XML 107 R17.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Acquisitions | 12 Months Ended
--- | ---
Dec. 31, 2019
Business Combinations [Abstract] |
Acquisitions | Acquisitions We account for business combinations in accordance with ASC 805, which requires us to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition related restructuring costs from acquisition accounting. 2018 Acquisitions NYX Gaming Group Limited Purchase Price Allocation On January 5, 2018, we completed the acquisition of all outstanding ordinary shares of NYX, creating a leading digital provider of sports wagering, iGaming and iLottery technologies, platforms, content, products and services. We paid $666 million in cash to acquire ordinary shares and other securities and to redeem NYX’s outstanding debt (including $92 million paid during the fourth quarter of 2017 to acquire NYX ordinary shares and other securities). The fair value of our NYX non-controlling equity interest held immediately before the acquisition date was $90 million. We incurred $8 million and $15 million of NYX acquisition-related costs which were recorded in Restructuring and other for the years ended December 31, 2018 and 2017, respectively. The following table summarizes the allocation of the purchase price, which reflects an $8 million adjustment from the preliminary allocation during the first quarter of 2018 and primarily related to the provisional amounts recognized for certain receivables and liabilities for which we have subsequently obtained and evaluated more detailed information than existed at the measurement date:
|  | January 5, 2018
Cash, cash equivalents and restricted cash |  | $ | 23 |
Accounts receivable and other current assets(1) |  | 56 |
Property and equipment and other non-current assets(1) |  | 22 |
Goodwill |  | 368 |
Intangible assets |  | 350 |
Total assets |  | $ | 819 |
Current liabilities(2) |  | $ | 74 |
Deferred income taxes |  | 66 |
Assumed debt and other liabilities |  | 300 |
Total liabilities |  | $ | 440 |
Total consideration transferred |  | $ | 379 |
(1) Including $41 million and $13 million of receivables and contract assets, respectively.
(2) Including $16 million of contract liabilities.
Cash, cash equivalents and restricted cash, accounts receivable and other current assets and most liabilities (other than as primarily related to deferred income taxes) were valued at the existing carrying values which approximated the estimated fair values. The fair value of deferred income taxes was determined by applying the applicable enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the acquired assets and assumed liabilities. The fair value of intangible assets was determined using a combination of the relief from royalty method and the excess earnings method using Level 3 inputs in the hierarchy as established by ASC 820. The discount rates used in the valuation analysis ranged between 10% and 14%, and the royalty rate used was 0.5%. The following table details the intangible assets that have been identified:
| Fair Value |  | Weighted Average Useful Life (Years)
Customer relationships | $ | 214 |  |  | 7
Intellectual property(1) | 127 |  |  | 7
Trade names | 10 |  |  | 7
(1) Primarily consists of core technology and content.
The factors contributing to the recognition of acquisition goodwill are based on enhanced financial and operational scale, market diversification, expected cost and operational synergies, assembled workforce and other strategic benefits. None of the resultant goodwill is expected to be deductible for income tax purposes. NYX revenue and net loss since the acquisition date included in our consolidated results were as follows:
| Year Ended
| December 31, 2018
Revenue | $ | 198 |
Net loss | 41 |
The acquired NYX business was integrated into our Digital business segment. The following unaudited pro forma financial information for the years ended December 31, 2018 and 2017 give effect to the NYX acquisition as if it had been completed on January 1, 2017:
| Year Ended December 31,
| 2018 |  | 2017
Revenue | $ | 3,363 |  |  | $ | 3,265 |
Net loss | 345 |  |  | 308 |
The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been if the NYX acquisition had taken place on January 1, 2017, nor is it indicative of future operating results. The pro forma amounts include the historical operating results of SGC and NYX prior to the acquisition, with adjustments factually supportable and directly attributable to the NYX acquisition, primarily related to the effect of fair value adjustments and related depreciation and amortization, acquisition-related fees and expenses, interest expense related to additional borrowings used to complete the acquisition and the effect of repayments of NYX historical debt as a result of the acquisition. Other 2018 Acquisitions On November 1, 2018, we completed the acquisition of Don Best, a leading global supplier of real-time betting data and pricing for North American sporting events. Don Best was integrated into our Digital business segment. 2017 Acquisitions On April 7, 2017, we completed the acquisition of all of the issued and outstanding capital stock of privately held mobile and social game company SpiceRack, which expands our existing portfolio of social casino games and our customer base. SpiceRack was integrated into our SciPlay business segment. In addition, we made three other individually immaterial acquisitions during 2017, which are reflected in the table below. The following table summarizes an aggregate disclosure related to business acquisitions completed in 2018 and 2017, excluding the NYX acquisition:
| Total Consideration |  | Cash paid, net of cash acquired |  | Contingent Acquisition Consideration(1) |  | Allocation of purchase price to Intangible assets, net(2) |  | Weighted average useful life of acquired intangible assets |  | Excess purchase price allocated to Goodwill
Aggregate total 2018 | $ | 46 |  |  | $ | 34 |  |  | $ | 9 |  |  | $ | 42 |  |  | 9.4 Years |  | $ | 11 |
Aggregate total 2017 | 66 |  |  | 58 |  |  | 8 |  |  | 56 |  |  | 8.3 Years |  | 13 |
(1) Contingent consideration is determined by fair value and included in the consideration transferred (see Note 16 for subsequent changes due to remeasurements, which are recorded in Restructuring and other). (2) Intangible assets primarily consist of technology-based and customer relationship intangible assets. The fair value of these intangible assets was determined using a combination of a relief from royalty method and the excess earnings method using Level 3 in the hierarchy as established by ASC 820. The discount rates and royalty rates used in the valuation analyses ranged between 9% and 20% and 1% and 16%, respectively.
Contingent acquisition consideration value is primarily based on reaching certain earnings-based metrics, with a maximum payout of up to $14 million as of December 31, 2019. Goodwill recognized relates to the SpiceRack and Don Best acquisitions, and the factors contributing to the recognition of goodwill are based on expected synergies resulting from these acquisitions, including the expansion of the customer base and new markets. Goodwill of $13 million attributable to SpiceRack acquisition is deductible for income tax purposes while goodwill attributable to the Don Best acquisition is not deductible for income tax purposes. The amount of revenue and earnings associated with the above acquisitions and since the acquisition date included in the consolidated financial statements were less than 5.0% for all periods presented and therefore were not significant to our consolidated financial statements.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration