 11 — 11 June 30, 2021 $ 1 $ 1,299 $ (3,435) $ (175) $ (199) $ 139 $ (2,370) Vesting of RSUs, net of tax withholdings and other — (3) — — — — (3) Stock-based compensation — 22 — — — — 22 Net income — — 182 — — 5 187 Other comprehensive loss — — — — (27) — (27) September 30, 2021 $ 1 $ 1,318 $ (3,253) $ (175) $ (226) $ 144 $ (2,191) |
Schedule of Stock-based Compensation Expense Recognized | The following reflects total stock-based compensation expense recognized under all programs in our continuing operations: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Related to L&W stock options $ — $ 3 $ 1 $ 25 Related to L&W RSUs 12 23 39 51 Related to SciPlay RSUs 3 — 7 5 Total $ 15 $ 26 $ 47 $ 81 |
Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | A summary of the changes in RSUs outstanding under our equity-based compensation plans during the nine months ended September 30, 2022 is presented below: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Unvested RSUs as of December 31, 2021 2.7 $ 32.03 Granted 1.7 $ 57.26 Vested (1.9) $ 38.75 Cancelled (0.7) $ 37.75 Unvested RSUs as of September 30, 2022 1.8 $ 46.50 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Schedule of Supplemental Operating Lease Information | Supplemental balance sheet and cash flow information related to operating leases is as follows: As of September 30, 2022 December 31, 2021 Operating lease right-of-use assets $ 51 $ 51 Accrued liabilities 17 16 Operating lease liabilities 39 40 Total operating lease liabilities $ 56 $ 56 Weighted average remaining lease term, units in years 4 4 Weighted average discount rate 5 % 5 % Nine Months Ended September 30, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 15 $ 15 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 17 $ 6 |
Maturities of Lease Liabilities | Lease liability maturities: Remainder of 2022 2023 2024 2025 2026 Thereafter Less Imputed Interest Total Operating leases $ 5 $ 18 $ 15 $ 11 $ 8 $ 5 $ (6) $ 56 |
Description of the Business a_4
Description of the Business and Summary of Significant Accounting Policies - Narrative (Details) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) shares | Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) Segment shares | Sep. 30, 2021 USD ($) shares | Mar. 01, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Number of business segments | Segment | 3 | ||||
Fair value of securities received in sale of discontinued operations | $ 46 | $ 0 | |||
Discontinued Operations, Disposed of by Sale | Sports Betting Business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from divestiture of businesses | $ 796 | ||||
Discontinued Operations, Disposed of by Sale | Sports Betting Business | Endeavor Group Holdings, Inc. | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from divestiture of businesses | $ 750 | ||||
Noncash, consideration, shares received (in shares) | shares | 2.3 | 2.3 | |||
Fair value of securities received in sale of discontinued operations | $ 46 | ||||
Continuing Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Acquisitions related to continuing operations, total consideration | $ 147 | ||||
Lottery Business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from divestiture of businesses | $ 5,700 | ||||
Alictus | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Business acquisition, percentage of voting interests acquired | 80% | ||||
Business acquisition, percentage of voting interests, contingent consideration | 0.20 | ||||
Contingent consideration arrangements, range of outcomes, value, low | 0 | 0 | |||
Contingent consideration arrangements, maximum payout | 200 | 200 | |||
Alictus | Continuing Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Acquisitions related to continuing operations, total consideration | 109 | ||||
Acquisitions During Period | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Contingent consideration arrangements, maximum payout | $ 213 | 213 | |||
Acquisitions During Period | Continuing Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Acquisitions related to continuing operations, total consideration | $ 6 | ||||
Related to L&W RSUs | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | shares | 2 | 3 | |||
Employee Stock | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Antidilutive securities excluded from computation of earnings per share (in shares) | shares | 2 | 2 |
Description of the Business a_5
Description of the Business and Summary of Significant Accounting Policies - Schedule of Business Acquisitions (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Business Combination, Consideration Transferred [Abstract] | ||
Contingent consideration/Redeemable non-controlling interest | $ 87 | $ 51 |
Excess purchase price allocated to Goodwill | 101 | |
Acquisitions During Period | ||
Business Combination, Consideration Transferred [Abstract] | ||
Contingent consideration arrangements, maximum payout | $ 213 | |
Minimum | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, contingent consideration, discount rate | 0.02 | |
Maximum | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, contingent consideration, discount rate | 0.16 | |
