Scientific Games' Third Quarter 2013 Revenue Rises 4%

            Scientific Games' Third Quarter 2013 Revenue Rises 4%

Strength of Core Businesses Drives 12% Increase in Attributable EBITDA

PR Newswire

NEW YORK, Nov. 7, 2013

NEW YORK, Nov. 7, 2013 /PRNewswire/ -- Scientific Games Corporation (Nasdaq:
SGMS) (the "Company") today announced results for the third quarter ended
September 30, 2013.

Summary Financial Results^(1)
($ in millions, except per share amounts)
                            Three Months Ended  Nine Months Ended
                            September 30,
                                                September 30,
                            2013       2012     2013      2012
Revenue                     $234.4     $224.6   $689.0    $681.8
Operating income^(2)        25.7       16.5     49.2      52.8
Attributable EBITDA:
 Continuing operations    $91.9      $82.3    $257.1    $252.3
 Discontinued operations  (0.1)      0.2      (0.8)     0.5
 Attributable EBITDA
                            $91.8      $82.5    $256.3    $252.8

Net loss^(2):
 Continuing operations    $(0.4)     $(24.6)  $(25.0)   $(31.6)
 Discontinued operations  (0.1)      (2.6)    (1.6)     (6.3)
 Net loss             $(0.5)     $(27.2)  $(26.6)   $(37.9)
Net loss per share^(2):
 Continuing operations    $(0.01)    $(0.27)  $(0.29)   $(0.34)
 Discontinued operations  (0.00)     (0.03)   (0.02)    (0.07)
 Net loss per share   $(0.01)    $(0.30)  $(0.31)   $(0.41)
Capital expenditures        $31.9      $29.7    $112.3    $80.0
Free cash flow^(2)          (6.2)      (5.1)    (16.7)    27.9

    All financial results referenced herein reflect those of Scientific Games
(1) through the periods ended September 30, 2013 and do not reflect the
    acquisition of WMS Industries Inc. ("WMS") on October 18, 2013.
    In connection with the WMS acquisition, the Company incurred professional
    fees and other expenses for the three and nine months ended September 30,
(2) 2013 of approximately $2.5 million and $8.7 million, respectively, which
    impacted operating income, net loss, net loss per share and free cash flow
    for those periods.

Attributable EBITDA and free cash flow are non-GAAP financial measures defined
below under "Non-GAAP Financial Measures" and reconciled to GAAP financial
measures in the accompanying tables.

Scientific Games sold its installed base of gaming terminals in its pub
business on March 25, 2013. The related results of operations are presented as
discontinued operations in the Company's financial statements for all periods
presented. All financial results referenced in this press release are for
continuing operations only, unless otherwise noted. 

Business Highlights

  oOn October 18, 2013, Scientific Games completed the acquisition of WMS,
    creating a leading company in the lottery and gaming industries with
    innovative content, world-class technology and an expansive geographic
    footprint, enabling the combined company to supply an extensive range of
    products and services to customers throughout the world

       oIn connection with the WMS acquisition, the Company terminated its
         prior credit agreement and entered into new senior secured credit
         facilities in an aggregate principal amount of $2.6 billion,
         comprised of a $300 million revolving credit facility and a $2.3
         billion term loan facility

  oThe Company extended its contract with Ladbrokes, a major U.K. bookmaker,
    pursuant to which the Company will be the sole provider of approximately
    9,000 server-based gaming machines to Ladbrokes through March 2019 
  oOn October 1, 2013, the Northstar New Jersey Lottery Group, a joint
    venture in which Scientific Games owns an approximate 18% equity interest,
    commenced marketing and sales services for the New Jersey Lottery
  oThis week, Scientific Games, in conjunction with bidding partners 888
    Holdings and Williams Interactive, a subsidiary of Scientific Games,
    launched iGaming for the Delaware Lottery and casinos, offering poker,
    casino table games and casino slots games
  oScientific Games recently signed a number of lottery contract extensions,
    including the following:

       oA contract extension with the Florida Lottery to continue supplying
         instant tickets and cooperative services ("CSP") through September
         2018
       oA contract extension with the Missouri Lottery to continue supplying
         instant tickets on a percentage of sales ("POS") basis and our
         Properties Plus^® loyalty and rewards program through June 2015 and
         October 2014, respectively

"Our strong third quarter results and recent contract wins and extensions
reflect the strength of our core businesses and our focus on delivering
results," Chairman and Chief Executive Officer A. Lorne Weil commented. "We
are also elated to welcome WMS employees to the Scientific Games family.
Closing the WMS acquisition marks a new chapter for all of us. The strength
and momentum of our combined operations establishes an excellent platform for
near- and long-term growth. We are uniting two companies with highly
complementary businesses and excellent management and operating talent to
create a leading lottery and gaming company with a comprehensive portfolio of
products and services for customers around the world."

Jeffrey S. Lipkin, Senior Vice President and Chief Financial Officer, added,
"We are proud of our team for delivering strong quarterly operating results,
while also remaining focused on the execution of a number of important
contract wins and completing the acquisition of WMS. We are now well underway
in executing on our comprehensive integration plans and remain confident in
our ability to deliver on the expected synergies. We expect the combined
company to benefit from the strength of both companies' innovative content and
offerings, visible and recurring revenue streams and a solid capital
structure."

