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Share Name | Share Symbol | Market | Type |
---|---|---|---|
International Game Technology PLC | NYSE:IGT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.20 | -1.00% | 19.85 | 20.30 | 19.76 | 20.28 | 1,135,021 | 01:00:00 |
☐
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
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December 31, 2019
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☐
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
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Name of each exchange on which registered
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Trading Symbol
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Ordinary Shares, nominal value $0.10
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New York Stock Exchange
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IGT
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204,435,333
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ordinary shares, nominal value $0.10 per share
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Emerging growth company
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U.S. GAAP
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x
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International Financial Reporting Standards as issued
by the International Accounting Standards Board
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Other
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o
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Page
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Abbreviation/Term
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Definition
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ASC
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Accounting Standards Codification
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ASU
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Accounting Standards Update
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B2B
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business-to-business
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B2C
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business-to-consumer
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BEAT
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base-erosion and anti-abuse tax
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Brexit
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the vote by the U.K. to leave the E.U. and the terms of such departure
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CEO
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Chief Executive Officer
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CFO
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Chief Financial Officer
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Company
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the Parent together with its consolidated subsidiaries
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De Agostini
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De Agostini S.p.A.
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EBITDA
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earnings before interest, taxes, depreciation and amortization
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E.U.
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European Union
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GAAP
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United States Generally Accepted Accounting Principles
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GDPR
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E.U. General Data Protection Regulation
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GILTI
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global intangible low-taxed income
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GTECH
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GTECH S.p.A.
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iGaming
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digital (interactive) gaming
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IGT
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International Game Technology, a Nevada corporation
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IGT PLC
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the Parent together with its consolidated subsidiaries
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Lottomatica
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Lottomatica Holding S.r.l.
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Loyalty Plan
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the terms and conditions related to the Special Voting Shares
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Loyalty Register
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the register of ordinary shares for which holders thereof have validly elected to exercise the related Special Voting Shares
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NAGI
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North America Gaming and Interactive
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NALO
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North America Lottery
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NYSE
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New York Stock Exchange
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Parent
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International Game Technology PLC
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R&D
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research and development
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SEC
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United States Securities and Exchange Commission
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Special Voting Shares
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the special voting shares in the Parent, worth U.S.$0.000001 each and carrying 0.9995 votes
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Tax Act
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the Tax Cuts and Jobs Act of 2017
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U.K.
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United Kingdom
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U.S.
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United States of America
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Wire Act
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U.S. Interstate Wire Act of 1961
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•
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the possibility that the Parent will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated;
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•
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the possibility that the Company may not achieve its anticipated financial results in one or more future periods;
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•
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reductions in customer spending;
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•
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a slowdown in customer payments and changes in customer demand for products and services as a result of changing
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•
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unanticipated changes relating to competitive factors in the industries in which the Company operates;
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•
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the Company’s ability to hire and retain key personnel;
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•
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the Company’s ability to attract new customers and retain existing customers in the manner anticipated;
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•
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reliance on and integration of information technology systems;
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•
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changes in legislation, governmental regulations, or the enforcement thereof that could affect the Company;
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•
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enforcement of an interpretation of the Wire Act in such a manner as to prohibit or limit activities in which the Company and its customers are engaged;
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•
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international, national, or local economic, social, or political conditions that could adversely affect the Company or its
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•
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conditions in the credit markets; risks associated with assumptions the Company makes in connection with its critical
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•
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the resolution of pending and potential future legal, regulatory, or tax proceedings and investigations;
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•
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the Company’s international operations, which are subject to the risks of currency fluctuations and foreign
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•
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the effect of coronavirus on our operations or the operations of our customers and suppliers.
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Item 1.
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Identity of Directors, Senior Management and Advisers
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Item 2.
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Offer Statistics and Expected Timetable
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Item 3.
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Key Information
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A.
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Selected Financial Data
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•
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“Presentation of Financial and Certain Other Information;”
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•
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“Item 3.D. Risk Factors;”
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•
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“Item 5. Operating and Financial Review and Prospects;” and
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•
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The Consolidated Financial Statements included in “Item 18. Financial Statements.”
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For the years ended December 31,
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|||||||||||||
($ thousands, except per share and dividend amounts)
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2019
|
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2018
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2017
|
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2016
|
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2015 (2)
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Total revenue (1)
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4,785,806
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4,831,256
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4,938,959
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5,153,896
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4,689,056
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Operating income (loss)
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637,128
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646,991
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(51,092
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)
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660,436
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539,956
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Income (loss) before provision for income taxes
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284,767
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304,048
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(976,925
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)
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323,413
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(17,031
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)
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Net income (loss)
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111,658
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114,647
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(947,511
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)
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264,207
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(55,927
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)
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Attributable to:
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IGT PLC
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(19,025
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)
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(21,350
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)
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(1,068,576
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)
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211,337
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(75,574
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)
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Non-controlling interests
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130,683
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115,671
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55,400
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45,413
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19,647
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Redeemable non-controlling interests
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—
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20,326
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65,665
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7,457
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—
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Net (loss) income attributable to IGT PLC per common share - basic
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(0.09
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)
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(0.10
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)
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(5.26
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)
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1.05
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(0.39
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)
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Net (loss) income attributable to IGT PLC per common share - diluted
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(0.09
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)
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(0.10
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)
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(5.26
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)
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1.05
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(0.39
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)
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Dividends declared per common share ($)
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0.80
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0.80
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0.80
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0.80
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0.40
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December 31,
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|||||||||||||
($ thousands, except share amounts)
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2019
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2018
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2017
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2016
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2015
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|||||
Cash and cash equivalents
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662,934
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250,669
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1,057,418
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294,094
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627,484
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Total assets (1) (2)
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13,644,590
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13,648,502
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15,159,208
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15,060,162
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15,163,295
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Debt (3)
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8,065,517
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8,012,089
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8,376,559
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7,863,162
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8,334,173
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Redeemable non-controlling interests
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—
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—
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356,917
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223,141
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—
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Total equity
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2,484,978
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2,751,929
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2,354,931
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3,425,665
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3,366,142
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Attributable to IGT PLC
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1,658,262
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1,807,899
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2,004,995
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3,068,699
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3,017,648
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Attributable to non-controlling interests
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826,716
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944,030
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349,936
|
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356,966
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348,494
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Common stock
|
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20,443
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20,421
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20,344
|
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20,228
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20,024
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Common shares issued
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204,435,333
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204,210,731
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203,446,572
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202,285,166
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200,244,239
|
|
C.
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Reasons for the Offer and Use of Proceeds
|
D.
|
Risk Factors
|
•
|
accountability and transparency requirements, which will require data controllers to demonstrate and record compliance
|
•
|
enhanced data consent requirements, which includes "explicit" consent in relation to the processing of sensitive data;
|
•
|
obligations to consider data privacy as any new products or services are developed and limit the amount of information
|
•
|
constraints on using data to profile data subjects;
|
•
|
providing data subjects with personal data in a usable format on request and erasing personal data in certain circumstances;
|
•
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reporting of breaches without undue delay (72 hours where feasible).
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•
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pay dividends and repurchase shares;
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•
|
acquire assets of other companies or acquire, merge or consolidate with other companies;
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•
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dispose of assets;
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•
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incur indebtedness; and
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•
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grant security interests in its assets.
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Item 4.
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Information on the Company
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A.
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History and Development of the Company
|
•
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the Company’s lottery operations have been certified for compliance with the World Lottery Association ("WLA") Associate Member CSR Standards and Certification Framework;
|
•
|
the Company has received responsible gaming accreditation for its land-based casino and lottery segments from the Global Gambling Guidance Group;
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•
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the Company’s B2C website interactive.IGTGames.com is certified through the Internet Compliance Assessment Program (iCAP), developed by the National Council on Problem Gambling;
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•
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the Company’s digital and gaming operations both achieved RG accreditation from the Global Gambling Guidance Group;
|
•
|
the Company has received an "AA" environmental, social and governance rating from MSCI, Inc. and a "prime" designation in corporate responsibility from ISS-oekom; and
|
•
|
the Company has been selected for inclusion in the Bloomberg Gender Equality Index.
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•
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Wide Area Progressives - games that are linked across several casinos and/or jurisdictions and share a large common jackpot, including The Wheel of Fortune® franchise; and
|
•
|
Multi-Level Progressives - games that are linked to a number of other games within the casino itself and offer players the opportunity to win different levels of jackpots, such as Fortune Coin™ Boost.
|
•
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"Centrally Determined" games which are games connected to a central server that determines the game outcome;
|
•
|
Class II games which are electronic video bingo machines that can be typically found in North American tribal casinos and certain other jurisdictions like South Africa; and
|
•
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Random-number-generated and live dealer electronic table games, including baccarat and roulette.
|
•
|
operates an expansive land-based B2C sports betting network through its “Better” brand on a fixed odds or pari-mutuel basis;
|
•
|
establishes odds and assumes the risks related to fixed-odds sports contracts;
|
•
|
collects the wagers; and
|
•
|
makes the payouts.
|
•
|
“software as a service” solutions offering modular services hosted and maintained in each U.S. state or tribal jurisdiction where Sports Betting is legal. These solutions provide the technology requirement for companies wishing to operate for themselves land-based (retail), digital and mobile fixed odds and pari-mutuel sports wagering, including trading and risk management tools, point of sale, websites, mobile apps and player account management software; and,
|
•
|
“turnkey” managed service solutions which combine the Company’s end-to-end sports betting management technology with a portfolio of value-added services including offer management, patron support, payments, fraud management, and other advisory functions to support operations by land-based, digital and omni-channel sports betting operators.
|
|
|
For the year ended December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Service revenue
|
|
619,265
|
|
|
624,476
|
|
Product sales
|
|
451,382
|
|
|
378,693
|
|
North America Gaming and Interactive
|
|
1,070,647
|
|
|
1,003,169
|
|
|
|
|
|
|
||
Service revenue
|
|
1,072,383
|
|
|
1,111,069
|
|
Product sales
|
|
92,816
|
|
|
80,833
|
|
North America Lottery
|
|
1,165,199
|
|
|
1,191,902
|
|
|
|
|
|
|
||
Service revenue
|
|
460,307
|
|
|
495,497
|
|
Product sales
|
|
379,881
|
|
|
324,486
|
|
International
|
|
840,188
|
|
|
819,983
|
|
|
|
|
|
|
||
Service revenue
|
|
1,708,069
|
|
|
1,814,549
|
|
Product sales
|
|
981
|
|
|
930
|
|
Italy
|
|
1,709,050
|
|
|
1,815,479
|
|
|
|
|
|
|
||
Other
|
|
722
|
|
|
723
|
|
|
|
|
|
|
||
Total revenue
|
|
4,785,806
|
|
|
4,831,256
|
|
C.
|
Organizational Structure
|
D.
|
Property, Plant and Equipment
|
•
|
an approximately 113,000 square foot production and research and development office building in Moncton, New Brunswick, Canada;
|
•
|
an approximately 52,500 square foot research and development lab and engineering office in Reno, Nevada;
|
•
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an approximately 51,000 square foot production and assembly facility and office in Gross St. Florian, Austria; and
|
•
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an approximately 13,000 square foot enterprise data center in West Greenwich, Rhode Island.
|
Location
|
Square
Feet
|
Use and Productive Capacity
|
Extent of
Utilization
|
Holding
Status
|
|
9295 Prototype Drive,
Reno, NV
|
1,251,179
|
Office; Warehouse, Game Studios; Hardware/Software Engineering; Global Production Center; Electronic Gaming Machine and Instant Ticket Vending Machine Production
|
100
|
%
|
Leased
|
6355 S. Buffalo Drive,
Las Vegas, NV
|
222,268
|
U.S. Principal Operating Facility, Game Studio, Systems Software, Showroom
|
100
|
%
|
Leased
|
55 Technology Way,
West Greenwich, RI
|
170,000
|
WG Technology Center: Office; Research and Testing; Storage and Distribution
|
100
|
%
|
Leased
|
4000 South Frontage Road, Suite 101
Lakeland, FL
|
141,960
|
Printing Plant: Printing facility; Storage and Distribution; Office
|
100
|
%
|
Leased
|
10 Memorial Boulevard,
Providence, RI
|
124,769
|
U.S. Principal Operating Facility
|
100
|
%
|
Leased
|
300 California Street, Floor 8,
San Francisco, CA |
15,457
|
Office; PlayDigital HQ
|
100
|
%
|
Leased
|
8520 Tuscany Way, Bldg. 6, Suite 100,
Austin, TX |
81,933
|
Texas Warehouse and National Response Center: Contact Center; Storage and Distribution; Office
|
95
|
%
|
Leased
|
5300 Riata Park Court, Bldg. E, Suite 100,
Austin, TX |
42,537
|
Austin Tech Campus: Research and Test; Office
|
90
|
%
|
Leased
|
8200 Cameron Road, Suite E120,
Austin, TX |
41,705
|
Data Center of the Americas: Data Center; Network Operations; Office
|
80
|
%
|
Leased
|
47 Technology Way,
West Greenwich, RI |
13,050
|
Enterprise Data Center: Data Center; Network Operations
|
75
|
%
|
Owned
|
75 Baker Street,
Providence, RI |
10,640
|
RI National Response Center: Office; Contact Center
|
100
|
%
|
Leased
|
Location
|
Square
Feet
|
Use and Productive Capacity
|
Extent of
Utilization
|
Holding
Status
|
|
Via delle Monachelle S.N.C.
Pomezia, Rome, Italy
|
170,456
|
Instant Ticket Warehouse; Instant Ticket Production
|
100
|
%
|
Leased
|
Galwin 2
1046 AW Amsterdam, Netherlands
|
125,128
|
Electronic Gaming Machine Production; Gaming Distribution/Repair; Research and Test; Office
|
90
|
%
|
Leased
|
Viale del Campo Boario 56/D 00154
Roma, Italy
|
123,740
|
Principal Operating Facility in Italy: Office Italy Data Center: Data Center; Network Operations
|
100
|
%
|
Leased
|
328 Urquhart Ave,
Moncton, New Brunswick, Canada
|
113,000
|
Canada HQ; Office; Research and Testing; VLT Production
|
100
|
%
|
Owned
|
Viale del Campo Boario 19 00154
Roma, Italy
|
96,840
|
Office; Software Development
|
95
|
%
|
Leased
|
73,750
|
Austria Gaming HQ; Office; Research and Test
|
90
|
%
|
Leased
|
|
29 Suzhoujie Street, Viva Plaza, Haidian District, Room No. 1-20, 11th and 18th Floors, Beijing 100080, China
|
54,058
|
Game Studio; Systems Software; Office
|
85
|
%
|
Leased
|
Al. Jerozolimskie, 92
Brama Building, Warsaw, Poland |
71,904
|
International Tech Hub; Office; Research and Test
|
95
|
%
|
Leased
|
USCE Tower
Bulevar Mihajla, Pupina No. 6 Belgrade, Serbia |
42,764
|
Software Development Office, Lottery and Gaming Products
|
95
|
%
|
Leased
|
11 Talavera Rd.
Building B, Sydney, Australia |
27,432
|
Office; Sales & Marketing; Financial Support
|
100
|
%
|
Leased
|
10 Finsbury Square, 3rd Floor
London EC2A 1AD, United Kingdom
|
17,340
|
International Management HQ, Play Digital
|
100
|
%
|
Leased
|
Marble Arch House,
66 Seymour Street, 2nd Floor, London W1H 5BT, United Kingdom |
11,495
|
Registered Global Headquarters of the Parent
|
75
|
%
|
Leased
|
Item 4A.
|
Unresolved Staff Comments
|
Item 5.
|
Operating and Financial Review and Prospects
|
•
|
Analysis of the conditions in, and the economic outlook for, the reporting units;
|
•
|
Analysis of general market data, including economic, governmental, and environmental factors;
|
•
|
Review of the history, current state, and future operations of the reporting units;
|
•
|
Analysis of financial and operating projections based on historical operating results, industry results, and expectations;
|
•
|
Analysis of financial, transactional, and trading data for companies engaged in similar lines of business to develop appropriate valuation multiples and operating comparisons; and
|
•
|
Calculation of the Company's market capitalization, total invested capital, the implied market participant acquisition premium, and supporting qualitative and quantitative analysis.
|
|
|
For the year ended
|
|
|
||||||||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Change
|
||||||||||||
($ thousands)
|
|
$
|
|
% of
Revenue
|
|
$
|
|
% of
Revenue
|
|
$
|
|
%
|
||||||
Service revenue
|
|
3,860,746
|
|
|
80.7
|
|
|
4,046,314
|
|
|
83.8
|
|
|
(185,568
|
)
|
|
(4.6
|
)
|
Product sales
|
|
925,060
|
|
|
19.3
|
|
|
784,942
|
|
|
16.2
|
|
|
140,118
|
|
|
17.9
|
|
Total revenue
|
|
4,785,806
|
|
|
100.0
|
|
|
4,831,256
|
|
|
100.0
|
|
|
(45,450
|
)
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services
|
|
2,380,355
|
|
|
49.7
|
|
|
2,450,658
|
|
|
50.7
|
|
|
(70,303
|
)
|
|
(2.9
|
)
|
Cost of product sales
|
|
553,293
|
|
|
11.6
|
|
|
491,030
|
|
|
10.2
|
|
|
62,263
|
|
|
12.7
|
|
Selling, general and administrative
|
|
846,047
|
|
|
17.7
|
|
|
844,059
|
|
|
17.5
|
|
|
1,988
|
|
|
0.2
|
|
Research and development
|
|
266,241
|
|
|
5.6
|
|
|
263,279
|
|
|
5.4
|
|
|
2,962
|
|
|
1.1
|
|
Goodwill impairment
|
|
99,000
|
|
|
2.1
|
|
|
118,000
|
|
|
2.4
|
|
|
(19,000
|
)
|
|
(16.1
|
)
|
Other operating expense, net
|
|
3,742
|
|
|
0.1
|
|
|
17,239
|
|
|
0.4
|
|
|
(13,497
|
)
|
|
(78.3
|
)
|
Total operating expenses
|
|
4,148,678
|
|
|
86.7
|
|
|
4,184,265
|
|
|
86.6
|
|
|
(35,587
|
)
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income
|
|
637,128
|
|
|
13.3
|
|
|
646,991
|
|
|
13.4
|
|
|
(9,863
|
)
|
|
(1.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
|
(410,129
|
)
|
|
(8.6
|
)
|
|
(417,387
|
)
|
|
(9.3
|
)
|
|
7,258
|
|
|
(1.7
|
)
|
Foreign exchange gain, net
|
|
39,839
|
|
|
0.8
|
|
|
129,051
|
|
|
(9.0
|
)
|
|
(89,212
|
)
|
|
(69.1
|
)
|
Other income (expense), net
|
|
17,929
|
|
|
0.4
|
|
|
(54,607
|
)
|
|
(1.1
|
)
|
|
72,536
|
|
|
(132.8
|
)
|
Total non-operating expenses
|
|
(352,361
|
)
|
|
(7.4
|
)
|
|
(342,943
|
)
|
|
(7.1
|
)
|
|
(9,418
|
)
|
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
|
284,767
|
|
|
6.0
|
|
|
304,048
|
|
|
6.3
|
|
|
(19,281
|
)
|
|
(6.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision for income taxes
|
|
173,109
|
|
|
3.6
|
|
|
189,401
|
|
|
3.9
|
|
|
(16,292
|
)
|
|
(8.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
111,658
|
|
|
2.3
|
|
|
114,647
|
|
|
2.4
|
|
|
(2,989
|
)
|
|
(2.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Less: Net income attributable to non-controlling interests
|
|
130,683
|
|
|
2.7
|
|
|
115,671
|
|
|
2.4
|
|
|
15,012
|
|
|
13.0
|
|
Less: Net income attributable to redeemable non-controlling interests
|
|
—
|
|
|
—
|
|
|
20,326
|
|
|
0.4
|
|
|
(20,326
|
)
|
|
(100.0
|
)
|
Net loss attributable to IGT PLC
|
|
(19,025
|
)
|
|
(0.4
|
)
|
|
(21,350
|
)
|
|
(0.4
|
)
|
|
2,325
|
|
|
(10.9
|
)
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
North America Gaming and Interactive
|
|
619,265
|
|
|
624,476
|
|
|
(5,211
|
)
|
|
(0.8
|
)
|
North America Lottery
|
|
1,072,383
|
|
|
1,111,069
|
|
|
(38,686
|
)
|
|
(3.5
|
)
|
International
|
|
460,307
|
|
|
495,497
|
|
|
(35,190
|
)
|
|
(7.1
|
)
|
Italy
|
|
1,708,069
|
|
|
1,814,549
|
|
|
(106,480
|
)
|
|
(5.9
|
)
|
Operating Segments
|
|
3,860,024
|
|
|
4,045,591
|
|
|
(185,567
|
)
|
|
(4.6
|
)
|
Corporate Support
|
|
—
|
|
|
—
|
|
|
—
|
|
|
-
|
|
Purchase Accounting
|
|
722
|
|
|
723
|
|
|
(1
|
)
|
|
(0.1
|
)
|
|
|
3,860,746
|
|
|
4,046,314
|
|
|
(185,568
|
)
|
|
(4.6
|
)
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Machine gaming
|
|
406,673
|
|
|
420,447
|
|
|
(13,774
|
)
|
|
(3.3
|
)
|
Other services
|
|
212,592
|
|
|
204,029
|
|
|
8,563
|
|
|
4.2
|
|
|
|
619,265
|
|
|
624,476
|
|
|
(5,211
|
)
|
|
(0.8
|
)
|
•
|
A decrease of $13.8 million in Machine gaming, primarily driven by an 11% year-over-year reduction in the installed base units that includes the impact of a strategic agreement with a distributor in Oklahoma, partially offset by higher average yields; and
|
•
|
An increase of $8.6 million in Other services, principally due to the expansion of the U.S. Sports Betting market and new iGaming contracts resulting in an increase of $16.2 million, partially offset by a $9.3 million decrease in social gaming.