Measurement Input, Discount Rate | Minimum | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, intangibles, discount rate | 16% | |
Measurement Input, Discount Rate | Maximum | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, intangibles, discount rate | 18% | |
Royalty | Minimum | Game Content and Technology | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, royalty rate | 20% | |
Royalty | Minimum | Trade names | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, royalty rate | 1% | |
Royalty | Maximum | Game Content and Technology | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, royalty rate | 21% | |
Royalty | Maximum | Trade names | ||
Business Combination, Consideration Transferred [Abstract] | ||
Business combination, royalty rate | 3% | |
Continuing Operations | ||
Business Combination, Consideration Transferred [Abstract] | ||
Total Consideration | $ 147 | |
Contingent consideration/Redeemable non-controlling interest | 25 | |
Allocation of purchase price to Intangible assets, net | $ 40 | |
Weighted average useful life of acquired intangible assets | 6 years | |
Excess purchase price allocated to Goodwill | $ 101 | |
Continuing Operations | Acquisitions During Period | ||
Business Combination, Consideration Transferred [Abstract] | ||
Total Consideration | 6 | |
Cash paid, net of cash acquired | $ 115 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Financial Statements | ||||
Pre-tax gain on sale of discontinued operation | $ 362 | |||
Fair value of securities received in sale of discontinued operations | $ 46 | $ 0 | ||
Discontinued Operations, Disposed of by Sale | Sports Betting Business | ||||
Condensed Financial Statements | ||||
Proceeds from divestiture of businesses | 796 | |||
Discontinued Operations, Disposed of by Sale | Sports Betting Business | Endeavor Group Holdings, Inc. | ||||
Condensed Financial Statements | ||||
Proceeds from divestiture of businesses | 750 | |||
Fair value of securities received in sale of discontinued operations | $ 46 | |||
Noncash, consideration, shares received (in shares) | 2.3 | 2.3 | ||
Lottery Business | ||||
Condensed Financial Statements | ||||
Proceeds from divestiture of businesses | $ 5,700 | |||
Gain on sale of discontinued operations before income taxes | $ 4,600 |
Discontinued Operations - Incom
Discontinued Operations - Income Statement and Balance Sheet Disclosures (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Income tax (expense) benefit | $ (4) | $ 172 | $ (8) | $ 164 | ||
Net income from discontinued operations, net of tax included in the consolidated statement of operations | 3,855 | 329 | ||||
Disposal group, depreciation and amortization | 26 | 79 | ||||
Disposal group, direct transaction closing fees | 7 | 85 | ||||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | ||||||
Total current assets of businesses held for sale | 0 | 0 | $ 497 | |||
Total non-current assets of businesses held for sale | 0 | 0 | 1,477 | |||
Total current liabilities of businesses held for sale | 0 | 0 | 282 | |||
Operating lease liabilities | 56 | 56 | 56 | |||
Total non-current liabilities of businesses held for sale | 0 | 0 | $ 124 | |||
Lottery Business | ||||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Gain on sale of discontinued operations before income taxes | $ 4,600 | |||||
Discontinued Operations | ||||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Total revenue | 32 | 285 | 371 | 860 | ||
Total cost of revenue | 9 | 148 | 177 | 431 | ||
Other operating expenses | 31 | 63 | 180 | 184 | ||
Operating (loss) income | (8) | 74 | 14 | 245 | ||
Total other income, net | 2 | 16 | 10 | 90 | ||
Net (loss) income from discontinued operations before income taxes | (6) | 90 | 24 | 335 | ||
Gain on sale of discontinued operations before income taxes | 362 | 0 | 4,930 | 0 | ||
Total net income from discontinued operations before income taxes | 356 | 90 | 4,954 | 335 | ||
Income tax (expense) benefit | 41 | 3 | (1,099) | (6) | ||
Net income from discontinued operations, net of tax included in the consolidated statement of operations | 315 | 87 | 3,855 | 329 | ||
Discontinued operations, stock-based compensation | $ 7 | 7 | $ 18 | 14 | ||
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | ||||||
Cash and cash equivalents | 44 | 44 | ||||
Restricted cash | 22 | 22 | ||||
Receivables, net | 214 | 214 | ||||
Inventories | 94 | 94 | ||||
Prepaid expenses deposits and other current assets | 123 | 123 | ||||
Total current assets of businesses held for sale | 497 | 497 | ||||
Property and equipment, net | 217 | 217 | ||||
Intangible assets and software, net | 304 | 304 | ||||
Goodwill | 623 | 623 | ||||
Equity investments | 251 | 251 | ||||
Other assets | 82 | 82 | ||||
Total non-current assets of businesses held for sale | 1,477 | 1,477 | ||||
Total assets of businesses held for sale | 1,974 | 1,974 | ||||
Accounts payable | 95 | 95 | ||||
Accrued liabilities and other | 187 | 187 | ||||
Total current liabilities of businesses held for sale | 282 | 282 | ||||
Operating lease liabilities | 34 | 34 | ||||
Other | 90 | 90 | ||||
Total non-current liabilities of businesses held for sale | 124 | 124 | ||||