Business Update

The Company's third quarter results reflected the strong overall performance
of its core businesses, which led to a 4% increase in revenue and 12% rise in
attributable EBITDA year-over-year.

Third quarter instant ticket and draw game retail sales of the Company's U.S.
customers increased 4.2% and 7.6%, respectively. Instant ticket performance
was generally stronger in states where the Company provides instant game
product management services while draw game sales benefited from two large
Powerball^® jackpots in the quarter.

The Company's licensed properties business, including its Properties Plus
program, was also an important contributor to the quarter's results and
benefited from several promotional games, anniversary-themed games and linked
games.

Instant ticket retail sales results in Italy continued to demonstrate signs of
stabilization. Third quarter retail sales increased 0.4% compared to the
prior-year period, reflecting an improvement on the year-over-year decreases
that occurred in the first and second quarters of 2013. In China, instant
ticket retail sales declined 2.3% in the third quarter compared to the
prior-year period. The Company is pursuing a number of initiatives to further
diversify its business in China.

The Company's U.K. gaming business faced difficult year-over-year comparisons
against strong gross win levels in the prior-year period. Additionally, we
believe weather-related and economic conditions in the U.K. affected player
activity and gross win in betting shops, resulting in a 4.7% year-over-year
decline in gross win per terminal per day in the third quarter. Betting shop
results were most significantly impacted by weather conditions in July.
However, the Company recently completed its roll-out of more than 7,000
Infinity terminals to the entire Gala Coral estate and is seeing a positive
player response to the enhanced functionality of the terminal. The Company is
planning the roll-out of approximately 9,000 new Clarity terminals to
Ladbrokes' entire U.K. estate in the first half of 2014.

A number of important company initiatives for 2013 recently launched,
including sales of instant games in Panama and the Dominican Republic, and
Northstar New Jersey's commencement of marketing and sales services for the
New Jersey Lottery, and the Delaware Lottery's launch of iGaming, with
Scientific Games and 888 Holdings serving as the primary vendor.

The most significant recent development was Scientific Games' acquisition of
WMS, which closed on October 18, 2013. Integration implementation is now well
underway and is focused on positioning the Company to realize the expected
synergies. 

In connection with the WMS acquisition, the Company incurred professional fees
and other expenses totaling approximately $2.5 million in the third quarter of
2013, with additional transaction-related fees and expenses related to the
closing incurred or anticipated to be incurred in the fourth quarter of 2013.

Third Quarter 2013 Operating Results by Segment
($ in millions)
                  Revenue             Operating Income (Loss)
                  Three Months Ended  Three Months Ended

                  September 30,       September 30,
                  2013       2012     2013           2012
Printed Products  $132.7     $127.4   $39.2          $30.3
Lottery Systems   69.0       61.9     8.3            8.9
Gaming            32.7       35.4     0.9            (4.4)



Printed Products

Revenue

  oRevenue growth of 4% was primarily driven by a $7.2 million increase from
    our licensed properties business, consisting of a $1.9 million increase in
    revenue from our Properties Plus customers and a $5.3 million increase in
    revenue from licensed games. Revenue growth also reflected a $3.9 million
    increase in revenue from customers that purchase tickets on a CSP and POS
    basis, and a $2.8 million increase in revenue from international customers
    who purchase tickets on a price-per-thousand basis
  oThese increases were partially offset by an $8.0 million decrease in
    revenue primarily due to lower revenue from U.S. customers that purchase
    tickets on a price-per-thousand basis, as well as a $0.7 million negative
    foreign exchange impact

Operating Income

  oThe $8.9 million or 29% increase in operating income was driven by:

       oa $7.4 million benefit from a higher and more profitable revenue mix
       oa $1.3 million decrease in depreciation and amortization as the
         prior-year period was negatively impacted by $1.9 million of
         accelerated depreciation related to closing of our Australia printing
         facility

Lottery Systems

Revenue

  oSales revenue increased $5.3 million or 43%, largely due to higher sales
    of hardware and software to international customers
  oService revenue increased $1.8 million or 4%, primarily driven by higher
    international service revenue and two large Powerball jackpots

Operating Income

  oOperating income decreased $0.6 million or 7%, as the $3.6 million benefit
    of a higher and more profitable revenue mix was offset by a $3.0 million
    increase in depreciation and amortization primarily related to new
    hardware development and terminal deployments, along with a $1.3 million
    increase in selling, general and administrative expenses principally due
    to higher accounts receivable reserves and investments in growth
    initiatives

Gaming

Revenue

  oThe $1.9 million decline in sales revenue primarily reflected lower sales
    of gaming terminals to bingo and arcade customers and customers outside
    the U.K.
  oThe $0.7 million decline in service revenue was principally due to a $0.7
    million negative foreign exchange impact and a decrease in gross win
    levels, partially offset by an increase in our installed base of gaming
    terminals

Operating Income

  oThe $5.4 million increase in operating income was largely due to:

       oa $2.6 million reduction in selling, general and administrative
         expenses primarily related to lower net accounts receivable reserves
         and cost savings initiatives
       oa $2.2 million decrease in depreciation and amortization, reflecting
         the write-down of gaming terminals in the prior-year period
       othe absence of $1.5 million of employee termination and restructuring
         costs recorded in the prior-year period

  oThe increase in operating income was partially offset by lower revenue

Interest Expense and Other Income (Expense)

  oInterest expense decreased by $0.9 million due to additional interest
    expense incurred in the prior-year period in connection with the
    refinancing of $200 million of 7.875% senior subordinated notes
  oThe prior-year period reflected a write-off of $15.5 million of deferred
    financing costs associated with the refinancing of the senior subordinated
    notes
  oOther income decreased by $0.7 million principally due to an increase in
    foreign exchange transaction expense 

