COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 | |
Title of 12(b) Security | Common Stock, $.001 par value | |
Trading Symbol | LNW | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 90,047,398 | |
Entity Central Index Key | 0000750004 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||||
Revenue: | |||||||
Total revenue | $ 731 | $ 648 | $ 2,131 | $ 1,830 | |||
Operating expenses: | |||||||
Selling, general and administrative | 204 | 181 | 599 | 535 | |||
Research and development | 55 | 56 | 168 | 163 | |||
Depreciation, amortization and impairments | 90 | 102 | 298 | 317 | |||
Restructuring and other | 17 | 27 | 66 | 106 | |||
Operating income | 147 | 89 | 362 | 175 | |||
Other (expense) income: | |||||||
Interest expense | (78) | (68) | (231) | (254) | |||
Loss on debt financing transactions | (15) | 0 | (15) | (147) | |||
Gain on remeasurement of debt and other | 0 | 0 | 0 | 27 | |||
Other income, net | 40 | 3 | 23 | 10 | |||
Total other expense, net | (53) | (65) | (223) | (364) | |||
Net income (loss) from continuing operations before income taxes | 94 | 24 | 139 | (189) | |||
Income tax expense | (14) | (4) | (27) | (8) | |||
Net income (loss) from continuing operations | 80 | 20 | 112 | (197) | |||
Net income from discontinued operations, net of tax(2) | 0 | 315 | [1] | 0 | 3,855 | [1] | |
Net income | 80 | 335 | 112 | 3,658 | |||
Less: Net income attributable to noncontrolling interest | 5 | 7 | 16 | 13 | |||
Net income attributable to L&W | $ 75 | $ 328 | $ 96 | $ 3,645 | |||
Per Share - Basic: | |||||||
Net income (loss) from continuing operations (in dollars per share) | $ 0.83 | $ 0.14 | $ 1.05 | $ (2.20) | |||
Net income from discontinued operations (in dollars per share) | 0 | 3.33 | 0 | 40.43 | |||
Net income attributable to L&W (in dollars per share) | 0.83 | 3.47 | 1.05 | 38.23 | |||
Per Share - Diluted: | |||||||
Net income (loss) from continuing operations (in dollars per share) | 0.81 | 0.14 | 1.03 | (2.20) | |||
Net income from discontinued operations (in dollars per share) | 0 | 3.28 | 0 | 40.43 | |||
Net income attributable to L&W (in dollars per share) | $ 0.81 | $ 3.42 | $ 1.03 | $ 38.23 | |||
Weighted average number of shares used in per share calculations: | |||||||
Basic (in shares) | 91 | 94 | 91 | 95 | |||
Diluted (in shares) | 92 | 96 | 93 | 95 | |||
Services | |||||||
Revenue: | |||||||
Total revenue | $ 503 | $ 453 | $ 1,476 | $ 1,329 | |||
Operating expenses: | |||||||
Cost of goods and services sold | [2] | 113 | 101 | 331 | 283 | ||
Products | |||||||
Revenue: | |||||||
Total revenue | 228 | 195 | 655 | 501 | |||
Operating expenses: | |||||||
Cost of goods and services sold | [2] | $ 105 | $ 92 | $ 307 | $ 251 | ||
[1] (2) The three and nine months ended September 30, 2022 include a pre-tax gain of $362 million and $4,930 million, respectively, on the sale of discontinued operations (see Note 2). |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Discontinued Operations | ||
Gain on sale of discontinued operations before income taxes | $ 362,000 | $ 4,930,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 80 | $ 335 | $ 112 | $ 3,658 |
Foreign currency translation loss, net of tax | (71) | (105) | (21) | (183) |
Derivative financial instruments unrealized gain, net of tax | 5 | 24 | 8 | 29 |
Other comprehensive loss from continuing operations | (66) | (81) | (13) | (154) |
Other comprehensive income from discontinued operations | 0 | 12 | 0 | 0 |
Total comprehensive income | 14 | 266 | 99 | 3,504 |
Less: comprehensive income attributable to noncontrolling interest | 5 | 7 | 16 | 13 |
Comprehensive income attributable to L&W | $ 9 | $ 259 | $ 83 | $ 3,491 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 891 | $ 914 |
Restricted cash | 50 | 47 |
Receivables, net of allowance for credit losses of $40 and $38, respectively | 477 | 455 |
Inventories | 183 | 161 |
Prepaid expenses, deposits and other current assets | 119 | 117 |
Total current assets | 1,720 | 1,694 |
Non-current assets: | ||
Restricted cash | 6 | 6 |
Receivables, net of allowance for credit losses of $1 and $2, respectively | 11 | 14 |
Property and equipment, net | 229 | 204 |
Operating lease right-of-use assets | 43 | 49 |
Goodwill | 2,903 | 2,919 |
Intangible assets, net | 638 | 797 |
Software, net | 151 | 145 |
Deferred income taxes | 112 | 114 |
Other assets | 74 | 67 |
Total assets | 5,887 | 6,009 |
Current liabilities: | ||
Current portion of long-term debt | 22 | 24 |
Accounts payable | 162 | 154 |
Accrued liabilities | 403 | 380 |
Income taxes payable | 32 | 64 |
Total current liabilities | 619 | 622 |
Deferred income taxes | 43 | 87 |
Operating lease liabilities | 30 | 37 |
Other long-term liabilities | 194 | 232 |
Long-term debt, excluding current portion | 3,855 | 3,870 |
Total liabilities | 4,741 | 4,848 |
Commitments and contingencies (Note 16) | ||
Stockholders’ equity: | ||
Common stock, par value $0.001 per share, 199 shares authorized; 116 and 115 shares issued, respectively, and 90 and 91 shares outstanding, respectively | 1 | 1 |
Additional paid-in capital | 1,402 | 1,370 |
Retained earnings | 613 | 517 |
Treasury stock, at cost, 26 and 24 shares, respectively | (726) | (580) |
Accumulated other comprehensive loss | (331) | (318) |
Total L&W stockholders’ equity | 959 | 990 |
Noncontrolling interest | 187 | 171 |
Total stockholders’ equity | 1,146 | 1,161 |
Total liabilities and stockholders’ equity | $ 5,887 | $ 6,009 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 40 | $ 38 |
Accounts receivable, allowance for credit loss, noncurrent | $ 1 | $ 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) | 116,000,000 | 115,000,000 |
Common stock, shares outstanding (in shares) | 90,000,000 | 91,000,000 |
Treasury stock, at cost, shares held (in shares) | 26,000,000 | 24,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | ||
Cash flows from operating activities: | |||
Net income | $ 112 | $ 3,658 | |
Less: Income from discontinued operations, net of tax | 0 | (3,855) | |
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations | 436 | 488 | |
Changes in working capital accounts, excluding the effects of acquisitions | (81) | (641) | |
Changes in deferred income taxes and other | (44) | 4 | |
Net cash provided by (used in) operating activities from continuing operations | 423 | (346) | |
Net cash provided by operating activities from discontinued operations | 0 | 52 | |
Net cash provided by (used in) operating activities | 423 | (294) | |
Cash flows from investing activities: | |||
Capital expenditures | (182) | (158) | |
Acquisitions of businesses, net of cash acquired | (4) | (118) | |
Proceeds from settlement of cross-currency interest rate swaps and other | (1) | 52 | |
Net cash used in investing activities from continuing operations | (187) | (224) | |
Net cash (used in) provided by investing activities from discontinued operations(1) | (3) | 6,368 | [1] |
Net cash (used in) provided by investing activities | (190) | 6,144 | |
Cash flows from financing activities: | |||
Borrowings under revolving credit facilities | 0 | 280 | |
Repayments under revolving credit facilities | 0 | (280) | |
Proceeds from issuance of senior notes and term loans | 550 | 2,200 | |
Repayment of notes and term loans (including redemption premium) | (562) | (6,984) | |
Payments on long-term debt | (17) | (103) | |
Payments of debt issuance and deferred financing costs | (8) | (37) | |
Payments on license obligations | (26) | (30) | |
Purchase of L&W common stock | (145) | (203) | |
Purchase of SciPlay’s Class A common stock | 23 | 18 | |
Net redemptions of common stock under stock-based compensation plans and other | (20) | (35) | |
Net cash used in financing activities from continuing operations | (251) | (5,210) | |
Net cash used in financing activities from discontinued operations | 0 | (3) | |
Net cash used in financing activities | (251) | (5,213) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2) | (12) | |
(Decrease) increase in cash, cash equivalents and restricted cash | (20) | 625 | |
Cash, cash equivalents and restricted cash, beginning of period | 967 | 701 | |
Cash, cash equivalents and restricted cash, end of period | 947 | 1,326 | |
Less: Cash, cash equivalents and restricted cash of discontinued operations | 0 | 0 | |
Cash, cash equivalents and restricted cash of continuing operations, end of period | 947 | 1,326 | |
Supplemental cash flow information: | |||
Cash paid for interest | 221 | 271 | |
Income taxes paid | 119 | 497 | |
Distributed earnings from equity investments | 2 | 4 | |
Cash paid for contingent consideration included in operating activities | 9 | 0 | |
Supplemental non-cash transactions: | |||
Non-cash interest expense | 8 | 12 | |
Fair value of securities received in sale of discontinued operations | $ 0 | $ 46 | |
[1](1) The nine months ended September 30, 2022 include $6,409 million in gross cash proceeds from the sale of discontinued operations, net of cash, cash equivalents and restricted cash transferred. |
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, 2023 | |
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 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, including casual gaming, to retail customers; and providing a comprehensive suite of digital gaming content, distribution platforms, player account management systems, as well as various other iGaming content and services. We report our results of operations in three business segments—Gaming, SciPlay and iGaming—representing our different products and services. Our common stock is listed on The Nasdaq Stock Market under the ticker symbol “LNW.” Our common stock is also listed as CDIs on the ASX and commenced active trading on May 22, 2023 (AEST) under the ticker symbol “LNW.” On October 23, 2023, we acquired the remaining approximately 17% equity interest in SciPlay not already owned by us pursuant to a merger (the “SciPlay Merger”) in an all-cash transaction of $496 million, excluding transaction fees and expenses. As a result of the SciPlay Merger, SciPlay ceased to be publicly traded and became a wholly owned subsidiary of L&W. Upon completion of the SciPlay Merger, the SciPlay Revolver was terminated. There were no borrowings outstanding under the SciPlay Revolver at the time of termination. We completed the sales of our former Lottery Business and Sports Betting Business during the second and third quarters of 2022, respectively. We have reflected the prior period financial results of these Divested Businesses as discontinued operations in our consolidated statements of operations. Refer to Note 2 for further information. Unless otherwise noted, amounts and disclosures included herein relate to our continuing operations. 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 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 2022 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 2022 10-K. Other Income, net Other income, net includes gains and losses from foreign currency transactions, interest income, earnings (losses) from equity investments and other items. Other income, net for the three and nine months ended September 30, 2023 primarily consisted of a gain of $30 million and a loss of $9 million, respectively, related to foreign currency transactions as well as $10 million and $28 million, respectively, in interest income. Foreign currency transaction gains and losses as well as interest income were not material for the three and nine months ended September 30, 2022. Computation of Basic and Diluted Net Income Attributable to L&W Per Share Basic and diluted net income attributable to L&W per share are based upon net income attributable to L&W divided by the weighted average number of common shares outstanding during the period. Diluted net income attributable to L&W 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. For the three and nine months ended September 30, 2023, we included 1 million and 2 million, respectively, of common stock equivalents in the calculation of diluted net income attributable to L&W per share, and for the three months ended September 30, 2022, we included 2 million of common stock equivalents in the calculation of diluted net income attributable to L&W per share. Basic and diluted net income attributable to L&W per share were the same for the nine months ended September 30, 2022, as all common stock equivalents would have been anti-dilutive for that period. We excluded 2 million of stock options and 2 million of RSUs outstanding from the calculation of diluted weighted-average common shares outstanding for the nine months ended September 30, 2022. New Accounting Guidance There have been no recent accounting pronouncements or changes in accounting pronouncements since those described within the Notes of our 2022 10-K that are expected to have a material impact on our consolidated financial statements. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | We completed the Divestitures in 2022 and reflected the prior period financial results of the Divested Businesses as discontinued operations in our consolidated statements of operations. For the sale of our former Lottery Business completed during the second quarter of 2022, we received $5.7 billion in gross cash proceeds and recorded a pre-tax gain of $4.6 billion. For the sale of our former Sports Betting Business completed during the third quarter of 2022, we received $796 million in gross proceeds and recorded a pre-tax gain of $362 million. The summarized results of our discontinued operations were as follows: Three Months Ended Nine Months Ended Total revenue $ 32 $ 371 Total cost of revenue 9 177 Other operating expenses (1) 31 180 Operating (loss) income (8) 14 Total other income, net 2 10 Net (loss) income from discontinued operations before income taxes (6) 24 Gain on sale of discontinued operations before income taxes 362 4,930 Total net income from discontinued operations before income taxes 356 4,954 Income tax expense (41) (1,099) Net income from discontinued operations, net of tax included in the consolidated statement of operations $ 315 $ 3,855 (1) The three and nine months ended September 30, 2022 include stock-based compensation of $7 million and $18 million, respectively, and $7 million and $85 million, respectively, related to direct transaction closing fees. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 2023 2022 Gaming Gaming operations $ 166 $ 161 $ 493 $ 479 Gaming machine sales 172 140 503 366 Gaming systems 71 70 197 181 Table products 56 48 161 137 Total $ 465 $ 419 $ 1,354 $ 1,163 SciPlay Mobile in-app purchases $ 173 $ 149 $ 509 $ 426 Web in-app purchases and other (1) 23 22 64 63 Total $ 196 $ 171 $ 573 $ 489 iGaming $ 70 $ 58 $ 204 $ 178 (1) Other primarily represents advertising revenue, which was not material in the periods presented. The amount of rental income revenue that is outside the scope of ASC 606 was $127 million and $367 million for the three and nine months ended September 30, 2023, respectively, and $116 million and $347 million for the three and nine months ended September 30, 2022, 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, 2023 Contract liability balance, beginning of period (1) $ 36 Liabilities recognized during the period 15 Amounts recognized in revenue from beginning balance (20) Contract liability balance, end of period (1) $ 31 (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 $ 469 $ 24 End of period balance, September 30, 2023 488 20 (1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets. As of September 30, 2023, 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, 2023 | |
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 2022 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 2022 10-K. The following tables present our segment information: Three Months Ended September 30, 2023 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 465 $ 196 $ 70 $ — $ 731 AEBITDA (2) 235 61 25 (35) $ 286 Reconciling items to net income from continuing operations before income taxes: D&A (64) (6) (12) (8) (90) Restructuring and other (1) (2) (4) (10) (17) Interest expense (78) (78) Loss on debt financing transactions (15) (15) Other income, net 39 39 Stock-based compensation (31) (31) Net income from continuing operations before income taxes $ 94 (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 reconciled to net income (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- and disposition-related costs and other unusual items; (3) interest expense; (4) loss on debt financing transactions; (5) change in fair value of investments and remeasurement of debt and other; (6) other (expense) income, net, including foreign currency gains or 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, 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 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, 2023 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 1,354 $ 573 $ 204 $ — $ 2,131 AEBITDA (2) 673 174 72 (104) $ 815 Reconciling items to net income from continuing operations before income taxes: D&A (221) (23) (36) (18) (298) Restructuring and other (10) (5) (14) (37) (66) Interest expense (231) (231) Loss on debt financing transactions (15) (15) Other income, net 19 19 Stock-based compensation (85) (85) Net income from continuing operations before income taxes $ 139 (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, 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 financing 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 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, 2023 | |
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, 2023 2022 2023 2022 Employee severance and related $ 2 $ 5 $ 15 $ 7 Strategic review and related (1) 9 14 27 68 Contingent acquisition consideration (2) 1 — 10 12 Restructuring, integration and other 5 8 14 19 Total $ 17 $ 27 $ 66 $ 106 (1) Includes costs associated with the SciPlay Merger, ASX listing, Divestitures (including ongoing separation activities), rebranding and related activities. (2) 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, 2023 | |
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, 2023 December 31, 2022 Current: Receivables $ 517 $ 493 Allowance for credit losses (40) (38) Current receivables, net 477 455 Long-term: Receivables 12 16 Allowance for credit losses (1) (2) Long-term receivables, net 11 14 Total receivables, net $ 488 $ 469 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, 2023 Balances over 90 days past due December 31, 2022 Balances over 90 days past due Receivables: U.S. and Canada $ 331 $ 3 $ 297 $ 5 International 198 41 212 34 Total receivables 529 44 509 39 Receivables allowance: U.S. and Canada (18) (5) (18) (5) International (23) (13) (22) (22) Total receivables allowance (41) (18) (40) (27) Receivables, net $ 488 $ 26 $ 469 $ 12 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, 2023 and 2022 is as follows: 2023 2022 Total U.S. and Canada International Total Beginning allowance for credit losses $ (40) $ (18) $ (22) $ (54) Provision (1) (1) — (3) Charge-offs and recoveries 1 — 1 7 Allowance for credit losses as of March 31 $ (40) $ (19) $ (21) $ (50) Provision (4) — (4) (1) Charge-offs and recoveries 2 1 1 3 Allowance for credit losses as of June 30 $ (42) $ (18) $ (24) $ (48) Provision — — — 4 Charge-offs and recoveries 1 — 1 1 Allowance for credit losses as of September 30 $ (41) $ (18) $ (23) $ (43) As of September 30, 2023 and December 31, 2022, 5% and 3%, respectively, of our total receivables, net, were past due by over 90 days. 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, 2023 Total Current Balances over 90 days past due Receivables $ 56 $ 38 $ 18 Allowance for credit losses (17) (9) (8) Receivables, net $ 39 $ 29 $ 10 We continuously review receivables and, as information concerning credit quality arises, 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, 2023 and December 31, 2022, 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, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: As of September 30, 2023 December 31, 2022 Parts and work-in-process $ 120 $ 124 Finished goods 63 37 Total inventories $ 183 $ 161 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, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and equipment, net consisted of the following: As of September 30, 2023 December 31, 2022 Land $ 6 $ 6 Buildings and leasehold improvements 59 56 Gaming machinery and equipment 725 685 Furniture and fixtures 25 25 Construction in progress 10 9 Other property and equipment 99 88 Less: accumulated depreciation (695) (665) Total property and equipment, net $ 229 $ 204 Depreciation expense is excluded from cost of services, cost of products and other operating expenses and is separately presented within Depreciation, amortization and impairments. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Depreciation expense $ 30 $ 27 $ 87 $ 82 |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and December 31, 2022: As of September 30, 2023 December 31, 2022 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 899 $ (549) $ 350 $ 902 $ (503) $ 399 Intellectual property 934 (747) 187 948 (714) 234 Licenses 374 (295) 79 371 (273) 98 Brand names 127 (116) 11 129 (108) 21 Trade names 162 (155) 7 162 (122) 40 Patents and other 11 (7) 4 12 (7) 5 Total intangible assets $ 2,507 $ (1,869) $ 638 $ 2,524 $ (1,727) $ 797 The following reflects intangible amortization expense included within Depreciation, amortization and impairments. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization expense (1) $ 41 $ 60 $ 160 $ 180 (1) The nine months ended September 30, 2023 include an intangible assets non-cash impairment charge of $4 million related to SciPlay restructuring of a certain foreign studio. Goodwill The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2022 to September 30, 2023. Gaming (1) SciPlay iGaming Totals Balance as of December 31, 2022 $ 2,373 $ 213 $ 333 $ 2,919 Foreign currency adjustments (3) (5) (8) (16) Balance as of September 30, 2023 $ 2,370 $ 208 $ 325 $ 2,903 (1) Accumulated goodwill impairment charges for the Gaming segment as of September 30, 2023 were $989 million. |
Software, net
Software, net | 9 Months Ended |
Sep. 30, 2023 | |
Capitalized Computer Software, Net [Abstract] | |
Software, net | Software, net consisted of the following: As of September 30, 2023 December 31, 2022 Software $ 1,116 $ 1,064 Accumulated amortization (965) (919) Software, net $ 151 $ 145 The following reflects amortization of software included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization expense $ 19 $ 15 $ 51 $ 55 |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-term Debt | The following table reflects our outstanding debt (in order of priority and maturity): As of September 30, 2023 December 31, 2022 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: SciPlay Revolver (1) 2024 variable $ — $ — $ — $ — LNWI Revolver 2027 variable — — — — LNWI Term Loan B 2029 variable 2,173 (27) 2,146 2,159 LNWI Senior Notes: 2025 Unsecured Notes 2025 8.625% — — — 545 2028 Unsecured Notes 2028 7.000% 700 (6) 694 693 2029 Unsecured Notes 2029 7.250% 500 (5) 495 495 2031 Unsecured Notes 2031 7.500% 550 (8) 542 — Other — — — — — 2 Total long-term debt outstanding $ 3,923 $ (46) $ 3,877 $ 3,894 Less: current portion of long-term debt (22) (24) Long-term debt, excluding current portion $ 3,855 $ 3,870 Fair value of debt (2) $ 3,895 (1) On October 23, 2023, upon completion of the SciPlay Merger, the SciPlay Revolver was terminated. (2) 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. Issuance of 2031 Unsecured Notes and Redemption of 2025 Unsecured Notes On August 23, 2023, we issued $550 million in aggregate principal amount of 7.500% senior unsecured notes due 2031 pursuant to an indenture among LNWI, as issuer, the Company, the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. We received net proceeds of $544 million from the issuance. The 2031 Unsecured Notes bear interest at the rate of 7.500% per annum, which accrues from August 23, 2023, and is payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2024. We may redeem some or all of the 2031 Unsecured Notes at any time prior to September 1, 2026, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any, to the date of the redemption plus a “make whole” premium. We may redeem some or all of the 2031 Unsecured Notes at any time on or after September 1, 2026, at the prices specified in the indenture. The 2031 Unsecured Notes are senior obligations of LNWI, rank equally with all of its existing and future senior debt and rank senior to all of its existing and future debt that is expressly subordinated to the 2031 Unsecured Notes. The 2031 Unsecured Notes are guaranteed on a senior unsecured basis by the Company and all of its wholly owned domestic restricted subsidiaries (other than LNWI and certain immaterial subsidiaries), subject to customary exceptions. The net proceeds of the 2031 Unsecured Notes offering, together with cash on hand, were used to redeem all $550 million of the 2025 Unsecured Notes and to pay accrued and unpaid interest thereon plus related premiums, fees and expenses. We were in compliance with the financial covenants under all debt agreements as of September 30, 2023 (for information regarding our financial covenants of all debt agreements, see Note 15 in our 2022 10-K). Loss on Debt Financing Transactions The following are components of the loss on debt financing transactions resulting from debt extinguishment and modification accounting for the three and nine months ended September 30, 2023 and 2022, respectively. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Repayment of principal balance at premium $ 12 $ — $ 12 $ 90 Unamortized debt discount and deferred financing costs, net 3 — 3 57 Total loss on debt refinancing transactions $ 15 $ — $ 15 $ 147 For additional information regarding the terms of our credit facilities and Senior Notes, see Note 15 in our 2022 10-K. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023, we held the following derivative instruments that were accounted for pursuant to ASC 815: Interest Rate Swap Contracts We use 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 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, 2023. These hedges mature in April 2027. We also previously had interest rate swap contracts that matured in February 2022. 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, 2023 2022 2023 2022 Gain recorded in accumulated other comprehensive loss, net of tax $ 5 $ 24 $ 8 $ 29 Interest income (expense) recorded related to interest rate swap contracts 4 (2) 11 (8) 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, 2023 2022 2023 2022 Total interest expense which reflects the effects of cash flow hedges $ (78) $ (68) $ (231) $ (254) Hedged item (5) (5) (15) (12) Derivative designated as hedging instrument 9 3 26 4 The following table shows the fair value of our hedges: As of Balance Sheet Line Item September 30, 2023 December 31, 2022 Interest rate swaps Other assets $ 40 $ 30 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, 2022 to September 30, 2023. Total Included in Accrued Liabilities Included in Other Long-Term Liabilities Balance as of December 31, 2022 $ 79 $ 34 $ 45 Payments (23) Fair value adjustments (1) 10 Other adjustments (2) (3) Balance as of September 30, 2023 $ 63 $ 44 $ 19 (1) Amount included in Restructuring and other (see Note 5). (2) Primarily represents extinguishment of $3 million in redeemable non-controlling interest liability associated with SciPlay’s acquisition of Alictus Yazilim Anonim Şirketi in 2022, as specified financial targets for the first year were not met. The charge was recorded in other income, net in our consolidated statements of operations. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Compensation Related Costs [Abstract] | |
Stockholders' Equity | Changes in Stockholders’ Equity (Deficit) The following tables present certain information regarding our stockholders’ equity as of September 30, 2023 and 2022: Nine Months Ended September 30, 2023 Common Stock Additional Paid in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2023 $ 1 $ 1,370 $ 517 $ (580) $ (318) $ 171 $ 1,161 Settlement of liability awards — 25 — — — — 25 Vesting of RSUs, net of tax withholdings and other — (14) — — — — (14) Purchase of treasury stock — — — (28) — — (28) Purchase of SciPlay’s Class A common stock — (8) — — — — (8) Stock-based compensation — 15 — — — — 15 Net income — — 22 — — 5 27 Other comprehensive income — — — — 6 — 6 March 31, 2023 $ 1 $ 1,388 $ 539 $ (608) $ (312) $ 176 $ 1,184 Vesting of RSUs, net of tax withholdings and other — 1 — — — — 1 Purchase of treasury stock — — — (5) — — (5) Purchase of SciPlay’s Class A common stock — (15) — — — — (15) Stock-based compensation — 13 — — — — 13 Net (loss) income — — (1) — — 6 5 Other comprehensive income — — — — 47 — 47 June 30, 2023 $ 1 $ 1,387 $ 538 $ (613) $ (265) $ 182 $ 1,230 Vesting of RSUs, net of tax withholdings and other — 3 — — — — 3 Purchase of treasury stock (1) — — — (113) — — (113) Stock-based compensation — 12 — — — — 12 Net income — — 75 — — 5 80 Other comprehensive loss — — — — (66) — (66) September 30, 2023 $ 1 $ 1,402 $ 613 $ (726) $ (331) $ 187 $ 1,146 (1) Includes excise taxes of $1 million for the three and nine months ended September 30, 2023. 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 — 43 — — — — 43 Vesting of RSUs, net of tax withholdings and other — (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’s Class A 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’s Class A 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). Stock-based Compensation The following reflects total stock-based compensation expense recognized under all programs: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Related to L&W stock options $ — $ — $ — $ 1 Related to L&W RSUs 19 12 59 39 Related to SciPlay RSUs 12 3 26 7 Total (1) $ 31 $ 15 $ 85 $ 47 (1) Includes $19 million and $45 million classified as liability awards for the three and nine months ended September 30, 2023, respectively, and $6 million and $16 million for the three and nine months ended September 30, 2022, respectively. Restricted Stock Units A summary of the changes in RSUs outstanding under our equity-based compensation plans during the nine months ended September 30, 2023 is presented below: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Unvested RSUs as of December 31, 2022 1.7 $ 46.66 Granted 1.1 $ 57.54 Vested (1.0) $ 44.52 Cancelled (0.1) $ 50.43 Unvested RSUs as of September 30, 2023 1.7 $ 54.66 The weighted-average grant date fair value of RSUs granted during the nine months ended September 30, 2023 and 2022 was $57.54 and $57.26, 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, 2023, we had $58 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, 2023 and 2022 was $58 million and $72 million, respectively. Series A Junior Participating Preferred Stock and Rights Agreement The 2018 Amended and Restated Rights Agreement, as described in Note 17 of our 2022 10-K, expired on June 19, 2023. Immediately prior to its expiration, no shares of Series A Junior Participating Preferred Stock were outstanding and no preferred share purchase rights had been exercised. At the time of the expiration of the agreement, the preferred share purchase rights expired and are no longer outstanding. Share Repurchase Programs On March 1, 2022, our Board of Directors approved a share repurchase program under which we are 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, 2023, we repurchased 2.1 million shares of common stock under the program at an aggregate cost of $146 million (including excise tax). 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. On May 3, 2023, SciPlay’s Board of Directors approved another share repurchase program under which it is authorized to repurchase, from time to time through May 3, 2024, up to an aggregate amount of $60 million of its outstanding Class A common stock. During the nine months ended September 30, 2023, SciPlay repurchased 1.4 million shares of Class A common stock under the programs at an aggregate cost of $23 million. As described in Note 1, on October 23, 2023, we completed the SciPlay Merger, and upon its completion, the SciPlay share repurchase program was terminated. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023. Our income tax expense (including discrete items) was $14 million and $27 million for the three and nine months ended September 30, 2023, respectively, and $4 million and $8 million for the three and nine months ended September 30, 2022, respectively. In 2023, our effective tax rate differs from the U.S. statutory rate of 21% primarily as a result of certain non-deductible items including foreign exchange losses, offset by tax benefits from internal restructuring transactions in the first quarter of 2023. In all periods, we recorded tax expense relative to pre-tax earnings in jurisdictions without valuation allowances, including our former 17% noncontrolling interest in SciPlay. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Our total operating lease expense for the three and nine months ended September 30, 2023 was $6 million and $17 million, respectively, and $6 million and $16 million for the three and nine months ended September 30, 2022, 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, 2023 December 31, 2022 Operating lease right-of-use assets $ 43 $ 49 Accrued liabilities 17 17 Operating lease liabilities 30 37 Total operating lease liabilities $ 47 $ 54 Weighted average remaining lease term, units in years 4 4 Weighted average discount rate 5 % 5 % Nine Months Ended September 30, 2023 2022 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 $ 3 $ 17 Lease liability maturities: Remainder of 2023 2024 2025 2026 2027 Thereafter Less Imputed Interest Total Operating leases $ 5 $ 17 $ 13 $ 9 $ 5 $ 4 $ (6) $ 47 As of September 30, 2023, we did not have material additional operating leases that have not yet commenced. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2023 | |
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 $11 million for all of our legal matters that were contingencies as of September 30, 2023 and December 31, 2022. 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 $13 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, LNWI, 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, LNWI and the other shareholders of Wintech of up to $5.0 million if certain levels of lottery sales were not achieved. In addition, LNWI 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, LNWI 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. LNWI filed separate actions opposing each resolution with the Tribunal Contencioso of Cundinamarca in Colombia (the “Tribunal”), which upheld both resolutions. LNWI 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 LNWI 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 LNWI to enforce the liquidation resolution and recover the claimed damages. In May 2013, the Tribunal denied LNWI’s merit defenses to the collection proceeding and issued an order of payment of approximately 90 billion Colombian pesos, or approximately $30 million, plus default interest (potentially accrued since 1994 at a 12% statutory interest rate). LNWI 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, LNWI filed a motion for clarification of the Council of State’s ruling, which was denied on April 15, 2021. On April 22, 2021, LNWI 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, LNWI filed a constitutional challenge to the Council of State’s December 10, 2020 decision with that court, which was denied on October 7, 2022. On December 7, 2022, LNWI filed an appeal with the Council of State from the denial of the constitutional challenge, which was denied on May 24, 2023. On June 28, 2023, the Columbian Constitutional Court received the record of the constitutional appeal for further consideration, and on September 26, 2023, that court selected LNWI’s constitutional appeal for further consideration. LNWI 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. 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 LNW Gaming, Inc., f/k/a Bally Gaming, Inc. 