Total liabilities of businesses held for sale | $ 406 | $ 406 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenue by Type (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 648 | $ 539 | $ 1,830 | $ 1,572 |
U.K. FOBT VAT Recovery | 44 | |||
Gaming | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 419 | 339 | 1,163 | 949 |
Gaming | Gaming operations | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 161 | 151 | 479 | 445 |
Gaming | Gaming machine sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 140 | 95 | 366 | 249 |
Gaming | Gaming systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 70 | 52 | 181 | 146 |
Gaming | Table products | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 48 | 41 | 137 | 109 |
SciPlay | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 171 | 147 | 489 | 452 |
SciPlay | Mobile in-app purchases | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 149 | 131 | 426 | 400 |
SciPlay | Web in-app purchases and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 22 | 16 | 63 | 52 |
iGaming | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 58 | $ 53 | $ 178 | $ 171 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | ||||
Operating Lease, Lease Income | $ 116 | $ 88 | $ 347 | $ 270 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Contract Liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Change In Contract Liabilities [Roll Forward] | |
Contract liability balance, beginning of period | $ 37 |
Liabilities recognized during the period | 9 |
Amounts recognized in revenue from beginning balance | (17) |
Contract liability balance, end of period | $ 29 |
Revenue Recognition - Balances
Revenue Recognition - Balances in Receivables and Contract Asset Accounts (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Receivables | $ 442 | $ 440 |
Contract Assets | $ 23 | $ 19 |
Business Segments - Additional
Business Segments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 Segment | |
Segment Reporting [Abstract] | |
Number of business segments | 3 |
Business Segments - Schedule of
Business Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 648 | $ 539 | $ 1,830 | $ 1,572 |
AEBITDA | 235 | 203 | 648 | 577 |
Reconciling items to Net income from continuing operations before income taxes: | ||||
Depreciation, amortization and impairments | (102) | (96) | (317) | (289) |
Restructuring and other | (27) | (45) | (106) | (96) |
Interest expense | (68) | (120) | (254) | (360) |
Total loss on debt refinancing transactions | 0 | 0 | (147) | 0 |
Gain on remeasurement of debt and other | 0 | 12 | 27 | 30 |
Other income, net | 1 | 7 | 17 | |
Stock-based compensation | (15) | (26) | (47) | (81) |
Net loss from continuing operations before income taxes | 24 | (72) | (189) | (202) |
Unallocated and Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 0 | 0 | 0 | 0 |
AEBITDA | (30) | (32) | (93) | (93) |
Reconciling items to Net income from continuing operations before income taxes: | ||||
Depreciation, amortization and impairments | 5 | (6) | (18) | (20) |
Restructuring and other | 25 | (41) | (82) | (85) |
Interest expense | (68) | (120) | (254) | (360) |
Gain on remeasurement of debt and other | 1 | 12 | 27 | 30 |
Other income, net | (15) | 7 | 17 | |
Stock-based compensation | (26) | (47) | (81) | |
Gaming | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 419 | 339 | 1,163 | 949 |
AEBITDA | 202 | 172 | 552 | 472 |
Reconciling items to Net income from continuing operations before income taxes: | ||||
Depreciation, amortization and impairments | 81 | (73) | (246) | (220) |
Restructuring and other | 1 | (1) | (5) | (7) |
SciPlay | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 171 | 147 | 489 | 452 |
AEBITDA | 43 | 45 | 128 | 138 |
Reconciling items to Net income from continuing operations before income taxes: | ||||
Depreciation, amortization and impairments | 6 | (4) | (16) | (11) |
Restructuring and other | 1 | (2) | (4) | (3) |
iGaming | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 58 | 53 | 178 | 171 |
AEBITDA | 20 | 18 | 61 | 60 |
Reconciling items to Net income from continuing operations before income taxes: | ||||
Depreciation, amortization and impairments | 10 | (13) | (37) | (38) |
Restructuring and other | $ 0 | $ (1) | $ (15) | $ (1) |
Restructuring and other (Detail
Restructuring and other (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | $ 27 | $ 45 | $ 106 | $ 96 |
Employee severance and related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 5 | 3 | 7 | 3 |
Strategic review and related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 14 | 31 | 68 | 57 |
Contingent acquisition consideration | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | 0 | 0 | 12 | 0 |
Restructuring, integration and other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other | $ 8 | $ 11 | $ 19 | $ 36 |
Receivables, Allowance for Cr_3
Receivables, Allowance for Credit Losses and Credit Quality of Receivables - Components of Accounts and Notes Receivable, Net (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Current: | ||
Receivables | $ 467 | $ 475 |