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Operating and Facilities Management Contracts
|
|
807,354
|
|
|
828,641
|
|
|
(21,287
|
)
|
|
(2.6
|
)
|
Lottery Management Agreements
|
|
108,032
|
|
|
129,104
|
|
|
(21,072
|
)
|
|
(16.3
|
)
|
Machine gaming
|
|
97,013
|
|
|
99,679
|
|
|
(2,666
|
)
|
|
(2.7
|
)
|
Other services
|
|
59,984
|
|
|
53,645
|
|
|
6,339
|
|
|
11.8
|
|
|
|
1,072,383
|
|
|
1,111,069
|
|
|
(38,686
|
)
|
|
(3.5
|
)
|
•
|
A decrease of $21.3 million in Operating and Facilities Management Contracts, primarily driven by a 29.3% reduction in same store revenues (revenue from existing customers as opposed to new customers) from multi-state jackpot games and a $45.5 million reduction in revenue due to the conclusion of the Illinois supply contract in the first quarter of 2019, partially offset by an increase in same store revenue growth of 4.6% due to increases in instant ticket and draw games;
|
•
|
A decrease of $21.1 million in lottery management agreements ("LMAs"), principally driven by lower multi-state jackpot activity resulting in a lower amount of expected LMA incentives to be earned; and
|
•
|
An increase of $6.3 million in Other services, principally due to a $5.5 million increase in sports betting revenue.
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Operating and Facilities Management Contracts
|
|
284,417
|
|
|
282,864
|
|
|
1,553
|
|
|
0.5
|
|
Machine gaming
|
|
111,839
|
|
|
139,936
|
|
|
(28,097
|
)
|
|
(20.1
|
)
|
Other services
|
|
64,051
|
|
|
72,697
|
|
|
(8,646
|
)
|
|
(11.9
|
)
|
|
|
460,307
|
|
|
495,497
|
|
|
(35,190
|
)
|
|
(7.1
|
)
|
•
|
An increase of $1.6 million in Operating and Facilities Management Contracts, principally due to higher same store revenue of $8.5 million, partially offset by unfavorable foreign currency translation of $10.4 million;
|
•
|
A decrease of $28.1 million in Machine gaming, principally driven by an 8.7% year-over-year reduction in the commercial gaming installed base units and $8.2 million of unfavorable foreign currency translation, partially offset by a 20.6% year-over-year increase in the video lottery terminal ("VLT") installed base units; and
|
•
|
A decrease of $8.6 million in Other services, principally driven by lower Commercial Services revenue of $7.9 million driven by unfavorable foreign exchange translation of $4.8 million and the sale of the Company’s BillBird subsidiary in the fourth quarter of 2019.
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Operating and Facilities Management Contracts
|
|
760,185
|
|
|
793,303
|
|
|
(33,118
|
)
|
|
(4.2
|
)
|
Machine gaming
|
|
572,242
|
|
|
672,202
|
|
|
(99,960
|
)
|
|
(14.9
|
)
|
Other services
|
|
375,642
|
|
|
349,044
|
|
|
26,598
|
|
|
7.6
|
|
|
|
1,708,069
|
|
|
1,814,549
|
|
|
(106,480
|
)
|
|
(5.9
|
)
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
(€ millions)
|
|
2019
|
|
2018
|
|
€
|
|
%
|
||||
10eLotto wagers
|
|
5,860
|
|
|
5,728
|
|
|
132
|
|
|
2.3
|
|
Core wagers
|
|
1,941
|
|
|
1,877
|
|
|
64
|
|
|
3.4
|
|
Wagers for late numbers
|
|
163
|
|
|
227
|
|
|
(64
|
)
|
|
(28.2
|
)
|
Million day
|
|
187
|
|
|
185
|
|
|
2
|
|
|
1.1
|
|
Total wagers
|
|
8,151
|
|
|
8,017
|
|
|
134
|
|
|
1.7
|
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
(€ millions)
|
|
2019
|
|
2018
|
|
€
|
|
%
|
||||
Total wagers
|
|
9,194
|
|
|
9,207
|
|
|
(13
|
)
|
|
(0.1
|
)
|
•
|
A decrease of $68.0 million in VLTs due primarily to increases in gaming machine taxes related to the Prelievo Unico Erariale (“PREU”) and unfavorable foreign exchange translation of $19.4 million, partially offset by a reduction in the return to players;
|
•
|
A decrease of $32.0 million in amusement with prize machines ("AWPs") due primarily to an 11.6% decrease in the average number of AWPs and unfavorable foreign exchange translation of $10.6 million.
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
(€ millions)
|
|
2019
|
|
2018
|
|
€
|
|
%
|
||||
VLT wagers
|
|
5,669
|
|
|
5,838
|
|
|
(169
|
)
|
|
(2.9
|
)
|
AWP wagers
|
|
3,690
|
|
|
3,717
|
|
|
(27
|
)
|
|
(0.7
|
)
|
Total wagers
|
|
9,359
|
|
|
9,555
|
|
|
(196
|
)
|
|
(2.1
|
)
|
•
|
An increase of $30.1 million in Commercial Services due to an increase in POS fees as a result of a new service offering, partially offset by unfavorable foreign currency translation of $8.6 million; and
|
•
|
A decrease of $1.7 million in Sports Betting primarily due to unfavorable foreign currency translation of $8.4 million, partially offset by a 6.6% increase in wagers (€908 million for the year ended December 31, 2019 compared to €852 million for the year ended December 31, 2018).
|
|
|
For the year ended December 31,
|
|
Change
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||
North America Gaming and Interactive
|
|
451,382
|
|
|
378,693
|
|
|
72,689
|
|
|
19.2
|
North America Lottery
|
|
92,816
|
|
|
80,833
|
|
|
11,983
|
|
|
14.8
|
International
|
|
379,881
|
|
|
324,486
|
|
|
55,395
|
|
|
17.1
|
Italy
|
|
981
|
|
|
930
|
|
|
51
|
|
|
5.5
|
Operating Segments
|
|
925,060
|
|
|
784,942
|
|
|
140,118
|
|
|
17.9
|
Purchase Accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
-
|
|
|
925,060
|
|
|
784,942
|
|
|
140,118
|
|
|
17.9
|
|
|
For the year ended December 31,
|
|
Change
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||
Gaming machines
|
|
321,217
|
|
|
261,696
|
|
|
59,521
|
|
|
22.7
|
Systems and other
|
|
130,165
|
|
|
116,997
|
|
|
13,168
|
|
|
11.3
|
|
|
451,382
|
|
|
378,693
|
|
|
72,689
|
|
|
19.2
|
•
|
An increase of $59.5 million in Gaming machines, primarily related to an increase of $30.1 million due to a higher volume of terminal sales, and an increase of $29.4 million due to higher average selling prices (“ASP”); and
|
•
|
An increase of $13.2 million in Systems and other, principally associated with an increase of $18.4 million in the license of software and other intellectual property rights, offset by fewer system add-on sales.
|
|
|
For the year ended December 31,
|
|
Change
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||
Lottery product
|
|
91,287
|
|
|
80,405
|
|
|
10,882
|
|
|
13.5
|
Systems and other
|
|
1,529
|
|
|
428
|
|
|
1,101
|
|
|
> 200.0
|
|
|
92,816
|
|
|
80,833
|
|
|
11,983
|
|
|
14.8
|
•
|
An increase of $10.9 million in Lottery product, principally due to an increase in the sale of systems and point of sale machines of $27.8 million to existing lottery customers and a $3.7 million increase in instant ticket printing sales to new and existing customers, partially offset by $19.6 million of lower product sales to Massachusetts.
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Lottery product
|
|
18,501
|
|
|
46,323
|
|
|
(27,822
|
)
|
|
(60.1
|
)
|
Gaming machines
|
|
259,424
|
|
|
193,092
|
|
|
66,332
|
|
|
34.4
|
|
Systems and other
|
|
101,956
|
|
|
85,071
|
|
|
16,885
|
|
|
19.8
|
|
|
|
379,881
|
|
|
324,486
|
|
|
55,395
|
|
|
17.1
|
|
•
|
A decrease of $27.8 million in Lottery product, primarily related to a large multi-year software license in the third quarter of 2018 that did not recur in 2019;
|
•
|
An increase of $66.3 million in Gaming machines, principally due to approximately 4,800 additional VLTs sold, primarily in Sweden, and approximately 2,500 additional commercial gaming machines (an 18.3% increase from the year ended December 31, 2018), partially offset by higher incentives and $6.9 million of unfavorable foreign currency translation; and
|
•
|
An increase of $16.9 million in Systems and other primarily due to $14.3 million higher gaming software licenses, partially offset by unfavorable foreign currency translation of $4.6 million.
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Cost of services
|
|
2,380,355
|
|
|
2,450,658
|
|
|
(70,303
|
)
|
|
(2.9
|
)
|
Cost of product sales
|
|
553,293
|
|
|
491,030
|
|
|
62,263
|
|
|
12.7
|
|
Selling, general and administrative
|
|
846,047
|
|
|
844,059
|
|
|
1,988
|
|
|
0.2
|
|
Research and development
|
|
266,241
|
|
|
263,279
|
|
|
2,962
|
|
|
1.1
|
|
Goodwill impairment
|
|
99,000
|
|
|
118,000
|
|
|
(19,000
|
)
|
|
(16.1
|
)
|
Other operating expense, net
|
|
3,742
|
|
|
17,239
|
|
|
(13,497
|
)
|
|
(78.3
|
)
|
Total operating expenses
|
|
4,148,678
|
|
|
4,184,265
|
|
|
(35,587
|
)
|
|
(0.9
|
)
|
•
|
An increase of $24.4 million in the North America Gaming and Interactive segment, principally due to an increase of $14.5 million in amortization and depreciation and a $3.0 million increase in licensing and royalties;
|
•
|
An increase of $6.8 million in the North America Lottery segment, principally due to an increase of $4.8 million in amortization and depreciation;
|
•
|
A decrease of $0.5 million in the International segment, principally due to a $4.6 million legal settlement offset by favorable foreign currency translation of $12.3 million;
|
•
|
A decrease of $89.0 million in the Italy segment, primarily related to favorable foreign currency translation of $53.9 million, a $26.1 million reduction in the amount of marketing and advertising ($25.1 million net of foreign currency translation) driven by regulations in Italy banning certain types of advertising, a $34.5 million decrease ($13.6 million net of foreign currency translation) in fees paid on gaming machines partially offset by an increase in fees received from commercial services, and an $8.0 million reduction in outside services ($3.5 million net of foreign currency translation); and
|
•
|
A decrease of $11.6 million in Purchase Accounting, principally associated with a decrease in depreciation and amortization primarily related to fully depreciated developed technologies acquired in the 2015 acquisition of IGT.
|
•
|
A $12.6 million increase in the North America Gaming and Interactive segment, primarily related to an increase of $5.8 million due to product sale mix, a $5.3 million increase in inventory obsolescence costs and a $4.9 million increase in manufacturing costs, partially offset by a $4.8 million reduction in freight costs; and
|
•
|
A $47.3 million increase in the International segment, principally due to an increase of $41.2 million due to product sale mix and a $10.2 million increase in manufacturing costs, partially offset by favorable foreign currency translation of $7.5 million.
|
•
|
A $9.8 million increase in the North America Gaming and Interactive segment, principally due to a $15.5 million increase in litigation costs;
|
•
|
A $7.2 million decrease in the International segment, principally due to a $13.5 million reduction in bad debt expense and $3.6 million of favorable foreign currency translation, partially offset by a non-recurring benefit in 2018 of $7.5 million related to the earn out of an acquisition;
|
•
|
A $3.6 million increase in the Italy segment, primarily related to a $10.5 million increase in depreciation and amortization, partially offset by a $7.3 million decrease in payroll related costs and $4.1 million of favorable foreign translation; and
|
•
|
A $3.8 million decrease in Corporate Support, primarily due to favorable foreign currency translation of $6.9 million, partially offset by $4.0 million of higher software license costs.
|
•
|
A $4.8 million increase in the North America Gaming and Interactive segment, primarily related to an increase of $7.3 million in outside services, partially offset by $5.6 million of favorable foreign currency translation.
|
|
|
For the year ended December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Restructuring expense
|
|
24,855
|
|
|
14,781
|
|
Transaction expense, net
|
|
5,588
|
|
|
51
|
|
Impairment (non-goodwill)
|
|
994
|
|
|
2,407
|
|
Gain on sale of assets to distributor
|
|
(27,695
|
)
|
|
—
|
|
|
|
3,742
|
|
|
17,239
|
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
North America Gaming and Interactive
|
|
263,968
|
|
|
218,860
|
|
|
45,108
|
|
|
20.6
|
|
North America Lottery
|
|
256,192
|
|
|
296,527
|
|
|
(40,335
|
)
|
|
(13.6
|
)
|
International
|
|
126,825
|
|
|
142,077
|
|
|
(15,252
|
)
|
|
(10.7
|
)
|
Italy
|
|
520,673
|
|
|
541,254
|
|
|
(20,581
|
)
|
|
(3.8
|
)
|
Operating Segments
|
|
1,167,658
|
|
|
1,198,718
|
|
|
(31,060
|
)
|
|
(2.6
|
)
|
Corporate Support
|
|
(237,663
|
)
|
|
(226,231
|
)
|
|
(11,432
|
)
|
|
(5.1
|
)
|
Purchase Accounting
|
|
(292,867
|
)
|
|
(325,496
|
)
|
|
32,629
|
|
|
10.0
|
|
|
|
637,128
|
|
|
646,991
|
|
|
(9,863
|
)
|
|
(1.5
|
)
|
|
|
For the year ended December 31,
|
||||
|
|
2019
|
|
2018
|
||
North America Gaming and Interactive
|
|
24.7
|
%
|
|
21.8
|
%
|
North America Lottery
|
|
22.0
|
%
|
|
24.9
|
%
|
International
|
|
15.1
|
%
|
|
17.3
|
%
|
Italy
|
|
30.5
|
%
|
|
29.8
|
%
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Senior Secured Notes
|
|
(351,077
|
)
|
|
(352,293
|
)
|
|
(1,216
|
)
|
|
(0.3
|
)
|
Term Loan Facilities
|
|
(36,138
|
)
|
|
(39,462
|
)
|
|
(3,324
|
)
|
|
(8.4
|
)
|
Revolving Credit Facilities
|
|
(28,160
|
)
|
|
(27,805
|
)
|
|
355
|
|
|
1.3
|
|
Other
|
|
(8,040
|
)
|
|
(12,058
|
)
|
|
(4,018
|
)
|
|
(33.3
|
)
|
Interest expense
|
|
(423,415
|
)
|
|
(431,618
|
)
|
|
(8,203
|
)
|
|
(1.9
|
)
|
Interest income
|
|
13,286
|
|
|
14,231
|
|
|
945
|
|
|
(6.6
|
)
|
Interest expense, net
|
|
(410,129
|
)
|
|
(417,387
|
)
|
|
(7,258
|
)
|
|
(1.7
|
)
|
•
|
A $4.5 million decrease in Senior Secured Notes and Term Loan Facilities, principally due to the following 2019 refinancing activities:
|
◦
|
The redemption of the €700 million 4.125% Senior Secured Notes due February 2020 in June 2019;
|
◦
|
The June 2019 issuance of the €750 million 3.500% Senior Secured Euro Notes due June 2026;
|
◦
|
The September 2019 issuance of the €500 million 2.375% Senior Secured Euro Notes due April 2028;
|
◦
|
The prepayment of the Term Loan Facility amortization payment due January 2020 in September 2019; and
|
•
|
A $5.6 million decrease related to cross-currency swaps designated as net investment hedges.
|
|
|
For the year ended December 31,
|
|
Change
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||
Gain on sale of investments
|
|
33,882
|
|
|
—
|
|
|
33,882
|
|
|
-
|
Debt related transactions
|
|
(11,935
|
)
|
|
(54,907
|
)
|
|
42,972
|
|
|
78.3
|
Other
|
|
(4,018
|
)
|
|
300
|
|
|
(4,318
|
)
|
|
> 200.0
|
|
|
17,929
|
|
|
(54,607
|
)
|
|
72,536
|
|
|
132.8
|
|
|
For the year ended December 31,
|
||||
($ thousands, except percentages)
|
|
2019
|
|
2018
|
||
Provision for income taxes
|
|
173,109
|
|
|
189,401
|
|
Income before provision for income taxes
|
|
284,767
|
|
|
304,048
|
|
Effective income tax rate
|
|
60.8
|
%
|
|
62.3
|
%
|
B.
|
Liquidity and Capital Resources
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Revolving Credit Facilities due July 2024
|
|
1,752,125
|
|
|
1,601,968
|
|
Cash and cash equivalents
|
|
662,934
|
|
|
250,669
|
|
Total Liquidity
|
|
2,415,059
|
|
|
1,852,637
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||
($ thousands)
|
|
$
|
|
%
|
|
$
|
|
%
|
||
Euros
|
|
399,042
|
|
|
60.2
|
|
140,282
|
|
|
56.0
|
U.S. dollars
|
|
170,771
|
|
|
25.8
|
|
41,395
|
|
|
16.5
|
Other currencies
|
|
93,121
|
|
|
14.0
|
|
68,992
|
|
|
27.5
|
Total Cash
|
|
662,934
|
|
|
100.0
|
|
250,669
|
|
|
100.0
|
|
|
For the year ended December 31,
|
|
Change
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||
Net cash provided by operating activities
|
|
1,093,135
|
|
|
29,626
|
|
|
1,063,509
|
|
|
> 200.0
|
|
Net cash used in investing activities
|
|
(312,190
|
)
|
|
(511,537
|
)
|
|
199,347
|
|
|
39.0
|
|
Net cash used in financing activities
|
|
(376,274
|
)
|
|
(311,545
|
)
|
|
(64,729
|
)
|
|
(20.8
|
)
|
Net cash flows
|
|
404,671
|
|
|
(793,456
|
)
|
|
1,198,127
|
|
|
151.0
|
|
•
|
A decrease in cash outflows of $878.1 million related to the upfront Italian license fee payments;
|
•
|
A decrease in cash outflows of $59.2 million in accounts payable, primarily due to the timing of payments;
|
•
|
A decrease in cash outflows of $71.9 million related to inventory, principally related to the strong product sales in the North America Gaming and Interactive and International segments during 2019 resulting in lower ending inventories;
|
•
|
A decrease in cash outflows of $45.7 million related to interest paid;
|
•
|
A decrease in cash outflows of $32.1 million related to contract assets and liabilities; and
|
•
|
An increase in cash outflows of $37.5 million primarily related to non-income based taxes in the Italy segment.
|
•
|
A reduction of $91.0 million in capital expenditures (refer to "Capital Expenditures" included within this section for details on the 2019 and 2018 activity); and
|
•
|
An increase in the proceeds from sale of assets of $104.8 million primarily related to the sale of the Company's investment in Yeonama, the sale of fixed assets as part of a strategic agreement with a distributor in Oklahoma, and the sale of the Company's BillBird subsidiary in the fourth quarter of 2019.
|
•
|
The Company made principal payments on long-term debt of $1.265 billion, principally composed of:
|
◦
|
The repurchase of $497.5 million of the 4.125% Senior Secured Euro Notes due February 2020;
|
◦
|
Principal payments of $350.2 million on the first installment on the Euro Term Loan Facility due January 25, 2020;
|
◦
|
Payments, net of borrowings, of $417.0 million on the Revolving Credit Facilities due July 2024;
|
•
|
The Company paid dividends of $163.5 million to shareholders;
|
•
|
The Company paid $136.7 million of dividends and returned $98.8 million of capital to non-controlling shareholders;
|
•
|
The Company received proceeds of $1.397 billion from long term debt, primarily related to:
|
◦
|
Proceeds of $550.1 million from the issuance of the €500 million 2.375% Senior Secured Euro Notes due April 2028 in September; and
|
◦
|
Proceeds of $847.0 million from the issuance of the €750 million 3.500% Senior Secured Euro Notes due June 2026 in June; and
|
•
|
The Company paid debt issuance costs of $25.9 million related to the 2019 debt issuances and certain amendments to the Euro Term Loan Facility due January 2023 and the Revolving Credit Facilities due July 2024.
|
•
|
The Company made principal payments on long-term debt of $1.900 billion composed of:
|
◦
|
Principal payments of $625.5 million on the 6.625% Senior Secured Notes due February 2018 upon maturity;
|
◦
|
Principal payments of $600.0 million on the 5.625% Notes in connection with the redemption in September 2018;
|
◦
|
Principal payments of $433.3 million on the 4.125% Notes and the 4.750% Notes in connection with the repurchases in June 2018; and
|
◦
|
Principal payments of $144.3 million on the 7.500% Notes in connection with the redemption in October 2018;
|
•
|
The Company paid dividends of $163.2 million to shareholders;
|
•
|
The Company paid $126.9 million of dividends and returned $85.1 million of capital to non-controlling shareholders;
|
•
|
The Company received capital increases of $321.6 million from non-controlling interests related to the Scratch & Win license in Italy; and
|
•
|
The Company received proceeds of $1.688 billion from long term debt, primarily related to:
|
◦
|
Proceeds of $577.7 million from the issuance of the €500 million 3.500% Senior Secured Euro Notes due July 2024 in June 2018;
|
◦
|
Proceeds of $750.0 million from the issuance of the $750 million 6.250% Senior Secured U.S. Dollar Notes due January 2027 in September 2018; and
|
◦
|
Net proceeds of $360.1 million from the Revolving Credit Facilities due July 2021.
|
•
|
Systems, equipment and other assets related to contracts;
|
•
|
Property, plant and equipment;
|
•
|
Intangible assets; and
|
•
|
Investments in associates.
|
|
|
For the year ended December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
North America Gaming and Interactive
|
|
(126,428
|
)
|
|
(150,985
|
)
|
|
(147,804
|
)
|
North America Lottery
|
|
(149,982
|
)
|
|
(163,912
|
)
|
|
(196,930
|
)
|
International
|
|
(45,908
|
)
|
|
(61,218
|
)
|
|
(89,700
|
)
|
Italy
|
|
(110,440
|
)
|
|
(145,692
|
)
|
|
(257,586
|
)
|
Operating Segments
|
|
(432,758
|
)
|
|
(521,807
|
)
|
|
(692,020
|
)
|
Corporate Support
|
|
(9,326
|
)
|
|
(11,245
|
)
|
|
(5,990
|
)
|
|
|
(442,084
|
)
|
|
(533,052
|
)
|
|
(698,010
|
)
|
•
|
Investments in systems, equipment and other assets related to contracts with customers in North America of $116.9 million; and
|
•
|
Investments in property, plant and equipment of $9.7 million.
|
•
|
Investments in systems, equipment and other assets related to contracts with customers in North America of $139.7 million; and
|
•
|
Investments in property, plant and equipment of $10.8 million.
|
•
|
Investments in systems, equipment and other assets related to contracts with customers in North America of $125.1 million; and
|
•
|
Investments in property, plant and equipment of $22.0 million.
|
•
|
Investments in systems, equipment and other assets related to contracts of $141.3 million, including systems and equipment deployed in California, Florida, Michigan, Rhode Island, and Texas.
|
•
|
Investments in systems, equipment and other assets related to contracts of $158.7 million, including systems and equipment deployed in California, New York, Rhode Island, South Carolina, West Virginia, and Florida.