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 the 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. On January 13, 2023, the district court entered an order requiring, among other things, that the plaintiffs make a formal written settlement demand by January 20, 2023, that the defendants respond to that demand in writing by January 27, 2023, and that the parties file a status report by January 31, 2023 confirming that they have complied with the district court’s order. On January 31, 2023, the parties filed a joint status report confirming that they have complied with the district court’s order to make and respond to a formal written demand. Discovery closed on June 1, 2023. On June 30, 2023, the defendants filed a motion for summary judgment, which is pending. We are unable at this time to estimate a range of reasonably possible losses above the amount we have accrued for this matter due to the complexity of the plaintiffs’ claims, and the unpredictability of the outcome of the proceedings in the district court, and on any appeal therefrom. 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 LNW Gaming, Inc., 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 LNW Gaming, Inc., 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 LNW Gaming, Inc., 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. On June 10, 2022, plaintiff Alfred T. Giuliano filed a notice of voluntary dismissal without prejudice, and the court therefore denied as moot defendants’ motion to lift the stay in an order entered on March 28, 2023. 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. In re Automatic Card Shufflers Litigation 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 LNW Gaming, Inc., 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 LNW Gaming, Inc., 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, which denied Respondents’ appeal on June 22, 2023. 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. On November 17, 2022, the plaintiff filed an arbitration demand against defendants before the American Arbitration Association, pursuant to which she seeks declaratory judgments that (1) SciPlay’s online social casino games constitute gambling under Kentucky law, and (2) SciPlay’s terms of service are void under Kentucky law. On January 12, 2023, the respondents filed their answering statement to plaintiff’s arbitration demand. 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. Allah Beautiful Matter On December 19, 2022, claimant Prince Imanifest Allah Beautiful filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of New Jersey’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by New Jersey players of SciPlay’s online social casino games other than the claimant. On March 7, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Sprinkle Matter On December 12, 2022, claimant Matthew Sprinkle filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Ohio’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Ohio players of SciPlay’s online social casino games other than the claimant. On March 7, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Sornberger Matter On March 8, 2023, plaintiff Andrea Sornberger filed a complaint against SciPlay Corporation and SciPlay Games, LLC in the Circuit Court of the Franklin County, Alabama. The complaint asserts claims for alleged violations of Alabama anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Alabama players of SciPlay’s online social casino games other than the plaintiff, the award of interests and costs, and injunctive and other relief. On April 12, 2023, defendants removed the action to the United States District Court for the Northern District of Alabama. On August 24, 2023, plaintiff voluntarily dismissed her complaint without prejudice, and re-filed it in the Circuit Court of Franklin County, Alabama. On September 27, 2023, defendants removed the re-filed action to the United States District Court for the Northern District of Alabama. 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. Roberts Matter On July 25, 2023, claimant Donovan Roberts filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Kentucky’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Kentucky players of SciPlay’s online social casino games other than the claimant. On October 6, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Ebersole Matter On July 25, 2023, claimant Christopher Ebersole filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Ohio’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Ohio players of SciPlay’s online social casino games other than the claimant. On October 12, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Murnaghan Matter On July 25, 2023, claimant Hope Murnaghan filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Massachusetts’ anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Massachusetts players of SciPlay’s online social casino games other than the claimant. On October 12, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 75 | $ 328 | $ 96 | $ 3,645 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Description of the Business a_2
Description of the Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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 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 2022 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 2022 10-K. |
Other Income (Expense), net | Other income, net includes gains and losses from foreign currency transactions, interest income, earnings (losses) from equity investments and other items. |
Computation of Basic and Diluted Net Income Attributable to L&W Per Share | Basic and diluted net income attributable to L&W per share are based upon net income attributable to L&W divided by the weighted average number of common shares outstanding during the period. Diluted net income attributable to L&W 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. |
New Accounting Guidance | There have been no recent accounting pronouncements or changes in accounting pronouncements since those described within the Notes of our 2022 10-K that are expected to have a material impact on our consolidated financial statements. |
Revenue Recognition (Policies)
Revenue Recognition (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 | |
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 2022 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, 2023 | |
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, 2023. |
Litigation (Policies)
Litigation (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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 $11 million for all of our legal matters that were contingencies as of September 30, 2023 and December 31, 2022. 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 $13 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, LNWI, 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, LNWI and the other shareholders of Wintech of up to $5.0 million if certain levels of lottery sales were not achieved. In addition, LNWI 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, LNWI 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. LNWI filed separate actions opposing each resolution with the Tribunal Contencioso of Cundinamarca in Colombia (the “Tribunal”), which upheld both resolutions. LNWI 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 LNWI 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 LNWI to enforce the liquidation resolution and recover the claimed damages. In May 2013, the Tribunal denied LNWI’s merit defenses to the collection proceeding and issued an order of payment of approximately 90 billion Colombian pesos, or approximately $30 million, plus default interest (potentially accrued since 1994 at a 12% statutory interest rate). LNWI 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, LNWI filed a motion for clarification of the Council of State’s ruling, which was denied on April 15, 2021. On April 22, 2021, LNWI 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, LNWI filed a constitutional challenge to the Council of State’s December 10, 2020 decision with that court, which was denied on October 7, 2022. On December 7, 2022, LNWI filed an appeal with the Council of State from the denial of the constitutional challenge, which was denied on May 24, 2023. On June 28, 2023, the Columbian Constitutional Court received the record of the constitutional appeal for further consideration, and on September 26, 2023, that court selected LNWI’s constitutional appeal for further consideration. LNWI 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. 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 LNW Gaming, Inc., f/k/a Bally Gaming, Inc. 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 the 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. On January 13, 2023, the district court entered an order requiring, among other things, that the plaintiffs make a formal written settlement demand by January 20, 2023, that the defendants respond to that demand in writing by January 27, 2023, and that the parties file a status report by January 31, 2023 confirming that they have complied with the district court’s order. On January 31, 2023, the parties filed a joint status report confirming that they have complied with the district court’s order to make and respond to a formal written demand. Discovery closed on June 1, 2023. On June 30, 2023, the defendants filed a motion for summary judgment, which is pending. We are unable at this time to estimate a range of reasonably possible losses above the amount we have accrued for this matter due to the complexity of the plaintiffs’ claims, and the unpredictability of the outcome of the proceedings in the district court, and on any appeal therefrom. 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 LNW Gaming, Inc., 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 LNW Gaming, Inc., 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 LNW Gaming, Inc., 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. On June 10, 2022, plaintiff Alfred T. Giuliano filed a notice of voluntary dismissal without prejudice, and the court therefore denied as moot defendants’ motion to lift the stay in an order entered on March 28, 2023. 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. In re Automatic Card Shufflers Litigation 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 LNW Gaming, Inc., 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 LNW Gaming, Inc., 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, which denied Respondents’ appeal on June 22, 2023. 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. On November 17, 2022, the plaintiff filed an arbitration demand against defendants before the American Arbitration Association, pursuant to which she seeks declaratory judgments that (1) SciPlay’s online social casino games constitute gambling under Kentucky law, and (2) SciPlay’s terms of service are void under Kentucky law. On January 12, 2023, the respondents filed their answering statement to plaintiff’s arbitration demand. 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. Allah Beautiful Matter On December 19, 2022, claimant Prince Imanifest Allah Beautiful filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of New Jersey’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by New Jersey players of SciPlay’s online social casino games other than the claimant. On March 7, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Sprinkle Matter On December 12, 2022, claimant Matthew Sprinkle filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Ohio’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Ohio players of SciPlay’s online social casino games other than the claimant. On March 7, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Sornberger Matter On March 8, 2023, plaintiff Andrea Sornberger filed a complaint against SciPlay Corporation and SciPlay Games, LLC in the Circuit Court of the Franklin County, Alabama. The complaint asserts claims for alleged violations of Alabama anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Alabama players of SciPlay’s online social casino games other than the plaintiff, the award of interests and costs, and injunctive and other relief. On April 12, 2023, defendants removed the action to the United States District Court for the Northern District of Alabama. On August 24, 2023, plaintiff voluntarily dismissed her complaint without prejudice, and re-filed it in the Circuit Court of Franklin County, Alabama. On September 27, 2023, defendants removed the re-filed action to the United States District Court for the Northern District of Alabama. 