NEW YORK, Nov. 6, 2012 /PRNewswire/ -- Scientific
Games Corporation (Nasdaq: SGMS) today announced results for the
third quarter ended September 30,
2012.
Summary
Financial Results ($ in millions, except per share
amounts)
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Three
Months Ended
September 30,
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Nine
Months Ended
September 30,
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2012
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2011
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2012
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2011
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Revenue
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$227.5
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$222.7
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$691.4
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$639.6
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Operating
income
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13.2
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21.4
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44.5
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64.6
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Attributable EBITDA
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82.5
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81.7
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252.7
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247.2
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Net
loss
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(27.1)
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(4.1)
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(37.9)
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(4.0)
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Net loss
per share
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($0.30)
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($0.04)
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($0.41)
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($0.04)
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Total
capital expenditures
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$29.7
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$24.2
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$80.0
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$68.4
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Free cash
flow
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($5.1)
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$30.8
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$27.9
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$84.3
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Attributable EBITDA and free cash flow as used herein are
non-GAAP financial measures defined below under "Non-GAAP Financial
Measures" and reconciled to GAAP financial measures in the
accompanying tables.
Recent Business Highlights
- Scientific Games' U.S. instant ticket and lottery systems
customers' retail sales increased 8.9% and 8.5%, respectively, in
the third quarter of 2012 compared to the prior-year period, based
on third-party data
- Global Draw's U.K. total gross win and gross win per terminal
per day increased 8.1% and 6.5%, respectively, in the third quarter
of 2012 versus the prior-year period, excluding William Hill's gross win in the prior-year
period
- Executed the following agreements:
- Contract with The Gala Coral Group ("Coral") for Global Draw to
continue to be the exclusive provider of server-based gaming
terminals for Coral's estate through 2017
- Contract for Properties Plus® internet-based player
loyalty rewards program for the Kentucky Lottery
- Seven-year contract with the Atlantic Lottery to remain the
exclusive instant ticket supplier through July 2019
- Three-year contract with the Massachusetts Lottery to supply
instant tickets through September
2015
- Six-year contract with the Texas Lottery to supply instant
tickets through August 2018
- Five-year contract with the Connecticut Lottery to supply
instant tickets through August
2017
- Two-year contract with the New Zealand Lottery to supply
instant tickets through July
2014
- Completed $300 million offering
of 6.250% senior subordinated notes due 2020 ("2020 Notes");
redeemed 7.875% senior subordinated notes due 2016 ("2016
Notes")
- Company repurchased 6,196,606 of its common shares at an
aggregate cost of $45.5 million
during the third quarter; through the settlement date of
November 2, 2012, Company repurchased
8,092,198 shares for approximately $60.7
million during 2012
"We were very pleased with the continued strong retail sales in
the U.S. and U.K., which helped to offset weakness in our
Italy and China businesses and the unfavorable impact of
foreign currency fluctuations on our results," Chairman and Chief
Executive Officer A. Lorne Weil
commented. "We are encouraged by signs of stabilization in
Italy, based on a number of recent
weeks of improved performance. While our China business remains soft as we move into
the fourth quarter, we are taking a series of actions designed to
revitalize our business there."
Mr. Weil continued, "We remain focused on our longer term
pipeline of growth opportunities. Our plans are ambitious for the
U.S., where we believe the lottery industry is at the beginning of
a new phase of growth with the ability to offer games to players
via the internet. As the leader in internet-based player loyalty
programs for U.S. lotteries, we believe we are uniquely positioned
to help lotteries transition to offering pay-for-play products to
their customers. We also see additional opportunities both in the
U.S. and internationally to implement our industry-leading instant
game management and optimization programs as well as our integrated
lottery solutions that have proven successful in maximizing lottery
performance in many jurisdictions globally."
Jeffrey S. Lipkin, Senior Vice
President and Chief Financial Officer, added, "We've taken further
steps this quarter to strengthen our balance sheet. The favorable
credit market environment provided an opportunity to refinance our
debt at very attractive rates and extend our weighted average
maturities to over five years, positioning us well to pursue our
growth initiatives. Furthermore, we believe that the recent
activity under our share repurchase program demonstrates our Board
of Directors' and management's continued support of and confidence
in our strategic plan and long-term growth prospects."
Business Update
Our third quarter results reflected varying levels of strength
across our diverse global businesses. U.S. retail sales continued
on a positive trend. Our customers' retail sales of instant tickets
rose 8.9% in the quarter and their sales of draw games grew 8.5%.
Instant ticket sales continue to be propelled by strong performance
in larger states, and draw sales have benefited from higher average
jackpots. We are also pleased that we secured a number of our
instant ticket contracts during the quarter.
We have seen sustained success with our services provided to the
Illinois Lottery through Northstar, where revenue grew
approximately 17% in the third quarter, driven by a nearly 20%
increase in instant ticket retail sales and a 12% increase in draw
sales. We think the results in Illinois are a good indicator of how we can
help lotteries maximize their performance through our
industry-leading instant game and facilities management programs,
as we have done in other states such as Florida, Pennsylvania and Georgia, which also reported strong instant
ticket sales increases this quarter. We believe these
value-added programs, including game design, telemarketing,
predictive ordering, warehousing and distribution and retail
execution, are a key factor behind the instant ticket sales growth
that U.S. lotteries have been realizing for some period of
time.
During the third quarter, we began selling our new
ULTRATM multi-game video gaming terminal. While the
ULTRA has been in the field for just a short time, we are very
excited about the prospects for this new, innovative product that
builds on years of experience developed in our lottery and Global
Draw businesses. This new product provides us with access to the
North American machine business to complement our successful
central monitoring and control systems business.
As importantly, video gaming was launched in Illinois in early October, with statewide
monitoring and control provided by our central system.
