CONTENTS
TERMS AND ABBREVIATIONS
STRATEGIC REPORT ................................................
Highlights ...............................................................
Chairperson Letter ................................................
CEO Statement .....................................................
Business Overview ...............................................
Financial Performance .........................................
Sustainability ..........................................................
Section 172 Statement ........................................
Principal Risks and Uncertainties ......................
DIRECTORS' REPORT ...............................................
Governance ...........................................................
Additional Disclosures ..........................................
DIRECTORS' REMUNERATION REPORT .............
Annual Statement .................................................
Remuneration Policy ............................................
Remuneration Report ...........................................
INDEPENDENT AUDITORS’ REPORT ...................
FINANCIAL STATEMENTS .......................................
Consolidated Financial Statements ...................
Parent Financial Statements ...............................
ADDITIONAL INFORMATION ...................................
Investor Information ..............................................
Forward-looking Statements ..............................
2
2
4
6
8
19
30
37
44
48
48
56
60
60
62
75
92
99
99
174
184
184
184
Common terms and abbreviations that appear throughout
this Annual Report and Accounts are defined herein. Other
less common terms and phrases are defined in the sections
in which they appear.
AGM annual general meeting
Articles the articles of association of the Parent
B2B business-to-business
B2C business-to-consumer
Board the board of directors of the Parent
CA 2006 the U.K. Companies Act 2006
CEO Chief Executive Officer
CFO Chief Financial Officer
Company or IGT the Parent, together with its consolidated
subsidiaries
De Agostini De Agostini S.p.A.
Director a director of the Parent
ESG environmental, social and governance
GHG greenhouse gas
NYSE the New York Stock Exchange
Parent International Game Technology PLC
R&D research and development
SEC United States Securities and Exchange Commission
TSR total shareholder return
U.K. United Kingdom
U.S. United States of America
Wire Act U.S. Interstate Wire Act of 1961
Amounts reported in this Annual Report and Accounts in millions are computed based on the amounts in thousands. Certain
amounts, including in columns and rows within tables, may not foot due to rounding. Percentages and earnings per share
amounts presented are calculated from the underlying unrounded amounts.
Annual Report and Accounts 2021
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Strategic Report
The Directors present their reports and the audited financial statements for International Game Technology PLC and
its subsidiaries for the period from January 1, 2021 to December 31, 2021.
Financial Highlights
* Represents net income (loss) from continuing operations attributable
to International Game Technology PLC per ordinary share
Company Revenue by Business Segment
The consolidated balance sheet on page 100 presents the Company's financial position at December 31, 2021 and
December 31, 2020. Movements in cash balances are presented in the consolidated statement of cash flows.
Material assets and liabilities have been disclosed within the respective notes to the consolidated financial
statements. Net assets were $1.7 billion and $1.2 billion at December 31, 2021 and 2020, respectively. Cash and
cash equivalents were $591 million and $907 million at December 31, 2021 and 2020, respectively.
Annual Report and Accounts 2021
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$ in MillionsTotal Revenue4,0813,11520212020Diluted Income (Loss) Per Share*$0.35$(4.76)20212020$ in MillionsOperating Income918(91)20212020Dividends Per Share$0.20$0.2020212020202169%27%4%Global LotteryGlobal GamingDigital & Betting202069%27%4%Global LotteryGlobal GamingDigital & Betting Strategic Report
Operational Highlights
Corporate Highlights
•
•
•
•
•
•
•
•
•
Drove an accelerated recovery from initial start of
COVID-19 pandemic
Achieved business and operating efficiencies,
delivering higher profit margins
Completed sale of Italian B2C gaming machine,
sports betting and digital gaming businesses to
Gamenet Group S.p.A.
• Global
Lottery
demonstrated
substantial
resilience as revenue and operating income from
the business segment was $2.8 billion and $1.1
billion, respectively
• Global Gaming revenue and operating income of
•
•
•
•
•
•
•
•
•
•
$1.1 billion and $44 million, respectively
Digital & Betting revenue and operating income of
$165 million and $33 million, respectively
Awarded significant long-term lottery contracts in
Jamaica and France, as well as in Connecticut,
where IGT will replace a competitor’s system
Signed new multi-year instant ticket services
contract
instants
in Germany and extended
contract in Ohio
Continued to grow iLottery operations, now with a
total of eight platform contracts including three
out of the 10 U.S. iLottery customers
Revolutionized cashless gaming with key
customers Indigo Sky and Agua Caliente
Expanded Peak
family with Peak65™ and
introduced a new innovative spin on mechanical
reels with the DiamondRS cabinet
Celebrated 25th Anniversary of IGT’s Wheel of
Fortune Slots
Continued fast expansion of iGaming which is
now live in more than 20 countries
IGT PlaySports
leading sports betting
solution in the U.S. and in 2021, IGT expanded
sports betting operations to more than 20 states
and over 60 venues
Introduced CrystalFlex™ and PeakBarTop™ Flex
cabinets that enable players to watch sports,
place sports wagers, play slots, video poker and
keno all on the same gaming machine, using the
same on-machine funds
is a
Established a dedicated Digital & Betting
business segment, inclusive of iGaming and
sports betting
Joe Asher joined IGT as President of Sports
Betting and Gil Rotem joined IGT as President of
iGaming
The World Lottery Association (“WLA”) recertified
IGT’s lottery operations, including iLottery, for
WLA’s Corporate Social Responsibility Standards
and Responsible Gaming Framework
for
Suppliers
Increased focus on ESG with publication of the
Global Responsible Gaming Policy and Human
Rights Policy Statement
Senior leaders were named to industry Hall of
Fames:
• Wendy Montgomery, Senior Vice President of
Marketing,
and
Sustainability was inducted into the Lottery
Industry Hall of Fame
Knute Knudson, Vice President of Global
Business
Tribal
Ambassador was inducted into the American
Gaming Association’s Gaming Hall of Fame
Joe Asher, President of Sports Betting, was
inducted into the Sports Betting Hall of Fame
Company and products honored with industry
awards:
•
Communications
Development
the Year
and
for
•
•
IGT
Platform Provider of
PlaySports and Land-Based Betting &
Gaming Product for Powerbucks™ at the
2021 SBC North America Awards
IGT’s CrystalBetting Terminal with multigame
content won Gold in the Best Consumer-
Service Technology category of 2021 GGB
Gaming & Technology Awards
Resort Wallet™ and IGTPay™ garnered IGT
Technology Provider of the Year, and IGT’s
Mobile Lottery Solution won Lottery Product
of the Year at the 2021 International Gaming
Awards
Casino Supplier of the Year at the 2021
Global Gaming Awards London
Product Innovation of the Year for Resort
Wallet™ and
IGTPay™ at 2021 Global
Gaming Awards Las Vegas
•
•
•
•
In January 2022, the Board implemented a number of changes to the Company’s executive team and Board. Marco
Sala became Executive Chair of the Board and Vincent Sadusky became CEO and Executive Director of the Board.
Lorenzo Pellicioli retired as Chairperson of the Board and remains a Non-Executive Director. The Board also
appointed two new independent Non-Executive Directors - Ashley M. Hunter and Maria Pinelli - who were,
respectively, appointed to the Nominating and Corporate Governance Committee and as chair of the Audit
Committee, replacing Vincent Sadusky.
Annual Report and Accounts 2021
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Strategic Report
CHAIRPERSON LETTER
This is my first report as Executive Chair of IGT. It is a
privilege to have been appointed to this role and I am
excited to continue to work with the management
team to make progress on delivering IGT’s long-term
strategy.
plan
Strategy
The Company's strategy is to grow IGT’s top line and
margins across all business segments, leveraging
industry-leading, innovative content and solutions and
optimized operations. For this purpose, the Board has
been actively evaluating management’s strategic and
business plans, including challenging the details in
relevant
and monitoring
each
implementation. Organizational changes in support of
IGT’s strategy continued in 2021 as we completed the
sale of our Italian B2C gaming machine, sports
betting, and digital gaming businesses. Additionally,
IGT introduced a new dedicated Digital & Betting
business segment, comprised of iGaming and sports
betting activities that were previously part of the
Global Gaming business segment. Further discussion
on the Company’s strategy can be found on page 10
of this Annual Report and Accounts.
the
Governance and the Board
Over the past seven years, the Board has established
clear priorities. The Board appreciates the importance
of good governance and an appropriate corporate
governance
organization.
Governance documents and policies in place are
reviewed regularly to ensure alignment with best
market practices, and the Board is committed to
oversee and implement high standards of ESG and
risk management practices, including cyber security.
system within
the
The Board also reviewed
its performance and
effectiveness, including evaluating the skills and
the Directors. Remuneration
competencies of
refined,
following
the Board’s
structures were
recommendation to shareholders to adopt a new
Directors’ remuneration policy at the 2021 AGM. The
new policy allows IGT to more effectively attract and
retain critical talent from the global marketplace that
is needed to execute our growth strategy.
Board composition
The size, composition, and succession pipeline of the
Board and its committees are continually reviewed.
Following the departure of our independent Non-
Executive Director, Beatrice Bassey, at the conclusion
of the AGM in May 2021, we were open to consider
candidates with experiences and skills to make a
meaningful contribution to the Board. As a result, a
number of changes to the executive and Board
leadership, including the appointment of Ashley M.
independent
Hunter and Maria Pinelli as new
members of
subsequently
the Board, were
determined to be in the best interests of IGT.
Following the announcement of the new Board
composition in January 2022, we are confident with
and look forward to the contributions of our strong
collaborative Board.
Sustainability
IGT and its predecessors have been an industry
leader in the sustainability movement and have
issued an annual sustainability report independently
assured by a third party since 2008. ESG policies
remain at the forefront of our business priorities, and
our sustainability program continues to be widely
recognized by leading ESG advocacy organizations
and investor rating groups.
is responsible
IGT’s commitment to creating sustainable value in the
long term was further strengthened in early 2021 by
the Sustainability Steering
the establishment of
Committee, comprised of key senior executives
across the Company. The Sustainability Steering
Committee
for a plan aimed at
identifying areas for improvement in the Company’s
performance with respect to external and internal
sustainability drivers. It will also define initiatives and
actions
improvement.
focus on continuous
Moreover, IGT is strengthening its efforts to limit its
climate change impacts through a carbon neutrality
project that started this year with the GHG inventory
calculation. The project will lead the Company to
develop specific emission reduction
targets and
that regard, we
decarbonization
announced the submission of the Science Based
Target Commitment Letter, in which IGT officially
pledges to set targets to reduce greenhouse gas
low-carbon emissions
to
emissions, contributing
trajectories.
to
In
Annual Report and Accounts 2021
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Strategic Report
growth and advancing our ESG impact. Further
details about steps we are taking towards a more
sustainable future are set out in the Sustainability
review starting at page 30 of this Annual Report and
Accounts.
Conclusion
I would like to take this opportunity to thank my fellow
Board members for their high level of engagement
and I remain grateful to the management team for
their exemplary performance.
The Board remains committed to promoting IGT’s
success for the benefit of all its stakeholders, and on
behalf of the Board, I would like to thank you for your
ongoing interest and support.
Marco Sala
Executive Chair
Risk management
Like most global companies, IGT is subject to a
myriad of risks, and the Board and its committees are
squarely focused on enterprise risk management.
Key risks that could impact IGT’s ability to achieve its
strategic, financial and operational objectives are
closely monitored. An investment in technology-driven
solutions was made
the
capabilities of IGT’s enterprise risk management
program. IGT’s robust global information security
organization
takes a comprehensive view of
information and cyber security issues. It refines its
approach to security and measures to mitigate risk
based on industry best practices and continuous
improvement
increasing
complexity.
in an area of ever
to expand
in 2021
throughout 2021.
Investor outreach
The Company maintained a robust dialogue with the
investment community
Investor
engagement included participation in several broker-
investor conferences and one-on-one
sponsored
discussions with shareholders. The Company also
held a virtual investor day where it provided an
overview of its strategy along with detailed near and
long-term financial goals. Further details of such
activities can be found in the Section 172 statement
from page 39 of this Annual Report and Accounts.
IGT intends to continue its high level of engagement
with the investment community in 2022. For example,
IGT held meetings with investors in January 2022 to
transition and has
communicate
leadership
investors on
initiated an ongoing dialogue with
environmental, social and governance
topics of
interest to the investment community.
the
Returning capital to shareholders
The Board approved a $0.20 per ordinary share
quarterly cash dividend on November 4, 2021 and
recently on February 24, 2022, which
more
the Company’s
represented a reinstatement of
traditional
they were
level of dividends after
suspended at the height of the pandemic. In addition,
the Company announced and initiated a $300 million
multi-year share repurchase program in November
2021, which represents the first time the Company
has utilized share repurchases as a method to return
capital to shareholders.
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Strategic Report
CEO STATEMENT
As I begin my role as the CEO of IGT, I can
confidently report that the Company is in a good
financial position with a solid foundation to build upon.
from
In 2021, we drove an accelerated recovery in our
the COVID-19 pandemic, and
operations
instituted significant business and operational
efficiencies to leverage our core competencies and
remain focused on strategic priorities. Through this,
in revenue with
we delivered over $4.0 billion
significant growth across all business segments.
For the remainder of 2022 and over the next few
years, we will remain focused on profitable growth
with strong cash flows and returns in all our business
segments. Our efforts are best characterized by three
main pillars: grow, innovate, and optimize. We plan to
grow IGT’s margins by leveraging innovative content
and solutions, enhancing our operational efficiency
and diligent capital allocation.
Streamlining the business
In May 2021, IGT completed the sale of 100% of its
Italian B2C gaming machine, sports betting and
digital gaming businesses to Gamenet Group S.p.A.
The proceeds from this sale were used to pay down
debt.
IGT also created a dedicated Digital & Betting
business segment to highlight and support this high-
growth business. Creating a new business vertical for
Digital & Betting gives IGT more flexibility in our
product and solutions portfolio and enables better
appreciation of the intrinsic value of these activities.
The Company
its
evaluation of a public listing of IGT’s Digital & Betting
business.
is also making progress
in
In early 2022, we agreed to sell our Italian proximity
payment business to PostePay S.p.A. – Patrimonio
Destinato IMEL, an entity of the Italian postal service
provider group. This transaction provides us with an
opportunity to monetize IGT's market leadership in
the Italian proximity payment business at an attractive
value as we continue to execute our long-term
strategy. We expect this transaction to be finalized
during the third quarter of 2022.
Global Lottery
The Global Lottery business segment at IGT is
delivering accelerated growth through innovation and
elevated player engagement. IGT’s lottery solutions,
products and value-added services are recognized as
best-in-class and utilized by most lottery operators
globally.
team has
the unique
Our
insights on game
innovation, portfolio optimization and sales strategies
for both retail and digital, that are helping drive
record-wagers for our customers. We are focused on
two main areas of incremental opportunity: iLottery
solutions and instant ticket services, as both offer
broad appeal and deliver high entertainment value to
players.
The multi-year outlook for our Global Lottery business
is compelling. We expect continued innovation, higher
iLottery adoption, increased player engagement and
market share gains in instant ticket services to fuel
our sales growth.
Global Gaming
Our Global Gaming business is seeing a strong
rebound in sales and profits, driven by focused
product strategies and the gaming market recovery
from the pandemic. We have achieved leadership
positions in North American and international terminal
revenue and sales, and our global casino and video
lottery systems are among
industry’s most
advanced solutions.
the
regulatory approval
IGT’s award-winning Resort Wallet™ and IGTPay™
received
in Nevada and
continues to drive cashless gaming adoption with
several deployments. Additionally, the expansion of
our multi-level progressive game portfolio on our
Peak cabinets strengthened our
leased game
portfolio and contributed to solid sales.
For 2022 and beyond, our Global Gaming business is
focused on expanding our presence in the core video
market in North America and improving our multi-level
progressive offerings in both product sales and
recurring revenue markets. We are also prepared to
Annual Report and Accounts 2021
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Strategic Report
take advantage of the upcoming Canadian video
lottery terminal replacement cycle and new operator
market openings.
Digital & Betting
As mentioned above, we created our dedicated
Digital & Betting business segment to support this
area of high growth. As part of this strategy, we hired
long-time industry executives Joe Asher as President
of Sports Betting and Gil Rotem as President of
iGaming. The Digital & Betting business continues to
grow quickly, propelled by IGT’s strong leadership
positions and new sports betting and
iGaming
regulation in the U.S.
diversity and inclusion objectives at the highest level.
Members of our senior leadership team have diversity
and inclusion goals to meet that are directly tied to
their compensation. Furthermore, all IGT employees
are encouraged to participate in Ignite Inclusion, a
training program designed to expand employees’
knowledge of diversity and
inclusion concepts
through individual learning.
Over the last few years, we have witnessed the
positive effect that IGT’s commitment to diversity and
inclusion has had on attracting and retaining talent,
and our programs have proven to be a differentiator
and competitive advantage in our hiring practices.
turnkey sports
IGT’s award-winning PlaySports
betting solution powers over 60 venues in 22 states.
Additionally, in 2021, we introduced the CrystalFlex™
and PeakBarTop™ Flex cabinets that enable players
to watch sports, place sports wagers, play slots, video
poker and keno all on the same gaming machine,
using the same on-machine funds.
Looking ahead
IGT’s vision is simple: to drive growth in the global
gaming industry through greater player engagement
and responsible management. Our diverse portfolio
to create
offers compelling growth opportunities
shareholder value and provides unique and
sustainable competitive advantages.
We also continued our rapid expansion of iGaming,
including launching in Michigan and Connecticut, and
are now live in more than 20 countries. For 2022, we
expect to double the number of new iGaming titles
and also begin distributing our first third-party games.
As Digital & Betting is our highest-growth area, we
are making significant investments in R&D and talent
to lay a solid foundation to support the trajectory we
expect over the next few years. IGT’s Digital &
Betting business has a robust pipeline for 2022, and
we look forward to expanding with new customers,
building on our long-term partnerships and allocating
capital to support their growth.
valuing
people,
Our commitment to sustainability
Our sustainability strategy is centered on four key
advancing
our
priorities:
responsibility, supporting our communities, and
fostering sustainable operations. Our commitment to
employees’ well-being, high standards of integrity and
inclusion, and
ethical conduct, diversity and
professional development are constantly improving
our Company from within.
in
the
industry by offering
Our mission is to strengthen our global leadership
positions
innovative
content, services and solutions. This mission sets the
foundation to grow top line and margins across all
business segments, while
increasing operational
efficiency and optimizing capital allocation.
We have set aggressive but achievable financial
goals including impressive cash flow generation over
the next few years. I have a high level of confidence
in
those
compelling objectives.
the Company’s ability
to deliver on
I want to thank our people for their continued
dedication to success, consistent delivery of results
and commitment to IGT’s future. Our success is
directly tied to their hard work. I wish you all much
health and well-being for 2022.
Vincent Sadusky
Chief Executive Officer
In 2021, IGT issued our first-ever Global Responsible
Gaming Policy to educate people about our programs
and solutions designed to promote fair play and
comply with responsible gaming requirements in all
jurisdictions in which we operate. IGT also published
our Human Rights Policy Statement, which outlines
our commitment to human dignity and civil rights.
IGT has a well-established and leading diversity and
inclusion program and we are committed to furthering
Annual Report and Accounts 2021
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Strategic Report
BUSINESS OVERVIEW
The Company is a global leader in gaming that
delivers entertaining and
responsible gaming
experiences for players across all channels and
regulated segments,
lotteries and gaming
from
machines to sports betting and digital. Leveraging a
wealth of compelling content, substantial investment
in innovation, player insights, operational expertise,
and
the Company’s
solutions deliver gaming experiences that responsibly
engage players and drive growth. The Company has
a well-established local presence and relationships
with governments and regulators in more than 100
countries around the world, and creates value by
adhering to the highest standards of service, integrity,
and responsibility.
leading-edge
technology,
The Company operates and provides an integrated
portfolio of innovative gaming technology products
and services, including: lottery management services,
online and instant lottery systems, gaming systems,
instant ticket printing, electronic gaming machines,
sports betting, digital gaming, digital lottery, and
commercial services. The Company is headquartered
in London, with principal operating facilities located in
Providence, Rhode Island; Las Vegas, Nevada; and
Rome, Italy. The Company had approximately 10,500
employees at December 31, 2021.
Effective September 1, 2021, the Company adopted a
new business segment structure focused on three
business segments: Global Lottery, Global Gaming
and Digital & Betting. This resulted in a change in our
operating segments and cash-generating units. The
Company's operations for the periods presented
herein are reported under this new business segment
structure.
the Company
As a part of its ongoing commitment to ensuring
appropriate strategic flexibility for its Digital & Betting
business segment,
is currently
undertaking a
legal entity and organizational
realignment designed to provide the Digital & Betting
business segment with dedicated management, a
more nimble organization and governance structure
and the ability to pursue organic and inorganic growth
opportunities. As part of this process, the Company
may evaluate a potential separate public listing of its
Digital & Betting business segment to further enhance
its strategic flexibility while maintaining a controlling
interest following the consummation of any such
potential separate public listing. There can be no
assurances as to the form and timing of any separate
public listing or other strategic activity that may result
from this evaluation or if any such listing or activity
will be consummated at all.
its
to sell
On February 25, 2022, the Parent’s wholly-owned
subsidiary, IGT Lottery S.p.A., signed a definitive
Italian proximity payment
agreement
business to PostePay S.p.A. – Patrimonio Destinato
IMEL, an entity of the Italian postal service provider
group, for €700 million. The transaction is subject to
regulatory
customary
approvals and is expected to close during the third
quarter of 2022.
conditions and
closing
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Strategic Report
Business model
The Company's organizational structure is focused on three business segments - Global Lottery, Global Gaming,
and Digital & Betting - which are supported by a streamlined corporate function. The business segments have the
key operating capabilities and autonomy necessary to manage the business, including product management, sales,
technology, and research and development.
The global market for regulated gaming is characterized by two main dynamics: strong player demand and
governments that look to regulated gaming as a way to fund good causes. In this context, IGT is uniquely positioned
to provide responsible solutions by leveraging its global leadership position, long history of innovation, and the
breadth and depth of its product offerings.
The Company’s resilient business model is characterized by robust recurring revenues and a diversified geographic
and product mix. Innovation is the key growth driver across all the Company’s activities in many different areas
including content, technology, distribution, and marketing. Our goal is to create value for all our stakeholders and we
are focused on supporting our industry, our community, and our world.
Global Lottery
IGT has a broad, global footprint in lottery where it
provides technology, including the central system and
retail terminal network, required for B2B operations
for B2C
and
operations. The Company serves 36 of the 46 U.S.
lotteries and is the dominant operator in Italy.
full coverage of
the value chain
Global Gaming
The Company maintains significant, long-standing
relationships with commercial casino and government
sponsored Video Lottery Terminal customers around
the world.
is
large portfolios of games and
bolstered by
intellectual property,
to best-in-class
central systems.
IGT’s Global Gaming
in addition
leadership
its
for worldwide
Digital & Betting
The Digital & Betting business segment has full
responsibility
iGaming and sports
betting activities, which were previously reported as
part of the Global Gaming business segment. This
business segment provides iGaming products and
services to online casino operators, as well as sports
betting technology and management services to
licensed sports betting operators, primarily in the U.S.
the Company’s
Further details with respect
products and services
the Lottery,
Gaming, and Digital & Betting business segments are
set out under the section headed Products and
services on page 12.
for each of
to
Annual Report and Accounts 2021
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Strategic Report
Strategy
IGT’s mission is to provide best-in-class content, services, and solutions to the global, regulated gaming industry.
The Company enables players to experience their favorite games across all channels and regulated segments, from
lotteries and gaming machines to sports betting and digital.
The Company’s businesses are complementary and cover the whole regulated gaming space. The Company enjoys
global coverage and is targeting opportunities in both existing and new regions, jurisdictions, and lottery/gaming
market segments.
The Company is positioned to serve governments and licensed private sector operators as a B2B and B2C provider
of technology, content, services, and solutions. The scope of our offering can, in the government sanctioned lottery
industry, expand to comprise a fully outsourced lottery operation when appropriate (i.e. Italian lottery concessions,
U.S. lottery management agreements).
with
engagement
Grow, innovate, and optimize in key markets via
continued focus on player-centric development,
strong
government
stakeholders and continued development of
digital and gaming capability
Over the past two years, IGT has built a solid
foundation for profitable growth. The Company’s
diversified portfolio creates resilience against variable
and uncertain conditions. Continued focus on cross-
selling, technology platforms and content synergies
allow the Company to leverage successful brands
and capabilities across businesses.
These actions, along with dedication and talent of the
Company’s worldwide
to
experience an accelerated
the
COVID-19 pandemic lows, and to be best positioned
to pursue strong growth and expanded cash
generation going forward.
staff, allowed
IGT
from
recovery
The key growth drivers in IGT’s portfolio are:
• Global Lottery: Sustained and accelerated growth
due to structural changes in consumer playing
preferences as well as accelerated pace of
government adoption of the digital channel;
land-based gaming,
IGT’s
lottery and digital
segments cover the full market value chain and
enable
longstanding
to
relationships, strengths and its history of success to
create
lottery
experiences.
the Company
innovative
leverage
gaming
new
and
via
opportunities
IGT recently realigned its product portfolio to capture
high-growth
transformational
strategic moves. These moves include the divestiture
of the Italian B2C gaming business completed in May
2021, refreshing its portfolio, the refocus of the
gaming portfolio on high-growth product verticals and
geographies, and the recent segregation of the Digital
& Betting business as a separate business segment
which will further enhance its organizational flexibility
and ability to compete in the fast-paced digital and
sports betting markets, and supports evaluation of a
potentially separate public listing.
is
The Company continues to execute a multi-year
focused on
global efficiency effort which
operational excellence, product simplification, and
operating margin
improvement. The Company
achieved over $200 million in structural cost savings
in 2021 compared to 2019, with further opportunities
for over $150 million in incremental savings targeted
by the end of 2023 as part of the OPtiMa cost savings
through a combination of operational
initiative
excellence,
interest expense, and
effective tax rate.
reduction of
•
• Global Gaming: Strong recovery trajectory from
pandemic lows coupled with margin expansion
(cost efficiencies) and product development
initiatives (e.g. cashless, multi-level progressive
games) are expected to deliver revenue and
profit growth;
Digital & Betting: Double-digit growth due to a
in North
favorable
regulatory environment
America, an accelerated change
in players
preferences, and strong content and customer
leadership. The change in player preference is
expected to be structural as supported by early
data in key U.S. jurisdictions like Michigan and
New Jersey where iGaming has continued to
grow or stabilize as casinos reopened and other
forms of entertainment became available; and
Player-centric innovation: Focus of innovation is
on improving player’s experience by removing
sources of
friction and enhancing playing
opportunities. For example, our best-in-class
cashless system creates a seamless experience
for players, allowing our customers to improve
understanding of player needs and drive
omnichannel engagement and loyalty.
•
IGT’s addressable market is large and growing.
Historically, the attractive secular trends in IGT’s
industry were driven by player’s demand and by
governments’ desire to expand regulation to fund
good causes and support
fiscal policies. More
recently, the pace of evolution of the global gaming
Annual Report and Accounts 2021
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Strategic Report
and lottery markets has accelerated as the industry
undergoes a profound digital transformation, resulting
in substantial opportunities for further accelerated
growth.
As secular trends in player demand and government
desire to fund good causes accelerate growth in
the
North America, Europe and Latin America,
Company will leverage key strengths to achieve its
strategy which is based on three main pillars:
• Grow: Continue to expand revenue and market
share across all business segments as gaming
recovers to a post-pandemic “normal”;
Innovate: Leverage wealth of creative gaming
and digital talent, leading R&D investment, and
extensive content library to deliver digital and
land-based experiences across all the Company’s
business segments. The Company seeks to
provide customized products and services to
meet local market regulations and support player
preferences; and
•
• Optimize: Streamline operations
lean
manufacturing, optimized
field support and
shared support functions to deliver sustainable,
efficient growth.
via
then distribute
The Company’s sustained R&D investments strive to
develop content and products which the Company
its customers across all
can
available platforms and technologies. The Company
also plans to strengthen its role as one of the
industry's leading innovators by introducing new
platforms and point of access devices.
to
during
lottery
resilience
Deliver top-line growth in Lottery, building upon a
higher baseline following the pandemic
industry has demonstrated
The global
remarkable
the COVID-19
pandemic, and revenue is expected to grow at mid-
single digit rate from pre-pandemic levels. Player
behaviors in covered markets appear to have shifted
permanently during the pandemic, with increased
interest in lottery games. This change in player
behaviors led to a step-change expansion in player
base and player spend which is expected to become
a sustained, long-term phenomenon.
The Company seeks to maintain its market-leading
position in lotteries as it continues to operate in
sophisticated
lottery markets, while also driving
growth in the overall market. The Company will
provide and operate highly secure online lottery
transaction processing systems to regulated markets
and deliver technologically advanced instant gaming
tickets and relative services.
More specifically,
focused on
the Company
continuing to drive same‑store sales growth and
is
retailer
is
the
its market share
achieving growth in instant tickets and draw-based
games in the U.S. by innovating game development,
modernizing customer and
technology
solutions, and driving customer engagement, loyalty,
and performance. The Company will also seek to
expand its instant ticket printing customer base and
has invested in additional production capacity to do
focused on
the Company
so. Furthermore,
expanding
fast-growing
in
iLottery business. In iLottery, the Company currently
offers a turnkey solution to lottery operators which
traditional draw-based games, eInstant
includes
games, website and mobile app solutions, a complete
player management platform, and
“managed
services”. IGT iLottery offering also provides a full
spectrum of digital products and services to those
operators that do not offer a full digital lottery
wagering program but are looking for digital solutions
such as loyalty and convenience apps. In 2021, IGT
launched the first-to-market cloud-based eInstant
platform. First client to roll out this solution was
Georgia, with more clients in the pipeline.
The Company is also focused on securing several
new contracts,
rebids, and multiple contract
extensions to strengthen its recurring revenue stream
and
future competitive
the wins on
positioning for upcoming contract opportunities.
leverage
Drive sustainable growth and healthy cash flows
in land-based Gaming as the sector recovers from
the COVID-19 pandemic
The land-based casino industry continued to recover
from the COVID-19 pandemic in 2021, and the global
B2B market is expected to fully recover by 2023. The
Company will seek to get back to pre-pandemic
performance through expansion of North American
market share, product innovation, and operational
efficiencies.
The Company is focused on growing its installed
base of leased gaming machines by taking advantage
of growth opportunities
in specific high-potential
product segments, such as multi-level progressive
games. The Company aims to achieve this by
focusing R&D investment on a wide-scale hardware
refresh, improved discipline in game development,
and extensive player
customer
engagement.
insight and
to
increase
The Company strives
its casino
management systems' market share with innovative
technology solutions. IGT’s cashless system solution
provides a single step, single sign-in wallet that
improves both player experience and customer
flexibility. The solution
integrated with
is
IGTPayTM and the Company intends to rapidly deploy
the solution to existing customers. The Company will
fully
Annual Report and Accounts 2021
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Strategic Report
also continue expanding its suite of compelling
system modules, offering features and functionalities
that will revolutionize the gaming experience, such as
bonusing and Mobile Responder.
The Company seeks to increase market positioning in
high-growth specialty product segments such as
II and
Electronic Table Games (ETGs), Class
Historical Horse Racing (HHRs) as well as growing its
gaming operations and product sales in international
markets through an expansion of localized content.
in May 2021 also
The sale of the Italian B2C gaming machine, sports
betting and digital gaming businesses which
completed
the
Company’s focus in the B2B market segment. This
transaction reframed and simplified the Company’s
priorities, improved its future profit margin and debt
profile, while de-risking Italy’s portfolio by exiting the
highest regulatory risk market segment.
reinforced
Maintain market leadership in high-growth digital
and betting spaces
The Digital & Betting business segment was created
in 2021 to provide a new platform for growth in IGT’s
iGaming and sports betting businesses. The new
business segment enables the Company to centralize
its high-growth, innovation-driven games, content and
talent, and to direct those resources at the speed
demanded
these markets. The
in
consolidation of digital and sports betting also
enables IGT to explore a separate, public listing for
the Digital & Betting business.
lead
to
The Digital & Betting business segment is committed
to delivering strong growth over the next four years
and is well positioned as a leading content and
iGaming
content and
solutions provider. The Company’s best-in-class real-
money
comprehensive
omnichannel B2B sports platform provide sustainable
competitive advantage in these spaces. IGT’s ability
to deploy rapidly to the market and teams of
developer talent enable the Company to deliver
solutions that drive results for its customers.
The iGaming business is building a compelling
content portfolio, with 120 active games, and we
expect to introduce 30+ new titles per year, both
original and ported from our land-based content. The
Company’s digital content strategy leverages both
proven land-based gaming brands and unique, newly
developed, digital intellectual property. The product
portfolio extends beyond IGT’s land-based strengths
and includes slots, progressives, table games and
video poker. iGaming solutions are optimized for
mobile and web-based environments, enabling
players to engage in the digital channel of their
choice. IGT’s Game Development Partners Program
will further extend the Company’s content portfolio,
enabling trusted third-party developers to build games
by utilizing IGT’s toolkit and math models.
IGT sports betting solutions are a trusted partner for
many
leading North American operators. The
Company’s omnichannel solution extends from point-
of-sale to back-end systems and enables players to
fully engage with IGT’s customers. The sports betting
product strategy focuses on efficiently developing
rich, engaging,
future-proof experiences. This
strategy informs key innovation priorities, including
cross-state wallet management, further development
of kiosks, and content and improved technology,
compliance and trading services.
Products and services
The Company has three broad categories of products and services: (1) Lottery, (2) Gaming, and (3) Digital &
Betting.
Lottery
The Company supplies a unique set of lottery
solutions to approximately 80 customers worldwide,
including to 36 of the 46 U.S. lotteries through its
Global Lottery business segment. Lottery customers
frequently designate their revenues for particular
purposes, such as education, economic development,
conservation,
for senior
citizens and veterans, health care, sports facilities,
capital construction projects, cultural activities, tax
relief, and others. Many governments have become
increasingly dependent on their lotteries as revenues
from lottery ticket sales are often a significant source
of funding for these programs.
transportation, programs
Lottery products and services are provided through
operating contracts, facilities management contracts
(“FMCs”), lottery management agreements (“LMAs”),
and product sales contracts. In the majority of
jurisdictions,
lottery authorities award contracts
through a competitive bidding process. Typical
service contracts are five to 10 years in duration,
often with multi-year extension options. After the
expiration of the initial or extended contract term, a
lottery authority generally may either seek
to
negotiate further extensions or commence a new
competitive bidding process. Certain customers may
require the Company to pay an upfront fee for the
right to exclusively manage their lottery.
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Strategic Report
lottery
that reconciles
transaction processing systems
The Company designs, sells, leases, and operates a
complete suite of point-of-sale machines that are
electronically linked with a centralized transaction
funds
processing system
between the retailer and the lottery authority. The
Company provides and operates highly secure, online
lottery
that are
capable of processing over 500,000 transactions per
minute. The Company provides more than 475,000
point-of-sale devices
lottery customers and
lotteries that it supports worldwide. The Company
also produces high-quality instant ticket games and
provides printing services such as instant ticket
marketing plans and graphic design, programming,
packaging, shipping, and delivery services.
to
services,
including
The Company has developed and continues to
develop new lottery games, licenses new game
brands from third parties, and installs a range of new
lottery distribution devices, all of which are designed
to drive responsible same-store sales growth for its
customers. In connection with its delivery of lottery
services, the Company actively advises its customers
on growth strategies. Depending on the type of
contract and the jurisdiction, the Company also
provides marketing
retail
optimization and lottery brand awareness campaigns.
The Company works closely with its lottery customers
and retailers to help retailers sell lottery games more
effectively. These
product
programs
merchandising and display
recommendations, a
selection of appropriate lottery product mix for each
location, and account reviews to plan lottery sales
growth strategies. The Company leverages years of
experience accumulated from being the exclusive
licensee for the Italian Scratch & Win instant lottery
game and the Italian Lotto, one of the world’s largest
lotteries. This lottery B2C expertise in Italy, which
includes management of all the activities along the
lottery value chain, allows the Company to better
serve B2B customers.
include
The Company also provides a complete suite of
iLottery solutions and services. This, coupled with its
professional expertise, allows lotteries to fully engage
their players on any digital channel in regulated
markets. Existing lottery game portfolios are extended
to the digital channel to provide a spectrum of
engaging content such as e-Instant tickets.
The Company’s primary competitors in the Lottery
business
Intralot, Neogames, Pollard,
SAZKA, Scientific Games, Sisal, and Tabcorp.
include
The primary types of lottery agreements are outlined
below:
Operating and Facilities Management Contracts
The majority of the Company’s revenue in the Lottery
business comes from operating contracts and FMCs.
through
Since 1998, and for a term expiring in 2025, the
Company has been the exclusive licensee for the
Italian Lotto game
(management of operations
commenced in 1994). Beginning in November of
2016, the Company’s exclusive license for the Italian
Lotto includes partners as part of a joint venture.
Lottoitalia s.r.l. (“Lottoitalia”), a joint venture company
among IGT Lottery S.p.A., Italian Gaming Holding
a.s., Arianna 2001 (an entity associated with the
Federation of Italian Tobacconists), and Novomatic
Italia, is the exclusive manager of the Italian Lotto
game. Lottoitalia is 61.5% owned by IGT Lottery
S.p.A. The Company, through Lottoitalia, manages
the activities along the lottery value chain, such as
creating games, determining payouts, collecting
its network, paying out prizes,
wagers
managing all accounting and other back-office
functions,
running advertising and promotions,
operating data transmission networks and processing
retailers with
centers,
assistance, and supplying materials including play
slips, tickets and receipts, and marketing and point-
of-sale materials for the game. Since 2004, and for a
term expiring in 2028, the Company also has been
the exclusive licensee for the instant ticket lottery
(“Gratta e Vinci” or “Scratch & Win”) through Lotterie
Nazionali S.r.l., a joint venture 64.0% owned by the
Parent’s subsidiary IGT Lottery S.p.A., with the
remainder directly and indirectly owned by Scientific
Games Corporation and Arianna 2001. As of
December 31, 2021, the revenue weighted average
remaining term of the Company's existing lottery
contracts in Italy was 5.4 years.
training staff, providing
The Company’s FMCs typically require the Company
to design, install, and operate the lottery system and
retail terminal network for an initial term, which is
typically five to 10 years. The Company’s FMCs are
granted on an exclusive basis, and usually contain
extension options under the same or similar terms
and conditions, generally ranging from one to five
years. Under a typical FMC, the Company maintains
ownership of the technology and equipment, and is
responsible for capital investments throughout the
duration of the contract, although the investments are
generally concentrated during the early years. The
Company provides a wide range of services to lottery
customers related to the technology, equipment, and
facilities such as hosting, maintenance, marketing,
and other support services. The Company generally
provides its lottery customers retailer terminal and
communication network equipment through operating
leases. In return, the Company typically receives fees
based upon a percentage of the sales of all lottery
Annual Report and Accounts 2021
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Strategic Report
the benefit of 22 U.S.
tickets, including draw-based and/or instant ticket
games, though under certain of its agreements, the
Company may receive fixed fees for certain goods or
services. In limited instances, the Company provides
instant tickets and online lottery systems and services
under the same facilities management contract. As of
February 24, 2022, the Company had FMCs with or
jurisdictions. As of
for
December 31, 2021, the Company’s largest FMCs by
annual revenue were Texas, California, Florida, New
York, and Michigan, and the revenue weighted-
average remaining term of the Company’s existing
FMCs (excluding Italy) was 5.3 years (7.3 years
including available extensions). Also, as of February
24, 2022, the Company operated under operating
contracts or FMCs in 17 international jurisdictions,
excluding Italy.
Another form of operating contract is an LMA. Under
an LMA, the Company manages, within parameters
determined by the lottery customer, the core lottery
functions, including the lottery systems and the
majority of the day-to-day activities along the lottery
includes collecting wagers,
value chain. This
managing accounting and other back-office functions,
running advertising and promotions, operating data
transmission networks and processing centers,
training staff, providing retailers with assistance, and
supplying materials for the games. LMAs also include
a separate FMC, pursuant to which the Company
leases certain hardware and equipment, and provides
access
to software and support services. The
Company provides lottery management services in
New Jersey as part of a joint venture and in Indiana
through a wholly-owned subsidiary of the Parent. The
Company’s revenues from LMAs include incentives
based on achievement of contractual metrics and,
with respect to the supply agreements are based
generally on a percentage of wagers. The Company
is also subject to penalties for failure to achieve
contractual metrics under its LMAs. The Company
categorizes revenue from LMAs as service revenue
from “Operating and facilities management contracts”
as described in Note 4, Revenue Recognition, to the
Consolidated Financial Statements.
Operating contracts and FMCs often require the
Company to pay substantial monetary liquidated
damages in the event of non-performance by the
Company. The Company’s revenues from operating
contracts and FMCs are generally service fees paid
to the Company directly by the lottery authority based
on a percentage of such lottery’s wagers or ticket
from
sales. The Company categorizes revenue
operating contracts and FMCs as service revenue
from “Operating and facilities management contracts”
as described in Note 4, Revenue Recognition, to the
Consolidated Financial Statements.