|
•
|
Investments in systems, equipment and other assets related to contracts of $194.8 million, including systems and equipment deployed in Florida, Virginia, Georgia, and North Carolina.
|
•
|
Investment in systems, equipment and other assets related to contracts of $39.6 million including systems and equipment deployed in Africa, Slovakia, Mexico, and Finland.
|
•
|
Investment in systems, equipment and other assets related to contracts of $59.0 million including systems and equipment deployed in Greece, Africa, Mexico, Poland, and the United Kingdom.
|
•
|
Investment in systems, equipment and other assets related to contracts of $73.2 million including systems and equipment deployed in Greece, Sweden, Colombia, and Poland; and
|
•
|
Acquisitions of $11.6 million.
|
•
|
Investments in systems, equipment and other assets related to contracts of $48.1 million principally for Machine Gaming and Lotto; and
|
•
|
Investments in intangible assets of $63.2 million principally related to software, sports betting rights, and licenses.
|
•
|
Investments in systems, equipment and other assets related to contracts of $89.0 million principally for Lotto and Machine Gaming; and
|
•
|
Investments in intangible assets of $52.2 million principally related to software, sports betting rights, and licenses.
|
•
|
Investment in systems, equipment and other assets related to contracts of $188.3 million principally for Lotto and Machine Gaming; and
|
•
|
Investments in intangible assets of $58.0 million principally related to software and licenses.
|
C.
|
Research and Development, Patents, and Licenses, etc.
|
D.
|
Trend Information
|
E.
|
Off-Balance Sheet Arrangements
|
($ thousands)
|
|
Total bonds
|
|
Performance bonds
|
|
507,123
|
|
WAP bonds
|
|
218,419
|
|
Bid and litigation bonds
|
|
41,788
|
|
All other bonds
|
|
3,602
|
|
|
|
770,932
|
|
|
|
Letters of Credit Outstanding
|
|
|
||||||||
($ thousands)
|
|
Not under the
Revolving Credit
Facilities
|
|
Under the
Revolving Credit
Facilities
|
|
Total
|
|
Weighted-
Average
Annual Cost
|
||||
December 31, 2019
|
|
402,300
|
|
|
—
|
|
|
402,300
|
|
|
1.02
|
%
|
December 31, 2018
|
|
453,719
|
|
|
—
|
|
|
453,719
|
|
|
0.98
|
%
|
|
|
Payments due by period
|
|||||||||||||
($ thousands)
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
more than 5 years
|
|||||
Long-term debt (1)
|
|
8,120,097
|
|
|
463,078
|
|
|
2,218,976
|
|
|
2,183,793
|
|
|
3,254,250
|
|
Operating leases (2)
|
|
497,437
|
|
|
72,690
|
|
|
117,776
|
|
|
96,566
|
|
|
210,405
|
|
Finance leases (3)
|
|
52,988
|
|
|
10,803
|
|
|
18,392
|
|
|
10,737
|
|
|
13,056
|
|
Total
|
|
8,670,522
|
|
|
546,571
|
|
|
2,355,144
|
|
|
2,291,096
|
|
|
3,477,711
|
|
G.
|
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
|
•
|
the possibility that the Parent will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated;
|
•
|
the possibility that the Company may not achieve its anticipated financial results in one or more future periods;
|
•
|
reductions in customer spending;
|
•
|
a slowdown in customer payments and changes in customer demand for products and services as a result of changing
|
•
|
unanticipated changes relating to competitive factors in the industries in which the Company operates;
|
•
|
the Company’s ability to hire and retain key personnel;
|
•
|
the Company’s ability to attract new customers and retain existing customers in the manner anticipated;
|
•
|
reliance on and integration of information technology systems;
|
•
|
changes in legislation, governmental regulations, or the enforcement thereof that could affect the Company;
|
•
|
enforcement of an interpretation of the Wire Act in such a manner as to prohibit or limit activities in which the Company and its customers are engaged;
|
•
|
international, national, or local economic, social, or political conditions that could adversely affect the Company or its customers;
|
•
|
conditions in the credit markets; risks associated with assumptions the Company makes in connection with its critical
|
•
|
the resolution of pending and potential future legal, regulatory, or tax proceedings and investigations;
|
•
|
the Company’s international operations, which are subject to the risks of currency fluctuations and foreign
|
•
|
the effect of coronavirus on our operations or the operations of our customers and suppliers.
|
Item 6.
|
Directors, Senior Management, and Employees
|
A.
|
Directors and Senior Management
|
Name
|
|
Position
|
Lorenzo Pellicioli(1)
|
|
Chairperson of the Board; Non-executive Director
|
James F. McCann
|
|
Vice-Chairperson of the Board; Lead Independent Director; Non-executive Director
|
Paget L. Alves
|
|
Independent Non-executive Director
|
Alberto Dessy
|
|
Independent Non-executive Director
|
Marco Drago(1)
|
|
Non-executive Director
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Heather J. McGregor
|
|
Independent Non-executive Director
|
Samantha F. Ravich
|
|
Independent Non-executive Director
|
Vincent L. Sadusky
|
|
Independent Non-executive Director
|
Marco Sala
|
|
Director and Chief Executive Officer
|
Gianmario Tondato da Ruos
|
|
Independent Non-executive Director
|
Renato Ascoli
|
|
Chief Executive Officer, North America(2)
|
Walter Bugno
|
|
Chief Executive Officer, International
|
Fabio Cairoli
|
|
Chief Executive Officer, Italy
|
Fabio Celadon
|
|
Executive Vice President, Strategy and Corporate Development
|
Mario Di Loreto
|
|
Executive Vice President, People & Transformation
|
Scott Gunn
|
|
Senior Vice President, Corporate Public Affairs
|
Wendy Montgomery
|
|
Senior Vice President, Global Brand, Marketing and Communications
|
Timothy M. Rishton
|
|
Senior Vice President, Chief Accounting Officer and Interim Chief Financial Officer
|
Robert Vincent
|
|
Chairperson of IGT Global Solutions Corporation(3)
|
Lorenzo Pellicioli, 68, has served as Chairperson of the Board since November 2018, before which he served as Vice-Chairperson of the Board since the formation of the Company in April 2015. From August 2006 to the formation of the Company, Mr. Pellicioli served on the GTECH S.p.A. (formerly Lottomatica Group) board of directors as Chairman from August 2006 to April 2015. Mr. Pellicioli has served as Chief Executive Officer of De Agostini S.p.A. since November 2005.
Mr. Pellicioli started his career as a journalist for the newspaper Giornale Di Bergamo and afterwards he became Bergamo TV Programmes Vice President. From 1978 to 1984, he held different posts in the sector of the Italian private television for Manzoni Pubblicità, Publikompass up to his nomination as Rete4 General Manager. In 1984, he joined the Gruppo Mondadori Espresso, the first Italian publishing group. He was initially appointed General Manager for Advertising Sales and Mondadori Periodici (magazines) Vice General Manager and afterwards President and CEO of Manzoni & C. S.p.A, advertising rep of the Group. From 1990 to 1997, he was appointed first President and CEO of Costa Cruise Lines in Miami, being part of Costa Crociere Group operating in the North American market (USA, Canada and Mexico) and then became Worldwide General Manager of Costa Crociere S.p.A., based in Genoa. From 1995 to 1997 he was also appointed President and CEO of the Compagnie Francaise de Croisières (Costa-Paquet), the Paris-based subsidiary of Costa Crociere. In 1997, he took part to the privatization of SEAT Pagine Gialle purchased by a group of financial investors. After the acquisition he was appointed CEO of SEAT. In February 2000, he also managed the “Internet Business Unit” of the Telecom Italia Group following the sale of SEAT. In September 2001, following the acquisition of Telecom Italia by the Pirelli Group, he resigned. Since November 2005 he has been CEO of the De Agostini Group, an Italian financial group with ownership in the publishing sector (De Agostini Editore), games and lotteries (IGT PLC), media and communications (Atresmedia - Spanish television leader, Banijay Group - a leading company in the production and distribution of television and media content) and financial investments (DeA Capital). He is also Chairman of the Board of Directors of DeA Capital, a member of the Board of Directors of Assicurazioni Generali S.p.A., and a member of the Advisory Board of Palamon Capital Partners. He was formerly also a member of the Boards of Directors of Enel, INA-Assitalia, and Toro Assicurazioni and of the Advisory Board of Lehman Brothers Merchant Banking. On April 3, 2017 he was honored with the title of Chevalier dans l’ordre de la Légion d’Honneur. |
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James F. McCann, 68, has served on the Board since the formation of the Company and is currently the Vice Chairperson, Lead Independent Director and is Chair of the Nominating and Corporate Governance Committee. He is the Chairman of 1-800-Flowers.com, Inc., and previously served as Chief Executive Officer, a position he held since 1976. Mr. McCann previously served as director and Chair of the Nominating and Governance Committee of Willis Towers Watson until his retirement in May 2019. He previously served as the Chairman of the Board of Directors of Willis Towers Watson from January 4, 2016 to January 1, 2019. Previously he served as Director (2004-2015) and non-executive Chairman (2013-2015) of Willis Group Holdings PLC (“Willis Group”). Prior to serving as the non-executive Chairman of the board of Willis Group, he served as the company’s presiding independent director. Mr. McCann previously served as a director for Scott’s Miracle-Gro from January 2014 to January 2020.
He previously served as a director and compensation committee member of Lottomatica S.p.A. (from August 2006 to April 2011), and as a director of Gateway, Inc. and The Boyds Collection, Ltd.
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Paget L. Alves, 65, has served on the Board since the formation of the Company and is a member of the Audit Committee and the Compensation Committee. Prior to the formation of the Company, Mr. Alves served on the International Game Technology board of directors since January 2010. He served as Chief Sales Officer of Sprint Corporation, a wireless and wireline communications services provider (“Sprint”), from January 2012 to September 2013 after serving as President of the Business Markets Group since 2009. From 2003 to 2009, Mr. Alves held various positions at Sprint, including President, Sales and Distribution from 2008 to 2009; President, South Region, from 2006 to 2008; Senior Vice President, Enterprise Markets, from 2005 to 2006; and President, Strategic Markets from 2003 to 2005. Between 2000 and 2003, Mr. Alves served as President and Chief Executive Officer of PointOne Telecommunications Inc., and President and Chief Operating Officer of Centennial Communications. He currently serves on the board of directors of YUM! Brands, Synchrony Financial, and Assurant, Inc.
Mr. Alves previously served on the board of directors of GTECH Holdings Corporation (2005-2006), and Herman Miller, Inc. (2008-2010). Mr. Alves earned a Bachelor of Science degree in Industrial and Labor Relations and a Juris Doctor degree from Cornell University.
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Alberto Dessy, 67, has served on the Board since the formation of the Company in April 2015 and is a member of the Compensation Committee and the Nominating and Corporate Governance Committee. He is currently a Professor at Bocconi University. Mr. Dessy is a Chartered Accountant who specializes in corporate finance, particularly the evaluation of companies, trademarks, equity and investments, financial structure, channels and loan instruments, funding for development and in acquisitions and disposals of companies. He has been an expert witness for parties to lawsuits and as an independent expert appointed by the court in various legal disputes.
He has previously served on the boards of many companies, both listed and unlisted, including Chiorino S.p.A., Redaelli Tecna S.p.A., Laika Caravans S.p.A., Premuda S.p.A., I.M.A. S.p.A, Milano Centro S.p.A., and DeA Capital S.p.A. Mr. Dessy graduated from Bocconi University and is a member of the distinguished faculty in corporate finance at the SDA Bocconi School of Management.
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|
Marco Drago, 74, has served on the Board since the formation of the Company in April 2015. From 2002 to the formation of the Company, Mr. Drago served on the board of directors of GTECH S.p.A. (formerly Lottomatica Group). Since 1997, Mr. Drago has been the Chairman of De Agostini, one of Italy’s largest family-run groups. Since July 2018 he has been the President of The Board of Directors of B&D Holding S.p.A. (formerly B&D Holding di Marco Drago e C.S.a.p.A., of which he had been President of the Board of Partners since 2006). He is also Vice President of Planeta De Agostini Group, Director of Atresmedia, DeA Capital S.p.A., De Agostini Editore S.p.A., S. Faustin (Techint Group) and member of the Assonime’s board of governors.
Mr. Drago graduated in Economics and Business at Università Bocconi in Milan in 1969. He started his career that same year in the family company joining Istituto Geografico De Agostini. In 1997 he replaced Achille Boroli as Chairman of De Agostini Holding S.p.A., having previously served as Executive Officer and Managing Director. He has received important awards such as “Bocconiano dell’anno” in 2001, and was made “Cavaliere del Lavoro” in 2003.
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Prof. Heather J. McGregor, 57, was appointed to the Board in March of 2017 and is a member of the Audit Committee. She is the Executive Dean of the Edinburgh Business School, the business school of Heriot Watt University in the U.K. In addition, Professor McGregor is a director of Non-Standard Finance PLC, a company specializing in offering consumer loans in the U.K. Professor McGregor has a Ph.D. from the University of Hong Kong in Structured Finance and is an experienced writer and broadcaster, including writing for the Financial Times for 17 years, and is currently a weekly columnist in the Sunday Times. Professor McGregor is also the founder of the Taylor Bennett Foundation, which works to promote diversity in the communications industry, and a founding member of the steering committee of the 30% Club, which is working to raise the representation of women at senior levels within the U.K.’s publicly listed companies.
In June 2015, Professor McGregor was made a Commander of the British Empire for her services to diversity and employment. In February 2017, she was appointed by the U.K. Government to be a member of the Honours Committee for the Economy.
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Dr. Samantha F. Ravich, 53, was appointed to the Board in July of 2019 and is a member of the Nominating and Corporate Governance Committee. She is a defense and intelligence policy and tech entrepreneur and the Chair of the Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies and its Transformative Cyber Innovation Lab; the Vice Chair of the President’s Intelligence Advisory Board; a Commissioner on the Congressionally-mandated Cyberspace Solarium Commission; and a member of the Secretary of Energy’s Advisory Board. Dr. Ravich is also a managing partner at A2P, LLC, a technology company that focuses on advanced advertising techniques, and a Board Governor at the Gemological Institute of America. Previously, she was the Republican Co-Chair of the Congressionally-mandated National Commission for Review of Research and Development Programs in the United States Intelligence Community and served as Deputy National Security Advisor for Vice President Cheney.
Dr. Ravich received her Ph.D. in Policy Analysis from the RAND Graduate School and her MCP/BSE from the University of Pennsylvania/Wharton School and is a member of the Council on Foreign Relations and the National Association of Corporate Directors.
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|
Vincent L. Sadusky, 54, has served on the Board since the formation of the Company and is Chair of the Audit Committee. Prior to the formation of the Company, Mr. Sadusky served on the International Game Technology board of directors from July 2010 to April 2015. He is Chief Executive Officer and a member of the board of directors of Univision Communications Inc., the largest Hispanic media company in the U.S. He served as President and Chief Executive Officer of Media General, Inc., one of the U.S’s largest owners of television stations, from December 2014 until January 2017, following the company’s merger with LIN Media LLC. Mr. Sadusky served as President and Chief Executive Officer of LIN Media LLC from 2006 to 2014 and was Chief Financial Officer from 2004 to 2006. Prior to joining LIN Media LLC, he held several management positions, including Chief Financial Officer and Treasurer, at Telemundo Communications, Inc. from 1994 to 2004, and from 1987 to 1994, he performed attestation and consulting services with Ernst & Young, LLP. Mr. Sadusky formerly served on the board of directors of Hemisphere Media Group, Inc. Previously, he served on the Open Mobile Video Coalition, to which he served as President from 2011 until its integration into the National Association of Broadcasters in January 2013. He formerly served on the boards of directors of JVB Financial Group, LLC, Maximum Service Television, Inc., Media General, Inc., LIN Media LLC and NBC Affiliates.
Mr. Sadusky earned a Bachelor of Science degree in Accounting from Pennsylvania State University where he was a University Scholar. He earned a Master of Business Administration degree from the New York Institute of Technology.
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|
Marco Sala, 60, has served as a member of the Board of Directors and Chief Executive Officer of the Company since its admission to the listing on the NYSE in 2015. Before then and since 2009, Mr. Sala served as Chief Executive Officer and a member of the Board of Directors of predecessor GTECH (formerly Lottomatica Group). Prior to the Company's admission to the listing on the NYSE in 2015, Mr. Sala served on the Board of Directors of Lottomatica since 2003, when he joined as Co-General Manager, before being appointed Managing Director with responsibility for the Italian Operations and other European activities since 2006.
Until June 2019, Mr. Sala has served as a member of the Board of Directors of OPAP S.A., a Greek gaming and sports betting operator.
He is also a member of the Board of Directors of Save the Children Italia, the Italian extension of the worldwide non-profit organization.
Before joining the Company, he served as Chief Executive Officer of Buffetti, Italy’s leading office equipment and supply retail chain. Prior to Buffetti, Mr. Sala served as Head of the Italian Business Directories Division for SEAT Pagine Gialle. He was later promoted to Head of Business Directories with responsibility for a number of international companies, such as Thomson (Great Britain), Euredit (France), and Kompass (Italy). Earlier in his career, he worked as Head of the Spare Parts Divisions at Magneti Marelli (a Fiat Group company) and soon after he became Head of the Lubricants Divisions. Additionally, he held various marketing positions at Kraft Foods. Mr. Sala graduated from Bocconi University in Milan, majoring in Business and Economics.
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|
Gianmario Tondato da Ruos, 60, has served on the Board since the formation of the Company and is Chair of the Compensation Committee. From 2006 to the formation of the Company, Mr. Tondato da Ruos served as a Lead Independent Director of GTECH S.p.A. (formerly Lottomatica Group). Mr. Tondato da Ruos has served as the Chief Executive Officer of Autogrill S.p.A. since April 2003. He joined Autogrill Group in 2000, and moved to the United States to manage the integration of the North American subsidiary HMSHost and successfully implemented a strategic refocusing on concessions and diversification into new business sectors, distribution channels and geographies.
Mr. Tondato da Ruos is Chairman of HMSHost Corporation, of Autogrill Italia S.p.A. and of Autogrill Europe S.p.A. He has been a director of Autogrill since March 2003, and sits on the advisory board of Rabobank (Hollande). He was formerly Chairman of World Duty Free S.p.A. and a director of World Duty Free Group S.A.U. Mr. Tondato da Ruos graduated with a degree in economics from Ca’Foscari University of Venice.
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Renato Ascoli, 58, is Chief Executive Officer, North America, and is responsible for product development, production, marketing, and delivery of all of the Company’s gaming and lottery offerings for the NAGI and NALO business units. This includes interactive and sports betting. Mr. Ascoli also currently serves on the board of directors of the American Gaming Association.
Prior to the formation of the Company, Mr. Ascoli served as General Manager of GTECH S.p.A. (formerly known as Lottomatica Group) and President of GTECH Products and Services, where he was responsible for overseeing the design, development, and delivery of state-of-the-art platforms, products, and services. He supported all stages of the sales process, and provided marketing and technology leadership to optimize investment decisions. Prior to this role, Mr. Ascoli served as Head of Italian Operations. In this position, he was responsible for the strategic direction and operations of the Company’s Italian businesses. He joined GTECH S.p.A. in 2006 as Director of the Gaming division.
From 1992 to 2005, Mr. Ascoli worked for the national railway system Ferrovie dello Stato/Trenitalia, where he held roles of increasing responsibility including head of Administration, Budget, and Control of the Local Transport Division; head of Strategies, Planning, and Control of the Transport Area; and head of the Passengers Commercial Unit. In 2000, he was appointed Marketing Director of the Passengers Division, and later served as Director of Operations and Passengers Division. He also was head of International Development for Trenitalia. Earlier in his career, he led international marketing efforts for Fincentro Group - Armando Curcio Editore, where he was responsible for commercial development of the publishing assets of Fincentro Group. He was also responsible for defining the strategic and management assets of the many companies comprising Fincentro Group. Mr. Ascoli also served as a consultant to Ambrosetti Group, supporting the internationalization process (Spain, England, and U.S.A.). He graduated from Bocconi University in Milan, majoring in Economics and Social Studies.
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Walter Bugno, 60, is Chief Executive Officer, International, and is responsible for the management and strategic development of the International region. He works directly with the Parent’s management teams to implement the Company’s vision through the ongoing delivery of value to customers, shareholders, and employees. Mr. Bugno leads the Company’s lottery, gaming, and interactive businesses throughout Europe (except Italy), as well as in the Middle East, Latin America and the Caribbean, Africa, and the Asia-Pacific region. He also oversees private manager agreement opportunities across these regions.
He joined GTECH S.p.A. (formerly known as Lottomatica Group) in July 2010 as President and CEO of SPIELO International. He led the business by capitalizing on the many growth opportunities in the gaming industry, and overseeing the Company’s long-term strategic direction. In 2012, Mr. Bugno’s portfolio expanded to include the Company’s interactive business. Under his leadership, SPIELO experienced substantial growth and became a major contributor to the Company’s total earnings. From 2006 to 2009, Mr. Bugno was the CEO of Casinos for Tabcorp Holdings Limited, Australia’s premier gambling and entertainment group. During his tenure with Tabcorp, Mr. Bugno transformed the business from being product-driven to customer-driven by revitalizing the customer casino experience with new loyalty programs, products, and customer service. Some of his successes included a new 12-year exclusive casino license with the New South Wales government, expansion of gaming products, and increases in market share.
Prior to Tabcorp, Mr. Bugno was President of Campbell Soup Company in Asia Pacific from 2002 to 2006. He was responsible for Campbell’s food products, manufacturing, and distribution. He was previously Managing Director of Lion Nathan Australia, a division of Lion, one of Australasia’s leading beverage and food companies. Mr. Bugno grew up in Australia and Italy, and has Bachelor of Commerce and Master of Commerce degrees from the University of New South Wales, Australia.
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Fabio Cairoli, 54, is Chief Executive Officer, Italy, and is responsible for managing all business lines, marketing services, and sales for the Company’s Italian operations. Through his leadership of the largest lottery operator in the world, Mr. Cairoli shares insights and best practices with other organizations in the Company. Mr. Cairoli joined the Company in 2012 as Senior Vice President of Business. He has more than 20 years of experience in consumer goods for multinational organizations, with both local and international expertise. He served as Group General Manager and Board Member of Bialetti Industrie, a world-renowned Italian manufacturer and retailer of stovetop coffee (espresso) makers and small household electrical appliances. During his tenure at Bialetti, he was responsible for turning around the business by refocusing strategy, streamlining costs, and optimizing the product portfolio and retail presence.