Our Gaming business performed well again this quarter. Revenue
grew 14% driven by the acquisition of Barcrest and an increase in
Global Draw's U.K. total gross win and gross win per terminal per
day. Based on the latest quarterly results reported by Ladbrokes
and William Hill, Ladbrokes' gross
win per terminal per week is approximately £50 higher than
William Hill's, a significant
improvement compared to the period before Scientific Games was the
exclusive provider to Ladbrokes, when Ladbrokes' gross win per
terminal per week was approximately £120 lower than William Hill's. Additionally, the Gaming
business has already realized some benefits from the recent
acquisition of ADS and its leading field-based service team, which
has expanded the range of products and services offered to betting
shop customers. The extension of the exclusive Coral contract
secures this significant customer through 2017 and Coral will be
the first customer to introduce Global Draw's new state-of the-art
Infinity2 terminal that features an innovative new design and
expanded functionality to enhance the player's experience.
In Italy, retail sales of
instant tickets declined by approximately 6.3% in the third
quarter, which we believe continued to be due to a decrease in
consumer spending related to difficult economic conditions and tax
increases. We are encouraged by some recent evidence of
stabilization in the instant ticket business in Italy, based on a number of weeks of improved
performance in both September and October. While it is too early to
determine if this is a turnaround, it is encouraging.
Instant ticket retail sales in China remained weak in the third quarter, with
sales softening further in the fourth quarter. However, retail
sales of the entire lottery segment in China grew by 20% year-to-date through
September 30, 2012, indicating
sustained consumer demand for lottery products. Instant ticket
sales have been impacted by a number of factors, including
competition from other lottery games. With our lottery partners, we
have developed a series of remedial actions that we believe will
slow down and ultimately reverse the recent trends; however, we
expect it will take some time for these actions to take effect so
that we may better capitalize on the long-term opportunity in
China.
Looking ahead, other growth initiatives include additional
roll-outs of our Properties Plus player rewards programs. During
the quarter, the Kentucky Lottery became our seventh Properties
Plus customer and we continue to realize increased revenue from
this business. We see additional opportunities in the pipeline and
believe the Properties Plus program will help lead the way for
states to begin providing internet-based offerings. We expect
that our long track record as an internet-based services vendor
will provide a competitive advantage.
Other developments during the quarter include the execution of a
new license agreement with Zynga, which provides us the ability to
feature many of Zynga's key brands on lottery instant tickets and
virtual games. Consistent with the increasing interest in
driving players online, lotteries will now have access to
Zynga-branded 2nd Chance interactive games and
2nd Chance virtual prizes that players can redeem in
conjunction with their favorite Zynga social games. The
"$1 Million Las Vegas Game Show
Experience," our 2012 multi-state game, which launched in the
second quarter, has shown promising initial results, with 11 states
signed up for the game.
The recent acquisitions of Provoloto and Parspro have also
created new opportunities for Scientific Games. We are working to
build on Provoloto's position as a leading provider of instant
ticket services in Mexico with our
content, licensing and marketing capabilities, in order to
strengthen our presence there and create a platform for further
expansion in Latin America.
In Delaware, where we are the
only vendor supplying a sports betting platform for a lottery in
the U.S., betting through our system during the current NFL season
has increased by 37% through late October
2012 compared to the prior-year period, reinforcing the
enthusiasm for this business that we have had for some time.
Indeed, with our many years of gaming expertise, combined with our
recent acquisition of Parspro and its state-of-the art sports
betting solutions, we see the potential for this area to be one of
the next waves of lottery development.
Third Quarter 2012 Financial Results
Revenue
- Revenue increase of 2.1% reflects growth in Gaming and Lottery
Systems segments, partially offset by a decline in Printed Products
and an unfavorable foreign exchange impact of $5.0 million
Operating Income
- Decrease in operating income primarily reflects:
- $11.2 million increase in
depreciation and amortization
- $0.8 million increase in employee
termination and restructuring
- Increases partially offset by $3.3
million decrease in selling, general and administrative
- Increase in depreciation and amortization principally reflects:
- Accelerated depreciation of $8.6
million related to a write-down of gaming terminals and
previously announced closing of Australia printing facility
- $1.6 million of additional
depreciation from acquisition of Barcrest
- Reduction in selling, general and administrative primarily due
to:
- $4.5 million decrease in accrual
related to the Asia-Pacific
business incentive compensation plan
- $1.1 million decrease in
acquisition and advisory fees
- $1.0 million reduction in
contractual marketing commitments
- Decreases partially offset by $2.4
million increase in accounts receivable reserves and
$1.5 million of incremental overhead
from acquisition of Barcrest
- Increase in employee termination and restructuring in the
Printed Products and Gaming groups of $0.3
million and $0.5 million,
respectively
Net Income
- In addition to the impact of the items mentioned above, the
decline in net income reflected:
- $11.3 million increase in loss on
early extinguishment of debt related to the redemption of the 2016
Notes and the write-off of previously deferred financing costs
- $3.2 million of lower earnings
from equity investments, primarily reflecting a decline in instant
ticket retail sales in Italy
- $2.9 million increase in income
tax expense
- Decline partially offset by $2.2
million decrease in other expense principally due to a
decline in foreign exchange transaction expense
EBITDA from Equity Investments
- EBITDA from equity investments decreased by $3.5 million, principally due to lower results
from Italy and China of $3.6
million and $0.9 million,
respectively
Attributable EBITDA
- Attributable EBITDA increased by $0.8
million, despite a reduction in EBITDA of approximately
$6.4 million from Italy and China businesses including unfavorable
currency fluctuations
Third
Quarter 2012 Operating Results by Segment ($ in
millions)
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Revenue
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Operating Income
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Three
Months Ended
September 30,
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Three
Months Ended
September 30,
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2012
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2011
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2012
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2011
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Printed
Products
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$127.4
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$129.6
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$30.3
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$34.7
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Lottery
Systems
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61.9
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59.6
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8.9
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7.3
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Gaming
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38.3
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33.5
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(7.7)
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3.2
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Printed Products
Revenue
- Revenue decrease of 1.8% resulted primarily from decline in
licensed properties business of $6.2
million, largely due to challenging year-over-year
comparisons resulting from timing of launch of the Wheel of
Fortune® multi-state game in 2011 compared to the timing
of the Las Vegas Game Show multi-state game in 2012, which launched
later during the year
- $3.2 million decline in
international revenue from customers that purchase tickets on a
price per thousand unit basis, including lower sales to
Italy
- $1.4 million unfavorable foreign
exchange impact
- Revenue decreases partially offset by:
- $5.2 million increase in revenue
from U.S. and international customers that compensate us based on a
percentage of retail sales, including cooperative services
customers
- $3.4 million increase in revenue
from U.S. customers that purchase tickets on a price per thousand
unit basis
Operating Income
- Operating income decrease reflected:
- $3.5 million impact from lower
revenue and less profitable mix of revenue
- $2.2 million increase in
depreciation and amortization
- $0.3 million of employee
termination and restructuring related to closing of Australia printing facility
- Increase in depreciation and amortization principally
reflected:
- $1.9 million of accelerated
depreciation related to closing Australia printing facility
- Decrease in operating income partially offset by $1.6 million decrease in selling, general and
administrative principally due to a reduction in contractual
marketing commitments and incentive compensation expense in
current-year period
Lottery Systems
Revenue
- Revenue increase of 3.8% primarily reflected higher sales
revenue from increased demand for equipment and systems from both
U.S. and international customers
- Service revenue was essentially flat compared to the prior-year
period as strength in current-year period in U.S. business resulted
in $2.7 million revenue increase,
driven by a large Powerball® jackpot and higher instant
ticket validation revenue, which was in large part offset by
$1.9 million of lower revenue in
China
- $2.1 million unfavorable foreign
exchange impact
Operating Income
- Increase in operating income primarily reflects higher revenue
from system sales
Gaming
Revenue
- Revenue increase of 14.2% principally driven by acquisition of
Barcrest, which contributed $3.7
million and $3.0 million of
service revenue and sales revenue, respectively
- Results also benefitted from $1.7
million increase in service revenue from licensed betting
office customers in the U.K. due in part to higher gross win per
terminal per day, partially offset by impact of loss of William
Hill contract
- Revenue growth was partially offset by:
- $1.7 million negative impact from
exiting Austrian over-the-counter business
- $1.5 million unfavorable foreign
exchange impact
Operating Income
- Decrease in operating income primarily due to:
- $9.0 million increase in
depreciation and amortization
- $4.4 million increase in selling,
general and administrative
- $0.5 million increase in employee
termination and restructuring; current-period amount relates to
previously announced reorganization of Gaming business
- Increase in depreciation and amortization principally reflects:
- $6.7 million of accelerated
depreciation related to a write-down of gaming terminals
- $1.6 million of additional
depreciation from acquisition of Barcrest
- Increase in selling, general and administrative primarily due
to:
- $2.4 million increase in accounts
receivable reserves
- $1.5 million of incremental
overhead from acquisition of Barcrest
- Decrease in operating income partially offset by $3.0 million impact from higher and more
profitable mix of revenue
Liquidity and Capital Resources
- At September 30, 2012, cash and
cash equivalents of $136.0 million
and availability under revolving credit facility of $210.3 million
- Total debt of $1,469.1 million as
of September 30, 2012 increased from
$1,390.7 million at December 31, 2011, primarily reflecting the
issuance of $300 million in 2020
Notes and the redemption of $200
million in 2016 Notes during the third quarter, and the
reduction of our China loans by
approximately $16.3 million in the
nine months ended September 30,
2012
- Free cash flow for third quarter was $(5.1) million, compared to $30.8 million in prior-year quarter, primarily
due to increased capital expenditures of $5.5 million and increased working capital
usage
- Received $0.6 million in cash
dividends from equity investment in RCN during third quarter
- Company repurchased 6,196,606 of its common shares at an
aggregate cost of $45.5 million
during the third quarter. Through the settlement date of
November 2, 2012, Company repurchased
8,092,198 shares for approximately $60.7
million during 2012.
Conference Call Details
Scientific Games will host a
conference call today at 5:00 pm Eastern
Standard Time to review these results and discuss other
topics. To access the call live via a listen-only webcast,
please visit www.scientificgames.com and click on the webcast link
under the Investor Information section. To access the call by
telephone, please dial (866) 713-8566 (U.S. and Canada) or (617) 597-5325 (international) 15
minutes prior to the start of the call. The conference ID is
73844124.
A presentation summarizing the results will also be provided in
the Investor Information section on our website prior to the
conference call. A replay of the webcast and accompanying
presentation will be archived in the Investor Information section
on our website.
About Scientific Games
Scientific Games Corporation
is a global leader in providing customized, end-to-end gaming
solutions to lottery and gaming organizations worldwide. Scientific
Games' integrated array of products and services includes instant
lottery games, lottery gaming systems, terminals and services, and
internet applications, as well as server-based interactive gaming
terminals and associated gaming control systems. For more
information, please visit our website at
www.scientificgames.com.
Company Contact:
Cindi Buckwalter, Investor
Relations
(212) 754-2233
Forward-Looking Statements
In this press release the
Company makes "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,"
"continue," "believe," "expect," "anticipate," "could,"
"potential," "opportunity," or similar terminology. These
statements are based upon management's current expectations,
assumptions and estimates and are not guarantees of future results
or performance. 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:
competition; material adverse changes in economic and industry
conditions; technological change; retention and renewal of existing
contracts and entry into new or revised contracts; availability and
adequacy of cash flows to satisfy obligations and indebtedness or
future needs; protection of intellectual property; security and
integrity of software and systems; laws and government regulation,
including those relating to gaming licenses, permits and
operations; inability to identify, complete and integrate future
acquisitions; inability to benefit from, and risks associated with,
strategic equity investments and relationships; failure of
Northstar to meet the net income targets or otherwise realize the
anticipated benefits under its private management agreement with
the Illinois Lottery; seasonality; inability to identify and
capitalize on trends and changes in the lottery and gaming
industries, including the potential expansion of regulated gaming
via the internet; inability to enhance and develop successful
gaming concepts; dependence on suppliers and manufacturers;
liability for product defects; fluctuations in foreign currency
exchange rates and other factors associated with international
operations; influence of certain stockholders; dependence on key
personnel; failure to perform on contracts; resolution of pending
or future litigation; labor matters; and stock price volatility.
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 the Company's filings with the Securities and
Exchange Commission, including under the heading "Risk Factors" in
our periodic reports. Forward-looking statements speak only as of
the date they are made and, except for the Company's ongoing
obligations under the U.S. federal securities laws, the Company
undertakes no obligation to publicly update any forward-looking
statements whether as a result of new information, future events or
otherwise.
Non-GAAP Financial Measures
Attributable EBITDA, as
used herein, is based on the definition of "consolidated EBITDA" in
our credit agreement (summarized below), except that attributable
EBITDA as used herein includes our share of the EBITDA of all of
our equity investments (whereas "consolidated EBITDA" for purposes
of the credit agreement generally includes our share of the EBITDA
of our Italian joint venture but only the income of our other
equity investments to the extent it has been distributed to
us). Attributable EBITDA is a non-GAAP financial measure that
is presented herein as a supplemental disclosure and is reconciled
to net income (loss) in a schedule below.
Attributable EBITDA includes adjustments only to the extent
contemplated by the definition of "consolidated EBITDA" in our
credit agreement (which adjustments are summarized in the paragraph
below). Note that the adjustment referred to in clause (9) in the
paragraph below was added to the definition of "consolidated
EBITDA" as part of the March 11, 2011
amendment to our credit agreement and revised as part of the
August 25, 2011 amendment to our
credit agreement.
"Consolidated EBITDA" means, for any period, "consolidated net
income" as defined in the credit agreement (i.e., generally our
consolidated net income (or loss) excluding the income (or deficit)
of our equity investments (other than our Italian joint venture)
except to the extent that such income has been distributed to us)
for such period plus, to the extent deducted in calculating such
consolidated net income for such period, the sum of (1) income tax
expense, (2) depreciation and amortization expense, (3) interest
expense (other than any interest expense of our Italian joint
venture in respect of debt for borrowed money of such joint venture
if such debt exceeds $25,000,000 in
the aggregate), (4) amortization or write-off of debt discount and
debt issuance costs and commissions, discounts and other fees and
charges associated with debt (see line item captioned "Debt-Related
Fees and Charges" in the schedules below), (5) amortization of
intangibles (including goodwill) and organization costs (see line
item captioned "Amortization of Intangibles" in the schedules
below), (6) earn-out payments with respect to certain acquisitions
that we have made, such as our acquisition of Global Draw, or any
other "permitted acquisitions" (generally, acquisitions of
companies that are primarily engaged in the same or related line of
business and that become subsidiaries of ours, or acquisitions of
all or substantially all of the assets of another company or
division or business unit of another company), including any loss
or expense with respect to such earn-out payments (see line item
captioned "Earn-Outs for Permitted Acquisitions" in the schedules
below), (7) extraordinary charges or losses determined in
accordance with GAAP, (8) non-cash stock-based compensation
expenses, (9) any cash compensation expense incurred but not paid
in such period so long as no cash payment in respect thereof is
made or required to be made prior to the scheduled maturity of the
borrowings under the credit agreement (provided that up to
$993,000 of non-cash compensation
expense accrued prior to August 25,
2011 may be added back notwithstanding that cash payments
may be required to be made in respect thereof prior to the
scheduled maturity of the borrowings) (see line item captioned
"Deferred Contingent Compensation Expense" in the schedules below),
(10) up to $3,000,000 of expenses,
charges or losses resulting from certain Peru investments (see line item captioned
"Peru Investment Expenses, Charges or Losses" in the schedules
below), (11) the non-cash portion of any non-recurring write-offs
or write-downs as required in accordance with GAAP (see line item
captioned "Non-Recurring Write-Offs under GAAP" in the schedules
below), (12) advisory fees and related expenses paid to advisory
firms in connection with "permitted acquisitions" (see line item
captioned "Acquisition Advisory Fees" in the schedules below), (13)
certain specified "permitted add-backs" (i.e., (A) up to
$15,000,000 (less the amount of
certain permitted pro forma adjustments to "consolidated EBITDA" in
connection with material acquisitions) of charges incurred during
any 12-month period in connection with (i) reductions in workforce,
(ii) contract losses, discontinued operations, shutdown expenses
and cost reduction initiatives, (iii) transaction expenses incurred
in connection with potential acquisitions and divestitures, whether
or not consummated, and (iv) restructuring charges and transaction
expenses incurred in connection with certain transactions with
Playtech Limited or its affiliates, and (B) reasonable and
customary costs incurred in connection with amendments to the
credit agreement) (see line item captioned "Specified Permitted
Add-Backs" in the schedules below) (provided that the foregoing
items (1) through (13) do not include write-offs or write-downs of
accounts receivable or inventory and, except with respect to
"permitted add-backs", any write-off or write-down to the extent it
is in respect of cash payments to be made in a future period), (14)
to the extent treated as an expense in the period paid or incurred,
certain payments, costs and obligations made or incurred by us in
connection with any award of a concession to operate the instant
ticket lottery in Italy, including
any up-front fee required under the applicable tender process (see
line item captioned "Italian Concession Obligations" in the
schedules below), (15) restructuring charges, transaction expenses
and shutdown expenses incurred in connection with the disposition
of all or part of our racing and venue management businesses,
together with any charges incurred in connection with discontinued
operations and cost-reduction initiatives associated with such
disposition, in an aggregate amount (for all periods combined) not
to exceed $7,325,000 (see line item
captioned "Racing Disposition Charges and Expenses" in the
schedules below) and (16) up to 5,250,000
pounds Sterling during any four-quarter period of expenses
or charges incurred in connection with the payment of license
royalties or other fees to Playtech Limited or its affiliates and
for software services provided to Global Draw or Games Media by
Playtech Limited or its affiliates (see line item captioned
"Playtech Royalties and Fees" in the schedules below), minus, to
the extent included in the statement of such consolidated net
income for such period, the sum of (1) interest income, (2)
extraordinary income or gains determined in accordance with GAAP
and (3) income or gains with respect to earn-out payments with
respect to acquisitions referred to above (see line item captioned
"Income on Earn-Outs for Permitted Acquisitions" in the schedules
below), provided that the aggregate amount of "consolidated EBITDA"
that is attributable to the Company's interest in its Italian joint
venture that would not have otherwise been permitted to be included
in "consolidated EBITDA" prior to giving effect to the March 11, 2011 amendment to the credit agreement
will be capped at $25,000,000 in any
period of four consecutive fiscal quarters (or $30,000,000 in the case of any such period ending
on or prior to June 30, 2012).
"Consolidated EBITDA" is also subject to certain adjustments in
connection with material acquisitions and dispositions as provided
in the credit agreement. The foregoing definitions of
"consolidated net income" and "consolidated EBITDA" are qualified
in their entirety by the full text of such definitions in our
credit agreement which was amended and restated on August 25, 2011, a copy of which is attached as
Exhibit 10.1 to our Current Report on Form 8-K filed with the
Securities and Exchange Commission on August
31, 2011.
Free cash flow, as included herein, represents net cash provided
by operating activities less total capital expenditures (which
includes lottery and gaming systems expenditures and other
intangible assets and software expenditures). Free cash flow
is a non-GAAP financial measure that is presented herein as a
supplemental disclosure and is reconciled to net cash provided by
operating activities in a schedule below.
EBITDA from equity investments, as included herein, represents
our share of EBITDA from equity investments, which is defined as
equity in earnings from our equity investments (whether or not any
such earnings have been distributed to us) plus income tax expense,
depreciation and amortization expense and interest (income)
expense, net of other. EBITDA from equity investments is a
non-GAAP financial measure that is presented herein as a
supplemental disclosure and is reconciled to earnings from equity
investments in a schedule below.
The Company's management uses the foregoing non-GAAP financial
measures in conjunction with GAAP financial measures to: monitor
and evaluate the performance of the Company's business operations,
as well as the performance of its equity investments, which have
become a more significant part of the Company's business;
facilitate management's internal comparisons of the Company's
historical operating performance of its business operations;
facilitate management's external comparisons of the results of its
overall business to the historical operating performance of other
companies that may have different capital structures and debt
levels; review and assess the operating performance of the
Company's management team; analyze and evaluate financial and
strategic planning decisions regarding future operating
investments; and plan for and prepare future annual operating
budgets and determine appropriate levels of operating
investments. Accordingly, the Company's management believes
that these non-GAAP financial measures are useful to investors to
provide them with disclosures of the Company's operating results on
the same basis as that used by the Company's management.
In addition, the Company's management believes that attributable
EBITDA is helpful in assessing the overall operating performance of
the Company and its equity investments and highlighting trends in
the Company's and its equity investments' core businesses that may
not otherwise be apparent when relying solely on GAAP financial
measures, because this non-GAAP financial measure eliminates from
the Company's and its equity investments' earnings financial items
that management believes have less bearing on the Company's and its
equity investments' performance, such as income tax expense,
depreciation and amortization expense and interest (income)
expense. Moreover, management believes attributable EBITDA is
useful to investors because a significant and increasing amount of
the Company's business is from its equity investments.
Management further believes that attributable EBITDA and free cash
flow provide useful information regarding the Company's liquidity
and its ability to service debt and fund investments.
Management believes that EBITDA from equity investments is helpful
in monitoring the financial performance of the Company's equity
investments and eliminates from the equity investments' earnings
financial items that management believes have less bearing on the
equity investments' performance.
The Company's management also believes attributable EBITDA is
useful to investors because the definition is derived from the
definition of "consolidated EBITDA" in our credit agreement, which
is used to calculate the Company's compliance with the financial
covenants contained in the credit agreement. Moreover,
attributable EBITDA and free cash flow (calculated by subtracting
total capital expenditures (which includes lottery and gaming
systems expenditures and other intangible assets and software
expenditures) from attributable EBITDA) are metrics used in
determining performance-based bonuses (subject to certain
additional adjustments in the discretion of the Compensation
Committee (e.g., to take into account changes in applicable
accounting rules during the year)).
Accordingly, the Company's management believes that the
presentation of the non-GAAP financial measures, when used in
conjunction with GAAP financial measures, provides both management
and investors with financial information that can be useful in
assessing the Company's financial condition and operating
performance.
The non-GAAP financial measures used herein should not be
considered in isolation of, as a substitute for, or superior to,
the financial information prepared in accordance with GAAP.
The non-GAAP financial measures as defined in this press release
may differ from similarly titled measures presented by other
companies. The non-GAAP financial measures, as well as other
information in this press release, should be read in conjunction
with the Company's financial statements filed with the Securities
and Exchange Commission.
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
(Unaudited,
in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Instant
tickets
|
|
$124,434
|
|
$126,693
|
|
$367,385
|
|
$370,972
|
|
Services
|
|
82,622
|
|
81,429
|
|
261,543
|
|
237,272
|
|
Sales
|
|
20,421
|
|
14,617
|
|
62,431
|
|
31,399
|
|
Total
revenue
|
|
227,477
|
|
222,739
|
|
691,359
|
|
639,643
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Cost of
instant tickets(1)
|
|
73,085
|
|
71,785
|
|
211,468
|
|
211,151
|
|
Cost of
services (1)
|
|
42,947
|
|
42,562
|
|
134,079
|
|
122,944
|
|
Cost of
sales(1)
|
|
12,784
|
|
10,332
|
|
43,949
|
|
21,383
|
|
Selling,
general and administrative
|
|
44,383
|
|
47,660
|
|
137,726
|
|
130,640
|
|
Employee
termination and restructuring
|
|
1,830
|
|
1,030
|
|
10,751
|
|
1,030
|
|
Depreciation and amortization
|
|
39,241
|
|
27,994
|
|
108,845
|
|
87,902
|
|
Operating
income
|
|
13,207
|
|
21,376
|
|
44,541
|
|
64,593
|
|
Other
(income) expense:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
25,990
|
|
26,297
|
|
75,073
|
|
79,161
|
|
Earnings
from equity investments
|
|
(5,702)
|
|
(8,895)
|
|
(21,462)
|
|
(27,469)
|
|
Early
extinguishment of debt
|
|
15,464
|
|
4,185
|
|
15,464
|
|
4,185
|
|
Other
(income) expense, net
|
|
(537)
|
|
1,711
|
|
93
|
|
(159)
|
|
Total
other expense
|
|
35,215
|
|
23,298
|
|
69,168
|
|
55,718
|
|
Income
(loss) before income tax expense
|
|
(22,008)
|
|
(1,922)
|
|
(24,627)
|
|
8,875
|
|
Income tax
expense
|
|
5,125
|
|
2,202
|
|
13,276
|
|
12,912
|
|
Net income
(loss)
|
|
$(27,133)
|
|
$
(4,124)
|
|
$(37,903)
|
|
$
(4,037)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) per share:
|
|
|
|
|
|
|
|
|
|
Basic net
income (loss)
|
|
$
(0.30)
|
|
$
(0.04)
|
|
$
(0.41)
|
|
$
(0.04)
|
|
Diluted
net income (loss)
|
|
$
(0.30)
|
|
$
(0.04)
|
|
$
(0.41)
|
|
$
(0.04)
|
|
Weighted
average number of shares:
|
|
|
|
|
|
|
|
|
|
Basic
shares
|
|
89,950
|
|
92,125
|
|
91,723
|
|
92,027
|
|
Diluted
shares
|
|
89,950
|
|
92,125
|
|
91,723
|
|
92,027
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Exclusive of depreciation and amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEET
DATA
|
|
(Unaudited,
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
Assets:
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
135,954
|
|
$
104,402
|
|
Other
current assets
|
|
326,138
|
|
301,154
|
|
Property
and equipment, net
|
|
396,400
|
|
426,488
|
|
Equity
investments
|
|
321,005
|
|
340,494
|
|
Other
long-term assets
|
|
1,018,538
|
|
989,373
|
|
Total
assets
|
|
$
2,198,035
|
|
$
2,161,911
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity:
|
|
|
|
|
|
Current
portion of long-term debt
|
|
$
14,978
|
|
$
26,191
|
|
Other
current liabilities
|
|
211,926
|
|
210,902
|
|
Long-term
debt, excluding current portion
|
|
1,454,088
|
|
1,364,476
|
|
Other
long-term liabilities
|
|
116,906
|
|
116,628
|
|
Stockholders' equity
|
|
400,137
|
|
443,714
|
|
Total
liabilities and stockholders' equity
|
|
$
2,198,035
|
|
$
2,161,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
CONSOLIDATED SEGMENT OPERATING DATA
|
|
(Unaudited,
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
Printed
|
|
Lottery
|
|
|
|
Corporate
|
|
|
|
|
|
Products
|
|
Systems
|
|
Gaming
|
|
Expense
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instant
tickets
|
|
$
124,434
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
124,434
|
|
Services
|
|
-
|
|
49,391
|
|
33,231
|
|
-
|
|
82,622
|
|
Sales
|
|
2,932
|
|
12,469
|
|
5,020
|
|
-
|
|
20,421
|
|
Total revenue
|
|
127,366
|
|
61,860
|
|
38,251
|
|
-
|
|
227,477
|
|
Cost of
instant tickets(1)
|
|
73,085
|
|
-
|
|
-
|
|
-
|
|
73,085
|
|
Cost of
services (1)
|
|
-
|
|
27,852
|
|
15,095
|
|
-
|
|
42,947
|
|
Cost of
sales(1)
|
|
1,844
|
|
6,997
|
|
3,943
|
|
-
|
|
12,784
|
|
Selling,
general and administrative
|
|
10,567
|
|
5,658
|
|
8,166
|
|
14,085
|
|
38,476
|
|
Stock-based compensation
|
|
863
|
|
583
|
|
463
|
|
3,998
|
|
5,907
|
|
Employee
termination and restructuring
|
|
287
|
|
-
|
|
1,543
|
|
-
|
|
1,830
|
|
Depreciation and amortization
|
|
10,426
|
|
11,877
|
|
16,788
|
|
150
|
|
39,241
|
|
Operating
income (loss)
|
|
$
30,294
|
|
$
8,893
|
|
$
(7,747)
|
|
$
(18,233)
|
|
$
13,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
Printed
|
|
Lottery
|
|
|
|
Corporate
|
|
|
|
|
|
Products
|
|
Systems
|
|
Gaming
|
|
Expense
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instant
tickets
|
|
$
126,693
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
126,693
|
|
Services
|
|
-
|
|
49,944
|
|
31,485
|
|
-
|
|
81,429
|
|
Sales
|
|
2,953
|
|
9,640
|
|
2,024
|
|
-
|
|
14,617
|
|
Total revenue
|
|
129,646
|
|
59,584
|
|
33,509
|
|
-
|
|
222,739
|
|
Cost of
instant tickets (1)
|
|
71,785
|
|
-
|
|
-
|
|
-
|
|
71,785
|
|
Cost of
services(1)
|
|
-
|
|
26,899
|
|
15,663
|
|
-
|
|
42,562
|
|
Cost of
sales(1)
|
|
1,906
|
|
6,813
|
|
1,613
|
|
-
|
|
10,332
|
|
Selling,
general and administrative
|