Instant ticket services
As an end-to-end provider of instant tickets and
related services, the Company produces high-quality
instant ticket games and provides ancillary printing
services such as instant ticket marketing plans and
graphic design, programming, packaging, shipping,
and delivery services. Instant tickets are sold at
numerous types of retail outlets but most successfully
in grocery and convenience stores.
the complete production process
ticket contracts are priced based on a
Instant
percentage of ticket sales revenues or on a price per
unit basis and generally range from two to five years
with extension opportunities. Government-sponsored
lotteries grant printing contracts on both an exclusive
and non-exclusive basis where there is typically one
primary vendor and one or more secondary vendors.
A primary contract permits the vendor to supply the
majority of the lottery’s ticket printing needs and
includes
from
concept development
through production and
shipment. It also typically includes marketing and
research support. A primary printing contract can
include any or all of
following services:
warehousing, distribution, telemarketing, and sales/
field support. A secondary printing contract includes
providing backup printing services and alternate
product sources. It may or may not include a
guarantee of a minimum or maximum number of
games. As of February 24, 2022, the Company
provided instant ticket printing products and services
to 31 customers in North America and 22 customers
The Company
jurisdictions.
in
international
categorizes revenue
ticket printing
from
contracts, that are not part of an operator or LMA
contract, as product sales from “Lottery products” as
described in Note 4, Revenue Recognition, to the
Consolidated Financial Statements. The instant ticket
production business is also highly competitive and
subject to strong, price-based competition.
instant
the
in most
Product sales and Services contracts
Under product sales and services contracts, the
Company assembles, sells, delivers, and installs
turnkey lottery systems or lottery equipment, provides
related services, and licenses related software. The
lottery authority maintains,
instances,
responsibility for lottery operations. The Company
sells additional machines and central computers to
expand existing systems and/or replace existing
equipment and provides ancillary maintenance and
support services related to the systems, equipment
licensed. The Company
sold, and software
categorizes revenue from product sales and services
contracts on a case-by-case basis as either service
revenue or product sales from “Systems, software,
and other” or “Lottery products” respectively, as
Annual Report and Accounts 2021
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Strategic Report
described in Note 4, Revenue Recognition, to the
Consolidated Financial Statements.
and
secure
Commercial services
The Company develops innovative technology and
offers commercial and payment services over a
its distribution
standalone network. Leveraging
processing
transaction
network
experience,
the Company offers high-volume
processing of commercial and payment transactions
including: prepaid cellular telephone recharges, bill
tax payments,
payments, e-vouchers, electronic
stamp duty services, and prepaid card recharges.
These services are primarily offered outside of North
America. In Italy, the Company’s commercial payment
and eMoney services network comprises points-of-
sale such as tobacconists, bars, petrol stations and
newspaper stands. The Company categorizes
revenue
from commercial services as service
revenue from “Systems, software, and other” as
described in Note 4, Revenue Recognition, to the
Consolidated Financial Statements.
its
to sell
On February 25, 2022, the Parent’s wholly-owned
subsidiary, IGT Lottery S.p.A., signed a definitive
agreement
Italian proximity payment
business to PostePay S.p.A. – Patrimonio Destinato
IMEL, an entity of the Italian postal service provider
group, for €700 million. The transaction is subject to
customary
regulatory
approvals and is expected to close during the third
quarter of 2022.
conditions and
closing
Gaming
The Company designs, develops, assembles or
orders the assembly of, and provides cabinets,
games, systems, and software for customers in
regulated gaming markets throughout the world under
fixed fee, participation and product sales contracts.
As of February 24, 2022, the Company holds more
than 440 global gaming licenses and does business
with commercial casino operators,
tribal casino
operators, and governmental organizations (primarily
consisting of Lottery operators). The Company
provides social casino content as part of a multi-year
strategic partnership with DoubleU Games. Gaming
products and services are provided through the
Global Gaming business segment.
The Company’s primary global competitors in Gaming
are Aristocrat, Everi, Konami, Novomatic, PlayAGS
and Scientific Games.
Gaming machines and Game content
The Company offers a diverse range of gaming
machine cabinets from which land-based casino
customers can choose to maximize functionality,
flexibility, and player comfort. In addition to cabinets,
sound,
the Company develops a wide range of casino games
taking into account local jurisdictional requirements,
market dynamics, and player preferences. The
Company combines elements of math, play
mechanics,
technological
art,
advancements with a library of entertainment licenses
and a proprietary intellectual property portfolio to
provide gaming products designed to provide a high
degree of player appeal and entertainment. The
Company offers a wide array of casino-style slot
machines in a variety of multi-line, multi-coin, and
multi-currency configurations.
and
The Company’s slot games typically fall into two
categories: premium games and core games.
Premium games include:
• Wide Area Progressives - games that are linked
across several casinos and/or jurisdictions and
share a large common jackpot, including The
Wheel of Fortune® franchise; and
• Multi-Level Progressives - games that are linked
to a number of other games within the casino
itself and offer players the opportunity to win
different levels of jackpots, such as Fortune
Coin™ Boost.
leased
Core games, which include video reel, mechanical
reel, and video poker, are typically sold and in some
the
situations
Company's most popular core games
in 2021
included Regal Riches, Dragons vs Pandas, Stinkin’
II,
Rich–Skunks Gone Wild, Superstar Poker
Superstar Poker and Super Times Pay Poker.
to customers. Some of
types of games
The Company produces other
including:
•
“Centrally Determined” games which are games
connected to a central server that determines the
game outcome;
Class II games which are electronic video bingo
machines that can be typically found in North
American
tribal casinos and certain other
jurisdictions like South Africa; and
live dealer
Random-number-generated and
electronic table games, including baccarat and
roulette.
•
•
is primarily generated
Gaming service revenue
through providing premium game content and
cabinets on short duration leases to customers. The
pricing of these arrangements is largely variable
where the casino customer pays fees to the Company
based on a percentage of amounts wagered, net win,
or a daily fixed fee for use of the game content,
cabinets, and related support services.
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Strategic Report
Gaming product sales revenues are generated from
the sales of land-based gaming machines (equipment
and game content), systems, component parts
(including game conversion sales), other equipment
and services. The Company categorizes revenue
from gaming machines as product sales
from
“Gaming terminals” and revenue from game content
as product sales from “Other” as described in Note 4,
Revenue Recognition, to the Consolidated Financial
Statements.
Video Lottery Terminal ("VLT")
The Company provides VLTs, VLT central systems,
and VLT games worldwide. VLTs are gaming
machines which are regulated by lotteries, and are
usually connected to a central system.
The Company provides systems and machines to
other gaming licensees, either as a product sale or
with long-term, fee-based contracts where the service
revenue earned is generally based on a percentage
of wagers, net of applicable gaming taxes. The
Company categorizes revenue from VLTs as either
service revenue from “Gaming terminal services” or
product sales from “Gaming terminals”, depending on
the nature of the transaction, as described in Note 4,
Revenue Recognition, to the Consolidated Financial
Statements.
Gaming management systems
The Company offers a comprehensive range of
system modules and applications for all areas of
casino management. Gaming systems products
include infrastructure and applications for casino
management, customer relationship management,
patron management, and server-based gaming. The
Company’s main casino management system offering
is the Advantage® System, which offers solutions and
modules
from
accounting and payment processing
to patron
management and regulatory compliance.
for a wide-range of activities
The Company’s systems feature customized player
messaging, tournament management, and integrated
marketing and business intelligence modules that
provide analytical, predictive, and management tools
for maximizing casino operational effectiveness. The
server-based solutions enable electronic game
delivery and configuration for slot machines, as well
as providing casino operators with opportunities to
increase profits by enhancing the players’ experience,
connecting with players interactively, and creating
operational efficiencies. Service Window enables
operators to market to customers more effectively by
leveraging an additional piece of hardware onto
existing machines for delivering in-screen messaging.
The Company’s systems portfolio also extends to
encompass mobile solutions such as the Resort
is a cardless, cashless
funding. Mobile solutions
Wallet™, which
loyalty
solution for casino players. Resort Wallet™ includes
IGTPay™, a fully cashless land-based offering for
casino operators which provides a direct link to
external
that drive
efficiencies and enable floor monitoring for operators
while decreasing response time to player needs
include Mobile Host, Mobile Responder, and Mobile
Notifier. The Company categorizes revenue from
gaming management systems as product sales from
“Other” as described in Note 4, Revenue Recognition,
to the Consolidated Financial Statements.
Digital & Betting
Digital
Digital gaming enables game play via the internet for
real money on mobile or the web. The Company,
through its PlayCasino brand, designs, assembles,
and distributes a full suite of configurable products,
systems, content, and services, and holds more than
35 licenses, 17 of which are specific to digital gaming
only, that authorize the provision of digital gaming
products and services worldwide, including digital
products such as blackjack, roulette, slot games,
poker, bingo, and other casino card games with
features such as single and multiplayer options with
branded titles and select third-party content.
iGaming systems and digital
The Company’s
platforms offer customers an integrated system that
provides player account management, advanced
marketing and analytical capabilities, improved player
engagement tools and a highly reliable and secure
payment system. The Company also offers a remote
game server, which is a fast gateway to extensive
casino content, and digital gaming services that
enhance player experiences and create marketing
opportunities around either the Company’s games or
third-party games.
from broad-based
The Company’s diverse iGaming B2B customer base
includes Caesars Interactive Entertainment, FanDuel,
Loto-Quebec, Ontario Lottery and Gaming and Penn
National Gaming, among others. The Company faces
traditional B2B
competition
providers, such as Playtech plc and Microgaming as
well as from in-house game development by some
operators and an increasing number of content
providers entering the market. The Company also
faces competition in the digital space from other
gaming suppliers, such as Scientific Games and
GAN.
from digital
The Company categorizes revenue
gaming products as product sales from “Other” and
revenue from digital gaming services as service
from “Digital and betting services” as
revenue
Annual Report and Accounts 2021
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Strategic Report
described in Note 4, Revenue Recognition, to the
Consolidated Financial Statements.
Sports betting
The Company provides sports betting technology and
management services, branded as PlaySports, to
licensed sports betting operators in over 20 states in
the U.S., holding 43 licenses that authorize the
provision of sports betting products and services, 18
of which are specific to sports betting only. The
Company does not operate direct to consumer sports
betting in the U.S.
The Company offers a combination of technology and
services to U.S. licensed sportsbook operators in
each state where sports betting is legal. The offering
may be different in each market in order to comply
with local regulations and market conditions. The
Company currently packages services in two ways:
•
“Sports betting platform” solutions offer modular
services hosted and maintained in each U.S.
state or tribal jurisdiction where sports betting is
legal. These solutions provide certified and
managed sports betting software made available
for customers to operate retail and account-
based
retail
interactive sports as well as
components such as self- service betting kiosks
and employee operated betting terminals, and
integrate with pari-mutuel race wagering in a
particular jurisdiction; and
“Turnkey” managed service solutions combine
the Company’s end-to-end
sports betting
management technology with a portfolio of value-
added services, principally trading and trading
support services, but that also may include offer
management, payments,
fraud management,
advisory functions, and interactive components
such as mobile web and desktop applications, all
of which support the operations of land-based,
digital,
betting
operators.
omni-channel
sports
and
•
Sports betting operators who are customers of the
Company in the U.S. include: FanDuel (Flutter plc),
Boyd Gaming
PointsBet, Delaware North,
Corporation, Resorts World and the Rhode Island
Lottery. The Company’s primary competitors in the
U.S. sports betting market include Scientific Games,
Amelco and Kambi, and may in the future include
OpenBet.
The Company categorizes revenue
from sports
betting as service revenue from “Digital and betting
in Note 4, Revenue
services” as described
Recognition,
Financial
Statements.
the Consolidated
to
the Company
remain competitive,
Research & Development (R&D)
To
invests
resources toward its R&D efforts to introduce new
and innovative games with dynamic features to attract
new customers and retain existing customers. The
Company’s R&D efforts cover multiple creative and
engineering disciplines,
including creative game
content, hardware, electrical, systems, and software
for lottery, land-based, online social, and digital real-
money applications.
Market trends
In general, the Company’s business is not materially
affected by seasonal variation. In the lottery business,
consumption may decrease over the summer months
due to the tendency of consumers to be on vacation
during that time, while consumption may increase
around Christmas. Seasonal gaming trends generally
show higher play levels in the spring and summer
months and lower levels in the fall and winter months.
Gaming product sales may be uneven throughout the
year, and can be affected by factors including the
timing of large transactions and new casino openings.
In the sports betting business, the volume of bets that
are collected over the year can be affected by the
schedules of sporting events and the particular
season of such sports. The volume of bets collected
may also be affected by schedules of significant
sporting events that occur at regular, but infrequent,
intervals, such as the Super Bowl and the NCAA
basketball tournament.
In any event, the Company’s worldwide operations
can be affected by industrial, economic, and political
factors on both a regional and global level. The
following are the principal factors which have affected
the Company’s results of operations and financial
condition and/or which may affect
results of
operations and financial condition for future periods.
fiscal year. The pandemic and
COVID-19
The COVID-19 pandemic has disrupted our business.
We began experiencing a significant decline in
operations due to COVID-19 towards the end of the
first quarter of fiscal 2020 and continuing throughout
the 2020
its
consequences, including lockdowns and the closure
of almost all casinos and gaming halls globally in the
first half of 2020, dramatically reduced demand for
gaming products and services. While most casinos
and gaming halls have since reopened, some
capacity restrictions still remain in place and some
remain closed. The ongoing impact of COVID-19 on
our longer-term operational and financial performance
will depend on future developments, including the
continued widespread distribution of safe and
effective COVID-19 vaccines. Many of these future
developments are outside of our control. The
Annual Report and Accounts 2021
Page | 17
exchange rate prevailing at the balance sheet date,
while income and expenses are translated using the
average exchange rates for the period covered.
Accordingly, fluctuations in the exchange rate of the
functional currencies of the Company’s subsidiaries
against the U.S. dollar impacts the Company’s results
of operations. The Company is particularly exposed
to movements in the euro/U.S. dollar exchange rate.
Although the fluctuations in exchange rates have had
a significant impact on the Company’s revenues, net
income, and net debt, the impact on operating income
and cash flows is less significant as revenues are
typically matched to costs denominated in the same
currency.
Strategic Report
Company continues to take measures to protect the
health and safety of its employees by enabling
employees who could work remotely to do so, while
maintaining critical on-site operations with enhanced
health and safety measures such as instituting mask
requirements, practicing social distancing, contact
tracing, and performing regular deep cleaning in each
facility.
Product sales
Product sales fluctuate from year to year due to the
mix, volume, and timing of the transactions. Product
sales amounted to $606 million and $476 million, or
approximately 15% and 15% of total revenues, for the
years ended December 31, 2021 and 2020,
respectively.
Jackpots
The Company believes that the performance of lottery
products is influenced by the size of available
jackpots in jurisdictions that offer such jackpots. In
general, when jackpots increase, sales of lottery
tickets also increase, further increasing the jackpot.
Non-cash goodwill impairments
During the first quarter of 2020, we determined there
was an interim goodwill impairment triggering event
caused by COVID-19 and as a result, we estimated
the fair value of each of our former cash-generating
units using an income approach based on projected
discounted cash flows. Based principally on lower
forecasted revenue and operating profits caused by
lower demand for our commercial gaming products,
we recorded a $296 million non-cash impairment loss
with no income tax benefit, of which $193 million and
$103 million was
former
International and North America Gaming and
Interactive cash-generating units, respectively,
to
reduce the carrying amount of the cash-generating
units to fair value.
recorded within our
Effects of foreign exchange rates
The Company is affected by fluctuations in foreign
exchange rates (i) through translation of foreign
currency financial statements into U.S. dollars for
consolidation, which is referred to as the translation
impact, and (ii) through transactions by subsidiaries in
currencies other than their own functional currencies,
which is referred to as the transaction impact.
Translation impacts arise in the preparation of the
consolidated financial statements; in particular, the
consolidated financial statements are prepared in
U.S. dollars while the financial statements of each of
the Company’s subsidiaries are generally prepared in
the functional currency of that subsidiary. In preparing
consolidated
financial statements, assets and
liabilities measured in the functional currency of the
subsidiaries are translated into U.S. dollars using the
Annual Report and Accounts 2021
Page | 18
Strategic Report
FINANCIAL PERFORMANCE
Results of Operations
Comparison of the years ended December 31, 2021 and 2020
($ in millions)
Service revenue by segment
Global Lottery
Global Gaming
Digital & Betting
Total service revenue
Product sales by segment
Global Lottery
Global Gaming
Digital & Betting
Total product sales
Total revenue
Operating expenses
Cost of services
Cost of product sales
Selling, general and administrative
Research and development
Restructuring
Goodwill impairment
Other operating expense
Total operating expenses
Operating income (loss)
Interest expense, net
Foreign exchange (gain) loss, net
Other expense
Other income
Total non-operating expenses
Income (loss) from continuing operations
before provision for income taxes
Provision for income taxes
Income (loss) from continuing operations
Income from discontinued operations, net of
tax
Gain on sale of discontinued operations, net
of tax
Income from discontinued operations
Net income (loss)
Less: Net income attributable to non-
controlling interests from continuing
operations
Less: Net loss attributable to non-controlling
interest from discontinued operations
Net income (loss) attributable to IGT PLC
For the year ended
December 31, 2021
% of
Revenue
$
December 31, 2020
% of
Revenue
$
Change
$
%
2,684
628
163
3,475
123
482
1
606
66
15
4
85
3
12
—
15
2,043
483
114
2,640
121
354
1
476
66
15
4
85
4
11
—
15
4,081
100
3,115
100
641
145
49
835
2
128
—
130
966
119
31
97
48
(39)
(296)
(3)
(43)
31
30
44
32
2
36
55
27
31
7
9
14
25
(87)
(100)
(65)
(1)
52
11
22
6
1
10
—
103
(3)
1,009
> 200.0
14
10
4
—
27
(86)
(376)
71
2
(388)
(20)
(121)
59
(44)
(45)
(30)
1
(31)
1,397
254
1,143
(148)
> 200.0
(118)
1
—
1
(12)
(33)
390
379
—
> 200.0
(931)
(30)
1,521
(163)
6
—
96
> 200.0
(5)
(933)
—
(30)
3
1,423
(57)
(153)
1,630
345
696
190
45
296
4
3,206
(91)
429
310
120
(5)
855
(945)
22
(967)
36
—
36
1,749
377
792
238
6
—
1
3,163
918
344
(66)
192
(3)
466
452
276
176
24
390
415
590
102
(2)
490
43
9
19
6
—
—
—
78
22
8
(2)
5
—
11
11
7
4
1
10
10
14
3
—
12
Annual Report and Accounts 2021
Page | 19
Strategic Report
Revenue
Total revenue for the year ended December 31, 2021 increased $966 million, or 31%, to $4.1 billion from $3.1 billion
for the prior corresponding period. Total service revenue increased $835 million primarily due to Global Lottery
experiencing a 20.1% increase in same-store sales, principally in Italy and North America, as well as an 11%
increase in our commercial services offering primarily in Italy. Global Gaming service revenue increased 30%
primarily due to an increase in total yields from total installed base units, principally as a result of more installed
base units becoming available to players as COVID-19 induced social distancing restrictions were lifted. Digital &
Betting service revenue increased 44% and was primarily attributable to expansion into new markets and increases
to the customer base in existing markets. Total product sales increases of $130 million were primarily attributable to
a higher number of machines units sold in our Global Gaming segment, principally due to casino operators returning
to more moderate levels of investments. See “Segment Revenues and Key Performance Indicators” section below
for further discussion related to the principal drivers of these changes.
Operating expenses
Cost of services
Cost of services for the year ended December 31, 2021 increased $119 million, or 7%, to $1.7 billion from $1.6
billion for the prior corresponding period. The primary contributor was related to $55 million of increases across the
business in payroll, benefits and variable compensation, of which $35 million and $18 million was attributable to our
Global Lottery and Global Gaming segments, respectively. The increase in variable compensation was related to the
reinstatement of the Company’s incentive compensation plans that were temporarily suspended in 2020 due to
uncertainties associated with COVID-19, discretionary bonuses that were paid during the fourth quarter of 2021 to
current employees who worked for the Company at June 30, 2020 and who were not covered by existing incentive
compensation plans, and stock-based compensation expense for awards granted in 2020. In addition, our Global
Lottery segment had increases of $31 million in point of sale (“POS”) consumables, $29 million in POS fees, $19
million in freight, $12 million in marketing and advertising, and $8 million in non-deductible value-added tax (“VAT”).
These increases were partially offset by a $15 million reduction in depreciation. Cost of services in our Digital &
Betting segment increased by $8 million, principally attributable to a $4 million increase in royalties, and our Global
Gaming segment experienced a $15 million reduction in depreciation.
As a percentage of service revenue, cost of services decreased by approximately 1100 basis points driven by an
approximate 1900 basis point decrease in our Global Gaming segment resulting from disciplined cost management,
benefits from costs savings initiatives, and increased operating leverage. Global Lottery had an approximate 900
basis point decrease driven by higher sales and increased operating leverage. Digital & Betting had an approximate
800 basis point decrease driven by higher revenues and increased operating leverage.
Cost of product sales
Cost of product sales for the year ended December 31, 2021 increased $31 million, or 9%, to $377 million from
$345 million for the prior corresponding period. This increase was primarily the result of a $128 million increase in
product sales partially offset by a $33 million decrease in inventory obsolescence reserves, within our Global
Gaming segment.
As a percentage of product revenue, cost of product sales declined by approximately 1000 basis points driven
primarily by an approximate 1600 basis point decrease in our Global Gaming segment, principally as a result of a
decrease in inventory obsolescence reserves and favorable product mix.
Selling, general and administrative
Selling, general and administrative for the year ended December 31, 2021 increased $97 million, or 14%, to $792
million from $696 million for the prior corresponding period. This was primarily attributable to a $98 million increase
(of which $35 million is non-cash equity-based compensation) in variable compensation across the business, of
which $51 million, $26 million, $19 million, and $2 million, was attributable to Corporate and Other, Global Gaming,
Global Lottery, and Digital & Betting, respectively. The increase in variable compensation was related to the
reinstatement of incentive compensation plans that were temporarily suspended in 2020 due to uncertainties
associated with COVID-19, discretionary bonuses that were paid during the fourth quarter of 2021 to current
Annual Report and Accounts 2021
Page | 20
Strategic Report
employees who worked for the Company at June 30, 2020 and who were not covered by existing incentive
compensation plans, and stock-based compensation expense related to awards granted in 2020. In addition, the
Company experienced a $16 million increase in outside services and decreases of $13 million and $5 million in bad
debt expense and lease expense, respectively.
Research and development
Research and development for the year ended December 31, 2021 increased $48 million, or 25%, to $238 million
from $190 million for the prior corresponding period. This was primarily attributable to a $29 million increase in
variable compensation related to the reinstatement of incentive compensation plans that were cancelled in 2020
and discretionary bonuses that were paid during the fourth quarter of 2021 to current employees who worked for the
Company at June 30, 2020 and who were not covered by existing incentive compensation plans in Global Gaming,
Global Lottery, and Digital & Betting of $16 million, $9 million, and $4 million, respectively. Additionally, as
anticipated as part of the 2020 restructuring plan consolidating our global technology organization, Global Gaming
experienced a $9 million increase in outside services related to casino systems development and the continued
growth in Digital & Betting resulted in a $5 million increase in employee payroll and benefits.
Restructuring
Restructuring for the year ended December 31, 2021 decreased $39 million, or 87%, to $6 million from $45 million
for the prior corresponding period. This decrease was primarily due to management initiating restructuring plans in
2020 to achieve long-term structural cost savings by simplifying our organizational structure, optimizing our global
supply chain, and consolidating our global technology organization.
Goodwill impairment
There were no goodwill impairments for the year ended December 31, 2021. Goodwill impairment was $296 million
for the year ended December 31, 2020. During the first quarter of 2020, we determined there was an interim
goodwill triggering event caused by COVID-19. Based principally on management’s financial projections, which
included the estimated impact of COVID-19, we recorded $193 million and $103 million non-cash impairment losses
within the former International and North America Gaming and Interactive cash-generating units, respectively, to
reduce the carrying amount of these cash-generating units to fair value.
Non-operating expenses
Interest expense, net
Interest expense, net for the year ended December 31, 2021 decreased $86 million, or 20%, to $344 million from
$429 million for the prior corresponding period. This decrease was primarily due to the Company maintaining a
lower average aggregate outstanding principal balance of our Senior Secured Notes compared to the prior
corresponding period, as well as reductions in the average cost of debt primarily due to the refinancing activity
executed in the first half of 2021.
Foreign exchange (gain) loss, net
Foreign exchange gain, net for the year ended December 31, 2021 was $66 million, compared to foreign exchange
loss, net of $310 million for the prior corresponding period. Foreign exchange movements are principally related to
fluctuations in the euro to U.S. dollar exchange rate on internal and external debt.
Other expense
Other expense for the year ended December 31, 2021 increased $71 million, or 59%, to $192 million from $120
million for the prior corresponding period. The increase was primarily related to the premium paid on the full
redemption of the 4.750% Senior Secured Euro Notes due February 2023, through the exercise of the make-whole
call option.
Annual Report and Accounts 2021
Page | 21
Strategic Report
Provision for income taxes
Provision for income taxes for the year ended December 31, 2021 increased $254 million to $276 million from $22
million for the prior corresponding period. The increase was primarily due to the level of pre-tax income and
increases in our valuation allowances related to our business interest expense limitation carryforward.
Income from discontinued operations, net of tax
Income from discontinued operations, net of tax for the year ended December 31, 2021 decreased $12 million, or
33%, to $24 million from $36 million for the prior corresponding period. Discontinued operations reflects the
operating activities of our Italian B2C gaming machine, sports betting, and digital gaming businesses through the
date of the sale in the second quarter of 2021. Refer to “Notes to the Consolidated Financial Statements—3.
Discontinued Operations and Assets Held for Sale” for further information.
Gain on sale of discontinued operations, net of tax
During the second quarter of 2021, the Company recorded a $390 million gain, net of tax, upon the completion of
the sale of its Italian B2C gaming machine, sports betting, and digital gaming businesses. Refer to “Notes to the
Consolidated Financial Statements—Note 3. Discontinued Operations and Assets Held for Sale” included in Item
18. “Financial Statements”.
Segment Revenues and Key Performance Indicators
Global Lottery
($ in millions)
Service revenue
Operating and facilities management contracts
Systems, software, and other
Product sales
Lottery products
Global Lottery segment revenue
(% on a constant-currency basis)
Global same-store sales growth (%)
Instant ticket & draw games
Multi-jurisdiction jackpots
Total
North America & Rest of world same-store sales
growth (%)
Instant ticket & draw games
Multi-jurisdiction jackpots
Total
Italy same-store sales growth (%)
Instant ticket & draw games
For the year ended
December 31,
2021
2020
Change
$
%
613
28
641
1
1
642
35
10
32
1
1
30
2,357
327
2,684
123
123
2,806
1,744
299
2,043
121
121
2,164
For the year ended
December 31,
2021
2020
18.1 %
46.4 %
20.1 %
1.6 %
(17.0) %
0.1 %
12.7 %
46.4 %
15.6 %
7.3 %
(17.0) %
4.7 %
38.9 %
(16.1) %
Annual Report and Accounts 2021
Page | 22
Strategic Report
Operating and facilities management contracts
Service revenue from Operating and facilities management contracts increased $613 million, or 35%, to $2.4 billion
from $1.7 billion for the prior corresponding period. This increase was primarily the result of a $467 million increase
in instant, draw-based, and multi-jurisdiction jackpot ticket sales that experienced a 20.1% increase in global same-
store sales in the aggregate. Italy same-store sales grew 38.9%, as revenues in the prior corresponding period were
lower, primarily due to the temporary COVID-19 induced suspension of retail lottery sales and a shift in consumer
discretionary spending to lottery in lieu of other forms of entertainment due to social distancing restrictions imposed.
North America and Rest of world experienced a 15.6% increase in same-store sales, primarily as a result of
increased instant and draw-based growth and higher jackpots from multi-state lotteries in North America, as well as
a shift in consumer discretionary spending to lottery products. Same-store sales also experienced increases over
the prior corresponding period due to the timing of the COVID-19 outbreak in the middle of March 2020. Additionally,
there was a $94 million increase in lottery management agreement revenues, primarily attributable to contractual
incentives earned and expected to be earned related to higher than forecasted sales in the first half of fiscal year
2021 and continued expectations of earning an incentive in fiscal year 2022 due to performance during the second
half of 2021. In the prior calendar year, the segment paid a penalty due to shortfalls in performance during our
customer’s fiscal year 2020 and forecasted the incurrence of net penalties during our customer’s fiscal year 2021.
Finally, there was a $42 million increase associated with retailer support services in Italy and a $31 million decrease
in anticipated payments to ADM related to underutilized marketing funds.
Systems, software, and other
Service revenue from Systems, software, and other increased $29 million, or 10%, to $327 million from $299 million
for the prior corresponding period. This increase was primarily the result of a $29 million increase from our Italian
commercial service offerings due to increased volumes.
Lottery products
Lottery products revenue remained relatively consistent with the prior corresponding period.
Global Gaming
($ in millions, except yields)
Service revenue
Gaming terminal services
Systems, software, and other
Product sales
Gaming terminals
Gaming other
Global Gaming segment revenue
Installed base units
Total installed base units
Total yields(1)
For the year ended
December 31,
2021
2020
Change
$
%
424
205
628
339
143
482
1,110
295
187
483
205
148
354
837
129
18
147
134
(6)
128
275
For the year ended
December 31,
Change
2021
2020
Units / $
%
48,849
49,300
(451)
$27.11
$18.06
$9.05
44
10
30
65
(4)
36
32
(0.9)
50.1
Global machine units sold
62.4
Total machine units sold
(1) Total yields represent revenue per day for the average installed base units. Installed base units included active and inactive units deployed to a
customer location.
23,807
14,662
9,145
Annual Report and Accounts 2021
Page | 23
Strategic Report
Gaming terminal services
Service revenue from Gaming terminal services increased $126 million, or 42%, to $424 million from $295 million
for the prior corresponding period. This increase was primarily driven by a 40% increase in average active installed
base units during the year as social distancing restrictions were lifted and more units became available to players.
These restrictions included the shutdown of most casinos and gaming halls beginning in the first quarter of 2020,
and upon re-opening, the removal or powering down of a portion of gaming machines from casino floors to maintain
social distancing.
Systems, software, and other
Service revenue from Systems, software, and other increased $17 million, or 9%, to $205 million from $187 million
for the prior corresponding period. This increase was primarily due to an $17 million increase in system and
software revenue, principally related to the increase in active poker machines that were previously inactive in the
prior corresponding period resulting from COVID-19 social distancing requirements.
Gaming terminals
Product sales from Gaming terminals increased $134 million, or 65%, to $339 million from $205 million for the prior
corresponding period. This increase was primarily associated with an increase of 9,145 in machine units sold,
primarily driven by replacement machine units in the United States and Canada. The increase in these units was
primarily the result of the segment’s recovery and casino operators returning to more moderate levels of
investments.
Gaming other
Product sales from Gaming other decreased $6 million, or 4%, to $143 million from $148 million for the prior
corresponding period, primarily related to $28 million of strategic leases recognized as sale-type leases in the prior
corresponding period and a $25 million reduction in the sale of amusement with prize (“AWP”) kits in Italy. AWP kits
are used in typically low-denomination gaming machines installed in retail outlets. These decreases were partially
offset by a $25 million recovery in systems, game conversion, and parts sales as casinos reopened and an increase
of $21 million in poker site licenses.
Digital & Betting
($ in millions)
Segment revenue
Digital and betting services
Product sales
Digital & Betting segment revenue
Digital and betting services
For the year ended December
31,
Change
2021
2020
$
%
163
1
165
114
1
115
50
1
50
44
55
44
Digital and betting services revenue for the year ended December 31, 2021 increased $50 million, or 44%, to $163
million from $114 million for the prior corresponding period. This increase was principally related to expanding
markets under our iGaming solutions, as well as increased same-store sales in sports betting due to an expanded
customer base.
Annual Report and Accounts 2021
Page | 24
Strategic Report
Segment Operating Results
Global Lottery
($ in millions)
Gross margin
Service
% of service revenue
Product
% of product sales
Operating income
Operating margin
Gross margin - Service
For the year ended December
31,
Change
2021
2020
$ / Basis
Points
(“bps”)
%
1,359
51 %
34
28 %
1,085
38.7 %
852
42 %
48
40 %
507
900 bps
(14)
(1200) bps
644
29.8 %
441
900 bps
60
(29)
68
Gross margin on service revenue increased from 42% for the year ended December 31, 2020 to 51% for the year
ended December 31, 2021 driven by higher sales and increased operating leverage.
Gross margin - Product
Gross margin on product sales decreased from 40% for the year ended December 31, 2020 to 28% for the year
ended December 31, 2021, principally due to decreased software license revenues which have higher gross margin
percentages than other product offerings.
Operating margin
Segment operating margin increased from 29.8% for the year ended December 31, 2020 to 38.7% for the year
ended December 31, 2021. This increase is primarily the result of the 30% increase in the segment’s revenues. As
the Global Lottery segment has a high percentage of fixed-costs, operating leverage increases as sales increase.
Global Gaming
($ in millions)
Gross margin
Service
% of service revenue
Product
% of product sales
Operating income (loss)
Operating margin
Gross margin - Service
For the year ended December
31,
Change
2021
2020
$ / bps
%
312
50 %
200
42 %
44
3.9 %
150
31 %
91
26 %
162
1900 bps
109
1600 bps
(209)
(24.8) %
253
2870 bps
108
120
(121)
Gross margin on service revenue increased from 31% for the year ended December 31, 2020 to 50% for the year
ended December 31, 2021 primarily resulting from disciplined cost management, benefits from costs savings
initiatives, and increased operating leverage.
Annual Report and Accounts 2021
Page | 25
Strategic Report
Gross margin - Product
Gross margin on product sales increased from 26% for the year ended December 31, 2020 to 42% for the year
ended December 31, 2021 principally as a result of a decrease in inventory obsolescence reserves as well as
favorable product mix.
Operating margin
Segment operating margin increased from (24.8)% for the year ended December 31, 2020 to 3.9% for the year
ended December 31, 2021 primarily due to an increase in revenues of 32% resulting from the segment’s continuing
recovery from the effects of COVID-19, disciplined cost management and benefits from costs saving initiatives,
along with increased operating leverage as the business continues to return to pre-pandemic scale.
Digital & Betting
($ in millions)
Gross margin
Service
% of service revenue
Product
% of product sales
Operating income
Operating margin
Gross margin - Service
For the year ended December 31,
Change
2021
2020
$ / bps
%
104
64 %
1
44 %
33
20.0 %
63
56 %
—
32 %
41
800 bps
—
1200 bps
65
115
7
5.5 %
27
1448 bps
> 200.0
Gross margin on service revenue increased from 56% for the year ended December 31, 2020 to 64% for the year
ended December 31, 2021 driven by higher revenues and increased operating leverage.
Operating margin
Segment operating margin increased from 5.5% for the year ended December 31, 2020 to 20.0% for the year ended
December 31, 2021 due to a $50 million increase in revenues primarily from iGaming driven by entering new
markets and expanding the existing customer base in existing markets in North America. Operating margin also
benefited from increased operating leverage which was partially mitigated by increased labor costs and marketing
activities.
Liquidity
The Company’s business is capital intensive and requires liquidity to meet its obligations and fund growth.
Historically, the Company’s primary sources of liquidity have been cash flows from operations and, to a lesser
extent, cash proceeds from financing activities, including amounts available under the Revolving Credit Facilities
due July 2024. In addition to general working capital and operational needs, the Company’s liquidity requirements
arise primarily from its need to meet debt service obligations and to fund capital expenditures and upfront license
fee payments. The Company also requires liquidity to fund acquisitions and associated costs. The Company’s cash
flows generated from operating activities together with cash flows generated from financing activities have
historically been sufficient to meet the Company's liquidity needs.
The Company believes its ability to generate cash from operations to reinvest in its business, primarily due to the
long-term nature of its contracts, is one of its fundamental financial strengths. Combined with funds currently
available and committed borrowing capacity, the Company expects to have sufficient liquidity to meet its financial
obligations and working capital requirements in the ordinary course of business for at least the next 12 months from
the date of issuance of these consolidated financial statements.
Annual Report and Accounts 2021
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Strategic Report
The cash management, funding of operations, and investment of excess liquidity are centrally coordinated by a
dedicated treasury team with the objective of ensuring effective and efficient management of funds.
At December 31, 2021 and 2020, the Company’s total available liquidity was as follows:
($ in millions)
Revolving Credit Facilities due July 2024
Cash and cash equivalents
Total Liquidity
December 31,
2021
2020
1,737
591
2,327
1,817
907
2,724
The Revolving Credit Facilities due July 2024 are subject to customary covenants (including maintaining a minimum
ratio of EBITDA to total net interest costs and a maximum ratio of total net debt to EBITDA) and events of default,
none of which are expected to impact the Company’s liquidity or capital resources.
The Company completed multiple debt transactions in 2021 and 2020. Refer to the “Notes to the Consolidated
Financial Statements—15. Debt” for further discussion of these transactions as well as information regarding the
Company’s other debt obligations, including the maturity profile of borrowings and committed borrowing facilities.
At December 31, 2021 and 2020, approximately 18% and 23% of the Company’s net debt portfolio was exposed to
interest rate fluctuations, respectively. The Company’s exposure to floating rates of interest primarily relates to the
Euro Term Loan Facilities due January 2027.
The following table summarizes the Company’s USD equivalent cash balances by currency:
($ in millions)
Euros
U.S. dollars
Other currencies
Total Cash
December 31, 2021
%
$
December 31, 2020
%
$
362
88
141
591
61
15
24
100
660
135
113
907
73
15
12
100
The Company holds an immaterial amount of cash in countries where there may be restrictions on transfer due to
regulatory or governmental bodies. Based on the Company’s review of such transfer restrictions and the cash
balances held in such countries, it does not believe such transfer restrictions have an adverse impact on its ability to
meet liquidity requirements at years ended December 31, 2021 and 2020.
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Strategic Report
Cash Flow Summary
The following table summarizes the statements of cash flows. A complete statement of cash flows is provided in the
Consolidated Financial Statements included herein.
($ in millions)
Net cash provided by operating activities from
continuing operations
Net cash used in investing activities from
continuing operations
Net cash used in financing activities
Net cash flows of continuing operations
Net cash (used in) provided by operating
activities from discontinued operations
Net cash provided by (used in) investing
activities from discontinued operations
Net cash flows from discontinued operations
Analysis of Cash Flows
For the year ended December 31,
Change
2021
2020
$
%
1,017
668
349
52
(216)
(1,948)
(1,147)
(228)
(493)
(53)
12
(1,455)
(5)
> 200.0
(28)
278
(306)
(110)
873
845
(35)
243
908
> 200.0
Net Cash Provided by Operating Activities from Continuing Operations
During the year ended December 31, 2021, the Company generated $1.0 billion of net cash provided by operating
activities of continuing operations, an increase of $349 million from the prior corresponding period. This increase
was principally attributed to an increase in operating income of $1.0 billion.
Non-cash adjustments to net income for the year ended December 31, 2021 were $1.0 billion, compared to $1.5
billion for the prior corresponding period. The principal drivers of the decrease in non-cash adjustments were related
to a $296 million goodwill impairment incurred in the prior period, a decrease in foreign exchange of $376 million,
and decreases in depreciation and amortization of $46 million in the aggregate for the year ended December 31,
2021. These decreases were partially offset by a $125 million increase in deferred income taxes, a $53 million
increase in loss on the extinguishment of debt, and a $43 million increase in stock-based compensation.
Changes in operating assets and liabilities for the year ended December 31, 2021 decreased $325 million from
$158 million in the prior corresponding period.
Net Cash Used in Investing Activities from Continuing Operations
During the year ended December 31, 2021, the Company used $216 million of net cash for investing activities, a
decrease of $12 million from the prior corresponding period. The decrease in net cash used in investing activities
included a $16 million reduction in capital expenditures and a $16 million reduction in other investing activities,
partially offset by a $12 million increase in proceeds from the sale of assets.
Net Cash Used in Financing Activities
During the year ended December 31, 2021, the Company used $1.9 billion of net cash for financing activities, an
increase of $1.5 billion from the prior corresponding period.
During 2021, cash flows used in financing activities primarily included principal payments of long-term debt of $2.8
billion, $127 million in return of capital to non-controlling interests, dividends paid to non-controlling interests of $91
million, $85 million of payments in connection with the early extinguishment of debt, net payments of financial
liabilities of $50 million, repurchases of ordinary shares of $41 million, and dividends paid to shareholders of $41
million. These cash outflows were partially offset by proceeds from long-term debt of $1.3 billion and net proceeds
from short-term borrowings of $51 million.
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Strategic Report
During 2020, cash flows used in financing activities primarily included principal payments on long-term debt of $988
million, dividends paid to non-controlling interests of $136 million, dividends paid to shareholders of $41 million, and
return of $32 million of capital to non-controlling shareholders. These cash outflows were partially offset by proceeds
from long-term debt of $750 million and net receipts from financial liabilities of $67 million.