Prior to Bialetti, Mr. Cairoli served as General Manager of Star Alimentare, a major Italian food company, and successfully relaunched a historical brand. Additionally, he spent part of his career with Julius Meinl Italia and with Motorola Mobile Devices Italy. He also spent 10 years with Kraft Foods in Italy and the U.K. in various capacities. Mr. Cairoli holds a Bachelor’s degree in Economics from the Catholic University in Milan.
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Fabio Celadon, 48, is Executive Vice President, Strategy and Corporate Development, and is responsible for the Company's Strategy, Mergers and Acquisitions and Competitive Intelligence functions. Under his direction, the organization monitors industry and competitive trends in the Company's core and adjacent markets; develops the Company's portfolio strategy; identifies key portfolio initiatives and supports the business unit CEOs in the identification and execution of their business unit strategic initiatives; executes the Group’s M&A strategy (mergers, acquisitions, JVs and divestitures), managing deal evaluation, structuring and negotiation, and coordinating internal cross-functional teams as well as external advisors.
Mr. Celadon most recently served as Senior Vice President, Gaming Portfolio, with responsibility for monitoring relevant technological advancements and market and competitive trends; consolidating the Company’s global research and development plan and related allocation of budgets and resources; evolving the Company’s content portfolio and consolidating hardware and content roadmaps; and, monitoring product performance and results.
Mr. Celadon previously served as Managing Director, Greater China and Senior Vice President, International. In this role, he was responsible for managing the Company's business and operations across lotteries, video lotteries, sports betting and interactive, and mobile gaming in Greater China. He was also responsible for the strategic development of the Company's business in Greater China, India, and Japan.
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Mario Di Loreto, 56, is Executive Vice President, People & Transformation, and is responsible for providing the overall HR leadership and strategy to further organizational development and ensure that the Company attracts, develops, and retains a talented, diverse, and engaged workforce. Prior to joining the Company, Mr. Di Loreto was Executive Vice President for Human Resources and Organization at Telecom Italia Group and its 50,000 employees, where he led a complete re-engineering of the HR management core processes across the global organization as part of a three-year People Strategy Program.
Prior to joining Telecom Italia, he spent four years as the Human Resources Group Director for Barilla, where he was responsible for 15,000 employees in 17 countries. In this role, Mr. Di Loreto participated in the re-organization of the international subsidiary companies to achieve cultural and business integration and alignment. In addition, Mr. Di Loreto has held HR positions with increasing levels of responsibility and authority with Starwood Hotels, where he was part of a global innovation team that worked under Starwood’s CEO at its U.S. headquarters to help define the evolution of the company’s organizational and business models. He has also held senior HR positions with Air One and subsequently Alitalia, where he participated in the creation and development of two low-cost carriers, Alitalia Team and Alitalia Express.
Mr. Di Loreto graduated with a Ph.D. in the Philosophy of Science from the University of Rome, and for a time, pursued an academic career before beginning his career in business.
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Scott Gunn, 53, is Senior Vice President, Corporate Public Affairs, and is responsible for the Company’s public affairs related to government relations strategy, and is instrumental in directing and facilitating government relationships and public engagement to advance global business interests for the NAGI, NALO, and International business units. Mr. Gunn has been with the Company for more than 25 years, and has held positions in operations, sales, business development, and public affairs. Prior to his current role, he was Senior Vice President of Global Government Relations and NALO Business Development, overseeing worldwide government relations strategy and managing the Company’s global network of government relations resources, as well as pursuing public sector market opportunities for the Company’s various lines of business in North America.
Mr. Gunn began his career at a public affairs firm in Washington, D.C. He was also an Associate at National Media Inc., where he worked on media strategy for state and federal political campaigns. He has held various positions within national and state political party organizations, and has been involved with several U.S. presidential campaigns. Mr. Gunn serves on the Board of Advisors to Reviver Auto, is chairperson of the Company’s Political Action Committee, and is a member of the Company’s Executive Diversity and Inclusion Council. He has a bachelor’s degree in Political Economics from Tulane University.
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Wendy Montgomery, 57, is Senior Vice President, Global Brand, Marketing and Communications, and oversees the strategy for the Company’s global brand, trade shows, product marketing, and external communications, including community relations, responsible gaming, and corporate social responsibility. Prior to joining the Company in 2018 as Senior Vice President of Global Lottery Marketing, Ms. Montgomery spent 13 years at the Ontario Lottery and Gaming Corporation where she led marketing, sales, operations, policy and planning, and the iGaming business. Her previous experience spans multiple industries, including in the entertainment business in her role as Vice President and General Manager, W Network, under Corus Entertainment, Inc., and before that, in the telecommunications field as Vice President of Marketing with Star Choice Communications, Inc. She has also held leadership roles in apparel, consumer products, and food categories, and has previously lived and worked in South Africa, Israel, Eastern Europe, Canada, and the United States.
Ms. Montgomery is a graduate of the Executive Leadership Program at Queen’s University in Kingston, Canada. She holds a diploma in Marketing Management from the Institute of Marketing Management in Johannesburg, South Africa, as well as a Higher National Diploma in Business Studies from Greenwich University in London, U.K. As of September 2019, Ms. Montgomery serves as Governor on the Miriam Hospital Foundation Board in Providence, RI.
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Timothy M. Rishton, 54, is Senior Vice President, Chief Accounting Officer and Interim Chief Financial Officer, and is responsible for overseeing Accounting and Tax, including developing and maintaining systems and internal controls over financial reporting; and the preparation of the Company's consolidated annual reporting in accordance with generally accepted accounting principles. On November 29, 2019, the Company's board of directors unanimously approved the appointment of Mr. Rishton as Interim Chief Financial Officer upon the resignation of Alberto Fornaro at the end of January 2020, during the search for a permanent replacement. As Interim Chief Financial Officer, Mr. Rishton oversees Finance, Accounting, Tax, Treasury, Legal, Investor Relations, and Compliance.
Prior to the formation of the Company, Mr. Rishton served as the Chief Accounting Officer for GTECH S.p.A. Mr. Rishton has been with the Company (and predecessor GTECH) since 1995, and over his 24 years with the Company, he has held a series of roles with increasing responsibility, including Vice President - Finance, Assistant Corporate Controller and Director of Accounting.
Before joining the Company, Mr. Rishton held various roles at Acushnet Company and Ernst & Young, where he provided assurance services to publicly listed and private company clients in a variety of industries. Mr. Rishton is a member of The American Institute of Certified Public Accountants and the Rhode Island Society of CPA’s.
Mr. Rishton received his bachelor’s degree in Accounting from the University of Rhode Island.
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Robert Vincent, 66, is Chairperson of IGT Global Solutions Corporation, the primary operating subsidiary for the U.S. lottery business, and represents the Company when interacting with global customers, current and potential partners, and government officials. He also serves as a senior counselor to Chief Executive Officer Marco Sala and the rest of the Company's senior leadership team.
Previously, Mr. Vincent served as the Company's Executive Vice President for Administrative Services and External Relations. He oversaw global external and internal corporate communications, media relations, branding, and social responsibility programs. He also led a centralized Administrative Services organization that included information security, global procurement, real estate/facilities, food services, environmental health and safety, and facility security and monitoring. In addition, he was involved in selected business development projects, and supported activities in compliance, investor relations, marketing communications, and government relations. Prior to that, he served as the Company's Senior Vice President of Human Resources and Public Affairs.
Before April 2015, Mr. Vincent had been affiliated with GTECH S.p.A. for more than 20 years, having served as an external consultant; as Vice President of Business Development for Dreamport, GTECH’s former gaming and entertainment subsidiary; and as Senior Vice President of Human Resources and Public Affairs for GTECH S.p.A.
Before joining the Company, he was a senior partner at RDW Group, a regional advertising and public relations company in Rhode Island. He also held senior policy and administrative positions with Rhode Island-based governments, including the Governor’s Office, Secretary of State’s Office, and the Providence Mayor’s Office. In addition, he has staffed community and government affairs efforts at Brown University in Providence.
Active in the community, Mr. Vincent serves on the Boards of the University of Rhode Island Foundation, Rhode Island Hospital Foundation, Family Service of Rhode Island, and the URI Harrington School of Communication.
Mr. Vincent received his bachelor’s degree in Political Science from the University of Rhode Island.
|
B.
|
Compensation
|
•
|
X is the number of days in the period beginning with (and including) the date of the AGM immediately preceding the appointment date (the Previous AGM) and ending on (and including) the date of the AGM immediately after the appointment date (the Next AGM); and
|
•
|
Y is the number of days in the period beginning with (and including) the date of the Previous AGM and ending on (and including) the appointment date.
|
Position
|
|
Fees ($)(1)
|
|
RSUs ($)(2)
|
||
Non-executive Director
|
|
100,000
|
|
|
200,000
|
|
Chairperson additional compensation
|
|
50,000
|
|
|
50,000
|
|
Lead Independent Director additional compensation
|
|
20,000
|
|
|
20,000
|
|
Committee Chairpersons additional compensation:
|
|
|
|
|
||
Audit Committee
|
|
40,000
|
|
|
—
|
|
Compensation Committee
|
|
30,000
|
|
|
—
|
|
Nominating and Corporate Governance Committee
|
|
20,000
|
|
|
—
|
|
Name & Position(s)(1)
|
|
Fees ($)
|
|
Taxable Benefits ($)(2)
|
|
RSUs ($)(3)
|
|
Total
|
||||
Lorenzo Pellicioli(4)
Non-executive Director
Chairperson of the Board
|
|
150,000
|
|
|
—
|
|
|
116,160
|
|
|
266,160
|
|
James F. McCann
Non-executive Director
Vice-Chairperson of the Board
Lead Independent Director
Chairperson of the Nominating and Corporate Governance Committee
|
|
140,000
|
|
|
54,053
|
|
|
102,066
|
|
|
296,119
|
|
Paget L. Alves
Non-executive Director
|
|
100,000
|
|
|
26,993
|
|
|
92,689
|
|
|
219,682
|
|
Alberto Dessy(5)
Non-executive Director
|
|
106,722
|
|
|
—
|
|
|
92,689
|
|
|
199,411
|
|
Marco Drago
Non-executive Director
|
|
100,000
|
|
|
—
|
|
|
92,689
|
|
|
192,689
|
|
Patti S. Hart(6)
Non-executive Director
|
|
75,000
|
|
|
5,969
|
|
|
92,689
|
|
|
173,658
|
|
Heather J. McGregor
Non-executive Director
|
|
100,000
|
|
|
—
|
|
|
92,689
|
|
|
192,689
|
|
Dr. Samantha Ravich(7)
Non-executive Director
|
|
42,436
|
|
|
—
|
|
|
—
|
|
|
42,436
|
|
Vincent L. Sadusky
Non-executive Director
Chairperson of the Audit Committee
|
|
140,000
|
|
|
13,720
|
|
|
92,689
|
|
|
246,409
|
|
Gianmario Tondato da Ruos
Non-executive Director
Chairperson of the Compensation Committee
|
|
130,000
|
|
|
—
|
|
|
92,689
|
|
|
222,689
|
|
Name
|
|
Salary
($)(1)
|
|
2019 Bonus
($)(2)
|
|
Equity
Awards
($)(3)
|
|
Other
($)(4)
|
|
Total
($)
|
Marco Sala,
Chief Executive Officer
|
|
1,277,768
|
|
3,797,237
|
|
1,004,475
|
|
765,795
|
|
6,845,275
|
Other Executive Officers &
Senior Consultant
|
|
4,223,723
|
|
5,644,716
|
|
1,659,656
|
|
5,683,148
|
|
17,211,243
|
Level
|
|
Financial Performance
|
|
Individual MBO
|
|
Financial Metric Mix
|
||||
Corporate
|
|
80%
|
|
20%
|
|
25% Adjusted EBITDA
|
|
25% Adjusted Consolidated Operating Income
|
|
30% Net Debt
|
Business Unit
|
|
80%
|
|
20%
|
|
25% Adjusted EBITDA
|
|
35% Adjusted Business Unit Operating Income
|
|
20% Net Debt
|
Name
|
|
No. of
Shares
|
|
Grant Date Fair Value on Date of Grant
|
|
Vesting
Period
|
|
Grant
Date
|
|
Per Share Market Price on Date of Grant
|
|||||
Marco Sala, Chief Executive Officer
|
|
212,927
|
|
|
$
|
11.11
|
|
|
2019-2023
|
|
July 29, 2019
|
|
$
|
13.86
|
|
Other Executive Officers
|
|
369,385
|
|
|
$
|
11.11
|
|
|
2019-2023
|
|
July 29, 2019
|
|
$
|
13.86
|
|
•
|
18 months of base salary;
|
•
|
18 months of STI (based upon a three-year average) and perquisites;
|
•
|
18 months tax preparation;
|
•
|
any accrued but unpaid STI earned for the prior fiscal year;
|
•
|
a prorated STI for the current fiscal year based on actual performance;
|
•
|
18 months of health and welfare benefits continuation; and
|
•
|
18 months following termination of employment to exercise vested stock options, unless the options otherwise expire under the original terms and conditions of the award.
|
•
|
18 months of base salary;
|
•
|
18 months of STI compensation (based upon a three-year average) and perquisites;
|
•
|
18 months of tax preparation;
|
•
|
any accrued but unpaid STI earned for the prior fiscal year;
|
•
|
a prorated STI for the current fiscal year based on actual performance;
|
•
|
24 months of health and welfare benefits continuation; and
|
•
|
18 months following termination of employment to exercise vested stock options, unless the options otherwise expire under the original terms and conditions of the award.
|
•
|
severance pay determined under the collective agreement;
|
•
|
any accrued but unpaid STI earned for the prior fiscal year; and
|
•
|
a notice indemnity equal to a minimum of six and a maximum of 12 months of total base salary and STI compensation.
|
|
Period
|
Estimated Value at December 31, 2019 ($) (1)
|
|
Severance Provisions
|
|
|
|
Base Pay
|
12-months
|
1,000,000
|
|
STI
|
Pro-rated at termination date (2)
|
|
|
Non-Compete Provisions
|
|
|
|
Additional Base Pay
|
Actual base for last 2 years
|
2,000,000
|
|
Projected STI
|
Actual payout for last 2 years (2017 & 2018)
|
4,157,250
|
|
|
Total Value
|
7,157,250
|
|
C.
|
Board Practices
|
•
|
the integrity of the Parent’s financial statements;
|
•
|
the Parent’s compliance with legal and regulatory requirements;
|
•
|
the independent registered public accounting firm’s qualifications and independence; and
|
•
|
the performance of the Parent’s internal audit function and independent registered public accounting firm.
|
•
|
ensuring that provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-
|
•
|
producing a report of the Parent’s remuneration policy and practices to be included in the Parent’s U.K. annual report and ensure that it is approved by the Board and put to shareholders for approval at the annual general meeting in accordance with the Companies Act 2006;
|
•
|
reviewing management recommendations and advising management on broad compensation policies such as salary
|
•
|
reviewing and approving goals and objectives relevant to the CEO’s compensation, evaluating the CEO’s performance
|
•
|
monitoring issues associated with CEO succession (in non-emergencies) and management development
|
•
|
making recommendations to the Board with respect to the Parent’s non-CEO executive officer compensation;
|
•
|
reviewing and recommending director compensation;
|
•
|
creating, modifying, amending, terminating, and monitoring compliance with stock ownership guidelines for executives and directors; and
|
•
|
designing, reviewing and amending the Company's policies relating to anti-harassment and coercion, and providing oversight of the enforcement of such policies by the Company's People & Transformation department.
|
•
|
recommending to the Board, consistent with criteria approved by the Board, the names of qualified persons to be
|
•
|
reviewing directorships in other public companies held by or offered to directors and senior officers of the Parent;
|
•
|
making recommendations to the Board for any changes, amendments, and modifications to the Parent's code of conduct and promptly disclosing any waivers for directors or executive officers, as required by applicable law;
|
•
|
monitoring and reassessing from time to time the Parent's Corporate Governance Guidelines and recommending any
|
•
|
determining, at least annually, the independence of each director under the independence requirements of the NYSE
|
•
|
overseeing, at least annually, the evaluation of the performance of the Board and each Board committee, as well as individual directors where appropriate;
|
•
|
assisting the Parent in making the periodic disclosures related to the Nominating and Corporate Governance
|
•
|
making recommendations to the Board concerning CEO emergency succession plans;
|
•
|
considering Parent’s legal obligations in the context of nominations and corporate governance, including any changes in applicable law and to recommendations and associated guidance from advisors, professional bodies, and proxy advisory firms; and
|
•
|
overseeing management's corporate social responsibility program and giving due consideration to environmental and social matters that could impact the Company, the environment or the communities in which the Company operates.
|
D.
|
Employees
|
|
|
At December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
North America Gaming and Interactive (1) (2) (3)
|
|
5,287
|
|
|
5,438
|
|
|
4,777
|
|
North America Lottery (2)
|
|
1,642
|
|
|
1,635
|
|
|
2,608
|
|
International (3)
|
|
1,406
|
|
|
1,505
|
|
|
1,542
|
|
Italy (3)
|
|
2,077
|
|
|
2,034
|
|
|
1,950
|
|
Corporate Support (1)
|
|
1,510
|
|
|
1,488
|
|
|
1,401
|
|
|
|
11,922
|
|
|
12,100
|
|
|
12,278
|
|
E.
|
Share Ownership
|
Policy Effective Date:
|
|
July 28, 2015
|
Stock Ownership Guidelines apply to:
|
|
Share plans starting in 2015
Any award vesting after the Policy Effective Date
Unvested Options as of the Policy Effective Date
|
Covered Executives:
|
|
CEO
Business Unit CEOs and Executive Vice Presidents
Senior Vice Presidents
|
Ownership Requirement Multiple of Base Salary:
|
|
CEO - 5X
Business Unit CEOs and Executive Vice Presidents - 3X
Senior Vice Presidents - 1X
|
Shares Included in Ownership:
|
|
All shares beneficially owned regardless of whether they are from a plan of the Parent or purchased on the market
Vested shares held in a trust to benefit the executive or family members
Shares under the legacy GTECH plans where vesting has been determined (earned) but shares have not been released
Note that Unearned Performance Shares do not count towards the Stock Ownership Guidelines until earned. (i.e., Performance Factor has not been determined/applied)
|
Legacy GTECH Holding Requirements:
|
|
Holding requirements stated in legacy GTECH Plans are still in effect, in addition to the new Stock Ownership Guidelines
|
Additional Holding Requirement - Not in Compliance with Stock Ownership Requirements:
|
|
50% of after tax options or shares that vest or are exercised after the effective date of the Stock Ownership Guidelines
|
Additional Holding Requirement - In Compliance with Stock Ownership Requirements:
|
|
20% of after tax options or shares that are exercised or vest for a period of 3 years following the exercise or vest date
|
•
|
each member of the Board;
|
•
|
each executive officer and senior consultant of the Parent; and
|
•
|
all members of the Board, executive officers, and senior consultant, taken together.
|
Name of Beneficial Owner
|
|
Number of
Ordinary
Shares(1)
|
|
Number of Ordinary Shares issuable upon vest within 60 days(2)
|
|
Percentage(3)
|
||
Directors:
|
|
|
|
|
|
|
|
|
Lorenzo Pellicioli
|
|
102,435
|
|
|
—
|
|
|
0.05
|
James F. McCann
|
|
99,770
|
|
|
—
|
|
|
0.05
|
Paget L. Alves
|
|
20,510
|
|
|
—
|
|
|
0.01
|
Alberto Dessy
|
|
29,176
|
|
|
—
|
|
|
0.01
|
Marco Drago
|
|
32,649
|
|
|
—
|
|
|
0.02
|
Heather J. McGregor
|
|
9,570
|
|
|
—
|
|
|
Less than 0.005
|
Dr. Samantha F. Ravich
|
|
—
|
|
|
—
|
|
|
—
|
Vincent L. Sadusky
|
|
40,188
|
|
|
—
|
|
|
0.02
|
Marco Sala
|
|
1,687,413
|
|
|
80,083
|
|
|
0.86
|
Gianmario Tondato da Ruos
|
|
27,058
|
|
|
—
|
|
|
0.01
|
Non-Director Executive Officers:
|
|
|
|
|
|
|
|
|
Renato Ascoli
|
|
219,198
|
|
|
35,040
|
|
|
0.12
|
Walter Bugno
|
|
316,081
|
|
|
25,500
|
|
|
0.17
|
Fabio Cairoli
|
|
55,355
|
|
|
21,609
|
|
|
0.04
|
Fabio Celadon
|
|
32,044
|
|
|
4,425
|
|
|
0.02
|
Mario Di Loreto
|
|
3,052
|
|
|
9,444
|
|
|
0.01
|
Scott Gunn
|
|
39,637
|
|
|
5,781
|
|
|
0.02
|
Wendy Montgomery
|
|
—
|
|
|
—
|
|
|
—
|
Timothy M. Rishton
|
|
14,268
|
|
|
3,041
|
|
|
0.01
|
|
|
2,728,404
|
|
|
184,923
|
|
|
1.43
|
Name
|
|
Grant Date
|
|
Amount of
Shares
Underlying
Grant
|
|
Amount
Exercisable (Vested)
|
|
Amount
Unexercisable (Unvested)
|
|
Exercise
Price
|
|
Expiration Date
|
|||||
Marco Sala
|
|
July 31, 2014
|
|
420,673
|
|
|
328,124
|
|
|
—
|
|
|
$
|
20.29
|
|
|
May 26, 2020
|
|
|
November 30, 2015
|
|
250,000
|
|
|
250,000
|
|
|
—
|
|
|
$
|
15.53
|
|
|
December 31, 2022
|
|
|
May 15, 2018
|
|
172,500
|
|
|
—
|
|
172,500
|
|
|
$
|
30.12
|
|
|
May 15, 2024
|
|
Walter Bugno
|
|
July 31, 2014
|
|
117,521
|
|
|
91,666
|
|
|
—
|
|
|
$
|
20.29
|
|
|
May 26, 2020
|
Fabio Celadon
|
|
July 31, 2014
|
|
17,094
|
|
|
13,333
|
|
|
—
|
|
|
$
|
20.29
|
|
|
May 26, 2020
|
Scott Gunn
|
|
July 31, 2014
|
|
27,029
|
|
|
21,082
|
|
|
—
|
|
|
$
|
20.29
|
|
|
May 26, 2020
|
Timothy M. Rishton
|
|
July 31, 2014
|
|
3,739
|
|
|
2,916
|
|
|
—
|
|
|
$
|
20.29
|
|
|
May 26, 2020
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
A.