Allowance for credit losses | (41) | (52) |
Current receivables, net | 426 | 423 |
Long-term: | ||
Receivables | 18 | 19 |
Allowance for credit losses | (2) | (2) |
Long-term receivables, net | 16 | 17 |
Total receivables, net | $ 442 | $ 440 |
Receivables, Allowance for Cr_4
Receivables, Allowance for Credit Losses and Credit Quality of Receivables - Accounts and Notes Receivable, Net by Geography and Delinquency (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | $ 485 | $ 494 | ||||||
Notes receivable allowance | (43) | $ (48) | $ (50) | (54) | $ (64) | $ (63) | $ (78) | $ (81) |
Total receivables, net | 442 | 440 | ||||||
UNITED STATES | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 298 | 321 | ||||||
Notes receivable allowance | (21) | (18) | ||||||
International | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 187 | 173 | ||||||
Notes receivable allowance | (22) | $ (27) | $ (29) | (36) | ||||
Balances Over 90 days Past Due | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 47 | 81 | ||||||
Notes receivable allowance | (28) | (25) | ||||||
Total receivables, net | 19 | 56 | ||||||
Balances Over 90 days Past Due | UNITED STATES | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 14 | 37 | ||||||
Notes receivable allowance | (6) | (6) | ||||||
Balances Over 90 days Past Due | International | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 33 | 44 | ||||||
Notes receivable allowance | $ (22) | $ (19) |
Receivables, Allowance for Cr_5
Receivables, Allowance for Credit Losses and Credit Quality of Receivables - Allowance for Accounts and Notes Receivable Activity (Details) - USD ($) $ in Millions | 3 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2021 | |
Allowance for notes receivable | |||||||
Beginning allowance for credit losses | $ (48) | $ (50) | $ (54) | $ (63) | $ (78) | $ (81) | |
Provision | 4 | (1) | (3) | (1) | (2) | 1 | |
Charge-offs and recoveries | 1 | 3 | 7 | 0 | 17 | 2 | |
Ending allowance for credit losses | (43) | (48) | (50) | $ (64) | $ (63) | $ (78) | |
Balances Over 90 days Past Due | |||||||
Allowance for notes receivable | |||||||
Beginning allowance for credit losses | (25) | ||||||
Ending allowance for credit losses | $ (28) | ||||||
Financing receivable, percent past due | 4% | 13% | |||||
International | |||||||
Allowance for notes receivable | |||||||
Beginning allowance for credit losses | $ (27) | (29) | (36) | ||||
Provision | 4 | 0 | 0 | ||||
Charge-offs and recoveries | 1 | 2 | 7 | ||||
Ending allowance for credit losses | (22) | (27) | (29) | ||||
International | Balances Over 90 days Past Due | |||||||
Allowance for notes receivable | |||||||
Beginning allowance for credit losses | (19) | ||||||
Ending allowance for credit losses | (22) | ||||||
UNITED STATES | |||||||
Allowance for notes receivable | |||||||
Beginning allowance for credit losses | (21) | (21) | (18) | ||||
Provision | 0 | (1) | (3) | ||||
Charge-offs and recoveries | 0 | 1 | 0 | ||||
Ending allowance for credit losses | $ (21) | $ (21) | $ (21) |
Receivables, Allowance for Cr_6
Receivables, Allowance for Credit Losses and Credit Quality of Receivables - Schedule of LATAM Receivables (Details) - Latin America $ in Millions | Sep. 30, 2022 USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Receivables | $ 72 |
Allowance for credit losses | (22) |
Receivables, net | 50 |
Current or Not Yet Due | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Receivables | 38 |
Allowance for credit losses | (10) |
Receivables, net | 28 |
Balances Over 90 days Past Due | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Receivables | 34 |
Allowance for credit losses | (12) |
Receivables, net | $ 22 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Parts and work-in-process | $ 114 | $ 70 |
Finished goods | 23 | 28 |
Inventories | $ 137 | $ 98 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Less: accumulated depreciation | $ (649) | $ (649) | $ (675) | ||
Total property and equipment, net | 202 | 202 | 213 | ||
Depreciation expense | 27 | $ 29 | 82 | $ 90 | |
Land | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 6 | 6 | 6 | ||
Buildings and leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 54 | 54 | 55 | ||
Gaming machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 669 | 669 | 712 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 20 | 20 | 22 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 13 | 13 | 9 | ||
Other property and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 89 | $ 89 | $ 84 |
Intangible Assets, net and Go_3
Intangible Assets, net and Goodwill - Schedule of Finite and Indefinite-lived Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | $ 2,548 | $ 2,599 |
Amortizable intangible assets, accumulated amortization | (1,781) | (1,653) |
Amortizable intangible assets, net balance | 767 | 946 |
Customer relationships | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 898 | 911 |
Amortizable intangible assets, accumulated amortization | (493) | (445) |
Amortizable intangible assets, net balance | 405 | 466 |
Intellectual property | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 906 | 914 |