Net cash flows from discontinued operations
Net cash used in operating activities from discontinued operations was $28 million compared to net cash provided
by operating activities from discontinued operations of $278 million for the prior corresponding period. Cash flows
from operations from discontinued operations reflects the operating activities of our Italian B2C gaming machine,
sports betting, and digital gaming businesses.
During the year ended December 31, 2021, the Company completed the sale of its Italian B2C gaming machine,
sports betting, and digital gaming businesses. At closing, the Company received net cash proceeds of $748 million
and had receivables of €100 million and €125 million due December 31, 2021 and September 30, 2022,
respectively. The Company received the payment due December 31, 2021 on August 5, 2021. Refer to “Notes to the
Consolidated Financial Statements—Note 3. Discontinued Operations and Assets Held for Sale” for further
discussion.
Non-financial measures
Non-financial measures have a useful role alongside financial measures to inform decision making and to evaluate
the Company's performance. Refer to the Strategic Report and the Directors' Report for further information on non-
financial measures.
Annual Report and Accounts 2021
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Strategic Report
SUSTAINABILITY
IGT’s commitment to sustainability represents the
Company’s long-term ambition to serve the global
gaming market according to disciplined ethical and
integrity principles. As a global leader in gaming, IGT
is committed to responsible and sustainable practices
that encompass a broad spectrum of sustainability
initiatives, from the Company’s energy use to wider
environmental and human rights
the
implementation of policies and strategic initiatives
such as establishing the Supplier Code of Conduct
and the publication and adoption of the Human Rights
Policy Statement.
issues,
to
The Company’s global sustainability strategy
centered on four key priorities:
•
is
life
IGT strives
Valuing and Protecting Our People: The
organizational climate of a business is how
employees at all levels perceive the workplace
environment. Many factors can contribute to an
employee’s perception, and
to
develop initiatives and programs that support a
positive organizational climate. This is evidenced
through a variety of initiatives to support this pillar
in daily work
IGT’s employee
including
Diversity and Inclusion Groups.
IGT maintains
Advancing Responsibility:
certifications in responsible gaming through both
the Global Gaming Guidance Group and World
Lottery Association. Responsible
gaming
capabilities and features are part of our core
products, and we are positioned
to assist
customers achieve
their responsible gaming
goals.
Supporting Our Communities: IGT supports the
community through corporate and employee-
flagship After School
driven programs. The
Advantage program
to bring
technology and skill development in STEAM
(Science, Technology, Engineering, the Arts and
Mathematics) education to youth. Since 1999,
IGT has placed over 340 digital learning centers.
IGT also supports communities
financially
through a charitable giving program that aligns
IGT’s Sustainable Development Goals
with
(“SDGs”). Employee programs support
the
unique passions of employees and promote
volunteerism.
IGT’s
Fostering
commitment
the
Company’s long-term ambition to serve the global
gaming market according to the highest level of
ethical and integrity principles. IGT has also
committed to continually working to increase its
ESG performance. For example, IGT’s instant
ticket printing facility in Lakeland (Florida) has
to
for
been acknowledged
Sustainable Operations:
to sustainability
its commitment
is designed
represents
•
•
•
developing sustainable solutions that reduce the
environmental impact of printing while improving
workers’ health and safety.
values
The Company is invested in creating a path to
sustainability that is inspired by its five fundamental
corporate
- Responsible, Authentic,
Pioneering, Collaborative, and Passionate. The
Company’s commitment complies with high standards
integrity and ethical conduct, diversity and
of
inclusion, and professional development.
IGT’s ongoing pledge to sustainable growth within the
gaming industry includes the guiding principles set
forth by the 2030 United Nations (“UN”) Agenda for
Sustainable Development and its 17 SDGs. Based on
its business activities and its sustainability priorities,
IGT has identified nine SDGs as key areas of focus:
no poverty, good health and well-being, quality
education, gender equality, affordable and clean
energy, decent work and economic growth, industry
innovation and infrastructure, reduced inequalities,
and climate action.
(“UN Global Compact”),
In addition, IGT has joined the United Nations Global
largest
Compact
corporate responsibility initiative in the world for the
development,
implementation, and disclosure of
responsible corporate policies and practices.
the
its sustainability governance,
As part of
IGT
established a Sustainability Steering Committee
(“SSC”) in 2021, made of representatives of several
corporate functions, which also focuses upon carrying
out programs and initiatives that contribute to the
Company’s sustainability strategy. Among
the
objectives pursued, the SSC is aiming to establish a
long-term
related objectives on
sustainability, fostering a consistent sustainability
approach across all regions and businesses, and
increasing communication on sustainability practices
by sharing best practices at global and local level.
The SSC is responsible for the assessment and
approval of a global sustainability plan consistent with
business priorities, thus ensuring the allocation of
appropriate resources.
vision and
ESG factors affect the evaluation process of the
Company according to the degree of sustainability
integrated into the business. Given that ESG data are
essentially qualitative factors, thus intangible, non-
financial and not readily quantifiable in monetary
terms, one of the main issues related to ESG rating is
disclosure.
to
improving the quality of information disclosed about
the conduct of its business.
IGT has continually committed
Annual Report and Accounts 2021
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Strategic Report
in more
Community
IGT is a global leader in one of the most regulated
industries. With operations
than 100
countries, there are recognizable differences related
not only to laws and regulations, but cultural and
social attitudes. Through a solid commitment to
sustainability, IGT strives to be a responsible partner
for local and international authorities, customers, and
players
the
Company operates.
jurisdictions where
in markets and
to request
IGT is determined to have a positive impact on the
communities in which the Company operates through
corporate and employee-driven community programs.
Community sponsorships are managed through an
that allows any non-profit
online giving portal
organization
funding or sponsorship.
Community requests are reviewed by IGT’s Social
Impact Committee to ensure that the organization and
its mission align with IGT's adopted SDGs. In 2021,
IGT continued to support organizations that align with
the SDGs of no poverty and good health and
wellbeing.
the
corporate-driven After School Advantage program
while adapting to health and safety protocols.
IGT also continued supporting
IGT has a corporate-driven Community Ambassador
program that fosters community efforts on the local
site level. It is through the Community Ambassador
program that the Company traditionally celebrates the
Global Food Collection Challenge, the Global Giving
Week, and the Global Book Collection. With these
local efforts, local sites donate or volunteer to causes
within
the pandemic
restrictions,
the Community Ambassadors have
shifted to virtual and contactless efforts. Globally, a
Virtual Volunteering Event was held in place of Global
Giving Week.
their communities. Given
IGT’s employee-driven programs provide employees
the opportunity to give back to their local communities
by giving their time, talent, or money.
Responsible gaming
Being part of a community at large also means
placing a focus on player protection and engaging
with key stakeholders for a well-rounded responsible
gaming program. IGT maintains close relationships
with customers, gaming regulators, and researchers
to further its support of player protection. IGT also
works closely with advocacy and research groups
who promote tools to prevent problem gambling,
support responsible gaming organizations, and work
to prevent underage gambling.
IGT’s commitment to responsible gaming starts with
its own people and is woven into the fabric of product
development, services, programs, and policies. IGT
that employees at all
ensures
levels and
responsibilities are trained to support and promote
responsible gaming in their daily activities, with
additional in-depth courses for employees in specific
roles such as game designers and contact center
associates. All products, games, systems, and portals
include advanced responsible gaming tools that help
safeguard players’ interests and address regulators’
concerns. Supporting this commitment to responsible
gaming, IGT published a comprehensive Responsible
Gaming Policy
for all employees. The policy
establishes a governance structure for responsible
gaming strategy that includes the development of
topic-focused working groups that will convene as
topics arise and a specific outcome is identified. The
Responsible Gaming Policy also addresses employee
gambling and establishes a local helpline database
for employees who may have concerns about
problem gambling for themselves or loved ones.
to
to
The certifications awarded to IGT by respected
industry associations worldwide are a
gaming
testament
responsible
IGT’s commitment
gaming. IGT was the first lottery vendor to receive the
World Lottery Association’s Responsible Gaming
Standards for Associate Members, covering IGT’s
lottery operations and was re-certified in 2021. IGT
received G4 (Global Gambling Guidance Group)
responsible gaming certification in 2017 and in 2019
for its land-based casino operations and digital
services, respectively, making it the first supplier to be
certified across both operations. In 2020, G4 re-
certified IGT for both operations simultaneously and
the next re-certification is expected in March 2022.
These certifications require renewal on a regular
basis. Therefore,
its
fulfil
responsible
recertification requirements.
improves
to
IGT continuously
programming
gaming
These efforts have been rewarded by the following
recognitions:
•
Jade Luchauer, IGT Senior Manager Global
Sustainability, won the “Outstanding Individual
Contribution to Responsible Gaming” award in
the Global Regulatory Awards 2021. The
independently judged, annual awards program is
coordinated by Gambling Compliance and is
designed to recognize and reward individuals and
teams who work tirelessly to set new standards in
compliance and responsibility across the global
gambling industry; and
IGT’s lottery operations, including iLottery, have
been recertified by the World Lottery Association
Social
(“WLA”)
Responsibility Standards and Responsible
Gaming Framework for Suppliers.
for WLA’s
Corporate
•
Annual Report and Accounts 2021
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Strategic Report
Human rights
As a global leader in the gaming industry, IGT is
committed
to supporting and cooperating with
international institutions and authorities to promote
corporate actions that advance societal goals. By
IGT
joining
strengthens
rights
principles derived from international conventions such
as the International Bill of Human Rights including the
UN Universal Declaration of Human Rights and the
fundamental Conventions of the International Labour
Organization (“ILO”).
the UN Global Compact network,
its commitment
to human
that businesses should
The first two principles of the UN Global Compact are
directly related to human rights and they respectively
first, support and
state
respect the protection of internationally proclaimed
human rights and second, ensure that they are not
complicit in human rights abuses. IGT identifies these
two principles as a major guide for its action towards
human rights protection and promotion; nonetheless,
in line with the third principle - relating to labor
principles - which states that businesses should
uphold the freedom of association and the effective
recognition of the right to collective bargaining, IGT
the value of using dialogue and
recognizes
negotiation
in
to achieve positive outcomes
employment practices. The Company abides by non-
discriminatory policies and procedures with respect to
trade unions, union memberships, and their activities.
IGT
representatives with
appropriate services to assist in the development of
effective collective agreements. IGT is involved in
collective bargaining
is
committed to accommodating specific local laws and
regulations, and providing the tools needed for union
representatives to perform their duties.
in different countries,
provides workers’
fight all
composed of different
As previously mentioned, in order to develop specific
targets and initiatives to achieve the SDGs, in 2018
IGT began an ongoing process that involved seven
working groups
IGT
departments. Among them, four working groups are
focused, from an internal IGT point of view, on
forms of
to
promoting measures
discrimination, fostering a productive employment
environment, guaranteeing fair and favorable working
conditions, raising awareness about human rights
practices and supporting vulnerable groups’ rights.
Specifically, the Respect for Human Rights working
group is committed to protecting human rights within
the Company boundaries, thus minimizing the risk of
human rights violation. The aforementioned working
group finalized IGT’s Human Rights Policy Statement,
published at
the end of 2021, which contains
information about commitment, responsibilities, and
behaviors in relation to human rights, required from
all employees, directors, officers, and consultants,
from
and expected
third parties, agents or
representatives who deal with or act on behalf of IGT
and its controlled affiliates. Through the Human
Rights Policy Statement, IGT recognizes its role as a
global organization and its responsibility for promoting
human dignity.
In 2019,
the organization.
the Sustainable
From an external perspective,
Procurement working group focuses on the protection
of human rights and the environment along the entire
the
supply chain of
IGT’s
aforementioned working group developed
Supplier Code of Conduct and defined criteria to
distribute it to its suppliers. The Supplier Code of
Conduct includes requirements related to business
ethics and regulatory compliance, human rights and
labor practices, environmental
regulations and
protection, responsible mineral sourcing, health and
safety, and confidential and proprietary information.
Suppliers are required to promptly inform IGT of any
potential violation of the code. In the event of an
actual violation, IGT and the concerned supplier will
develop a remediation plan. The code has been sent
to selected existing suppliers and it forms part of the
on-boarding process for new suppliers. During 2021,
the Sustainable Procurement working group
proceeded with the mapping of IGT suppliers, the first
phase of a process designed
integrate
sustainability criteria, including respect for human
rights, into global supplier evaluations.
to
The working groups cooperate to guarantee that
there is a clear, aligned and consistent connection
between
the Company’s existing commitments,
policies and actions, and the topic of human rights,
also considering the best practices available on a
global scale.
to
is committed
to modern
IGT has a zero-tolerance approach
slavery, and
implementing and
enforcing initiatives to reduce the risk of modern
slavery and human rights violations in the Company
businesses and its supply chain. IGT’s Code of
Conduct serves as a guide to the moral, legal, and
ethical standards expected of employees and
suppliers when doing business with IGT, and it sets
parameters for acceptable behaviors of employees
when liaising with suppliers.
Responsibilities for health and safety are shared. IGT
is committed to providing, maintaining and promoting
a safe, healthy and productive work environment for
all employees and ensuring compliance with all
safety
health
applicable
regulations.
IGT’s Safe and Healthy Work
Environment policy covers topics such as workplace
violence, illegal drug and alcohol use, tobacco use,
fitness for duty and additionally covers the actions
environmental
and
Annual Report and Accounts 2021
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Strategic Report
that should be taken if someone needs to report a
violation.
resulting from the Company’s activities as evidenced
by the data collection process.
Environment
As part of the Company's approach to sustainability,
IGT is committed to ensuring that its operations
interact with the environment in a socially responsible
manner in order to reduce any environmental impact.
The Company's activities are primarily related to
office work, encompassing software implementation,
R&D, and administrative work. The Company’s
largest offices are in Providence (Rhode Island),
Reno (Nevada), Las Vegas (Nevada) and Rome
(Italy). IGT's industrial activities are related to its
printing processes, which take place in Lakeland
(Florida) and in Tito Scalo (Italy), and assembling,
which primarily occurs in Reno (Nevada). Among the
seven working groups mentioned above, during 2021,
IGT activated the Environmental Care working group
which is responsible for supervising IGT’s efforts to
fight climate change through the improvement of
operations efficiency,
the mitigation of pollution
generated by air emissions and use of hazardous
chemicals, and the more efficient use of natural
resources. Within this working group, a specific Task
Force on Carbon Neutrality was also created in order
to develop the Carbon Neutrality Project, starting with
the full (Scope I, II and III) GHG inventory calculation
Initiative (SBTi)
and
commitment, formalized through the submission of
the Science Based Target Commitment Letter in
December 2021.
the Science Based Target
by
implementing
IGT is committed to improving its environmental
performance
Environmental
Management Systems certified according to the ISO
14001 Standard and these are in place in its
Lakeland, Rome and Reno sites. Moreover, since
2011, the Company has implemented an ISO 50001
certified Energy Management System for the Rome
site. In addition, the Reno facility has a Green Globes
Certification (equivalent to the previous LEED gold
certification awarded by the United States Green
Building Council in 2015).
•
•
•
During the time period covered by this Annual Report
and Accounts, the Company has been committed to
reducing the environmental impact of IGT’s facilities
around the world. The initiatives carried out have
primarily involved the replacement of old lighting
systems and energy efficiency of heating, ventilation
and air conditioning systems. Among them:
•
The Tito Scalo site (PCC, Italy) has continued the
replacement of the old lighting systems with Light
Emitting Diode (“LED”) installations. In 2021, LED
electrical power for illumination was equal to
22%, allowing an annual energy saving of 14,400
kWh.
The Reno site (Nevada) performed activities
aimed at increasing the efficiency of heating,
ventilation and air conditioning (HVAC) systems.
Moreover, there was a drop in utilities usage due
to the outsourcing of some operations to third
parties, which led to an annual energy saving of
301,853 kWh.
In 2021, the renovation of Campo Boario 56 site
(Rome, Italy) involved the replacement of the old
lighting system with LED installations, a process
that will continue in 2022. Moreover, the closure
of Campo Boario 19 site (Rome, Italy) in 2021 led
to a reduction in water, electricity and gas
consumption.
An Anilox Cleaning system was installed at the
Lakeland site (Florida) in 2021 for a more efficient
washing of printing machines. Specifically, this
system allows cleaning of the printing rollers
through
the
detergent need in the cleaning process. The
installation of such new equipment has led to an
annual energy saving equal to 676,900 kWh and
to the elimination of 52,491 gallons of wastewater
from the main stream. The installation of a
is
second Anilox Cleaning system, which
expected to result in annual energy savings of
371,640 kWh, has already been planned for
2022.
thus reducing
technology,
laser
Effective and reliable monitoring allows IGT to assess
its progress with respect to reaching its environmental
commitments. Over the years, the Company has
gradually improved its monitoring activities related to
energy consumption and GHG emissions data
through an
tool aimed at
collecting environmental data on a business-site
basis. In 2021, the latter was replaced by a third-party
tool, in an effort to make the data collection process
smoother and increasingly user-friendly. The Scope I
and II GHG emissions data presented in this report
contains the energy consumption and emissions data
internal web-based
Annual Report and Accounts 2021
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Strategic Report
Energy Consumption and Greenhouse Gas
Global GHG emissions and
energy use data
Combustion of fuel and operation
of facilities - Scope I emissions
(tCO2e)(3)(5)
Electricity, heat, steam and cooling
purchased for own use - Scope II
emissions (tCO2e)(4)(5)
Total gross Scope I and Scope II
emissions (tCO2e)(5)
Energy consumption used to
calculate above emissions (kWh)(6)
For the year ended December 31,
2021(1)
For the year ended December 31,
2020(2)
UK and offshore
Global
(excluding UK
and offshore)
UK and offshore
Global
(excluding UK
and offshore)
72
101
173
31,989
33,355
59
59
28,216
36,662
65,344
118
64,878
765,606
204,956,290
530,322
196,310,361
(1) Data related to the GHG emissions for 2021 could be updated based on data that will be available after the publication of this Annual Report and Accounts. The
updated data will be published in the IGT Sustainability Report 2021.
(2) 2020 GHG emissions data have been aligned to the data published in the IGT Sustainability Report 2020.
(3) Scope I: fuel consumption (including natural gas; diesel, propane and liquified petroleum gas (“LPG”) consumption for generators; diesel, gasoline and LPG for
vehicles such as company cars, small trucks or forklifts) and fugitive emissions of refrigerants.
Ton CO2eq = data (fuel consumption or refrigerants refill) * Emission Factor.
Data for the most energy intensive sites were mainly collected from invoices. In addition, in order to calculate Scope I GHG emissions with reference to 100% of
IGT active locations, 2021 data for the remaining offices were estimated based on the best methodologies available.
(4) Scope II: electricity consumption only.
Ton CO2eq = kWh * Emission Factor.
The ratio of the annual emissions associated with the Company’s activities based on the quantity of tonnage per thousand dollars is equal to 0.016 in 2021. In
2020, the same ratio was equal to 0.021 (Scope I and Scope II divided by total revenues in U.S. thousand dollars).
Data for the most energy intensive sites were mainly collected from invoices. In addition, in order to estimate Scope II GHG emissions with reference to 100% of
active IGT locations, 2021 data for the remaining offices have been estimated based on the best methodologies available.
(5) The slight increase in CO2eq Scope I and Scope II emissions is mainly due to the alleviation of the effects of the COVID-19 pandemic and to the resumption of
most activities at full capacity. With reference to Scope II emissions only, the decrease is mainly due to a perimeter change (i.e. sale of the Italian B2C gaming
machine, sports betting, and digital gaming businesses).
The methodology used is based on voluntary and mandatory GHG reporting guidance issued by the Department for Environment, Food and Rural Affairs
(“DEFRA”). For GHG emissions related to electricity, we have used the emission factors issued by the International Energy Agency (IEA, 2018), except for U.S.
states for which we used state-based U.S. Environmental Protection Agency (“EPA”) emission factors, and from Italy, for which we used the ISPRA (Department
for the Geological Service of Italy) emission factors. For countries for which the IEA emission factors were not available, we used the Institute for Global
Environmental Strategies (“IGES”) emission factors.
For GHG emissions related to fuels consumption and refrigerant gas refills, we used the emission factors from the DEFRA (2021) and the EPA.
(6) For fuel and operations energy consumption, we have used DEFRA protocol conversion factors in order to obtain data expressed in kWh.
IGT
is actively engaged
Employee
Diversity and Inclusion; Equal employment
At IGT, diversity and inclusion are critical to who we
are.
in building and
sustaining a diverse and inclusive company that
anticipates and meets the needs of the global
customer base and the evolving demographics of the
communities where our employees and customers
are located. In 2018, the Company established the
Office of Diversity and Inclusion which is responsible
for implementing the Company’s Global Strategic
Plan for Diversity and Inclusion.
In 2019, the Company formally launched its Diversity
and Inclusion Groups (“DIGs"). DIGs are employee
networks structured around dimensions of diversity
and are open
to all employees. DIGs provide
engagement and development opportunities, help
faced
develop awareness of
the unique
issues
by employees, and promote inclusion at every level of
the Company. By 2021, the Company launched
seven DIGs with twelve chapters worldwide, including
groups
for women, black employees; military
veterans; persons with disabilities; employees who
are 50 years of age and above; lesbian, gay,
bisexual, transgender and queer employees and their
supporters; and millennials and GenZers. Over 15%
of the Company’s employees belong to at least one
DIG and thousands more participate in programming
and development opportunities hosted by our DIGs.
To ensure the continued growth and expansion of our
DIGs, the Company hosted a weeklong “boot camp”
for DIG leaders and Company leaders who serve as
Executive Sponsors to ensure the group’s purpose,
direction, and vision is still meaningful, reflective of
the needs of members, and supported by DIG
leadership. This series of workshops also prepared
Annual Report and Accounts 2021
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Strategic Report
leaders
group
execution.
for 2021 strategy and program
DIGs are instrumental in addressing and articulating
employee needs and concerns in response to the
impact of COVID-19 on the Company’s business and
the work and personal lives of all employees.
In
recognition of Mental Health Awareness Month, our
DIGs hosted a weekly speakers’ series that brought
professionals to IGT for conversations about mental
health and wellness. IGT is also proud of its recently
inclusively
published Parent’s Handbook, which
represents all the ways a family can grow – birth,
adoption, surrogacy, foster relationships and more. It
also addresses infertility or the loss of a child. The
idea for the Parent Guide came from a grassroots
effort of members of our Women’s Inclusion Network
and is one of the ways our seven DIGs are positively
impacting IGT.
focuses on highlighting
In 2021, we also added NEXGEN, our seventh DIG
which
the potential of
millennials and GenZers at IGT by providing a
platform for all to have a voice, excite our colleagues,
engage and develop talent, and play an active role in
the future of IGT.
In 2021, IGT submitted its responses to the Human
Rights Campaign Foundation’s Corporate Equality
Index, which measures LGBTQ+ equality in the
workplace. In early 2022, the Company became the
first gaming supplier to earn the highly respected
designation of “Best Place to Work for LGBTQ+
Equality”.
IGT also joined the UN Global Compact UK Network’s
Target Gender Equality, which provides participating
companies with opportunities
the
implementation of
the Women’s Empowerment
Principles in alignment with Sustainable Development
for equal women’s
Goal 5.5, which
representation, participation and
in
business globally.
to deepen
leadership
calls
discrimination on the basis of characteristics such as,
race, color, religion, sex, gender, sexual orientation,
gender identity or expression, pregnancy, marital
status or civil partnership status, national origin,
citizenship, covered veteran status, ancestry, age,
physical or mental disability, medical condition,
genetic information, or any other legally protected
status in accordance with applicable local, state, and
federal laws. To the extent reasonably possible, IGT
will accommodate applicants and employees with
disabilities, including those who acquire temporary or
long-term disabilities during their employment with
IGT. In addition, IGT may offer training and other
professional development opportunities to employees
with disabilities or those who become disabled during
their employment.
by
set
IGT values workplace diversity and respect for all
employees. As reported, the Company follows the
Labour
the
principles
Organization Declaration on Fundamental Principles
and Rights at Work in the member countries where
the Company operates and is committed to providing
a work environment where everyone is treated with
fairness, dignity, and respect without discrimination.
International
its policies, outlining
in business conduct,
the
IGT regularly updates
Company’s commitment
to equal employment
opportunities and non-discrimination, thus fostering a
work environment that reflects a fair and inclusive
culture that values unity and diversity. The Company
enforces compliance by implementing practices to
training
execute policies
employees in the application of procedures, and
taking appropriate disciplinary action up to and
including termination of employment for violation of
the Company’s policies except where prohibited by
law or contrary
local collective bargaining
agreements. IGT has a specific anti-harassment
policy, that reflects best practices and addresses
company culture, designed to set the expectations
and standards of behavior required
IGT
employees.
for all
to
All the Company’s employees participated in training
that focused on building awareness of the Company’s
global policies relating to equal employment and anti-
harassment and bullying. In 2021, certain hiring
focused on
in
managers participated
mitigating bias in the hiring process and leaders,
including members of
the Global Diversity and
Inclusion Council participated in “Fostering Diversity
and Inclusion”, offered through ExecOnline and the
Yale University School of Management.
training
IGT is committed to providing equal employment
opportunities for all applicants and employees on the
basis of qualification. The Company will not permit
Annual Report and Accounts 2021
Page | 35
the
business segment,
IGT’s annual
Sustainability Report, and an announcement that
thousands of employees worldwide would receive
special, one-time bonuses.
launch of
IGT
intends
Additionally,
to distribute a global
employee survey in 2022 as part of a new 18-month
engagement survey cycle. The survey will allow every
member of IGT’s workforce to express their opinions
on a variety of topics.
in
Company’s
involvement
Employee
performance
Historically, as part of encouraging employee
involvement in the performance of the Company, IGT
has offered several performance-based programs,
such as a share-award program for employees at a
certain level. The share award is typically conditioned
on a three-year performance cycle, based on the
financial
achievement of several predetermined
metrics. Setting these thresholds and offering this
share incentive helps drive leadership accountability
and shareholder alignment, which significantly
impacts the overall performance of the Company. The
Company also offers a short-term incentive program
based on achievement of predetermined fiscal year
financial results as well as individual performance
against specific predetermined goals. By providing
specific participant training on these programs the
Company strengthens employee understanding and
engagement in the targeted business performance
outcomes. Further,
IGT offers an employee
that provides
recognition program, Spotlight,
monetary and non-monetary awards for noteworthy
employee contributions.
Due to the challenges experienced in 2020, the
Company suspended the short-term incentive and
Spotlight programs until 2021 and, instead approved
a one-time award of restricted share units, for which
vesting is based on continued service through the
vesting dates, to certain employees in leadership
positions, given the challenge of establishing long-
term performance metrics during such
time of
uncertainty. The Company reinstated performance-
based programs for employees in 2021, including the
short-term
incentive program, and performance-
based share awards, and our recognition program,
consistent with historical practice.
Strategic Report
Communication
The Company maintains communication tools and
channels that facilitate the distribution of information
to employees. Communication outlets include email,
internal social networking, a file-sharing and instant
messaging platform, print materials and an internal
website, OneIGT. Across platforms,
information
distributed to employees touches on everything from
to organizational
financial and economic news
updates, new product launches, policies, programs
and stories about individual accomplishments, among
other topics. As of January 2022, OneIGT has
received more than 3 million site visits since its
launch in January 2020.
including
In 2021,
facets of
these events
IGT also regularly hosts Company-wide meetings to
provide employees with important information and to
IGT hosted
field employee questions.
dozens of
sessions
highlighting the Company’s financial performance,
talent development processes, diversity and inclusion
initiatives and business-specific events highlighting
core
IGT’s operations. These events
featured leaders including but not limited to the CFO,
the Senior Vice President of People and
Transformation, the CEO of Global Lottery, the CEO
of Global Gaming and the CEO of Digital & Betting.
One director engaged with employees in 2021 by
taking part
International Women’s Day
celebration, which was broadcast to employees as a
video during two live events, while the CFO engaged
with employees by answering audience questions
during town hall events throughout the year. The CEO
engaged with employees through emails that touched
on topics such as the launch of IGT’s Digital & Betting
in an
Annual Report and Accounts 2021
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Strategic Report
SECTION 172 STATEMENT
The Directors are accountable to shareholders and, in
accordance with section 172 of the CA 2006, must act
in a way that is likely to promote the success of the
Company for the benefit of its members as a whole.
In doing so, the Directors must have regard, amongst
other matters, to (a) the likely consequences of any
decision in the long-term; (b) the interests of the
Company’s employees; (c) the need to foster the
Company’s business relationships with suppliers,
customers and others; (d) the desirability of the
Company maintaining a reputation for high standards
of business conduct; and (e) the need to act fairly as
between members of the Company, consistent with
the Company’s core and sustainable business
objectives.
The Board has broad responsibilities to establish the
Company’s organizational structure, strategy, and risk
profile to pursue longer-term value creation and
business growth of the Company whilst honoring
commitments to stakeholders. To this end, the Board
holds an annual strategy session with management
present to review and discuss the market trends and
management strategic plans (including assumptions,
projections, and conclusions) as well as initiatives to
implement, monitor and review these periodically. The
Company’s investor outreach program is reported to
the Board directly and the Board evaluates and
discusses cybersecurity-related risks faced by the
Company not less than annually. In addition, the Audit
Committee also receives report on cybersecurity-
related risks as part of its quarterly risk management
updates.
reviews periodic
The Board is supported by an Audit Committee, a
Compensation Committee, and a Nominating and
Corporate Governance Committee, with a clear
framework of matters delegated to each committee.
Material business decisions are reserved for the
Board and certain strategic and financial thresholds
have been determined to identify matters requiring
Board consideration and approval. Specifically, the
reports and
Audit Committee
updates on the organization’s systems and controls
as well as risks and exposures, and holds an annual
dedicated session
the
Company’s Enterprise Risk Management program
(including cybersecurity updates). The Compensation
Committee
and makes
recommendations to the Board on human capital
management matters, including culture and employee
engagement, and diversity, equity and inclusion,
whilst the Nominating and Corporate Governance
Committee periodically reviews the size, composition
(including diversity) and leadership of the Board and
its committees.
receive updates on
reviews, monitors
to
that
IGT Sustainability Steering Committee, comprised of
executive management, was established in 2021 with
include creating a homogeneous
goals
regions and
sustainability approach across all
businesses and establishing a long-term vision and
related objectives on sustainability. These goals are
through management evaluation and
pursued
approval of a global sustainability plan
is
integrated and consistent with business priorities, and
which progress
the
Nominating and Corporate Governance Committee.
is periodically overseen by
that
The day-to-day management of the business has
been delegated to the CEO, and senior management
have also been delegated authority to make decisions
within specified parameters which the Nominating
reviews
and Corporate Governance Committee
annually. The Board and its committees receive from
management
to
operations across IGT, including the interests and
views of key stakeholders for consideration and
discussion to help the Board when making specific
decisions and providing ongoing oversight at the
group level.
information and reports relating
Key decisions
For each matter which comes before the Board and
its committees, the Directors aim to create and deliver
likely
long-term value whilst considering
consequences of any decision in the long-term,
including the stakeholders who may be affected, their
interests and any potential impact as part of the
decision making process.
the
COVID-19
During 2021, the Company was recovering gradually
from the impact of the COVID-19 pandemic on its
operations and people. Efforts continue to protect the
overall sustainability and growth of the Company in
order to return to pre-pandemic operations and
performance,
including developing new ways of
working which will provide the Company with an
opportunity to consider changes to its real estate
footprint. A decision was also taken to reinstate the
performance-based annual bonus program for all
eligible employees.
the Company
implemented a discretionary bonus program of up to
$15 million for the population of employees who are
not normally eligible to participate in the performance-
based annual bonus program. This discretionary
program represented a portion of
the savings
achieved by the Company through cost reduction
initiatives implemented during 2020 and 2021 in
In addition,
Annual Report and Accounts 2021
Page | 37
Strategic Report
response to the pandemic (including furloughs,
salary reductions and reduced working hours).
Financing and share repurchase program
In March 2021, the Board approved the issuance of
up to $750 million new senior secured notes and the
use of the net proceeds alongside IGT’s senior
revolving credit facilities to redeem the existing senior
secured notes due in 2022. A key driver of the
decision was to extend the average life of the
Company’s debt instruments and reduce the average
cost of borrowing going forward. In July 2021, the
Board approved the amendment and extension of the
facility agreement which
loan
Company’s
following
included an ESG margin adjustment
improvement
the
Company’s commitment to sustainability, which is
another step in a plan to enhance IGT’s credit profile,
generate additional
liquidity, and extend debt
maturities. The Board’s financing decisions helped
strengthen the outlook for IGT’s liquidity position and
enabled IGT to support and preserve its operations,
protect the long-term value of the business and
further strengthen the Company’s financial resilience.
rating, highlighting
IGT’s
term
in
In November 2021, the Board authorized a program
for the repurchase of up to $300 million of the
Company’s ordinary shares during a period of four
years, enhancing shareholder returns after reinstating
quarterly
cash dividend. Further details on
repurchase activities completed during the 2021
financial year are disclosed in the Directors’ Report.
Board and committee membership
Beatrice Bassey stood down from her position as a
Director at the conclusion of the AGM in May 2021
the
and consequently retired as a member of
Nominating and Corporate Governance Committee.
The Board, with support from the Nominating and
Corporate Governance Committee, considered the
composition of the Board and each Board committee
to ensure their effective functioning in supporting the
Board, and evaluated the impact of Beatrice Bassey’s
departure in the Board’s decision making process and
in providing entrepreneurial
the Board’s
leadership and meeting
the
the objectives of
Company with a view to enhancing shareholder value
over the long-term. Whilst it was concluded that the
size of the Board then remained effective with ten
directors, the Board’s primary aim of finding a
candidate with the appropriate board experience and
relevant skills to make a meaningful contribution to
the Board remains. As such, when nominating a
director for appointment to the Board, the Nominating
role
including gender,
and Corporate Governance Committee will consider
candidates
from a wide range of backgrounds,
including finance, institutional relations and ESG,
amongst others, and against objective criteria, and
with due regard to the benefits of diversity on the
Board,
racial and ethnic
backgrounds, and cognitive and personal strengths,
which the Board believes would be valuable to sound
business decisions and effective
stakeholder
management practices. The continual evaluation of
the Board and committee composition ultimately led
to a number of changes to the executive and Board
leadership announced in January 2022.
Remuneration Policy and Equity Incentive Plan
the periodic review of
Following
the Directors’
remuneration policy, the Compensation Committee
recommended to the Board to set forth a new policy
to clarify and modernize
its philosophy and
remuneration elements to support the Company's
strategy and growth, align with peer company
to compete
practice, and allow
effectively for talent on a global basis. As such, the
Board presented a new Directors’ remuneration policy
at the 2021 AGM, which was subsequently approved
by shareholders and took effect immediately following
the conclusion of the AGM.
the Company
The Board also presented a new 2021 Equity
Incentive Plan to shareholders at the 2021 AGM,
which was subsequently approved by shareholders,
allowing the Company to continue to make grants to
motivate employees and
for
delivering growth in shareholder value.
reward Directors
New Digital & Betting business segment
The Company announced, in September 2021, the
establishment of a dedicated Digital & Betting
business segment, comprising its iGaming and sports
betting activities, that were previously part of the
Global Gaming business segment. As a result, IGT
will report results under three business segments -
Global Lottery, Global Gaming and Digital & Betting.
The decision was made, following consideration of
the strong leadership positions established by IGT
and the dynamic growth across its iGaming and
sports betting businesses, with significant growth
expected to continue. Also, these businesses have
become strategically important to IGT as they afford
IGT the opportunity to leverage the global reach and
strong customer relationships of the Global Gaming
business segment. The new structure is expected to
enable better appreciation of the intrinsic value of
IGT’s product and solutions portfolio. In November
Annual Report and Accounts 2021
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Strategic Report
it
that
the Company also announced
is
2021,
undertaking a
legal entity and organizational
realignment over the next 12 months designed to
provide the Digital & Betting business with dedicated
management, a more nimble organization and
governance structure as well as the ability to pursue
organic and inorganic growth opportunities. As part of
this process, the Company may evaluate a potential
separate public listing of its Digital & Betting business
flexibility while
to
maintaining a controlling
the
consummation of any such potential separate public
listing.
further enhance
its strategic
following
interest
Commitment to net-zero emissions
Given the increasing urgency of the world’s climate
crisis, the Board acknowledged that more companies,
including IGT in spite of its low exposure, need to
take bold climate action in concrete support of the
worldwide fight to save the planet. As part of the
development of
is
strengthening its efforts to limit its climate change
impacts through a specific carbon neutrality project
that started in 2021 with the Scope III (indirect
emissions happening upstream and downstream in
the value chain) GHG inventory calculation and will
enable the Company to develop specific emission
reduction targets and decarbonization trajectories.
its sustainability plan,
IGT
Our stakeholders
The processes and activities in respect of the Company’s key stakeholders as described below and in this Strategic
Report demonstrate how the Directors have addressed their responsibility under section 172 of the CA 2006.
REGULATORS
IGT’s activities are subject to extensive and complex governmental and regulatory
requirements, which are constantly evolving and may vary from jurisdiction to jurisdiction.
Regulators rely on IGT’s capabilities and experience in preventing and reacting to illegal and
problem gambling.
Approach, engagement and initiatives
IGT continues to build on its well-established local presence and relationships with regulators in the countries where
it operates around the world. IGT’s top managers regularly attend meetings with public authorities and institutions at
local and global levels to actively provide updates and share knowledge and expertise. During 2021:
•
Four regular and one special meeting of the Global Compliance Governance Committee (established in
accordance with the Twelfth Revised Order of Registration issued by the Nevada Gaming Commission and
Nevada Gaming Control Board, item 12, requirement to maintain a “gaming compliance program plan”), were
held;
Four regular meetings of the Government Affairs Committee, established by IGT to oversee, amongst other
things, its government relations matters, were held;
IGT cooperated with 5 regulatory authority investigations for the purpose of renewing its global regulatory
licensing portfolio; 31 personal interviews and one corporate visit were conducted;
IGT continued its efforts to work with gaming authorities and industry groups to expand IGT’s responsible
gaming product offerings that go above and beyond jurisdictional regulations; and
The Enterprise Risk Management team conducted detailed assessments on key risks that could impact IGT’s
ability to achieve its objectives and monitored key risk mitigation strategies.
•
•
•
•
Information on stakeholders
•
The Audit Committee receives quarterly updates on all cases of regulatory violations, citations, and fines, as
well as general regulatory compliance updates which are reported by the Audit Committee chair to the Board.
The Audit Committee receives quarterly risk management updates, which are reported by the Audit Committee
chair to the Board, so that the Directors are aware of risks, potential impact, and mitigating strategies.
The Audit Committee receives an annual report on activities of the IGT Global Compliance Governance
Committee (which in turn, receives reports on activities of the IGT Government Affairs Committee, including on
new and amended government relations agreements and quarterly financial contributions made by IGT), with a
year end presentation provided by the committee’s chair.
Each Board committee also receives general regulatory and market practice updates, so that the Directors are
kept informed of regulatory and market developments and can respond and take action accordingly.
•
•
•
Annual Report and Accounts 2021
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Strategic Report
EMPLOYEES
It is IGT's people who will enable us to continue to meet the business challenges posed in
today’s gaming market. IGT’s overall goal is to increase the presence of underrepresented
groups at all levels and create a more inclusive organizational culture.
Approach, engagement and initiatives
IGT is committed to creating an engaging employee experience. During 2021:
• We continued our focus on employee communication with weekly employee newsletters highlighting stories
within the business as well as employee news. OneIGT, our intranet launched in January 2020, celebrated more
than 2.1 million views in 2021, a 100% increase. We also produced close to 50 town halls to ensure employees
are knowledgeable about our business and strategy;
• We launched our “listening strategy” which encompasses MyVoice, our employee engagement survey, but also
a hiring manager survey, candidate survey and exiting employee survey. We are establishing touch points with
our employees as well as potential candidates to ensure we are always providing an optimal employee
experience. For example, feedback from our hiring manager survey has already prompted an improvement in
how we order equipment and streamline the process for new hire on-boarding;
• We launched GROW workshops to enable our employees to take charge of their own careers to support
ongoing employee development which, as noted in our 2020 MyVoice survey, is a key driver of engagement.
This was supported by the refresh of online learning via Udemy/LearnShare and HarvardManageMentor. We
pivoted our in-person Manager Essentials Program, for all first line managers, to virtual and ran our second
cohort of Leading IGT for vice presidents and above partnering with Harvard University to deliver the program.
We have also focused on mental health with a number of workshops as well as looking towards the future ways
of working with a dedicated site full of resources to enable managers and employees in this new hybrid work
model; and
• We launched our integrated talent management program, which enables IGT and its managers to truly know the
talent in our organization. By calibrating and collaborating on our workforce’s performance, potential and critical
roles, we are proactively identifying our high performing talent while empowering employees to take control of
their careers. We had over 4,600 employees and managers participate in training sessions and open houses so
they could better understand the process and the tools, and we also saw almost 1,500 employees promoted
into new roles.
Information on stakeholders
•
The Compensation Committee reviews management recommendations and advises management on broad
compensation policies.
The Compensation Committee receives updates and reports from the People and Transformation department
on human capital matters, including talent management processes to ensure IGT attracts and retains talent and
meets market expectations for senior management remuneration packages, and on IGT’s Global Strategic Plan
for Diversity and Inclusion to create a more inclusive organizational culture.
