Light & Wonder, Inc. · ASX:LNW

Light & Wonder — Scientific Games — Debt Investor Presentation (May 2013)

60 slides from Light & Wonder's debt investor presentation, May 14, 2013

1. Slide 1: Lender Presentation May 14, 2013

   Lender Presentation May 14, 2013 © 2013 Copyright Scientific Games Corporation. All Rights Reserved.

2. Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 2 Forward-Looking Statements; Non-GAAP Financial Measures Throughout this presentation, Scientific Games makes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looki

3. Slide 3: Forward-Looking Statements; Non-GAAP Financial Measures (Cont'd)

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 3 Forward-Looking Statements; Non-GAAP Financial Measures (Cont’d) Non-GAAP Financial Measures: This presentation includes certain financial measures that were not prepared in accordance with generally accepted accounting principles

4. Slide 4: Meeting Agenda & Presenters

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 4 Meeting Agenda & Presenters Transaction Overview Transaction Rationale Key Credit Highlights Scientific Games Overview WMS Overview Synergy Overview Indicative Terms and Timeline Lorne Weil Chairman & CEO, Scientific Games Jeff Li

5. Slide 5: Transaction Overview

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 5 Transaction Overview

6. Slide 6: Transaction Overview

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 6 Transaction Overview On January 31, 2013, Scientific Games Corporation (“SGMS,” “Scientific Games” or the “Company”) announced its proposed acquisition of WMS Industries Inc. (“WMS”) for $26.00 per share Acquisition price implies

7. Slide 7: Existing and Combined Debt Capitalization

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 7 As of 3/31/13 Existing and Combined Debt Capitalization SGMS WMS Adj. Combined Cash and Cash Equivalents (1) $90 $58 $44 $192 Existing Revolvers $85 ($85) New Revolver ($300mm) SGMS Term Loan A 558 (558) New Term Loan B ("TLB") 2,

8. Slide 8: Transaction Rationale

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 8 Transaction Rationale

9. Slide 9: A Transformative Combination: Scale and Scope

   © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 9 A Transformative Combination: Scale and Scope Transaction Creates one of the largest B2B / B2G global gaming suppliers Combines leading companies in gaming machines, lottery instant tickets, systems, sports betting and interactive

10. Slide 10: Leverages Core Competencies of Both Companies

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 10 Leverages Core Competencies of Both Companies Sophisticated systems technology Hardware sourcing, engineering and manufacturing expertise Proficiency in developing and procuring complex B2G / B2B opportunities Wide-ranging field

11. Slide 11: Strategy: Expand Geographic Footprint and Scope of Product Offerings

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 11 Strategy: Expand Geographic Footprint and Scope of Product Offerings Game Content Terminals Systems/ Server-Based Games U.S. Centric Business 2016 Turnkey B2B Gaming Global Business Strategy: Leverage both shared and unique compe

12. Slide 12: Scientific Games Overview

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 12 Scientific Games Overview

13. Slide 13: Overview of Scientific Games

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 13 Overview of Scientific Games A leader in ~$75 billion worldwide instant ticket category (1) Largest portfolio of licensed brands for lotteries A leader in value chain management services for lotteries A leader in lottery loyalty

14. Slide 14: Printed Products Segment

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 15 Printed Products Segment Instant ticket supplier to 40 U.S. jurisdictions and experience selling into ~50 countries; extensive experience in emerging markets Five highly sophisticated, secure printing facilities on four continent

15. Slide 15: Lottery Systems Segment

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 16 Lottery Systems Segment Provides customized computer software, equipment and data communications networks to lotteries A leading provider of terminals and software Instant ticket validation networks 11 full-service facilities man

16. Slide 16: Gaming Segment

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 17 Gaming Segment Leading supplier of server-based gaming terminals and systems for betting shops, bingo halls and arcades in the U.K. Installed base of approximately 24,000 participation machines International presence in Caribbean