Amortizable intangible assets, accumulated amortization | (690) | (670) |
Amortizable intangible assets, net balance | 216 | 244 |
Licenses | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 441 | 472 |
Amortizable intangible assets, accumulated amortization | (383) | (380) |
Amortizable intangible assets, net balance | 58 | 92 |
Brand names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 127 | 132 |
Amortizable intangible assets, accumulated amortization | (104) | (97) |
Amortizable intangible assets, net balance | 23 | 35 |
Trade names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 162 | 158 |
Amortizable intangible assets, accumulated amortization | (104) | (54) |
Amortizable intangible assets, net balance | 58 | 104 |
Patents and other | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 14 | 12 |
Amortizable intangible assets, accumulated amortization | (7) | (7) |
Amortizable intangible assets, net balance | $ 7 | $ 5 |
Intangible Assets, net and Go_4
Intangible Assets, net and Goodwill - Intangible Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 60 | $ 46 | $ 180 | $ 138 |
Intangible Assets, net and Go_5
Intangible Assets, net and Goodwill - Reconciliation of the Carrying Amount of Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | $ 2,892 |
Acquired goodwill | 101 |
Foreign currency adjustments | (128) |
Balance at the end of the period | 2,865 |
Gaming | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 2,405 |
Acquired goodwill | 0 |
Foreign currency adjustments | (62) |
Balance at the end of the period | 2,343 |
Goodwill, Impaired, Accumulated Impairment Loss | 989 |
SciPlay | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 126 |
Acquired goodwill | 93 |
Foreign currency adjustments | (6) |
Balance at the end of the period | 213 |
iGaming | |
Goodwill [Roll Forward] | |
Balance at the beginning of the period | 361 |
Acquired goodwill | 8 |
Foreign currency adjustments | (60) |
Balance at the end of the period | $ 309 |
Software, net (Details)
Software, net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Capitalized Computer Software, Net [Abstract] | |||||
Software | $ 1,035 | $ 1,035 | $ 996 | ||
Accumulated amortization | (905) | (905) | (879) | ||
Software, net | 130 | 130 | $ 117 | ||
Capitalized Computer Software, Amortization | $ 15 | $ 21 | $ 55 | $ 61 |
Long-Term and Other Debt - Sche
Long-Term and Other Debt - Schedule of Outstanding Debt (Details) - USD ($) $ in Millions | Apr. 14, 2022 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument | ||||
Face value | $ 6,997 | |||
Paid interest | $ 48 | |||
Premium, other fees and expenses | $ 123 | $ 49 | ||
Total long-term debt outstanding | $ 3,898 | $ 8,690 | ||
Senior Notes | 2025 Secured Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5% | 5% | ||
Face value | $ 0 | 1,250 | ||
Paid interest | $ 31 | |||
Premium, other fees and expenses | $ 31 | 0 | ||
Total long-term debt outstanding | $ 0 | 1,240 | ||
Senior Notes | 2026 Secured Euro Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 3.375% | 3.375% | ||
Face value | $ 0 | 361 | ||
Paid interest | $ 2 | |||
Premium, other fees and expenses | $ 6 | 0 | ||
Total long-term debt outstanding | $ 0 | 364 | ||
Senior Notes | 2025 Unsecured Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 8.625% | |||
Face value | $ 550 | |||
Premium, other fees and expenses | 5 | |||
Total long-term debt outstanding | $ 545 | 544 | ||
Senior Notes | 2026 Unsecured Euro Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | 5.50% | ||
Face value | $ 0 | 278 | ||
Paid interest | $ 3 | |||
Premium, other fees and expenses | $ 8 | 0 | ||
Total long-term debt outstanding | $ 0 | 280 | ||
Senior Notes | 2026 Unsecured Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 8.25% | 8.25% | ||
Face value | $ 0 | 1,100 | ||
Paid interest | $ 7 | |||
Premium, other fees and expenses | 45 | 0 | ||
Total long-term debt outstanding | $ 0 | 1,090 | ||
Senior Notes | 2028 Unsecured Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 7% | |||
Face value | $ 700 | |||
Premium, other fees and expenses | 7 | |||
Total long-term debt outstanding | $ 693 | 692 | ||
Senior Notes | 2029 Unsecured Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 7.25% | |||
Face value | $ 500 | |||
Premium, other fees and expenses | 6 | |||
Total long-term debt outstanding | $ 494 | 494 | ||
Capital Lease Obligations | Capital lease obligations as of period end payable monthly and other | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 0% | |||
Face value | $ 2 | |||
Premium, other fees and expenses | 0 | |||
Total long-term debt outstanding | 2 | 4 | ||
Senior Secured Credit Facilities | Secured Debt | SGI Revolver | ||||
Debt Instrument | ||||
Face value | 0 | |||
Premium, other fees and expenses | 0 | |||
Total long-term debt outstanding | 0 | 0 | ||
Senior Secured Credit Facilities | Secured Debt | SGI Term Loan B-5 | ||||
Debt Instrument | ||||
Face value | 0 | $ 4,008 | ||
Paid interest | 5 | |||
Premium, other fees and expenses | $ 33 | 0 | ||
Total long-term debt outstanding | 0 | 3,982 | ||
Senior Secured Credit Facilities | Secured Debt | SciPlay Revolver | ||||
