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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to        
Commission file number: 001-11693 
SCIENTIFIC GAMES CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
81-0422894
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
 
6601 Bermuda Road, Las Vegas, Nevada 89119
(Address of principal executive offices)
(Zip Code) 
(702) 897-7150
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.001 par valueSGMSThe NASDAQ Stock Market
Preferred Stock Purchase RightsThe NASDAQ Stock Market
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer 
Non-accelerated filer 
Smaller reporting company 
Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ý

The registrant has the following number of shares outstanding of each of the registrant’s classes of common stock as of May 4, 2021:
Common Stock: 96,078,321




SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL AND OTHER INFORMATION
THREE MONTHS ENDED MARCH 31, 2021
 
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2



Glossary of Terms
The following terms or acronyms used in this Quarterly Report on Form 10-Q are defined below:
Term or AcronymDefinition
2020 10-K2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021
2025 Secured Notes5.000% senior secured notes due 2025 issued by SGI
2026 Secured Euro Notes3.375% senior secured notes due 2026 issued by SGI
2026 Unsecured Euro Notes5.500% senior unsecured notes due 2026 issued by SGI
2025 Unsecured Notes
8.625% senior unsecured notes due 2025 issued by SGI
2026 Unsecured Notes8.250% senior unsecured notes due 2026 issued by SGI
2028 Unsecured Notes7.000% senior unsecured notes due 2028 issued by SGI
2029 Unsecured Notes7.250% senior unsecured notes due 2029 issued by SGI
AEBITDAAdjusted EBITDA, our performance measure of profit or loss for our business segments
ASCAccounting Standards Codification
ASUAccounting Standards Update
COVID-19Coronavirus disease first identified in 2019 (declared a pandemic by the World Health Organization on March 11, 2020)
D&Adepreciation, amortization and impairments (excluding goodwill)
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
KPIsKey Performance Indicators
LBOlicensed betting office
LIBORLondon Interbank Offered Rate
Notea note in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, unless otherwise indicated
POSpercentage of retail sales
Participationwith respect to our Gaming business, refers to gaming machines provided to customers through service or leasing arrangements in which we earn revenues and are paid based on: (1) a percentage of the amount wagered less payouts; (2) fixed daily-fees; (3) a percentage of the amount wagered; or (4) a combination of (2) and (3), and with respect to our Lottery business, refers to a contract or arrangement in which we earn revenues and are paid based on a percentage of retail sales
R&Dresearch and development
RMGreal-money gaming
RSUrestricted stock unit
SECSecurities and Exchange Commission
Secured Notesrefers to the 2025 Secured Notes and 2026 Secured Euro Notes, collectively
Senior Notesthe Secured Notes and the Unsecured Notes
SciPlay Revolver$150 million revolving credit facility agreement entered into by SciPlay Holding Company, LLC, a subsidiary of SciPlay Corporation, that matures in May 2024
SG&Aselling, general and administrative
SGCScientific Games Corporation
SGIScientific Games International, Inc., a wholly-owned subsidiary of SGC
Shufflersvarious models of automatic card shufflers, deck checkers and roulette chip sorters
Unsecured Notesrefers to the 2026 Unsecured Euro Notes, 2026 Unsecured Notes, 2028 Unsecured Notes and 2029 Unsecured Notes, collectively
U.S. GAAPaccounting principles generally accepted in the U.S.
U.S. jurisdictionsthe 50 states in the U.S. plus the District of Columbia, U.S. Virgin Islands and Puerto Rico
VGTvideo gaming terminal
VLTvideo lottery terminal
Intellectual Property Rights 
All ® notices signify marks registered in the United States. © 2021 Scientific Games Corporation. All Rights Reserved.