|
Major Shareholders
|
Name of Beneficial Owner
|
Number of
Ordinary
Shares Owned
|
Percent of
Ordinary
Shares Owned
|
Number of Ordinary Shares on the Loyalty Register
|
Percent of Total
Voting Power
|
||||
De Agostini S.p.A.
|
103,422,324
|
|
50.59
|
%
|
103,422,324
|
|
67.18
|
%
|
•
|
beneficial interests in the Parent's ordinary shares that are traded on the NYSE are held through the book-entry system provided by The Depository Trust Company (“DTC”) and are registered in the register of shareholders in the name of Cede & Co., as DTC’s nominee; and
|
•
|
in certificated form
|
B.
|
Related Party Transactions
|
C.
|
Interests of Experts and Counsel
|
A.
|
Consolidated Statements and Other Financial Information
|
B.
|
Significant Changes
|
A.
|
Offer and Listing Details
|
B.
|
Plan of Distribution
|
C.
|
Markets
|
D.
|
Selling Shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the Issue
|
Item 10.
|
Additional Information
|
A.
|
Share Capital
|
•
|
the giving of a guarantee, security, or indemnity in respect of money lent or obligations incurred by him or any other person at the request of or for the benefit of the Parent or any of its subsidiary undertakings;
|
•
|
the giving of a guarantee, security, or indemnity in respect of a debt or obligation of the Parent or any of its subsidiary undertakings for which the director has assumed responsibility in whole or in part, either alone or jointly with others, under a guarantee or indemnity or by the giving of security;
|
•
|
a transaction or arrangement concerning an offer of shares, debentures, or other securities of the Parent or any of its subsidiary undertakings for subscription or purchase, in which offer he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate;
|
•
|
a transaction or arrangement to which the Parent is or is to be a party concerning another company (including a subsidiary undertaking of the Parent) in which he or any person connected with him is interested (directly or indirectly) whether as an officer, shareholder, creditor, or otherwise (a “relevant company”), if he and any persons connected with him do not to his knowledge hold an interest in shares (as that term is used in sections 820 to 825 of the CA 2006) representing 1% or more of either any class of the equity share capital (excluding any share of that class held as treasury shares) in the relevant company or of the voting rights available to members of the relevant company;
|
•
|
a transaction or arrangement for the benefit of the employees of the Parent or any of its subsidiary undertakings (including any pension fund or retirement, death or disability scheme) which does not award him a privilege or benefit not generally awarded to the employees to whom it relates; or
|
•
|
a transaction or arrangement concerning the purchase or maintenance of any insurance policy for the benefit of directors or for the benefit of persons including directors.
|
•
|
the holders of the Special Voting Shares will be entitled to receive out of the assets of the Parent available for distribution to its shareholders the sum of, in aggregate, U.S. $1.00 but shall not be entitled to any further participation in the assets of the Parent; and
|
•
|
the holders of the Sterling Non-Voting Shares will be entitled to receive out of the assets of the Parent available for distribution to its shareholders the sum of, in aggregate, £1.00 but shall not be entitled to any further participation in the assets of the Parent,
|
(i)
|
allot shares in the Parent, or to grant rights to subscribe for or to convert or exchange any security into shares in the Parent, up to an aggregate nominal amount (i.e., par value) of U.S. $6,813,040.10;
|
(ii)
|
allot Special Voting Shares and to grant rights to subscribe for, or to convert any security into, Special Voting Shares, up to a maximum aggregate nominal amount of $136.26; and
|
(iii)
|
exclude pre-emption rights in respect of such issuances up to an aggregate nominal amount (i.e., par value) of U.S. $1,201,956.02.
|
D.
|
Exchange Controls
|
E.
|
Taxation
|
•
|
banks, thrifts, mutual funds, and other financial institutions;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
traders in securities that elect to apply a mark-to-market method of accounting;
|
•
|
broker-dealers;
|
•
|
tax-exempt organizations and pension funds;
|
•
|
U.S. holders that own (directly, indirectly, or constructively) 10% or more of the Company's stock (by vote or value);
|
•
|
insurance companies;
|
•
|
dealers or brokers in securities or foreign currency;
|
•
|
individual retirement and other deferred accounts;
|
•
|
U.S. holders whose functional currency is not the U.S. dollar;
|
•
|
U.S. expatriates;
|
•
|
“passive foreign investment companies” or “controlled foreign corporations”;
|
•
|
persons subject to the alternative minimum tax;
|
•
|
U.S. holders that hold their shares as part of a straddle, hedging, conversion constructive sale or other risk reduction transaction;
|
•
|
partnerships or other entities or other arrangements treated as partnerships for U.S. federal income tax purposes and their partners and investors; and
|
•
|
U.S. holders that received their shares through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan.
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
|
•
|
a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (2) the trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes.
|
F.
|
Dividends and Paying Agents
|
G.
|
Statement of Experts
|
H.
|
Documents on Display
|
I.
|
Subsidiary Information
|
Item 11.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 12.
|
Description of Securities Other than Equity Securities
|
Item 13.
|
Defaults, Dividends, Arrearages, and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Item 15.
|
Controls and Procedures
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded, as necessary, to permit preparation of financial statements in accordance with generally accepted accounting principles; and that receipts and expenditures of the Company are made only in accordance with authorizations of the Company's management and directors; and
|
•
|
provide reasonable assurance that unauthorized acquisition, use or disposition of the Company's assets, that could have a material effect on the financial statements, would be prevented or detected on a timely basis.
|
|
|
For the year ended December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Audit fees
|
|
11,090
|
|
|
13,254
|
|
Tax fees
|
|
1,294
|
|
|
1,242
|
|
Audit-related fees
|
|
660
|
|
|
1,028
|
|
All other fees
|
|
147
|
|
|
189
|
|
|
|
13,191
|
|
|
15,713
|
|
•
|
Audit fees consist of professional services performed in connection with the annual financial statements.
|
•
|
Tax fees consist of professional services for tax planning and compliance.
|
•
|
Audit-related fees consist of assurance and related services that are reasonably related to the performance of the audit or review of the financial statements and agreed upon procedures for certain financial statement areas.
|
•
|
All other fees, other than those reported above, mainly consist of services in relation to intellectual property royalty audits, compliance-related services, and access to online accounting research software applications.
|
Item 17.
|
Financial Statements
|
Item 18.
|
Financial Statements
|
Item 19.
|
Exhibits
|
Exhibit
|
|
Description
|
|
|
|
1.1
|
|
|
|
|
|
|
|
There have not been filed as exhibits to this Form 20-F certain long-term debt instruments, none of which relates to indebtedness that exceeds 10% of the consolidated assets of International Game Technology PLC. International Game Technology PLC agrees to furnish the Securities and Exchange Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of International Game Technology PLC and its consolidated subsidiaries.
|
|
|
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
2.4
|
|
|
|
|
|
2.5
|
|
|
|
|
|
Exhibit
|
|
Description
|
2.6
|
|
|
|
|
|
2.7
|
|
|
|
|
|
2.8
|
|
|
|
|
|
2.9
|
|
|
|
|
|
2.10
|
|
|
|
|
|
2.11
|
|
|
|
|
|
2.12
|
|
|
|
|
|
2.13
|
|
|
|
|
|
2.14
|
|
|
|
|
|
2.15
|
|
|
|
|
|
Exhibit
|
|
Description
|
2.16
|
|
|
|
|
|
2.17
|
|
|
|
|
|
2.18
|
|
|
|
|
|
2.19
|
|
|
|
|
|
2.20
|
|
|
|
|
|
2.21
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
Exhibit
|
|
Description
|
4.8
|
|
|
|
|
|
8.1
|
|
|
|
|
|
12.1
|
|
|
|
|
|
12.2
|
|
|
|
|
|
13.1
|
|
|
|
|
|
13.2
|
|
|
|
|
|
15.1
|
|
|
|
|
|
101.INS
|
|
Inline XBRL Instance Document
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
104
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
|
INTERNATIONAL GAME TECHNOLOGY PLC
|
|
|
|
|
|
/s/ Timothy M. Rishton
|
|
Name: Timothy M. Rishton
|
|
Title: Interim Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||
|
|
Notes
|
|
2019
|
|
2018
|
||
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
662,934
|
|
|
250,669
|
|
Restricted cash and cash equivalents
|
|
|
|
231,317
|
|
|
261,108
|
|
Trade and other receivables, net
|
|
4
|
|
1,006,127
|
|
|
949,085
|
|
Inventories
|
|
5
|
|
161,790
|
|
|
282,698
|
|
Other current assets
|
|
6
|
|
571,869
|
|
|
543,136
|
|
Total current assets
|
|
|
|
2,634,037
|
|
|
2,286,696
|
|
Systems, equipment and other assets related to contracts, net
|
|
9
|
|
1,307,940
|
|
|
1,404,426
|
|
Property, plant and equipment, net
|
|
9
|
|
146,055
|
|
|
185,349
|
|
Operating lease right-of-use assets
|
|
10
|
|
341,538
|
|
|
—
|
|
Goodwill
|
|
11
|
|
5,451,494
|
|
|
5,580,227
|
|
Intangible assets, net
|
|
12
|
|
1,836,002
|
|
|
2,044,723
|
|
Other non-current assets
|
|
6
|
|
1,927,524
|
|
|
2,147,081
|
|
Total non-current assets
|
|
|
|
11,010,553
|
|
|
11,361,806
|
|
Total assets
|
|
19
|
|
13,644,590
|
|
|
13,648,502
|
|
|
|
|
|
|
|
|
||
Liabilities and shareholders' equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
1,120,922
|
|
|
1,142,371
|
|
Current portion of long-term debt
|
|
14
|
|
462,155
|
|
|
—
|
|
Short-term borrowings
|
|
14
|
|
3,193
|
|
|
34,822
|
|
Other current liabilities
|
|
13
|
|
882,081
|
|
|
824,931
|
|
Total current liabilities
|
|
|
|
2,468,351
|
|
|
2,002,124
|
|
Long-term debt, less current portion
|
|
14
|
|
7,600,169
|
|
|
7,977,267
|
|
Deferred income taxes
|
|
15
|
|
366,822
|
|
|
446,083
|
|
Operating lease liabilities
|
|
10
|
|
310,721
|
|
|
—
|
|
Other non-current liabilities
|
|
13
|
|
413,549
|
|
|
471,099
|
|
Total non-current liabilities
|
|
|
|
8,691,261
|
|
|
8,894,449
|
|
Total liabilities
|
|
|
|
11,159,612
|
|
|
10,896,573
|
|
Commitments and contingencies
|
|
16
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
Common stock, par value $0.10 per share; 204,435,333 and 204,210,731 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
|
|
|
20,443
|
|
|
20,421
|
|
Additional paid-in capital
|
|
|
|
2,395,532
|
|
|
2,534,134
|
|
Retained deficit
|
|
|
|
(1,020,238
|
)
|
|
(1,008,193
|
)
|
Accumulated other comprehensive income
|
|
17
|
|
262,525
|
|
|
261,537
|
|
Total IGT PLC’s shareholders’ equity
|
|
|
|
1,658,262
|
|
|
1,807,899
|
|
Non-controlling interests
|
|
|
|
826,716
|
|
|
944,030
|
|
Total shareholders’ equity
|
|
|
|
2,484,978
|
|
|
2,751,929
|
|
Total liabilities and shareholders’ equity
|
|
|
|
13,644,590
|
|
|
13,648,502
|
|
|
|
|
|
For the year ended December 31,
|
|||||||
|
|
Notes
|
|
2019
|
|
2018
|
|
2017
|
|||
Service revenue
|
|
3, 19
|
|
3,860,746
|
|
|
4,046,314
|
|
|
4,136,556
|
|
Product sales
|
|
3, 19
|
|
925,060
|
|
|
784,942
|
|
|
802,403
|
|
Total revenue
|
|
3, 19
|
|
4,785,806
|
|
|
4,831,256
|
|
|
4,938,959
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of services
|
|
|
|
2,380,355
|
|
|
2,450,658
|
|
|
2,553,083
|
|
Cost of product sales
|
|
|
|
553,293
|
|
|
491,030
|
|
|
579,431
|
|
Selling, general and administrative
|
|
|
|
846,047
|
|
|
844,059
|
|
|
816,093
|
|
Research and development
|
|
|
|
266,241
|
|
|
263,279
|
|
|
313,088
|
|
Goodwill impairment
|
|
11
|
|
99,000
|
|
|
118,000
|
|
|
714,000
|
|
Other operating expense, net
|
|
|
|
3,742
|
|
|
17,239
|
|
|
14,356
|
|
Total operating expenses
|
|
|
|
4,148,678
|
|
|
4,184,265
|
|
|
4,990,051
|
|
|
|
|
|
|
|
|
|
|
|||
Operating income (loss)
|
|
19
|
|
637,128
|
|
|
646,991
|
|
|
(51,092
|
)
|
|
|
|
|
|
|
|
|
|
|||
Interest expense, net
|
|
14
|
|
(410,129
|
)
|
|
(417,387
|
)
|
|
(448,463
|
)
|
Foreign exchange gain (loss), net
|
|
|
|
39,839
|
|
|
129,051
|
|
|
(443,977
|
)
|
Other income (expense), net
|
|
|
|
17,929
|
|
|
(54,607
|
)
|
|
(33,393
|
)
|
Total non-operating expenses
|
|
|
|
(352,361
|
)
|
|
(342,943
|
)
|
|
(925,833
|
)
|
|
|
|
|
|
|
|
|
|
|||
Income (loss) before provision for (benefit from) income taxes
|
|
15
|
|
284,767
|
|
|
304,048
|
|
|
(976,925
|
)
|
|
|
|
|
|
|
|
|
|
|||
Provision for (benefit from) income taxes
|
|
15
|
|
173,109
|
|
|
189,401
|
|
|
(29,414
|
)
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss)
|
|
|
|
111,658
|
|
|
114,647
|
|
|
(947,511
|
)
|
|
|
|
|
|
|
|
|
|
|||
Less: Net income attributable to non-controlling interests
|
|
|
|
130,683
|
|
|
115,671
|
|
|
55,400
|
|
Less: Net income attributable to redeemable non-controlling interests
|
|
|
|
—
|
|
|
20,326
|
|
|
65,665
|
|
Net loss attributable to IGT PLC
|
|
|
|
(19,025
|
)
|
|
(21,350
|
)
|
|
(1,068,576
|
)
|
|
|
|
|
|
|
|
|
|
|||
Net loss attributable to IGT PLC per common share - basic and diluted
|
|
22
|
|
(0.09
|
)
|
|
(0.10
|
)
|
|
(5.26
|
)
|
|
|
|
|
|
|
|
|
|
|||
Weighted-average shares - basic and diluted
|
|
22
|
|
204,373
|
|
|
204,083
|
|
|
203,130
|
|
|
|
|
|
For the year ended December 31,
|
|||||||
|
|
Notes
|
|
2019
|
|
2018
|
|
2017
|
|||
Net income (loss)
|
|
|
|
111,658
|
|
|
114,647
|
|
|
(947,511
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
17
|
|
(16,527
|
)
|
|
(90,784
|
)
|
|
183,350
|
|
Unrealized loss on hedges
|
|
17
|
|
(1,451
|
)
|
|
(1,531
|
)
|
|
(3,554
|
)
|
Unrealized gain (loss) on other
|
|
17
|
|
3,060
|
|
|
(5,008
|
)
|
|
(733
|
)
|
Other comprehensive (loss) income
|
|
|
|
(14,918
|
)
|
|
(97,323
|
)
|
|
179,063
|
|
Comprehensive income (loss)
|
|
|
|
96,740
|
|
|
17,324
|
|
|
(768,448
|
)
|
Less: Comprehensive income attributable to non-controlling interests
|
|
|
|
114,777
|
|
|
96,980
|
|
|
54,937
|
|
Less: Comprehensive income attributable to redeemable non-controlling interests
|
|
|
|
—
|
|
|
20,326
|
|
|
65,665
|
|
Comprehensive loss attributable to IGT PLC
|
|
|
|
(18,037
|
)
|
|
(99,982
|
)
|
|
(889,050
|
)
|
|
|
|
|
For the year ended December 31,
|
|||||||
|
|
Notes
|
|
2019
|
|
2018
|
|
2017
|
|||
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
111,658
|
|
|
114,647
|
|
|
(947,511
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
434,264
|
|
|
432,899
|
|
|
401,085
|
|
Amortization
|
|
|
|
279,193
|
|
|
272,561
|
|
|
401,355
|
|
Amortization of upfront license fees
|
|
|
|
205,739
|
|
|
217,341
|
|
|
209,774
|
|
Goodwill impairment
|
|
11
|
|
99,000
|
|
|
118,000
|
|
|
714,000
|
|
Stock-based compensation expense
|
|
20
|
|
26,514
|
|
|
33,086
|
|
|
4,704
|
|
Debt issuance cost amortization
|
|
|
|
22,436
|
|
|
22,042
|
|
|
23,217
|
|
Loss on extinguishment of debt
|
|
|
|
11,964
|
|
|
54,423
|
|
|
25,733
|
|
Foreign exchange (gain) loss, net
|
|
|
|
(39,839
|
)
|
|
(129,051
|
)
|
|
443,977
|
|
Gain on sale of assets
|
|
|
|
(64,714
|
)
|
|
(318
|
)
|
|
(51,186
|
)
|
Deferred income taxes
|
|
15
|
|
(68,293
|
)
|
|
(34,494
|
)
|
|
(296,265
|
)
|
Other non-cash costs, net
|
|
|
|
23,091
|
|
|
32,275
|
|
|
26,826
|
|
Changes in operating assets and liabilities, excluding the effects of dispositions and acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
(58,213
|
)
|
|
(54,356
|
)
|
|
45,465
|
|
Inventories
|
|
|
|
84,472
|
|
|
12,556
|
|
|
51,406
|
|
Upfront license fees
|
|
|
|
—
|
|
|
(878,055
|
)
|
|
(244,698
|
)
|
Accounts payable
|
|
|
|
7,180
|
|
|
(51,990
|
)
|
|
(3,031
|
)
|
Other assets and liabilities
|
|
|
|
18,683
|
|
|
(131,940
|
)
|
|
(141,463
|
)
|
Net cash provided by operating activities
|
|
|
|
1,093,135
|
|
|
29,626
|
|
|
663,388
|
|
|
|
|
|
|
|
|
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(442,084
|
)
|
|
(533,052
|
)
|
|
(698,010
|
)
|
Proceeds from sale of assets
|
|
|
|
124,043
|
|
|
19,243
|
|
|
167,452
|
|
Proceeds from sale of Double Down Interactive LLC, net of cash divested
|
|
|
|
—
|
|
|
—
|
|
|
823,788
|
|
Other
|
|
|
|
5,851
|
|
|
2,272
|
|
|
2,336
|
|
Net cash (used in) provided by investing activities
|
|
|
|
(312,190
|
)
|
|
(511,537
|
)
|
|
295,566
|
|
|
|
|
|
|
|
|
|
|
|||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments on long-term debt
|
|
|
|
(1,264,647
|
)
|
|
(1,899,888
|
)
|
|
(1,754,259
|
)
|
Dividends paid
|
|
|
|
(163,503
|
)
|
|
(163,236
|
)
|
|
(162,528
|
)
|
Net (payments of) receipts from financial liabilities
|
|
|
|
(34,324
|
)
|
|
7,123
|
|
|
(150
|
)
|
Net (payments of) proceeds from short-term borrowings
|
|
|
|
(32,067
|
)
|
|
34,822
|
|
|
—
|
|
Debt issuance costs paid
|
|
|
|
(25,930
|
)
|
|
(17,033
|
)
|
|
(16,378
|
)
|
Payments in connection with the extinguishment of debt
|
|
|
|
(8,689
|
)
|
|
(49,976
|
)
|
|
(38,832
|
)
|
Proceeds from long-term debt
|
|
|
|
1,397,025
|
|
|
1,687,761
|
|
|
1,762,270
|
|
Dividends paid - non-controlling interests
|
|
|
|
(136,655
|
)
|
|
(126,926
|
)
|
|
(50,601
|
)
|
Return of capital - non-controlling interests
|
|
|
|
(98,788
|
)
|
|
(85,121
|
)
|
|
(52,352
|
)
|
Capital increase - non-controlling interests
|
|
|
|
1,499
|
|
|
321,584
|
|
|
41,011
|
|
Dividends paid - redeemable non-controlling interests
|
|
|
|
—
|
|
|
—
|
|
|
(7,307
|
)
|
Return of capital - redeemable non-controlling interests
|
|
|
|
—
|
|
|
—
|
|
|
(32,039
|
)
|
Capital increase - redeemable non-controlling interests
|
|
|
|
—
|
|
|
—
|
|
|
107,457
|
|
Other
|
|
|
|
(10,195
|
)
|
|
(20,655
|
)
|
|
(43,264
|
)
|
Net cash used in financing activities
|
|
|
|
(376,274
|
)
|
|
(311,545
|
)
|
|
(246,972
|
)
|
|
|
|
|
|
|
|
|
|
|||
Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents
|
|
|
|
404,671
|
|
|
(793,456
|
)
|
|
711,982
|
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash and cash equivalents
|
|
|
|
(22,197
|
)
|
|
(197
|
)
|
|
52,132
|
|
Cash and cash equivalents, and restricted cash and cash equivalents at the beginning of the period
|
|
|
|
511,777
|
|
|
1,305,430
|
|
|
541,316
|
|
Cash and cash equivalents, and restricted cash and cash equivalents at the end of the period
|
|
|
|
894,251
|
|
|
511,777
|
|
|
1,305,430
|
|
|
|
For the year ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|||
Interest
|
|
(400,022
|
)
|
|
(445,698
|
)
|
|
(417,110
|
)
|
Income taxes
|
|
(235,385
|
)
|
|
(239,831
|
)
|
|
(296,386
|
)
|
|
|
|
|
|
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|||
Capital expenditures
|
|
(50,616
|
)
|
|
(51,805
|
)
|
|
(62,858
|
)
|
Dividends declared - non-controlling interests
|
|
—
|
|
|
—
|
|
|
(12,588
|
)
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
(Deficit)
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
IGT PLC
Equity
|
|
Non-
Controlling
Interests
|
|
Total
Equity
|
|||||||
Balance at December 31, 2016
|
20,228
|
|
|
2,849,761
|
|
|
38,067
|
|
|
160,643
|
|
|
3,068,699
|
|
|
356,966
|
|
|
3,425,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
(1,068,576
|
)
|
|
—
|
|
|
(1,068,576
|
)
|
|
55,400
|
|
|
(1,013,176
|
)
|
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
179,526
|
|
|
179,526
|
|
|
(463
|
)
|
|
179,063
|
|
Total comprehensive (loss) income
|
—
|
|
|
—
|
|
|
(1,068,576
|
)
|
|
179,526
|
|
|
(889,050
|
)
|
|
54,937
|
|
|
(834,113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital increase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,799
|
|
|
41,799
|
|
Stock-based compensation expense
|
—
|
|
|
4,704
|
|
|
—
|
|
|
—
|
|
|
4,704
|
|
|
—
|
|
|
4,704
|
|
Shares issued upon exercise of stock options
|
21
|
|
|
(3,566
|
)
|
|
—
|
|
|
—
|
|
|
(3,545
|
)
|
|
—
|
|
|
(3,545
|
)
|
Shares issued under stock award plans
|
95
|
|
|
(11,514
|
)
|
|
—
|
|
|
—
|
|
|
(11,419
|
)
|
|
—
|
|
|
(11,419
|
)
|
Return of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51,211
|
)
|
|
(51,211
|
)
|
Dividends paid
|
—
|
|
|
(162,528
|
)
|
|
—
|
|
|
—
|
|
|
(162,528
|
)
|
|
(49,777
|
)
|
|
(212,305
|
)
|
Other
|
—
|
|
|
(3
|
)
|
|
(1,863
|
)
|
|
—
|
|
|
(1,866
|
)
|
|
(2,778
|
)
|
|
(4,644
|
)
|
Balance at December 31, 2017
|
20,344
|
|
|
2,676,854
|
|
|
(1,032,372
|
)
|
|
340,169
|
|
|
2,004,995
|
|
|
349,936
|
|
|
2,354,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
(21,350
|
)
|
|
—
|
|
|
(21,350
|
)
|
|
115,671
|
|
|
94,321
|
|
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(78,632
|
)
|
|
(78,632
|
)
|
|
(18,691
|
)
|
|
(97,323
|
)
|
Total comprehensive (loss) income
|
—
|
|
|
—
|
|
|
(21,350
|
)
|
|
(78,632
|
)
|
|
(99,982
|
)
|
|
96,980
|
|
|
(3,002
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Reclassification of redeemable non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
377,243
|
|
|
377,243
|
|
Capital increase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
319,254
|
|
|
319,254
|
|
Adoption of new accounting standards
|
—
|
|
|
—
|
|
|
45,527
|
|
|
—
|
|
|
45,527
|
|
|
—
|
|
|
45,527
|
|
Stock-based compensation expense
|
—
|
|
|
33,086
|
|
|
—
|
|
|
—
|
|
|
33,086
|
|
|
—
|
|
|
33,086
|
|
Shares issued upon exercise of stock options
|
15
|
|
|
(1,566
|
)
|
|
—
|
|
|
—
|
|
|
(1,551
|
)
|
|
—
|
|
|
(1,551
|
)
|
Shares issued under stock award plans
|
62
|
|
|
(11,153
|
)
|
|
—
|
|
|
—
|
|
|
(11,091
|
)
|
|
—
|
|
|
(11,091
|
)
|
Return of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85,046
|
)
|
|
(85,046
|
)
|
Dividends paid
|
—
|
|
|
(163,236
|
)
|
|
—
|
|
|
—
|
|
|
(163,236
|
)
|
|
(114,337
|
)
|
|
(277,573
|
)
|
Other
|
—
|
|
|
149
|
|
|
2
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
Balance at December 31, 2018
|
20,421
|
|
|
2,534,134
|
|
|
(1,008,193
|
)
|
|
261,537
|
|
|
1,807,899
|
|
|
944,030
|
|
|
2,751,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
(19,025
|
)
|
|
—
|
|
|
(19,025
|
)
|
|
130,683
|
|
|
111,658
|
|
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
988
|
|
|
988
|
|
|
(15,906
|
)
|
|
(14,918
|
)
|
Total comprehensive (loss) income
|
—
|
|
|
—
|
|
|
(19,025
|
)
|
|
988
|
|
|
(18,037
|
)
|
|
114,777
|
|
|
96,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock-based payment expense
|
—
|
|
|
26,514
|
|
|
—
|
|
|
—
|
|
|
26,514
|
|
|
—
|
|
|
26,514
|
|
Capital increase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,499
|
|
|
1,499
|
|
Shares issued under stock award plans
|
22
|
|
|
(1,613
|
)
|
|
—
|
|
|
—
|
|
|
(1,591
|
)
|
|
—
|
|
|
(1,591
|
)
|
Return of capital
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98,872
|
)
|
|
(98,872
|
)
|
Dividends paid
|
—
|
|
|
(163,503
|
)
|
|
—
|
|
|
—
|
|
|
(163,503
|
)
|
|
(136,836
|
)
|
|
(300,339
|
)
|
Other
|
—
|
|
|
—
|
|
|
6,980
|
|
|
—
|
|
|
6,980
|
|
|
2,118
|
|
|
9,098
|
|
Balance at December 31, 2019
|
20,443
|
|
|
2,395,532
|
|
|
(1,020,238
|
)
|
|
262,525
|
|
|
1,658,262
|
|
|
826,716
|
|
|
2,484,978
|
|
1.