Earnings and EBITDA from Equity Investments

  oEarnings from equity investments decreased by $2.3 million, primarily due
    to lower results from the Company's International Terminal Leasing ("ITL")
    joint venture due to a change in the estimated useful lives of certain
    gaming terminals
  oEBITDA from equity investments increased by $1.3 million, primarily
    reflecting higher results from the Company's joint venture in Italy

Liquidity and Capital Resources

  oAt September 30, 2013, we had cash and cash equivalents of $73.5 million
    and availability under our revolving credit facility of $210.3 million
  oWe had total debt of $1,459.1 million at September 30, 2013 compared to
    $1,468.2 million at December 31, 2012
  oIn connection with the WMS acquisition, the Company terminated its prior
    credit agreement on October 18, 2013 and entered into new senior secured
    credit facilities in aggregate principal amount of $2.6 billion, comprised
    of a $300 million revolving credit facility and a $2.3 billion term loan
    facility. The term loan facility was used, in part, to finance the WMS
    acquisition, to pay off all indebtedness under our and WMS's prior credit
    agreements and to pay related acquisition and financing fees and expenses
  oFree cash flow for the third quarter was $(6.2) million compared to $(5.1)
    million in the prior-year period, principally reflecting increased working
    capital usage that was timing-related and an increase in capital
    expenditures driven primarily by printing press upgrades and gaming
    terminal purchases for the U.K.
  oWe received $3.1 million of return of capital payments from equity
    investments in the third quarter, which are not included in the free cash
    flow metric:

       oItaly joint venture - $2.0 million
       oITL - $1.1 million

  oWe received $0.6 million in cash dividends in the third quarter from our
    equity investment in Roberts Communications Network
  oWe made the following equity investments in the third quarter:

       oGreece joint venture - $42.9 million, partially from previously
         restricted cash
       oNorthstar New Jersey joint venture - $0.9 million

Conference Call Details

Scientific Games will host a conference call today at 5:00 pm Eastern Time to
review these results and discuss other topics. To access the call live via a
listen-only webcast, please visit www.scientificgames.com and click on the
webcast link under the Investor Information section. To access the call by
telephone, please dial (877) 415-3186 (U.S. and Canada) or (857) 244-7329
(international). The conference ID is 14501704.

A presentation summarizing the results will also be provided in the Investor
Information section on our website prior to the conference call. A replay of
the webcast and accompanying presentation will be archived in the Investor
Information section on our website. 

About Scientific Games
Scientific Games Corporation is a leading developer of technology-based
products and services and associated content for worldwide gaming and lottery
markets. The Company's portfolio includes instant and draw-based lottery
games; electronic gaming machines and game content; server-based lottery and
gaming systems; sports betting technology; loyalty and rewards programs; and
social, mobile and interactive content and services. For more information,
please visit: www.scientificgames.com.

Company Contacts
Investor Relations:
Cindi Buckwalter, (212) 754-2233
William Pfund, (847) 785-3167

Media Relations:
Aimee Remey, (212) 754-2233

Forward-Looking Statements
In this press release, the Company makes "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements describe future expectations, plans, results or
strategies and can often be identified by the use of terminology such as
"may," "will," "estimate," "intend," "continue," "believe," "expect,"
"anticipate," "should," "could," "potential," "opportunity," or similar
terminology. Forward-looking statements may contain expectations regarding
activities, financial position, operations, synergies and other results
following our acquisition of WMS. These statements are based upon management's
current expectations, assumptions and estimates and are not guarantees of
timing, future results or performance. Actual results may differ materially
from those contemplated in these statements due to a variety of risks and
uncertainties and other factors, including, among other things: competition;
material adverse changes in economic and industry conditions; technological
change; retention and renewal of existing contracts and entry into new or
revised contracts; effect of indebtedness on our operations and financial
condition; availability and adequacy of cash flows to satisfy obligations and
indebtedness or future needs; protection of our intellectual property; ability
to license third party intellectual property; intellectual property rights of
others; security and integrity of software and systems; reliance on
information technology systems; laws and government regulation, including
those relating to gaming licenses, permits and operations; inability to
identify, complete and integrate future acquisitions; inability to benefit
from, and risks associated with, strategic equity investments and
relationships; inability of our joint venture to meet the net income targets
or otherwise to realize the anticipated benefits under its private management
agreement with the Illinois Lottery; inability of our joint venture to meet
the net income targets or other requirements under its agreement to provide
marketing and sales services to the New Jersey Lottery or otherwise to realize
the anticipated benefits under such agreement (including as a result of a
protest); failure to realize the anticipated benefits related to the award to
our consortium of an instant ticket concession in Greece; the seasonality of
our business; disruption of our current plans and operations in connection
with our acquisition of WMS; failure to achieve the intended benefits of the
WMS acquisition, including due to the inability to realize synergies in the
anticipated amounts or within the contemplated time-frames or cost
expectations, or at all; inability to identify and capitalize on trends and
changes in the lottery and gaming industries, including the potential
expansion of regulated gaming via the internet; inability to enhance and
develop successful gaming concepts; slow growth of gaming jurisdictions or the
casino industry; decline in the replacement cycle of gaming machines;
consolidation or ownership changes in the casino industry; dependence on
suppliers and manufacturers; liability for product defects; fluctuations in
foreign currency exchange rates and other factors associated with
international operations; influence of certain stockholders; dependence on key
personnel; failure to perform under our contracts; resolution of pending or
future litigation; labor matters; and stock price volatility. Additional
information regarding risks and uncertainties and other factors that could
cause actual results to differ materially from those contemplated in
forward-looking statements is included from time to time in the Company's
filings with the Securities and Exchange Commission ("SEC"), including in our
Annual Report on Form 10-K filed with the SEC on March 12, 2013 and in our
subsequent periodic reports. Forward-looking statements speak only as of the
date they are made and, except for the Company's ongoing obligations under the
U.S. federal securities laws, the Company undertakes no obligation to publicly
update any forward-looking statements whether as a result of new information,
future events or otherwise.

Non-GAAP Financial Measures
All references in the section below to our "credit agreement" refer to the
Company's prior credit agreement that was in effect as of September 30, 2013
and, as discussed above, was subsequently terminated on October 18, 2013 in
connection with the Company's entry into its new credit facilities.

"Attributable EBITDA," as used herein, is based on the definition of
"consolidated EBITDA" in our credit agreement (summarized below), except that
attributable EBITDA as used herein includes our share of the EBITDA of all of
our equity investments (whereas "consolidated EBITDA" for purposes of the
credit agreement generally includes our share of the EBITDA of our Italian
joint venture but only the income of our other equity investments to the
extent it has been distributed to us). Attributable EBITDA is a non-GAAP
financial measure that is presented herein as a supplemental disclosure and is
reconciled to net income (loss) in a schedule below.

Attributable EBITDA includes adjustments only to the extent contemplated by
the definition of "consolidated EBITDA" in our credit agreement (which
adjustments are summarized in the paragraph below). For purposes of
calculating our financial ratios under the credit agreement, consolidated
EBITDA is calculated over a trailing period of four consecutive fiscal
quarters and more recent adjustments may replace older adjustments within such
four-quarter period, subject to any caps specified in the credit agreement
with respect to particular categories of adjustments (as discussed below).
Accordingly, the aggregate amount of any such adjustments within a particular
category reported in our quarterly earnings releases over a four-quarter
period may exceed such cap over such period (but will not exceed such cap in
any particular quarter).

"Consolidated EBITDA" means, for any period, "consolidated net income" as
defined in the credit agreement (i.e., generally our consolidated net income
(or loss) excluding the income (or deficit) of our equity investments (other
than our Italian joint venture) except to the extent that such income has been
distributed to us) for such period plus, to the extent deducted in calculating
such consolidated net income for such period, the sum of (1) income tax
expense, (2) depreciation and amortization expense, (3) interest expense
(other than any interest expense of our Italian joint venture in respect of
debt for borrowed money of such joint venture if such debt exceeds $25,000,000
in the aggregate), (4) amortization or write-off of debt discount and debt
issuance costs and commissions, discounts and other fees and charges
associated with debt (see line item captioned "Debt-Related Fees and Charges"
in the schedules below), (5) amortization of intangibles (including goodwill)
and organization costs (see line item captioned "Amortization of Intangibles"
in the schedules below), (6) earn-out payments with respect to certain
acquisitions that we have made or any other "permitted acquisitions"
(generally, acquisitions of companies that are primarily engaged in the same
or related line of business and that become subsidiaries of ours, or
acquisitions of all or substantially all of the assets of another company or
division or business unit of another company), including any loss or expense
with respect to such earn-out payments (see line item captioned "Earn-Outs for
Permitted Acquisitions" in the schedules below), (7) extraordinary charges or
losses determined in accordance with GAAP, (8) non-cash stock-based
compensation expenses, (9) any cash compensation expense incurred but not paid
in such period so long as no cash payment in respect thereof is made or
required to be made prior to the scheduled maturity of the borrowings under
the credit agreement (provided that up to $993,000 of non-cash compensation
expense accrued prior to August 25, 2011 may be added back notwithstanding
that cash payments may be required to be made in respect thereof prior to the
scheduled maturity of the borrowings) (see line item captioned "Deferred
Contingent Compensation Expense" in the schedules below), (10) up to
$3,000,000 of expenses, charges or losses resulting from certain Peru
investments (see line item captioned "Peru Investment Expenses, Charges or
Losses" in the schedules below), (11) the non-cash portion of any
non-recurring write-offs or write-downs as required in accordance with GAAP
(see line item captioned "Non-Recurring Write-Offs under GAAP" in the
schedules below), (12) advisory fees and related expenses paid to advisory
firms in connection with "permitted acquisitions" (see line item captioned
"Acquisition Advisory Fees" in the schedules below), (13) certain specified
"permitted add-backs" (i.e., (A) up to $15,000,000 (less the amount of certain
permitted pro forma adjustments to "consolidated EBITDA" in connection with
material acquisitions) of charges incurred during any 12-month period in
connection with (i) reductions in workforce, (ii) contract losses,
discontinued operations, shutdown expenses and cost reduction initiatives,
(iii) transaction expenses incurred in connection with potential acquisitions
and divestitures, whether or not consummated, and (iv) restructuring charges
and transaction expenses incurred in connection with certain transactions with
Playtech Limited or its affiliates, and (B) reasonable and customary costs
incurred in connection with amendments to the credit agreement) (see line item
captioned "Specified Permitted Add-Backs" in the schedules below) (provided
that the foregoing items (1) through (13) do not include write-offs or
write-downs of accounts receivable or inventory and, except with respect to
"permitted add-backs", any write-off or write-down to the extent it is in
respect of cash payments to be made in a future period), (14) to the extent
treated as an expense in the period paid or incurred, certain payments, costs
and obligations made or incurred by us in connection with any award of a
concession to operate the instant ticket lottery in Italy, including any
up-front fee required under the applicable tender process (see line item
captioned "Italian Concession Obligations" in the schedules below), (15)
restructuring charges, transaction expenses and shutdown expenses incurred in
connection with the disposition of all or part of our racing and venue
management businesses, together with any charges incurred in connection with
discontinued operations and cost-reduction initiatives associated with such
disposition, in an aggregate amount (for all periods combined) not to exceed
$7,325,000 (see line item captioned "Racing Disposition Charges and Expenses"
in the schedules below) and (16) up to 5,250,000 pounds Sterling during any
four-quarter period of expenses or charges incurred in connection with the
payment of license royalties or other fees to Playtech Limited or its
affiliates and for software services provided to Global Draw or Games Media by
Playtech Limited or its affiliates (see line item captioned "Playtech
Royalties and Fees" in the schedules below), minus, to the extent included in
the statement of such consolidated net income for such period, the sum of (1)
interest income, (2) extraordinary income or gains determined in accordance
with GAAP and (3) income or gains with respect to earn-out payments with
respect to acquisitions referred to above (see line item captioned "Income on
Earn-Outs for Permitted Acquisitions" in the schedules below), provided that
the aggregate amount of "consolidated EBITDA" that is attributable to the
Company's interest in its Italian joint venture that would not have otherwise
been permitted to be included in "consolidated EBITDA" prior to giving effect
to the March 11, 2011 amendment to the credit agreement will be capped at
$25,000,000 in any period of four consecutive fiscal quarters (or $30,000,000
in the case of any such period ending on or prior to June 30, 2012).
"Consolidated EBITDA" is also subject to certain adjustments in connection
with material acquisitions and dispositions as provided in the credit
agreement. The foregoing definitions of "consolidated net income" and
"consolidated EBITDA" are qualified in their entirety by reference to the full
text of such definitions in our credit agreement, which was amended and
restated on August 25, 2011, a copy of which is attached as Exhibit 10.1 to
our Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 31, 2011.

Free cash flow, as included herein, represents net cash provided by operating
activities less total capital expenditures (which includes lottery and gaming
systems expenditures and other intangible assets and software expenditures).
Free cash flow is a non-GAAP financial measure that is presented herein as a
supplemental disclosure and is reconciled to net cash provided by operating
activities in a schedule below.

EBITDA from equity investments, as included herein, represents our share of
the EBITDA (i.e., earnings (whether or not distributed to us) plus income tax
expense, depreciation and amortization expense and interest (income) expense,
net of other) of our equity investees. EBITDA from equity investments is a
non-GAAP financial measure that is presented herein as a supplemental
disclosure and is reconciled to earnings from equity investments in a schedule
below.

The Company's management uses the foregoing non-GAAP financial measures in
conjunction with GAAP financial measures to: monitor and evaluate the
performance of the Company's business operations, as well as the performance
of its equity investments, which have become a more significant part of the
Company's business; facilitate management's internal comparisons of the
Company's historical operating performance of its business operations;
facilitate management's external comparisons of the results of its overall
business to the historical operating performance of other companies that may
have different capital structures and debt levels; review and assess the
operating performance of the Company's management team; analyze and evaluate
financial and strategic planning decisions regarding future operating
investments; and plan for and prepare future annual operating budgets and
determine appropriate levels of operating investments. Accordingly, the
Company's management believes that these non-GAAP financial measures are
useful to investors to provide them with disclosures of the Company's
operating results on the same basis as that used by the Company's management.

In addition, the Company's management believes that attributable EBITDA is
helpful in assessing the overall operating performance of the Company and its
equity investments and highlighting trends in the Company's and its equity
investees' core businesses that may not otherwise be apparent when relying
solely on GAAP financial measures, because this non-GAAP financial measure
eliminates from the Company's and its equity investees' earnings financial
items that management believes have less bearing on the Company's and its
equity investees' performance, such as income tax expense, depreciation and
amortization expense and interest (income) expense. Moreover, management
believes attributable EBITDA is useful to investors because a significant and
increasing amount of the Company's business is through its equity
investments. Management further believes that attributable EBITDA and free
cash flow provide useful information regarding the Company's liquidity and its
ability to service debt and fund investments. Management believes that EBITDA
from equity investments is helpful in monitoring the financial performance of
the Company's equity investments and eliminates from the equity investees'
earnings financial items that management believes have less bearing on the
equity investments' performance.