3



FORWARD-LOOKING STATEMENTS
Throughout this Quarterly Report on Form 10-Q, we make “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” “should,” “could,” “potential,” “opportunity,” “goal,” or similar terminology. The forward-looking statements contained in this Quarterly Report on Form 10-Q are generally located in the material set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” but may be found in other locations as well. These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties and other factors, including, among other things:
the impact of the COVID-19 pandemic and any resulting unfavorable social, political, economic and financial conditions, including the temporary and potentially recurring closure of casinos and lottery operations on a jurisdiction-by-jurisdiction basis;
slow growth of new gaming jurisdictions, slow addition of casinos in existing jurisdictions and declines in the replacement cycle of gaming machines;
risks relating to foreign operations, including anti-corruption laws, fluctuations in currency rates, restrictions on the payment of dividends from earnings, restrictions on the import of products and financial instability, including the potential impact to our business resulting from the continuing uncertainty following the U.K.’s withdrawal from the European Union;
difficulty predicting what impact, if any, new tariffs imposed by and other trade actions taken by the U.S. and foreign jurisdictions could have on our business;
U.S. and international economic and industry conditions;
level of our indebtedness, higher interest rates, availability or adequacy of cash flows and liquidity to satisfy indebtedness, other obligations or future cash needs;
the discontinuation or replacement of LIBOR, which may adversely affect interest rates;
inability to reduce or refinance our indebtedness;
restrictions and covenants in debt agreements, including those that could result in acceleration of the maturity of our indebtedness;
competition;
inability to win, retain or renew, or unfavorable revisions of, existing contracts, and the inability to enter into new contracts;
the impact of U.K. legislation approving the reduction of fixed-odds betting terminals maximum stakes limit on LBO operators, including the related closure of certain LBO shops;
inability to adapt to, and offer products that keep pace with, evolving technology, including any failure of our investment of significant resources in our R&D efforts;
changes in demand for our products and services;
inability to benefit from, and risks associated with, strategic equity investments and relationships;
inability to achieve some or all of the anticipated benefits of SciPlay being a standalone public company;
dependence on suppliers and manufacturers;
SciPlay’s dependence on certain key providers;
ownership changes and consolidation in the gaming industry;
fluctuations in our results due to seasonality and other factors;
security and integrity of our products and systems, including the impact of any security breaches or cyber-attacks;
protection of our intellectual property, inability to license third-party intellectual property and the intellectual property rights of others;
reliance on or failures in information technology and other systems;
litigation and other liabilities relating to our business, including litigation and liabilities relating to our contracts and licenses, our products and systems, our employees (including labor disputes), intellectual property, environmental laws and our strategic relationships;
reliance on technological blocking systems;
challenges or disruptions relating to the completion of the domestic migration to our enterprise resource planning system;

4



laws and government regulations, both foreign and domestic, including those relating to gaming, data privacy and security, including with respect to the collection, storage, use, transmission and protection of personal information and other consumer data, and environmental laws, and those laws and regulations that affect companies conducting business on the internet, including online gambling;
legislative interpretation and enforcement, regulatory perception and regulatory risks with respect to gaming, especially internet wagering, social gaming and sports wagering;
changes in tax laws or tax rulings, or the examination of our tax positions;
opposition to legalized gaming or the expansion thereof and potential restrictions on internet wagering;
significant opposition in some jurisdictions to interactive social gaming, including social casino gaming and how such opposition could lead these jurisdictions to adopt legislation or impose a regulatory framework to govern interactive social gaming or social casino gaming specifically, and how this could result in a prohibition on interactive social gaming or social casino gaming altogether, restrict our ability to advertise our games, or substantially increase our costs to comply with these regulations;
expectations of shift to regulated online gaming or sports wagering;
inability to develop successful products and services and capitalize on trends and changes in our industries, including the expansion of internet and other forms of interactive gaming;
the continuing evolution of the scope of data privacy and security regulations, and our belief that the adoption of increasingly restrictive regulations in this area is likely within the U.S. and other jurisdictions;
incurrence of restructuring costs;
goodwill impairment charges including changes in estimates or judgments related to our impairment analysis of goodwill or other intangible assets;
stock price volatility;
failure to maintain adequate internal control over financial reporting;
dependence on key executives;
natural events that disrupt our operations, or those of our customers, suppliers or regulators;
possibility that the 2018 renewal of the Lotterie Nazionali S.r.l. concession to operate the Italian instant games lottery is not final (pending appeal against existing court rulings relating to third-party protest against the renewal of the concession); and
expectations of growth in total consumer spending on social casino gaming.
Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A in our 2020 10-K. Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
You should also note that this Quarterly Report on Form 10-Q may contain references to industry market data and certain industry forecasts. Industry market data and industry forecasts are obtained from publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe industry information to be accurate, it is not independently verified by us and we do not make any representation as to the accuracy of that information. In general, we believe there is less publicly available information concerning the international gaming, lottery, social and digital gaming industries than the same industries in the U.S.
Due to rounding, certain numbers presented herein may not precisely agree or add up on a cumulative basis to the totals previously reported.