|
Description of Business
|
2.
|
Summary of Significant Accounting Policies
|
i.
|
we have written approval;
|
ii.
|
the contract is committed;
|
iii.
|
the rights of the parties, including payment terms, are identified;
|
iv.
|
the contract has commercial substance; and
|
v.
|
collectability of consideration is probable.
|
•
|
The customer can benefit from the service or product either on its own or together with other resources that are readily available to the customer; and
|
•
|
Our promise to transfer the service or product to the customer is separately identifiable from other promises in the contract.
|
•
|
Operating and Facilities Management Contracts;
|
•
|
Lottery Management Agreements ("LMA");
|
•
|
Machine Gaming; and
|
•
|
Other Services.
|
•
|
Lottery and gaming machines, including game content; and
|
•
|
Lottery and gaming systems and other.
|
•
|
The Company recognized revenue when persuasive evidence of an arrangement existed, delivery had occurred, the sales price was fixed and determinable and collectability was reasonably assured (or probable under ASC 985, Software);
|
•
|
The Company allocated the transaction price based on the relative selling price for each element determined using vendor-specific objective evidence (“VSOE”), if available, third-party evidence (“TPE”) or best estimate of selling price if neither VSOE nor TPE were available. The Company’s process for determining relative selling price was materially the same as its current allocation of the transaction price to each performance obligation; and
|
•
|
Jackpot expense for our WAP services were recognized as a cost of service, whereas similar payments under ASC 606 are recognized as a reduction of revenue.
|
Category
|
|
Estimated
economic life
|
Sports betting rights
|
|
7 years
|
Computer software and game library
|
|
3 - 14 years
|
Licenses
|
|
3 - 15 years
|
Customer relationships
|
|
3 - 20 years
|
Developed technologies
|
|
5 - 14 years
|
Trademarks
|
|
6 - 20 years
|
Other
|
|
4 - 17 years
|
•
|
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments in active markets.
|
•
|
Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the instruments.
|
•
|
Level 3 - inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
|
3.
|
Revenue Recognition
|
|
|
For the year ended December 31, 2019
|
||||||||||||||||
($ thousands)
|
|
North America Gaming and Interactive
|
|
North America Lottery
|
|
International
|
|
Italy
|
|
Other
|
|
Total
|
||||||
Operating and Facilities Management Contracts
|
|
—
|
|
|
807,354
|
|
|
284,417
|
|
|
760,185
|
|
|
—
|
|
|
1,851,956
|
|
Lottery Management Agreements
|
|
—
|
|
|
108,032
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
108,032
|
|
Machine gaming
|
|
406,673
|
|
|
97,013
|
|
|
111,839
|
|
|
572,242
|
|
|
—
|
|
|
1,187,767
|
|
Other services
|
|
212,592
|
|
|
59,984
|
|
|
64,051
|
|
|
375,642
|
|
|
722
|
|
|
712,991
|
|
Service revenue
|
|
619,265
|
|
|
1,072,383
|
|
|
460,307
|
|
|
1,708,069
|
|
|
722
|
|
|
3,860,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lottery product
|
|
—
|
|
|
91,287
|
|
|
18,501
|
|
|
—
|
|
|
—
|
|
|
109,788
|
|
Gaming machines
|
|
321,217
|
|
|
—
|
|
|
259,424
|
|
|
—
|
|
|
—
|
|
|
580,641
|
|
Systems and other
|
|
130,165
|
|
|
1,529
|
|
|
101,956
|
|
|
981
|
|
|
—
|
|
|
234,631
|
|
Product sales
|
|
451,382
|
|
|
92,816
|
|
|
379,881
|
|
|
981
|
|
|
—
|
|
|
925,060
|
|
Total revenue
|
|
1,070,647
|
|
|
1,165,199
|
|
|
840,188
|
|
|
1,709,050
|
|
|
722
|
|
|
4,785,806
|
|
|
|
For the year ended December 31, 2018
|
||||||||||||||||
($ thousands)
|
|
North America Gaming and Interactive
|
|
North America Lottery
|
|
International
|
|
Italy
|
|
Other
|
|
Total
|
||||||
Operating and Facilities Management Contracts
|
|
—
|
|
|
828,641
|
|
|
282,864
|
|
|
793,303
|
|
|
—
|
|
|
1,904,808
|
|
Lottery Management Agreements
|
|
—
|
|
|
129,104
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
129,104
|
|
Machine gaming
|
|
420,447
|
|
|
99,679
|
|
|
139,936
|
|
|
672,202
|
|
|
—
|
|
|
1,332,264
|
|
Other services
|
|
204,029
|
|
|
53,645
|
|
|
72,697
|
|
|
349,044
|
|
|
723
|
|
|
680,138
|
|
Service revenue
|
|
624,476
|
|
|
1,111,069
|
|
|
495,497
|
|
|
1,814,549
|
|
|
723
|
|
|
4,046,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lottery product
|
|
—
|
|
|
80,405
|
|
|
46,323
|
|
|
—
|
|
|
—
|
|
|
126,728
|
|
Gaming machines
|
|
261,696
|
|
|
—
|
|
|
193,092
|
|
|
—
|
|
|
—
|
|
|
454,788
|
|
Systems and other
|
|
116,997
|
|
|
428
|
|
|
85,071
|
|
|
930
|
|
|
—
|
|
|
203,426
|
|
Product sales
|
|
378,693
|
|
|
80,833
|
|
|
324,486
|
|
|
930
|
|
|
—
|
|
|
784,942
|
|
Total revenue
|
|
1,003,169
|
|
|
1,191,902
|
|
|
819,983
|
|
|
1,815,479
|
|
|
723
|
|
|
4,831,256
|
|
($ thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Balance Sheet Classification
|
||
Receivables, net
|
|
1,006,127
|
|
|
949,085
|
|
|
Trade and other receivables, net
|
|
|
|
|
|
|
|
||
Contract assets:
|
|
|
|
|
|
|
||
Current
|
|
47,499
|
|
|
58,739
|
|
|
Other current assets
|
Non-current
|
|
76,188
|
|
|
69,691
|
|
|
Other non-current assets
|
|
|
123,687
|
|
|
128,430
|
|
|
|
|
|
|
|
|
|
|
||
Contract liabilities:
|
|
|
|
|
|
|
||
Current
|
|
(67,816
|
)
|
|
(72,005
|
)
|
|
Other current liabilities
|
Non-current
|
|
(65,855
|
)
|
|
(67,022
|
)
|
|
Other non-current liabilities
|
|
|
(133,671
|
)
|
|
(139,027
|
)
|
|
|
4.
|
Trade and Other Receivables, net
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Gross
|
|
1,057,489
|
|
|
1,008,509
|
|
Allowance for credit losses
|
|
(51,362
|
)
|
|
(59,424
|
)
|
Net
|
|
1,006,127
|
|
|
949,085
|
|
|
|
December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
|
(59,424
|
)
|
|
(53,323
|
)
|
|
(58,884
|
)
|
Recoveries (provisions), net
|
|
2,920
|
|
|
(10,800
|
)
|
|
(12,255
|
)
|
Amounts written off as uncollectible
|
|
4,119
|
|
|
2,222
|
|
|
17,826
|
|
Foreign currency translation
|
|
729
|
|
|
2,869
|
|
|
(5,885
|
)
|
Other
|
|
294
|
|
|
(392
|
)
|
|
5,875
|
|
Balance at end of year
|
|
(51,362
|
)
|
|
(59,424
|
)
|
|
(53,323
|
)
|
5.
|
Inventories
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Raw materials
|
|
86,877
|
|
|
172,229
|
|
Work in progress
|
|
11,663
|
|
|
32,835
|
|
Finished goods
|
|
96,895
|
|
|
117,519
|
|
Inventories, gross
|
|
195,435
|
|
|
322,583
|
|
Obsolescence reserve
|
|
(33,645
|
)
|
|
(39,885
|
)
|
Inventories, net
|
|
161,790
|
|
|
282,698
|
|
|
|
December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
|
(39,885
|
)
|
|
(26,911
|
)
|
|
(17,402
|
)
|
Provisions, net
|
|
(28,970
|
)
|
|
(14,199
|
)
|
|
(8,909
|
)
|
Amounts written off
|
|
23,375
|
|
|
817
|
|
|
41
|
|
Foreign currency translation
|
|
(130
|
)
|
|
408
|
|
|
(641
|
)
|
Other
|
|
11,965
|
|
|
—
|
|
|
—
|
|
Balance at end of year
|
|
(33,645
|
)
|
|
(39,885
|
)
|
|
(26,911
|
)
|
6.
|
Other Assets
|
|
|
|
|
December 31,
|
||||
($ thousands)
|
|
Note
|
|
2019
|
|
2018
|
||
Customer financing receivables, net
|
|
|
|
226,979
|
|
|
170,273
|
|
Other receivables
|
|
|
|
67,095
|
|
|
61,055
|
|
Income taxes receivable
|
|
|
|
56,857
|
|
|
39,075
|
|
Value-added tax ("VAT") receivable
|
|
|
|
53,148
|
|
|
60,232
|
|
Contract assets
|
|
3
|
|
47,499
|
|
|
58,739
|
|
Prepaid expenses
|
|
|
|
41,520
|
|
|
47,781
|
|
Prepaid royalties
|
|
|
|
24,999
|
|
|
52,712
|
|
Other
|
|
|
|
53,772
|
|
|
53,269
|
|
|
|
|
|
571,869
|
|
|
543,136
|
|
|
|
|
|
December 31,
|
||||
($ thousands)
|
|
Notes
|
|
2019
|
|
2018
|
||
Upfront license fees, net:
|
|
|
|
|
|
|
||
Italian Scratch & Win
|
|
|
|
873,756
|
|
|
992,333
|
|
Italian Lotto
|
|
|
|
568,669
|
|
|
677,564
|
|
New Jersey
|
|
|
|
83,209
|
|
|
91,970
|
|
Indiana
|
|
|
|
11,853
|
|
|
13,247
|
|
|
|
|
|
1,537,487
|
|
|
1,775,114
|
|
|
|
|
|
|
|
|
||
Customer financing receivables, net
|
|
|
|
122,124
|
|
|
88,354
|
|
Contract assets
|
|
3
|
|
76,188
|
|
|
69,691
|
|
Finance lease right-of-use assets
|
|
10
|
|
35,586
|
|
|
—
|
|
Deferred income taxes
|
|
15
|
|
27,108
|
|
|
38,117
|
|
Prepaid royalties
|
|
|
|
25,092
|
|
|
64,598
|
|
Debt issuance costs
|
|
14
|
|
20,464
|
|
|
—
|
|
Other
|
|
|
|
83,475
|
|
|
111,207
|
|
|
|
|
|
1,927,524
|
|
|
2,147,081
|
|
Upfront License Fee
|
|
License Term
|
|
Amortization Start Date
|
Italian Scratch & Win
|
|
9 years
|
|
October 2019
|
Italian Lotto
|
|
9 years
|
|
December 2016
|
New Jersey
|
|
15 years, 9 months
|
|
October 2013
|
Indiana
|
|
15 years
|
|
July 2013
|
|
|
December 31, 2019
|
|||||||
|
|
|
|
Allowance for
|
|
|
|||
($ thousands)
|
|
Gross
|
|
credit losses
|
|
Net
|
|||
Current
|
|
255,221
|
|
|
(28,242
|
)
|
|
226,979
|
|
Non-current
|
|
125,542
|
|
|
(3,418
|
)
|
|
122,124
|
|
|
|
380,763
|
|
|
(31,660
|
)
|
|
349,103
|
|
|
|
December 31, 2018
|
|||||||
|
|
|
|
Allowance for
|
|
|
|||
($ thousands)
|
|
Gross
|
|
credit losses
|
|
Net
|
|||
Current
|
|
196,831
|
|
|
(26,558
|
)
|
|
170,273
|
|
Non-current
|
|
91,005
|
|
|
(2,651
|
)
|
|
88,354
|
|
|
|
287,836
|
|
|
(29,209
|
)
|
|
258,627
|
|
|
|
December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
|
(29,209
|
)
|
|
(19,574
|
)
|
|
(7,856
|
)
|
Provisions, net
|
|
(2,477
|
)
|
|
(10,131
|
)
|
|
(5,236
|
)
|
Amounts written off as uncollectible
|
|
11
|
|
|
317
|
|
|
—
|
|
Foreign currency translation
|
|
15
|
|
|
179
|
|
|
(159
|
)
|
Other
|
|
—
|
|
|
—
|
|
|
(6,323
|
)
|
Balance at end of year
|
|
(31,660
|
)
|
|
(29,209
|
)
|
|
(19,574
|
)
|
7.
|
Fair Value Measurements
|
|
|
|
|
December 31, 2019
|
||||||||||
($ thousands)
|
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative assets
|
|
Other current and other non-current assets
|
|
—
|
|
|
8,317
|
|
|
2,471
|
|
|
10,788
|
|
Equity investments
|
|
Other non-current assets
|
|
7,769
|
|
|
—
|
|
|
15,098
|
|
|
22,867
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities
|
|
Other current and other non-current liabilities
|
|
—
|
|
|
6,425
|
|
|
—
|
|
|
6,425
|
|
|
|
|
|
December 31, 2018
|
||||||||||
($ thousands)
|
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted cash equivalents
|
|
Restricted cash and cash equivalents
|
|
56,550
|
|
|
—
|
|
|
—
|
|
|
56,550
|
|
Derivative assets
|
|
Other current and other non-current assets
|
|
—
|
|
|
7,317
|
|
|
2,519
|
|
|
9,836
|
|
Equity investments
|
|
Other non-current assets
|
|
6,585
|
|
|
—
|
|
|
13,509
|
|
|
20,094
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities
|
|
Other current and other non-current liabilities
|
|
—
|
|
|
25,473
|
|
|
—
|
|
|
25,473
|
|
|
|
December 31, 2019
|
|||||||||||||
($ thousands)
|
|
Carrying
Amount |
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
|||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer financing receivables, net
|
|
349,103
|
|
|
—
|
|
|
—
|
|
|
349,686
|
|
|
349,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Jackpot liabilities
|
|
234,827
|
|
|
—
|
|
|
—
|
|
|
230,363
|
|
|
230,363
|
|
Debt (1)
|
|
8,062,816
|
|
|
—
|
|
|
8,589,939
|
|
|
—
|
|
|
8,589,939
|
|
|
|
December 31, 2018
|
|||||||||||||
($ thousands)
|
|
Carrying
Amount |
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Fair Value
|
|||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|||||
Customer financing receivables, net
|
|
258,627
|
|
|
—
|
|
|
—
|
|
|
260,857
|
|
|
260,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Jackpot liabilities
|
|
254,567
|
|
|
—
|
|
|
—
|
|
|
229,089
|
|
|
229,089
|
|
Debt (1)
|
|
7,996,073
|
|
|
—
|
|
|
8,089,154
|
|
|
—
|
|
|
8,089,154
|
|
8.
|
Derivative Financial Instruments
|
9.
|
Systems, Equipment and Other Assets Related to Contracts, net and Property, Plant and Equipment, net
|
|
|
Systems & Equipment, net
|
|
PPE, net
|
||||||||
|
|
December 31,
|
|
December 31,
|
||||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Land
|
|
297
|
|
|
303
|
|
|
2,317
|
|
|
2,462
|
|
Buildings
|
|
107,538
|
|
|
157,611
|
|
|
70,473
|
|
|
69,799
|
|
Terminals and systems
|
|
2,933,649
|
|
|
3,014,733
|
|
|
—
|
|
|
—
|
|
Furniture and equipment
|
|
198,324
|
|
|
205,305
|
|
|
240,375
|
|
|
257,444
|
|
Construction in progress
|
|
54,950
|
|
|
74,382
|
|
|
15,624
|
|
|
12,777
|
|
|
|
3,294,758
|
|
|
3,452,334
|
|
|
328,789
|
|
|
342,482
|
|
Accumulated depreciation
|
|
(1,986,818
|
)
|
|
(2,047,908
|
)
|
|
(182,734
|
)
|
|
(157,133
|
)
|
|
|
1,307,940
|
|
|
1,404,426
|
|
|
146,055
|
|
|
185,349
|
|
10.