17. Slide 17: Strategic Equity Investments

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 18 Strategic Equity Investments Lotterie Nazionali S.r.l. (LNS) - Gratta e Vinci) - The largest instant ticket lottery in the world - 20% equity interest CSG Lottery Technology (CSG) - Printer of instant tickets for the China Sports

18. Slide 18: SGMS Interactive Gaming

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 19 SGMS Interactive Gaming Business Activities currently reside within each business unit Lottery Loyalty and rewards programs Interactive second chance drawings Sports betting iLottery gaming platform iGaming (casino-style games) E

19. Slide 19: WMS Overview

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 20 WMS Overview

20. Slide 20: WMS Business Overview

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 21 WMS Business Overview Product Sales Gaming Operations Interactive Gaming LTM 3/31/13 Revenue: $690mm LTM 3/31/13 Attributable EBITDA: $230mm Headquartered in Waukegan, Illinois with on-ground presence in 14 countries worldwide Gl

21. Slide 21: WMS Business Overview: Revenue by Product and Geography

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 22 WMS Business Overview LTM 3/31/13 Revenue by Product LTM 3/31/13 Revenue by Geography 84% 16% 59% 35% 6% Outside U.S. and Canada U.S. and Canada Product Sales Gaming Operations Interactive

22. Slide 22: WMS Product Sales

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 23 30% 16% 13% 41% WMS Product Sales Sales of video slots, mechanical slots & video poker Current ASP of ~$15,000+ @ ~50% margin 20+% ship share in March 2013 quarter, ex VLTs 70 new game themes introduced in fiscal 2012 Sales of hi

23. Slide 23: WMS Gaming Operations

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 24 59% 6% 3% 32% WMS Gaming Operations WMS-owned slot machines leased to casino operators Participation leases based on revenue share as % of coin-in, % of net win, fixed daily fee or a combination Installed base of over 9,600 parti

24. Slide 24: WMS Interactive Products and Services

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 25 WMS Interactive Products and Services Managed Services Remote Game Server Integration Provides comprehensive suite of B2B online products & services Real-- Leverage library of games for online & mobile distribution a white-label

25. Slide 25: Key Credit Highlights

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 26 Key Credit Highlights

26. Slide 26: Key Credit Highlights

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 27 Diverse and Recurring Revenue Base Specialized Industry Characteristics Marquee Customer Relationships and Leading Portfolio of Brands Key Credit Highlights Substantial Free Cash Flow Generation Favorable Industry Dynamics Leadin

27. Slide 27: Leading Global Gaming Technology Supplier

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 28 Leading Global Gaming Technology Supplier Source: Company filings. (1) Revenue, EBITDA and EBITDA margin of Lottomatica, Intralot, Ainsworth Game Technology and Pollard Banknote are for CY 2012 period. Revenue, EBITDA and EBITDA

28. Slide 28: Favorable Industry Dynamics

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 29 $57 $58 $58 $58 $59 $62 $67 $69 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013E Favorable Industry Dynamics $(40) $(75) $(80) $(45) $(110) $(191) $(130) $(107) 2002 2003 2004 2005 2009 2010 2011 2012 U.S. State B

29. Slide 29: Diverse Revenue Base

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 30 Diverse Revenue Base Slot Machine Sales Interactive (Gaming & Social Media) Draw Games Player Loyalty VLTs / Gaming Machines Interactive (Lottery, Gaming & Social Media) Instant Tickets Sports Betting High Profile, Player-Favorit

30. Slide 30: Diverse and Recurring Revenue Base

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 31 Diverse and Recurring Revenue Base Note: U.S. Dollars in millions. WMS fiscal year ends June 30. Combined LTM 3/31/13 Revenue by Business Segment Combined FY 2012 Revenue by Geography 31% 16% 10% 43% 67% 33% Lottery 47% SGMS Gami

31. Slide 31: Recurring Revenue Base

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 32 Recurring Revenue Base Approximately Two-Thirds of CY 2012 Combined Revenue is “Recurring” Typical Contract Terms WMS Recurring Revenue 17% Scientific Games Printed Products: U.S. contracts generally 3-5 year terms, frequently wi