The Nominating and Corporate Governance Committee reviews and approves the annual Sustainability Report
which discloses, amongst other things, talent attraction and retention, diversity and inclusion, and how IGT
ensures fair labor and favorable working conditions and the respect of health and safety standards.
The Audit Committee reviews cases of whistleblowing.
•
•
•
COMMUNITY AND ENVIRONMENT
IGT recognizes the importance of contributing to communities and reducing any
damaging effects on the environment from business processes.
Approach, engagement and initiatives
IGT is committed to community involvement and supporting programs that enrich and strengthen the communities
where IGT operates. IGT’s commitment towards the community is also aimed at supporting initiatives and local
projects aimed at increasing digital skills of young people and promoting technical innovation. During 2021:
•
IGT Community Ambassadors continued to emphasize community efforts allowing virtual volunteering and
contact-less efforts;
• Global Giving Week, which included events in areas across the globe, was held in May. During this event,
volunteer and donation efforts for local employees were identified while observing health and safety
precautions;
IGT continued with the After School Advantage Program while observing health and safety best practices;
IGT also prioritized giving basic needs to organizations and causes. This effort aligns with IGT’s adopted
Sustainability Development Goals;
•
•
Annual Report and Accounts 2021
Page | 40
Strategic Report
•
•
IGT continued to encourage employees to engage with non-profit organizations independently when possible;
and
IGT in Italy continued with supporting the protection and enhancement of Italian artistic and cultural heritage
through the conservation and restoration of art. In particular, IGT supported the cleaning/dedusting of Pope
Julius II's tomb and of Moses, one of the most famous sculptures by Italian artist Michelangelo Buonarroti, in the
church of San Pietro in Vincoli in Rome.
See “Sustainability - Community” on page 31, for community activities carried out by the Company.
IGT is committed to achieving environmental sustainability in its operations and strives for continuous improvement
in its environmental management systems and reduction of its environmental impact. During 2021, IGT’s facilities
located worldwide carried out several activities, including replacement of old lighting systems and on energy
efficiency of heating, ventilation and air conditioning systems. See “Sustainability - Environment” on page 33, for the
Company’s environmental activities.
Information on stakeholders
•
The Nominating and Corporate Governance Committee reviews IGT’s sustainability program which gives due
consideration to environmental, social and governance matters that could impact IGT, the environment, or the
communities in which IGT operates, and receives updates on initiatives and programs carried out by the global
sustainability team.
The Nominating and Corporate Governance Committee reviews and approves the annual Sustainability Report
to ensure it is consistent with IGT’s sustainability program, business strategy, and core values.
The Directors review the findings on GHG emissions and global energy produced by IGT’s activities as reported
in this Annual Report and Accounts and the annual Sustainability Report.
SHAREHOLDERS
Our retail and institutional shareholders are the owners of the Company, and they play an
important role in monitoring the performance of the Company.
Approach, engagement and initiatives
As a publicly listed company, IGT maintains a regular dialogue with shareholders, potential new investors, and
analysts through a combination of meetings, correspondence, and reporting. During 2021:
•
IGT’s representatives participated in several virtual and in-person investor conferences, including the Deutsche
Bank Gaming, Lodging, Leisure & Restaurants Conference; Truist Gaming, Lodging, Leisure & Restaurants
Conference; Bank of America Gaming & Lodging Conference; Goldman Sachs Travel & Leisure Conference; JP
Morgan Gaming, Lodging, Restaurants & Leisure Conference; Jefferies Consumer Conference; JP Morgan
European High Yield Conference; Bank of America Leveraged Finance Conference; and the Macquarie Bright
Ideas Conference, among others;
Several virtual non-deal roadshows were also completed throughout the year, as were hundreds of ad-hoc, one-
on-one meetings with members of the investment community; and
The Company held a virtual investor day, providing an overview of its strategy, in addition to both near and long-
term financial goals, that was viewed by several hundred members of the investment community.
•
•
Information on stakeholders
•
The Directors receive updates and feedback on the continued dialogue between IGT and our institutional
investors through meetings, calls, conferences and emails.
Each Board committee receives updates from management on IGT’s legal obligations, e.g. changes to law and
regulations, including in the context of corporate governance.
Each Board committee receives regular updates from management on market guidelines, recommendations
and associated guidelines from advisors, professional bodies, and proxy advisory firms, as well as any notes
analysts may have.
•
•
•
•
Annual Report and Accounts 2021
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Strategic Report
PLAYERS AND CUSTOMERS
IGT's business relies on the level of player activity with its lottery, gaming, digital and
betting products and solutions.
IGT works closely with its customers to help them attract and retain new players and
conducts extensive research on its products and solutions to understand player
behavior and ensure the highest level of performance, player experience and safety.
Approach, engagement and initiatives
IGT strives to deliver unrivalled gaming experiences that engage players and drive growth, whilst also maintaining a
long-standing commitment to player protection through close relationships with customers, gaming regulators,
research institutes, and advocacy groups that promote tools to prevent problem gambling and support responsible
gaming. During 2021:
•
IGT Lottery in Italy launched a new My Lotteries app with a gaming experience that engages both online and
retail players, designed to enhance player experience and player safety; and
In November, IGT Lottery in Italy achieved alignment for the fifth time with the European Lotteries Responsible
Gaming Standards in accordance with the criteria set in the European Lotteries Certification Framework.
•
IGT operates as a trusted growth partner for both lottery and gaming customers, including government customers
worldwide. Attention and dedication to IGT customers are integrated into the strategies IGT uses to provide them
with comprehensive customer service and participation in industry events. During 2021:
•
IGT participated in virtual and in-person lottery industry association events, including EL/WLA Marketing
Seminar, EL Communications Workshop, NASPL Professional Development Seminar, NASPL DeskCon. IGT
also participated in two NASPL hosted Executive Committee Dialogues where leading industry vendors were
invited to speak with the NASPL leadership team on challenges and opportunities facing the lottery industry.
These sessions were held in the Spring and Fall of 2021, via a Teams call and included a Q&A session;
IGT produced a 45-minute video business update that was showcased in the virtual NASPL DeskCon trade
show booth. This included business updates from IGT leadership as well as an update on our commitment to
Diversity and Inclusion;
IGT engaged with leading lottery media partners with participation in PGRI Retail Modernization, PGRI Digital
Lottery, PGRI Lottery Expo, and La Fleurs. During these events, IGT representatives had the opportunity to
participate in speaking engagements and industry panel discussions with other industry thought leaders;
Two “Players Projects” lottery customer virtual events were held in June and December. These “edutainment”
events featured industry experts engaging with IGT about key topics for lottery operators such as consumer
behavior trends and impact on purchase decisions and the advancement of cloud technology. These events are
designed to provide information on a topic relevant to the global lottery customer base for consideration in
lottery business planning;
IGT transformed its in-person Lottery Market Insights Workshop into virtual sessions held in April and May,
where 40 lottery customers used these weekly Teams video sessions to share challenges, best practices, and
lessons learned relating to the area of market research, consumer and retailer insights throughout the rapidly
changing environment during the pandemic;
IGT participated in virtual and in-person gaming, iGaming and sports betting tradeshows, conferences, and
events, including the Global Gaming Expo (G2E), Indian Gaming Tradeshow & Convention (NIGA), SBC
Summit and SBC Digital Summit North America, Ukrainian Gaming Week (UGW) and Gaming Industry Expo
(GIE) tradeshows, the Belgrade Future Gaming exhibition and the iGaming Next event in Malta, during which
IGT promoted and marketed its products;
IGT produced its own Casino Operator Perspectives event, gaining important insights from gaming customers
while sharing product and solution updates relevant to and supportive of player safety in a COVID-19 gaming
environment;
IGT continued with its efforts in managing and producing webinars, customer forums, and videos to educate IGT
customers on its products as well as broader issues affecting customers’ business. This outreach included the
Roadshow Trailer initiative in North America, three customer forums in Australia, webinars in Australia and New
Zealand, videos featuring Gaming Chief Operating Officer Nick Khin (highlighting industry updates, resources,
and helpful information to keep our operators informed and supported as they navigated the pandemic), and
videos to help support the first virtual Video Lottery Terminal (VLT) Customer Advisory Board;
IGT continued with its efforts in producing content, promotions and campaigns for magazines, newsletters,
promotional materials and other corporate literature for its customers and their players;
IGT Lottery in Italy delivered a brand new mobile app for retailers that allows a 360-degree interaction with
operations: making GeV orders, storage management, and monitoring payments. Moreover, users can enjoy
•
•
•
•
•
•
•
•
•
Annual Report and Accounts 2021
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Strategic Report
additional services like training and education courses, initiatives and competitions on loyalty, communications
and customer care; and
IGT Lottery in Italy provided a new training path named “Digital Road” aimed to educate and engage its retailers
on digital strategies and tools to improve their business.
•
Information on stakeholders
•
The Nominating and Corporate Governance Committee reviews and approves the annual Sustainability Report
which discloses, amongst other things (i) updates on IGT’s main objectives pertaining to players such as
promoting protective tools to prevent problem gambling, supporting responsible gaming organizations that
address problem gambling, and preventing underage gambling, and (ii) activities undertaken in connection with
its customers.
The Nominating and Corporate Governance Committee receives updates on IGT’s sustainability program and
initiatives, including IGT’s commitment as a responsible and ethical supplier of gaming and lottery products and
services.
SUPPLIERS
Suppliers play a key role in IGT’s ability to support its customers’ requirements.
•
•
•
•
Approach, engagement and initiatives
IGT works with suppliers that can ensure high quality goods and services and meet high economic, ethical, and
socio-environmental standards. During 2021:
•
IGT continued to perform and undertake periodic business and quality reviews on suppliers, which serve to
review the performance and provide feedback to suppliers;
IGT Lottery in Italy improved the Supplier Qualification Process requiring suppliers to accept the Supplier Code
of Conduct;
IGT initiated its supply chain mapping process to categorize vendors determined to be critical to business
operations in order to continuously assess and evaluate the overall health and ongoing viability of key suppliers;
The Supplier Code of Conduct was translated into Spanish, Italian and Chinese to enable better spread of ideas
and information in local or native languages; and
In order to mitigate the impact of global supply chain shortages, IGT utilized and benefited from the strategic
partnerships established with top tier contract manufacturers as part of the restructuring plan to optimize its
global supply chain initiated in 2020. In addition, IGT engineering also utilized input from strategic suppliers to
re-design electronic systems around available material to deal with the most difficult shortages, and finally
coordinated with strategic contract manufactures to search for global broker and spot market channels to
resolve shortages.
Information on stakeholders
•
The Audit Committee receives periodic risk management updates (including risks pertaining to the Company's
supply chain), which are reported by the Audit Committee chair to the Board, so that the Directors are aware of
risks, potential impact and mitigating actions.
The Directors receive periodic updates on compliance with IGT’s Code of Conduct which sets out the
Company’s zero-tolerance approach to modern slavery and its commitment to implementing and enforcing
effective systems and controls to promote an ethically sensitive business and reduce the risk of contracting with
suppliers who are not aligned to these principles.
The Directors receive information on the initiatives and activities undertaken in connection with the Company's
supply chain as part of its review and approval of the UK Modern Slavery Act statement.
•
•
•
Annual Report and Accounts 2021
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Strategic Report
PRINCIPAL RISKS AND UNCERTAINTIES
The Company faces a number of risks which could impact the achievement of its strategic, financial and operational
objectives. Enterprise risks can be caused by factors internal or external to the Company. While it is not possible to
identify or anticipate every risk due to the changing business environment, the Company has an established risk
management process to identify, assess, manage, report and monitor risks. The Company’s risk management
process is set by the Board, which avails itself of its Audit Committee.
Generally, risks are assessed on both an inherent basis (i.e. the theoretical risk if there were no mitigating controls
in place) and a residual basis (i.e. the risk that remains after considering and assessing the effectiveness of
controls). The assessment methodology incorporates a determination of the likelihood that a risk will occur, and the
potential financial, regulatory, and reputational impacts if it were to materialize. It also includes an evaluation of the
operating and design effectiveness of a risk’s controls.
At IGT, risks are categorized as (i) Financial, (ii) Operational, (iii) Regulatory and Legal, (iv) Technology and
Information Security, and (v) Strategic. The potential impact of the key risks, and the mitigating controls in place to
manage their impact, are as follows:
to
travel
impact, many aspects of
The continuing and evolving COVID-19 pandemic
The extent and duration of the COVID-19 pandemic
and related government actions has impacted, and
may continue
the
Company's business, including through workforce
limitations,
restrictions, closure of public
buildings and businesses, cancellation of events,
supply chain disruptions, decreased customer
demand for its products and services and decreased
consumer demand for some of the products and
services that the Company provides to its customers
and, in some cases, directly to consumers. Further,
the perception of risk of infection have contributed to
consumer unease, decreased discretionary spending
and consumer travel, which have had and will
continue to have a negative effect on the Company.
The outbreak of COVID-19 and
resulting
unfavorable economic conditions have also impacted
and could continue to impact, the ability of the
Company’s customers to make timely payments.
the
more frequent, and increasingly more difficult to
anticipate and prevent due to their rapidly evolving
nature. The Company continues to experience cyber-
attacks of varying degrees and phishing attacks on a
regular basis. Any systems failure or compromise of
the Company's security that results in the release of
confidential business or personal information could
seriously
reputation.
Additionally, cyber-attacks could also compromise
trade secrets and other sensitive information and
result in such information being disclosed to others
and becoming less valuable.
the Company's
harm
Mitigating actions:
• We continuously implement and improve network
protection
security measures
safeguards to prevent or detect cyber-attacks.
• We put in place and improve our internal policies
and procedures, and also hold insurance policies
that can mitigate losses incurred due to cyber-
attacks.
data
and
Mitigating actions:
• We have
implemented a cross-functional,
company-wide COVID-19 response team focused
on addressing the impact of the global pandemic
on our employees, customers, liquidity, financial
position and continuity of services.
• We continue
to monitor
the
pandemic and its impact on the Company's
results, operations, outlooks, plans, goals,
growth, cash flows, and liquidity.
the extent of
lottery and
Malicious breach compromising
gaming systems
The Company's business involves the storage and
transmission of confidential business and personal
information, and theft and security breaches may
expose the Company to a risk of loss of, or improper
use and disclosure of, such information, which may
result in significant litigation expenses and liability
exposure. Cyber-attacks on businesses are becoming
Supply chain and parts shortages
the parts,
The Company purchases most of
components, and subassemblies necessary for its
lottery terminals and electronic gaming machines
from outside sources. The Company outsources the
lottery
manufacturing and assembly of certain
terminals to third-party vendors. The Company’s
operating results could be adversely affected if one or
more of its manufacturing and assembly outsourcing
to meet production schedules.
vendors
Disruptions and delays could adversely affect our
suppliers’ ability to meet production schedules.
fails
Mitigating actions:
• We put in place multiple mitigation strategies to
reduce the impact of supply chain and parts
shortages,
including adjusting delivery and
production schedules.
Annual Report and Accounts 2021
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Strategic Report
• We continue to monitor the extent of the supply
chain and parts shortages and its impact on the
Company’s operations.
• We strive to create a fair and inclusive culture
that values unity, diversity, and belonging in our
people, players, customers, and communities.
Penalties for failure to perform
The Company's Italian licenses, lottery contracts in
the U.S. and in other jurisdictions, and other service
contracts often require performance bonds or letters
of credit to secure its performance under such
contracts and require the Company to pay substantial
monetary liquidated damages in the event of non-
performance by the Company. At December 31,
2021, the Company had outstanding performance
bonds and letters of credit in an aggregate amount of
approximately $1.3 billion. These instruments present
a potential expense for the Company and divert
financial resources from other uses. Claims on
performance bonds, drawings on letters of credit, and
payment of liquidated damages could individually or
in the aggregate have a material adverse effect on
the Company's business.
Mitigating actions:
• We strive to perform under each of our contracts.
To date, we have not had to pay any substantial
monetary liquidated damages as a result of our
non-performance.
to
linked
product
is directly
development,
Failure to attract, retain and motivate personnel
The Company’s ability to attract and retain key
management,
finance,
marketing, and research and development personnel,
and its ability to attract and maintain a diverse
workforce,
the Company’s
continued success. In all of the industries in which the
Company operates,
for qualified
executives and highly-skilled technical workers is
intensely competitive, and increasing competition for
talent and changing expectations of current and
prospective employees pose new challenges relating
to the attraction and retention of key personnel. The
loss of key employees or an inability to hire a
sufficient number of technical staff could limit the
Company's ability to develop successful products and
could cause delays in getting new products to market.
the market
Mitigating actions:
• We put in place and improve on our succession
plans for key roles.
• We provide well-structured and competitive
reward and benefit packages that ensure our
ability to attract and retain the employees we
need.
• We invest in training and career development
opportunities for our people to support them in
their careers.
result
in discretionary consumer
Adverse changes
spending
Socio-political and economic factors that impact
in decreased
consumer confidence may
discretionary spending by consumers and have a
negative effect on
the Company's business.
Unfavorable changes in social, political and economic
conditions and economic uncertainties, as well as
decreased discretionary spending by consumers,
may adversely
impact customers, suppliers and
business partners in a variety of ways. A decline in
discretionary income over an extended period could
cause some of the Company’s customers to close
casinos or other gaming operations, which would
adversely affect the Company's business.
Mitigating actions:
• We constantly review our business strategy and
remain closely aligned with governments and
other policy makers across our markets.
• We also have a diverse portfolio across many
regions.
• We implement pricing initiatives and prize payout
strategies, and continue to improve our players
experience.
Slow growth or declines in the lottery and gaming
markets
The Company’s future success will depend, in part,
on the success of the lottery and gaming industries in
attracting and retaining new players in the face of
increased competition
the entertainment and
in
gaming markets, as well as the Company’s own
success in developing innovative services, products
and distribution methods/systems to achieve this
goal. In addition, there is a risk that new products and
services may replace existing products and services
and the Company's customers might acquire or
develop
their
dependencies on
the Company's product and
services. The replacement of old products and
services with new products and services may offset
the overall growth of sales of the Company.
competencies
reduce
that
Mitigating actions:
• We work with other participants in the lottery
industry to attract and retain new players, and
devote significant
to developing
innovative services, products, and distribution
methods/systems.
resources
Annual Report and Accounts 2021
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Strategic Report
to
needs,
the Company’s
liquid assets to meet cash flow
Insufficient
requirements
The Company’s business is capital intensive and
requires liquidity to meet its obligations and fund
growth. In addition to general working capital and
operational
liquidity
requirements arise primarily from its need to meet
fund capital
debt service obligations and
expenditures and upfront license fee payments. The
Company also requires liquidity to fund acquisitions
and associated costs. While the Company’s cash
flows generated from operating activities, together
with cash flows generated from financing activities,
have historically been sufficient
the
Company's liquidity needs, it may be possible that its
inability to generate cash, including as a result of
unfavorable economic and business conditions, may
result in the Company not having sufficient liquidity to
meet its financial obligations and working capital
requirements in the ordinary course of business.
to meet
Mitigating actions:
•
The cash management, funding of operations,
and investment of excess liquidity are centrally
coordinated by a dedicated treasury team with
the objective of ensuring effective and efficient
management of funds.
Product performance across all business units
The Company must anticipate changing customer
needs and end-user preferences as well as emerging
technological trends through the development of new
If product does not
products and
perform, the Company could damage its reputation
and lose business to its competitors, which would
adversely affect its financial condition.
technologies.
Mitigating actions:
• We maintain a robust, collaborative product
development
incorporates
comprehensive planning, research, development,
testing, feedback, and monitoring.
process
that
• We pursue a relentless focus on identifying and
responding to customer and player preferences
and requirements to deliver entertaining and
innovative gaming experiences.
in determining
Changes to U.S. and foreign tax laws
The Company is subject to tax laws in the U.S. and
several foreign tax jurisdictions and judgment is
required
the Company’s global
provision for income taxes. While the Company
believes its tax positions are consistent with the tax
laws in the jurisdictions in which it conducts business,
it is possible that these positions may be overturned
by tax authorities, which may have a significant
impact on the Company’s global provision for income
laws or
taxes. Furthermore, changes
tax
in
regulations may be proposed or enacted that could
significantly affect
tax
expense. If U.S. or other foreign tax authorities
change applicable tax laws, the Company’s overall
taxes could increase.
the Company’s overall
Mitigating actions:
• We maintain a well-qualified tax department as
well as good relationships with third party tax
these risks and
experts, helping
to assess
achieve compliance with
tax
relevant
legislation.
• We strive
to maintain a consultative and
the
collaborative relationship with the tax authorities.
Changing enforcement of the U.S. Interstate Wire
Act of 1961
On January 14, 2019, the U.S. Department of Justice
(the "DOJ") published an opinion (the "2019 Opinion")
reversing its previously-issued opinion that the Wire
Act, which prohibits several types of wager-related
communications over a
“wire communications
facility”, was applicable only to sports betting. The
2019 Opinion interprets the Wire Act as applying to
other forms of gambling that cross state lines. On
June 3, 2019, the U.S. District Court for the District of
New Hampshire ruled that the Wire Act applies only
to sports betting and related activities, and the
decision was affirmed in part by the United States
Court of Appeals for the First Circuit on January 20,
2021. The DOJ did not file a writ or seek an extension
to appeal the First Circuit decision. Accordingly, the
First Circuit decision is final and unappealable. If the
Wire Act is broadly interpreted and enforced to
prohibit activities in which the Company and its
customers are engaged, the Company could be
subject to investigations, criminal and civil penalties,
sanctions and/or other remedial measures and/or the
Company may be required to substantially change
the way it conducts its business.
Mitigating actions:
•
The Company filed a complaint against the DOJ
in the U.S. District Court for the District of Rhode
Island. The complaint seeks declaratory relief that
the Wire Act applies only to sports betting and
related activities. If granted, the Company would
enjoy the same relief that the plaintiffs received in
the New Hampshire decision, that the Wire Act
applies solely
to sports betting and related
activities wherever the Company’s United States
businesses are located, as opposed to the
current protection which is currently limited to the
First Circuit.
Annual Report and Accounts 2021
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Strategic Report
Impact of climate change and other geopolitical
events
In addition, although not a principal risk, the Company
may be impacted by severe weather and other
geological events (including as a result of climate
change) that could disrupt the Company’s operations
or the operations of the Company’s customers,
suppliers, data service providers and regulators.
Natural disasters or other disruptions at any of the
Company’s facilities or the Company’s suppliers’
facilities, may
the operation,
impair or delay
development, provisions or delivery of the Company’s
products and services. The Company’s operations
could also be impacted by geopolitical events, such
as the outbreak of hostilities, and other acts of
violence, including escalation of war or terrorism, any
of which could adversely affect the Company’s ability
to operate and deliver its products and services.
While the Company insures against certain business
interruption risks, the Company cannot assure that
such insurance will compensate the Company for any
losses incurred as a result of natural or other
disasters. Any serious disruption to the Company’s
operations, or those of the Company’s customers,
suppliers, data service providers, or regulators, could
have a material adverse effect on the Company’s
results of operations, cash
financial
condition.
flows and
This Strategic Report was approved by the Board on
March 10, 2022 and signed on its behalf by:
Vincent Sadusky
Chief Executive Officer
March 16, 2022
Annual Report and Accounts 2021
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Directors’ Report
GOVERNANCE
Our Board of Directors
The Directors are responsible for the management of the Parent’s business, for which purpose they may exercise
all of the powers of the Parent whether relating to the management of the business or not.
The directors of the Parent for the year ended December 31, 2021 were: Marco Sala (CEO), Lorenzo Pellicioli
(Chairperson), James McCann (Vice Chairperson and Lead Independent Director), Massimiliano Chiara (CFO),
Alberto Dessy, Marco Drago, Heather McGregor, Samantha Ravich, Vincent Sadusky and Gianmario Tondato Da
Ruos. Beatrice Bassey was previously a director of the Parent whose term of office ended on May 11, 2021.
In January 2022, the Board implemented a number of changes to the Company’s executive team and Board.
Effective January 14, 2022, the Board appointed Ashley M. Hunter and Maria Pinelli as Non-Executive Directors.
Ashley M. Hunter was also appointed to the Nominating and Corporate Governance Committee and Maria Pinelli
was appointed chair of the Audit Committee, replacing Vincent Sadusky. Effective January 24, 2022, Lorenzo
Pellicioli retired as Chairperson of the Board and remains a Non-Executive Director. On the same date, Marco Sala
became Executive Chair of the Board and Vincent Sadusky became CEO and Executive Director of the Board.
The Board is currently comprised of (i) seven independent directors including James McCann, the Vice Chairperson
of the Board and Lead Independent Director, and (ii) five non-independent directors - Marco Sala (Executive Chair),
Vincent Sadusky (CEO), Massimiliano Chiara (CFO), Lorenzo Pellicioli, and Marco Drago. Messrs. Pellicioli and
Drago are the chief executive officer and chairperson of the board, respectively, of De Agostini, the Parent's
controlling shareholder.
Annual Report and Accounts 2021
Page | 48
Role3; 25.0%9; 75.0%ExecutiveNon-executiveIndependence7; 58.3%5; 41.7%IndependentNon-independentTenure4; 33.3%8; 66.7%0-4 years5-9 yearsGender Diversity8; 66.7%4; 33.3%ManWomanRacial/Ethnic Diversity11; 91.7%1; 8.3%WhiteBlack, Asian and minority ethnicSkills and Experience(as reported by the Directors)127955558International experienceOther public company experienceAccounting/Financial reportingLegal/Regulatory/RiskConsumer/RetailDigital/TechnologyInstitutionalEnvironmental, Social and Governance
Directors’ Report
Ⓐ Audit Committee Ⓒ Compensation Committee Ⓝ Nominating and Corporate Governance Committee
O Committee Chair
Marco Sala
Executive Chair
Age
62
Appointed to the Board
April 2015
Committee membership
-
Marco Sala has served as the Executive Chair of the Board since January 2022. Prior to this, he served as a
member of the Board and Chief Executive Officer of the Company since its admission to the listing on the NYSE in
2015 through January 2022. Before then and since 2009, Marco Sala served as Chief Executive Officer and a
member of the board of directors of predecessor GTECH S.p.A. (formerly Lottomatica Group). Prior to the Parent's
admission to the listing on the NYSE in 2015, Marco Sala served on the board of directors of Lottomatica since
2003, when he joined as Co-General Manager, before being appointed Managing Director with responsibility for the
Italian Operations and other European activities since 2006.
In June 2020, Marco Sala was appointed to the board of directors of De Agostini. He is also a member of the board
of directors of Save the Children Italia, the Italian extension of the worldwide non-profit organization, and a member
of the board of directors of the Rome Biomedical Campus University Foundation, a non-profit organization in charge
of promoting scientific research and of supporting the Biomedical Campus University of Rome. Until June 2019,
Marco Sala served as a member of the board of directors of OPAP S.A., a Greek gaming and sports betting
operator. Before joining the Company, he served as Chief Executive Officer of Buffetti, Italy’s leading office
equipment and supply retail chain. Prior to Buffetti, Marco Sala served as Head of the Italian Business Directories
Division for SEAT Pagine Gialle. He was later promoted to Head of Business Directories with responsibility for a
number of international companies, such as Thomson (Great Britain), Euredit (France), and Kompass (Italy). Earlier
in his career, he worked as Head of the Spare Parts Divisions at Magneti Marelli (a Fiat Group company) and soon
after he became Head of the Lubricants Divisions. Additionally, he held various marketing positions at Kraft Foods.
Marco Sala graduated from Bocconi University in Milan (Italy), majoring in Business and Economics.
James F. McCann
Vice Chairperson and Lead Independent
Director
Age
70
Appointed to the Board
April 2015
Committee membership
Ⓝ
James McCann has served on the Board since the formation of the Company. He is the Chairman of 1-800-
Flowers.com, Inc., and previously served as Chief Executive Officer, a position he held since 1976. He is also
Chairman and CEO of Clarim Acquisition, a blank check company targeting consumer-facing e-commerce which
was founded in 2020. James McCann previously served as director and chair of the Nominating and Governance
Committee of Willis Towers Watson until his retirement in May 2019. He previously served as the Chairman of the
board of directors of Willis Towers Watson from January 4, 2016 to January 1, 2019. Previously he served as
director (2004-2015) and non-executive Chairman (2013-2015) of Willis Group Holdings PLC (“Willis Group”). Prior
to serving as the non-executive Chairman of the board of Willis Group, he served as the company’s presiding
independent director. James McCann has served on the board of Amyris, Inc. since 2019, including as a member of
the Audit Committee and the Operations and Finance Committee.
He previously served as a director and Compensation Committee member of Lottomatica S.p.A. (from August 2006
to April 2011), and as a director of Gateway, Inc., The Boyds Collection, Ltd and Scott’s Miracle-Gro.
Massimiliano (Max) Chiara
Chief Financial Officer
Age
53
Appointed to the Board
April 2020
Committee membership
-
Max Chiara has served on the Board and as Chief Financial Officer of the Company since April 2020. Before joining
the Company, Max Chiara served as Chief Financial Officer of CNH Industrial since September 2013. Max Chiara
was also named the Chief Sustainability Officer at CNH Industrial in 2016, and he also served as head of Mergers &
Acquisitions for CNH Industrial from 2017. Between 2009 and 2013, Max Chiara served in various positions with
Fiat Chrysler Automobiles (and its predecessors) as Chief Financial Officer and Head of Business Development in
Latin America, Vice President of Financial Planning and Analysis and Business Development Finance, VP Finance
Brands and Marketing Controller, and served as Director of Business Development Finance for its engine business
unit Fiat Powertrain between 2007 and 2009. Earlier in his career, Max Chiara held various managerial roles at
Teksid Aluminum, PricewaterhouseCoopers, Robert Bosch, the Wuerth Group, and was a M&A financial analyst
Annual Report and Accounts 2021
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Directors’ Report
with Dresdner Kleinwort Benson. Max Chiara also held the position of Chairman of the Italian Association of
Corporate Treasurers (AITI) for the years 2004-2007.
Max Chiara graduated from the Luigi Bocconi University in Milan (Italy), with a degree in Business Administration
Cum Laude, and has a CEMS Master’s degree in International Management from the Bocconi University (with the
University of Cologne in Germany as host school).
Alberto Dessy
Independent Non-Executive Director
Age
69
Appointed to the Board
April 2015
Committee membership
Ⓐ Ⓒ
Alberto Dessy has served on the Board since the formation of the Company. He is currently a Professor at Bocconi
University. Alberto Dessy is a Chartered Accountant who specializes in corporate finance, particularly the evaluation
of companies, trademarks, equity and investments, financial structure, channels and loan instruments, funding for
development and in acquisitions and disposals of companies. He has been an expert witness for parties to lawsuits
and as an independent expert appointed by the court in various legal disputes. He has previously served on the
boards of many companies, both listed and unlisted, including Chiorino S.p.A., Redaelli Tecna S.p.A., Laika
Caravans S.p.A., Premuda S.p.A., I.M.A. S.p.A., Milano Centro S.p.A., and DeA Capital S.p.A.
Alberto Dessy graduated from Bocconi University in Milan (Italy) and is a member of the distinguished faculty in
corporate finance at the SDA Bocconi School of Management.
Marco Drago
Non-Executive Director
Age
76
Appointed to the Board
April 2015
Committee membership
-
Marco Drago has served on the Board since the formation of the Company. From 2002 to the formation of the
Company, Marco Drago served on the board of directors of GTECH S.p.A. (formerly Lottomatica Group). Since
1997, Marco Drago has been the Chairman of De Agostini, one of Italy’s largest family-run groups. Since July 2018
he has been the President of the board of directors of B&D Holding S.p.A. (formerly B&D Holding di Marco Drago e
C. S.a.p.A., of which he had been President of the Board of Partners since 2006). He is also Vice Chairman of
Planeta De Agostini Group, director of Atresmedia, Honorary Chairman of De Agostini Editore S.p.A. and member of
the S. Faustin (Techint Group) board.
Marco Drago graduated in Economics and Business at Bocconi University in Milan (Italy) in 1969. He started his
career that same year in the family company joining Istituto Geografico De Agostini. In 1997 he replaced Achille
Boroli as Chairman of De Agostini Holding S.p.A., having previously served as Executive Officer and Managing
Director. He has received important awards such as “Bocconiano dell’anno” in 2001, and was made “Cavaliere del
Lavoro” in 2003.
Ashley M. Hunter
Independent Non-Executive Director
Age
42
Appointed to the Board
January 2022
Committee membership
Ⓝ
Ashley M. Hunter has been a lecturer at the University of Texas at Austin School of Information since 2015, and is
the founding partner of A. Hunter & Company, a leading risk management advisory firm. Previously she was
managing director of HM Risk Group LLC where she assisted many startups and corporations with alternative risk
transfer schemes and reinsurance placement, globally. Under her leadership, HM Risk Group became a leader in
the development of niche insurance products for the sharing and assistive reproductive technology industry. Prior to
founding HM Risk Group in 2006, she worked in various claims and underwriting management positions for State
Farm Insurance Companies, The Hartford Insurance Company and AIG Insurance Company.
Ashley M. Hunter is an active member of the Professional Liability Underwriting Society, Women in Private Equity
and The Waters Street Club. Ashley M. Hunter currently serves as a Director for Affordable Central Texas, a Trustee
for Zach Theatre, Fredericksburg Texas Zoning Board of Adjustment and a gubernatorial appointee for Motor
Vehicle Crime Prevention Authority.
Ashley M. Hunter has a BM in Music Theory and Composition from Centenary College of Louisiana and an MBA in
Finance from Texas A&M University. Ashley M. Hunter is also an accomplished concert violinist.
Annual Report and Accounts 2021
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Directors’ Report
Prof. Heather J. McGregor
Independent Non-Executive Director
Age
59
Appointed to the Board
March 2017
Committee membership
Ⓐ
Heather McGregor is the Executive Dean of the Edinburgh Business School, the business school of Heriot-Watt
University in the U.K., having held the post since 2016. She is also the Acting Head of Social Sciences at the
university. Her earlier career was in investment banking and she then spent 17 years as an entrepreneur leading
her own executive search firm prior to her move into higher education. She holds an Advanced Diploma in
Management Accounting and a full CGMA qualification. Heather McGregor has a PhD from the University of Hong
Kong in Structured Finance and an MBA from London Business School. Her undergraduate degree was a BSc in
Agricultural Economics & Marketing from Newcastle University.
Heather McGregor is an experienced writer and broadcaster, including writing for the Financial Times for 17 years.
She is also the founder of the Taylor Bennett Foundation, which works to promote diversity in the communications
industry, and a founding member of the steering committee of the 30% Club, which is working to raise the
representation of women at senior levels within the U.K.’s publicly listed companies. In addition, Heather McGregor
is a non-executive director of Fundsmith Emerging Equities Trust plc (an investment trust listed on the London Stock
Exchange) and Lowell UK (a private financial services company majority owned by Permira Advisers LLC).
In 2021, Heather McGregor was one of the first two people at Heriot-Watt University to be named a Principal Fellow
of the Higher Education Academy; in 2021 she was elected a Fellow of the Royal Society of Edinburgh.
Heather McGregor was awarded a CBE in the 2015 Queen’s Birthday Honours List for her services to business,
especially diversity in the workplace.
Lorenzo Pellicioli
Non-Executive Director
Age
70
Appointed to the Board
April 2015
Committee membership
-
Lorenzo Pellicioli has served on the Board since the formation of the Company. He served as Chairperson of the
Board from November 2018 through January 2022, before which he served as Vice-Chairperson of the Board since
the formation of the Company. From August 2006 to the formation of the Company, Lorenzo Pellicioli served on the
GTECH S.p.A. (formerly Lottomatica Group) board of directors as Chairman from August 2006 to April 2015.
Lorenzo Pellicioli has served as Chief Executive Officer of De Agostini since November 2005 and will retire from the
position effective June 2022.
Lorenzo Pellicioli started his career as a journalist for the newspaper Giornale Di Bergamo and afterwards he
became Bergamo TV Programmes Vice President. From 1978 to 1984, he held different posts in the sector of the
Italian private television for Manzoni Pubblicità, Publikompass up to his nomination as Rete4 General Manager. In
1984, he joined the Gruppo Mondadori Espresso, the first Italian publishing group. He was initially appointed
General Manager for Advertising Sales and Mondadori Periodici (magazines) Vice General Manager and afterwards
President and CEO of Manzoni & C. S.p.A, advertising rep of the group. From 1990 to 1997, he was appointed first
President and CEO of Costa Cruise Lines in Miami, being part of Costa Crociere Group operating in the North
American market (USA, Canada and Mexico) and then became Worldwide General Manager of Costa Crociere
S.p.A., based in Genoa. From 1995 to 1997 he was also appointed President and CEO of the Compagnie Francaise
de Croisières (Costa-Paquet), the Paris-based subsidiary of Costa Crociere. In 1997, he took part to the
privatization of SEAT Pagine Gialle purchased by a group of financial investors. After the acquisition, he was
appointed CEO of SEAT. In February 2000, he also managed the “Internet Business Unit” of the Telecom Italia
Group following the sale of SEAT. In September 2001, following the acquisition of Telecom Italia by the Pirelli Group,
he resigned. Since November 2005 he has been CEO of the De Agostini Group, an Italian financial group with
ownership in the publishing sector (De Agostini Editore), games and lotteries (IGT), media and communications
(Atresmedia - Spanish television leader, Banijay Group - a leading company in the production and distribution of
television and media content) and financial investments (DeA Capital).
He is also Chairman of the board of directors of DeA Capital, a member of the board of directors of Assicurazioni
Generali S.p.A., and a member of the Advisory Board of Palamon Capital Partners. He was formerly also a member
of the boards of directors of Enel, INA-Assitalia, and Toro Assicurazioni and of the Advisory Board of Lehman
Brothers Merchant Banking. On April 3, 2017, he was honored with the title of Chevalier dans l’ordre de la Légion
d’Honneur.
Annual Report and Accounts 2021
Page | 51
Directors’ Report
Maria Pinelli
Independent Non-Executive Director
Age
59
Appointed to the Board
January 2022
Committee membership
Ⓐ
Maria Pinelli is a global C-suite executive who currently serves as a member of the board of directors for Globant
S.A. and board director and chair of the audit committee for Archer Aviation, Inc. and Clarim Acquisition Corp. She
served in a variety of leadership roles at Ernst & Young (EY) from October 1986 to November 2020, including
consumer products and retail leader, technology leader, global vice chair – strategic growth markets, global IPO
leader, and Americas leader – strategic growth markets. In her role as an advisor at EY, she successfully led more
than 20 initial public offerings in four different countries and more than 25 merger and acquisition transactions
worldwide and testified before the U.S. House Financial Services Committee on the state of the capital markets. Her
experience includes strategic transactions and due diligence advice, Sarbanes-Oxley implementation and
stakeholder management. She has served as an advisor to some of the world’s most iconic e-commerce, consumer
products, and retail brands. Recipient of several awards, she was recognized as one of the Square Mile's most
inspiring Power 100 Women which highlights the talkers, the thinkers, the women influencing policy and changing
the way the City of London thinks.
The Board has determined that Maria Pinelli’s simultaneous service on the audit committees of three other public
companies does not impair her ability to effectively serve on the Audit Committee.
Samantha F. Ravich
Independent Non-Executive Director
Age
55
Appointed to the Board
July 2019
Committee membership
Ⓝ Ⓒ
Dr. Samantha Ravich is a defense and intelligence policy and tech entrepreneur and the Chair of the Center on
Cyber and Technology Innovation at the Foundation for Defense of Democracies and its Transformative Cyber
Innovation Lab. She was formerly the Vice Chair of the President’s Intelligence Advisory Board; a Commissioner on
the Congressionally-mandated Cyberspace Solarium Commission; and a member of the Secretary of Energy’s
Advisory Board. Dr. Ravich is also a managing partner at A2P, LLC, a technology company that focuses on
advanced advertising techniques, and a Board Governor at the Gemological Institute of America. Previously, she
was the Republican Co-Chair of the Congressionally-mandated National Commission for Review of Research and
Development Programs in the United States Intelligence Community and served as Deputy National Security
Advisor for Vice President Cheney.
Dr. Samantha Ravich received her PhD in Policy Analysis from the RAND Graduate School and her MCP/BSE from
the University of Pennsylvania/Wharton School and is a member of the Council on Foreign Relations and the
National Association of Corporate Directors.
Vincent (Vince) L. Sadusky
Chief Executive Director
Age
56
Appointed to the Board
April 2015
Committee membership
-
Vince Sadusky has served as Chief Executive Officer since January 2022. He has served on the Board since the
formation of the Company and was chair of the Audit Committee until January 2022. Prior to the formation of the
Company, Vince Sadusky served on the International Game Technology board of directors from July 2010 to April
2015. He formerly served as Chief Executive Officer and a member of the board of directors of Univision
Communications Inc., the largest Hispanic media company in the U.S. He served as President and Chief Executive
Officer of Media General, Inc., one of the U.S.’s largest owners of television stations, from December 2014 until
January 2017, following the company’s merger with LIN Media LLC. Vince Sadusky served as President and Chief
Executive Officer of LIN Media LLC from 2006 to 2014 and was Chief Financial Officer from 2004 to 2006. Prior to
joining LIN Media LLC, he held several management positions, including Chief Financial Officer and Treasurer, at
Telemundo Communications, Inc. from 1994 to 2004, and from 1987 to 1994, he performed attestation and
consulting services with Ernst & Young. Vince Sadusky formerly served on the board of directors of Hemisphere
Media Group, Inc. Previously, he served on the Open Mobile Video Coalition, to which he served as President from
2011 until its integration into the National Association of Broadcasters in January 2013. He formerly served on the
boards of directors of JVB Financial Group, LLC, Maximum Service Television, Inc., Media General, Inc., LIN Media
LLC and NBC Affiliates.