The Company's management also believes attributable EBITDA is useful to
investors because the definition is derived from the definition of
"consolidated EBITDA" in our credit agreement, which is used to calculate the
Company's compliance with the financial covenants contained in the credit
agreement. Moreover, attributable EBITDA and free cash flow (calculated by
subtracting total capital expenditures (which includes lottery and gaming
systems expenditures and other intangible assets and software expenditures)
from attributable EBITDA) are metrics used in determining performance-based
bonuses (subject to certain additional adjustments in the discretion of the
Compensation Committee (e.g., to take into account changes in applicable
accounting rules during the year)).

Accordingly, the Company's management believes that the presentation of the
non-GAAP financial measures, when used in conjunction with GAAP financial
measures, provides both management and investors with financial information
that can be useful in assessing the Company's financial condition and
operating performance.

The non-GAAP financial measures used herein should not be considered in
isolation of, as a substitute for, or superior to, the financial information
prepared in accordance with GAAP. The non-GAAP financial measures as defined
in this press release may differ from similarly titled measures presented by
other companies. The non-GAAP financial measures, as well as other information
in this press release, should be read in conjunction with the Company's
financial statements filed with the Securities and Exchange Commission.



SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
                            Three Months Ended        Nine Months Ended
                            September 30,             September 30,
                            2013         2012         2013         2012
Revenue:
Instant tickets             $       $       $       $     
                            129,647      124,434      378,998      367,385
Services                   80,810       79,782       247,753      252,022
Sales                      23,950       20,421       62,288       62,431
Total revenue               234,407      224,637      689,039      681,838
Operating expenses:
Cost of instant             70,645       73,085       210,349      211,468
tickets^(1)
Cost of services ^(1)       42,583       41,024       135,020      127,253
Cost of sales^(1)           13,311       12,784       39,262       43,949
Selling, general and        46,994       43,767       143,789      135,529
administrative
Employee termination and    -            1,817        331          9,868
restructuring
Depreciation and            35,219       35,655       111,052      100,941
amortization
Operating income            25,655       16,505       49,236       52,830
Other (expense) income:
Interest expense           (25,125)     (25,990)     (75,271)     (75,073)
Earnings from equity        3,381        5,702        13,012       21,462
investments
Early extinguishment of     -            (15,464)     -            (15,464)
debt
Other income (expense),     (45)         656          (850)        (30)
net
Total other expense         (21,789)     (35,096)     (63,109)     (69,105)
Net income (loss) before    3,866        (18,591)     (13,873)     (16,275)
income tax expense
Income tax expense          4,232        5,962        11,163       15,322
Net loss from continuing    $       $       $       $     
operations                    (366)    (24,553)     (25,036)     (31,597)
Discontinued operations:
Loss from discontinued      $       $       $       $     
operations                    (111)     (3,298)     (2,793)     (8,289)
Other (expense) income      -            (119)        (46)         (63)
Gain on sale of assets      -            -            828          -
Income tax benefit          26           837          468          2,046
Net loss from discontinued  $       $       $       $     
operations                     (85)    (2,580)     (1,543)     (6,306)
Net loss                    $       $       $       $     
                              (451)    (27,133)     (26,579)     (37,903)
Basic earnings per share:
Continuing operations       $       $       $       $     
                             (0.01)     (0.27)     (0.29)     (0.34)
Discontinued operations     (0.00)       (0.03)       (0.02)       (0.07)
Basic net loss              $       $       $       $     
                             (0.01)     (0.30)     (0.31)     (0.41)
Diluted earnings per
share:
Continuing operations       $       $       $       $     
                             (0.01)     (0.27)     (0.29)     (0.34)
Discontinued operations     (0.00)       (0.03)       (0.02)       (0.07)
Diluted net loss            $       $       $       $     
                             (0.01)     (0.30)     (0.31)     (0.41)
Weighted average number of
shares:
Basic shares               85,128       89,950       84,919       91,723
Diluted shares             85,128       89,950       84,919       91,723
(1) Exclusive of
depreciation and
amortization.





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited, in thousands)
                                               September 30,   December 31,
                                               2013            2012
Assets:
Cash and cash equivalents                      $    73,461  $   109,015
Other current assets                           331,680         375,603
Property and equipment, net                    375,069         376,877
Equity investments                             353,683         316,234
Other long-term assets                         1,022,335       1,009,179
 Total assets                                $  2,156,228   $  2,186,908
Liabilities and Stockholders' Equity:
Current portion of long-term debt              $    11,085  $    16,458
Other current liabilities                      209,489         239,889
Long-term debt, excluding current portion      1,448,051       1,451,708
Other long-term liabilities                    132,964         114,062
Stockholders' equity                           354,639         364,791
 Total liabilities and stockholders' equity  $  2,156,228   $  2,186,908