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. Roberts Matter On July 25, 2023, claimant Donovan Roberts filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Kentucky’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Kentucky players of SciPlay’s online social casino games other than the claimant. On October 6, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Ebersole Matter On July 25, 2023, claimant Christopher Ebersole filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Ohio’s anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Ohio players of SciPlay’s online social casino games other than the claimant. On October 12, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. Murnaghan Matter On July 25, 2023, claimant Hope Murnaghan filed an arbitration demand against respondent SciPlay Corporation before the American Arbitration Association. The complaint asserts claims for alleged violations of Massachusetts’ anti-gambling statutes and seeks unspecified money damages, including recovery of monies allegedly lost by Massachusetts players of SciPlay’s online social casino games other than the claimant. On October 12, 2023, the respondent filed its answering statement to claimant’s arbitration demand. 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. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The summarized results of our discontinued operations were as follows: Three Months Ended Nine Months Ended Total revenue $ 32 $ 371 Total cost of revenue 9 177 Other operating expenses (1) 31 180 Operating (loss) income (8) 14 Total other income, net 2 10 Net (loss) income from discontinued operations before income taxes (6) 24 Gain on sale of discontinued operations before income taxes 362 4,930 Total net income from discontinued operations before income taxes 356 4,954 Income tax expense (41) (1,099) Net income from discontinued operations, net of tax included in the consolidated statement of operations $ 315 $ 3,855 (1) The three and nine months ended September 30, 2022 include stock-based compensation of $7 million and $18 million, respectively, and $7 million and $85 million, respectively, related to direct transaction closing fees. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 2023 2022 Gaming Gaming operations $ 166 $ 161 $ 493 $ 479 Gaming machine sales 172 140 503 366 Gaming systems 71 70 197 181 Table products 56 48 161 137 Total $ 465 $ 419 $ 1,354 $ 1,163 SciPlay Mobile in-app purchases $ 173 $ 149 $ 509 $ 426 Web in-app purchases and other (1) 23 22 64 63 Total $ 196 $ 171 $ 573 $ 489 iGaming $ 70 $ 58 $ 204 $ 178 (1) Other primarily represents advertising revenue, which was not material in the periods presented. |
Summary of Balances in Receivables, Contract Assets and Contract Liabilities Accounts | The following table summarizes the activity in our contract liabilities for the reporting period: Nine Months Ended September 30, 2023 Contract liability balance, beginning of period (1) $ 36 Liabilities recognized during the period 15 Amounts recognized in revenue from beginning balance (20) Contract liability balance, end of period (1) $ 31 (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 $ 469 $ 24 End of period balance, September 30, 2023 488 20 (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, 2023 | |
Segment Reporting [Abstract] | |
Operating Information by Segment | The following tables present our segment information: Three Months Ended September 30, 2023 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 465 $ 196 $ 70 $ — $ 731 AEBITDA (2) 235 61 25 (35) $ 286 Reconciling items to net income from continuing operations before income taxes: D&A (64) (6) (12) (8) (90) Restructuring and other (1) (2) (4) (10) (17) Interest expense (78) (78) Loss on debt financing transactions (15) (15) Other income, net 39 39 Stock-based compensation (31) (31) Net income from continuing operations before income taxes $ 94 (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 reconciled to net income (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- and disposition-related costs and other unusual items; (3) interest expense; (4) loss on debt financing transactions; (5) change in fair value of investments and remeasurement of debt and other; (6) other (expense) income, net, including foreign currency gains or 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, 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 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, 2023 Gaming SciPlay iGaming Unallocated and Reconciling Items (1) Total Total revenue $ 1,354 $ 573 $ 204 $ — $ 2,131 AEBITDA (2) 673 174 72 (104) $ 815 Reconciling items to net income from continuing operations before income taxes: D&A (221) (23) (36) (18) (298) Restructuring and other (10) (5) (14) (37) (66) Interest expense (231) (231) Loss on debt financing transactions (15) (15) Other income, net 19 19 Stock-based compensation (85) (85) Net income from continuing operations before income taxes $ 139 (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, 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 financing 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 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, 2023 | |
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, 2023 2022 2023 2022 Employee severance and related $ 2 $ 5 $ 15 $ 7 Strategic review and related (1) 9 14 27 68 Contingent acquisition consideration (2) 1 — 10 12 Restructuring, integration and other 5 8 14 19 Total $ 17 $ 27 $ 66 $ 106 (1) Includes costs associated with the SciPlay Merger, ASX listing, Divestitures (including ongoing separation activities), rebranding and related activities. (2) 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, 2023 | |
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, 2023 December 31, 2022 Current: Receivables $ 517 $ 493 Allowance for credit losses (40) (38) Current receivables, net 477 455 Long-term: Receivables 12 16 Allowance for credit losses (1) (2) Long-term receivables, net 11 14 Total receivables, net $ 488 $ 469 As of September 30, 2023 Balances over 90 days past due December 31, 2022 Balances over 90 days past due Receivables: U.S. and Canada $ 331 $ 3 $ 297 $ 5 International 198 41 212 34 Total receivables 529 44 509 39 Receivables allowance: U.S. and Canada (18) (5) (18) (5) International (23) (13) (22) (22) Total receivables allowance (41) (18) (40) (27) Receivables, net $ 488 $ 26 $ 469 $ 12 As of September 30, 2023 Total Current Balances over 90 days past due Receivables $ 56 $ 38 $ 18 Allowance for credit losses (17) (9) (8) Receivables, net $ 39 $ 29 $ 10 |
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, 2023 and 2022 is as follows: 2023 2022 Total U.S. and Canada International Total Beginning allowance for credit losses $ (40) $ (18) $ (22) $ (54) Provision (1) (1) — (3) Charge-offs and recoveries 1 — 1 7 Allowance for credit losses as of March 31 $ (40) $ (19) $ (21) $ (50) Provision (4) — (4) (1) Charge-offs and recoveries 2 1 1 3 Allowance for credit losses as of June 30 $ (42) $ (18) $ (24) $ (48) Provision — — — 4 Charge-offs and recoveries 1 — 1 1 Allowance for credit losses as of September 30 $ (41) $ (18) $ (23) $ (43) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consisted of the following: As of September 30, 2023 December 31, 2022 Parts and work-in-process $ 120 $ 124 Finished goods 63 37 Total inventories $ 183 $ 161 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Components of Property and Equipment | Property and equipment, net consisted of the following: As of September 30, 2023 December 31, 2022 Land $ 6 $ 6 Buildings and leasehold improvements 59 56 Gaming machinery and equipment 725 685 Furniture and fixtures 25 25 Construction in progress 10 9 Other property and equipment 99 88 Less: accumulated depreciation (695) (665) Total property and equipment, net $ 229 $ 204 Depreciation expense is excluded from cost of services, cost of products and other operating expenses and is separately presented within Depreciation, amortization and impairments. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Depreciation expense $ 30 $ 27 $ 87 $ 82 |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 and December 31, 2022: As of September 30, 2023 December 31, 2022 Gross Carrying Value Accumulated Amortization Net Balance Gross Carrying Value Accumulated Amortization Net Balance Amortizable intangible assets: Customer relationships $ 899 $ (549) $ 350 $ 902 $ (503) $ 399 Intellectual property 934 (747) 187 948 (714) 234 Licenses 374 (295) 79 371 (273) 98 Brand names 127 (116) 11 129 (108) 21 Trade names 162 (155) 7 162 (122) 40 Patents and other 11 (7) 4 12 (7) 5 Total intangible assets $ 2,507 $ (1,869) $ 638 $ 2,524 $ (1,727) $ 797 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within Depreciation, amortization and impairments. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization expense (1) $ 41 $ 60 $ 160 $ 180 (1) The nine months ended September 30, 2023 include an intangible assets non-cash impairment charge of $4 million related to SciPlay restructuring of a certain foreign studio. The following reflects amortization of software included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization expense $ 19 $ 15 $ 51 $ 55 |
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, 2022 to September 30, 2023. Gaming (1) SciPlay iGaming Totals Balance as of December 31, 2022 $ 2,373 $ 213 $ 333 $ 2,919 Foreign currency adjustments (3) (5) (8) (16) Balance as of September 30, 2023 $ 2,370 $ 208 $ 325 $ 2,903 (1) Accumulated goodwill impairment charges for the Gaming segment as of September 30, 2023 were $989 million. |
Software, net (Tables)
Software, net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Capitalized Computer Software, Net [Abstract] | |
Schedule of Software, net | Software, net consisted of the following: As of September 30, 2023 December 31, 2022 Software $ 1,116 $ 1,064 Accumulated amortization (965) (919) Software, net $ 151 $ 145 |
Schedule of Amortization Expense | The following reflects intangible amortization expense included within Depreciation, amortization and impairments. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization expense (1) $ 41 $ 60 $ 160 $ 180 (1) The nine months ended September 30, 2023 include an intangible assets non-cash impairment charge of $4 million related to SciPlay restructuring of a certain foreign studio. The following reflects amortization of software included within D&A: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization expense $ 19 $ 15 $ 51 $ 55 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The following table reflects our outstanding debt (in order of priority and maturity): As of September 30, 2023 December 31, 2022 Final Maturity Rate(s) Face value Unamortized debt discount/premium and deferred financing costs, net Book value Book value Senior Secured Credit Facilities: SciPlay Revolver (1) 2024 variable $ — $ — $ — $ — LNWI Revolver 2027 variable — — — — LNWI Term Loan B 2029 variable 2,173 (27) 2,146 2,159 LNWI Senior Notes: 2025 Unsecured Notes 2025 8.625% — — — 545 2028 Unsecured Notes 2028 7.000% 700 (6) 694 693 2029 Unsecured Notes 2029 7.250% 500 (5) 495 495 2031 Unsecured Notes 2031 7.500% 550 (8) 542 — Other — — — — — 2 Total long-term debt outstanding $ 3,923 $ (46) $ 3,877 $ 3,894 Less: current portion of long-term debt (22) (24) Long-term debt, excluding current portion $ 3,855 $ 3,870 Fair value of debt (2) $ 3,895 (1) On October 23, 2023, upon completion of the SciPlay Merger, the SciPlay Revolver was terminated. (2) 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 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 three and nine months ended September 30, 2023 and 2022, respectively. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Repayment of principal balance at premium $ 12 $ — $ 12 $ 90 Unamortized debt discount and deferred financing costs, net 3 — 3 57 Total loss on debt refinancing transactions $ 15 $ — $ 15 $ 147 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 2022 2023 2022 Gain recorded in accumulated other comprehensive loss, net of tax $ 5 $ 24 $ 8 $ 29 Interest income (expense) recorded related to interest rate swap contracts 4 (2) 11 (8) |