5


PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)
Three Months Ended March 31,
20212020
Revenue:
Services$463 $422 
Product sales104 168 
Instant products162 135 
Total revenue729 725 
Operating expenses:
Cost of services(1)
139 130 
Cost of product sales(1)
50 91 
Cost of instant products(1)
77 73 
Selling, general and administrative186 198 
Research and development52 51 
Depreciation, amortization and impairments123 138 
Goodwill impairment 54 
Restructuring and other21 22 
Operating income (loss)81 (32)
Other (expense) income:
Interest expense(121)(124)
Earnings (loss) from equity investments9 (2)
Gain on remeasurement of debt25 10 
Other expense, net (3)
Total other expense, net(87)(119)
Net loss before income taxes
(6)(151)
Income tax expense(3)(4)
Net loss
(9)(155)
Less: Net income attributable to noncontrolling interest6 4 
Net loss attributable to SGC$(15)$(159)
Basic and diluted net loss attributable to SGC per share:
 
Basic$(0.16)$(1.69)
Diluted$(0.16)$(1.69)
Weighted average number of shares used in per share calculations:
 
Basic shares95 94 
Diluted shares95 94 
(1) Excludes D&A.
See accompanying notes to condensed consolidated financial statements.

6


SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited, in millions)
Three Months Ended March 31,
20212020
Net loss$(9)$(155)
Other comprehensive loss:
Foreign currency translation gain (loss), net of tax4 (83)
Pension and post-retirement (loss) gain, net of tax(1)2 
Derivative financial instruments unrealized gain (loss), net of tax5 (16)
Total other comprehensive gain (loss) 8 (97)
Total comprehensive loss(1)(252)
Less: comprehensive income attributable to noncontrolling interest6 4 
Comprehensive loss attributable to SGC$(7)$(256)
See accompanying notes to condensed consolidated financial statements.

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except par value)
As of
March 31, 2021December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$967 $1,016 
Restricted cash88 117 
Receivables, net of allowance for credit losses $79 and $81, respectively
621 616 
Inventories191 191 
Prepaid expenses, deposits and other current assets241 241 
Total current assets2,108 2,181 
Non-current assets:
Restricted cash10 10 
Receivables, net of allowance for credit losses $5 and $5, respectively
20 20 
Property and equipment, net406 415 
Operating lease right-of-use assets95 94 
Goodwill3,287 3,292 
Intangible assets, net1,243 1,299 
Software, net220 227 
Equity investments265 262 
Other assets202 184 
Total assets$7,856 $7,984 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term debt
$44 $44 
Accounts payable
280 203 
Accrued liabilities
544 586 
Total current liabilities
868 833 
Deferred income taxes
80 79 
Operating lease liabilities
78 77 
Other long-term liabilities
229 260 
Long-term debt, excluding current portion
9,122 9,259 
Total liabilities
10,377 10,508 
Commitments and contingencies (Note 16)


Stockholders’ deficit:
Common stock, par value $0.001 per share: 199 shares authorized; 113 shares issued and 96 and 95 shares outstanding, respectively
1 1 
Additional paid-in capital
1,272 1,268 
Accumulated loss
(3,544)(3,529)
Treasury stock, at cost, 17 shares
(175)(175)
Accumulated other comprehensive loss
(210)(218)
Total SGC stockholders’ deficit
(2,656)(2,653)
Noncontrolling interest
135 129 
Total stockholders’ deficit
(2,521)(2,524)
Total liabilities and stockholders’ deficit
$7,856 $7,984 
See accompanying notes to condensed consolidated financial statements.