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED SEGMENT OPERATING DATA
(Unaudited, in thousands)
                         Three Months Ended September 30, 2013
                                                         Unallocated
                         Printed   Lottery              Corporate
                         Products  Systems    Gaming     Expense      Totals
Instant tickets          $       $      $      $       $  
                         129,647    -       -        -     129,647
Services                 -         51,167     29,643     -            80,810
Sales                    3,041     17,816     3,093      -            23,950
 Total revenue        132,688   68,983     32,736     -            234,407
Cost of instant          70,645    -          -          -            70,645
tickets^(1)
Cost of services ^(1)    -         28,436     14,147     -            42,583
Cost of sales^(1)        2,168     9,890      1,253      -            13,311
Selling, general and     10,717    6,862      5,145      18,485       41,209
administrative
Stock-based              832       653        290        4,010        5,785
compensation
Employee termination     -         -          -          -            -
and restructuring
Depreciation and         9,151     14,887     10,980     201          35,219
amortization
Operating income (loss)  $      $      $      $        $   
from continuing          39,175    8,255       921     (22,696)    25,655
operations
                         Three Months Ended September 30, 2012
                                                         Unallocated
                         Printed   Lottery              Corporate
                         Products  Systems    Gaming     Expense      Totals
Instant tickets          $       $      $      $       $  
                         124,434    -       -        -     124,434
Services                 -         49,391     30,391     -            79,782
Sales                    2,932     12,469     5,020      -            20,421
 Total revenue        127,366   61,860     35,411     -            224,637
Cost of instant tickets  73,085    -          -          -            73,085
^(1)
Cost of services^(1)     -         27,852     13,172     -            41,024
Cost of sales^(1)        1,844     6,997      3,943      -            12,784
Selling, general and     10,567    5,658      7,565      14,085       37,875
administrative
Stock-based              863       583        448        3,998        5,892
compensation
Employee termination     287       -          1,530      -            1,817
and restructuring
Depreciation and         10,426    11,877     13,202     150          35,655
amortization
Operating income (loss)  $      $      $       $        $   
from continuing          30,294    8,893      (4,449)   (18,233)    16,505
operations
(1) Exclusive of
depreciation and
amortization.





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CONSOLIDATED SEGMENT OPERATING DATA
(Unaudited, in thousands)
                         Nine Months Ended September 30, 2013
                                                         Unallocated
                         Printed   Lottery              Corporate
                         Products  Systems    Gaming     Expense      Totals
Instant tickets          $       $      $      $       $  
                         378,998    -       -       -       378,998
Services                 -         153,427    94,326     -            247,753
Sales                    10,099    42,619     9,570      -            62,288
 Total revenue        389,097   196,046    103,896    -            689,039
Cost of instant          210,349   -          -          -            210,349
tickets^(1)
Cost of services ^(1)    -         86,441     48,579     -            135,020
Cost of sales^(1)        7,132     26,450     5,680      -            39,262
Selling, general and     33,486    19,987     16,743     56,284       126,500
administrative
Stock-based              2,460     1,906      973        11,950       17,289
compensation
Employee termination     331       -          -          -            331
and restructuring
Depreciation and         26,963    42,756     40,809     524          111,052
amortization
Operating income (loss)  $       $       $       $        $   
                         108,376  18,506     (8,888)   (68,758)     49,236
                         Nine Months Ended September 30, 2012
                                                         Unallocated
                         Printed   Lottery              Corporate
                         Products  Systems    Gaming     Expense      Totals
Instant tickets          $       $      $      $       $  
                         367,385    -       -       -       367,385
Services                 -         153,511    98,511     -            252,022
Sales                    8,177     37,446     16,808     -            62,431
 Total revenue        375,562   190,957    115,319    -            681,838
Cost of instant          211,468   -          -          -            211,468
tickets^(1)
Cost of services ^(1)    -         84,174     43,079     -            127,253
Cost of sales^(1)        5,245     23,681     15,023     -            43,949
Selling, general and     31,745    17,791     19,160     49,352       118,048
administrative
Stock-based              2,544     1,701      1,258      11,978       17,481
compensation
Employee termination     4,794     -          5,074      -            9,868
and restructuring
Depreciation and         31,242    35,953     33,297     449          100,941
amortization
Operating income (loss)  $      $       $       $        $   
                         88,524    27,657     (1,572)   (61,779)     52,830
(1) Exclusive of
depreciation and
amortization.