Vince Sadusky earned a Bachelor of Science degree in Accounting from Pennsylvania State University where he
was a University Scholar. He earned a Master of Business Administration degree from the New York Institute of
Technology.
Annual Report and Accounts 2021
Page | 52
Directors’ Report
Gianmario Tondato Da Ruos
Independent Non-Executive Director
Age
62
Appointed to the Board
April 2015
Committee membership
Ⓒ
Gianmario Tondato Da Ruos has served on the Board since the formation of the Company. From 2006 to the
formation of the Company, he served as a Lead Independent Director of GTECH S.p.A. (formerly Lottomatica
Group). Gianmario Tondato Da Ruos has served as the Chief Executive Officer of Autogrill S.p.A. since April 2003.
He joined Autogrill Group in 2000, and moved to the United States to manage the integration of the North American
subsidiary HMSHost and successfully implemented a strategic refocusing on concessions and diversification into
new business sectors, distribution channels, and geographies.
Gianmario Tondato Da Ruos is Chairman of HMSHost Corporation, of Autogrill Italia S.p.A., and of Autogrill Europe
S.p.A. He has been a director of Autogrill S.p.A. since March 2003, and sits on the advisory board of Rabobank
(Hollande) on the strategic advisory board of Planet Farms Holding S.p.A. (Italy). He was formerly Chairman of
World Duty Free S.p.A. and a director of World Duty Free Group S.A.U.
Gianmario Tondato Da Ruos graduated with a degree in economics from Ca’Foscari University of Venice.
Board practices and corporate governance
arrangements
The Parent is a U.K. public limited company that has
its ordinary shares listed on the NYSE. The Articles
provide that, for as long as its ordinary shares are
listed on the NYSE, the Parent shall comply with all
NYSE corporate governance standards set forth in
Section 3 of the NYSE Listed Company Manual
applicable to non-controlled domestic U.S. issuers,
regardless of whether the Parent is a foreign private
issuer.
In
the
reflect
long-term.
this regard,
To this end, the Board adopted the Corporate
Governance Guidelines (a copy of which is available
the Board’s
at www.IGT.com) which
commitment to monitor the effectiveness of policy and
decision making both at the Board and management
level, with a view to enhancing shareholder value
the Board
over
periodically reviews its size and composition ensuring
that a majority of the Directors shall be independent,
and
the Nominating and Corporate Governance
Committee reviews each Director’s independence,
character and integrity prior to appointment and in
connection with re-nomination decisions. While the
Corporate Governance Guidelines do not cover each
and every issue that may surface, the Board is of the
view that the Corporate Governance Guidelines set
the proper tone for the operation of the Board and will
assist the Board in fulfilling its obligations to the
diverse group of owners and other stakeholders of
the Company. The Nominating and Corporate
Governance Committee
the Corporate
Governance Guidelines from time to time to ensure
that they remain suitable for the needs of the
Company and in accordance with applicable law and
regulations.
reviews
The Parent also voluntarily applies a selected number
of provisions of the U.K. Corporate Governance Code
the NYSE
which (i) are not
inconsistent with
corporate governance standards, and (ii) would
generally be expected by the market to be voluntarily
applied by a company like the Parent. For example,
the continued appointment of all Directors is normally
subject
to annual shareholder vote, and each
committee of the Board is composed of independent
non-executive directors. Also, the responsibilities of
the Chairperson, the Lead Independent Director, the
Board and each Board committee are set out in the
Corporate Governance Guidelines and the charters
for each Board committee which are publicly available
at www.IGT.com.
The Board has the following committees: (1) an Audit
(2) a Nominating and Corporate
Committee,
Governance Committee, and (3) a Compensation
Committee. The membership of each committee
meets the independence and eligibility requirements
of the NYSE and applicable law. The members of
each committee are appointed by and serve at the
discretion of
the Board until such member’s
successor is duly elected and qualified or until such
removal. The
member’s earlier
chairperson of each committee is appointed by the
Board.
resignation or
Audit Committee
The Audit Committee is responsible for, among other
things, assisting the Board's oversight of:
•
•
The integrity of the Parent’s financial statements;
The Parent’s compliance with
regulatory requirements;
The independent registered public accounting
firm’s qualifications and independence;
The performance of the Parent’s internal audit
registered public
function and
accounting firm; and
The Parent’s
financial
reporting and systems of disclosure controls and
procedures.
internal controls over
independent
legal and
•
•
•
Annual Report and Accounts 2021
Page | 53
Directors’ Report
operational
The Audit Committee is also responsible for oversight
of risk assessment and risk management, including
with respect to major financial, compliance, strategic
(including
and
cybersecurity risk), and for making recommendations
to the Board for any changes, amendments, and
modifications to the Parent’s Code of Conduct and
promptly disclosing any waivers for directors or
executive officers, as required by applicable law.
exposures
risk
before
approval
engaging
The Audit Committee pre-approves engagements of
registered public
independent
the Company’s
accounting firm to audit the Company’s consolidated
financial statements. The Audit Committee has a
policy requiring management to obtain the Audit
the
Committee’s
Company’s independent registered public accounting
firm to provide any other audit or permitted non-audit
services to the Company or its subsidiaries. Pursuant
to this policy, which is designed to ensure that such
engagements do not impair the independence of the
Company’s independent registered public accounting
firm, the Audit Committee reviews and pre-approves,
if appropriate, specific audit and non-audit services in
the categories audit services, tax services, audit-
related services, and any other services that may be
performed by the Company’s independent registered
public accounting firm.
Each member of the Audit Committee must meet the
financial literacy requirement, as such qualification is
interpreted by the Board in its business judgment, or
must become financially literate within a reasonable
period of time after his or her appointment to the Audit
Committee. In addition, at least one member of the
Audit Committee must have accounting or related
the Board
financial management expertise, as
interprets such qualification in its business judgment.
Compensation Committee
The purpose of the Compensation Committee is to
discharge the responsibilities of the Board relating to
the Parent’s executives and
compensation of
directors. The Compensation Committee
is
responsible for, among other things:
•
Reviewing management recommendations and
advising management on broad compensation
policies such as salary
ranges, deferred
compensation, incentive programs, pension, and
executive stock plans;
Reviewing and approving goals and objectives
relevant to the CEO’s compensation, evaluating
the CEO’s performance in light of those goals and
objectives, and setting the CEO’s compensation
level based on this evaluation;
•
• Monitoring issues associated with succession
and management development of the CEO and
other senior executives;
• Making recommendations
non-CEO
to
to
and
executive
recommending
the Board with
respect
officer
compensation, incentive compensation plans and
equity-based plans that are subject to Board
approval;
Reviewing
compensation;
Creating, modifying, amending, terminating, and
monitoring compliance with share ownership
guidelines for executives and directors; and
Reviewing,
making
monitoring
recommendations to the Board on human capital
management matters including work environment
and safety, culture and employee engagement,
and diversity, equity and inclusion.
director
and
•
•
•
and
Corporate
Nominating
Committee
The Nominating and Corporate Governance
Committee is responsible for, among other things:
•
Governance
Recommending to the Board, consistent with
criteria approved by the Board, the names of
qualified persons to be nominated for election or
re-election as directors (including, in consultation
with the Compensation Committee, the CEO’s
successor) and the membership and chairperson
of each Board committee;
Reviewing each Director’s character and integrity
prior to appointment and in connection with re-
nomination decisions and Board evaluations;
Reviewing, at least annually the appropriate skills
and characteristics required of Board members in
the context of the current composition of the
Board and its committees;
Periodically
the size, composition
(including diversity) and leadership of the Board
and committees thereof and recommending any
proposed changes to the Board;
Reviewing and reassessing from time to time the
Company’s Corporate Governance Guidelines
and recommending any changes to the Board;
Determining, at least annually, the independence
of each director under
independence
requirements of
the NYSE and any other
regulatory requirements and report such findings
to the Board;
reviewing
the
•
•
•
•
•
• Overseeing, at least annually, the evaluation of
the performance of the Board and each Board
committee, as well as individual directors where
appropriate; and
• Overseeing IGT’s corporate social responsibility
program and giving due consideration to diversity
and inclusion, sustainability, environmental and
social matters that could impact the Company,
the environment or the communities in which the
Company operates.
Annual Report and Accounts 2021
Page | 54
Directors’ Report
Board and committee meeting attendance
Board and committee meeting attendance in 2021
Number of meetings held
Board
7
Audit
Committee
7
Compensation
Committee
6
Nominating and Corporate
Governance Committee
6
Directors
Max Chiara
Alberto Dessy
Marco Drago
James McCann
Heather McGregor
Lorenzo Pellicioli
Samantha Ravich
Vince Sadusky
Marco Sala
Gianmario Tondato Da Ruos
Former Directors who served for part of that year
Beatrice Bassey(1)
7/7
7/7
4/7
7/7
7/7
7/7
7/7
6/7
7/7
5/7
3/3
-
7/7
-
-
7/7
-
-
7/7
-
-
-
-
6/6
-
-
-
-
6/6
-
-
6/6
-
-
-
-
6/6
-
-
6/6
-
-
-
3/3
(1) Beatrice Bassey stood down from her position as a Director at the conclusion of the AGM on May 11, 2021, and consequently retired as a member of the
Nominating and Corporate Governance Committee.
the Audit Committee,
There are at least five scheduled meetings for the
Board and each committee each year (six for the
Nominating and Corporate Governance Committee
and
respectively), and
additional meetings are called as necessary. The
attendance at Board and committee meetings during
2021 is expressed as the number of meetings
attended out of the number that each Director was
eligible to attend. Where a Director is unable to attend
a Board or committee meeting, copies of all papers
are still received in advance. The chairpersons of the
Board and each committee, as well as the Lead
Independent Director, are available for individual
to provide
consultation between meetings and
briefing on any relevant outcomes from a Board or
committee meeting should a Director be unable to
attend. Executive sessions
for all Directors or
committee members (as the case may be) with no
management in attendance, as well as Independent
Director sessions, are regularly held at the end of
each meeting to, among other things, summarize the
outcome of the meeting and plan actions for the next
one, which can be easily shared with absent
participants.
Board and committee evaluation
The effectiveness of the Board is vital to the success
of the Company. The Board undertakes a rigorous
self-evaluation process each year to assess how the
Board, its committees and each individual Director is
performing. The evaluation in 2021 was undertaken
by way of an internal questionnaire, supported by
discussions with
the Nominating and Corporate
Governance Committee, the independent Directors
and the full Board. Any items of note that result from
the questionnaire or subsequent discussions are
followed up on by the Board or relevant committee.
that
through
to support management
The Board and committee self-evaluation in 2021
revealed that the Board is generally satisfied with its
there was almost absolute
performance, and
the Board had supported and
satisfaction
continues
the
COVID-19 pandemic. Also, each Director reported
being satisfied with their individual performance, and
there was general satisfaction over the decision-
making process, the size and composition of the
Board (and potentially reverting to an 11-member
Board while driving greater diversity), Board’s culture
and ethics, and the number and type of committees to
assist with performance of the Board’s obligations.
The Directors were also satisfied with the Board’s role
and performance in carrying out its responsibilities,
noting there could be further improvement on its role
in
financial and business strategy planning.
Succession and selection processes for the Board
and senior executives remain an area for potential
improvement.
the
that
The Directors were generally satisfied with the annual
issues raised
evaluation process and
following the annual directors’ evaluation conducted
in 2020 were adequately addressed. While an
external facilitator was not seen as necessary for the
2021 self-evaluation process, the Nominating and
Corporate Governance Committee will consider
whether an externally facilitated self-evaluation and
other supplementary means to evaluation are desired
for the next review.
Annual Report and Accounts 2021
Page | 55
Directors’ Report
ADDITIONAL DISCLOSURES
Matters reported in the Strategic Report
The Strategic Report sets out those matters required to be disclosed in the Directors’ Report which are considered to
be of strategic importance:
•
Likely future developments of the Company (see “Business model” and “Strategy” from pages 9 and 10,
respectively);
Research and development (see “Research & Development (R&D)” on page 17);
Employee: Diversity and Inclusion; Equal employment, Communication, and Employee involvement in
Company’s performance (see “Employee” from page 34);
Engagement with employees and consideration of employees’ interests (see Section 172 Statement, “Key
decisions” and “Our stakeholders” from page 37);
Engagement with suppliers, customers and others (see Section 172 Statement, “Key decisions” and “Our
stakeholders” from page 37); and
•
•
•
•
• Greenhouse gas emissions and energy consumption (refer to “Environment” from page 33).
The Directors’ Report should be read in conjunction with the Strategic Report, the Directors’ Remuneration Report
and other sections of this Annual Report and Accounts, all of which are incorporated into this Directors’ Report by
reference.
General information
The Parent is a public company limited by shares,
incorporated in the United Kingdom and is registered
in England and Wales with registered number
09127533. The address of the Parent's registered
office is 2nd Floor Marble Arch House, 66 Seymour
Street, London, England, W1H 5BT.
Branches
As the Company is a global business, there are
activities operated through many jurisdictions. In
2021, the Company was active in over 100 countries
and had 29 branches.
Directors' interests
The Directors have interests in the Parent’s ordinary
shares as detailed in the Directors’ Remuneration
Report of this Annual Report and Accounts.
Directors’ indemnities
In accordance with the Articles and to the extent
permitted by law, (i) the directors and officers of the
Parent or any of its associated bodies corporate
(within the meaning of the Articles) are granted
qualifying third party indemnity provisions for the
purposes of the CA 2006 in respect of liability incurred
as a result of their office, and (ii) the directors of the
Parent are granted qualifying pension scheme
indemnity provisions for the purposes of the CA 2006
in respect of liability incurred as a result of the
Company’s activities as a trustee of an occupational
pension scheme. These provisions were in force
during the financial year ended December 31, 2021
and up to the date of this Annual Report and
Accounts.
In addition, the Parent maintained a directors’ and
officers’ liability insurance policy throughout the year
to cover against certain legal liabilities and costs for
claims incurred in respect of any act or omission in the
execution of their duties.
(i.e. political
Political donations and political expenditure
During
the year ended December 31, 2021
subsidiaries of the Parent made various forms of
contributions
(where permissible),
charitable donations, membership dues, and
sponsorships) to entities in the U.S. and a single
event sponsorship to the Italian Embassy in the U.S.
(Washington, DC) that have charitable, social welfare,
trade and business sector, or political affiliations and
missions. Some of these organizations and entities
have affiliations with government officials. These
contributions totaled $1.8 million in the U.S. The
Company has
jurisdictional
reporting requirements for these contributions and
such contributions are permissible under applicable
laws.
fully complied with
The Company's policy is that no political donations will
be made and no political expenditure will be incurred
outside the U.S. or Canada.
Other than as set forth above, neither the Parent nor
any of its subsidiaries for the year ended December
31, 2021:
• Made any donations to a registered political party
or other political organization or any independent
election candidate in or outside the U.K.; or
Incurred any political expenditure in or outside the
U.K.
•
Annual Report and Accounts 2021
Page | 56
Directors’ Report
Share capital
The issued share capital of the Parent as of March 10,
2022, is $20,588,057 and £50,000, consisting of
205,878,508 ordinary shares of $0.10 each (of which
2,490,574 shares were held in treasury), 205,878,508
special voting shares of $0.000001 each, and 50,000
sterling non-voting shares of £1 each.
The special voting shares carry 0.9995 votes each
(compared to 1 vote for each ordinary share) and are
held at all times by a nominee appointed by the
Parent. Shareholders who maintain their ownership of
ordinary shares continuously for at least three years
are eligible to elect to direct the voting rights in
respect of one special voting share per ordinary share
held for such period, provided that such shareholders
meet certain conditions set out in the Parent's Loyalty
Plan (details of which are available at www.IGT.com).
Once those conditions have been met and that eligible
shareholder has successfully elected to participate in
the Loyalty Plan, that shareholder will have the voting
power of the equivalent of 1.9995 votes for each
ordinary share held. The special voting shares and
ordinary shares will be treated as if they are a single
class of shares and not divided into separate classes
for voting purposes. Further details of the special
voting shares and the rights attaching to them are set
out in the Articles.
As of March 10, 2022, De Agostini had an economic
interest of approximately 50.9% (excluding treasury
shares) in the Parent and, due to its election to
exercise the special voting shares associated with its
ordinary shares pursuant to the Loyalty Plan, a voting
interest in the Parent of approximately 65.4% of the
total voting rights (excluding treasury shares).
to a
The Directors were authorized, at the 2021 AGM, to
allot ordinary shares in the capital of the Company up
to a maximum nominal amount of $6,828,552.20 and
further maximum nominal amount of
up
$6,828,552.20 where the allotment is in connection
with an offer by way of a rights issue, in each case
representing approximately one third of the nominal
value of the ordinary shares in issue on March 24,
2021, for a period expiring at the end of the next AGM
(or if sooner, August 10, 2022). The Directors are
requesting a new authority for the Parent to allot
ordinary shares in the capital of the Company at the
Investment
forthcoming AGM
Association Share Capital Management Guidelines.
line with
the
in
end of the next AGM (or if sooner, on November 10,
2022).
On November 16, 2021, the Company announced a
$300 million multi-year share repurchase program,
pursuant to which repurchases will be made pursuant
to
into with
counterparties approved by shareholders.
repurchase
contracts
entered
From the commencement of the repurchase program
in November 2021 up to December 31, 2021, the
Parent bought back 1,500,000 ordinary shares of
$0.10 each (representing 0.73% of the issued ordinary
total
shares as of December 31, 2021)
consideration of approximately $40.8 million,
in
accordance with shareholder authority obtained at the
2021 AGM. All 1,500,000 ordinary shares repurchased
the year ended December 31, 2021 were
in
transferred
information,
please see Note 20, Shareholders’ Equity to the
Consolidated Financial Statements.
treasury. For
further
for a
into
The Directors are requesting a new authority at the
Investment
forthcoming AGM
Association Share Capital Management Guidelines.
line with
the
in
Dividends
There were no recommended dividend payments for
approval by shareholders for the period January 1,
2021 to December 31, 2021.
The Company paid dividends of $41 million to
to non-controlling
shareholders and $91 million
shareholders for the year ended December 31, 2021.
For
information, please see Note 20,
Shareholders’ Equity to the Consolidated Financial
Statements.
further
focuses
Financial risk management objectives and policies
The Company's activities expose it to a variety of
market risks including interest rate risk and foreign
currency exchange rate risk. The Company's overall
risk management
the
strategy
unpredictability of financial markets and seeks to
minimize potential adverse effects on its performance
through ongoing operational and finance activities.
The Company monitors and manages its exposure to
such risks both centrally and at the local level, as
appropriate, as part of its overall risk management
program with the objective of seeking to reduce the
potential adverse effects of such risks on its results of
operations and financial position.
on
Share repurchase
The Parent obtained shareholder authority at the 2021
AGM
the
to purchase a maximum of 10% of
aggregate issued ordinary shares of $0.10 in the
Parent as of March 24, 2021, amounting
to
20,485,656 shares. This authority will expire at the
Depending upon the risk assessment, the Company
uses selected derivative hedging
instruments,
including principally interest rate swaps and foreign
currency
the purposes of
managing interest rate risk and currency risks arising
forward contracts,
for
Annual Report and Accounts 2021
Page | 57
Directors’ Report
from its operations and sources of financing. The
Company's policy is not to enter into such contracts
for speculative purposes.
to
financial
foreign currency exchange
Further disclosures
risk
relating
management objectives and policies, as well as
disclosures relating to exposure to interest rate risk
risk, are
and
described in Note 10, Financial Risk Management to
the Consolidated Financial Statements. The
Company's accounting policies regarding derivatives
and hedging are described in Note 2, Summary of
Significant Accounting Policies to the Consolidated
Financial Statements.
rate
Going concern
The current activities of the Company and those
factors likely to affect its future development, together
with a description of
financial position, are
its
described in the Strategic Report. Principal risks and
uncertainties affecting the Company are described in
the Principal Risks and Uncertainties section of the
Strategic Report. Critical accounting estimates
affecting the carrying values of assets and liabilities of
the Company are discussed in Note 2, Summary of
Significant Accounting Policies to the Consolidated
Financial Statements.
Having reviewed management's forecasted operating
results, forecasted cash flows, forecasted net debt,
and forecasted funds available on the Revolving
Credit Facilities, the Directors have a reasonable
the Company has adequate
expectation
resources to continue in operational existence for the
foreseeable future and therefore will be well placed to
manage its business risks successfully.
that
Accordingly, the Directors consider it appropriate to
the going concern basis of
continue
accounting
financial statements
contained in this Annual Report and Accounts.
in preparing
to adopt
the
its
to sell
Subsequent events
On February 25, 2022, the Parent’s wholly-owned
subsidiary, IGT Lottery S.p.A., signed a definitive
agreement
Italian proximity payment
business to PostePay S.p.A. – Patrimonio Destinato
IMEL, an entity of the Italian postal service provider
group, for €700 million. The transaction is subject to
customary closing conditions and regulatory approvals
and is expected to close during the third quarter of
2022.
Statement of Directors’ responsibilities
The Directors are responsible
the
Strategic Report, Directors’ Report, the Directors'
Remuneration Report and the financial statements in
accordance with applicable law and regulations.
for preparing
The CA 2006 and its associated regulations require
directors to prepare financial statements for each
financial year. Under the CA 2006, the Directors have
prepared the consolidated financial statements in
accordance with international accounting standards in
conformity with the requirements of the CA 2006 and
the Parent financial statements in accordance with the
U.K. Generally Accepted Accounting Practice (U.K.
Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law). Under
the CA 2006, the Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Parent and the Company and of the profit or loss of
the Parent and the Company for that period. In
preparing these financial statements, the Directors are
required to:
•
Select suitable accounting policies and then apply
them consistently;
State whether applicable international accounting
standards in conformity with the requirements of
the CA 2006 have been
the
financial statements and U.K.
consolidated
Accounting Standards, comprising FRS 101, has
been followed for the Parent financial statements,
subject to any material departures disclosed and
explained in the financial statements;
followed
for
•
• Make judgments and accounting estimates that
•
are reasonable and prudent; and
Prepare the financial statements on the going
to
concern basis unless
presume that the Parent and the Company will
continue in business.
inappropriate
is
it
The Directors are also responsible for safeguarding
the assets of the Parent and the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Parent's and the Company’s transactions
and disclose with reasonable accuracy the financial
position of the Parent and the Company at any time
and enable
financial
that
to ensure
statements comply with the CA 2006.
them
the
responsible
the
The Directors are also
maintenance and integrity of the Parent’s website.
Legislation in the U.K. governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
for
Annual Report and Accounts 2021
Page | 58
Directors’ Report
Disclosure of information to the auditor
In accordance with section 418 of the CA 2006, each
of the Directors confirms that:
•
So far as such Director is aware, there is no
relevant audit information of which the Company’s
auditor is unaware; and
Such Director has taken all the steps that he or
she ought to have taken as a director in order to
make him or her aware of any relevant audit
information, and to establish that the Company’s
auditor is aware of that information.
•
Independent auditors
The auditors, PricewaterhouseCoopers LLP, has
indicated its willingness to continue in office and a
its re-appointment will be
resolution concerning
proposed at the forthcoming AGM.
This Directors’ Report was approved by the Board on
March 10, 2022 and signed on its behalf by:
Vincent Sadusky
Chief Executive Officer
March 16, 2022
Annual Report and Accounts 2021
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Directors’ Remuneration Report
ANNUAL STATEMENT
Dear Recipient,
relevant
As the chairperson of the Compensation Committee
(the "Committee"), I am pleased to present the
Directors' Remuneration Report for the financial year
ended December 31, 2021, prepared in accordance
with
in particular
Schedule 8 of The Large and Medium-sized
Companies and Groups (Accounts and Reports)
Regulations 2008, as amended. This report consists
of three sections:
•
requirements,
legal
This Annual Statement, which summarizes the
work of the Committee, our approach to Directors’
remuneration, and the activities of the Committee
in the year;
The Remuneration Policy, which sets out our
Directors’ Remuneration Policy approved by the
shareholders at the 2021 AGM. The policy will
last for three years from the 2021 AGM or until
another remuneration policy is approved in a
general meeting; and
The Remuneration Report, which presents the
payments and awards made to Directors, details
the link between the Parent’s performance and
remuneration for the 2021 financial year, and
explains how
the Remuneration Policy was
implemented in the financial year under review.
The Remuneration Report
to
demonstrate the link between the Company's
strategy, its performance and the remuneration
outcomes of our Directors and particularly those
of our Executive Director and former CEO, Marco
Sala, and our Executive Director and Executive
Vice President and CFO, Max Chiara.
is designed
•
•
is subject
The Remuneration Report, together with this Annual
Statement,
to an annual advisory
shareholder vote at the forthcoming AGM and does
to an
not affect
individual Director.
the actual remuneration paid
Remuneration program
In order to ensure that our remuneration program
remains competitive and appropriate within the global
markets where we compete
for directors and
executive talent, the Committee continues to review
IGT's remuneration structures. Among other things,
the reviews take into account the additional director
responsibilities involved with service on the board of a
public limited company incorporated under the laws of
England and Wales, listed on the NYSE, subject to
the SEC reporting requirements, and subject to
extensive gaming licensing requirements in numerous
jurisdictions as compared with other companies that
are listed and incorporated solely in the U.K., as well
as external emerging trends in corporate governance.
trends. We are sensitive
The Committee further evaluates and looks for
opportunities to align the Company’s remuneration
shareholder expectations and
structures with
governance
to U.K.
corporate governance practices and remuneration
policies, and recognize that some aspects of our
remuneration arrangements may not be consistent
with these practices and policies given our global
footprint, our listing on the NYSE, and our need for
global talent.
The Committee values shareholder and investors
feedback, and will take into consideration feedback
received, including views and votes received in
relation to resolutions brought forward at the AGM
each year, as part of the ongoing review and
evaluation of the Company’s remuneration practices
to ensure that such practices continue to reinforce
IGT’s long-term strategy and remains closely aligned
with shareholders’ interests.
Remuneration highlights
Executive Directors
Below are the highlights of the remuneration related
circumstances that impacted our Executive Directors
during 2021:
financial metrics
Performance achievements - short-term incentive
(“STI”) compensation plan (“STIP”)
The Company exceeded its objectives for all three
- Consolidated Adjusted
key
EBITDA, Consolidated Adjusted Operating Income,
and Net Debt - with respect to the 2021 STIP.
Financial metrics comprise 80% of the targeted STI
value, with the remaining 20% earned based on the
of Management By Objectives
achievement
(“MBOs”).
Directors’ MBO
Executive
achievement was scored as between target and
the
maximum, and validated and approved by
Committee and Board at the February 2022 meeting.
The
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Performance achievements - long-term incentive
(“LTI”) compensation plan (“LTIP”)
The Committee reviewed performance achievement
of the outstanding 2019-2021 LTI awards against
established metrics at the February 2022 Committee
meeting and determined that the performance metrics
did not meet threshold achievement and, therefore,
no 2019-2021 LTI awards vested for Executive
Directors or other eligible employees.
2021 LTI awards
As a result of COVID-19’s impact on business
operations, the Committee approved two separate LTI
performance
eligible
unit
participants, including the Executive Directors; the
first with a two-year performance period (2021-2022),
and the second with a three-year performance period
(2021-2023).
awards
share
to
In conclusion
The year ahead will likely be another exciting one as
we look to continue to enhance our alignment of pay
with the Company’s strategy.
I would like to thank our shareholders for their
continued support during the year. We continue to
welcome your feedback as we remain committed to
open and transparent dialogue with shareholders and
we hope to receive your support at the forthcoming
AGM.
Gianmario Tondato Da Ruos
Chairperson of the Compensation Committee
2021 Co-Investment Plan
During 2021, the Committee implemented a co-
investment plan for the former CEO based on several
performance factors and awards, further details and
vesting conditions of which are set out in the
Remuneration Report.
Non-Executive Directors
There were no substantial changes to the Non-
Executive Directors' remuneration during 2021.
Other highlights
The Committee approved a $15 million discretionary
give-back bonus to a global population of employees
not otherwise eligible to participate in the Company’s
STIP in the form of a one-time discretionary cash
bonus of 5% of base salary. Eligible employees hired
prior
remained
continuously employed with the Company, were paid
in December 2021.The award represented a portion
of the savings achieved by the Company through cost
reduction initiatives implemented during 2020 and
2021 in response to the pandemic.
to June 30, 2020, and who
Annual Report and Accounts 2021
Page | 61
Directors’ Remuneration Report
REMUNERATION POLICY
In this part of the Director’s Remuneration Report, we set out the Remuneration Policy that was approved at the
AGM held on May 11, 2021 and took effect immediately thereafter. The Remuneration Policy can also be found
within our 2020 Annual Report and Accounts (pages 62 to 75) which is available at the Investor Relations section
of the Company’s website (www.IGT.com). The policy will remain in effect until shareholders approve changes to
the policy or until a new policy is put before shareholders for approval at the 2024 AGM, whichever is sooner.
The Remuneration Policy begins with the Executive Director and Non-Executive Director Remuneration Policy
tables and narrative, and is followed by an outline of remuneration structures.
Setting the Remuneration Policy
The Committee is constituted to assist the Board in discharging its responsibilities relating to the compensation of
the Company’s CEO and other executive officers and Directors. The Committee, which is made up of independent
Non-Executive Directors, was mindful in its deliberations on the Remuneration Policy of any potential conflicts of
interest (e.g. in accordance with the Committee’s charter, no member of the Committee shall act to fix his or her own
compensation except for uniform compensation to directors for their service as directors), and sought to minimize
them through an open and transparent internal discussion process and by seeking independent advice from its
external advisors where necessary.
The Committee undertakes a review of the Remuneration Policy periodically, taking into account all elements of
remuneration together to ensure the Remuneration Policy, as a whole, continues to position the Company to be able
to provide competitive compensation to existing and prospective directors which is aligned to market practice, while
ensuring the appropriate balance of fixed remuneration with variable remuneration tied to the achievement of the
Company's strategic goals and growth objectives. In preparation for the review of our Remuneration Policy, the
Committee:
•
Considered how the current Remuneration Policy related to and supported the Company’s strategy, and formed
its own views on the changes required to the current Remuneration Policy to align with the strategy and to be
consistent with the Company’s desired level of business risk;
Considered the impact of applicable law and regulations, corporate governance standards, best practice and
guidance issued by regulators and other interested parties, including proxy advisors;
Considered views from shareholders on past Remuneration Reports;
Considered the remuneration practices found in other companies of comparable size and industries, and
markets in which IGT competes for talent at the senior executive level, particularly in the United States and Italy;
Considered the wider workforce remuneration structure to ensure the approach to executive remuneration is
consistent; and
Consulted with legal and compensation advisors and relevant members of the Company’s senior management
on the proposed changes to the current Remuneration Policy.
•
•
•
•
•
The structure of the Company’s remuneration program is outlined in the Annual Statement of this Directors’
Remuneration Report. The Committee, when determining the Remuneration Policy, strives to ensure that the
Company’s remuneration structures:
•
•
•
•
•
•
•
Attract, retain, and motivate high caliber directors globally;
Support the delivery of the Company’s strategic and business objectives;
Reflect the global operating model of the Company whilst taking account of governance best practices;
Promote a strong and sustainable performance culture;
Align the interests of directors with those of the shareholders;
Are transparent and easily understood; and
Are flexible and accommodating to attract and retain talent in different geographies.
Consideration of employment conditions
When determining remuneration arrangements for the Directors, the Committee takes into account compensation
and employment conditions throughout the Company, those of our global peer companies, performance and market
trends and practices to evaluate whether the structure and quantum of the Directors’ pay opportunities remain
appropriate in this context. The Committee receives periodic updates from the People and Transformation (HR)
department on the overall remuneration structures and policies for senior executives with support from
compensation advisors, including benchmarking the Company's senior executive remuneration with peer
companies. We do not consult with employees on the Remuneration Policy.
Annual Report and Accounts 2021
Page | 62
Directors’ Remuneration Report
At other levels of the Company, employees receive a remuneration package that is reflective of their role and
responsibilities, set by reference to relative remuneration throughout the Company and external market data, where
applicable. Employees at an executive level will typically have a greater emphasis on performance-related and long-
term pay compared to those below this level. Annual incentives may be payable based on performance measures
which are suitable to the nature and responsibility of the role. This is considered when determining the policy for
Executive Directors.
Consideration of shareholder views
The Committee values shareholder feedback when forming the Remuneration Policy. There are established
processes in place whereby our management and our investor relations team meet periodically with investors and
shareholders either at their request or at industry events to discuss and gather feedback, which is formally
presented to the Committee and Board for ongoing evaluation of the Company's strategy and governance practices,
including remuneration practices. To date, remuneration has not been a significant topic raised by shareholders as a
part of this process and, therefore, no specific views have been taken into account. The Committee also reviews
shareholder views and votes received in relation to resolutions brought forward at the AGM each year and takes
these into account when developing remuneration and related policy.
Summary of key changes from the previous policy
While the structure of the 2019 Remuneration Policy has been retained, the Committee has updated and clarified a
number of elements of the Remuneration Policy to better enable the Company to compete for, attract and retain
executive talent to support the long-term interests of the Company and its stakeholders and further align to U.K.
best practices. Key changes include the following:
•
Clarifying the broad, global nature of the market in which the Company competes for executive talent,
particularly in the United States and Italy, to tailor the remuneration to meet these needs;
Defining the benefits and pension programs, which are tailored to the market in which the executive is employed
or resides;
Clarifying the different levels at which bonus may be paid;
Setting out the process for considering shareholder views;
Clarifying the factors taken into consideration when setting remuneration for new recruits;
Clarifying the awards typically granted under the Long Term Incentive Plan and increasing the maximum values
associated with such awards aimed to provide the Committee with added flexibility to align our compensation
opportunity with market practice;
Clarifying the purpose of the different components of remuneration; and
Identifying the typical division of performance targets between financial and non-financial targets.
•
•
•
•
•
•
•
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Future Policy Table
The table on the following pages sets out the Remuneration Policy for Executive Directors and Non-Executive
Directors, explaining how each element operates and how each part links to the corporate strategy.
Executive Directors
An Executive Director plays a key role in the management and success of a company. The Remuneration Policy
and structures are designed to promote these combined roles, to incentivize the delivery of sustained performance
consistent with the Company's strategic goals and appropriate risk management, and to reward success in doing
so.
Fixed Pay: Base Salary
Purpose and
Link to Strategy
Operation
To pay a salary that (1) reflects the role, responsibilities, experience and knowledge of
the individual; (2) is competitive with other employers with whom the Company
competes for talent, including companies in our industry, other complex industries,
companies of comparable size, and in the geographies in which the Company
operates; and (3) allows the Company to attract and retain appropriate Executive
Directors to support the long-term interests of the Company.
Base salaries are set taking into account:
•
•
•
•
The individual’s skills, experience and current remuneration package;
The size and scope of the role;
Salary and total remuneration levels at similar sized companies; and
Remuneration of other executives and group employees.
Salaries are reviewed annually by the Committee.
Performance Conditions There are no performance conditions.
Maximum Opportunity
There is no set maximum salary given the global market in which the Company
competes for talent; however, the Company annually reviews salaries of global
companies in similar industries, of similar size and with similar complexities to ensure
Executive Director salaries are within a market competitive range.
The maximum opportunity for an increase in base salary on an annual basis is 10% of
that year's annual base salary. Increases may be made above this level up to 20% of
that base salary in exceptional circumstances, such as:
• Where an individual is brought in on a lower salary with the intention of
increasing the salary level gradually dependent on performance in the role;
There is a material increase in the size and scope of the role; and
•
• Market practice has evolved to mean that the salary is no longer considered
to be competitive.
Personal performance is taken into account when considering base salary increases.
Recovery or Withholding There is no provision for recovery.
Fixed Pay: Benefits
Purpose and
Link to Strategy
Operation
To provide market competitive benefits to enable Executive Directors to undertake
their role through ensuring well-being, security and access to the support and
resources necessary or appropriate to perform their role as expected by the
Company.
Executive Directors receive a range of benefits, which may vary by location and be
tailored to reflect market practice. These may include, but are not limited to, private
medical insurance, private dental insurance, life and permanent disability insurance,
travel indemnity, tax preparation services, tax equalization, housing and car
allowances or a cash perquisite allowance in lieu of housing, car or other allowances.
In line with the policy for other employees, Executive Directors may be eligible to
receive relocation allowances and transfer-related benefits as appropriate.
Where an Executive Director incurs expenses in the ordinary conduct of business and
such expenses give rise to tax, the Company may reimburse the director for any tax
for which the director may be liable.
Benefits are reviewed regularly but not on a pre-determined schedule.
Performance Conditions There are no performance conditions.
Annual Report and Accounts 2021
Page | 64
Directors’ Remuneration Report
Maximum Opportunity
There is no maximum level of benefits. However, Executive Directors generally
participate in the same level of medical, dental and other health and welfare programs
of the workforce in the jurisdiction, adjusted to accommodate statutory requirements,
market practice and/or job level.
Life insurance of up to 4 times base salary, payable on death in service.
Cash perquisite allowances may be offered to Executive Directors in lieu of other
allowances. Such allowances do not exceed $100,000 on an annual basis.
Recovery or Withholding There is no provision for recovery.
Fixed Pay: Pension
Purpose and
Link to Strategy
Operation
To provide Executive Directors an appropriate level of savings for their retirement
which is motivating and appropriately competitive within the relevant labor market.
Executive Directors are offered the same or similar pension schemes which are
offered to the workforce in the jurisdiction in which they are employed or likely to
retire. All pension schemes are defined contribution and no defined benefit
arrangements are offered to Executive Directors. Contribution levels may vary by
jurisdiction to accommodate statutory requirements, market practice and/or job level
of the individuals.
Performance Conditions There are no performance conditions.
Maximum Opportunity
Maximum opportunities vary by jurisdiction and job level; however, the Company
provides pension schemes which are aligned with market practice of the employing
jurisdiction.
Subject to compliance with specific jurisdictional requirements which may change
from time to time, annual employer contributions are no higher than 42.5% of base
salary or a combination of fixed remuneration and annual bonus.
Recovery or Withholding There is no provision for recovery.
Variable Pay: Annual Bonus
Purpose and
Link to Strategy
Operation
the Committee determines
To align a component of remuneration with the achievement of Company performance
measured against predetermined annual financial and strategic objectives.
The annual bonus is performance-based, and performance is assessed over one
year.
Annually
individual
performance metrics utilized in the program based on the Company's short-term
objectives. The Committee approves the threshold, target and maximum performance
measures for these metrics, which will generally align with the Company's annual
financial and strategic plan, as well as the coinciding payouts at each level of
achievement.
Upon completion of the fiscal year, the Committee reviews and certifies the
performance achievement against each of the performance measures and resulting
payments under the plan.
The annual bonus does not generally have any additional vesting or deferral period.
the appropriate
financial and
Performance Conditions Performance measures, weightings and targets will be set annually based on the
Company's short-term objectives. Generally 80% of the bonus will be based on
financial performance measures which may include, but are not limited to, profitability,
cash flow, liquidity or balance sheet metrics.
Details of the measures, weightings and targets applicable to the annual incentive
bonus for each year, including a description of how they were chosen and whether
they were met, will be disclosed retrospectively in the annual report on Directors'
remuneration for the relevant financial year (subject to commercial sensitivity).
The ongoing maximum annual bonus target opportunity will be limited to 300% of
base salary.
Maximum Opportunity
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Threshold performance will result in a pay out of up to 25% of maximum and on-target
bonus will pay out up to 50% of maximum.
Payouts under the plan will not exceed the following:
Below threshold: 0% of target
•
Threshold: 50% of target
•
•
Target: 100% of target
• Maximum: 200% of target
The Committee retains discretion to increase or reduce pay-outs (including to nil)
based on an assessment of regulatory conduct and general Company performance
over the performance period, subject always to the maximum payout and to ensure
that the rewards properly reflect business performance.
Recovery or Withholding The Company has implemented an executive compensation recoupment policy
pursuant to which incentive compensation may be recouped in certain instances, such
as a material restatement of the Company’s financial statements resulting from
material noncompliance with financial reporting requirements under applicable law or
fraud, and incentive compensation is generally subject to any clawback, recoupment,
or forfeiture provisions required by laws applicable to the Company or its subsidiaries
or affiliates. The executive compensation recoupment policy may be amended from
time to time by the Board or a committee thereof.
Variable Pay: Long-Term Incentive Plan (“LTIP”)
Purpose and
Link to Strategy
Operation
Long-term incentive compensation is designed to: (1) balance and align the interests
of Executive Directors and shareholders; (2) reward Executive Directors for
demonstrated leadership and performance aimed towards the creation of shareholder
value; (3) increase equity holding levels; (4) align with competitive levels of
compensation opportunity within our peer group; and (5) support in attracting,
retaining and motivating Executive Directors.