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SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Three Months Ended March 31,
20212020
Cash flows from operating activities:
Net loss
$(9)$(155)
Adjustments to reconcile net loss to cash provided by operating activities
122 243 
Changes in working capital accounts
9 25 
Changes in deferred income taxes and other
1 7 
Net cash provided by operating activities
123 120 
Cash flows from investing activities:
Capital expenditures(50)(53)
Acquisitions of businesses(2) 
Additions to equity method investments, net of distributions(9) 
Proceeds from sale of assets and other 22 
Net cash used in investing activities
(61)(31)
Cash flows from financing activities:
Borrowings under SGI revolving credit facility
 50 
Repayments under SGI revolving credit facility
(100)(90)
Payments on long-term debt (10)(10)
Payments on license obligations
(13)(8)
Taxes paid related to net share settlement of equity awards and other(16)(1)
Net cash used in financing activities
(139)(59)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1)(5)
(Decrease) increase in cash, cash equivalents and restricted cash
(78)25 
Cash, cash equivalents and restricted cash, beginning of period1,143 375 
Cash, cash equivalents and restricted cash, end of period
$1,065 $400 
Supplemental cash flow information:
Cash paid for interest$123 $110 
Income taxes paid
7 6 
Distributed earnings from equity investments4 4 
Supplemental non-cash transactions:
Non-cash interest expense
$6 $5 
 See accompanying notes to condensed consolidated financial statements.

9



SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, amounts in USD, table amounts in millions, except per share amounts)

(1) Description of the Business and Summary of Significant Accounting Policies
Description of the Business
We are a leading developer of technology-based products and services and associated content for the worldwide gaming, lottery, social and digital gaming industries. Our portfolio of revenue-generating activities primarily includes supplying gaming machines and game content, casino-management systems and table game products and services to licensed gaming entities; providing instant and draw-based lottery products, lottery systems and lottery content and services to lottery operators; providing social casino and other mobile games to retail customers; and providing a comprehensive suite of digital RMG and sports wagering solutions, distribution platforms, content, products and services. We also gain access to technologies and pursue global expansion through strategic acquisitions and equity investments. We report our results of operations in four business segments—Gaming, Lottery, SciPlay and Digital—representing our different products and services.
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The accompanying condensed consolidated financial statements include the accounts of SGC, its wholly owned subsidiaries, and those subsidiaries in which we have a controlling financial interest. Investments in other entities in which we do not have a controlling financial interest but we exert significant influence are accounted for in our consolidated financial statements using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.
In the opinion of SGC and its management, we have made all adjustments necessary to present fairly our consolidated financial position, results of operations, comprehensive loss and cash flows for the periods presented. Such adjustments are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2020 10-K. Interim results of operations are not necessarily indicative of results of operations to be expected for a full year.
Impact of COVID-19
As more fully described in the “Description of the Business and Summary of Significant Accounting Policies - Impact of COVID-19” in Note 1 of our 2020 10-K, COVID-19 disruptions continue to impact our results of operations and particularly our Gaming business segment operations. Even though the majority of gaming establishments reopened globally, gaming operations have yet to return to pre-COVID levels, as limited international travel, social distancing measures and reduced operating capacity restrictions remain in effect in many jurisdictions, and overall uncertainty regarding the magnitude and length of time that these disruptions will continue to impact our business remains unknown and may change in the future and such changes could be material. We continue to assess the situation jurisdiction by jurisdiction and actively manage our daily cash flows and continue to evaluate additional measures that will reduce operating costs and conserve cash to preserve liquidity as we execute on our strategic initiatives.
As of March 31, 2021, our total available liquidity (excluding our SciPlay business segment) was $898 million, which included $203 million of undrawn availability under SGI’s revolving credit facility. In April of 2021, we made a voluntary payment of $150 million on SGI’s revolving credit facility.
Significant Accounting Policies
There have been no changes to our significant accounting policies described within the Notes of our 2020 10-K.
Computation of Basic and Diluted Net Loss Per Share
Basic and diluted net loss attributable to SGC per share were the same for all periods presented as all common stock equivalents during those periods would be anti-dilutive. We excluded 2 million and 1 million of stock options from the diluted weighted-average common shares outstanding for the three months ended March 31, 2021 and 2020, respectively. We excluded 3 million and 2 million of RSUs from the calculation of diluted weighted-average common shares outstanding for the three months ended March 31, 2021 and 2020, respectively.
New Accounting Guidance - Not Yet Adopted
The FASB issued ASU No. 2020-04 and subsequently ASU No. 2021-01, Reference Rate Reform (Topic 848) in March 2020 and January 2021, respectively. The new guidance provides optional expedients and exceptions for applying U.S.