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ATTRIBUTABLE EBITDA
RECONCILIATION OF EARNINGS FROM EQUITY INVESTMENTS TO EBITDA FROM EQUITY
INVESTMENTS
(Unaudited, in thousands)
                          Three Months Ended        Nine Months Ended
                          September 30,             September 30,
                          2013         2012         2013         2012
Net loss from             $       $         $         $   
continuing operations     (366)       (24,553)     (25,036)     (31,597)
Add: Income tax expense   4,232        5,962        11,163       15,322
Add: Depreciation and     35,219       35,655       111,052      100,941
amortization
Add: Interest expense     25,125       25,990       75,271       75,073
Add: Early                -            15,464       -            15,464
extinguishment of debt
Add/Less: Other           45           (656)        850          30
(income) expense
EBITDA from continuing    $        $        $         $   
operations                64,255       57,862       173,300      175,233
Credit Agreement
adjustments:
Add: Debt-Related Fees    $       $        $       $    
and Charges ^(1)            -        15,509          8      15,564
Add: Amortization of      -            -            -            -
Intangibles
Add: Earn-outs for        -            -            -            -
Permitted Acquisitions
Add: Extraordinary
Charges or Losses under   -            -            -            -
GAAP
Add: Non-Cash
Stock-Based               5,785        5,892        17,289       17,481
Compensation Expenses
Add: Deferred
Contingent Compensation   -            -            -            -
Expense
Add: Non-Recurring        -            -            15           -
Write-Offs under GAAP
Add: Acquisition          2,460        485          8,752        1,156
Advisory Fees
Add: Specified
Permitted Add-Backs       162          2,326        3,048        11,241
^(2)
Add: Italian Concession   -            -            -            -
Obligations
Add: Racing Disposition   -            -            -            -
Charges and Expenses
Add: Playtech Royalties   2,228        1,834        6,379        5,364
and Fees
Less: Interest Income     (47)         (296)        (192)        (356)
Less: Extraordinary
Income or Gains under     -            -            -            -
GAAP
Less: Income on
Earn-Outs for Permitted   -            -            -            -
Acquisitions
Adjustments to conform
to Credit Agreement
definition:
Add/Less: Other           (45)         656          (850)        (30)
(income) expense ^(3)
Less: Early               -            (15,464)     -            (15,464)
extinguishment of debt
Less: Earnings from       (3,381)      (5,702)      (13,012)     (21,462)
equity investments
Add: EBITDA from equity   20,475       19,202       62,319       63,535
investments
Attributable EBITDA
from continuing           91,892       82,304       257,056      252,262
operations
Attributable EBITDA
from discontinued         (111)        197          (824)        483
operations
Attributable EBITDA       $         $         $          $  
                          91,781       82,501       256,232      252,745
EBITDA from equity
investments ^(4):
Earnings from equity      $       $       $        $    
investments               3,381        5,702        13,012       21,462
Add: Income tax expense   2,597        2,477        8,337        9,250
Add: Depreciation and     12,943       10,192       38,666       29,884
amortization
Add: Interest expense,    1,554        831          2,304        2,939
net of other
EBITDA from equity        $        $        $        $    
investments               20,475       19,202       62,319       63,535
EBITDA from
discontinued operations
Net loss from             $       $        $        $    
discontinued operations    (85)       (2,580)      (1,543)      (6,306)
Less: Income tax          (26)         (837)        (468)        (2,046)
benefit
Add: Depreciation and     -            3,586        597          7,904
amortization
Add: Credit agreement     -            28           590          931
adjustments
EBITDA from               $       $       $       $     
discontinued operations   (111)        197        (824)        483
(1) Amounts reflect write-off of unamortized deferred financing costs in
connection with early extinguishment
of debt and other debt-related fees and charges.
(2) Amounts include management
transition expenses, transaction
expenses and restructuring expenses.
(3) Amounts include foreign exchange
transactions, interest income,
minority interest and other items.
(4) EBITDA from equity investments includes
results from the Company's participation in
Lotterie Nazionali
S.r.l., Roberts Communications Network, LLC,
Beijing CITIC Scientific Games Technology Co.,
Ltd., Sportech
Plc, Sciplay (through January 23, 2012), Beijing
Guard Libang Technology Co., Ltd. and Northstar
Lottery Group, LLC.





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
CALCULATION OF FREE CASH FLOW
(Unaudited, in thousands)
                            Three Months Ended          Nine Months Ended
                            September 30,               September 30,
                            2013           2012         2013         2012
Net cash provided by        $         $        $       $   
operating activities        25,654        24,572      95,693      107,928
Less: Capital               (7,886)        (4,883)      (22,893)     (9,194)
expenditures
Less: Lottery and gaming    (8,269)        (11,367)     (51,334)     (30,723)
systems expenditures
Less: Other intangible
assets and software         (15,711)       (13,408)     (38,116)     (40,109)
expenditures
 Total Capital           $          $         $         $   
Expenditures                (31,866)      (29,658)    (112,343)   (80,026)
Free cash flow              $         $        $        $    
                            (6,212)       (5,086)     (16,650)    27,902
For the third quarter ended September 30, 2013, the
Company received return of capital payments from its
equity investments in LNS of $2.0 million and ITL of
$1.1 million. For the third quarter ended
September 30, 2012, the Company received no return of
capital payments from its equity investments.
For the second quarter ended June 30, 2013, the Company received
return of capital payments from its equity
investments in LNS of $13.9 million and CLN of $2.2 million. For
the second quarter ended June 30, 2012, the
Company received return of capital payments from its equity
investments in LNS of $15.1 million and ITL of $0.9 million.
For the first quarter ended March 31, 2013, the Company
received no return of capital payments from its equity
investments. For the first quarter ended March 31,
2012, the Company received return of
capital payments from its equity investment in ITL of
$2.2 million.
These items were not included in the
Company's Free Cash Flow metric.





SCIENTIFIC GAMES CORPORATION AND SUBSIDIARIES
KEY PERFORMANCE INDICATORS
(Unaudited, in millions, except terminals and ASP)
                               Three Months Ended September  Nine Months Ended
                               30,                           September 30,
                               2013              2012        2013      2012
Italy - Gratta e Vinci ^(1):
Retail Sales (Euros) ^(1)      2,253             2,243       7,173     7,296
China - China Sports Lottery
^(1):
Retail Sales (RMB)             3,806             3,897       12,440    13,480
Tickets Sold                   497               510         1,621     1,801
ASP (RMB)                      7.66              7.64        7.67      7.48
                               As of September 30,
Terminal installed base at     2013              2012
end of period:
Global Draw                   27,230            24,752
Games Media                   -                 2,514
Barcrest                       3,065             4,352
(1) Information provided by
third-party lottery
operators.





SOURCE Scientific Games Corporation

Website: http://www.scientificgames.com
 
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