Debt Instrument | ||||
Face value | 0 | |||
Premium, other fees and expenses | 0 | |||
Total long-term debt outstanding | $ 0 | $ 0 |
Long-Term and Other Debt - Narr
Long-Term and Other Debt - Narrative (Details) - USD ($) $ in Millions | Apr. 14, 2022 | Sep. 30, 2022 | Mar. 31, 2022 |
Debt Instrument | |||
Debt Instrument, Face Amount, Decrease (Increase) Due to Refinancing | $ 4,957 | ||
Principal debt amount | 3,953 | $ 3,947 | $ 8,910 |
Face value | $ 6,997 | ||
Senior Secured Credit Facilities | Credit Facility, Term Loan, Maturing 2029 | Secured Debt | |||
Debt Instrument | |||
Face value | $ 2,200 | ||
Debt Instrument, Interest Rate, Stated Percentage | 2% | ||
Debt Instrument, Periodic Payment, Percentage of Principal | 0.0100 | ||
Senior Secured Credit Facilities | Credit Facility, Term Loan, Maturing 2029 | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||
Debt Instrument | |||
Debt Instrument, Basis Spread on Variable Rate | 3% | ||
Senior Secured Credit Facilities | Revolver, Maturing 2027 | Secured Debt | |||
Debt Instrument | |||
Face value | $ 750 | ||
Debt Instrument, Interest Rate, Stated Percentage | 1% | ||
Debt Instrument, Interest Rate, Increase (Decrease) | 0.25% | ||
Senior Secured Credit Facilities | Revolver, Maturing 2027 | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||
Debt Instrument | |||
Debt Instrument, Basis Spread on Variable Rate | 2% | ||
Term Loan Facility and Revolving Credit Facility, April 2022 | Secured Debt | |||
Debt Instrument | |||
Face value | $ 5 | ||
Debt Instrument, Covenant Terms, Maximum Ratio of Borrowings Exceeding Commitments | 0.30 | ||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 4.50 |
Long-Term and Other Debt - Sc_2
Long-Term and Other Debt - Schedule of Retired and Redeemed Debt and Interest Payments (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Apr. 14, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument | ||||
Face value | $ 6,997 | |||
Unamortized debt discount/premium and deferred financing costs, net | $ 49 | $ 123 | ||
Book value | 3,898 | $ 8,690 | ||
Less: current portion of long-term debt | (24) | (44) | ||
Long-term debt, excluding current portion | 3,874 | 8,646 | ||
Fair value of debt | $ 3,813 | |||
Senior Notes | Senior Secured Notes, Maturing 2025 | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5% | 5% | ||
Face value | $ 0 | 1,250 | ||
Unamortized debt discount/premium and deferred financing costs, net | 0 | $ 31 | ||
Book value | $ 0 | 1,240 | ||
Senior Notes | 2026 Secured Euro Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 3.375% | 3.375% | ||
Face value | $ 0 | 361 | ||
Unamortized debt discount/premium and deferred financing costs, net | 0 | $ 6 | ||
Book value | $ 0 | 364 | ||
Senior Notes | 2026 Unsecured Euro Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | 5.50% | ||
Face value | $ 0 | 278 | ||
Unamortized debt discount/premium and deferred financing costs, net | 0 | $ 8 | ||
Book value | $ 0 | 280 | ||
Senior Notes | 2026 Unsecured Notes | ||||
Debt Instrument | ||||
Debt Instrument, Interest Rate, Stated Percentage | 8.25% | 8.25% | ||
Face value | $ 0 | 1,100 | ||
Unamortized debt discount/premium and deferred financing costs, net | 0 | $ 45 | ||
Book value | 0 | 1,090 | ||
Senior Secured Credit Facilities | Secured Debt | SGI Term Loan B-5 | ||||
Debt Instrument | ||||
Face value | 0 | $ 4,008 | ||
Unamortized debt discount/premium and deferred financing costs, net | 0 | $ 33 | ||
Book value | 0 | 3,982 | ||
Senior Secured Credit Facilities | Secured Debt | SGI Revolver | ||||
Debt Instrument | ||||
Face value | 0 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | |||
Book value | 0 | 0 | ||
Senior Secured Credit Facilities | Secured Debt | SGI Term Loan B | ||||
Debt Instrument | ||||
Face value | 2,195 | |||
Unamortized debt discount/premium and deferred financing costs, net | 31 | |||
Book value | $ 2,164 | $ 0 |
Long-Term and Other Debt - Loss
Long-Term and Other Debt - Loss on Debt Refinancing (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Instrument | ||||
Repayment of principal balance at premium | $ 90 | |||
Unamortized debt discount/premium and deferred financing costs, net | 57 | |||
Total loss on debt refinancing transactions | $ 0 | $ 0 | $ 147 | $ 0 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Apr. 30, 2022 | Dec. 31, 2021 | Feb. 28, 2018 |
Derivative [Line Items] | ||||
Contingent consideration | $ 87 | $ 51 | ||
Included in Accrued Liabilities | ||||
Derivative [Line Items] | ||||
Contingent consideration | $ 37 | $ 3 | ||
Cash Flow Hedging | Designated as Hedging Instrument | Interest rate swap | ||||
Derivative [Line Items] | ||||
Derivative average fixed interest rate | 2.832% | 2.4418% | ||
Derivative, Notional Amount | $ 700 | $ 800 | ||
Senior Secured Notes, Maturing 2025 | Senior Notes | Cross-currency interest rate swaps | ||||
Derivative [Line Items] | ||||
Long-term debt | $ 460 | |||
April 2022 Refinancing | Senior Notes | Cross-currency interest rate swaps | ||||
Derivative [Line Items] | ||||
Proceeds from settlement of derivative instrument | $ 50 |
Fair Value Measurements - Gains