|
Leases
|
($ thousands)
|
|
Balance Sheet Classification
|
|
December 31, 2019
|
|
Assets
|
|
|
|
|
|
Operating ROU asset
|
|
Operating lease right-of-use assets
|
|
341,538
|
|
Finance ROU asset, net (1)
|
|
Other non-current assets
|
|
35,586
|
|
Total lease assets
|
|
|
|
377,124
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Operating lease liability, current
|
|
Other current liabilities
|
|
50,442
|
|
Finance lease liability, current
|
|
Other current liabilities
|
|
8,731
|
|
Operating lease liability, non-current
|
|
Operating lease liabilities
|
|
310,721
|
|
Finance lease liability, non-current
|
|
Other non-current liabilities
|
|
36,335
|
|
Total lease liabilities
|
|
|
|
406,229
|
|
|
|
Weighted-Average
|
|||
|
|
Remaining Lease Term (in years)
|
|
Discount Rate
|
|
Operating leases
|
|
8.60
|
|
6.89
|
%
|
Finance leases
|
|
6.01
|
|
5.45
|
%
|
($ thousands)
|
|
For the year ended
December 31, 2019 |
|
Operating lease costs
|
|
83,972
|
|
Finance lease costs (1)
|
|
10,341
|
|
Variable lease costs (2)
|
|
74,324
|
|
Year
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
|||
2020
|
|
72,690
|
|
|
10,803
|
|
|
83,493
|
|
2021
|
|
63,013
|
|
|
10,413
|
|
|
73,426
|
|
2022
|
|
54,763
|
|
|
7,979
|
|
|
62,742
|
|
2023
|
|
50,544
|
|
|
5,749
|
|
|
56,293
|
|
2024
|
|
46,022
|
|
|
4,988
|
|
|
51,010
|
|
Thereafter
|
|
210,405
|
|
|
13,056
|
|
|
223,461
|
|
Total lease payments
|
|
497,437
|
|
|
52,988
|
|
|
550,425
|
|
Less: Imputed interest
|
|
(136,274
|
)
|
|
(7,922
|
)
|
|
(144,196
|
)
|
Present value of lease liabilities
|
|
361,163
|
|
|
45,066
|
|
|
406,229
|
|
($ thousands)
|
|
For the year ended
December 31, 2019 |
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
Operating cash flows from operating and finance leases
|
|
82,366
|
|
Finance cash flows from finance leases
|
|
7,632
|
|
|
|
|
|
Non-cash activity:
|
|
|
|
ROU assets obtained in exchange for lease obligations (net of early terminations)
|
|
|
|
Operating leases
|
|
16,000
|
|
Finance leases
|
|
9,441
|
|
Year
|
|
Operating
|
|
Capital
|
|
Total
|
|||
2019
|
|
69,690
|
|
|
8,946
|
|
|
78,636
|
|
2020
|
|
56,204
|
|
|
8,304
|
|
|
64,508
|
|
2021
|
|
46,092
|
|
|
7,499
|
|
|
53,591
|
|
2022
|
|
41,324
|
|
|
5,809
|
|
|
47,133
|
|
2023
|
|
38,155
|
|
|
6,097
|
|
|
44,252
|
|
Thereafter
|
|
204,216
|
|
|
2,978
|
|
|
207,194
|
|
Total future minimum lease payments
|
|
455,681
|
|
|
39,633
|
|
|
495,314
|
|
Less imputed interest
|
|
|
|
|
(9,529
|
)
|
|
|
|
Present value of future minimum lease payments
|
|
|
|
|
30,104
|
|
|
|
|
11.
|
Goodwill
|
($ thousands)
|
|
North America
Gaming and
Interactive
|
|
North America
Lottery
|
|
International
|
|
Italy
|
|
Total
|
|||||
Balance at December 31, 2017
|
|
1,439,867
|
|
|
1,221,589
|
|
|
1,549,381
|
|
|
1,512,978
|
|
|
5,723,815
|
|
Impairment
|
|
—
|
|
|
—
|
|
|
(118,000
|
)
|
|
—
|
|
|
(118,000
|
)
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
(8,534
|
)
|
|
(17,319
|
)
|
|
(25,853
|
)
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
265
|
|
|
265
|
|
Balance at December 31, 2018
|
|
1,439,867
|
|
|
1,221,589
|
|
|
1,422,847
|
|
|
1,495,924
|
|
|
5,580,227
|
|
Impairment
|
|
—
|
|
|
—
|
|
|
(99,000
|
)
|
|
—
|
|
|
(99,000
|
)
|
Disposal
|
|
—
|
|
|
—
|
|
|
(13,201
|
)
|
|
—
|
|
|
(13,201
|
)
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
(2,677
|
)
|
|
(13,855
|
)
|
|
(16,532
|
)
|
Balance at December 31, 2019
|
|
1,439,867
|
|
|
1,221,589
|
|
|
1,307,969
|
|
|
1,482,069
|
|
|
5,451,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
2,153,867
|
|
|
1,225,682
|
|
|
1,658,698
|
|
|
1,497,641
|
|
|
6,535,888
|
|
Accumulated impairment
|
|
(714,000
|
)
|
|
(4,093
|
)
|
|
(235,851
|
)
|
|
(1,717
|
)
|
|
(955,661
|
)
|
|
|
1,439,867
|
|
|
1,221,589
|
|
|
1,422,847
|
|
|
1,495,924
|
|
|
5,580,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
2,153,867
|
|
|
1,225,682
|
|
|
1,641,187
|
|
|
1,483,754
|
|
|
6,504,490
|
|
Accumulated impairment
|
|
(714,000
|
)
|
|
(4,093
|
)
|
|
(333,218
|
)
|
|
(1,685
|
)
|
|
(1,052,996
|
)
|
|
|
1,439,867
|
|
|
1,221,589
|
|
|
1,307,969
|
|
|
1,482,069
|
|
|
5,451,494
|
|
12.
|
Intangible Assets, net
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||
($ thousands)
|
|
Weighted- Average
Amortization Period (Years) |
|
Gross Carrying Amount
|
|
Accumulated
Amortization |
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization |
|
Net Carrying Amount
|
||||||
Amortized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Customer relationships
|
|
15.2
|
|
2,379,425
|
|
|
1,176,860
|
|
|
1,202,565
|
|
|
2,428,946
|
|
|
1,093,753
|
|
|
1,335,193
|
|
Computer software and game library
|
|
5.4
|
|
998,360
|
|
|
809,079
|
|
|
189,281
|
|
|
967,828
|
|
|
753,160
|
|
|
214,668
|
|
Trademarks
|
|
14.1
|
|
185,285
|
|
|
76,196
|
|
|
109,089
|
|
|
185,590
|
|
|
61,806
|
|
|
123,784
|
|
Licenses
|
|
10.1
|
|
298,007
|
|
|
247,436
|
|
|
50,571
|
|
|
294,104
|
|
|
221,934
|
|
|
72,170
|
|
Developed technologies
|
|
5.4
|
|
219,448
|
|
|
203,121
|
|
|
16,327
|
|
|
220,097
|
|
|
179,192
|
|
|
40,905
|
|
Sports betting rights
|
|
6.5
|
|
146,505
|
|
|
137,772
|
|
|
8,733
|
|
|
134,197
|
|
|
131,933
|
|
|
2,264
|
|
Other
|
|
7.7
|
|
35,439
|
|
|
21,003
|
|
|
14,436
|
|
|
27,460
|
|
|
18,634
|
|
|
8,826
|
|
|
|
|
|
4,262,469
|
|
|
2,671,467
|
|
|
1,591,002
|
|
|
4,258,222
|
|
|
2,460,412
|
|
|
1,797,810
|
|
Unamortized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
|
245,000
|
|
|
—
|
|
|
245,000
|
|
|
246,913
|
|
|
—
|
|
|
246,913
|
|
Total intangible assets, excluding goodwill
|
|
|
|
4,507,469
|
|
|
2,671,467
|
|
|
1,836,002
|
|
|
4,505,135
|
|
|
2,460,412
|
|
|
2,044,723
|
|
Year
|
|
Amount
|
|
2020
|
|
252,983
|
|
2021
|
|
211,443
|
|
2022
|
|
181,008
|
|
2023
|
|
146,148
|
|
2024
|
|
138,744
|
|
Total
|
|
930,326
|
|
13.
|
Other Liabilities
|
|
|
|
|
December 31,
|
||||
($ thousands)
|
|
Notes
|
|
2019
|
|
2018
|
||
Employee compensation
|
|
|
|
163,463
|
|
|
145,616
|
|
Accrued interest payable
|
|
|
|
141,485
|
|
|
139,276
|
|
Taxes other than income taxes
|
|
|
|
135,607
|
|
|
149,203
|
|
Accrued expenses
|
|
|
|
123,280
|
|
|
115,165
|
|
Jackpot liabilities
|
|
16
|
|
74,725
|
|
|
76,191
|
|
Contract liabilities
|
|
3
|
|
67,816
|
|
|
72,005
|
|
Current financial liabilities
|
|
|
|
62,860
|
|
|
107,316
|
|
Operating lease liabilities
|
|
10
|
|
50,442
|
|
|
—
|
|
Income taxes payable
|
|
|
|
33,314
|
|
|
8,209
|
|
Other
|
|
|
|
29,089
|
|
|
11,950
|
|
|
|
|
|
882,081
|
|
|
824,931
|
|
|
|
|
|
December 31,
|
||||
($ thousands)
|
|
Notes
|
|
2019
|
|
2018
|
||
Jackpot liabilities
|
|
16
|
|
160,101
|
|
|
178,376
|
|
Contract liabilities
|
|
3
|
|
65,855
|
|
|
67,022
|
|
Reserves for uncertain tax positions
|
|
|
|
47,523
|
|
|
40,803
|
|
Finance lease liabilities
|
|
10
|
|
36,335
|
|
|
57,756
|
|
Income taxes payable
|
|
|
|
26,493
|
|
|
25,654
|
|
Royalties payable
|
|
|
|
18,918
|
|
|
26,686
|
|
Other
|
|
|
|
58,324
|
|
|
74,802
|
|
|
|
|
|
413,549
|
|
|
471,099
|
|
14.
|
Debt
|
|
|
December 31, 2019
|
|||||||||||||
($ thousands)
|
|
Principal
|
|
Debt issuance
cost, net
|
|
Premium
|
|
Swap
|
|
Total
|
|||||
6.250% Senior Secured U.S. Dollar Notes due February 2022
|
|
1,500,000
|
|
|
(8,199
|
)
|
|
—
|
|
|
(473
|
)
|
|
1,491,328
|
|
4.750% Senior Secured Euro Notes due February 2023
|
|
954,890
|
|
|
(6,508
|
)
|
|
—
|
|
|
—
|
|
|
948,382
|
|
5.350% Senior Secured U.S. Dollar Notes due October 2023
|
|
60,567
|
|
|
—
|
|
|
318
|
|
|
—
|
|
|
60,885
|
|
3.500% Senior Secured Euro Notes due July 2024
|
|
561,700
|
|
|
(4,369
|
)
|
|
—
|
|
|
—
|
|
|
557,331
|
|
6.500% Senior Secured U.S. Dollar Notes due February 2025
|
|
1,100,000
|
|
|
(10,041
|
)
|
|
—
|
|
|
—
|
|
|
1,089,959
|
|
3.500% Senior Secured Euro Notes due June 2026
|
|
842,550
|
|
|
(7,445
|
)
|
|
—
|
|
|
—
|
|
|
835,105
|
|
6.250% Senior Secured U.S. Dollar Notes due January 2027
|
|
750,000
|
|
|
(6,613
|
)
|
|
—
|
|
|
—
|
|
|
743,387
|
|
2.375% Senior Secured Euro Notes due April 2028
|
|
561,700
|
|
|
(5,297
|
)
|
|
—
|
|
|
—
|
|
|
556,403
|
|
Senior Secured Notes, long-term
|
|
6,331,407
|
|
|
(48,472
|
)
|
|
318
|
|
|
(473
|
)
|
|
6,282,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Euro Term Loan Facility due January 2023
|
|
1,325,612
|
|
|
(8,223
|
)
|
|
—
|
|
|
—
|
|
|
1,317,389
|
|
Euro Revolving Credit Facilities due July 20241
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
U.S. Dollar Revolving Credit Facilities due July 20241
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Long-term debt, less current portion
|
|
7,657,019
|
|
|
(56,695
|
)
|
|
318
|
|
|
(473
|
)
|
|
7,600,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
4.750% Senior Secured Euro Notes due March 2020
|
|
435,767
|
|
|
(978
|
)
|
|
—
|
|
|
—
|
|
|
434,789
|
|
5.500% Senior Secured U.S. Dollar Notes due June 2020
|
|
27,311
|
|
|
—
|
|
|
74
|
|
|
(19
|
)
|
|
27,366
|
|
Current portion of long-term debt
|
|
463,078
|
|
|
(978
|
)
|
|
74
|
|
|
(19
|
)
|
|
462,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term borrowings
|
|
3,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Debt
|
|
8,123,290
|
|
|
(57,673
|
)
|
|
392
|
|
|
(492
|
)
|
|
8,065,517
|
|
|
|
December 31, 2018
|
|||||||||||||
($ thousands)
|
|
Principal
|
|
Debt issuance
cost, net |
|
Premium
|
|
Swap
|
|
Total
|
|||||
4.125% Senior Secured Euro Notes due February 2020
|
|
501,058
|
|
|
(1,891
|
)
|
|
—
|
|
|
—
|
|
|
499,167
|
|
4.750% Senior Secured Euro Notes due March 2020
|
|
444,146
|
|
|
(5,894
|
)
|
|
—
|
|
|
—
|
|
|
438,252
|
|
5.500% Senior Secured U.S. Dollar Notes due June 2020
|
|
27,311
|
|
|
—
|
|
|
234
|
|
|
(26
|
)
|
|
27,519
|
|
6.250% Senior Secured U.S. Dollar Notes due February 2022
|
|
1,500,000
|
|
|
(11,611
|
)
|
|
—
|
|
|
(18,780
|
)
|
|
1,469,609
|
|
4.750% Senior Secured Euro Notes due February 2023
|
|
973,250
|
|
|
(8,520
|
)
|
|
—
|
|
|
—
|
|
|
964,730
|
|
5.350% Senior Secured U.S. Dollar Notes due October 2023
|
|
60,567
|
|
|
—
|
|
|
416
|
|
|
—
|
|
|
60,983
|
|
3.500% Senior Secured Euro Notes due July 2024
|
|
572,500
|
|
|
(5,321
|
)
|
|
—
|
|
|
—
|
|
|
567,179
|
|
6.500% Senior Secured U.S. Dollar Notes due February 2025
|
|
1,100,000
|
|
|
(11,615
|
)
|
|
—
|
|
|
—
|
|
|
1,088,385
|
|
6.250% Senior Secured U.S. Dollar Notes due January 2027
|
|
750,000
|
|
|
(7,333
|
)
|
|
—
|
|
|
—
|
|
|
742,667
|
|
Senior Secured Notes, long-term
|
|
5,928,832
|
|
|
(52,185
|
)
|
|
650
|
|
|
(18,806
|
)
|
|
5,858,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Euro Term Loan Facility due January 2023
|
|
1,717,500
|
|
|
(12,105
|
)
|
|
—
|
|
|
—
|
|
|
1,705,395
|
|
Euro Revolving Credit Facilities due July 2024
|
|
313,158
|
|
|
(6,163
|
)
|
|
—
|
|
|
—
|
|
|
306,995
|
|
U.S. Dollar Revolving Credit Facilities due July 2024
|
|
115,000
|
|
|
(8,614
|
)
|
|
—
|
|
|
—
|
|
|
106,386
|
|
Long-term debt, less current portion
|
|
8,074,490
|
|
|
(79,067
|
)
|
|
650
|
|
|
(18,806
|
)
|
|
7,977,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term borrowings
|
|
34,822
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Debt
|
|
8,109,312
|
|
|
(79,067
|
)
|
|
650
|
|
|
(18,806
|
)
|
|
8,012,089
|
|
Year
|
|
U.S. Dollar Denominated
|
|
Euro Denominated
|
|
Total
|
|||
2020
|
|
27,311
|
|
|
435,767
|
|
|
463,078
|
|
2021
|
|
—
|
|
|
359,488
|
|
|
359,488
|
|
2022
|
|
1,500,000
|
|
|
359,488
|
|
|
1,859,488
|
|
2023
|
|
60,567
|
|
|
1,561,526
|
|
|
1,622,093
|
|
2024
|
|
—
|
|
|
561,700
|
|
|
561,700
|
|
2025 and thereafter
|
|
1,850,000
|
|
|
1,404,250
|
|
|
3,254,250
|
|
Total principal payments
|
|
3,437,878
|
|
|
4,682,219
|
|
|
8,120,097
|
|
Description
|
|
Principal (thousands)
|
|
Effective
Interest Rate |
|
Issuer
|
|
Guarantors
|
|
Collateral
|
|
Redemption
|
|
Interest payments
|
4.750% Senior Secured Euro Notes due March 2020 (1)
|
|
€387,900
|
|
6.00%
|
|
Parent
|
|
*
|
|
†
|
|
+
|
|
Annually in arrears
|
5.500% Senior Secured U.S. Dollar Notes due June 2020
|
|
$27,311
|
|
4.88%
|
|
IGT
|
|
**
|
|
††
|
|
++
|
|
Semi-annually in arrears
|
6.250% Senior Secured U.S. Dollar Notes due February 2022
|
|
$1,500,000
|
|
6.52%
|
|
Parent
|
|
*
|
|
†
|
|
+++
|
|
Semi-annually in arrears
|
4.750% Senior Secured Euro Notes due February 2023
|
|
€850,000
|
|
4.98%
|
|
Parent
|
|
*
|
|
†
|
|
+++
|
|
Semi-annually in arrears
|
5.350% Senior Secured U.S. Dollar Notes due October 2023
|
|
$60,567
|
|
5.47%
|
|
IGT
|
|
**
|
|
††
|
|
++
|
|
Semi-annually in arrears
|
3.500% Senior Secured Euro Notes due July 2024
|
|
€500,000
|
|
3.68%
|
|
Parent
|
|
*
|
|
†
|
|
+++
|
|
Semi-annually in arrears
|
6.500% Senior Secured U.S. Dollar Notes due February 2025
|
|
$1,100,000
|
|
6.71%
|
|
Parent
|
|
*
|
|
†
|
|
+++
|
|
Semi-annually in arrears
|
3.500% Senior Secured Euro Notes due June 2026
|
|
€750,000
|
|
3.65%
|
|
Parent
|
|
*
|
|
†
|
|
++++
|
|
Semi-annually in arrears
|
6.250% Senior Secured U.S. Dollar Notes due January 2027
|
|
$750,000
|
|
6.41%
|
|
Parent
|
|
*
|
|
†
|
|
+++
|
|
Semi-annually in arrears
|
2.375% Senior Secured Euro Notes due April 2028
|
|
€500,000
|
|
2.50%
|
|
Parent
|
|
*
|
|
†
|
|
++++
|
|
Semi-annually in arrears
|
†
|
Ownership interests of the Parent in certain of its direct subsidiaries and certain intercompany loans with principal balances in excess of $10 million.
|
††
|
Certain intercompany loans with principal balances in excess of $10 million.
|
+
|
The Parent may redeem in whole but not in part at any time prior to maturity at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. The Parent may also redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to redeem in whole or in part at 100% of their principal amount together with accrued and unpaid interest.
|
++
|
International Game Technology ("IGT") may redeem in whole or in part at any time prior to maturity at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. IGT may also redeem in whole or in part at 100% of their principal amount together with accrued and unpaid interest in connection with certain gaming regulatory events. Upon the occurrence of certain events, IGT will be required to offer to repurchase all of the notes at a price equal to 101% of their principal amount together with accrued and unpaid interest.
|
+++
|
The Parent may redeem in whole or in part at any time prior to the date which is six months prior to maturity at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. After such date, the Parent may redeem in whole or in part at 100% of their principal amount together with accrued and unpaid interest. The Parent may also redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to offer to repurchase all of the notes at a price equal to 101% of their principal amount together with accrued and unpaid interest.
|
++++
|
The Parent may redeem in whole or in part at any time prior to the first date set forth in the redemption price schedule at 100% of their principal amount together with accrued and unpaid interest and a make-whole premium. After such date, the Parent may redeem in whole or in part at a redemption price set forth in the redemption price schedule in the indenture, together with accrued and unpaid interest. The Parent may also redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to offer to repurchase all of the notes at a price equal to 101% of their principal amount together with accrued and unpaid interest.
|
Due Date
|
|
Amount (€ thousands)
|
|
January 25, 2021
|
|
320,000
|
|
January 25, 2022
|
|
320,000
|
|
January 25, 2023
|
|
540,000
|
|
Maximum Amount
Available (thousands)
|
|
Facility
|
|
Borrowers
|
$1,050,000
|
|
Revolving Credit Facility A
|
|
Parent, IGT, and IGT Global Solutions Corporation
|
€625,000
|
|
Revolving Credit Facility B
|
|
Parent and Lottomatica Holding S.r.l.
|
•
|
Commitment fees - payable on the aggregate undrawn and un-cancelled amount of the Revolving Credit Facilities depending on the Parent’s long-term ratings by Moody’s and S&P. The applicable rate was 0.725% at December 31, 2019.
|
•
|
Utilization fees - payable on the aggregate drawn amount of the Revolving Credit Facilities at a rate depending on the percentage of the Revolving Credit Facilities utilized. There was no balance as of December 31, 2019.
|
|
|
Letters of Credit Outstanding
|
|
|
||||||||
($ thousands)
|
|
Not under the
Revolving Credit
Facilities
|
|
Under the
Revolving Credit
Facilities
|
|
Total
|
|
Weighted-
Average
Annual Cost
|
||||
December 31, 2019
|
|
402,300
|
|
|
—
|
|
|
402,300
|
|
|
1.02
|
%
|
December 31, 2018
|
|
453,719
|
|
|
—
|
|
|
453,719
|
|
|
0.98
|
%
|
|
|
For the year ended December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Senior Secured Notes
|
|
(351,077
|
)
|
|
(352,293
|
)
|
|
(389,879
|
)
|
Term Loan Facilities
|
|
(36,138
|
)
|
|
(39,462
|
)
|
|
(23,567
|
)
|
Revolving Credit Facilities
|
|
(28,160
|
)
|
|
(27,805
|
)
|
|
(34,984
|
)
|
Other
|
|
(8,040
|
)
|
|
(12,058
|
)
|
|
(10,469
|
)
|
Interest expense
|
|
(423,415
|
)
|
|
(431,618
|
)
|
|
(458,899
|
)
|
Interest income
|
|
13,286
|
|
|
14,231
|
|
|
10,436
|
|
Interest expense, net
|
|
(410,129
|
)
|
|
(417,387
|
)
|
|
(448,463
|
)
|
15.