32. Slide 32: Specialized Industry Characteristics

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 33 Specialized Industry Characteristics Customers are government or government-sponsored entities Long-term contracts with renewal options Complex procurement process requiring strong government relations and proposal competencies S

33. Slide 33: Marquee Customer Relationships

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 34 Marquee Customer Relationships Denotes SGMS & WMS overlapping customers

34. Slide 34: Leading Portfolio of Licensed and Proprietary Brands

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 35 Leading Portfolio of Licensed and Proprietary Brands

35. Slide 35: Substantial Free Cash Flow Generation

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 36 Substantial Free Cash Flow Generation The combination of SGMS and WMS is expected to generate meaningful cash flow In CY 2012, SGMS and WMS spent ~18% of combined revenue in capex; however, excluding one-time WMS items, capex rep

36. Slide 36: Synergy Overview

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 37 Synergy Overview

37. Slide 37: Highly Achievable Cost Synergies

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 38 $7 $22 $9 $18 $34 $60 $50 $100 Year 1 Year 2 Highly Achievable Cost Synergies Anticipated Cost Synergies: Components & Timing LTM 3/31/13 Combined Company Costs Anticipated run-rate cost savings of $100 million, representing less

38. Slide 38: Anticipated SG&A Cost Synergies: Detail

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 39 $12 $26 $14 $20 $26 $60 $22 $18 $60 $100 Year 2 Anticipated SG&A Cost Synergies: Detail Reduce combined SG&A headcount by 12% Eliminate duplicative technology platforms Relocate development activities off-shore Eliminate duplicat

39. Slide 39: Anticipated R&D Cost Synergies: Detail

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 40 $22 $18 $60 $100 Year 2 Anticipated R&D Cost Synergies: Detail Merge various content studios, technologies, and licenses into an enterprise content development and delivery organization Relocate software development off-shore, le

40. Slide 40: Anticipated COGS Savings: Detail

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 41 Anticipated COGS Savings: Detail Year 2 Illustrative Units Sold (WMS) (Based on Current Volumes) 22,000 Pro Forma Average Savings Per Unit ~$1,000 Anticipated Savings as a % of Current Average Cost Per Unit 12.5% Illustrative Man

41. Slide 41: Anticipated CapEx Savings: Detail

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 42 Anticipated CapEx Savings: Detail Recent WMS capital expenditures impacted by accelerated replacement of gaming operations footprint and various one-time projects Pro forma spending levels as a percentage of revenue are more in l

42. Slide 42: Potential Revenue Synergies

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 43 Potential Revenue Synergies 1 International Expansion: WMS < 20% international vs. SGMS ~50% international 2 Cross-selling: WMS gaming machines sold to government entities and SGMS systems sold to casino customers 4 Game Content:

43. Slide 43: One-Time Costs and Integration Costs

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 44 One-Time Costs and Integration Costs Executive change of control payments 50% of stay bonuses ~$20mm Total: ~$66mm Severance 50% of stay bonuses BoD fees Insurance coverage Merger integration costs ~$46mm Non-cash retention bonus

44. Slide 44: Financial Overview

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 45 Financial Overview

45. Slide 45: SGMS Historical Performance

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 46 $303 $327 $343 2010 2011 2012 SGMS Historical Performance ($ in millions) $799 $879 $941 2010 2011 2012 Revenue Attributable EBITDA (1) Excludes results from racing business, which was sold in October 2010. ($ in millions) (1) (1

46. Slide 46: WMS Historical Performance

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 48 WMS Historical Performance ($ in millions) ($ in millions) Revenue Attributable EBITDA $798 $714 $689 CY 2010 CY 2011 CY 2012 $282 $239 $239 CY 2010 CY 2011 CY 2012 Note: Amounts represent calendarized historical financial result

47. Slide 47: WMS March 2013 Quarter Performance Highlights

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 49 WMS March 2013 Quarter Performance Highlights Product Sales Excluding VLTs, quarterly ship share improved to over 20% Shipped nearly 1,000 new Blade cabinets, with strong in-casino play performance reported In anticipation of the