Annual LTIP awards are usually granted in the form of performance-based restricted
share units (“PSUs”), but time-based restricted share units, restricted stock, stock
options, performance-based stock options, share appreciation rights or any
combination thereof may also be granted.
Awards granted under the LTIP have a vesting period of at least one year.
Performance-based awards normally have a three-year performance-period aligned
with the fiscal year and vest in two equal tranches approximately three- and four-
years after the grant date, subject to achievement of pre-established performance
conditions.
Award levels and the framework for determining vesting are reviewed annually.
Executive Directors must hold all of the net settled shares they receive under the LTIP
for a period of at least five years from the date of grant. The period expires on the fifth
anniversary of the date of grant, provided that the relevant director meets his or her
holding requirements under the Share Ownership Guidelines, a summary of which is
included in the Directors' remuneration report. Separately, the Share Ownership
Guidelines require Executive Directors to hold a certain amount of shares for a period
of up to two years after cessation of service.
The Committee has discretion to amend the terms and conditions of any award within
the limits of this policy and the terms of the award agreement.
Performance Conditions Performance measures, weightings and targets for the entire performance period of
the LTIP awards are set annually prior to the award date, align with the Company's
operating and strategic priorities for the upcoming performance period. Typically, all of
the performance measurements are financial or market-based in nature including, but
not limited to profitability, cash flow, liquidity, other balance sheet or shareholder return
measures.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Maximum Opportunity
Details of the measures, weightings and targets applicable to the annual LTIP
program for each year will be disclosed retrospectively in the annual report on
Directors' remuneration in the year following the completion of the performance period
(subject to commercial sensitivity).
The maximum target is 800% of base salary measured at the award's grant date.
Payouts under each LTIP will not exceed the following:
Below threshold: 0% of target
•
Threshold: 50% of target
•
•
Target: 100% of target
• Maximum: 200% of target
The Committee retains discretion to increase or reduce pay-outs (including to nil)
based on an assessment of regulatory conduct and general Company performance
over the performance period, subject always to the maximum payout and to ensure
that the rewards properly reflect business performance, as adjusted to reflect
fluctuations in the applicable currency exchange rate, non-recurring items such as
acquisitions and disposals and other extraordinary circumstances.
Recovery or Withholding The Company has implemented an executive compensation recoupment policy
pursuant to which incentive compensation may be recouped in certain instances, such
as a material restatement of the Company’s financial statements resulting from
material noncompliance with financial reporting requirements under applicable law or
fraud, and incentive compensation is generally subject to any clawback, recoupment,
or forfeiture provisions required by laws applicable to the Company or its subsidiaries
or affiliates. The executive compensation recoupment policy may be amended from
time to time by the Board or a committee thereof.
Variable Pay: Co-investment plan
Purpose and
Link to Strategy
Operation
Co-investment plans are designed to: (1) balance and align the interests of Executive
Directors and shareholders; (2) reward for demonstrated leadership and performance
aimed towards the creation of shareholder value; (3) as an incentive for Executive
Directors to achieve one or more specified performance targets; (4) increase equity
holding levels; and (5) provide Executive Directors with a commitment to hold a
minimum number of shares in the Company for a period as determined by the
Committee.
A co-investment plan is performance-based and is generally granted once every three
years. Typically, a co-investment plan award coincides with an Executive Director's
reappointment to the Board.
Under a co-investment plan, the Company may issue and/or grant options over
shares, share appreciation
restricted share units,
performance units, performance shares or other share-based awards or any
combination thereof. Typically, the Company matches the co-investment plan
participant's commitment to hold shares on a 1:1 ratio.
Awards vest after the performance period, typically subject to: (1) achievement of pre-
established performance metrics; (2) the Executive Director continuing to hold the
specified number of shares during the performance period; (3) the Executive Director
reinvesting up to 50% of net shares received subject to the plan in the next cycle of
co-investment plan, if requested to do so; and (4) the Executive Director continuing to
serve as a Director on the Board during the performance period.
Options vested under a co-investment plan generally expire four years after the
vesting date.
restricted shares,
rights,
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Executive Directors must hold all of the net settled shares they receive under a co-
investment plan for a period of at least five years from the date of grant. The period
expires on the fifth anniversary of the date of grant, provided that the relevant
director meets his or her holding requirements under the Share Ownership
Guidelines, a summary of which is included in the Directors' remuneration report.
Separately, the Share Ownership Guidelines require Executive Directors to hold a
certain amount of shares for a period of up to two years after cessation of service.
The Committee has discretion to amend the terms and conditions of any co-
investment plan within the limits of this policy and the terms of the relevant
agreement.
Performance Conditions Performance measures, weightings and targets for the entire performance period of a
co-investment plan are set at the time of grant. Typically, at least 80% of the
performance measurements are financial or market-based in nature including, but not
limited to profitability, cash flow, liquidity, other balance sheet or shareholder return
measures.
Details of the measures, weightings and targets applicable to a co-investment plan
will be disclosed retrospectively in the annual report on Directors' remuneration in the
year following the completion of the performance period (subject to commercial
sensitivity).
There is no over-riding maximum opportunity for the co-investment plans. The
Committee sets a target (which may include different levels of achievement) for each
co-investment plan in its discretion on grant, and awards vest if the applicable
performance conditions are met.
Maximum Opportunity
Recovery or Withholding The Company has implemented an executive compensation recoupment policy
pursuant to which incentive compensation may be recouped in certain instances, such
as a material restatement of the Company’s financial statements resulting from
material noncompliance with financial reporting requirements under applicable law or
fraud, and incentive compensation is generally subject to any clawback, recoupment,
or forfeiture provisions required by laws applicable to the Company or its subsidiaries
or affiliates. The executive compensation recoupment policy may be amended from
time to time by the Board or a committee thereof.
Non-Executive Directors
Fixed pay: Fees
Purpose and
Link to Strategy
Operation
To attract and retain high-calibre individuals, with appropriate experience or industry-
related skills, by offering market competitive fee levels.
Non-Executive Directors receive a basic fee for their Board services. Additional fees
may be paid in relation to additional responsibilities including:
•
•
•
•
The role of the Chairperson;
The role of Lead Independent Director;
Chairing
the Audit, Compensation and Nominating and Corporate
Governance Committees and any other Board committees as may be
established from time to time; and
Carrying out specific and/or ad hoc projects or tasks.
The fee of the Chairperson is set taking into account the individual’s circumstances,
skills and experience, the scope of the role and the needs and circumstances of the
Company. Non-Executive Director fees are set taking into account market practice
levels and commitment required of the Directors in connection with, but not limited to,
regulatory and licensing procedures.
Fees are reviewed annually by the Committee.
Expenses incurred in the course of duties may be reimbursed by the Company.
Certain benefits, including statutory pension contributions, may be payable by virtue
of the payment of fees and the grant of equity awards, depending on the location of
the Non-Executive Director.
Performance Conditions There are no performance conditions.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Maximum Opportunity
There are no set maximum fees; however, fee levels of peer companies will be taken
into account when considering increases.
The maximum opportunity for an increase in fees on an annual basis is 10% of that
year’s annual fees rising to a maximum of 20% of those fees in exceptional
circumstances, as determined by the Committee in its sole discretion.
Current fee levels are set out in the annual report on Directors' remuneration.
Recovery or Withholding There is no provision for recovery.
Fixed pay: Equity Awards
Purpose and
Link to Strategy
Operation
To reward Non-Executive Directors for continued service, whilst aligning Non-
Executive Directors with shareholders through linking an element of compensation to
share performance.
Typically, each Non-Executive Director is granted a time-vesting restricted share unit
("RSU") award, generally unconnected to the performance of such Non-Executive
Director. The Committee retains the discretion to grant equity awards to Non-
Executive Directors as permitted under the Company's Long Term Incentive Plan.
An RSU award is normally granted to each existing Non-Executive Director annually
and to a new Non-Executive Director at the time of appointment.
The number of RSUs covered by each award is generally determined by dividing (i)
the Annual Grant Value (the current level of which is set out in the annual report on
Directors' remuneration) by (2) the closing price of an ordinary share as of the date of
grant, prorated accordingly in respect of grants made to new Non-Executive Directors.
There is no set maximum for the Annual Grant Value, but the Committee determines
the amount based on its periodic benchmarking of compensation for the Non-
Executive Directors.
Awarded units normally vest at the next annual general meeting of the Parent after
grant date, subject to continued service of the Non-Executive Director as a Director on
the Board.
Equity awards do not have a post-vest holding or deferral requirement. Instead, the
Company maintains Share Ownership Guidelines, which require the Non-Executive
Director to maintain a level of share ownership measured as a multiple of base fee. A
summary of
the Directors'
remuneration report.
Award levels and the framework for determining vesting are reviewed periodically,
generally every one or two years.
The Committee has discretion to amend the terms and conditions of any award within
the limits of this policy and the terms of the award agreement.
the Share Ownership Guidelines
included
in
is
Performance Conditions There are no performance conditions.
Maximum Opportunity
The maximum target is 100% of the grant value.
The maximum increase of the Annual Grant Value on an annual basis is 10% of that
year's Annual Grant Value, rising to a maximum of 20% of that year's Annual Grant
Value in exceptional circumstances, as determined by the Committee in its sole
discretion.
Recovery or Withholding Awards made to Non-Executive Directors may be recouped in certain instances, such
as error in calculation or fraud, and the RSUs are generally subject to any clawback,
recoupment, or forfeiture provisions required by laws applicable to the Company or its
subsidiaries or affiliates. Such recoupment policy may be amended from time to time
by the Board or a committee thereof.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Notes to the Future Policy Table
Performance measures and targets
Each year, the Committee gives careful consideration to the performance measures that should apply to incentives.
•
•
For the annual bonus, the Committee considers that a combination of financial measures relating to the
Company's strategic objectives and business strategy and individual financial measures, is most appropriate for
assessing performance over the short to medium term. Other non-financial measures, including customer,
people, and culture, and encompassing environmental, social and governance aspects, may be used in
combination with the aforementioned measures.
For the LTIP and the co-investment plan, the Committee considers that financial or market performance metrics,
including shareholder return, profitability, cash flow and certain balance sheet metrics, provide the optimum
balance to assess the long-term financial performance of the Company and growth in shareholder returns on an
absolute and relative basis. Non-financial measures, including customer, people and culture, and encompassing
environmental, social and governance aspects, may be used in combination with financial measures.
The Committee reserves the right to amend, introduce and/or remove performance measures and targets for
awards as it considers appropriate, subject to the rules of the relevant plan and any legal or regulatory restrictions.
Remuneration policy for other employees
While our Remuneration Policy follows the same fundamental principles across the Company, packages offered to
employees reflect differences in market practice in the different countries, role and seniority.
Like the Executive Directors, employees at management level and above receive a fixed salary and may receive a
variable annual bonus. The annual bonus differs between employee levels of seniority: the Executive Directors and
senior management employees are generally subject to an 80% bonus weighting as to financial results and a bonus
weighting of 20% based on personal performance. The annual bonus is paid out on an annual basis subject to the
financial results of the Parent and the personal performance of each employee. Manager and above level
employees in general also participate in the same annual bonus plan. The percentage of the plan allocated to
financial and individual objectives varies by level. Target as a percentage of base salary also varies by level.
Eligible employees participate in the same LTIP as the Executive Directors or such other long-term incentive plans
as may be adopted by the Committee from time to time.
Employees, other than the Executive Directors, are not eligible to participate in the co-investment plan, which is
specifically aimed at Executive Directors.
Approach to recruitment remuneration
The Company operates in a complex, global and specialized sector and competes for talent on a global basis and,
in many instances, outside of the U.K. and across industries. The Committee’s approach to recruitment
remuneration is to develop remuneration packages that put the Company in a position to effectively attract and
retain executive talent based on competitive pay, benefits and practices in relevant markets, sectors and
geographies.
Although the remuneration package for a newly appointed Non-Executive Director would normally be in line with the
structure set out in the Remuneration Policy table, the Committee determines the remuneration of new Executive
Directors on a case-by-case basis. Generally, the level of fixed remuneration will be determined after considering
the candidate’s skills and experience and the market data for the role that they will be undertaking and the
remuneration needed to attract talent under the circumstances. It is expected that for new Executive Directors:
•
•
Base salary will be set in line with the Remuneration Policy.
Benefits will be in line with the Remuneration Policy. Additional benefits may be offered for new Executive
Directors, such as relocation benefits.
Pensions will be in line with the Remuneration Policy.
The annual bonus quantum and performance measures will generally be in line with the ongoing Remuneration
Policy as implemented for other Executive Directors during the year. However, the Committee reserves the right
to vary the performance measures and targets for the year of recruitment if it considers appropriate (e.g. where
a large portion of the year has already elapsed). The annual bonus maximum will generally reflect the ongoing
policy for current Executive Directors, pro-rated as relevant.
•
•
Annual Report and Accounts 2021
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Directors’ Remuneration Report
•
•
The LTIP quantum, performance measures and targets will be line with the ongoing Remuneration Policy as
implemented for other Executive Directors during the year. The LTIP award maximum for new Executive
Directors will generally reflect the ongoing policy for current Executive Directors.
The co-investment quantum, performance measures and targets will be line with the ongoing Remuneration
Policy as implemented for other Executive Directors during the year.
The Company may also pay reasonable fees and expenses for a new Executive Director in relation to their
appointment.
The Committee recognizes that a new Executive Director may forfeit remuneration as a result of leaving a previous
employer and the Committee will consider mitigating that loss or part of that loss by making buy-out awards in
addition to the remuneration outlined above. In making buy-out awards, the Committee will consider any relevant
factors, including any performance conditions attached to any previous incentive arrangements and the likelihood of
these conditions being met, the proportion of the performance period remaining and the form of award. Where
possible, buy-out awards will be made using existing incentive plans and may be settled in cash or shares and in
one payment or over a period of years.
The Committee retains discretion to offer other payments, whether in cash or in shares, which reflect market
conditions or practice by location when it considers these to be in the best interests of the Company and, therefore,
shareholders. The Committee does not intend to use this discretion to make a non-performance related incentive
payment but considers it important to retain the ability to do so in order to attract and retain executive talent. In any
case, the Committee may consult with its external, independent compensation consultant to confirm the package
provided at recruitment is market competitive and aligned with the standard remuneration elements for the role and
location.
Directors' contractual arrangements
Executive Directors' service contracts1
The Company does not have a policy of fixed term contracts for Executive Directors. Generally, contracts include a
notice period of no more than 12 months.
An Executive Director, following cessation of his or her service, is subject to confidentiality undertakings and certain
restrictive covenants, including restrictions on soliciting or providing goods or services to certain customers,
employing or enticing away from the group certain persons employed by any group company or being involved with
any business in competition with the company, among others, for a period of time after such cessation.
Marco Sala
The current CEO and Executive Director, Marco Sala2, has a service agreement with the Parent (70% of
employment) and a service agreement with its wholly owned subsidiary, Lottomatica (30% of employment). There is
no fixed term for the service agreement with the Parent and the Lottomatica service agreement; however, as a
matter of best practice, Marco Sala’s appointment as a director of the Parent will be made subject to reappointment
by shareholders at the Parent’s AGM. Marco Sala’s service agreement can be terminated by either party on the
giving of six months’ notice, if not, immediately for cause. He cannot resign without prior approval from the Board.
Max Chiara
The current CFO and Executive Director, Max Chiara, has a service agreement with the Parent. There is no fixed
term for the service agreement with the Parent; however, as a matter of best practice, it is expected that Max
Chiara’s appointment as a director of the Parent will be made subject to annual reappointment by shareholders at
the Parent’s AGM. Max Chiara’s service agreement with the Parent can be terminated by the Parent if Max Chiara
fails to cure the grounds for such termination as specified in the agreement within a 60-day notice period, or
1 Vince Sadusky was appointed as CEO and Executive Director subsequent to the approval of the Remuneration Policy in May 2021. There is no
fixed term for the service agreement with the Parent; however, as a matter of best practice, it is expected that Vince Sadusky’s appointment as a
director of the Parent will be made subject to reappointment by shareholders at the Parent’s AGM. Vince Sadusky’s service agreement with the
Parent can be terminated by the Parent if Vince Sadusky fails to cure the grounds for such termination as specified in the agreement within a 60-
day notice period, or immediately in any other cases. Vince Sadusky may terminate the service agreement on the giving of 60 days’ notice,
following which the Board may elect to have such termination become effective immediately or on such later date (but no later than the date
specified in the notice). Further details of Vince Sadusky’s remuneration arrangements are included in the Remuneration Report - Implementation
of the Remuneration Policy for the year ending December 31, 2022.
2 Effective January 24, 2022, Marco Sala was appointed Executive Chair of the Board, and Vince Sadusky was appointed CEO and Executive
Director.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
immediately in any other cases. Max Chiara may terminate the service agreement on the giving of 60 days’ notice,
following which the Board may elect to have such termination become effective immediately or on such later date
(but no later than the date specified in the notice).
Non-Executive Directors' appointment agreements
All Non-Executive Directors’ services are provided for in accordance with the prior appointment of the Directors and
their individual appointment agreements. Non-Executive Directors are generally expected to be re-appointed
annually on each AGM date, unless his/her appointment is terminated earlier by either party on the giving of one
month's notice.
3Details of the terms of the appointment of the current Non-Executive Directors are as follows:
Non-Executive Director
James McCann (Vice Chairperson and Lead Independent Director)
Alberto Dessy
Marco Drago
Ashley M. Hunter
Heather McGregor
Lorenzo Pellicioli
Maria Pinelli
Samantha Ravich
Gianmario Tondato Da Ruos
Start of Current
Term
May 11, 2021
May 11, 2021
May 11, 2021
January 14, 2022
May 11, 2021
May 11, 2021
January 14, 2022
May 11, 2021
May 11, 2021
Expected Expiry of
Current Term
May 10, 2022
May 10, 2022
May 10, 2022
May 10, 2022
May 10, 2022
May 10, 2022
May 10, 2022
May 10, 2022
May 10, 2022
Loss of office
When a Director leaves the Company, the Committee will review the circumstances and apply the appropriate
treatment having regard to the practice for other senior employees of the Company which may vary by location, and
in accordance with the Director’s contractual entitlements established and as may be amended by the Committee
specifically to facilitate the exit of a particular individual. Where applicable, the Committee aims to avoid rewarding
poor performance and to recoup undue or excessive pay.
When determining the treatment of the various elements of compensation upon cessation of service, the Committee
will give regard to the rationale for the departure. An individual may be treated as a ‘good leaver’ for these purposes
if they leave by way of the following circumstances – (i) death, (ii) injury, ill-health or disability, (iii) redundancy, (iv)
retirement, and/or (v) any other circumstances as determined by the Committee or the Board.
The Company’s equity incentive plan(s) contains provisions relating to a change in control which provides for full
accelerated vesting of all outstanding share options, share appreciation rights and full value awards (other than
performance-based awards), when a replacement award is not provided. In addition, any performance-based award
for which a replacement award is not issued, will be deemed to be earned and payable with all applicable
performance metrics deemed achieved at the greater of: (a) the applicable target level; or (b) the level of
achievement as determined by the Committee not later than the date of the change in control, taking into account
performance through the latest date preceding the change in control as to which performance can practically be
determined, but in no case, later than the end of the applicable performance period. In the event of a reorganization
or other transactions which would affect the current or future value of any award, an adjustment may be made to the
number of shares if considered appropriate.
The Committee also retains discretion to make additional payments in respect of (i) settling any statutory claims
which the Committee considers, in its reasonable judgment, may arise in respect of the termination (whilst seeking
to ensure that there is no reward for failure), and (ii) reasonable legal costs and other expenses reasonably incurred
by the Director in respect of the termination and any settlement arrangements; provided in all cases that the
Committee considers that it would be in the best interests of the Company to do so.
3 For ease of reference, this table has been updated since the approval of the Remuneration Policy at the 2021 AGM to reflect the current term of
appointment of each Non-Executive Director in office as of the date of this Annual Report and Accounts.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Executive Directors
The table below summarizes the policies which will apply in respect of the various elements of compensation in the
event of cessation of an Executive Director’s service with the Company, unless determined otherwise at the
discretion of the Committee:
Element of remuneration Loss of office payment policy
Base Salary
Benefits
Pension
Annual Bonus
LTIP
Co-investment
Salary will continue to be paid throughout the notice period although the Committee has
the discretion to make a payment in lieu of notice.
A good leaver may be entitled to receive up to 24 months of base salary.
Benefits will continue to be paid throughout the notice period although the Committee
has the discretion to make a payment in lieu of notice.
A good leaver may continue to receive a range of benefits, including without limitation,
health and welfare benefits, tax preparation and perquisites, following cessation for up
to 24 months.
Pensions will continue to be paid throughout the notice period although the Committee
has the discretion to make a payment in lieu of notice.
Any accrued but unpaid annual bonuses for the prior fiscal year will be paid.
A director may be entitled to an annual bonus, pro-rated if applicable and subject to
performance assessment, in respect of the financial year in which the cessation occurs.
A good leaver may be entitled up to 18 months annual bonus (based upon a three-year
average).
Share awards and options will be treated in accordance with the relevant plan rules. The
Committee would consider whether outstanding and unvested awards and/or options
should lapse on leaving or should, at the Committee’s discretion, be preserved. If
awards and/or options are preserved, they would continue until the vesting date or be
accelerated, and they would be pro-rated based on service over the performance period
or vest in full.
A good leaver may exercise vested stock options up until the original expiration date
under the original terms and conditions of the award, generally a three-year period after
the vest date.
All outstanding and unvested awards and/or options will be automatically and
immediately forfeited for no consideration as of cessation of service.
A Director may also be entitled to additional payments, including but not limited to certain payments or benefits
which are in line with and which reflect market practice, including the provision of outplacement support, reasonable
costs associated with relocation back to an individual’s home country, and tax preparation. In some countries, it may
be a legal requirement to provide on-going consideration for post-termination restrictive covenants. The Committee
may impose post-termination restrictive covenants on Directors which continue for up to two years after cessation of
service and which may require payment of appropriate consideration.
Marco Sala
As consideration for compliance with the post-employment restrictive covenants, Marco Sala is entitled to a lump
sum payment equal to two years’ base salary and any annual bonus payments for the two financial years prior to
the date of termination.4
According to a severance agreement entered into between the Company and Marco Sala (which supersedes a
stability agreement originally entered into on February 20, 2012 between him and legacy GTECH S.p.A. and then
assigned to Lottomatica S.p.A. as part of the merger), subject to Marco Sala working his notice period, he is entitled
to a severance payment equal to one year’s base salary (plus any amounts owed to him) and a pro-rated short term
incentive bonus payment as of the date of termination based on the projection of the Company's full year business
4 Subsequent to the approval of the Remuneration Policy at the 2021 AGM, and in connection with the restructuring of Marco Sala’s service
arrangement with the Parent due to his appointment to the position of Executive Chair of the Board, the Committee agreed upon a fixed payment
amount of $7.5 million as consideration of Marco Sala agreeing to comply with post-employment restrictive covenants which continue for 24
months after cessation of service in accordance with the terms of the Remuneration Policy on loss of office (see above). This arrangement
supersedes and extinguishes Marco Sala’s previous entitlements. Details are also included in the Remuneration Report - Implementation of the
Remuneration Policy for the year ending December 31, 2022.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
and financial results. The severance payment is subject to the Company determining that he is a good leaver which
includes, but is not limited to, circumstances involving redundancy, permanent incapacity, or retirement with the
agreement of the Company. No severance payment will be made if Marco Sala’s employment is terminated for
cause.
Non-Executive Directors
No remuneration is payable upon a Non-Executive Director's termination, other than accrued fees and expenses,
subject to the discretion of the Committee.
RSU awards will be treated in accordance with the relevant plan rules and the terms and conditions of the award
agreement. The Committee would consider whether outstanding and unvested awards should lapse on leaving or
should, at the Committee’s discretion, be preserved. If awards are preserved, they would continue until the vesting
date or be accelerated, and they would be pro-rated based on service over the period or vest in full.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
REMUNERATION REPORT
This Remuneration Report sets out the Committee’s
responsibilities and activities, how the Remuneration
Policy was implemented in 2021 and the resulting
payments each of the Directors received, and the
planned implementation of the Remuneration Policy
in 2022. The information in this report has been
audited where
required under applicable U.K.
legislation, which is indicated for the applicable
sections.
for setting
responsible
Compensation Committee activities
The Committee
the
is
remuneration packages for the Chairperson, the
Executive Directors, and the Non-Executive Directors,
and for recommending to the Board the remuneration
for Directors. The Committee also has
policy
oversight
and
remuneration
of
senior members of
arrangements
management.
the
for other
policy
comprises
The Committee
three
currently
independent Non-Executive Directors. As of the date
of this report, the Committee is chaired by Gianmario
Tondato Da Ruos, and its other members are Alberto
Dessy and Samantha Ravich. The Committee held
six meetings during 2021, attended by members of
the Committee as follows:
Director
Gianmario Tondato Da Ruos
(Chairperson)
Alberto Dessy
Samantha Ravich
Member since
% of meetings
attended
April 2015
April 2015
June 2020
100 %
100 %
100 %
The CEO attends the meetings of the Committee
from time to time to support the Committee as
needed. Certain officers and employees, such as the
Senior Vice President, Global Head of People and
Transformation, the CFO, the General Counsel and
the Company Secretary, usually attend meetings of
the Committee.
The activities undertaken by the Committee during
2021 included:
•
Reviewing and benchmarking the remuneration
of the Executive Directors;
Deliberating on pay quantum for the CEO and
senior management;
Reviewing and approving compensation and
incentive compensation plans with respect to the
CEO and senior management, including setting
performance measures and targets;
Reviewing and approving short- and long-term
incentive scoring projections and results, awards,
and plan designs;
•
•
•
•
Reviewing and approving the $15 million one-
time discretionary give-back bonus program to a
population of eligible employees not otherwise
eligible to participate in the company short-term
incentive plans;
• Monitoring compliance with share ownership
senior
the Directors and
guidelines by
management;
Approving the 2020 Remuneration Report;
the Committee charter, executive
Reviewing
compensation
(clawback) policy,
board expense reimbursement policy and other
compensation-related policies; and
recoupment
•
•
• Monitoring external developments and assessing
the impact on the Remuneration Policy.
During 2021, the Committee has been advised by
Mercer in its consideration of matters in relation to
executive remuneration. Mercer is part of the Marsh &
McLennan Companies, Inc., a global professional
services firm and a third party unconnected with IGT.
Mercer has been acting as independent adviser to the
Committee since 2015 and the Committee has
renewed Mercer’s appointment for the financial year
2022. The Committee has satisfied itself that the
advice received from Mercer was objective and
independent.
The total fees in relation to the advice provided by
Mercer to the Committee and the Board during the
year were $205,789. Mercer also assists
the
Company in providing general consulting services,
salary surveys, and advice on fund performance of its
401(k) plans in the U.S.
2021 AGM - Remuneration Report voting results
At the 2021 AGM, there was an advisory vote on our
remuneration report, the result of the poll was as
follows:
Votes for
Votes against
Total votes cast
Votes withheld
99.63 %
0.37 %
366,175,708
1,362,240
367,537,948
191,326
2021 AGM - Remuneration Policy voting results
At the 2021 AGM, there was a binding vote on our
remuneration policy, the result of the poll was as
follows:
Votes for
Votes against
Total votes cast
Votes withheld
87.40 %
12.60 %
321,270,462
46,305,115
367,575,577
153,697
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Executive Directors’ remuneration as a single figure (audited)
The remuneration of the Executive Directors for the financial years ended December 31, 2021 and 2020 is set out
below and relates to the performance of their roles as the Executive Directors of the Parent or in connection with the
management of the affairs of the Company.
($)
Salary(1)
Marco Sala
Taxable
Benefits(2)
Pension(3)
Other(4)
Total
Fixed Pay
STI(5)
LTI(6)
Total
Variable Pay
Total(7)
2021
2020
1,146,352
1,669,388
1,756,340
979,998
280,988
1,195,884
—
—
4,572,080
3,594,814
—
2,456,870
—
7,939,504
3,594,814
7,939,504
8,166,894
10,396,374
Max Chiara
2021
2020
800,000
453,846
93,552
294,711
10,150
500,000
1,403,702
1,365,000
—
754
500,000
1,249,311
—
2,485,665
1,365,000
2,485,665
2,768,702
3,734,976
(1) Marco Sala’s annual salary as CEO was $1,000,000 paid monthly, of which 70% is paid in GBP and 30% in Euros, both of which are converted using fiscal
year-to-date exchange rates. In addition to base salary, the amount includes true-up payments related to foreign currency fluctuations and tax equalization, per
his employment contract. Marco Sala’s 2020 salary also reflects a 50% reduction for the April 2020 to September 2020 period.
Max Chiara’s annual salary is $800,000 paid bi-weekly. He joined the Company in April 2020; therefore, his 2020 salary reflects a pro-rated annual amount as
well as a 30% reduction for the April 2020 to September 2020 period.
(2) Taxable benefits include the following:
($)
Marco Sala
2021
2020
Max Chiara
2021
2020
Housing(a)
Car Benefit
Meals &
Travel
Allowances
Insurance(b)
Tax(c)
Other (d)
Total Taxable
Benefits
945,247
17,762
—
—
23,352
22,959
—
—
7,722
7,335
—
—
4,706
4,569
1,932
5,529
688,361
228,363
—
—
—
—
91,620
289,182
1,669,388
280,988
93,552
294,711
(a) The 2021 housing benefit represents Marco Sala’s housing allowance payment, which is paid once every three years per Marco Sala's Italian employment
agreement.
(b) Includes health and life insurance.
(c) Represents tax equalization related to long-term incentive and allowances as well as tax preparation services.
(d) Includes benefits paid to Max Chiara for costs incurred to re-locate from his prior residence to Rhode Island as required for his employment, as well as his
pro-rated perquisite.
(3) Marco Sala's pension includes base pension contributions, severance and employer social tax contributions in respect of his Italian service agreement. Marco
Sala’s 2020 pension includes a $766,717 pension contribution related to his 2019 annual bonus which was paid in 2020.
Max Chiara's pension includes employer contributions to his United States defined contribution 401(k) plan.
(4) The amount relates to the first and second installments of a $2.0 million bonus as part of Max Chiara's offer of employment to compensate for his forfeited
remuneration at his previous employer, which is to be paid in four equal installments as follows: (1) within 30-days of his employment start date; and (2) on each
of the first, second and third anniversaries of his employment start date. He must remain employed with the Company through the applicable payment date to
receive each installment.
(5) This amount represents the annual bonus earned for the annual performance period ended 2021 paid in 2022. Marco Sala’s amount also includes the estimated
true-up payments related to foreign currency fluctuations and tax equalization, per his employment contract. The Committee cancelled the annual performance-
based bonus program in 2020; therefore, no bonus was earned in 2020.
(6) Total long-term incentive is as follows:
Performance Share
Units(a)
Restricted Share
Units(b)
Co-Investment
Units (c)
Co-Investment
Options (c)
Total LTI
Shares
($)
Shares
($)
Shares
($)
Shares
($)
Shares
($)
Marco Sala
2021
2020
Max Chiara
2021
2020
—
—
—
—
—
—
—
—
—
—
277,508
7,939,504
—
—
86,881
2,485,665
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
277,508
7,939,504
—
—
86,881
2,485,665
(a) Marco Sala’s 2021 amount reflects 0% performance achievement subject to the 2019 through 2021 performance period, therefore no shares will vest
under this plan. The 2020 amount reflects 0% performance achievement subject to the 2018 through 2020 performance period, therefore no shares
vested under this plan.
(b) The 2020 amount reflects the number of restricted share units granted on November 6, 2020, of which 50% of the restricted share units vested on
December 31, 2021 and the remaining 50% vest on December 31, 2022, subject to continued service through the applicable vesting dates. The 2020
amount has been updated to reflect the number of units vested on December 31, 2021, multiplied by $28.91, the statutory stock price on the date of vest;
and number of units expected to vest on December 31, 2022, multiplied by $28.31, the three-month average closing stock price ending December 31,
2021.
(c) The 2021 amount for Marco Sala reflects 0% performance achievement subject to the 2018 through 2020 performance period, therefore no shares vested
under this plan.
(d) Details on share price appreciation is included in “Interests and vesting criteria of awards made during the financial year” hereafter.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
(7) Marco Sala's total remuneration reflects all remuneration related to his employment contract with the Parent, and for the avoidance of doubt, under his
employment contract with Lottomatica S.p.A. which merged with and was absorbed by IGT Lottery S.p.A. (formerly Lottomatica Holding S.r.l.), effective
December 1, 2018.
Performance against performance conditions for the annual bonus program (audited)
Annual bonuses under the short-term incentive (“STI”) compensation plan (“STIP”) are earned by reference to the
financial year and paid in March following the end of the financial year.
The Committee reviews the performance measures and targets of the STIP annually to evaluate whether these
measures remain appropriately aligned to the Company’s overall business strategy. Payment to the Executive
Directors under the 2021 STIP was based on both predetermined financial performance metrics, including
Consolidated Operating Income (“OI”) (excluding Purchase Price Accounting), Adjusted Consolidated Earnings
Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), and Adjusted Consolidated Net Debt, and
individual Management by Objectives (“MBOs”).
Target payments to Marco Sala continue to be based on 150% of his salary with a maximum opportunity of 300% of
base salary. The table below sets out the 2021 STIP financial metrics and actual performance and the bonuses
accruing in 2021 for Marco Sala:
($ in millions)
Financial Performance Measures
Adjusted Consolidated OI
Adjusted Consolidated EBITDA
Adjusted Consolidated Net Debt
Personal Performance Measures
MBOs
Weighting
Threshold
Target
Maximum
2021
Performance
Payout %
644.0
1,239.2
6,489.0
715.5
1,376.9
6,331.0
787.0
1,514.6
6,173.0
25%
25%
30%
20%
200%
200%
200%
150%
Payout as % of Target
Payout as % of Maximum
50.0%
50.0%
60.0%
30.0%
190.0%
95.0%
Target payments to Max Chiara are based on 87.5% of his salary with a maximum opportunity of 175% of his base
salary. The table below sets out the 2021 STIP financial metrics and actual performance and the bonuses accruing
in 2021 for Max Chiara:
($ in millions)
Financial Performance Measures
Adjusted Consolidated OI
Adjusted Consolidated EBITDA
Adjusted Consolidated Net Debt
Personal Performance Measures
MBOs
Weighting
Threshold
Target
Maximum
2021
Performance
Payout %
644.0
1,239.2
6,489.0
715.5
1,376.9
6,331.0
787.0
1,514.6
6,173.0
25%
25%
30%
20%
200%
200%
200%
175%
Payout as % of Target
Payout as % of Maximum
50.0%
50.0%
60.0%
35.0%
195.0%
97.5%
Performance against performance conditions for the LTIP vesting (audited)
Performance share units
The amount included in performance share units of the 2021 single total figure of remuneration reflects the
performance share units granted in 2019. Vesting was dependent on performance over three financial years ended
on December 31, 2021 and continued service until April 1, 2022 for 50% of the units earned and April 1, 2023 for the
remaining 50% of units earned. Given the impact of COVID-19 on the Company’s financial results, threshold
performance for vesting was not achieved and the Committee did not use discretion to vest any portion of the 2019
performance share units. No shares were earned in respect of this performance period; therefore, no value has
been realized related to share price appreciation.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
The performance achieved against the performance targets is shown below:
($ in millions)
2019 - 2021
Adjusted Cumulative EBITDA
Adjusted Net Debt
EBITDA/Net Debt Matrix Result
Relative TSR Modifier
Performance results (% of target)(1)
Total units earned (% of maximum)(2)
Threshold
<25th
7,668
5,014
Target
5,420
7,368
60th
Maximum
Payout %
5,691
7,068
>75th
—%
—%
—%
119.8%
—%
—%
(1) The performance results weighted as the product of (a) the Adjusted EBITDA and Net Debt Payment Matrix (0.0%) multiplied by (b) relative Total Shareholder
Return percentile payout (119.8%).
(2) The maximum number of shares to be earned under the plan is 145% of target.
Performance against performance conditions for the Co-Investment Plan (audited)
The amount relating to the co-investment award in the 2021 single total figure of remuneration reflects the
performance share units and performance share options granted to Marco Sala under the co-investment
agreements entered into with the Parent in May 2018 (“2018 Co-Investment Agreement”). The purpose of the 2018
Co-Investment Agreement was to focus Marco Sala on the strategic and business objectives of the Company as
well as further aligning the interests of Marco Sala with those of the Company’s shareholders. Under the agreement,
the Parent agreed to match Marco Sala’s existing ownership of 345,000 ordinary shares in the Parent. The 345,000
ordinary shares were to be comprised of up to 172,500 ordinary shares and 172,500 options for ordinary shares, so
long as the following performance conditions were met:
•
Absolute TSR is equal to or greater than 20% over the three-year performance period (the initial price of $28.32
is equal to the 20-trading-days average share price ending on the date of grant, and the final price is equal to
the 60-trading-days-average share price ending on the approval of the Parent’s 2020 financial statements at the
2021 AGM);
• Marco Sala’s continued ownership of 345,000 ordinary shares during the three-year performance period;
• Marco Sala remains an Executive Director of the Parent until the shareholders approve the Parent’s 2020
financial statements at the 2021 AGM; and
• Marco Sala’s agreement to re-invest 50% of the total committed and awarded shares (considering also cash
proceeds for exercised share options, net of tax) in the next three-year co-investment plan if in 2021 he is
confirmed as an Executive Director of the Parent for another three-year mandate.
During the financial period ended 2020, the Committee determined that the financial conditions related to Absolute
TSR had not been met. Accordingly, on May 15, 2021, all performance share units and performance share options
subject to the 2018 Co-Investment Award agreement were cancelled.
Interests and vesting criteria of awards made during the financial year (audited)
LTIP - Performance share units (audited)
Performance share units were not granted in 2020 due to challenges in setting forward-looking performance metrics
amidst the uncertainty due to the COVID-19 pandemic. As a result, two LTI awards were approved by the
Committee in 2021 pursuant to which performance share units were granted to the Executive Directors. In
particular, the LTI awards to Marco Sala reflect the extraordinary efforts demonstrated and results achieved by the
Company during the COVID-19 pandemic, and are designed to motivate performance in support of rapid post-
pandemic recovery.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
2021-2022 LTI awards - Performance share units
The first award will vest 50% in 2023 and 2024, respectively, based on cumulative performance over the 2021-2022
period and continued service through the vesting date. The details of these awards are included in the table below:
Executive Director
Marco Sala
Max Chiara
Type of Award
Performance Share
Units
Performance Share
Units
Maximum
Units
204,405
121,390
Price on
Grant Date
($)
Face Value on
Grant Date(1)
($)
Share Price
Appreciation(2)
($)
22.70
22.70
4,639,994
1,146,712
2,755,553
680,998
(1) The face value on grant date is calculated as the maximum number of units which could be earned under the award times the Price on Grant Date.
(2) Share price appreciation is calculated as the three-month ending share price as of December 31, 2021, $28.31, less the Price on Grant Date, $22.70, multiplied
by the maximum number of units which could be earned. The Committee has not exercised discretion related to share price appreciation.
The vesting of the performance share units under the 2021-2022 LTI awards is tied to the three performance
metrics based on performance in 2021 through to 2022 as follows.
•
•
•
Two-Year Cumulative Consolidated Adjusted EBITDA
Two-Year Cumulative Consolidated Free Cash Flow
Relative TSR
Profitability measure
Use of cash
Performance against peers
Two-Year Cumulative Consolidated Adjusted EBITDA (“Two-Year Adjusted EBITDA”)
The Two-Year Adjusted EBITDA performance metric refers to the cumulative Adjusted EBITDA of the Company’s
continuing operations as reported in the annual public press releases issued by the Company for the years ended
December 31, 2021 and 2022. The performance share units subject to this vesting criteria may be greater than,
equal to, or less than the original amount of target based on actual performance, relative to the target as follows:
Two-Year Adjusted EBITDA Target
% Vesting
< 95%
—%
95%
20%
100%
100%
> 105%
116%
The Committee may exercise its right to make reasonable adjustments in order to preserve the incentives intended
at the time of grant.
Two-Year Cumulative Consolidated Free Cash Flow (“Two-Year Free Cash Flow”)
The Two-Year Free Cash Flow performance metric refers to the cumulative consolidated free cash flow from the
Company’s continuing operations as reported in the annual public press releases issued by the Company for the
years ended December 31, 2021 and 2022. The performance share units subject to this vesting criteria may be
greater than, equal to, or less than the original amount of target based on actual performance, relative to the target
as follows:
Two-Year Free Cash Flow Target
% Vesting
< 92.5%
—%
92.5%
20%
100%
100%
> 115%
116%
The Committee may exercise its right to make reasonable adjustments in order to preserve the incentives intended
at the time of grant.
Relative TSR Payment Factor
The Relative TSR Payment Factor is based on relative TSR for the companies included in the Russell MidCap Index
as of the first day of the measurement period. The measurement period is the period commencing on January 1,
2021 and ending on December 31, 2022. After the Two-Year Adjusted EBITDA and Two-Year Free Cash Flow
performance metrics are calculated, the TSR modifier is applied to the calculated vestings.