|
12,173
|
|
6,104
|
|
3,885
|
|
19,907
|
|
42,069
|
|
Stock-based compensation
|
|
856
|
|
522
|
|
353
|
|
3,860
|
|
5,591
|
|
Employee
termination and restructuring
|
|
-
|
|
-
|
|
1,030
|
|
-
|
|
1,030
|
|
Depreciation and amortization
|
|
8,177
|
|
11,939
|
|
7,744
|
|
134
|
|
27,994
|
|
Operating
income (loss)
|
|
$
34,749
|
|
$
7,307
|
|
$
3,221
|
|
$
(23,901)
|
|
$
21,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Exclusive of depreciation and amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
|
CONSOLIDATED SEGMENT OPERATING DATA
|
|
|
(Unaudited,
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
|
Printed
|
|
Lottery
|
|
|
|
Corporate
|
|
|
|
|
|
|
Products
|
|
Systems
|
|
Gaming
|
|
Expense
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instant
tickets
|
|
$
367,385
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
367,385
|
|
|
Services
|
|
-
|
|
153,511
|
|
108,032
|
|
-
|
|
261,543
|
|
|
Sales
|
|
8,177
|
|
37,446
|
|
16,808
|
|
-
|
|
62,431
|
|
|
Total revenue
|
|
375,562
|
|
190,957
|
|
124,840
|
|
-
|
|
691,359
|
|
|
Cost of
instant tickets(1)
|
|
211,468
|
|
-
|
|
-
|
|
-
|
|
211,468
|
|
|
Cost of
services (1)
|
|
-
|
|
84,174
|
|
49,905
|
|
-
|
|
134,079
|
|
|
Cost of
sales(1)
|
|
5,245
|
|
23,681
|
|
15,023
|
|
-
|
|
43,949
|
|
|
Selling,
general and administrative
|
|
31,745
|
|
17,791
|
|
21,309
|
|
49,352
|
|
120,197
|
|
|
Stock-based compensation
|
|
2,544
|
|
1,701
|
|
1,306
|
|
11,978
|
|
17,529
|
|
|
Employee
termination and restructuring
|
|
4,794
|
|
-
|
|
5,957
|
|
-
|
|
10,751
|
|
|
Depreciation and amortization
|
|
31,242
|
|
35,953
|
|
41,201
|
|
449
|
|
108,845
|
|
|
Operating
income (loss)
|
|
$
88,524
|
|
$
27,657
|
|
$
(9,861)
|
|
$
(61,779)
|
|
$
44,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
Unallocated
|
|
|
|
|
|
|
Printed
|
|
Lottery
|
|
|
|
Corporate
|
|
|
|
|
|
|
Products
|
|
Systems
|
|
Gaming
|
|
Expense
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instant
tickets
|
|
$
370,972
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
370,972
|
|
|
Services
|
|
-
|
|
150,356
|
|
86,916
|
|
-
|
|
237,272
|
|
|
Sales
|
|
6,810
|
|
22,447
|
|
2,142
|
|
-
|
|
31,399
|
|
|
Total revenue
|
|
377,782
|
|
172,803
|
|
89,058
|
|
-
|
|
639,643
|
|
|
Cost of
instant tickets(1)
|
|
211,151
|
|
-
|
|
-
|
|
-
|
|
211,151
|
|
|
Cost of
services (1)
|
|
-
|
|
79,087
|
|
43,857
|
|
-
|
|
122,944
|
|
|
Cost of
sales(1)
|
|
4,150
|
|
15,585
|
|
1,648
|
|
-
|
|
21,383
|
|
|
Selling,
general and administrative
|
|
33,950
|
|
15,047
|
|
9,620
|
|
56,730
|
|
115,347
|
|
|
Stock-based compensation
|
|
2,571
|
|
1,375
|
|
1,180
|
|
10,167
|
|
15,293
|
|
|
Employee
termination and restructuring
|
|
-
|
|
-
|
|
1,030
|
|
-
|
|
1,030
|
|
|
Depreciation and amortization
|
|
24,745
|
|
35,185
|
|
27,581
|
|
391
|
|
87,902
|
|
|
Operating
income (loss)
|
|
$
101,215
|
|
$
26,524
|
|
$
4,142
|
|
$
(67,288)
|
|
$
64,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Exclusive of depreciation and amortization.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
RECONCILIATION OF NET INCOME TO ATTRIBUTABLE
EBITDA
|
|
RECONCILIATION OF EARNINGS FROM EQUITY INVESTMENTS
TO EBITDA FROM EQUITY INVESTMENTS
|
|
(Unaudited,
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$(27,133)
|
|
$(4,124)
|
|
$(37,903)
|
|
$
(4,037)
|
|
|
Add:
Income tax expense
|
|
5,125
|
|
2,202
|
|
13,276
|
|
12,912
|
|
|
Add:
Depreciation and amortization
|
|
39,241
|
|
27,994
|
|
108,845
|
|
87,902
|
|
|
Add:
Interest expense
|
|
25,990
|
|
26,297
|
|
75,073
|
|
79,161
|
|
|
Add: Early
extinguishment of debt
|
|
15,464
|
|
4,185
|
|
15,464
|
|
4,185
|
|
|
Add: Other
(income) expense
|
|
(537)
|
|
1,711
|
|
93
|
|
(159)
|
|
|
EBITDA
|
|
$
58,150
|
|
$58,265
|
|
$174,848
|
|
$179,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Agreement adjustments:
|
|
|
|
|
|
|
|
|
|
|
Add:
Debt-Related Fees and Charges (1)
|
|
$
15,509
|
|
$
4,185
|
|
$
15,564
|
|
$
4,306
|
|
|
Add:
Amortization of Intangibles
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Add:
Earn-outs for Permitted Acquisitions
|
|
-
|
|
-
|
|
-
|
|
105
|
|
|
Add:
Extraordinary Charges or Losses under GAAP
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Add:
Non-Cash Stock-Based Compensation Expenses
|
|
5,907
|
|
5,591
|
|
17,529
|
|
15,293
|
|
|
Add:
Deferred Contingent Compensation Expense
|
|
-
|
|
-
|
|
-
|
|
993
|
|
|
Add:
Non-Recurring Write-Offs under GAAP
|
|
-
|
|
324
|
|
-
|
|
324
|
|
|
Add:
Acquisition Advisory Fees
|
|
485
|
|
1,587
|
|
1,156
|
|
1,587
|
|
|
Add:
Specified Permitted Add-Backs (2)
|
|
2,339
|
|
3,305
|
|
12,124
|
|
6,097
|
|
|
Add:
Italian Concession Obligations
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Add:
Racing Disposition Charges and Expenses
|
|
-
|
|
18
|
|
-
|
|
96
|
|
|
Add:
Playtech Royalties and Fees
|
|
1,834
|
|
494
|
|
5,364
|
|
1,653
|
|
|
Less:
Interest Income
|
|
(296)
|
|
(69)
|
|
(356)
|
|
(274)
|
|
|
Less:
Extraordinary Income or Gains under GAAP
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Less:
Income on Earn-Outs for Permitted Acquisitions
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to conform to Credit Agreement
definition:
|
|
|
|
|
|
|
|
|
|
|
Add/Less:
Other (income) expense (3)
|
|
537
|
|
(1,711)
|
|
(93)
|
|
159
|
|
|
Less:
Early extinguishment of debt
|
|
(15,464)
|
|
(4,185)
|
|
(15,464)
|
|
(4,185)
|
|
|
Less:
Earnings from equity investments
|
|
(5,702)
|
|
(8,895)
|
|
(21,462)
|
|
(27,469)
|
|
|
Add:
EBITDA from equity investments
|
|
19,202
|
|
22,751
|
|
63,535
|
|
68,525
|
|
|
Attributable EBITDA
|
|
$
82,501
|
|
$81,660
|
|
$252,745
|
|
$247,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
from equity investments (4):
|
|
|
|
|
|
|
|
|
|
|
Earnings
from equity investments
|
|
$
5,702
|
|
$
8,895
|
|
$
21,462
|
|
$
27,469
|
|
|
Add:
Income tax expense
|
|
2,477
|
|
3,641
|
|
9,250
|
|
9,912
|
|
|
Add:
Depreciation and amortization
|
|
10,192
|
|
9,259
|
|
29,884
|
|
27,494
|
|
|
Add:
Interest expense, net of other
|
|
831
|
|
956
|
|
2,939
|
|
3,650
|
|
|
EBITDA
from equity investments
|
|
$
19,202
|
|
$22,751
|
|
$
63,535
|
|
$
68,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount
reflects write-off of unamortized deferred financing costs in
connection with early extinguishment of debt and other debt-related
fees and charges.
|
(2) Amount
includes management transition expenses, transaction expenses and
restructuring expenses.
|
(3)
Amounts include foreign exchange transactions, interest income,
minority interest and other items.
|
(4) EBITDA
from equity investments includes results from the Company's
participation in Lotterie Nazionali S.r.l., Roberts Communications
Network, LLC, CSG Lottery Technology (Beijing) Co. Ltd., Sportech
Plc, Sciplay (through January 23, 2012), Guard Libang and Northstar
Lottery Group, LLC (beginning March 1, 2011).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
|
|
|
CALCULATION OF FREE CASH FLOW
|
|
|
|
|
(Unaudited,
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
|
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
|
$
24,572
|
|
$
55,044
|
|
$107,928
|
|
$152,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
Capital expenditures
|
|
(4,883)
|
|
(2,250)
|
|
(9,194)
|
|
(5,863)
|
|
|
|
|
Less:
Lottery and gaming systems expenditures
|
|
(11,367)
|
|
(11,781)
|
|
(30,723)
|
|
(33,972)
|
|
|
|
|
Less:
Other intangible assets and software expenditures
|
|
(13,408)
|
|
(10,164)
|
|
(40,109)
|
|
(28,536)
|
|
|
|
|
Total Capital Expenditures
|
|
$(29,658)
|
|
$(24,195)
|
|
$
(80,026)
|
|
$
(68,371)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
|
$
(5,086)
|
|
$
30,849
|
|
$
27,902
|
|
$
84,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
third quarter ended September 30, 2012, the Company received no
return of capital payments from its equity
|
investments. For the third quarter ended September
30, 2011, the Company received a return of capital payment
from
|
its equity
investment in LNS of $0.4 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
second quarter ended June 30, 2012, the Company received return of
capital payments from its equity
|
investments in LNS of $15.1 million and ITL of $0.9
million. For the second quarter ended June 30, 2011,
the
|
Company
received return of capital payments from its equity investment in
LNS of $6.3 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
first quarter ended March 31, 2012, the Company received return of
capital payments from its
|
equity
investment in ITL of $2.2 million. For the first quarter ended March 31,
2011, the Company received
|
no return
of capital payments from its equity investments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These
items were not included in the Company's Free Cash Flow
metric.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCIENTIFIC GAMES CORPORATION AND
SUBSIDIARIES
|
|
KEY
PERFORMANCE INDICATORS
|
|
(Unaudited,
in millions, except terminals and ASP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30,
|
|
Nine
Months Ended September 30,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Italy -
Gratta e Vinci (1):
|
|
|
|
|
|
|
|
|
|
Retail
Sales (Euros) (1)
|
|
2,243.0
|
|
2,393.0
|
|
7,296.0
|
|
7,764.0
|
|
|
|
|
|
|
|
|
|
|
|
China -
China Sports Lottery (1):
|
|
|
|
|
|
|
|
|
|
Retail
Sales (RMB)
|
|
3,897.0
|
|
4,730.0
|
|
13,480.0
|
|
14,697.0
|
|
Tickets
Sold
|
|
510.0
|
|
651.0
|
|
1,801.0
|
|
2,097.0
|
|
ASP
(RMB)
|
|
7.64
|
|
7.27
|
|
7.48
|
|
7.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
September 30,
|
|
|
|
|
|
Terminal
installed base at end of period:
|
|
2012
|
|
2011
|
|
|
|
|
|
Global
Draw
|
|
24,752
|
|
26,632
|
|
|
|
|
|
Games
Media
|
|
2,514
|
|
3,641
|
|
|
|
|
|
Barcrest
|
|
4,352
|
|
5,267
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Information provided by third-party lottery
operators.
|
|
|
|
|
|
|
SOURCE Scientific Games Corporation