48. Slide 48: Combined LTM Performance

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 50 Combined LTM Performance ($ in millions) LTM 3/31/13 Combined Revenue and Attributable EBITDA $926 $335 $690 $230 $100 $1,616 $665 Combined Revenue Combined Attributable EBITDA SGMS WMS Anticipated Cost Synergies (1) WMS Attribut

49. Slide 49: Substantial Free Cash Flow Generation

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 51 SGMS $335 WMS $230 $63 $100 ($81) $20 ($236) ($154) ($21) ($40) $565 ($256) $196 $0 $200 $400 $600 $800 Combined LTM 3/31/13 Attributable EBITDA Anticipated Run-Rate Cost Synergies Cash Flow from Equity Investments EBITDA from Eq

50. Slide 50: Long-Dated Capital Structure with Substantial Liquidity

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 52 $23 $23 $2,162 $250 $350 $300 $300 $25 $23 $23 $23 $573 $373 $2,462 2014 2015 2016 2017 2018 2019 2020 Term Loan B Other Debt Senior Sub Notes Revolver Maturity Long-Dated Capital Structure with Substantial Liquidity No near-term

51. Slide 51: Indicative Terms and Timeline

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 53 Indicative Terms and Timeline

52. Slide 52: Summary Term Sheet: Senior Secured Credit Facilities

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 54 Summary Term Sheet Senior Secured Credit Facilities Borrower: Scientific Games International, Inc. SGI Facilities: $300mm Revolving Credit Facility (“Revolver”) $2,300mm Term Loan B (“TLB”) Guarantors: Scientific Games Corporatio

53. Slide 53: Corporate Structure (Following Merger)

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 55 Corporate Structure (Following Merger) Scientific Games International, Inc. (“SGI”) Gaming North America, Inc. Foreign Subsidiaries Domestic Subsidiaries Foreign Subsidiaries Foreign Subsidiaries Scientific Games Corporation (NAS

54. Slide 54: Key Transaction Dates

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 56 Key Transaction Dates Date Key Milestones May 14th Lender meeting May 16th Post credit agreement May 21st Comments to credit agreement due Commitments due Fall Expect to receive gaming regulatory approvals Closing and funding May

55. Slide 55: Public Lender Q&A

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 57 Public Lender Q&A

56. Slide 56: Appendix

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 58 Appendix

57. Slide 57: Reconciliation Information

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 59 Reconciliation Information ($ in millions) Three months ended LTM 3/31/10 3/31/11 3/31/12 3/31/13 3/31/13 Reconciliation to SGMS Attributable EBITDA Net Income (Loss) $5 ($7) $2 ($12) ($77) Income Tax Expense 2 5 5 4 13 Depreciat

58. Slide 58: Reconciliation to EBITDA from Equity Investments and WMS Attributable EBITDA

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 60 ($ in millions) Twelve months ended December 31, Three months ended LTM 2010 2011 2012 3/31/10 3/31/11 3/31/12 3/31/13 3/31/13 Reconciliation to EBITDA from Equity Investments: Earnings from Equity Investments $49 $29 $28 $16 $9

59. Slide 59: Reconciliation to Revenue and Attributable EBITDA Excluding Racing Business

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 61 ($ in millions) Three Twelve Months Months Ended Ended 3/31/10 12/31/10 SGMS Revenue $216 $882 Less: Revenue from Racing Business (25) (84) SGMS Revenue Excluding Racing Business $192 $799 Reconciliation to SGMS Attributable EBIT

60. Slide 60: Reconciliation Information (Cont'd)

    © 2013 Copyright Scientific Games Corporation. All Rights Reserved. 62 - Reconciliation Information (Cont’d) Scientific Games’ management uses non-GAAP financial measures (such as Attributable EBITDA and EBITDA from Equity Investments) in conjunction with GAAP financial measures to: monitor and eval

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