10



GAAP to contract modifications and hedging relationships, including derivative instruments impacted by changes in the interest rates used for discounting cash flows for computing variable margin settlements, subject to meeting certain criteria, that reference LIBOR or other reference rates expected to be discontinued, in 2022 or potentially 2023 (pending possible extension). The ASUs establish certain contract modification principles that entities can apply in other areas that may be affected by reference rate reform and certain elective hedge accounting expedients and exceptions. The ASUs may be applied prospectively. We are currently assessing the impact of these standards on our consolidated financial statements.
We do not expect that any other recently issued accounting guidance will have a significant effect on our consolidated financial statements.
(2) Revenue Recognition
The following table disaggregates revenues by type within each of our business segments:
Three Months Ended March 31,
20212020
Gaming
  Gaming operations$113 $119 
  Gaming machine sales55 92 
  Gaming systems42 55 
  Table products34 52 
    Total$244 $318 
Lottery
  Instant products $162 $136 
  Lottery systems86 76 
    Total$248 $212 
SciPlay
  Mobile$133 $101 
  Web and other18 17 
    Total$151 $118 
Digital
Sports and platform$33 $38 
Gaming and other53 39 
    Total$86 $77 
    
The amount of rental income revenue that is outside the scope of ASC 606 was $63 million and $74 million for the three months ended March 31, 2021, and 2020, respectively.
Contract Liabilities and Other Disclosures
The following table summarizes the activity in our contract liabilities for the reporting period:
Three Months Ended March 31, 2021
Contract liability balance, beginning of period(1)
$89 
Liabilities recognized during the period30 
Amounts recognized in revenue from beginning balance(20)
Contract liability balance, end of period(1)
$99 
(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, except for Lottery instant products sold under percentage of retail sales contracts. Revenue is recognized for

11



such contracts upon delivery to our customers, while conversion to cash is based on the retail sale of the underlying tickets to end consumers. As a result, revenue recognition under ASC 606 does not approximate conversion to cash for such contracts in any periods presented. Total revenue recognized under such contracts was $19 million in the three months ended March 31, 2021 and 2020. 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$636 $127 
End of period balance, March 31, 2021
641 117 
(1) Contract assets are included primarily within Prepaid expenses, deposits and other current assets in our consolidated balance sheets.

As of March 31, 2021, 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.
(3) Business Segments
We report our operations in four business segments—Gaming, Lottery, SciPlay and Digital—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 2 and 3 in our 2020 10-K.
In evaluating financial performance, our Chief Operating Decision Maker focuses on AEBITDA as management’s segment measure of profit or loss, which is described in Note 2 in our 2020 10-K. The accounting policies of our business segments are the same as those described within the Notes in our 2020 10-K. The following tables present our segment information:
Three Months Ended March 31, 2021
GamingLotterySciPlayDigital
Unallocated and Reconciling Items(1)
Total
Total revenue
$244 $248 $151 $86 $ $729 
AEBITDA
108 119 46 29 (32)$270 
Reconciling items to consolidated net loss before income taxes:
D&A
(75)(14)(3)(24)(7)(123)
Restructuring and other
(3)  (1)(17)(21)
EBITDA from equity investments
(20)(20)
Earnings from equity investments
9 9 
Interest expense
(121)(121)
Gain on remeasurement of debt25 25 
Other expense, net
(2)(2)
Stock-based compensation
(23)(23)
Net loss before income taxes
$(6)
(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 before income taxes.