Fair Value Measurements - Gains (Loss) and Interest Expense on Interest Rate Swap Contracts (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain recorded in accumulated other comprehensive loss, net of tax | $ 24 | $ 5 | $ 29 | $ 14 |
Interest rate swap | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest expense recorded related to interest rate swap contracts | $ 2 | $ 5 | $ 8 | $ 14 |
Fair Value Measurements - Effec
Fair Value Measurements - Effect of Interest Rate Swap Contracts (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Total interest expense which reflects the effects of cash flow hedges | $ (68) | $ (120) | $ (254) | $ (360) |
Hedged item | (5) | (5) | (12) | (14) |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 3 | $ 0 | $ 4 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Interest rate swap | Accrued liabilities | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative fair value | $ 0 | $ 0 | $ 3 | ||
Interest rate swap | Other assets | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative fair value | 32 | 32 | 0 | ||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss), before Reclassification and Tax | 31 | 32 | |||
Cross-currency interest rate swaps | Other assets | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative fair value | $ 0 | 0 | $ 42 | ||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss), before Reclassification and Tax | $ 12 | $ 4 | $ 25 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Acquisition Consideration (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contingent consideration/Redeemable non-controlling interest | $ 87 | $ 51 |
Additions | 27 | |
Payments | (3) | |
Fair value adjustments | 12 | |
Included in Accrued Liabilities | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contingent consideration/Redeemable non-controlling interest | 37 | 3 |
Included in Other Long-Term Liabilities | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Contingent consideration/Redeemable non-controlling interest | $ 50 | $ 48 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Changes in Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | $ 966 | $ (2,137) | $ (2,106) | $ (2,370) | $ (2,521) | $ (2,524) | $ (2,106) | $ (2,524) |
Settlement of liability awards and other, net | 43 | |||||||
Vesting of RSUs, net of tax withholdings and other | (3) | 0 | (31) | (3) | (4) | (13) | ||
Purchase of treasury stock | (152) | (51) | ||||||
Purchase of SciPlay common stock | (11) | (7) | ||||||
Stock-based compensation | 14 | 15 | 17 | 22 | 31 | 17 | ||
Net income | 335 | 3,295 | 28 | 187 | 113 | (9) | 3,658 | 291 |
Other comprehensive loss | (69) | (48) | (37) | (27) | 11 | 8 | ||
Stockholders' equity, ending balance | 1,232 | 966 | (2,137) | (2,191) | (2,370) | (2,521) | 1,232 | (2,191) |
Net income attributable to L&W | 328 | 182 | 3,645 | 276 | ||||
Less: Net income attributable to noncontrolling interest | 7 | 5 | 13 | 15 | ||||
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
Stockholders' equity, ending balance | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
Additional Paid in Capital | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | 1,375 | 1,366 | 1,337 | 1,299 | 1,272 | 1,268 | 1,337 | 1,268 |
Settlement of liability awards and other, net | 43 | |||||||
Vesting of RSUs, net of tax withholdings and other | (3) | 0 | (31) | (3) | (4) | (13) | ||
Purchase of SciPlay common stock | 10 | 6 | ||||||
Stock-based compensation | 14 | 15 | 17 | 22 | 31 | 17 | ||
Stockholders' equity, ending balance | 1,376 | 1,375 | 1,366 | 1,318 | 1,299 | 1,272 | 1,376 | 1,318 |
Retained Earnings (Accumulated Loss) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | 159 | (3,132) | (3,158) | (3,435) | (3,544) | (3,529) | (3,158) | (3,529) |
Net income | 328 | 3,291 | 26 | 109 | (15) | |||
Stockholders' equity, ending balance | 487 | 159 | (3,132) | (3,253) | (3,435) | (3,544) | 487 | (3,253) |
Net income attributable to L&W | 182 | |||||||
Treasury Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | (378) | (226) | (175) | (175) | (175) | (175) | (175) | (175) |
Purchase of treasury stock | (152) | (51) | ||||||
Stockholders' equity, ending balance | (378) | (378) | (226) | (175) | (175) | (175) | (378) | (175) |
Accumulated Other Comprehensive Loss | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | (346) | (298) | (261) | (199) | (210) | (218) | (261) | (218) |
Other comprehensive loss | (69) | (48) | (37) | (27) | 11 | 8 | ||
Stockholders' equity, ending balance | (415) | (346) | (298) | (226) | (199) | (210) | (415) | (226) |
Noncontrolling Interest | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' equity, beginning balance | 155 | 152 | 150 | 139 | 135 | 129 | 150 | 129 |
Purchase of SciPlay common stock | (1) | (1) | ||||||
Stock-based compensation | 0 | |||||||
Net income | 7 | 4 | 2 | 4 | 6 | |||
Stockholders' equity, ending balance | 161 | $ 155 | $ 152 | 144 | $ 139 | $ 135 | 161 | $ 144 |
Less: Net income attributable to noncontrolling interest | $ 5 | |||||||
Discontinued Operations, Disposed of by Sale | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Other comprehensive loss | $ 51 | $ 74 |
