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Light Wonder, Inc. (LNW) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

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Light Wonder, Inc.

CIK: 750004 Ticker: LNW

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Scientific Games Provides Business Strategy Update and Reports Fourth Quarter and Full Year 2021 Results

Scientific Games to Be Rebranded “Light & Wonder,” Reflecting Transformation to a Cross-platform Global Game Company

Company Expects to Significantly De-lever, Targeting Net Debt Leverage Ratio(1) Range of 2.5x to 3.5x

Company Provides Capital Allocation Strategy and Authorizes $750 Million Share Repurchase Program

Lottery Divestiture Expected to Close in March(2) Providing Approximately $5 Billion in Net Cash Proceeds, Sports Betting Divestiture on Track to Close in Q2(2)

Strong Double Digit Growth in Consolidated Revenue From Continuing Operations, Up 21% in 4th Quarter and Up 27% for the Full Year


LAS VEGAS – March 1, 2022 —
Scientific Games Corporation (NASDAQ: SGMS) (“Scientific Games,” “SGC” or the “Company”) today reported results for the fourth quarter and fiscal year ended December 31, 2021.

Jamie Odell, Executive Chair, stated, “from the outset we recognized the enormous opportunity to drive increased shareholder value through re-structuring the balance sheet, redefining the portfolio and becoming a sustainable growth company. We are already seeing the early stages of the strategy successfully executed and with the announced divestitures, the Company will immediately shift from a debt to an equity story and achieve gearing significantly below the levels we underwrote in our investment thesis. We couldn’t be happier with the way the entire team have executed on the transformation strategy, and our initial expectations are already being exceeded.”

Barry Cottle, President and Chief Executive Officer of Scientific Games, said, “I want to thank our teams for a tremendously successful 2021. We would not be where we are today without their hard work and dedication that has enabled our transformative journey. We executed on a number of significant initiatives this past year including the announced sales of our Lottery and Sports Betting businesses, as we delivered on our promises. We want to be really clear on our capital priorities. First, debt reduction to a target net debt leverage ratio range of 2.5x to 3.5x. We expect to dedicate more than 90% of the Lottery proceeds to pay down debt, which combined with the expected Sports Betting proceeds will put us within our target range. Second, the Board has authorized a three-year, $750 million share repurchase program. We see buy-backs at current share price levels as highly accretive to shareholder value. And, third, we will always prefer using our capital for buy-backs, debt reduction and organic investments unless we are convinced that M&A will deliver greater long-term shareholder value than other uses of our capital.”

“Operationally, we are very pleased with the strong performance we achieved in the quarter which capped what was an outstanding year, as we grew double-digits on both top and bottom line and generated substantial cash flow while laying the foundation for future growth. As we begin this new chapter we have chosen a new name, Light & Wonder. A name that evokes the kind of feelings we want to capture in the work we do every day, excitement, inspiration, imagination and maybe even a little bit of magic and certainly a lot of fun. As we embark on this next phase, we’re grateful to be able to focus our energy on creating those experiences for our players.”

BUSINESS STRATEGY UPDATE
Overall the Company, now rebranded as Light & Wonder, is moving rapidly to execute on its vision with a singular focus to be the leading cross-platform global game company, accelerating efforts to de-lever and invest for sustainable growth.
Progressing on Asset Divestitures, we expect the Lottery transaction to close by the end of March(2) with approximately $5 Billion in net after-tax cash proceeds; the Sports Betting transaction is on track to close in Q2(2).
De-levering and transforming the balance sheet is a key focus, establishing a long-term net debt leverage ratio target range of 2.5x to 3.5x, rapidly moving from a debt to an equity story. We expect to be squarely in this range by the end of Q2 with the sale of Lottery and Sports Betting businesses.
Provided Capital Allocation Strategy, taking a balanced and opportunistic approach, significantly de-levering, returning substantial capital to shareholders, while investing in key growth opportunities.
Authorized a 3-year, $750 million share repurchase program, underscoring a clear commitment and opportunity to return significant capital to shareholders. It reflects our strengthened balance sheet, the recurring nature of our revenue, our strong cash flow generation and the tremendous value we see in our shares. The share repurchase program will be via one or more open market repurchases, privately negotiated transactions, including block trades, accelerated share repurchases, issuer tender offers or other derivative contracts or instruments, “10b5-1” plan, or other financial arrangements or other arrangements.
Investing in our largest growth opportunities, both organically and inorganically, in content and digital markets to accelerate growth. Organic investments directed at R&D, capex and the launch of our new Las Vegas iGaming studio. Announced SciPlay’s acquisition of proven casual game developer Alictus as we rapidly expand in the casual market. Further bolstering our portfolio and digital mix through acquisitions of Koukoi, Lightning Box Studio, Elk Studio and Authentic Gaming.