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Three Months Ended March 31, 2020
GamingLotterySciPlayDigital
Unallocated and Reconciling Items(1)
Total
Total revenue
$318 $212 $118 $77 $ $725 
AEBITDA
96 78 35 23 (32)$200 
Reconciling items to consolidated net loss before income taxes:
D&A
(89)(14)(2)(21)(12)(138)
Goodwill impairment(54)    (54)
Restructuring and other
(12)(5)(1)(1)(3)(22)
EBITDA from equity investments
(7)(7)
Loss from equity investments
(2)(2)
Interest expense
(124)(124)
Gain on remeasurement of debt10 10 
Other expense, net
(4)(4)
Stock-based compensation(10)(10)
Net loss before income taxes
$(151)
(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 before income taxes.
(4) 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 related costs and other unusual items. The following table summarizes pre-tax restructuring and other costs for the periods presented:
Three Months Ended March 31,
20212020
Employee severance and related(1)
$1 $18 
Restructuring, integration and other(2)
20 4 
Total$21 $22 
(1) The three months ended March 31, 2020 includes $14 million in severance and other benefits granted to employees as a result of COVID-19 related austerity measures.
(2) The three months ended March 31, 2021 includes cost associated with strategic and business optimization initiatives.
(5) 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
March 31, 2021December 31, 2020
Current:
Receivables
$700 $697 
Allowance for credit losses
(79)(81)
Current receivables, net
621 616 
Long-term:
Receivables
25 25 
Allowance for credit losses
(5)(5)
Long-term receivables, net20 20 
Total receivables, net
$641 $636 

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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
March 31, 2021Balances over 90 days past dueDecember 31, 2020Balances over 90 days past due
Receivables:
U.S. and Canada$478 $96 $443 $88 
International247 50 279 52 
Total receivables725 146 722 140 
Receivables allowance:
U.S. and Canada(42)(25)(43)(26)
International(42)(23)(43)(24)
     Total receivables allowance
(84)(48)(86)(50)
Receivables, net$641 $98 $636 $90 

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 months ended March 31, 2021 and 2020 is as follows:
20212020
TotalU.S. and CanadaInternationalTotal
Beginning allowance for credit losses
$(86)$(43)$(43)$(42)
Provision
   (28)
Charge-offs and recoveries
2 1 1  
Ending allowance for credit losses $(84)$(42)$(42)$(70)

At March 31, 2021, 15% of our total receivables, net, were past due by over 90 days compared to 14% at December 31, 2020.

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 in the Latin America region (“LATAM”) and are primarily comprised of Mexico, Peru and Argentina. The following table summarizes our LATAM receivables:
As of March 31, 2021
TotalCurrent or Not Yet DueBalances Over 90 days Past Due
Receivables$110 $49 $61 
Allowance for credit losses(53)(14)(39)
Receivables, net$57 $35 $22 

We increased our allowance for credit losses by $28 million in the first quarter of 2020. This increase was primarily related to Gaming customers in LATAM (which transact with both domestic and international subsidiaries) as those customers were particularly affected by COVID-19 closures of gaming operations establishments with COVID-related closures lasting longer than in other geographic regions. We did not have material credit losses during the first quarter of 2021. We

14


continuously review receivables and as information concerning credit quality arise, reassess our expectations of future losses and record an incremental reserve if warranted at that time. Our current allowance for credit losses represents our current expectation of credit losses; however future expectations could change as the ultimate impact of the COVID-19 disruption remains uncertain, particularly as to the financial stability of our customers during and after the COVID-19 disruption period.
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 March 31, 2021 and December 31, 2020, the fair value of receivables, net, approximated the carrying value due to contractual terms of receivables generally being less than 24 months.
(6) Inventories
Inventories consisted of the following:
As of
March 31, 2021December 31, 2020
Parts and work-in-process
$115 $122 
Finished goods
76 69 
Total inventories
$191 $191 
    