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, 2023 2022 2023 2022 Total interest expense which reflects the effects of cash flow hedges $ (78) $ (68) $ (231) $ (254) Hedged item (5) (5) (15) (12) Derivative designated as hedging instrument 9 3 26 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, 2023 December 31, 2022 Interest rate swaps Other assets $ 40 $ 30 |
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, 2022 to September 30, 2023. Total Included in Accrued Liabilities Included in Other Long-Term Liabilities Balance as of December 31, 2022 $ 79 $ 34 $ 45 Payments (23) Fair value adjustments (1) 10 Other adjustments (2) (3) Balance as of September 30, 2023 $ 63 $ 44 $ 19 (1) Amount included in Restructuring and other (see Note 5). (2) Primarily represents extinguishment of $3 million in redeemable non-controlling interest liability associated with SciPlay’s acquisition of Alictus Yazilim Anonim Şirketi in 2022, as specified financial targets for the first year were not met. The charge was recorded in other income, net in our consolidated statements of operations. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Compensation Related Costs [Abstract] | |
Schedule of Stockholders' Deficit | The following tables present certain information regarding our stockholders’ equity as of September 30, 2023 and 2022: Nine Months Ended September 30, 2023 Common Stock Additional Paid in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Noncontrolling Interest Total January 1, 2023 $ 1 $ 1,370 $ 517 $ (580) $ (318) $ 171 $ 1,161 Settlement of liability awards — 25 — — — — 25 Vesting of RSUs, net of tax withholdings and other — (14) — — — — (14) Purchase of treasury stock — — — (28) — — (28) Purchase of SciPlay’s Class A common stock — (8) — — — — (8) Stock-based compensation — 15 — — — — 15 Net income — — 22 — — 5 27 Other comprehensive income — — — — 6 — 6 March 31, 2023 $ 1 $ 1,388 $ 539 $ (608) $ (312) $ 176 $ 1,184 Vesting of RSUs, net of tax withholdings and other — 1 — — — — 1 Purchase of treasury stock — — — (5) — — (5) Purchase of SciPlay’s Class A common stock — (15) — — — — (15) Stock-based compensation — 13 — — — — 13 Net (loss) income — — (1) — — 6 5 Other comprehensive income — — — — 47 — 47 June 30, 2023 $ 1 $ 1,387 $ 538 $ (613) $ (265) $ 182 $ 1,230 Vesting of RSUs, net of tax withholdings and other — 3 — — — — 3 Purchase of treasury stock (1) — — — (113) — — (113) Stock-based compensation — 12 — — — — 12 Net income — — 75 — — 5 80 Other comprehensive loss — — — — (66) — (66) September 30, 2023 $ 1 $ 1,402 $ 613 $ (726) $ (331) $ 187 $ 1,146 (1) Includes excise taxes of $1 million for the three and nine months ended September 30, 2023. 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 — 43 — — — — 43 Vesting of RSUs, net of tax withholdings and other — (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’s Class A 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’s Class A 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). |
Schedule of Stock-based Compensation Expense Recognized | The following reflects total stock-based compensation expense recognized under all programs: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Related to L&W stock options $ — $ — $ — $ 1 Related to L&W RSUs 19 12 59 39 Related to SciPlay RSUs 12 3 26 7 Total (1) $ 31 $ 15 $ 85 $ 47 (1) Includes $19 million and $45 million classified as liability awards for the three and nine months ended September 30, 2023, respectively, and $6 million and $16 million for the three and nine months ended September 30, 2022, respectively. |
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, 2023 is presented below: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Unvested RSUs as of December 31, 2022 1.7 $ 46.66 Granted 1.1 $ 57.54 Vested (1.0) $ 44.52 Cancelled (0.1) $ 50.43 Unvested RSUs as of September 30, 2023 1.7 $ 54.66 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
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, 2023 December 31, 2022 Operating lease right-of-use assets $ 43 $ 49 Accrued liabilities 17 17 Operating lease liabilities 30 37 Total operating lease liabilities $ 47 $ 54 Weighted average remaining lease term, units in years 4 4 Weighted average discount rate 5 % 5 % Nine Months Ended September 30, 2023 2022 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 $ 3 $ 17 |
Maturities of Lease Liabilities | Lease liability maturities: Remainder of 2023 2024 2025 2026 2027 Thereafter Less Imputed Interest Total Operating leases $ 5 $ 17 $ 13 $ 9 $ 5 $ 4 $ (6) $ 47 |
Description of the Business a_3
Description of the Business and Summary of Significant Accounting Policies - Narrative (Details) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Oct. 23, 2023 USD ($) | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 shares | Sep. 30, 2023 USD ($) Segment shares | Sep. 30, 2022 shares | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Number of business segments | Segment | 3 | ||||
Foreign currency transaction gain (loss) | $ | $ 30 | $ (9) | |||
Interest income | $ | $ 10 | $ 28 | |||
Common stock equivalents included in calculation of diluted net income | shares | 1 | 2 | 2 | ||
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 | ||||
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 | ||||
SciPlay | Subsequent Event | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Percentage of SciPlay stock owned by other parties | 17% | ||||
SciPlay Acquisition | Subsequent Event | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Acquisitions related to continuing operations, total consideration | $ | $ 496 |
Discontinued Operations - Incom
Discontinued Operations - Income Statement and Balance Sheet Disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Income tax expense | $ (14,000) | $ (4,000) | $ (27,000) | $ (8,000) | ||
Net income from discontinued operations, net of tax included in the consolidated statement of operations | $ 0 | 3,855,000 | ||||
Discontinued Operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from divestiture of businesses, net of cash divested | 6,409,000 | |||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Total revenue | 32,000 | 371,000 | ||||
Total cost of revenue | 9,000 | 177,000 | ||||
Other operating expenses(1) | [1] | 31,000 | 180,000 | |||
Operating (loss) income | (8,000) | 14,000 | ||||
Total other income, net | 2,000 | 10,000 | ||||
Net (loss) income from discontinued operations before income taxes | (6,000) | 24,000 | ||||
Gain on sale of discontinued operations before income taxes | 362,000 | 4,930,000 | ||||
Total net income from discontinued operations before income taxes | 356,000 | 4,954,000 | ||||
Income tax expense | (41,000) | (1,099,000) | ||||
Net income from discontinued operations, net of tax included in the consolidated statement of operations | 315,000 | 3,855,000 | ||||
Discontinued operations, stock-based compensation | 7,000 | 18,000 | ||||
Disposal group, direct transaction closing fees | 7,000 | $ 85,000 | ||||
Discontinued Operations | Lottery Business | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from divestiture of businesses, net of cash divested | $ 5,700,000 | |||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Gain on sale of discontinued operations before income taxes | $ 4,600,000 | |||||
Discontinued Operations | Sports Betting Business Segment | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from divestiture of businesses, net of cash divested | 796,000 | |||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||||||
Gain on sale of discontinued operations before income taxes | $ 362,000 | |||||
[1](1) The three and nine months ended September 30, 2022 include stock-based compensation of $7 million and $18 million, respectively, and $7 million and $85 million, respectively, related to direct transaction closing fees. |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenue by Type (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | $ 731 | $ 648 | $ 2,131 | $ 1,830 | |
Operating Segments | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 465 | 419 | 1,354 | 1,163 | |
Operating Segments | Gaming | Gaming operations | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 166 | 161 | 493 | 479 | |
Operating Segments | Gaming | Gaming machine sales | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 172 | 140 | 503 | 366 | |
Operating Segments | Gaming | Gaming systems | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 71 | 70 | 197 | 181 | |
Operating Segments | Gaming | Table products | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 56 | 48 | 161 | 137 | |
Operating Segments | SciPlay | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 196 | 171 | 573 | 489 | |
Operating Segments | SciPlay | Mobile in-app purchases | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | 173 | 149 | 509 | 426 | |
Operating Segments | SciPlay | Web in-app purchases and other | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | [1] | 23 | 22 | 64 | 63 |
Operating Segments | iGaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenue | $ 70 | $ 58 | $ 204 | $ 178 | |
[1](1) Other primarily represents advertising revenue, which was not material in the periods presented. |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | ||||
Rental income revenue | $ 127 | $ 116 | $ 367 | $ 347 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Contract Liabilities (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 USD ($) | ||
Change In Contract Liabilities [Roll Forward] | ||
Contract liability balance, beginning of period | $ 36 | [1] |
Liabilities recognized during the period | 15 | |
Amounts recognized in revenue from beginning balance | (20) | |
Contract liability balance, end of period | $ 31 | [1] |
[1](1) Contract liabilities are included within Accrued liabilities and Other long-term liabilities in our consolidated balance sheets. |
Revenue Recognition - Balances
Revenue Recognition - Balances in Receivables and Contract Asset Accounts (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |||
Receivables | $ 488 | $ 469 | |
Contract Assets | [1] | $ 20 | $ 24 |
[1](1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets. |
Business Segments - Additional
Business Segments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2023 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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Segment Reporting Information [Line Items] | |||||
Total revenue | $ 731 | $ 648 | $ 2,131 | $ 1,830 | |
AEBITDA | [1] | 286 | 235 | 815 | 648 |
Reconciling items to net income from continuing operations before income taxes: | |||||
Depreciation, amortization and impairments | (90) | (102) | (298) | (317) | |
Restructuring and other | (17) | (27) | (66) | (106) | |
Interest expense | (78) | (68) | (231) | (254) | |
Loss on debt financing transactions | (15) | 0 | (15) | (147) | |
Gain on remeasurement of debt and other | 0 | 0 | 0 | 27 | |
Other income (expense), net | 39 | 1 | 19 | 7 | |
Stock-based compensation | (31) | (15) | (85) | (47) | |
Net income (loss) from continuing operations before income taxes | 94 | 24 | 139 | (189) | |
Operating Segments | Gaming | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 465 | 419 | 1,354 | 1,163 | |
AEBITDA | [1] | 235 | 202 | 673 | 552 |
Reconciling items to net income from continuing operations before income taxes: | |||||
Depreciation, amortization and impairments | (64) | (81) | (221) | (246) | |