Stockholders' Equity - Stock Ba
Stockholders' Equity - Stock Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 15 | $ 26 | $ 47 | $ 81 |
Related to L&W stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 0 | 3 | 1 | 25 |
Related to L&W RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 12 | 23 | 39 | 51 |
Related to L&W RSUs | SciPlay | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 3 | $ 0 | $ 7 | $ 5 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Restricted Stock Units (Details) - Related to L&W RSUs - $ / shares shares in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Number of Restricted Stock Units | ||
Unvested RSU's at beginning of period (in shares) | 2.7 | |
Granted (in shares) | 1.7 | |
Vested (in shares) | (1.9) | |
Cancelled (in shares) | (0.7) | |
Unvested RSU's at end of period (in shares) | 1.8 | |
Weighted Average Grant Date Fair Value | ||
Unvested RSU's at beginning of period (in dollars per share) | $ 32.03 | |
Granted (in dollars per share) | 57.26 | $ 55.01 |
Vested (in dollars per share) | 38.75 | |
Cancelled (in dollars per share) | 37.75 | |
Unvested RSU's at end of period (in dollars per share) | $ 46.50 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Nov. 04, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Unrecognized stock based compensation | $ 54,000,000 | ||||
Unrecognized stock based compensation, period for recognition | 2 years | ||||
Stock purchase program, aggregate cost | $ 152,000,000 | $ 51,000,000 | |||
Share Repurchase Program, March 2022 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock repurchase program, authorized amount | $ 750,000,000 | ||||
Stock repurchase program, shares acquired (in shares) | 3.7 | ||||
Stock purchase program, aggregate cost | $ 203,000,000 | ||||
Stock purchase program, average cost per share (in usd per share) | $ 55.39 | ||||
Share Repurchase Program, March 2022 | Subsequent Event | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock repurchase program, shares acquired (in shares) | 0.7 | ||||
Stock purchase program, aggregate cost | $ 38,000,000 | ||||
Share Repurchase Program, May 2022 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock repurchase program, authorized amount | $ 60,000,000 | ||||
Stock repurchase program, shares acquired (in shares) | 1.4 | ||||
Stock purchase program, aggregate cost | $ 18,000,000 | ||||
Stock purchase program, average cost per share (in usd per share) | $ 13.13 | ||||
Share Repurchase Program, May 2022 | Subsequent Event | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Stock repurchase program, shares acquired (in shares) | 0.7 | ||||
Stock purchase program, aggregate cost | $ 10,000,000 | ||||
Related to L&W RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Granted (in dollars per share) | $ 57.26 | $ 55.01 | |||
Awards vested in period, fair value | $ 71,600,000 | $ 74,100,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Valuation Allowance [Line Items] | ||||
Income Tax Expense (Benefit) | $ 4 | $ (172) | $ 8 | $ (164) |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21% | |||
Income Taxes Paid | 497 | $ 27 | ||
Lottery Business | ||||
Valuation Allowance [Line Items] | ||||
Disposal Group, Including Discontinued Operation, Accrued Income Tax Payable | $ 685 | $ 685 | ||
Income Taxes Paid | $ 465 | |||
Other SciPlay Owners | ||||
Valuation Allowance [Line Items] | ||||
Percentage of SciPlay stock owned by other parties | 19% | 19% |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease expenses | $ 6 | $ 6 | $ 16 | $ 16 |
Leases - Supplemental Operating
Leases - Supplemental Operating Lease Information (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Leases [Abstract] | |||
Operating lease right-of-use assets | $ 51 | $ 51 | |
Accrued liabilities | 17 | 16 | |
Operating lease liabilities | 39 | 40 | |
Total operating lease liabilities | $ 56 | $ 56 | |
Weighted average remaining lease term, units in years | 4 years | 4 years | |
Weighted average discount rate | 5% | 5% | |
Operating cash flows for operating leases | $ 15 | $ 15 | |
Operating lease right-of-use assets obtained in exchange for new lease liabilities | $ 17 | $ 6 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Leases [Abstract] | |
Remainder of 2022 | $ 5 |
2023 | 18 |
2024 | 15 |
2025 | 11 |
2026 | 8 |
Thereafter | 5 |
Less Imputed Interest | (6) |
Total | $ 56 |
Litigation (Details)
Litigation (Details) $ in Millions, $ in Billions | 1 Months Ended | 3 Months Ended | |||
Jun. 30, 1999 USD ($) | Jun. 30, 1999 COP ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 1993 USD ($) | |
Other Commitments [Line Items] | |||||
Loss contingency accrual | $ 3 | $ 27 | |||
Contractual penalty | 12 | ||||
Guarantee of Business Revenue | |||||
Other Commitments [Line Items] | |||||
Contractual penalty | $ 5 | ||||
Loss contingency deposit of surety bond | $ 4 | ||||
Ecosalud | |||||
Other Commitments [Line Items] | |||||
Litigation settlement, amount awarded to other party | $ 30.2 | $ 90 | |||
Washington State Matter | |||||
Other Commitments [Line Items] | |||||
Payments for legal settlements | $ 25 |