Parts and work-in-process include parts for gaming machines, lottery terminals and instant lottery ticket materials, as well as labor and overhead costs for work-in-process associated with the manufacturing of instant lottery games and lottery terminals. Our finished goods inventory primarily consists of gaming machines for sale, instant products primarily for our Participation arrangements and our licensed branded merchandise.
(7) Property and Equipment, net    
Property and equipment, net consisted of the following:
As of
March 31, 2021December 31, 2020
Land$15 $15 
Buildings and leasehold improvements133 132 
Gaming and lottery machinery and equipment1,035 1,026 
Furniture and fixtures32 32 
Construction in progress53 43 
Other property and equipment277 277 
Less: accumulated depreciation(1,139)(1,110)
Total property and equipment, net$406 $415 
Depreciation expense is excluded from Cost of services, Cost of product sales, Cost of instant products and Other operating expenses and is separately presented within D&A.
Three Months Ended March 31,
20212020
Depreciation expense$40 $44 
(8) Intangible Assets, net and Goodwill
Intangible Assets, net
The following tables present certain information regarding our intangible assets as of March 31, 2021 and December 31, 2020:

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As of
March 31, 2021December 31, 2020
Gross Carrying Value
Accumulated Amortization
Net Balance
Gross Carrying Value
Accumulated Amortization
Net Balance
Amortizable intangible assets:
Customer relationships$1,110 $(501)$609 $1,108 $(478)$630 
Intellectual property953 (661)292 958 (648)310 
Licenses558 (415)143 558 (405)153 
Brand names127 (89)38 128 (86)42 
Trade names117 (45)72 117 (42)75 
Patents and other24 (16)8 24 (16)8 
2,889 (1,727)1,162 2,893 (1,675)1,218 
Non-amortizable intangible assets:
Trade names
83 (2)81 83 (2)81 
Total intangible assets
$2,972 $(1,729)$1,243 $2,976 $(1,677)$1,299 
The following reflects intangible amortization expense included within D&A:
Three Months Ended March 31,
20212020
Amortization expense$56 $65 
The table below reconciles the change in the carrying value of goodwill by business segment for the period from December 31, 2020 to March 31, 2021.
GamingLotterySciPlayDigitalTotals
Balance as of December 31, 2020
$2,425 $353 $124 $390 $3,292 
Foreign currency adjustments (3)(1)(2)1 (5)
Balance as of March 31, 2021
$2,422 $352 $122 $391 $3,287 
(1) Accumulated goodwill impairment charges for the Gaming segment as of March 31, 2021 were $989 million.
(1) Accumulated goodwill impairment charges for the Lottery segment as of March 31, 2021 were $137 million.
(9) Software, net
Software, net consisted of the following:
As of
March 31, 2021December 31, 2020
Software $1,198 $1,197 
Accumulated amortization(978)(970)
Software, net$220 $227 
The following reflects amortization of software included within D&A:
Three Months Ended March 31,
20212020
Amortization expense$27 $29 

(10) Equity Investments
Equity investments totaled $265 million and $262 million as of March 31, 2021 and December 31, 2020, respectively. We received distributions and dividends totaling $4 million during the three months ended March 31, 2021 and 2020.

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(11) Long-Term and Other
Outstanding Debt and Finance Leases
The following table reflects our outstanding debt:
As of
March 31, 2021December 31, 2020
Final MaturityRate(s)Face valueUnamortized debt discount/premium and deferred financing costs, netBook valueBook value
Senior Secured Credit Facilities:
SGI Revolver2024variable$435 $ $435 $535 
SGI Term Loan B-52024variable4,050 (46)4,004 4,012 
SciPlay Revolver2024variable    
SGI Senior Notes:
2025 Secured Notes(1)
20255.000%1,250 (12)1,238 1,237 
2026 Secured Euro Notes(2)
20263.375%381 (4)377 395 
2025 Unsecured Notes20258.625%550 (7)543 542 
2026 Unsecured Euro Notes(2)
20265.500%293 (3)290 303 
2026 Unsecured Notes20268.250%1,100 (12)1,088 1,088 
2028 Unsecured Notes20287.000%700 (9)691 691 
2029 Unsecured Notes20297.250%500 (6)494 493 
Finance lease obligations as of March 31, 2021 payable monthly through 2023 and other(3)
20234.217%6  6 7 
Total long-term debt outstanding$9,265 $(99)$9,166 $9,303 
Less: current portion of long-term debt(44)(44)
Long-term debt, excluding current portion$9,122 $9,259 
Fair value of debt(4)
$9,454 
(1) In connection with the February 2018 Refinancing (see Note 15 in our 2020 10-K), we entered into certain cross-currency interest rate swap agreements to achieve more attractive interest rates by effectively converting $460 million of the fixed-rate, U.S. Dollar-denominated 2025 Secured Notes, including the semi-annual interest payments through October 2023, to a fixed-rate Euro-denominated debt, with a fixed annual weighted average interest rate of approximately 2.946%. These cross-currency swaps have been designated as a hedge of our net investment in certain subsidiaries.
(2) We designated a portion of our 2026 Secured Euro Notes as a net investment non-derivative hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in our operating results caused by the change in foreign currency exchange rates of the Euro relative to the U.S. Dollar (see Note 12 for additional information). The total change in the face value of the 2026 Secured Euro Notes and 2026 Unsecured Euro Notes due to changes in foreign currency exchange rates since the issuance was a reduction of $38 million, of which a $25 million gain was recognized on remeasurement of debt in the Consolidated Statements of Operations for the three months ended March 31, 2021.
(3) Includes $6 million related to certain revenue transactions presented as debt in accordance with ASC 470.
(4) 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.

We were in compliance with the financial covenants under all debt agreements as of March 31, 2021 (for information regarding our financial covenants of all debt agreements, see Notes 1 and 15 in our 2020 10-K).
For additional information regarding the terms of our credit facilities, Secured Notes and Unsecured Notes, see Note 15 in our 2020 10-K.
(12) 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

17


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 March 31, 2021, we held the following derivative instruments that were accounted for pursuant to ASC 815:
Interest Rate Swap Contracts
We currently 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 February 2018, we entered into interest rate swap contracts to hedge a portion of our interest expense associated with our variable rate debt to effectively fix the interest rate that we pay. These interest rate swap contracts are designated as cash flow hedges under ASC 815. We pay interest at a weighted-average fixed rate of 2.4418% and receive interest at a variable rate equal to one-month LIBOR. The total notional amount of interest rate swaps outstanding was $800 million as of March 31, 2021. These hedges mature in February 2022.
These hedges are highly effective in offsetting changes in our future expected cash flows due to the fluctuation in the one-month LIBOR rate associated with our variable rate debt. We qualitatively monitor the effectiveness of these hedges on a quarterly basis. As a result of the effective matching of the critical terms on our variable rate interest expense being hedged to the hedging instruments being used, we expect these hedges to remain highly effective.
All gains and losses from these hedges are recorded in Other comprehensive loss until the future underlying payment transactions occur. Any realized gains or losses resulting from the hedges are recognized (together with the hedged transaction) as Interest expense. We estimate 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 are categorized as Level 2 in the fair value hierarchy as established by ASC 820.
The following table shows the Gain (loss) and Interest expense recognized on our interest rate swap contracts:
Three Months Ended March 31,
20212020
Gain (loss) recorded in accumulated other comprehensive loss, net of tax$5 $(16)
Interest expense recorded related to interest rate swap contracts 5 2 

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 the consolidated statements of operations:
Three Months Ended March 31,
20212020
Interest expense
Total interest expense which reflects the effects of cash flow hedges $(121)