|
Income Taxes
|
|
|
For the year ended December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Income (loss) before provision for (benefit from) income taxes
|
|
284,767
|
|
|
304,048
|
|
|
(976,925
|
)
|
United Kingdom statutory tax rate
|
|
19.00
|
%
|
|
19.00
|
%
|
|
19.25
|
%
|
Statutory tax expense (benefit)
|
|
54,106
|
|
|
57,769
|
|
|
(188,058
|
)
|
|
|
|
|
|
|
|
|||
Base erosion and anti-abuse ("BEAT") tax
|
|
31,340
|
|
|
13,769
|
|
|
—
|
|
IRAP and state taxes
|
|
30,607
|
|
|
38,820
|
|
|
33,484
|
|
Non-deductible goodwill impairment
|
|
18,810
|
|
|
22,420
|
|
|
137,445
|
|
Foreign tax expense, net of U.S. federal benefit
|
|
13,585
|
|
|
14,930
|
|
|
14,500
|
|
Foreign tax and statutory rate differential (1)
|
|
10,805
|
|
|
48,040
|
|
|
(71,050
|
)
|
Change in unrecognized tax benefits
|
|
6,637
|
|
|
9,166
|
|
|
20,624
|
|
GILTI tax
|
|
4,575
|
|
|
11,079
|
|
|
—
|
|
Change in valuation allowances
|
|
507
|
|
|
(13,723
|
)
|
|
58,672
|
|
Italian allowance for corporate equity
|
|
(3,674
|
)
|
|
(4,515
|
)
|
|
(11,761
|
)
|
Non-taxable foreign exchange gain
|
|
(3,744
|
)
|
|
(12,384
|
)
|
|
—
|
|
Non-taxable gains on investments
|
|
(6,225
|
)
|
|
—
|
|
|
—
|
|
Italian tax settlement
|
|
—
|
|
|
16,664
|
|
|
—
|
|
Tax impact of Tax Act
|
|
—
|
|
|
(10,852
|
)
|
|
(114,219
|
)
|
Capital gain taxes on sale of Double Down Interactive LLC ("DoubleDown")
|
|
—
|
|
|
—
|
|
|
94,303
|
|
Other
|
|
15,780
|
|
|
(1,782
|
)
|
|
(3,354
|
)
|
|
|
173,109
|
|
|
189,401
|
|
|
(29,414
|
)
|
|
|
|
|
|
|
|
|||
Effective tax rate
|
|
60.8
|
%
|
|
62.3
|
%
|
|
3.0
|
%
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Deferred tax assets:
|
|
|
|
|
|
|
Net operating losses
|
|
175,342
|
|
|
226,249
|
|
Provisions not currently deductible for tax purposes
|
|
143,864
|
|
|
112,768
|
|
Section 163(j) interest limitation
|
|
93,522
|
|
|
75,778
|
|
Lease liabilities
|
|
79,328
|
|
|
—
|
|
Depreciation and amortization
|
|
43,034
|
|
|
49,548
|
|
Jackpot timing differences
|
|
40,550
|
|
|
42,651
|
|
Inventory reserves
|
|
3,437
|
|
|
10,497
|
|
Other
|
|
44,099
|
|
|
17,503
|
|
Gross deferred tax assets
|
|
623,176
|
|
|
534,994
|
|
Valuation allowance
|
|
(156,133
|
)
|
|
(170,831
|
)
|
Deferred tax assets, net of valuation allowance
|
|
467,043
|
|
|
364,163
|
|
|
|
|
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
|
Acquired intangible assets
|
|
536,244
|
|
|
589,993
|
|
Depreciation and amortization
|
|
175,254
|
|
|
157,260
|
|
Lease right-of-use assets
|
|
74,201
|
|
|
—
|
|
Other
|
|
21,058
|
|
|
24,876
|
|
Total deferred tax liabilities
|
|
806,757
|
|
|
772,129
|
|
Net deferred income tax liability
|
|
(339,714
|
)
|
|
(407,966
|
)
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Deferred income taxes - non-current asset
|
|
27,108
|
|
|
38,117
|
|
Deferred income taxes - non-current liability
|
|
(366,822
|
)
|
|
(446,083
|
)
|
|
|
(339,714
|
)
|
|
(407,966
|
)
|
|
|
December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
|
170,831
|
|
|
184,554
|
|
|
151,653
|
|
Expiration of tax attributes
|
|
(15,205
|
)
|
|
—
|
|
|
(25,771
|
)
|
Net charges to (income) expense
|
|
507
|
|
|
(13,723
|
)
|
|
58,672
|
|
Balance at end of year
|
|
156,133
|
|
|
170,831
|
|
|
184,554
|
|
|
|
December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
|
26,635
|
|
|
20,975
|
|
|
14,340
|
|
Additions to tax positions - current year
|
|
717
|
|
|
11,947
|
|
|
479
|
|
Additions to tax positions - prior years
|
|
2,358
|
|
|
16,973
|
|
|
7,503
|
|
Reductions to tax positions - current year
|
|
—
|
|
|
—
|
|
|
(893
|
)
|
Reductions to tax positions - prior years
|
|
—
|
|
|
(4,610
|
)
|
|
(41
|
)
|
Settlements
|
|
—
|
|
|
(17,238
|
)
|
|
—
|
|
Lapses in statutes of limitations
|
|
(535
|
)
|
|
(1,412
|
)
|
|
(413
|
)
|
Balance at end of year
|
|
29,175
|
|
|
26,635
|
|
|
20,975
|
|
16.
|
Commitments and Contingencies
|
($ thousands)
|
|
December 31, 2019
|
|
Current liabilities
|
|
74,725
|
|
Non-current liabilities
|
|
160,101
|
|
|
|
234,826
|
|
($ thousands)
|
|
Previous Winners
|
|
Future Winners
|
|
Total
|
|||
2020
|
|
32,589
|
|
|
41,988
|
|
|
74,577
|
|
2021
|
|
25,111
|
|
|
8,326
|
|
|
33,437
|
|
2022
|
|
22,338
|
|
|
689
|
|
|
23,027
|
|
2023
|
|
20,073
|
|
|
689
|
|
|
20,762
|
|
2024
|
|
17,496
|
|
|
689
|
|
|
18,185
|
|
Thereafter
|
|
93,745
|
|
|
10,329
|
|
|
104,074
|
|
Future jackpot payments due
|
|
211,352
|
|
|
62,710
|
|
|
274,062
|
|
Unamortized discounts
|
|
|
|
|
|
|
|
(39,236
|
)
|
Total jackpot liabilities
|
|
|
|
|
|
|
|
234,826
|
|
($ thousands)
|
|
Total bonds
|
|
Performance bonds
|
|
507,123
|
|
WAP bonds
|
|
218,419
|
|
Bid and litigation bonds
|
|
41,788
|
|
All other bonds
|
|
3,602
|
|
|
|
770,932
|
|
(a)
|
Steele, James et al. v. GTECH Corp., filed on December 9, 2014 in Travis County (No. D1GN145114). Through intervenor actions, over 1,200 plaintiffs claim damages in excess of $500.0 million. GTECH Corporation’s plea to the jurisdiction for dismissal based on sovereign immunity was denied. GTECH Corporation appealed. The appellate court ordered that plaintiffs' sole remaining claim should be reconsidered.
|
(b)
|
Nettles, Dawn v. GTECH Corp. et al., filed on January 7, 2015 in Dallas County (No. 051501559CV). Plaintiff claims damages in excess of $4.0 million. GTECH Corporation and the TLC won pleas to the jurisdiction for dismissal based on sovereign immunity. Plaintiff lost her appeal and petitioned for Texas Supreme Court review. On April 27, 2018, IGT Global Solutions Corporation petitioned for Texas Supreme Court review and the Texas Supreme Court heard arguments on December 3, 2019 in both the Nettles and Steele cases. A decision is expected by June 2020.
|
(c)
|
Guerra, Esmeralda v. GTECH Corp. et al., filed on June 10, 2016 in Hidalgo County (No. C277716B). Plaintiff claims damages in excess of $0.5 million.
|
(d)
|
Wiggins, Mario & Kimberly v. IGT Global Solutions Corp., filed on September 15, 2016 in Travis County (No. D1GN16004344). Plaintiffs claim damages in excess of $1.0 million.
|
(e)
|
Campos, Osvaldo Guadalupe et al. v. GTECH Corp., filed on October 20, 2016 in Travis County (No. D1GN16005300). Plaintiffs claim damages in excess of $1.0 million.
|
17.
|
Shareholders’ Equity
|
|
|
December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Balance at beginning of year
|
|
204,210,731
|
|
|
203,446,572
|
|
|
202,285,166
|
|
Shares issued under restricted stock plans
|
|
224,602
|
|
|
619,614
|
|
|
947,709
|
|
Shares issued upon exercise of stock options
|
|
—
|
|
|
144,545
|
|
|
213,697
|
|
Balance at end of year
|
|
204,435,333
|
|
|
204,210,731
|
|
|
203,446,572
|
|
Per share amount ($)
|
|
2019
|
|
2018
|
|
2017
|
|||
First Quarter
|
|
0.20
|
|
|
0.20
|
|
|
0.20
|
|
Second Quarter
|
|
0.20
|
|
|
0.20
|
|
|
0.20
|
|
Third Quarter
|
|
0.20
|
|
|
0.20
|
|
|
0.20
|
|
Fourth Quarter
|
|
0.20
|
|
|
0.20
|
|
|
0.20
|
|
Total cash dividends declared
|
|
0.80
|
|
|
0.80
|
|
|
0.80
|
|
|
|
|
|
Unrealized Gain (Loss) on:
|
|
AOCI
|
||||||||||||
|
|
Foreign
Currency
Translation
|
|
Hedges
|
|
Other
|
|
Total
|
|
Attributable
to non-controlling
interests
|
|
Attributable to IGT PLC
|
||||||
Balance at December 31, 2016
|
|
154,796
|
|
|
(1,673
|
)
|
|
6,734
|
|
|
159,857
|
|
|
786
|
|
|
160,643
|
|
Change during period
|
|
182,791
|
|
|
(6,610
|
)
|
|
(798
|
)
|
|
175,383
|
|
|
463
|
|
|
175,846
|
|
Reclassified to operations (1)
|
|
—
|
|
|
1,744
|
|
|
—
|
|
|
1,744
|
|
|
—
|
|
|
1,744
|
|
Tax effect
|
|
559
|
|
|
1,312
|
|
|
65
|
|
|
1,936
|
|
|
—
|
|
|
1,936
|
|
Other comprehensive income (loss)
|
|
183,350
|
|
|
(3,554
|
)
|
|
(733
|
)
|
|
179,063
|
|
|
463
|
|
|
179,526
|
|
Balance at December 31, 2017
|
|
338,146
|
|
|
(5,227
|
)
|
|
6,001
|
|
|
338,920
|
|
|
1,249
|
|
|
340,169
|
|
Change during period
|
|
(90,309
|
)
|
|
(163
|
)
|
|
(4,979
|
)
|
|
(95,451
|
)
|
|
18,691
|
|
|
(76,760
|
)
|
Reclassified to operations (1)
|
|
(4,254
|
)
|
|
536
|
|
|
—
|
|
|
(3,718
|
)
|
|
—
|
|
|
(3,718
|
)
|
Tax effect
|
|
3,779
|
|
|
(1,904
|
)
|
|
(29
|
)
|
|
1,846
|
|
|
—
|
|
|
1,846
|
|
Other comprehensive (loss) income
|
|
(90,784
|
)
|
|
(1,531
|
)
|
|
(5,008
|
)
|
|
(97,323
|
)
|
|
18,691
|
|
|
(78,632
|
)
|
Balance at December 31, 2018
|
|
247,362
|
|
|
(6,758
|
)
|
|
993
|
|
|
241,597
|
|
|
19,940
|
|
|
261,537
|
|
Change during period
|
|
(18,172
|
)
|
|
237
|
|
|
2,877
|
|
|
(15,058
|
)
|
|
15,906
|
|
|
848
|
|
Reclassified to operations (1)
|
|
1,623
|
|
|
(2,183
|
)
|
|
—
|
|
|
(560
|
)
|
|
—
|
|
|
(560
|
)
|
Tax effect
|
|
22
|
|
|
495
|
|
|
183
|
|
|
700
|
|
|
—
|
|
|
700
|
|
Other comprehensive (loss) income
|
|
(16,527
|
)
|
|
(1,451
|
)
|
|
3,060
|
|
|
(14,918
|
)
|
|
15,906
|
|
|
988
|
|
Balance at December 31, 2019
|
|
230,835
|
|
|
(8,209
|
)
|
|
4,053
|
|
|
226,679
|
|
|
35,846
|
|
|
262,525
|
|
18.
|
Variable Interest Entities
|
Name of subsidiary
|
|
% Ownership held by
the Company
|
|
Lottoitalia S.r.l. ("Lottoitalia")
|
|
61.50
|
%
|
Lotterie Nazionali S.r.l. ("LN")
|
|
64.00
|
%
|
Northstar New Jersey Lottery Group, LLC ("Northstar NJ") (1)
|
|
82.31
|
%
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
Current assets
|
|
842,893
|
|
|
890,664
|
|
Non-current assets
|
|
1,652,641
|
|
|
1,924,277
|
|
Total assets
|
|
2,495,534
|
|
|
2,814,941
|
|
|
|
|
|
|
||
Total liabilities
|
|
498,681
|
|
|
389,853
|
|
19.
|
Segment Information
|
For the year ended
December 31, 2019 |
|
North
America
Gaming and
Interactive
|
|
North
America
Lottery
|
|
International
|
|
Italy
|
|
Operating
Segment
Total
|
|
Corporate
Support
|
|
Purchase
Accounting
|
|
Total
|
||||||||
Service revenue
|
|
619,265
|
|
|
1,072,383
|
|
|
460,307
|
|
|
1,708,069
|
|
|
3,860,024
|
|
|
—
|
|
|
722
|
|
|
3,860,746
|
|
Product sales
|
|
451,382
|
|
|
92,816
|
|
|
379,881
|
|
|
981
|
|
|
925,060
|
|
|
—
|
|
|
—
|
|
|
925,060
|
|
Total revenue
|
|
1,070,647
|
|
|
1,165,199
|
|
|
840,188
|
|
|
1,709,050
|
|
|
4,785,084
|
|
|
—
|
|
|
722
|
|
|
4,785,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
263,968
|
|
|
256,192
|
|
|
126,825
|
|
|
520,673
|
|
|
1,167,658
|
|
|
(237,663
|
)
|
|
(292,867
|
)
|
|
637,128
|
|
Depreciation and amortization
|
|
117,940
|
|
|
157,042
|
|
|
61,405
|
|
|
169,607
|
|
|
505,994
|
|
|
12,586
|
|
|
194,877
|
|
|
713,457
|
|
Expenditures for long-lived assets
|
|
(126,579
|
)
|
|
(149,982
|
)
|
|
(39,909
|
)
|
|
(47,233
|
)
|
|
(363,703
|
)
|
|
(8,115
|
)
|
|
—
|
|
|
(371,818
|
)
|
For the year ended
December 31, 2018 |
|
North
America Gaming and Interactive |
|
North
America Lottery |
|
International
|
|
Italy
|
|
Operating
Segment
Total |
|
Corporate
Support |
|
Purchase
Accounting |
|
Total
|
||||||||
Service revenue
|
|
624,476
|
|
|
1,111,069
|
|
|
495,497
|
|
|
1,814,549
|
|
|
4,045,591
|
|
|
—
|
|
|
723
|
|
|
4,046,314
|
|
Product sales
|
|
378,693
|
|
|
80,833
|
|
|
324,486
|
|
|
930
|
|
|
784,942
|
|
|
—
|
|
|
—
|
|
|
784,942
|
|
Total revenue
|
|
1,003,169
|
|
|
1,191,902
|
|
|
819,983
|
|
|
1,815,479
|
|
|
4,830,533
|
|
|
—
|
|
|
723
|
|
|
4,831,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
218,860
|
|
|
296,527
|
|
|
142,077
|
|
|
541,254
|
|
|
1,198,718
|
|
|
(226,231
|
)
|
|
(325,496
|
)
|
|
646,991
|
|
Depreciation and amortization
|
|
105,295
|
|
|
152,135
|
|
|
62,688
|
|
|
161,758
|
|
|
481,876
|
|
|
14,495
|
|
|
209,089
|
|
|
705,460
|
|
Expenditures for long-lived assets
|
|
(150,440
|
)
|
|
(163,912
|
)
|
|
(60,456
|
)
|
|
(93,252
|
)
|
|
(468,060
|
)
|
|
(9,719
|
)
|
|
—
|
|
|
(477,779
|
)
|
For the year ended
December 31, 2017 |
|
North
America Gaming and Interactive |
|
North
America Lottery |
|
International
|
|
Italy
|
|
Operating
Segment
Total |
|
Corporate
Support |
|
Purchase
Accounting |
|
Total
|
||||||||
Service revenue
|
|
780,633
|
|
|
1,093,048
|
|
|
557,049
|
|
|
1,703,901
|
|
|
4,134,631
|
|
|
1,203
|
|
|
722
|
|
|
4,136,556
|
|
Product sales
|
|
377,065
|
|
|
92,174
|
|
|
332,015
|
|
|
1,149
|
|
|
802,403
|
|
|
—
|
|
|
—
|
|
|
802,403
|
|
Total revenue
|
|
1,157,698
|
|
|
1,185,222
|
|
|
889,064
|
|
|
1,705,050
|
|
|
4,937,034
|
|
|
1,203
|
|
|
722
|
|
|
4,938,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
278,963
|
|
|
289,025
|
|
|
163,799
|
|
|
478,540
|
|
|
1,210,327
|
|
|
(197,089
|
)
|
|
(1,064,330
|
)
|
|
(51,092
|
)
|
Depreciation and amortization
|
|
81,355
|
|
|
129,517
|
|
|
66,745
|
|
|
161,484
|
|
|
439,101
|
|
|
11,554
|
|
|
351,785
|
|
|
802,440
|
|
Expenditures for long-lived assets
|
|
(147,175
|
)
|
|
(204,104
|
)
|
|
(77,815
|
)
|
|
(188,013
|
)
|
|
(617,107
|
)
|
|
(3,964
|
)
|
|
—
|
|
|
(621,071
|
)
|
|
|
December 31,
|
||||
($ thousands)
|
|
2019
|
|
2018
|
||
North America Gaming and Interactive
|
|
3,467,583
|
|
|
3,655,694
|
|
North America Lottery
|
|
2,441,256
|
|
|
2,467,487
|
|
International
|
|
2,613,698
|
|
|
2,807,234
|
|
Italy
|
|
4,297,267
|
|
|
4,505,689
|
|
|
|
12,819,804
|
|
|
13,436,104
|
|
Corporate Support
|
|
824,786
|
|
|
212,398
|
|
|
|
13,644,590
|
|
|
13,648,502
|
|
|
|
December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
United States
|
|
2,115,791
|
|
|
2,063,477
|
|
|
2,195,791
|
|
Italy
|
|
1,743,845
|
|
|
1,824,004
|
|
|
1,728,472
|
|
United Kingdom
|
|
73,050
|
|
|
59,062
|
|
|
74,567
|
|
Rest of Europe
|
|
323,382
|
|
|
312,484
|
|
|
383,170
|
|
All other
|
|
529,738
|
|
|
572,229
|
|
|
556,959
|
|
Total
|
|
4,785,806
|
|
|
4,831,256
|
|
|
4,938,959
|
|
20.
|
Stock-Based Compensation
|
|
|
|
|
Weighted-Average
|
|
|
|||||
|
|
Stock
Options
|
|
Exercise Price Per Share ($)
|
|
Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value ($ thousands)
|
|||
Outstanding at January 1, 2019
|
|
1,785,383
|
|
|
21.07
|
|
|
|
|
|
|
Granted
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Exercised
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Expired
|
|
(644,817
|
)
|
|
21.66
|
|
|
|
|
|
|
Outstanding at December 31, 2019
|
|
1,140,566
|
|
|
20.73
|
|
|
1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
At December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest
|
|
1,140,566
|
|
|
20.73
|
|
|
1.43
|
|
—
|
|
Exercisable
|
|
968,066
|
|
|
19.06
|
|
|
0.91
|
|
—
|
|
|
|
2018
|
|
Valuation model
|
|
Monte Carlo
|
|
Exercise price ($)
|
|
30.12
|
|
Expected option term (in years)
|
|
2.83
|
|
Expected volatility of the Company’s stock (%)
|
|
35.00
|
|
Risk-free interest rate (%)
|
|
2.73
|
|
Dividend yield (%)
|
|
2.66
|
|
|
|
PSUs
|
|
Weighted- Average Grant Date Fair Value ($)
|
|
RSUs
|
|
Weighted- Average Grant Date Fair Value ($)
|
||||
Nonvested at January 1, 2019
|
|
4,270,047
|
|
|
25.79
|
|
|
59,913
|
|
|
30.21
|
|
Granted
|
|
2,133,512
|
|
|
11.10
|
|
|
131,676
|
|
|
14.10
|
|
Vested
|
|
(277,330
|
)
|
|
27.52
|
|
|
(61,580
|
)
|
|
29.84
|
|
Forfeited
|
|
(1,065,278
|
)
|
|
25.89
|
|
|
—
|
|
|
—
|
|
Nonvested at December 31, 2019
|
|
5,060,951
|
|
|
19.41
|
|
|
130,009
|
|
|
14.07
|
|
|
|
|
|
|
|
|
|
|
||||
At December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized cost for nonvested awards ($ thousands)
|
|
39,661
|
|
|
|
|
|
676
|
|
|
|
|
Weighted-average future recognition period (in years)
|
|
2.64
|
|
|
|
|
|
0.37
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||
PSUs granted during the year
|
|
2,133,512
|
|
|
1,564,083
|
|
|
1,723,730
|
|
Weighted-average grant date fair value ($)
|
|
11.10
|
|
|
28.93
|
|
|
17.74
|
|
|
|
|
|
|
|
|
|||
RSUs granted during the year
|
|
131,676
|
|
|
68,142
|
|
|
117,745
|
|
Weighted-average grant date fair value ($)
|
|
14.10
|
|
|
30.23
|
|
|
21.12
|
|
|
|
For the year ended December 31,
|
|||||||
($ thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Cost of services
|
|
2,131
|
|
|
1,923
|
|
|
26
|
|
Cost of product sales
|
|
430
|
|
|
445
|
|
|
(8
|
)
|
Selling, general and administrative
|
|
21,409
|
|
|
27,702
|
|
|
4,628
|
|
Research and development
|
|
2,544
|
|
|
3,016
|
|
|
58
|
|
Stock-based compensation expense before income taxes
|
|
26,514
|
|
|
33,086
|
|
|
4,704
|
|
Income tax benefit
|
|
6,119
|
|
|
7,562
|
|
|
975
|
|
Total stock-based compensation, net of tax
|
|
20,395
|
|
|
25,524
|
|
|
3,729
|
|
21.
|
Dispositions
|
22.
|
Earnings Per Share
|
|
|
For the year ended December 31,
|
|||||||
($ and shares in thousands, except per share amounts)
|
|
2019
|
|
2018
|
|
2017
|
|||
Numerator:
|
|
|
|
|
|
|
|
|
|
Net loss attributable to IGT PLC
|
|
(19,025
|
)
|
|
(21,350
|
)
|
|
(1,068,576
|
)
|
|
|
|
|
|
|
|
|||
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted-average shares - basic and diluted
|
|
204,373
|
|
|
204,083
|
|
|
203,130
|
|
|
|
|
|
|
|
|
|||
Net loss attributable to IGT PLC per common share - basic and diluted
|
|
(0.09
|
)
|
|
(0.10
|
)
|
|
(5.26
|
)
|
23.
|
Related Party Transactions
|
1 Year International Game Techn... Chart |
1 Month International Game Techn... Chart |
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