Restructuring and other | (1) | (1) | (10) | (5) | |
Operating Segments | SciPlay | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 196 | 171 | 573 | 489 | |
AEBITDA | [1] | 61 | 43 | 174 | 128 |
Reconciling items to net income from continuing operations before income taxes: | |||||
Depreciation, amortization and impairments | (6) | (6) | (23) | (16) | |
Restructuring and other | (2) | (1) | (5) | (4) | |
Operating Segments | iGaming | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | 70 | 58 | 204 | 178 | |
AEBITDA | [1] | 25 | 20 | 72 | 61 |
Reconciling items to net income from continuing operations before income taxes: | |||||
Depreciation, amortization and impairments | (12) | (10) | (36) | (37) | |
Restructuring and other | (4) | 0 | (14) | (15) | |
Unallocated and Reconciling Items | |||||
Segment Reporting Information [Line Items] | |||||
Total revenue | [2] | 0 | 0 | 0 | 0 |
AEBITDA | [1],[2] | (35) | (30) | (104) | (93) |
Reconciling items to net income from continuing operations before income taxes: | |||||
Depreciation, amortization and impairments | [2] | (8) | (5) | (18) | (18) |
Restructuring and other | [2] | (10) | (25) | (37) | (82) |
Interest expense | [2] | (78) | (68) | (231) | (254) |
Loss on debt financing transactions | 15 | (15) | (147) | ||
Gain on remeasurement of debt and other | [2] | 1 | 27 | ||
Other income (expense), net | [2] | 39 | $ (15) | 19 | 7 |
Stock-based compensation | [2] | $ (31) | $ (85) | $ (47) | |
[1](2) AEBITDA is reconciled to net income (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- and disposition-related costs and other unusual items; (3) interest expense; (4) loss on debt financing transactions; (5) change in fair value of investments and remeasurement of debt and other; (6) other (expense) income, net, including foreign currency gains or losses and earnings from equity investments; and (7) stock-based compensation. AEBITDA is presented as our primary segment measure of profit or loss.[2](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. |
Restructuring and Other (Detail
Restructuring and Other (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other | $ 17 | $ 27 | $ 66 | $ 106 | |
Employee severance and related | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other | 2 | 5 | 15 | 7 | |
Strategic review and related | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other | [1] | 9 | 14 | 27 | 68 |
Contingent acquisition consideration | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other | [2] | 1 | 0 | 10 | 12 |
Restructuring, integration and other | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring and other | $ 5 | $ 8 | $ 14 | $ 19 | |
[1](1) Includes costs associated with the SciPlay Merger, ASX listing, Divestitures (including ongoing separation activities), rebranding and related activities.[2](2) Represents contingent consideration fair value adjustment (see Note 12). |
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, 2023 | Dec. 31, 2022 |
Current: | ||
Receivables | $ 517 | $ 493 |
Allowance for credit losses | (40) | (38) |
Current receivables, net | 477 | 455 |
Long-term: | ||
Receivables | 12 | 16 |
Allowance for credit losses | (1) | (2) |
Long-term receivables, net | 11 | 14 |
Total receivables, net | $ 488 | $ 469 |
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, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | $ 529 | $ 509 | ||||||
Notes receivable allowance | (41) | $ (42) | $ (40) | (40) | $ (43) | $ (48) | $ (50) | $ (54) |
Total receivables, net | 488 | 469 | ||||||
U.S. and Canada | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 331 | 297 | ||||||
Notes receivable allowance | (18) | (18) | (19) | (18) | ||||
International | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 198 | 212 | ||||||
Notes receivable allowance | (23) | $ (24) | $ (21) | (22) | ||||
Balances over 90 days past due | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 44 | 39 | ||||||
Notes receivable allowance | (18) | (27) | ||||||
Total receivables, net | $ 26 | $ 12 | ||||||
Financing receivable, percent past due | 5% | 3% | ||||||
Balances over 90 days past due | U.S. and Canada | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | $ 3 | $ 5 | ||||||
Notes receivable allowance | (5) | (5) | ||||||
Balances over 90 days past due | International | ||||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||||
Notes receivable | 41 | 34 | ||||||
Notes receivable allowance | $ (13) | $ (22) |
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, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Allowance for Credit Loss [Roll Forward] | ||||||
Beginning allowance for credit losses | $ (42) | $ (40) | $ (40) | $ (48) | $ (50) | $ (54) |
Provision | 0 | (4) | (1) | 4 | (1) | (3) |
Charge-offs and recoveries | 1 | 2 | 1 | 1 | 3 | 7 |
Ending allowance for credit losses | (41) | (42) | (40) | $ (43) | $ (48) | $ (50) |
U.S. and Canada | ||||||
Allowance for Credit Loss [Roll Forward] | ||||||
Beginning allowance for credit losses | (18) | (19) | (18) | |||
Provision | 0 | 0 | (1) | |||
Charge-offs and recoveries | 0 | 1 | 0 | |||
Ending allowance for credit losses | (18) | (18) | (19) | |||
International | ||||||
Allowance for Credit Loss [Roll Forward] | ||||||
Beginning allowance for credit losses | (24) | (21) | (22) | |||
Provision | 0 | (4) | 0 | |||
Charge-offs and recoveries | 1 | 1 | 1 | |||
Ending allowance for credit losses | $ (23) | $ (24) | $ (21) |
Receivables, Allowance for Cr_6
Receivables, Allowance for Credit Losses and Credit Quality of Receivables - Schedule of LATAM Receivables (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts Receivable, Net, Current | $ 477 | $ 455 |
Latin America | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 56 | |
Allowance for credit losses | (17) | |
Receivables, net | 39 | |
Latin America | Current | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 38 | |
Allowance for credit losses | (9) | |
Accounts Receivable, Net, Current | 29 | |
Latin America | Balances over 90 days past due | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 18 | |
Allowance for credit losses | (8) | |
Accounts Receivable, Net, Current | $ 10 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Parts and work-in-process | $ 120 | $ 124 |
Finished goods | 63 | 37 |
Inventories | $ 183 | $ 161 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Less: accumulated depreciation | $ (695) | $ (695) | $ (665) | ||
Total property and equipment, net | 229 | 229 | 204 | ||
Depreciation expense | 30 | $ 27 | 87 | $ 82 | |
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 | 59 | 59 | 56 | ||
Gaming machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 725 | 725 | 685 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 25 | 25 | 25 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | 10 | 10 | 9 | ||
Other property and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property, plant and equipment, gross | $ 99 | $ 99 | $ 88 |
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, 2023 | Dec. 31, 2022 |
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | $ 2,507 | $ 2,524 |
Amortizable intangible assets, accumulated amortization | (1,869) | (1,727) |
Amortizable intangible assets, net balance | 638 | 797 |
Customer relationships | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 899 | 902 |
Amortizable intangible assets, accumulated amortization | (549) | (503) |
Amortizable intangible assets, net balance | 350 | 399 |
Intellectual property | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 934 | 948 |
Amortizable intangible assets, accumulated amortization | (747) | (714) |
Amortizable intangible assets, net balance | 187 | 234 |
Licenses | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 374 | 371 |
Amortizable intangible assets, accumulated amortization | (295) | (273) |
Amortizable intangible assets, net balance | 79 | 98 |
Brand names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 127 | 129 |
Amortizable intangible assets, accumulated amortization | (116) | (108) |
Amortizable intangible assets, net balance | 11 | 21 |
Trade names | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 162 | 162 |
Amortizable intangible assets, accumulated amortization | (155) | (122) |
Amortizable intangible assets, net balance | 7 | 40 |
Patents and other | ||
Amortizable intangible assets: | ||
Amortizable intangible assets, gross carrying value | 11 | 12 |
Amortizable intangible assets, accumulated amortization | (7) | (7) |
Amortizable intangible assets, net balance | $ 4 | $ 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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Amortization expense | $ 41 | $ 60 | $ 160 | [1] | $ 180 |
Intangible assets non-cash impairment charge | $ 4 | ||||
[1](1) The nine months ended September 30, 2023 include an intangible assets non-cash impairment charge of $4 million related to SciPlay restructuring of a certain foreign studio. |
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, 2023 USD ($) | ||
Goodwill [Roll Forward] | ||
Balance at the beginning of the period | $ 2,919 | |
Foreign currency adjustments | (16) | |
Balance at the end of the period | 2,903 | |
Gaming | ||
Goodwill [Roll Forward] | ||
Balance at the beginning of the period | 2,373 | [1] |
Foreign currency adjustments | (3) | [1] |
Balance at the end of the period | 2,370 | [1] |
Accumulated goodwill impairment charges | 989 | |
SciPlay | ||
Goodwill [Roll Forward] | ||
Balance at the beginning of the period | 213 | |
Foreign currency adjustments | (5) | |
Balance at the end of the period | 208 | |
iGaming | ||
Goodwill [Roll Forward] | ||
Balance at the beginning of the period | 333 | |
Foreign currency adjustments | (8) | |
Balance at the end of the period | $ 325 | |
[1](1) Accumulated goodwill impairment charges for the Gaming segment as of September 30, 2023 were $989 million. |
Software, net (Details)
Software, net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Capitalized Computer Software, Net [Abstract] | |||||
Software | $ 1,116 | $ 1,116 | $ 1,064 | ||
Accumulated amortization | (965) | (965) | (919) | ||
Software, net | 151 | 151 | $ 145 | ||
Amortization expense | $ 19 | $ 15 | $ 51 | $ 55 |
Long-term Debt - Schedule of Ou
Long-term Debt - Schedule of Outstanding Debt (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Aug. 23, 2023 | Dec. 31, 2022 | |
Debt Instrument | ||||
Face value | $ 3,923 | |||
Unamortized debt discount/premium and deferred financing costs, net | 46 | |||
Book value | 3,877 | $ 3,894 | ||
Less: current portion of long-term debt | (22) | (24) | ||
Long-term debt, excluding current portion | 3,855 | 3,870 | ||
Fair value of debt | [1] | 3,895 | ||
Secured Debt | Senior Secured Credit Facilities | SciPlay Revolver | ||||
Debt Instrument | ||||
Face value | [2] | 0 | ||
Unamortized debt discount/premium and deferred financing costs, net | [2] | 0 | ||
Book value | [2] | 0 | 0 | |
Secured Debt | Senior Secured Credit Facilities | LNWI Revolver | ||||
Debt Instrument | ||||
Face value | 0 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | |||
Book value | 0 | 0 | ||
Secured Debt | Senior Secured Credit Facilities | LNWI Term Loan B | ||||
Debt Instrument | ||||
Face value | 2,173 | |||
Unamortized debt discount/premium and deferred financing costs, net | 27 | |||
Book value | $ 2,146 | 2,159 | ||
Senior Notes | 2025 Unsecured Notes | ||||
Debt Instrument | ||||
Rate(s) | 8.625% | |||
Face value | $ 0 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | |||
Book value | $ 0 | 545 | ||
Senior Notes | 2028 Unsecured Notes | ||||
Debt Instrument | ||||
Rate(s) | 7% | |||
Face value | $ 700 | |||
Unamortized debt discount/premium and deferred financing costs, net | 6 | |||
Book value | $ 694 | 693 | ||
Senior Notes | 2029 Unsecured Notes | ||||
Debt Instrument | ||||
Rate(s) | 7.25% | |||
Face value | $ 500 | |||
Unamortized debt discount/premium and deferred financing costs, net | 5 | |||
Book value | $ 495 | 495 | ||
Senior Notes | 2031 Unsecured Notes | ||||
Debt Instrument | ||||
Rate(s) | 7.50% | 7.50% | ||
Face value | $ 550 | $ 550 | ||
Unamortized debt discount/premium and deferred financing costs, net | 8 | |||
Book value | 542 | 0 | ||
Other | Other | ||||
Debt Instrument | ||||
Face value | 0 | |||
Unamortized debt discount/premium and deferred financing costs, net | 0 | |||
Book value | $ 0 | $ 2 | ||
[1](2) 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.[2](1) On October 23, 2023, upon completion of the SciPlay Merger, the SciPlay Revolver was terminated. |
Long-term Debt - Narrative (Det
Long-term Debt - Narrative (Details) - USD ($) $ in Millions | Aug. 23, 2023 | Sep. 30, 2023 |
Debt Instrument | ||
Face value | $ 3,923 | |
2031 Unsecured Notes | Senior Notes | ||
Debt Instrument | ||
Face value | $ 550 | $ 550 |
Net proceeds from issuance | $ 544 | |
Rate(s) | 7.50% | 7.50% |
Redemption price, percent of principal | 100% | |
2025 Unsecured Notes | Senior Notes | ||
Debt Instrument | ||
Face value | $ 0 | |
Rate(s) | 8.625% | |
Outstanding debt redeemed | $ 550 |
Long-term Debt - Loss on Debt F
Long-term Debt - Loss on Debt Financing Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Disclosure [Abstract] | ||||
Repayment of principal balance at premium | $ 12 | $ 0 | $ 12 | $ 90 |
Unamortized debt discount and deferred financing costs, net | 3 | 0 | 3 | 57 |
Total loss on debt refinancing transactions | $ (15) | $ 0 | $ (15) | $ (147) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - Cash Flow Hedging - Designated as Hedging Instrument - Interest rate swap $ in Millions | Sep. 30, 2023 USD ($) |
Derivative [Line Items] | |
Derivative average fixed interest rate | 2.832% |
Notional amount | $ 700 |
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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain recorded in accumulated other comprehensive loss, net of tax | $ 5 | $ 24 | $ 8 | $ 29 |
Interest rate swap | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest income (expense) recorded related to interest rate swap contracts | $ 4 | $ (2) | $ 11 | $ (8) |
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, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Total interest expense which reflects the effects of cash flow hedges | $ (78) | $ (68) | $ (231) | $ (254) |
Hedged item | (5) | (5) | (15) | (12) |
Derivative designated as hedging instrument | $ 9 | $ 3 | $ 26 | $ 4 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Hedges (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Interest rate swap | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative fair value | $ 40 | $ 30 |
Fair Value Measurements - Conti
Fair Value Measurements - Contingent Acquisition Consideration (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2023 | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Balance as of December 31, 2022 | $ 79 | $ 79 | ||
Payments | (23) | |||
Fair value adjustments | [1] | (10) | ||
Other adjustments | (3) | (3) | [2] | |
Balance as of September 30, 2023 | 63 | |||
Included in Accrued Liabilities | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Balance as of December 31, 2022 | 34 | 34 | ||
Balance as of September 30, 2023 | 44 | |||
Included in Other Long-Term Liabilities | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Balance as of December 31, 2022 | $ 45 | 45 | ||
Balance as of September 30, 2023 | $ 19 | |||
[1](1) Amount included in Restructuring and other (see Note 5).[2](2) Primarily represents extinguishment of $3 million in redeemable non-controlling interest liability associated with SciPlay’s acquisition of Alictus Yazilim Anonim Şirketi in 2022, as specified financial targets for the first year were not met. The charge was recorded in other income, net in our consolidated statements of operations. |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Changes in Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Stockholders' equity, beginning balance | $ 1,230 | $ 1,184 | $ 1,161 | $ 966 | $ (2,137) | $ (2,106) | $ 1,161 | $ (2,106) | |||
Settlement of liability awards | 25 | 43 | |||||||||
Vesting of RSUs, net of tax withholdings and other | 3 | 1 | (14) | (3) | 0 | (31) | |||||
Purchase of treasury stock | (113) | [1] | (5) | (28) | (152) | (51) | |||||
Purchase of SciPlay’s Class A common stock | (15) | (8) | (11) | (7) | |||||||
Stock-based compensation | 12 | 13 | 15 | 14 | 15 | 17 | |||||
Net income | 80 | 5 | 27 | 335 | 3,295 | 28 | 112 | 3,658 | |||
Other comprehensive income (loss) | (66) | 47 | 6 | (69) | [2] | (48) | [2] | (37) | |||
Stockholders' equity, ending balance | 1,146 | 1,230 | 1,184 | 1,232 | 966 | (2,137) | 1,146 | 1,232 | |||
Excise taxes included in purchase of treasury stock | 1 | ||||||||||
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 | 1,387 | 1,388 | 1,370 | 1,375 | 1,366 | 1,337 | 1,370 | 1,337 | |||
Settlement of liability awards | 25 | 43 | |||||||||
Vesting of RSUs, net of tax withholdings and other | 3 | 1 | (14) | (3) | (31) | ||||||
Purchase of SciPlay’s Class A common stock | 15 | (8) | 10 | 6 | |||||||
Stock-based compensation | 12 | 13 | 15 | 14 | 15 | 17 | |||||
Stockholders' equity, ending balance | 1,402 | 1,387 | 1,388 | 1,376 | 1,375 | 1,366 | 1,402 | 1,376 | |||
Retained Earnings | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Stockholders' equity, beginning balance | 538 | 539 | 517 | 159 | (3,132) | (3,158) | 517 | (3,158) | |||
Net income | (1) | 22 | 328 | 3,291 | 26 | ||||||
Stockholders' equity, ending balance | 613 | 538 | 539 | 487 | 159 | (3,132) | 613 | 487 | |||
Treasury Stock | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Stockholders' equity, beginning balance | (613) | (608) | (580) | (378) | (226) | (175) | (580) | (175) | |||
Purchase of treasury stock | (113) | [1] | (5) | (28) | (51) | ||||||
Stockholders' equity, ending balance | (726) | (613) | (608) | (378) | (378) | (226) | (726) | (378) | |||
Accumulated Other Comprehensive Loss | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Stockholders' equity, beginning balance | (265) | (312) | (318) | (346) | (298) | (261) | (318) | (261) | |||
Other comprehensive income (loss) | (66) | 47 | 6 | (69) | [2] | (48) | [2] | (37) | |||
Stockholders' equity, ending balance | (331) | (265) | (312) | (415) | (346) | (298) | (331) | (415) | |||
Accumulated Other Comprehensive Loss | Discontinued Operations | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Other comprehensive income (loss) | 51 | 74 | |||||||||
Noncontrolling Interest | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Stockholders' equity, beginning balance | 182 | 176 | 171 | 155 | 152 | 150 | 171 | 150 | |||
Purchase of SciPlay’s Class A common stock | 0 | (1) | (1) | ||||||||
Stock-based compensation | 0 | ||||||||||
Net income | 6 | 5 | 7 | 4 | 2 | ||||||
Stockholders' equity, ending balance | $ 187 | $ 182 | $ 176 | $ 161 | $ 155 | $ 152 | $ 187 | $ 161 | |||
[1](1) Includes excise taxes of $1 million for the three and nine months ended September 30, 2023.[2](1) Includes reclassifications of $51 million and $74 million for the three and nine months ended September 30, 2022, respectively, from accumulated other comprehensive loss into income due to the sales of discontinued operations (see Note 2). |
Stockholders' Equity - Stock Ba
Stockholders' Equity - Stock Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Share-based compensation expense | [1] | $ 31 | $ 15 | $ 85 | $ 47 |
Related to L&W stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Share-based compensation expense | 0 | 0 | 0 | 1 | |
Related to L&W RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Share-based compensation expense | 19 | 12 | 59 | 39 | |
Related to L&W RSUs | SciPlay | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Share-based compensation expense | 12 | 3 | 26 | 7 | |
Liability Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||
Share-based compensation expense | $ 19 | $ 6 | $ 45 | $ 16 | |
[1](1) Includes $19 million and $45 million classified as liability awards for the three and nine months ended September 30, 2023, respectively, and $6 million and $16 million for the three and nine months ended September 30, 2022, respectively. |
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, 2023 | Sep. 30, 2022 | |
Number of Restricted Stock Units | ||
Unvested RSU's at beginning of period (in shares) | 1.7 | |
Granted (in shares) | 1.1 | |
Vested (in shares) | (1) | |
Cancelled (in shares) | (0.1) | |
Unvested RSU's at end of period (in shares) | 1.7 | |
Weighted Average Grant Date Fair Value | ||
Unvested RSU's at beginning of period (in dollars per share) | $ 46.66 | |
Granted (in dollars per share) | 57.54 | $ 57.26 |
Vested (in dollars per share) | 44.52 | |
Cancelled (in dollars per share) | 50.43 | |
Unvested RSU's at end of period (in dollars per share) | $ 54.66 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 19, 2023 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||||||
Unrecognized stock based compensation | $ 58,000,000 | $ 58,000,000 | |||||||
Unrecognized stock based compensation, period for recognition | 2 years | ||||||||
Stock purchase program, aggregate cost | 113,000,000 | [1] | $ 5,000,000 | $ 28,000,000 | $ 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 | $ 750,000,000 | |||||||
Stock repurchase program, shares acquired (in shares) | 2,100,000 | ||||||||
Stock purchase program, aggregate cost | $ 146,000,000 | ||||||||
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 | $ 60,000,000 | |||||||
Stock repurchase program, shares acquired (in shares) | 1,400,000 | ||||||||
Stock purchase program, aggregate cost | $ 23,000,000 | ||||||||
Share Repurchase Program, May 2023 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||||||
Stock repurchase program, authorized amount | $ 60,000,000 | $ 60,000,000 | |||||||
Amended and Restated Rights Agreement | Series A Preferred Stock | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||||||
Preferred shares outstanding (in shares) | 0 | ||||||||
Amended and Restated Rights Agreement | Series A Preferred Stock | Preferred Stock Purchase Rights | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||||||
Preferred shares issued on exercise (in shares) | 0 | ||||||||
Related to L&W RSUs | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||||||||
Granted (in dollars per share) | $ 57.54 | $ 57.26 | |||||||
Awards vested in period, fair value | $ 58,000,000 | $ 72,000,000 | |||||||
[1](1) Includes excise taxes of $1 million for the three and nine months ended September 30, 2023. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Oct. 23, 2023 | |
Valuation Allowance [Line Items] | |||||
Income tax expense | $ 14 | $ 4 | $ 27 | $ 8 | |
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 21% | ||||
SciPlay | Subsequent Event | |||||
Valuation Allowance [Line Items] | |||||
Percentage of SciPlay stock owned by other parties | 17% |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease expenses | $ 6 | $ 6 | $ 17 | $ 16 |
Leases - Supplemental Operating
Leases - Supplemental Operating Lease Information (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Assets and Liabilities, Lessee [Abstract] | |||
Operating lease right-of-use assets | $ 43 | $ 49 | |
Accrued liabilities | 17 | 17 | |
Operating lease liabilities | 30 | 37 | |
Total operating lease liabilities | $ 47 | $ 54 | |
Weighted average remaining lease term, units in years | 4 years | 4 years | |
Weighted average discount rate | 5% | 5% | |
Cash Flow, Operating Activities, Lessee [Abstract] | |||
Operating cash flows for operating leases | $ 15 | $ 15 | |
Operating leases | $ 3 | $ 17 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
Remainder of 2023 | $ 5 |
2024 | 17 |
2025 | 13 |
2026 | 9 |
2027 | 5 |
Thereafter | 4 |
Less Imputed Interest | (6) |
Total | $ 47 |
Litigation (Details)
Litigation (Details) $ in Millions, $ in Billions | 1 Months Ended | ||||
Jun. 30, 1999 USD ($) | Jun. 30, 1999 COP ($) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 1993 USD ($) | |
Other Commitments [Line Items] | |||||
Loss contingency accrual | $ 11 | $ 11 | |||
Contractual penalty | $ 13 | ||||
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 | $ 90 |