KEY ANNOUNCEMENTS
Rebranding Scientific Games - on March 1, 2022, we announced our intention to rebrand Scientific Games Corporation to Light & Wonder as part of the Lottery sale and to align to our vision of becoming the leading cross-platform global game company. Our legal name “Scientific Games Corporation” is expected to be legally changed to “Light & Wonder, Inc.” during the second quarter of 2022, upon satisfying all applicable legal requirements in the state of Nevada.
You will be able to access the Investor Relations section of our website at scientificgames.com/investors up to March 3, 2022, at which time the Light & Wonder website officially launches.
The ticker symbol for the Company’s common stock will be changed from SGMS to LNW at the time of the legal name change. The Company’s common stock will continue to be listed on The NASDAQ Stock Exchange. No action is required by existing stockholders with respect to the planned name and ticker symbol changes.
Light & Wonder is planning to hold an Investor Day on May 17, 2022, in New York City.



(1) Non-GAAP financial measure, defined below. Additional information on the non-GAAP financial measure targeted long-term net debt leverage ratio is available below.
(2) Subject to applicable regulatory approvals and customary closing conditions.


The following information was filed by Light Wonder, Inc. (LNW) on Tuesday, March 1, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Cover
Condensed Consolidated Statements Of Cash Flows
Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical)
Consolidated Statements Of Comprehensive Income (Loss)
Consolidated Statements Of Operations
Business Segments
Business Segments (Tables)
Business Segments - Additional Information (Details)
Business Segments - Schedule Of Segment Reporting Information, By Segment (Details)
Description Of The Business And Summary Of Significant Accounting Policies
Description Of The Business And Summary Of Significant Accounting Policies (Policies)
Description Of The Business And Summary Of Significant Accounting Policies (Tables)
Description Of The Business And Summary Of Significant Accounting Policies - Narrative (Details)
Description Of The Business And Summary Of Significant Accounting Policies - Schedule Of Business Acquisitions (Details)
Discontinued Operations
Discontinued Operations (Details)
Discontinued Operations (Tables)
Discontinued Operations- Narrative (Details)
Fair Value Measurements
Fair Value Measurements (Tables)
Fair Value Measurements - Additional Information (Details)
Fair Value Measurements - Effect Of Interest Rate Swap Contracts (Details)
Fair Value Measurements - Fair Value Of Hedges (Details)
Fair Value Measurements - Gains (Loss) And Interest Expense On Interest Rate Swap Contracts (Details)
Income Taxes
Income Taxes (Details)
Intangible Assets, Net And Goodwill
Intangible Assets, Net And Goodwill (Tables)
Intangible Assets, Net And Goodwill - Intangible Amortization Expense (Details)
Intangible Assets, Net And Goodwill - Reconciliation Of The Carrying Amount Of Goodwill (Details)
Intangible Assets, Net And Goodwill - Schedule Of Finite And Indefinite-Lived Intangible Assets (Details)
Inventories
Inventories (Details)
Inventories (Tables)
Leases
Leases (Tables)
Leases - Additional Information (Details)
Leases - Maturities Of Lease Liabilities (Details)
Leases - Supplemental Operating Lease Information (Details)
Litigation
Litigation (Details)
Long-Term And Other Debt
Long-Term And Other Debt (Tables)
Long-Term And Other Debt - Narrative (Details)
Long-Term And Other Debt - Schedule Of Outstanding Debt (Details)
Long-Term And Other Debt - Schedule Of Retired And Redeemed Debt And Interest Payments (Details)
Property And Equipment, Net
Property And Equipment, Net (Details)
Property And Equipment, Net (Tables)
Receivables, Allowance For Credit Losses And Credit Quality Of Receivables
Receivables, Allowance For Credit Losses And Credit Quality Of Receivables (Tables)
Receivables, Allowance For Credit Losses And Credit Quality Of Receivables - Allowance For Notes Receivable Activity (Details)
Receivables, Allowance For Credit Losses And Credit Quality Of Receivables - Components Of Accounts And Notes Receivable, Net (Details)
Receivables, Allowance For Credit Losses And Credit Quality Of Receivables - Components Of Notes Receivable, Net (Details)
Receivables, Allowance For Credit Losses And Credit Quality Of Receivables - Schedule Of Latam Receivables (Details)
Restructuring And Other
Restructuring And Other (Details)
Restructuring And Other (Tables)
Revenue Recognition
Revenue Recognition (Tables)
Revenue Recognition - Additional Information (Details)
Revenue Recognition - Balances In Receivables And Contract Asset Accounts (Details)
Revenue Recognition - Summary Of Contract Liabilities (Details)
Revenue Recognition - Summary Of Revenue By Type (Details)
Software, Net
Software, Net (Details)
Software, Net (Tables)
Stockholders' Deficit
Stockholders' Deficit (Tables)
Stockholders' Deficit - Narrative (Details)
Stockholders' Deficit - Schedule Of Changes In Equity (Details)
Stockholders' Deficit - Schedule Of Restricted Stock Units (Details)
Stockholders' Deficit - Stock Based Compensation Expense (Details)
Ticker: LNW
CIK: 750004
Form Type: 10-Q Quarterly Report
Accession Number: 0000750004-22-000016
Submitted to the SEC: Tue May 10 2022 4:46:50 PM EST
Accepted by the SEC: Tue May 10 2022
Period: Thursday, March 31, 2022
Industry: Computer Integrated Systems Design

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