Performance Factor
The Performance Factor is the product of the Two-Year Adjusted EBITDA and Two-Year Free Cash Flow multiplied
by the Relative TSR Payment Factor. Actual vestings under the plan can range from 0% to 145% if all maximum
targets are met.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
2021-2023 LTI awards - Performance share units
The second award will vest 50% in 2024 and 2025, respectively, based on cumulative performance over the
2021-2023 period and continued service through the vesting date. The details of these awards are included in the
table below:
Executive Director
Marco Sala
Max Chiara
Type of Award
Performance
Share Units
Performance
Share Units
Maximum
Units
306,608
182,085
Price on
Grant Date
($)
Face Value on
Grant Date(1)
($)
Share Price
Appreciation(2)
($)
22.70
22.70
6,960,002
1,720,071
4,133,330
1,021,497
(1) The face value on grant date is calculated as the maximum number of units which could be earned under the award times the Price on Grant Date.
(2) Share price appreciation is calculated as the three-month ending share price as of December 31, 2021, $28.31, less the Price on Grant Date, $22.70, multiplied
by the maximum number of units which could be earned. The Committee has not exercised discretion related to share price appreciation.
The vesting of the performance share units under the 2021-2023 LTI awards is tied to the three performance
metrics based on performance in 2021 through to 2023 as follows.
•
•
•
Three-Year Cumulative Consolidated Adjusted EBITDA
Three-Year Cumulative Consolidated Free Cash Flow
Relative TSR
Profitability measure
Use of cash
Performance against peers
Three-Year Cumulative Consolidated Adjusted EBITDA (“Three-Year Adjusted EBITDA”)
The Three-Year Adjusted EBITDA performance metric refers to the cumulative Adjusted EBITDA of the Company’s
continuing operations as reported in the annual public press releases issued by the Company for the years ended
December 31, 2021, 2022 and 2023. The performance share units subject to this vesting criteria may be greater
than, equal to, or less than the original amount of target based on actual performance, relative to the target as
follows:
Three-Year Adjusted EBITDA Target
% Vesting
< 95%
—%
95%
20%
100%
100%
> 105%
116%
The Committee may exercise its right to make reasonable adjustments in order to preserve the incentives intended
at the time of grant.
Three-Year Cumulative Consolidated Free Cash Flow (“Three-Year Free Cash Flow”)
The Three-Year Free Cash Flow performance metric refers to the cumulative consolidated free cash flow from the
Company’s continuing operations as reported in the annual public press releases issued by the Company for the
years ended December 31, 2021, 2022 and 2023. The performance share units subject to this vesting criteria may
be greater than, equal to, or less than the original amount of target based on actual performance, relative to the
target as follows:
Three-Year Free Cash Flow Target
% Vesting
< 92.5%
—%
92.5%
20%
100%
100%
> 115%
116%
The Committee may exercise its right to make reasonable adjustments in order to preserve the incentives intended
at the time of grant.
Relative TSR Payment Factor
The Relative TSR Payment Factor is based on relative TSR for the companies included in the Russell MidCap Index
as of the first day of the measurement period. The measurement period is the period commencing on January 1,
2021 and ending on December 31, 2023. After the Three-Year Adjusted EBITDA and Three-Year Free Cash Flow
performance metrics are calculated, the TSR modifier is applied to the calculated vestings.
Performance Factor
The Performance Factor is the product of the Three-Year Adjusted EBITDA and Three-Year Free Cash Flow
multiplied by the Relative TSR Payment Factor. Actual vestings under the plan can range from 0% to 145% if all
maximum targets are met.
Annual Report and Accounts 2021
Page | 80
Directors’ Remuneration Report
CEO Co-Investment Plan (audited)
In 2021, the Company entered into a CEO Co-Investment Plan with Marco Sala. Marco Sala’s appointment as
Executive Chair of the Board, effective January 24, 2022, did not impact any of the vesting conditions for awards
granted under the plan. The CEO Co-Investment Plan is intended to align Marco Sala’s interests with those of the
Company’s shareholders. Under the CEO Co-Investment Plan, the Company matched Marco Sala’s commitment to
hold his ordinary shares on a 1:1 basis (up to 470,000 shares), comprising a matching grant of up to 345,000
shares, awarded half in performance share units and half in share options on May 11, 2021, and a matching grant of
up to 125,000 shares awarded in performance share units on July 28, 2021.
The vesting conditions that apply to all performance share units and options awarded under the CEO Co-Investment
Plan are as follows:
• Marco Sala remaining a director of the Company until the shareholders approve the Company’s 2023 financial
•
statements at the AGM in 2024; and
If requested to do so by the Committee, Marco Sala’s agreement to re-invest 50% of the total committed and
awarded shares (considering also cash proceeds for exercised share options) (after tax) in the next three-year
co-investment plan in 2024 if he is confirmed as a director of the Company for another three-year mandate.
In addition, the 345,000 shares awarded on May 11, 2021 are subject to Marco Sala’s continued ownership of at
least 345,000 ordinary shares during the three-year performance period, while the 125,000 shares awarded on July
28, 2021 are subject to the condition that Marco Sala continue to own at least 470,000 ordinary shares during the
three-year performance period.
The number of performance share units and options awarded under the CEO Co-Investment Plan that vest will
depend on the satisfaction of the following market and performance conditions:
Performance conditions
Absolute TSR
Consolidated Free Cash Flow
Consolidated Adjusted EBITDA
Deleverage Achievement
Portfolio Analysis Achievement
Diversity and Inclusion
Type of Condition
Market
Performance
Performance
Performance
Performance
Performance
Target Performance
Shares subject to
Metric
86,250
64,688
21,562
62,500
31,250
31,250
297,500
Target Performance
Options subject to
Metric
86,250
64,688
21,562
172,500
Absolute TSR
Absolute TSR is equal to or greater than 20% over the three-year performance period (the initial price of $17.18 is
equal to the 20-day trading average stock price ending on the date of grant, and the final price is equal to the 60-
trading-days-average stock price ending on the approval of the Company’s 2023 financial statements at the AGM in
2024).
Consolidated Free Cash Flow (“Three-Year Free Cash Flow”)
The Three-Year Free Cash Flow performance metric refers to the cumulative consolidated free cash flow from the
Company’s continuing operations as reported in the annual public press releases issued by the Company for the
years ended December 31, 2021, 2022 and 2023. The performance share units and performance options subject to
this vesting criteria may be equal to or less than the original amount of target based on actual performance, relative
to the target as follows:
Three-Year Free Cash Flow Target
% Vesting
< 92.5%
—%
92.5%
20%
100%
100%
The Committee may exercise its right to make reasonable adjustments in order to preserve the incentives intended
at the time of grant.
Annual Report and Accounts 2021
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Directors’ Remuneration Report
Consolidated Adjusted EBITDA (“Three-Year Adjusted EBITDA”)
The Three-Year Adjusted EBITDA performance metric refers to the cumulative Adjusted EBITDA of the Company’s
continuing operations as reported in the annual public press releases issued by the Company for the years ended
December 31, 2021, 2022 and 2023. The performance share units and performance options subject to this vesting
criteria may be equal to or less than the original amount of target based on actual performance, relative to the target
as follows:
Three-Year Adjusted EBITDA Target
% Vesting
< 95%
—%
95%
20%
100%
100%
The Committee may exercise its right to make reasonable adjustments in order to preserve the incentives intended
at the time of grant.
Deleverage Achievement
The Deleverage Achievement metric refers to the leverage ratio, being the ratio of the Company’s Net Debt as of
December 31, 2023 divided by Company’s Adjusted EBITDA for the twelve-month period ending on December 31,
2023, as reported in the annual public press release of the financial results issued by the Company for the year
ended December 31, 2023. Actual shares earned subject to the Deleverage Achievement condition may be equal to
or less than the target amount based on actual performance relative to the target leverage ratio as follows:
Deleverage Achievement Target
% Vesting
> 107.5%
—%
107.5%
20%
100%
100%
Portfolio Analysis Achievement
The Portfolio Analysis Achievement metric refers to a process led to analyze the Company’s portfolio of business
within the business segments to identify opportunities to create incremental shareholder value during the years
ended December 31, 2021, 2022 and 2023. Actual shares earned subject to the Portfolio Analysis Achievement will
be equal to the target amount if the condition has been satisfied, as determined at the sole discretion of the
Committee.
Diversity and Inclusion
The Diversity and Inclusion metric refers to a process led to embed diversity and inclusion in the Company’s
corporate culture, including developing long-term Company goals for diverse groups of employees in leadership
roles and other key relevant roles within the Company, during the years ended December 31, 2021, 2022 and 2023.
Actual shares earned subject to the Diversity and Inclusion condition will be equal to the target amount if the
condition has been satisfied, as determined at the sole discretion of the Committee.
Grant of performance share units
The performance share unit awards granted under the CEO Co-Investment Plan in 2021 have a per share market
price on the date of grant and grant date fair value of the shares as outlined in the table below:
Type of Condition
Market
Performance
Performance
Grant Date
May 11, 2011
May 11,2011
July 28, 2021
Maximum
units
86,250
86,250
125,000
Price on Grant Date
($)
20.37
20.37
19.87
Face Value on
Grant Date(1)
($)
1,756,913
1,756,913
2,483,750
Share Price
Appreciation(2)
($)
684,825
684,825
1,055,000
(1) The face value on grant date is calculated as the maximum number of units which could be earned under the award times the Price on Grant Date.
(2) Share appreciation is calculated as the three-month ending share price as of December 31, 2021, $28.31, less the Price on Grant Date, multiplied by the
maximum number of units which could be earned. The Committee has not exercised discretion related to share price appreciation.
The performance share unit awards granted under the CEO Co-Investment Plan in 2021 will vest on the date the
shareholders approve the Company’s 2023 financial statements at the AGM in 2024.
Annual Report and Accounts 2021
Page | 82
Directors’ Remuneration Report
Grant of share options
The 172,500 options granted Marco Sala pursuant to the CEO Co-Investment Plan on May 11, 2021 have an
exercise price of $20.37 and the options will expire on the fourth anniversary of the vesting date.
Type of Condition
Market
Performance
Grant Date
May 11, 2011
May 11,2011
Maximum
units
86,250
86,250
Price on Grant Date
($)
20.37
20.37
Face Value on
Grant Date(1)
($)
1,756,913
1,756,913
Share Price
Appreciation(2)
($)
684,825
684,825
(1) The face value on grant date is calculated as the maximum number of units which could be earned under the award times the Price on Grant Date.
(2) Share appreciation is calculated as the three-month ending share price as of December 31, 2021, $28.31, less the Price on Grant Date, multiplied by the
maximum number of units which could be earned. The Committee has not exercised discretion related to share price appreciation.
Pensions (audited)
Marco Sala
Marco Sala participates in the Company’s Italian pension funds at the same rates eligible employees participate, the
rate of which may be different by entry date into the plan and job level. The amount in the single-figure table reflects
Marco Sala's Italian pension under his service agreement with Lottomatica S.p.A. which merged with and was
absorbed by IGT Lottery S.p.A., formerly Lottomatica Holding S.r.l. (“Lottomatica”), effective December 1, 2018, and
the Italian integrative pension fund, both of which are structured as a contribution scheme. Under the pension fund
subject to his service agreement, the employee contribution rate is equal to 10.19% and the employer quota is
approximately 27% of base salary, allowances and annual bonus. Marco Sala’s contributions subject to the Italian
integrative pension fund (PREVIP) are levied at a rate of 3.45% and employer contributions are 8.55% of base
salary. Both pension funds’ contribution rates are applied to Marco Sala’s remuneration earned under both of his
service agreements with the Parent and IGT Lottery S.p.A. as disclosed in the single figure table. Employer
contributions are allocated to the Parent and IGT Lottery S.p.A. based on remuneration earned under such
agreement.
In addition, the Company makes mandatory contributions to PREVIP for TFR (Italy’s severance program) at a
6.90% rate of Marco Sala’s base salary, allowances and annual bonus earned under both of his service
agreements. At the time Marco Sala’s employment ends with the Company, he may receive this benefit as a lump
sum payment or keep the balance in PREVIP. As of December 31, 2021, there was no accrual for an Italian
severance payment for Marco Sala.
The estimated retirement date for Marco Sala is in January 2027, which, in accordance with Italian regulations,
could be postponed to March 2027.
Max Chiara
Max Chiara is eligible to participate in the Company's U.S. defined contribution 401(k) plan, which is offered to all
U.S. employees. IGT provides a 3.5% company match on the first 6% of employee contributions as follows: 100%
match on the first 1% of employee contributions and 50% match on the next 5% of employee contributions, subject
to the U.S. Internal Revenue Services (“IRS”) limits then in effect, which was $19,500 in 2021 with an additional
"catch-up" contribution of $6,500 for employees age 50 or older as of December 31, 2021.
Annual Report and Accounts 2021
Page | 83
Directors’ Remuneration Report
Non-Executive Directors' remuneration as a single figure (audited)
The remuneration of the Non-Executive Directors for the financial years ended December 31, 2021 and 2020 is set
out below and relates to his/her performance of his/her role as a Non-Executive Director of the Parent.
($)
Lorenzo Pellicioli (Chairperson then)(4)
Retainers
Other Fees(1)
Restricted Share
Units(2)
Total(3)
2021
2020
150,000
150,000
James McCann (Vice Chairperson and Lead Independent Director)
Paget Alves(5)
Beatrice Bassey(6)
Alberto Dessy(7)
Marco Drago
Heather McGregor
Samantha Ravich
2021
2020
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Vince Sadusky(8)
2021
2020
Gianmario Tondato Da Ruos
2021
2020
140,000
140,000
48,974
36,026
78,077
119,619
104,000
100,000
100,000
100,000
100,000
100,000
100,000
140,000
140,000
130,000
130,000
—
—
—
20,478
9,441
—
—
—
5,377
—
—
—
—
—
—
—
6,720
—
—
311,778
579,995
274,352
510,391
461,778
729,995
414,352
670,869
—
58,415
—
464,008
249,411
464,008
249,411
464,008
249,411
464,008
249,411
464,008
249,411
464,008
249,411
464,008
36,026
542,085
369,030
573,385
349,411
564,008
349,411
564,008
349,411
564,008
389,411
610,728
379,411
594,008
(1) These figures primarily relate to reimbursable meal and travel expenses for attending Board meetings in the U.K.
(2) Amounts for 2021 reflect the number of restricted share units granted on May 18, 2021 multiplied by $28.31, the three-month ending share price as of
December 31, 2021. The restricted share units vest on the date of the 2022 AGM. Amounts for 2020 have been updated to reflect the number of restricted share
units granted on June 25, 2020 multiplied by the share price on the vesting date, $20.37. Beatrice Bassey’s 2020 restricted share units also includes a pro-rated
award for her services from March 20, 2020 to June 25, 2020, the amount of which is equal to the number of shares granted times the share price on the
vesting date, $8.78.
(3) Non-Executive Directors are not eligible to receive variable remuneration; therefore, Total remuneration equals fixed remuneration.
(4) Effective January 24, 2022, Lorenzo Pellicioli retired as Chairperson of the Board and became a Non-Executive Director.
(5) Paget Alves stood down from his position as a Director at the conclusion of the 2020 AGM and his term ended on June 25, 2020. He received a pro-rated
amount of compensation for his services during the year.
(6) Beatrice Bassey stood down from her position as a Director at the conclusion of the 2021 AGM and her term ended on May 11, 2021. She received a pro-rated
amount of compensation for her services during the year.
(7) Alberto Dessy's fees include a 4% stipend related to Italian regulatory requirements.
(8) Effective January 24, 2022, Vince Sadusky was appointed CEO and Executive Director.
Annual Report and Accounts 2021
Page | 84
Directors’ Remuneration Report
Payments to past Directors and payments for loss of office (audited)
Beatrice Bassey retired as a member of the Board on May 11, 2021. Her fees and restricted share units awarded in
2020, which vested on May 11, 2021 in accordance with the terms of the award agreement, have been included in
the Non-Executive Directors' remuneration as a single figure table and share interests table of this report. Beatrice
Bassey has not received any other remuneration or payments upon ceasing to be a Director.
There have been no other payments of money or other assets made to any Director or for loss of office, in each
case, at any time during the financial year ended December 31, 2021.
Statement of Director's shareholding and share interests (audited)
Executive Directors’ interests in share awards (audited)
The table below sets out details of the interests of the Executive Directors in share awards for the year ended
December 31, 2021:
Awards Held
at January
1, 2021
Granted/
Performance
Adjustments
During the
Year(1)
Shares
Vested
During the
Year
Awards Held
at December
31, 2021
Market Price
at Grant Date
End of
Performance
Period
35,254
172,500
212,927
277,508
—
—
—
(172,500)
(212,927)
—
172,500
352,423
(35,254)
—
—
(138,754)
—
—
—
—
—
138,754
172,500
352,423
$20.63
$30.12
$13.86
$9.08
$20.37
$22.70
2019
2021
2021
Not Applicable
2024
2022 & 2023
Date of Grant
Marco Sala
May 23, 2017
May 15, 2018
Jul 29, 2019
Nov 6, 2020
May 11, 2021
May 18, 2021
Jul 28, 2021
—
125,000
—
125,000
$19.87
2024
Max Chiara
Nov 6, 2020
May 18, 2021
86,881
—
—
209,293
(43,440)
—
43,441
209,293
$9.08
$22.7
Not Applicable
2022 & 2023
(1) Decreases relate to adjustments for actual performance achieved.
Vesting Date
2020 & 2021
2021
2022 & 2023
2021 & 2022
2024
2023, 2024 &
2025
2024
2021 & 2022
2023, 2024 &
2025
Executive Directors’ interests in share options (audited)
The table below sets out details of the interests of the Marco Sala in share options which are outstanding as of
December 31, 2021:
Awards
Held at
January
1, 2021
250,000
172,500
—
Granted/
Performance
Adjustments
During the
Year (1)
—
(172,500)
172,500
Exercised
During
the Year
—
—
—
Expired
During
the Year
—
—
—
Awards
Held at
December
31, 2021
250,000
—
172,500
Date of
Grant
Nov 30, 2015
May 15, 2018
May 11, 2021
(1) Decreases relate to adjustments for actual performance achieved.
(2) The market price at grant date is equal to the exercise price of the share option.
Exercise
Price(2)
$15.53
$30.12
$20.37
End of
Performance
Period
2017
2021
2024
Vesting
Date
2018
2021
2024
Expires
On
2022
2024
2028
Max Chiara does not have any interests in share options as of December 31, 2021.
Annual Report and Accounts 2021
Page | 85
Directors’ Remuneration Report
Executive Directors’ total share interests (audited)
The table below shows the Executive Directors’ share interests as of December 31, 2021, including shares held by
connected persons.
Executive Director
Marco Sala
Max Chiara
Restricted Share
Units
138,754
43,441
Performance Share
Units
649,923
209,293
Share options
422,500
—
Total of Outstanding
Shares and Options
1,211,177
252,734
Shares Beneficially
Owned Outright(1)
1,396,133
25,863
(1) All shareholding ownership guideline requirements have been complied with to the extent applicable.
Non-Executive Directors’ share interests (audited)
The table below shows the Non-Executive Directors’ share interests as of December 31, 2021, unless otherwise
noted, including shares held by connected persons.
Name
Lorenzo Pellicioli
James McCann
Beatrice Bassey(2)
Alberto Dessy
Marco Drago
Heather McGregor
Samantha Ravich
Vince Sadusky(3)
Gianmario Tondato Da Ruos
Restricted Share Units(1)
11,013
9,691
—
8,810
8,810
8,810
8,810
8,810
8,810
Shares Beneficially
Owned Outright
145,658
66,629
28,748
63,755
67,034
28,897
22,667
73,702
62,784
(1) Non-Executive Directors do not have options outstanding.
(2) Beatrice Bassey stood down from her position as a Director at the conclusion of the 2021 AGM and her term ended on May 11, 2021. She does not have any
outstanding equity subject to the Parent's incentive plans. Her beneficial ownership is as of her service end date.
(3) Effective January 24, 2022, Vince Sadusky was appointed CEO and Executive Director.
Share Ownership Guidelines
Executive Directors are required to acquire and maintain shares with a fair market value equal to at least three
times base salary (which is the case for the current CFO, Max Chiara) and a maximum of at least five times base
salary (which is the case for the current CEO, Vince Sadusky). Shares included in the ownership criteria include
shares which are beneficially owned regardless of whether the shares were issued under a Company plan or
purchased on the market, and vested shares held in trust for the benefit of the Executive Director or his family
members. Unearned performance shares do not count towards the ownership criteria until such shares have been
earned. Unvested restricted share units and unexercised share options are not taken into account for purposes of
the guidelines. If the Executive Director has a co-investment agreement, 50% of shares committed to the co-
investment will not be taken into account for purposes of the guidelines.
Executive Directors must hold all of the net settled shares they receive under the LTIP and the co-investment plan
for a period of at least five years from the date of grant. The period expires on the fifth anniversary of the date of
grant, provided the relevant director meets his or her holding requirements under the Share Ownership Guidelines.
Executive Directors are required to hold (i) during the first year post departure, the lower of their respective
shareholding guideline and the actual shareholding immediately prior to departure, and (ii) during the second year
post departure, the lower of 50% of their respective shareholding guideline and the actual shareholding at the start
of the second year post departure.
Beginning November 10, 2020 (or five years after joining the Board if such date is subsequent to November 10,
2020), a Non-Executive Director is expected to hold, for as long as he or she remains on the Board, ordinary shares
of the Parent that have a fair market value equal to at least three times the base annual retainer amount then in
effect for that Non-Executive Director. Unvested restricted share units and unexercised share options are not taken
into account for the purposes of the guidelines. Non-compliant Non-Executive Directors are prohibited from selling
shares of the Parent until they have met their applicable target level of share ownership, excluding any shares sold
to cover any applicable tax withholding requirements or the exercise price of any share options.
Annual Report and Accounts 2021
Page | 86
Directors’ Remuneration Report
The Committee has the discretion to amend the shareholding guidelines at any time.
Each of the Directors are on track to meet the requirements of the share ownership guidelines and their respective
share interests at December 31, 2021 (including shares held by connected persons) are as disclosed in this
Remuneration Report in the section headed “Statement of Director's shareholding and share interests (audited)”
above.
Performance graph and table
Total shareholder return (TSR)
The chart below shows the TSR index for the Company as against the Russell Midcap Index. The Company
considers it appropriate to benchmark its performance to the Russell Midcap Index due to the Company's nature
and size.
(1) TSR calculation utilizes the 60-day average price for the period 60
days before the start dates and end dates of each period for the
Parent's ordinary shares and the Russell Midcap Index; TSR includes
impact of dividend payments.
Total remuneration of the Chief Executive Officer
The table below sets out the total remuneration of the CEO for the financial years ended December 31, 2011 to
2021, inclusive. Please note that Marco Sala was CEO of the Parent from April 7, 2015 to the year ended December
31, 2021 and remains CEO until January 24, 2022, when he assumed the role of Executive Chair. Prior to this time,
he was a director of the Parent's predecessor entities.
Year
2021 ($) (1)
2020 ($)
2019 ($)
2018 ($) (1)
2017 ($)
2016 ($)
2015 ($) (1)
2014 (€)
2013 (€)
2012 (€)
2011 (€)
Total Remuneration
8,166,894
10,396,374
6,498,640
19,487,373
9,238,964
7,553,912
9,646,006
7,155,968
6,884,167
6,428,145
6,167,166
Annual bonus paid as % of
maximum
95%
—%
83%
78%
61%
82%
75%
96%
93%
96%
85%
LTI vested as a % of maximum
(awards actually vested in year)
6%
—%
26%
37%
86%
72%
78%
100%
92%
66%
0% - 2008 LTI
(1) Total remuneration includes a housing allowance paid once every three years subject to his IGT Lottery S.p.A. (formerly Lottomatica) contract.
Annual Report and Accounts 2021
Page | 87
Period EndedIndex ValueTSR PerformanceCompanyRussell Midcap Index29June201531Dec201531Dec201631Dec201731Dec201831Dec201931Dec202031Dec20216080100120140160180200220240260280 Directors’ Remuneration Report
Percentage change in Director and employee remuneration
The following table compares the annual percentage change, year over year, of each Director's remuneration to the
Company's employees as a whole, in all jurisdictions, calculated on a full-time equivalent basis.
Employees(2)
Executive Directors
Marco Sala (CEO then)(3)
Max Chiara (CFO)(4)
Non-Executive Directors
Lorenzo Pellicioli
James McCann
Beatrice Bassey(5)
Alberto Dessy
Marco Drago
Heather McGregor
Samantha Ravich(6)
Vince Sadusky(7)
Gianmario Tondato Da Ruos
Salary and
Fees
4%
2021
Benefits(1)
(8)%
17%
76%
—%
(13)%
(54)%
9%
—%
—%
—%
(5)%
—%
476%
(68)%
—%
—%
—%
—%
—%
—%
—%
—%
—%
Salary and
Fees
(8)%
2020
Benefits(1)
(1)%
(23)%
—%
—%
(17)%
—%
2%
—%
—%
136%
(5)%
—%
9%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
STI(1)
100%
100%
100%
—%
—%
—%
—%
—%
—%
—%
—%
—%
STI(1)
(100)%
(100)%
—%
—%
—%
—%
—%
—%
—%
—%
—%
—%
(1) Non-Executive Directors do not receive benefits or short-term incentives.
(2) Employee percentages exclude payments made to Executive Directors.
(3) Effective January 24, 2022, Marco Sala was appointed Executive Chair of the Board.
(4) Max Chiara joined the Company in April 2020, therefore no change between 2020 and 2019 is reflected in the table above.
(5) Beatrice Bassey was appointed to the Board on March 20, 2020, therefore no change between 2020 and 2019 is reflected in the table above. Beatrice Bassey
stood down from her position as a Director at the conclusion of the 2021 AGM and her term ended on May 11, 2021. The change between 2021 and 2020
reflects her prorate salaries in both years.
(6) Samantha Ravich was appointed to the Board on July 31, 2019 and received a pro-rated amount of compensation for her services in 2019.
(7) Effective January 24, 2022, Vince Sadusky was appointed CEO and Executive Director.
CEO Pay Ratios
The average number of U.K. employees for the financial years ended December 31, 2020 and 2021 were no more
than 250; the Company was therefore exempt from reporting pay ratios in relation to the total remuneration of the
CEO.
Relative importance of spend on pay
The following table shows the year-on-year movement in total remuneration of all employees, compared to the level
of distributions to shareholders by way of dividend and share buyback in respect of the financial years ended
December 31, 2021 and 2020:
(1) The total pay increased 17% in 2021 when compared to 2020, based
on constant 2020 foreign currency rates. The Parent is not aware of
any other extraordinary payments utilizing cash flow or profit. Total Pay
includes wages, benefits, annual bonus,
incentive
compensation and training and other personnel costs. Total Pay in
2021 is calculated at the prior year's foreign exchange rate to 2020
actual Total Pay.
long-term
(2) There were no share buybacks for the financial year ended December
31, 2020.
Following amendments to IGT’s revolving credit facilities agreement
and term loan facility agreement in May 2020, dividends and share
buybacks were prohibited, at least, through June 30, 2021. The
Company announced and initiated a $300 million multi-year share
repurchase program in November 2021, after reinstating quarterly cash
dividend.
Annual Report and Accounts 2021
Page | 88
Period EndingMillions$1,089.6$81.7$932.3$40.920212020Total Pay(1)Distributions toshareholders(2)$0$200$400$600$800$1,000$1,200$1,400 Directors’ Remuneration Report
Implementation of the Remuneration Policy for the year ending December 31, 2022
This section sets out how the Company intends to implement the approved Remuneration Policy (see the
Remuneration Policy section of this Directors' Remuneration Report, which can also be found within our 2020
Annual Report and Accounts (pages 62 to 75) which is available at the Investor Relations section of the Company’s
website (www.IGT.com)) for the financial year ending December 31, 2022.
On January 20, 2022, the Company announced certain changes to the Company’s executive team and the Board.
Effective January 24, 2022, Lorenzo Pellicioli retired as Chairperson and remains a Non-Executive Director. Marco
Sala, CEO then, was appointed Executive Chair of the Board, and Vince Sadusky was appointed CEO and
Executive Director.
Executive Director
Elements
Salary
Implementation
Marco Sala, who was appointed Executive Chair effective January 24, 2022, will receive an
annual salary of $750,000, which is paid 70% in the U.K. in pounds sterling and 30% in Italy in
Euros. This payment arrangement requires periodic true-ups for currency fluctuations to ensure
he is paid $750,000 annually. Marco Sala’s salary was established based on a competitive
market review as well as through consultation with the Committee’s executive compensation
advisors at Mercer.
Vince Sadusky, who was appointed CEO and Executive Director effective January 24, 2022,
will receive an annual salary of $1,500,000. Vince Sadusky’s salary was established based on
a market review of total compensation for like-positions across IGT’s competitive peer group as
well as through consultation with the Committee’s executive compensation advisors at Mercer.
Although Vince Sadusky’s base salary is higher than his predecessor, Marco Sala, their total
cash compensation as CEO remains the same.
Max Chiara will continue to receive an annual salary of $800,000.
Benefits
Pension
Annual Salary 2022
$750,000
$1,500,000
$800,000
Annual Salary 2021
$1,000,000
$—
$800,000
Percentage Change
(25)%
N/A
—%
Marco Sala(1)
Vince Sadusky
Max Chiara
(1) For comparative purposes, the 2021 annual salary for Marco Sala reflects his entitlement as CEO, prior to his new role as
Executive Chair.
Each Executive Director will continue to be eligible to receive certain health, welfare and other
benefits including health and life insurance, tax preparation services, tax equalization, and
housing and car allowances or a cash perquisite allowance in lieu of housing, car or other
allowances.
Marco Sala will continue to participate in the Company’s Italian pension under his service
agreement with IGT Lottery S.p.A (formerly Lottomatica) and the Italian integrative pension
fund, both of which are structured as a contribution scheme. Under the pension fund subject to
his service agreement, the employee contribution rate is equal to 10.19% and the employer
quota is approximately 27% of base salary, allowances and annual bonus. Marco Sala’s
contributions subject to the Italian integrative pension fund are levied at a rate of 3.45% and
employer contributions are 8.55% of base salary. Both pension funds’ contribution rates are
applied to Marco Sala’s remuneration earned under both of his service agreements with the
Parent and IGT Lottery S.p.A. In addition, the Company makes mandatory contributions to
PREVIP for TFR (Italy’s severance program) at a 6.90% rate of Marco Sala’s base salary,
allowances and annual bonus earned under both of his service agreements. Employer
contributions are allocated to the Parent and IGT Lottery S.p.A. based on remuneration earned
under such agreement.
Vince Sadusky will, and Max Chiara will continue to, participate in the Company’s defined
contribution 401(k) plan. IGT provides a 3.5% company match on the first 6% of employee
contributions.
Annual Report and Accounts 2021
Page | 89
Directors’ Remuneration Report
Elements
Annual Bonus
Implementation
Each Executive Director will continue to participate in the Company’s annual bonus for fiscal
year 2022, with a maximum annual bonus award opportunity as set out below:
• Marco Sala - 232.75% of base salary
•
Vince Sadusky - 167% of base salary
• Max Chiara - 175% of base salary
The Company’s annual bonus for fiscal year 2022 is expected to be based on a mix of
predetermined company financial metrics (80%) - Consolidated Operating Income (excluding
purchase price accounting) (25%), Consolidated EBITDA (25%), and Consolidated Net Debt
(30%) - and individual performance metrics (20%), as approved by the Committee to ensure
they appropriately align to the overall business strategy.
LTIP
Full details of the metrics and achievement will be disclosed retrospectively.
The Committee expects to award performance-based shares for a 2022-2024 period
performance cycle, with a target grant date value as set out below:
• Marco Sala - $2.0 million
•
• Max Chiara - $2.0 million
Vince Sadusky - $2.25 million
The plan is expected to be 100% based on predetermined financial performance targets
(Consolidated Adjusted EBITDA and Consolidated Free Cash Flow) aligned with the
Company's long-term strategy and modified by the Company's relative TSR performance
compared to the Russell Midcap Index. Actual payout opportunity will be based on
performance achievement against the targets and will range between 0% to 145% of target
shares.
Co-investment
plan
Full details of the metrics and achievement will be disclosed retrospectively.
In light of the co-investment plan entered into with Marco Sala in 2021, new co-investment plan
is not expected to be entered into with Marco Sala in 2022.
The Committee will determine whether co-investment plans will be entered into with the other
Executive Directors, and if so, the terms of such arrangements.
Marco Sala
Subsequent to the approval of the Remuneration
Policy at the 2021 AGM, and in connection with the
restructuring of Marco Sala’s service arrangement
with the Parent due to his new role as Executive
Chair of the Board, the Committee agreed upon a
fixed payment amount of $7.5 million as consideration
of Marco Sala agreeing
to comply with post-
employment restrictive covenants which continue for
24 months after cessation of service, in accordance
with the terms of the Remuneration Policy on loss of
office.
and
extinguishes Marco Sala’s previous contractual
entitlements relating to restrictive covenants.
arrangement
supersedes
This
Vince Sadusky
Vince Sadusky was granted performance share units
with a grant date of January 24, 2022, a target grant
date value of $2.25 million and subject to the same
performance metrics and vesting schedule applicable
to the 2021 performance share units awarded to the
Parent’s former CEO, Marco Sala, for the 2021-2023
performance period. He was also granted a one-time
recruitment award of restricted share units with a
grant date of January 24, 2022, and a grant date
value of $7.5 million with an opportunity to earn up to
an additional 350,000 shares depending on the share
price of the Parent’s ordinary shares for the 60 days
immediately preceding and ending on the vesting
date, which is three years after the grant date.
Annual Report and Accounts 2021
Page | 90
Directors’ Remuneration Report
Non-Executive Directors
Elements
Fees
Implementation
As of the date of this Directors' Remuneration Report, the fees of Chairperson and other Non-
Executive Directors remain unchanged from the year ended December 31, 2021, as set out
below.
The Committee retains discretion to review the fees of the Non-Executive Directors for the
remainder of the financial year ending December 31, 2022, and any changes to fees will be in
line with the Remuneration Policy.
Non-Executive Director
with additional fees related to service for
Chairperson
Lead Independent Director
Chair of Audit Committee
Chair of Compensation Committee
Chair of Nominating and Corporate Governance Committee
2022
$100,000
2021
$100,000
$50,000
$20,000
$40,000
$30,000
$20,000
$50,000
$20,000
$40,000
$30,000
$20,000
Equity awards
The Committee has reviewed the terms of the Non-Executive Directors’ restricted share unit
award agreement and has determined that the agreement will operate in a broadly similar
manner to the year ended December 31, 2021.
Non-Executive Director
with additional restricted share units related to service for
Chairperson
Lead Independent Director
Annual Grant
Value 2022
$200,000
Annual Grant
Value 2021
$200,000
$50,000
$20,000
$50,000
$20,000
This Directors’ Remuneration Report was approved
by the Board on March 10, 2022 and signed on its
behalf by:
Gianmario Tondato Da Ruos
Chairperson of the Compensation Committee
March 16, 2022
Annual Report and Accounts 2021
Page | 91
Independent Auditors’ Report
Independent auditors’ report to the
members of International Game
Technology PLC
Report on the audit of the financial statements
Opinion
In our opinion:
•
•
•
•
International Game Technology PLC’s group financial statements and parent financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of the parent’s affairs as at 31 December 2021 and of the group’s
profit and the group’s cash flows for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
the parent financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which
comprise: the Consolidated Balance Sheet as at 31 December 2021; the Parent Balance Sheet as at 31 December 2021; the
Consolidated Statement of Operations, the Consolidated Statement of Comprehensive Income (Loss), the Consolidated
Statement of Cash Flows, the Consolidated Statement of Shareholders' Equity, and the Parent Statement of Shareholders'
Equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting
policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Annual Report and Accounts 2021
Page | 92
Independent Auditors’ Report
Our audit approach
Overview
Audit scope
• We conducted full scope audit work over three components in which the group has significant operations (Rome, Italy and
Reno, Nevada and Providence, Rhode Island, USA) and a full scope audit of the parent.
In addition, we performed procedures on specific balances at seven non-significant components.
•
• During the year, the group engagement team had virtual meetings with the significant components in Italy and the USA.
Key audit matters
•
•
Identifying and evaluating the contractual terms and conditions of revenue transactions (group)
Impairment of investments in subsidiaries (parent)
Materiality
• Overall group materiality: $35 million (2020: $30 million) based on approximately 2.29% of EBITDA adjusted to remove the
impact of impairment losses and foreign exchange gains and losses.
• Overall parent materiality: $70 million (2020: $78 million) based on approximately 1% of total liabilities.
• Performance materiality: $26.25 million (2020: $22.50 million) (group) and $52.50 million (2020: $58.50 million) (parent).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or
not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Impairment of Investments in subsidiaries is a new key audit matter this year related to the Parent. Testing management’s
goodwill impairment assessments prior to the reorganisation of the group for the North America Gaming and Interactive (‘NAGI’)
and International cash generating units and the Global Gaming cash generating unit as at 31 December 2020 (group), Evaluating
the allocation of goodwill to discontinued operations (group) and Assessing management’s consideration of the impact of
COVID-19 (group and parent) were key audit matters last year. They are no longer included as key audit matters because there
is significant headroom in the cash generating units given the performance and forecasts. The goodwill allocation to the
discontinued operations was a one-off matter in the prior year only. Otherwise, the key audit matters below are consistent with
last year.
Annual Report and Accounts 2021
Page | 93
Independent Auditors’ Report
Key audit matter
Identifying and evaluating the contractual terms and conditions
of revenue transactions (group)
As described in Note 4 to the consolidated financial statements,
the group generated service and product revenues of $3,475
million and $606 million, respectively, for the year ended 31
December 2021.
The group’s revenue
include contracts with
transactions
customers that consist of a combination of services and
products that are accounted for as one or more distinct
performance obligations. Management applies judgement in
identifying and evaluating contractual terms and conditions that
impact the identification of performance obligations and the
associated pattern of revenue recognition.
the
involved
judgement
in understanding
We considered this a key audit matter given the level of
complexity and
the
revenue affecting terms and conditions in the group’s revenue
contracts. Under IFRS 15, Revenue from Contracts with
Customers,
identification of different performance
obligations, and the allocation of arrangement consideration to
each of those obligations in a contract, can require significant
management judgement.
Impairment of investments in subsidiaries (parent)
As described in note 3 to the Parent financial statements, the
investments in subsidiaries is $4,799 million (2020: $4,786
million).
impairment
Investments are assessed
impairment
for
indicators exist. If such indicators exist, the recoverable
amounts of the investments in subsidiaries are estimated in
order to determine the extent of the impairment loss, if any. Any
such impairment loss is recognised in the Parent Income
Statement.
if
As of 31 December 2021, the carrying value of the investment
in each directly owned subsidiary is supported by the respective
subsidiaries' underlying net assets indicating no potential
impairment. As no other impairment indicators were identified
as of the balance sheet date the Directors have concluded that
the investment in subsidiary balance was fully recoverable and
no impairment was required as of 31 December 2021.
How our audit addressed the key audit matter
Our procedures included the following:
the design and
● Evaluating
testing
the operating
to determine
effectiveness of management’s controls
performance obligations, allocate a reasonable fair value to
each and so to recognise revenue appropriately based upon
the contractual terms and conditions.
● On a sample basis, we selected revenue items from a full
revenue listing and tested the timing and accuracy of amounts
recognised by determining whether the relevant obligations
had been performed and had been allocated an appropriate
value based upon the contractual terms of the associated
contract.
Based on the procedures performed, we noted no material
issues from our work.
Our procedures included the following:
● We have considered the net assets of the respective
subsidiaries as at 31 December 2021 and note the net assets
exceed the carrying value of investment.
● In addition to net assets, we have considered other internal
and external factors, and no impairment triggers have been
identified.
Based on the procedures performed, we noted no material
issues from our work.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the parent, the accounting processes and controls, and
the industry in which they operate.
The group has its corporate headquarters in London, England, and operating headquarters in Rome, Italy and Reno, Nevada
and Providence, Rhode Island, USA. The worldwide engagement team is aligned to IGT PLC’s geographical organisation and
broadly mirrors the group’s management structure.
As the group’s corporate headquarters are based in London, the group engagement team is also based in London and supported
by component teams in Rome, Italy and Boston, Massachusetts, USA.
Where work was performed by teams outside of the UK, we determined the level of independent involvement needed at those
local operations to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our
opinion on the consolidated financial statements as a whole. We issued formal, written instructions to the teams outside the UK
Annual Report and Accounts 2021
Page | 94
Independent Auditors’ Report
setting out the work to be performed by each of them and maintained regular communication throughout the audit cycle. These
interactions included participating in the planning and clearance meetings with our teams in Rome and Boston, holding regular
video and conference calls, as well as reviewing work papers and assessing matters reported.
We performed certain specified audit procedures across six non-significant components to gain sufficient audit coverage over
certain balances in the consolidated financial statements. The balances covered at each individual component varied based on
their size but consisted of some or all of the following: service revenue, product revenue, cost of services, cost of sales, accounts
receivable, other assets, deferred revenue, accounts payable and systems and equipment.
In total, the audit work performed accounted for approximately 92% of consolidated net revenue and approximately 95% of
consolidated total assets. At the group level, we also carried out other risk assessment procedures on the components not
covered by the procedures described above. The group engagement team also performed audit procedures over the
consolidation.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How
determined it
Rationale
benchmark
applied
we
for
Financial statements - group
$35 million (2020: $30 million).
impact of
impairment
losses and
Approximately 2.29% of EBITDA adjusted to remove
the
foreign
exchange gains and losses.
We consider an Earnings before
tax,
depreciation and amortisation (EBITDA), adjusted to
remove the impact of impairment losses and foreign
exchange gains and losses, to be one of the
principal metrics for the members of International
Game Technology PLC in assessing the recurring
financial performance of
it best
the group as
represents results from underlying operations.
interest,
Financial statements - parent
$70 million (2020: $78 million).
Approximately 1% of total liabilities.
We consider total liabilities to be one of the principal
International
considerations
Game Technology PLC in assessing the parent’s
financial position.
the members of
for
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The
range of materiality allocated across components was $3.5 million and $33 million (with $13 million being used for the parent for
the purpose of the group audit). Certain components were audited to a local statutory audit materiality that was also less than our
overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of
our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2020: 75%) of overall materiality, amounting to $26.25 million
(2020: $22.50 million) for the group financial statements and $52.50 million (2020: $58.50 million) for the parent financial
statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the lower end of our normal range was
appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above
$3.5 million (group audit) (2020: $2.5 million) and $3.5 million (parent audit) (2020: $3.5 million) as well as misstatements below
those amounts that, in our view, warranted reporting for qualitative reasons.
Annual Report and Accounts 2021
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Independent Auditors’ Report
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the parent’s ability to continue to adopt the going concern basis
of accounting included:
•
•
•
•
•
assessing the business processes and controls related to the going concern assessment, including the suitability of the
model used and the selection of estimates and assumptions;
agreeing the underlying cash flow projections to approved forecasts;
evaluating the key assumptions and estimates within the forecasts;
considering liquidity and available financial resources; and
reviewing debt agreements and assessing the group's ability to comply with the financial covenants associated with its
various debt facilities.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group's and the parent’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and
the parent’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement,
we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors' Report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic report and Directors' Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Annual Report and Accounts 2021
Page | 96
Independent Auditors’ Report
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of the Directors’ responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The
directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the parent or to cease operations, or have no realistic alternative but to
do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to gaming laws and bribery and anti-corruption legislation, and we considered the extent to which non-
compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a
direct impact on the financial statements such as the Companies Act 2006 and international tax legislation. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override
of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial
results and potential management bias in the selection and application of significant accounting judgements and estimates. The
group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit
procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or
component auditors included:
• Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities.
• Discussions with the Vice President of Internal Audit, the Senior Vice President and Chief Accounting Officer, the Vice
President and Corporate Controller, the Senior Vice President of Chief Compliance and Risk Management Officer and
General Counsel, including consideration of known or suspected instances of non-compliance with laws and regulations and
fraud.
• Assessment of matters reported on the group’s whistleblowing helpline and the results of management’s investigation of such
matters
• Challenging assumptions made by management in the selection and application of significant accounting judgments and
•
estimates
Identifying and testing the validity of journal entries, in particular any journal entries posted with unusual account
combinations, journals posted by senior management and consolidation journals
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through
collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Annual Report and Accounts 2021
Page | 97
Independent Auditors’ Report
Use of this report
This report, including the opinions, has been prepared for and only for the parent’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received
from branches not visited by us; or
certain disclosures of directors’ remuneration specified by law are not made; or
the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with
the accounting records and returns.
•
•
We have no exceptions to report arising from this responsibility.
Jaskamal Sarai (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
16 March 2022
Annual Report and Accounts 2021
Page | 98
Financial Statements
INTERNATIONAL GAME TECHNOLOGY PLC
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet at December 31, 2021 and 2020 .............................................................................
100
Consolidated Statement of Operations for the years ended December 31, 2021 and 2020 ............................
101
Consolidated Statement of Comprehensive Loss for the years ended December 31, 2021 and 2020 ..........
102
Consolidated Statement of Cash Flows for the years ended December 31, 2021 and 2020 ...........................
103
Consolidated Statement of Shareholders' Equity for the years ended December 31, 2021 and 2020 ...........
105
Notes to the Consolidated Financial Statements .....................................................................................................
106
Annual Report and Accounts 2021
Page | 99
Financial Statements
International Game Technology PLC
Consolidated Balance Sheet
($ in millions)
Notes
2021
2020
December 31,
Assets
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Trade and other receivables, net
Inventories
Other current assets
Assets held for sale
Total current assets
Systems, equipment and other assets related to contracts, net
Property, plant and equipment, net
Right-of-use assets
Goodwill
Intangible assets, net
Other non-current assets
Total non-current assets
Total assets
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
Current portion of long-term debt
Short-term borrowings
Other current liabilities
Liabilities held for sale
Total current liabilities
Long-term debt, less current portion
Deferred income taxes
Lease liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Shareholders’ equity
Share capital
Share premium
Retained deficit
Other reserves
Total IGT PLC’s shareholders’ equity
Non-controlling interests
Total shareholders’ equity
Total liabilities and shareholders’ equity
5
6
7
3
11
11
12
14
15
7
17
17
16
3
17
18
12
16
20
591
112
903
183
587
4
2,379
937
114
273
4,756
1,409
1,421
8,909
11,288
929
—
52
994
—
1,974
6,475
359
285
489
7,608
9,582
21
2,896
(2,065)
379
1,230
476
1,706
11,288
907
127
846
169
480
826
3,355
1,068
132
304
4,827
1,572
1,740
9,644
12,999
1,054
393
—
1,023
248
2,719
7,869
323
290
574
9,055
11,774
20
2,871
(2,473)
280
698
527
1,225
12,999
The accompanying notes are an integral part of these consolidated financial statements.
The consolidated financial statements were approved by the Board of Directors on March 10, 2022 and signed on its behalf on March 16, 2022
by:
Vincent Sadusky
Chief Executive Officer
Company registration number: 09127533
Annual Report and Accounts 2021
Page | 100
Financial Statements
International Game Technology PLC
Consolidated Statement of Operations
($ in millions and shares in thousands, except per share amounts)
Service revenue
Product sales
Total revenue
Cost of services
Cost of product sales
Selling, general and administrative
Research and development
Restructuring
Goodwill impairment
Other operating expense
Total operating expenses
Operating income (loss)
Interest expense, net
Foreign exchange (gain) loss, net
Other expense
Other income
Total non-operating expenses
Income (loss) from continuing operations before provision for income taxes
Provision for income taxes
Income (loss) from continuing operations
Income from discontinued operations, net of tax
Gain on sale of discontinued operations, net of tax
Income from discontinued operations
Net income (loss)
Less: Net income attributable to non-controlling interests from continuing
operations
Less: Net loss attributable to non-controlling interest from discontinued
operations
Net income (loss) attributable to IGT PLC
Net income (loss) from continuing operations attributable to IGT PLC per
common share - basic
Net income (loss) from continuing operations attributable to IGT PLC per
common share - diluted
Net income (loss) attributable to IGT PLC per common share - basic
Net income (loss) attributable to IGT PLC per common share - diluted
Weighted-average shares - basic
Weighted-average shares - diluted
Notes
4, 22
4, 22
4, 22
13
14
22
17
18
18
3
3
24
24
24
24
24
24
For the year ended December 31,
2021
2020
3,475
606
4,081
1,749
377
792
238
6
—
1
3,163
918
344
(66)
192
(3)
466
452
276
176
24
390
415
590
102
(2)
490
0.36
0.35
2.39
2.37
2,640
476
3,115
1,630
345
696
190
45
296
4
3,206
(91)
429
310
120
(5)
855
(945)
22
(967)
36
—
36
(931)
6
(5)
(933)
(4.76)
(4.76)
(4.56)
(4.56)
204,954
206,800
204,725
204,725
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report and Accounts 2021
Page | 101
Financial Statements
International Game Technology PLC
Consolidated Statement of Comprehensive Income (Loss)
($ in millions)
For the year ended December 31,
Notes
2021
2020
Net income (loss)
Foreign currency translation adjustments, net of tax
Unrealized gain (loss) on hedges, net of tax
Unrealized loss on other, net of tax
Other comprehensive income, net of tax (1)
(931)
108
(1)
—
107
Comprehensive income (loss)
(824)
Less: Comprehensive income attributable to non-controlling interests
61
Comprehensive income (loss) attributable to IGT PLC
(885)
(1) All items in other comprehensive income, net of tax will be reclassified subsequently to profit or loss when specific conditions are met, with the
exception of unrealized loss on defined benefit plans of $1 million for the year ended December 31, 2021, which is included in unrealized loss on
other, net of tax.
590
45
3
(1)
47
637
48
589
20
20
20
20
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report and Accounts 2021
Page | 102
Financial Statements
International Game Technology PLC
Consolidated Statement of Cash Flows
($ in millions)
For the year ended December 31,
Notes
2021
2020
Cash flows from operating activities
Net income (loss)
Less: Income from discontinued operations, net of tax
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by
operating activities from continuing operations:
Depreciation
Amortization of upfront license fees
Amortization
Loss on extinguishment of debt
Redeemable non-controlling interest
Deferred income taxes
Stock-based compensation
Debt issuance cost amortization
Goodwill impairment
Foreign exchange (gain) loss, net
Other non-cash items, net
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:
3
23
14
Trade and other receivables
Inventories
Accounts payable
Other assets and liabilities
Net cash provided by operating activities from continuing operations
Net cash (used in) provided by operating activities from discontinued operations
Net cash provided by operating activities
Cash flows from investing activities
Capital expenditures
Proceeds from sale of assets
Other
Net cash used in investing activities from continuing operations
Net cash provided by (used in) investing activities from discontinued operations
Net cash provided by (used in) investing activities
Cash flows from financing activities
Principal payments on long-term debt
Payments in connection with the extinguishment of debt
Net (payments of) receipts from financial liabilities
Debt issuance costs paid
Net proceeds from (repayments of) Revolving Credit Facilities
Net proceeds from (payments of) short-term borrowings
Proceeds from long-term debt
Repurchases of ordinary shares
Dividends paid
Dividends paid - non-controlling interests
Return of capital - non-controlling interests
Capital increase - non-controlling interests
Other
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Less: Cash and cash equivalents of discontinued operations
Cash and cash equivalents at the end of the period of continuing operations
590
415
390
218
190
92
91
41
35
21
—
(66)
(2)
(95)
(13)
(77)
19
1,017
(28)
989
(238)
21
1
(216)
873
657
(2,846)
(85)
(50)
(14)
17
51
1,339
(41)
(41)
(91)
(127)
12
(72)
(1,948)
(302)
(22)
914
591
—
591
(931)
36
423
212
202
39
72
(84)
(8)
19
296
310
(2)
74
17
14
53
668
278
946
(255)
9
18
(228)
(35)
(263)
(959)
(25)
67
(22)
(29)
(7)
750
—
(41)
(136)
(32)
8
(66)
(493)
190
61
663
914
7
907
Annual Report and Accounts 2021
Page | 103
Financial Statements
International Game Technology PLC
Consolidated Statement of Cash Flows
($ in millions)
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest
Income taxes
Non-cash investing and financing activities:
Capital expenditures
The accompanying notes are an integral part of these consolidated financial statements.
For the year ended December 31,
2021
2020
393
188
26
431
89
24
Annual Report and Accounts 2021
Page | 104
Financial Statements
International Game Technology PLC
Consolidated Statement of Shareholders’ Equity
($ in millions)
Share
Capital
Share
Premium
Retained
Deficit
Other
Reserves
(Note 20)
Total
IGT PLC
Equity
Non-
Controlling
Interests
(Note 21)
Total
Equity
Balance at December 31, 2019
Net (loss) income
Other comprehensive income, net of tax
Total comprehensive (loss) income
Capital increase
Shares issued under stock award plans
Stock-based compensation (Note 23)
Return of capital
Dividends paid
Other
Balance at December 31, 2020
Net income
Other comprehensive income (loss), net
of tax
Total comprehensive income
Stock-based compensation (Note 23)
Capital increase
Tax benefit on stock-based compensation
Shares issued under stock award plans
Divestiture of non-controlling interest
Repurchases of ordinary shares
Return of capital
Dividends paid
Other
Balance at December 31, 2021
20
—
—
—
—
—
—
—
—
—
20
—
—
—
—
—
—
—
—
—
—
—
—
21
2,880
(1,497)
232
1,635
540
2,175
—
—
—
—
(1)
(8)
—
—
—
(933)
—
(933)
—
—
—
—
(41)
(2)
—
48
48
—
—
—
—
—
—
2,871
(2,473)
280
—
—
—
35
—
2
(12)
—
—
—
—
—
490
—
490
—
—
—
—
—
(41)
—
(41)
—
—
99
99
—
—
—
—
—
—
—
—
—
(933)
48
(885)
—
(1)
(8)
—
(41)
(2)
698
490
99
589
35
—
2
(12)
—
(41)
—
(41)
—
2,896
(2,065)
379
1,230
2
59
61
8
—
—
(23)
(60)
1
527
100
(52)
48
—
13
—
—
(18)
—
(64)
(33)
3
476
(931)
107
(824)
8
(1)
(8)
(23)
(101)
(1)
1,225
590
47
637
35
13
2
(12)
(18)
(41)
(64)
(74)
3
1,706
The accompanying notes are an integral part of these consolidated financial statements.
Annual Report and Accounts 2021
Page | 105
Financial Statements
International Game Technology PLC
Notes to the Consolidated Financial Statements
1. Description of Business
International Game Technology PLC (the “Parent”), together with its consolidated subsidiaries (collectively referred
to as “IGT PLC,” the “Company,” “we,” “our,” or “us”), is a global leader in gaming that delivers entertaining and
responsible gaming experiences for players across all channels and regulated segments, from gaming machines
and lotteries to sports betting and digital. We operate and provide an integrated portfolio of innovative gaming
technology products and services, including: lottery management services, online and instant lottery systems,
gaming systems, instant ticket printing, electronic gaming machines, sports betting, digital gaming, digital lottery,
and commercial services. We have a local presence and relationships with governments and regulators in more
than 100 countries around the world.
We are majority owned by De Agostini S.p.A. (“De Agostini”), a century-old publishing, media, and financial services
company that is incorporated in Italy. Our remaining shares not held by De Agostini are publicly held. De Agostini is
the smallest group to consolidate these financial statements and is majority owned by B&D Holding S.p.A. (“B&D”)
which is incorporated in Italy and the largest group to consolidate these financial statements. B&D is wholly owned
by the Boroli and Drago families.
2. Summary of Significant Accounting Policies
The principal accounting policies adopted are set out below and have been consistently applied to all years
presented, unless otherwise noted.
Basis of Preparation
The accompanying consolidated financial statements and notes of the Company, prepared for statutory purposes,
have been prepared on a going concern basis and in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 (“IFRS”).
The consolidated financial statements have been prepared on a historical cost basis unless otherwise stated. The
consolidated financial statements are stated in millions of United States (“U.S.”) dollars (except share, per share,
and employee headcount data) unless otherwise indicated and are computed based on the amounts in thousands.
Certain amounts in columns and rows within tables may not foot due to rounding. Percentages and earnings per
share amounts presented are calculated from the underlying unrounded amounts.
As further described in Note 3 – Discontinued Operations and Assets Held for Sale, on May 10, 2021, the Company
completed the sale of its Italian B2C gaming machine, sports betting, and digital gaming businesses, which met the
criteria to be reported as a discontinued operation during the fourth quarter of 2020. As a result, the historical
financial results are reflected in the Company's consolidated financial statements as a discontinued operation, and
assets and liabilities were classified as assets and liabilities held for sale at December 31, 2020.
Recasting of Certain Prior Period Information
During the third quarter of 2021, we modified the information that our chief operating decision maker, who was also
our Chief Executive Officer, regularly reviewed for purposes of allocating resources and assessing performance,
prompting a change in management, operating segments, and cash-generating units. As a result, beginning in the
third quarter of 2021, we report our financial performance based on our new business segments described in Note
22 – Segment Information. We have recast our historically presented comparative segment information to conform
to the way we internally manage and monitor segment performance as of the third quarter of 2021. This change
primarily impacted Note 4 – Revenue Recognition, Note 14 – Goodwill, and Note 22 – Segment Information, with no
impact on consolidated revenue, net income, or cash flows.
Principles of Consolidation
The consolidated financial statements include the accounts of the Parent and our majority-owned or controlled
subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Earnings or losses
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attributable to non-controlling interests in a subsidiary are included in net income (loss) in the consolidated
statement of operations.
Investments in which we have the ability to exercise significant influence, but do not control, and with respect to
which we are not the primary beneficiary, are accounted for using the equity method of accounting. Equity
investments in which we have no ability to exercise significant influence that do not have a readily determinable fair
value and do not have a Net Asset Value per share are measured at cost, less impairment, which approximates fair
value. Equity method investments and equity investments in which we have no ability to exercise significant
influence are included within other non-current assets in the consolidated balance sheet.
Critical Estimates, Judgments, and Assumptions
The preparation of financial statements in conformity with IFRS requires management to make estimates,
judgments, and assumptions that affect the reported amounts of assets, liabilities, equity, revenues and expenses,
and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates,
judgments, and methodologies. We base our estimates on historical experience and on various other assumptions
that we believe are reasonable, the results of which form the basis for making judgments about the carrying values
of assets, liabilities, and equity, and the amount of revenues and expenses. These estimates, judgments, and
assumptions are used for, but not limited to, revenue recognition, allowance for credit losses, evaluation of long-
lived assets for impairment, legal and other contingencies, and income taxes. Detailed information about each of
these estimates, judgments, and assumptions is included in their respective notes, together with information about
the basis of calculation for each affected line item in the financial statements.
The accounting policy descriptions set out the areas where judgments and estimates need exercising, the most
significant of which include the following Key Judgments (♣) and Significant Estimates (♦):
• Revenue, refer to accounting policy, page 107 and 108 (♣)
• Goodwill, refer to accounting policy, page 111 (♦) and Note 14, page 137 (♦)
• Discontinued Operations and Assets Held for Sale, refer to Note 3, page 117 (♣), (♦)
Revenue
We account for a contract with a customer when: we have written approval; the contract is committed; the rights of
the parties, including payment terms, are identified; the contract has commercial substance; and collection of
consideration is probable.
Performance obligations are identified at contract inception. A performance obligation is a promise in a contract with
a customer to transfer products or services that are distinct. If we enter into two or more contracts at or near the
same time, the contracts may be combined and accounted for as one contract, in which case we determine whether
the services or products in the combined contract are distinct. A service or product that is promised to a customer is
distinct if both of the following criteria are met: the customer can benefit from the service or product either on its own
or together with other resources that are readily available to the customer; and our promise to transfer the service or
product to the customer is separately identifiable from other promises in the contract.
(♣) Revenue is recognized when (or as) control of a promised service or product transfers to a customer, in an
amount that reflects the consideration (which represents the transaction price) to which we expect to be entitled in
exchange for transferring that service or product. If the consideration promised in a contract includes a variable
amount, we estimate the amount to which we expect to be entitled using either the expected value or most likely
amount method. Our contracts may include terms that could cause variability in the consideration, including, for
example, rebates, volume discounts, service-level penalties, and performance bonuses or other forms of contingent
revenue.
(♣) The Company often enters into contracts with customers that consist of a combination of services and products
that are accounted for as one or more distinct performance obligations. Management applies judgment in identifying
and evaluating the contractual terms and conditions that impact the identification of performance obligations and the
pattern of revenue recognition.
Our standard payment terms dictate that payment is due upon receipt of invoice, payable within 30 days. Invoices
are generally issued as control transfers and/or as services are rendered. Additionally, in determining the
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transaction price, we adjust the promised amount of consideration for the effects of the time value of money if the
payment terms are not standard and the timing of payments agreed to by the parties to the contract provide the
customer or the Company with a significant benefit of financing, in which case the contract contains a significant
financing component. Most arrangements that contain a significant financing component include explicit financing
terms.
We may include subcontractor services or third-party vendor services or products in certain arrangements. In these
arrangements, revenue from sales of third-party vendor services or products are recorded net of costs when we are
acting as an agent between the customer and the vendor, and gross when we are the principal for the transaction.
To determine whether we are an agent or principal, we consider whether we obtain control of the services or
products before they are transferred to the customer. In making this evaluation, several factors are considered, most
notably whether we have primary responsibility for fulfillment to the customer, as well as inventory risk and pricing
discretion.
Additional information on revenue recognition is included in Note 4 – Revenue Recognition.
Arrangements with Multiple Performance Obligations
(♣) We often enter into contracts that consist of a combination of services and products based on the needs of our
customers, which may include post-contract support for the software and a contract for post-warranty maintenance
service for the hardware. These contracts consist of multiple services and products, whereby the hardware and
software may be delivered in one period and the software support and hardware maintenance services are
delivered over time.
To the extent that a service or product in an arrangement with multiple performance obligations is subject to other
specific accounting guidance, that service or product is accounted for in accordance with such specific guidance.
For all other distinct services and products in these arrangements, the arrangement transaction price is allocated to
each performance obligation on a relative standalone selling price basis or another method that depicts the amount
of consideration to which we expect to be entitled in exchange for transferring the promised services or products. If
the services and products are not distinct, we determine an appropriate measure of progress based on the nature of
our overall promise for the single performance obligation.
To the extent we grant the customer the option to acquire additional services or products in one of these
arrangements, we account for the option as a distinct performance obligation in the contract only if the option
provides a material right to the customer that it would not receive without entering into the contract (i.e., a significant
discount incremental to the range of discounts typically given for the service or product), in which case the customer
in effect pays in advance for the option to purchase future services or products. We allocate a portion of the
transaction price to the material right and recognize revenue when those future services or products are transferred
or when the option expires.
Standalone Selling Price
(♣) We allocate the transaction price to each performance obligation on a relative standalone selling price (“SSP”)
basis. The SSP is the price at which we would sell a promised service or product separately to a customer. In some
instances, we are able to establish SSP based on the observable prices of services or products sold separately in
comparable circumstances to a similar customer. We typically establish an SSP range for our services and products
that are reassessed on a periodic basis or when facts and circumstances change.
In other instances, we may not be able to establish an SSP range based on observable prices, and we estimate the
SSP by considering multiple factors including, but not limited to, overall market conditions, including geographic or
regional specific factors, competitive positioning, competitor actions, internal costs, profit objectives, and pricing
practices. Estimating SSP is a formal process that includes review and approval by management.
Contract Costs
Certain eligible, non-recurring costs incurred in the initial phases of service contracts are capitalized and amortized
ratably over the expected period of benefit, which includes anticipated contract renewals or extensions. Recurring
operating costs in these contracts are recognized as incurred.
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Financial Statements
Practical Expedients and Exemptions
We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and
concurrent with specific revenue-producing transactions.
We generally expense incremental costs of obtaining a contract (e.g., sales commissions) when incurred because
the amortization period would have been one year or less. These costs are recorded within selling, general and
administrative expenses in our consolidated statement of operations. For certain of our long-term contracts,
recoverable costs are capitalized and amortized on a straight-line basis over the expected customer relationship
period.
We do not account for significant financing components if the period between when we transfer the promised
service or product to the customer and when the customer pays for that service or product will be one year or less.
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length
of one year or less, (ii) performance obligations for which we recognize revenue at the amount that we have the
right to invoice for services performed, (iii) contracts for which variable consideration is accounted for in accordance
with sales-based or usage-based royalty guidance, and (iv) wholly unperformed contracts.
Contract Assets and Liabilities
Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized
exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment
is no longer conditional on events other than the passage of time. Contract liabilities include deferred revenue,
advance payments, and billings in excess of revenue recognized.
Stock-Based Compensation
Stock-based compensation represents the cost related to stock-based awards granted to directors and employees.
Stock-based compensation cost is measured at the grant date or modification date, based on the estimated fair
value of the award and recognized as expense, net of estimated forfeitures, over the vesting periods. For awards
subject to cliff vesting, compensation cost is recognized by way of a straight-line method over the award’s expected
vesting period. For awards subject to graded vesting, compensation cost is recognized by way of an accelerated
attribution method over the entire awards’ expected vesting periods.
Advertising
Advertising costs are expensed as incurred. Advertising expense was $33 million and $25 million for the years
ended December 31, 2021 and 2020, respectively.
Research and Development Costs
Research and development costs (“R&D”), which principally include employee compensation costs, are expensed
as incurred, as the criteria to capitalize development costs have not been met.
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of highly liquid investments purchased with an original maturity of
three months or less at the date of acquisition, such as bank deposits, money market funds, and interest bearing
bank accounts with insignificant interest rate risk. The fair value of cash and cash equivalents approximates the
carrying amount.
Restricted Cash and Cash Equivalents
We are required by gaming regulations to maintain sufficient reserves in restricted cash accounts to be used for the
purpose of funding payments to WAP jackpot winners. These restricted cash balances are based primarily on the
jackpot meters displayed to slot players, or for previously won jackpots, and vary by jurisdiction. Restricted cash is
also maintained for interactive digital player deposits, collections on factored and serviced receivables not yet paid
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Financial Statements
through to the third-party owner, and for customer funds received in relation to the provision of our commercial
services. These amounts are restricted based on the contracts with our customers or local regulations.
Allowance for Credit Losses
We maintain an allowance for expected credit losses on receivables measured as the difference between the cash
flows due in accordance with the contract and the cash flows we expect to receive. The allowance is regularly
reviewed by considering factors such as the creditworthiness of our customers, historical experience, aging of
receivables, and current market and economic conditions, as well as management’s expectations of future
conditions when appropriate. The allowance is deducted from the amortized cost basis of the receivable to present
the net amount expected to be collected.
We estimate expected credit losses on receivables on a collective (pool) basis when similar risk characteristics
exist. Trade and other receivables and customer financing receivables represent the initial pools which are
segregated further by business segment, geography, internal risk rating, and aging. The risk of loss is assessed
over the contractual life of the receivables and we adjust historical loss rates for current and future conditions based
on qualitative considerations. The expected loss rate for each receivable pool is applied to the aggregate receivable
balance to determine the allowance requirement.
We assess the probability of default on receivables at initial recognition and then whether there has been a
significant increase in credit risk on an ongoing basis. Receivables are written off against the allowance when there
is no reasonable expectation of recovery, for example where all legal avenues for collection of amounts due have
been exhausted, the receivable (or relevant portion) is written off.
We determine delinquency based on the contractual payment terms. An account may be considered delinquent if
there are unpaid balances remaining on the account the day after the contractual due date.
For amounts due from certain government customers in the Global Lottery business segment, we have not
established an allowance as we have no expectation of loss based on a long history of no credit losses and the
explicit guarantee of a sovereign entity.
Inventories
Inventories are stated at the lower of cost (applying the first in, first out method) and net realizable value.
Allowances are made for defective, obsolete, or excess inventory.
Assets and Liabilities Held for Sale
We classify assets and liabilities (disposal groups) to be sold as held for sale in the period in which all of the
following criteria are met: management, having the authority to approve the action, commits to a plan to sell the
disposal group; the disposal group is available for immediate sale in its present condition subject to terms
customary for sales of such disposal groups; an active program to locate a buyer and other actions required to
complete the plan to sell the disposal group have been initiated; the sale of the disposal group is probable, and
transfer of the disposal group is expected to qualify for recognition as a completed sale within one year; the disposal
group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions
required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn.
We initially measure a disposal group that is classified as held for sale at the lower of its carrying value or fair value
less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale
criteria are met. Conversely, gains are not recognized on the sale of a disposal group until the date of sale. We
assess the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held
for sale and report any subsequent changes as an adjustment to the carrying value of the disposal group, as long
as the new carrying value does not exceed the carrying value of the disposal group at the time it was initially
classified as held for sale.
Upon determining that a disposal group meets the criteria to be classified as held for sale, we report the assets and
liabilities of the disposal group, if material, in the line items assets held for sale and liabilities held for sale in the
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consolidated balance sheet in each period presented. Refer to Note 3 – Discontinued Operations and Assets Held
for Sale, for further information.
Systems, Equipment and Other Assets Related to Contracts, Net and Property, Plant and Equipment, Net
We have two categories of fixed assets: systems, equipment and other assets related to contracts (“Systems &
Equipment”) and property, plant and equipment (“PPE”).
Systems & Equipment are assets that primarily support our operating contracts, FMCs, and WAP systems
(collectively, the “Contracts”) and are principally composed of lottery and gaming assets. PPE are assets we use
internally, not associated with Contracts, primarily related to production and assembly, selling, general and
administration, and R&D.
Systems & Equipment and PPE are stated at cost, net of accumulated depreciation and accumulated impairment
loss, if any. Costs incurred for Systems & Equipment and PPE not yet placed into service are classified as
construction in progress and are not depreciated until placed in service. Depreciation is recognized on a straight-line
basis over the estimated useful lives of the assets. Repair and maintenance costs are expensed as incurred,
whereas major improvements that increase asset values and extend useful lives are capitalized.
Systems & Equipment and PPE are tested for impairment whenever events or changes in circumstances indicate
the carrying amount of those assets may not be recoverable. If the recoverable amount of an asset is estimated to
be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.
The Company calculates its recoverable amount as its fair value less costs to dispose.
Goodwill
The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their
estimated fair values at the date of acquisition. Goodwill represents costs in excess of fair values assigned to the
underlying identifiable net assets of acquired businesses, and is stated at cost less accumulated impairment losses.
Goodwill has been allocated to and is tested for impairment at the cash-generating unit level, which is the same
level as our operating segments. We evaluate our cash-generating units annually and if necessary, reassign
goodwill using a relative fair value approach. As of December 31, 2021 we have identified three cash-generating
units: Global Lottery, Global Gaming, and Digital & Betting.
(♦) Goodwill is tested for impairment annually, in the fourth quarter, and whenever events or changes in
circumstances indicate the carrying amount may impaired. The goodwill impairment test compares the recoverable
amount of a cash-generating unit with its carrying amount and an impairment loss is recognized for the amount by
which the carrying amount exceeds the cash-generating unit’s recoverable amount. In performing the goodwill
impairment test, we estimate the recoverable amount of the cash-generating units using an income approach based
on projected discounted cash flows. When certain qualitative criteria are met, we will use the most recently
calculated recoverable amount from a preceding period in the impairment test.
Other Intangible Assets
Other intangible assets, which include indefinite-lived and definite-lived intangible assets, are stated at cost, less
accumulated amortization and accumulated impairment losses.
Indefinite-lived intangible assets are composed of trademarks for which there is no foreseeable limit of the period
over which they are expected to generate net cash inflows. Definite-lived intangible assets, which are primarily
composed of customer relationships and computer software and game library, are capitalized and amortized on a
straight-line basis over their estimated economic lives. Estimated useful lives are determined considering the period
the assets are expected to contribute to future cash flows. Amortization of software-related intangibles is included in
cost of services and cost of product sales and amortization of other intangible assets is included in selling, general
and administrative expenses in the consolidated statement of operations.
Indefinite-lived intangible assets other than goodwill are tested for impairment annually, in the fourth quarter, or
whenever events or changes in circumstances indicate the carrying amount may not be recoverable. We perform a
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quantitative analysis that compares the recoverable value of indefinite-lived intangible assets to their carrying
amount and an impairment loss is recognized when the carrying amount exceeds the recoverable value.
Capitalized Software Development Costs
Costs incurred in the development of our externally-sold software products are expensed as incurred, except certain
software development costs eligible for capitalization. Software development costs incurred subsequent to
establishing technological feasibility and through the general release of the software products are capitalized.
Capitalized costs are amortized over the products’ estimated economic life to cost of product sales in the
consolidated statement of operations.
Costs incurred during the application development phase of software for services provided to customers are
capitalized as internal-use software and amortized over the useful life to cost of services in the consolidated
statement of operations. Costs incurred during the application development of software for internal use, and not for
use in services provided to customers, are capitalized and amortized over the useful life to selling, general and
administrative expenses in the consolidated statement of operations.
Upfront License Fees
We periodically make long-term investments in contracts with customers and obtain licenses to supply products and
services to our customers. As consideration, we pay license fees, which are classified as other non-current assets in
the consolidated balance sheet. We recognize the amortization of the license fees as a reduction of service revenue
over the estimated economic life of the license term. This method reflects the pattern in which economic benefits
are expected to be realized. The recoverability of each payment is subject to significant estimates about future
revenues related to the contracts’ future cash flows. We evaluate these assets for impairment and update
amortization rates on an agreement by agreement basis. The assets are reviewed for impairment whenever events
or changes in circumstances indicate their carrying amount may not be recoverable. In periods in which payments
are made to the customer, we classify the payment as a cash outflow from operating activities in the consolidated
statement of cash flows.
Jackpot Accounting
We incur costs to fund jackpots and accrue jackpot liabilities with every wager on devices connected to a WAP
system. Jackpot liabilities are estimated based on the size of the jackpot, the number of WAP units in service,
variations and volume of play, and interest rate movements. Jackpots are generally payable to winners immediately,
in the case of instant wins, or in equal annual installments over 19 to 25 years. Winners may elect to receive a lump
sum payment for the present value of the jackpot discounted at applicable interest rates in lieu of periodic annual
installments.
Jackpot liabilities are composed of payments due to previous winners, and amounts due to future winners of
jackpots not yet won. Liabilities due to previous winners for periodic payments are carried at the accreted cost of a
qualifying U.S. government or agency annuity investment that may be purchased at the time of the jackpot win. If
the periodic liability is not initially funded with an annuity investment, it is discounted and accreted using the risk-free
rate at the time of the jackpot win.
Liabilities due to future winners are recorded at the present value of the estimated amount of jackpots not yet won.
We estimate the present value of these liabilities using current market rates, weighted with historical lump sum
payout election ratios. Based on the most recent historical patterns, approximately 95% of winners will elect the
lump sum payment option. The current portion of these liabilities are estimated based on historical experience with
winner payment elections, in conjunction with the theoretical projected number of jackpots.
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Financial Statements
Legal and Other Contingencies
Loss contingency provisions arising from a legal proceeding or claim are recorded for probable and estimable
losses at the best estimate of a loss when there is a range of possible outcomes, or when a best estimate cannot be
made, at the midpoint of the range when any point in a continuous range is as likely as any other, the determination
of which requires significant judgment. If it is reasonably possible but not probable that a liability has been incurred,
or if the amount of a probable loss cannot be reasonably estimated, the amount or range of estimated loss is
disclosed, if material. We evaluate our provisions for legal contingencies at least quarterly and, as appropriate,
establish new provisions or adjust existing provisions to reflect the facts and circumstances known to us at the time,
including information regarding negotiations, settlements, rulings, and other relevant events and developments, the
advice of counsel, and the assumptions and judgment of management. Legal costs are expensed as incurred.
Fair Value Measurements
We account for certain financial assets and liabilities at fair value. Financial assets and liabilities are categorized,
based on the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives
the highest priority to the use of observable inputs and the lowest priority to the use of unobservable inputs. When
inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value
measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
These levels are as follows:
•
•
•
Level 1 - inputs are based upon unadjusted quoted prices for identical instruments in active markets
Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for
identical or similar instruments in markets that are not active, and model-based valuation techniques for which
all significant inputs are observable in the market or can be corroborated by observable market data for
substantially the full term of the instruments
Level 3 - inputs are unobservable and typically reflect management’s estimates of assumptions that market
participants would use in pricing the asset or liability
Derivative Financial Instruments
We use derivative financial instruments for the management of foreign currency risks and interest rate risks. We do
not enter into derivatives for speculative purposes. Derivatives are recognized as either assets or liabilities in the
consolidated balance sheet at fair value. All derivatives are recorded gross, except netting of foreign exchange
contracts and counterparty netting of interest receivable and payable related to interest rate swaps, as applicable.
The accounting for changes in the fair value of a derivative depends on the nature of the hedge and the hedge
effectiveness. Derivative gains and losses are reported in the consolidated statement of cash flows consistent with
the classification of the cash flows from the underlying hedged items.
For derivative instruments designated as cash flow hedges, gains and losses are recorded in other comprehensive
income (loss) and are subsequently reclassified when the hedged item affects earnings. At that time, the amount is
reclassified from other comprehensive income (loss) to the same income statement line as the earnings effect of the
hedged item.
For derivative instruments designated as fair value hedges, changes in fair value are recorded in interest expense
and are offset by changes in the fair value of the underlying debt instrument due to changes in the benchmark
interest rate. In the event the derivative instruments are subsequently de-designated as hedges, the change in fair
value is recognized in interest expense, net in the consolidated statement of operations with no corresponding offset
to debt.
For derivative instruments designated as net investment hedges, the spot portion of the derivative gain or loss is
reported in foreign currency translation within other comprehensive income (loss) to offset any gains or losses on
translation of the net investment in the subsidiary until the net investment is sold or liquidated, at which point the
amounts are reclassified to earnings. All other components of the derivative fair value will be reported as either
interest income or interest expense, on an amortized basis.
Derivative instruments not designated as hedges are recognized in the consolidated balance sheet at fair value with
the changes in fair value recorded in foreign exchange (gain) loss, net in the consolidated statement of operations.
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Financial Statements
Leases
We determine whether a contract is or contains a lease at inception. As a lessee, we recognize right-of-use (“ROU”)
assets and lease liabilities on the lease commencement date based on the present value of lease payments over
the lease term. ROU assets also include any upfront lease payments or initial direct costs and are adjusted for lease
incentives received.
We consider renewal and termination options, including whether they are reasonably certain to be exercised, in
determining the lease term and establishing the ROU assets and lease liabilities. ROU assets and lease liabilities
are calculated using our incremental borrowing rate, which is based on the lease currency and length of the lease,
unless the implicit rate is determinable.
Most of our lease contracts contain both lease and non-lease components. As a lessee, we combine lease and non-
lease components into a single lease component for all classes of underlying assets except certain communication
equipment. For certain communication equipment, we allocate the consideration between lease and non-lease
components based on relative standalone price.
Variable lease payments are generally expensed as incurred except for certain rent payments that depend on an
index, which are included in lease payments using the index rate in effect as of the lease commencement date.
When the lease payments are adjusted for changes in the index, we will remeasure the ROU asset and lease
liability.
Short-term leases, which are leases with an initial term of 12 months or less with no purchase options that are
reasonably certain of exercise, are not recognized on the balance sheet. The rental payments are recognized as
lease expense on a straight-line basis over the lease term.
Certain of our long term lottery and commercial gaming service arrangements include leases for equipment installed
at customer locations. As the lessor, we evaluate whether the leases are classified as finance or operating leases
and recognize revenue based on that evaluation. Finance leases are recognized as product sale revenue while
operating leases are recognized as service revenue.
Income Taxes
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on
the difference between the tax basis of assets and liabilities and their reported amounts using the enacted tax rates
in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as
reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets
is not recorded if, based upon available evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized. The effect of a change in income tax rates is recognized as income or expense in the
period that includes the enacted or substantively enacted date.
Accounting for uncertainty in income taxes recognized in the consolidated financial statements is in accordance with
accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be
recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon
external examination. If the tax position is deemed “more likely than not” to be sustained, the tax position is then
assessed to determine the amount of the benefit to recognize in the consolidated financial statements. The amount
of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being
realized upon ultimate settlement.
We recognize interest and penalties related to unrecognized tax benefits in provision for income taxes in the
consolidated statement of operations. Accrued interest and penalties are included within other non-current liabilities
in the consolidated balance sheet.
We use the period cost method for global intangible low-taxed income (“GILTI”) provisions and therefore have not
recorded deferred taxes for basis differences expected to reverse in future periods.
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Financial Statements
Foreign Currency Translation
The financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S.
dollars, with the resulting translation adjustments recorded as a component of other reserves within shareholders’
equity. Assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet
date, while income and expense items are translated using the average exchange rates during the period.
New Accounting Standards - Recently Adopted
In August 2020, the International Accounting Standards Board ("IASB") issued Interest Rate Benchmark Reform -
Phase 2, which amends IFRS 9, Financial Instruments, IAS 39, Financial Instruments: Recognition and
Measurement, IFRS 7, Financial Instruments: Disclosures, IFRS 4, Insurance Contracts and IFRS 16, Leases (the
“Phase 2” amendments). The Phase 2 amendments focused on relief when an existing interest rate is replaced with
an alternative interest rate. The Phase 2 amendments were effective January 1, 2021, and did not have a material
impact on our consolidated financial statements.
All other standards or amendments to standards that have been issued by the IASB and are effective from January
1, 2021 forward are not applicable nor had a significant effect on the our consolidated financial statements.
New Accounting Standards - Not Yet Adopted
We do not currently expect any recently issued accounting guidance to have a significant effect on the consolidated
financial statements.
3. Discontinued Operations and Assets Held for Sale
On December 7, 2020, the Parent announced that its wholly-owned subsidiary, IGT Lottery S.p.A. (formerly
Lottomatica Holding S.r.l.), had entered into a definitive agreement to sell one hundred percent of the share capital
of Lottomatica Videolot Rete S.p.A. and Lottomatica Scommesse S.r.l., the members of the IGT group which
conducted its Italian B2C gaming machine, sports betting, and digital gaming businesses to Gamenet Group S.p.A.
for a cash sale price of €950 million (€725 million of which was paid at closing, €100 million of which was paid on
August 5, 2021, and the remaining €125 million of which is payable on September 30, 2022, which is included within
other receivables, a component of other current assets, as described in Note 7 – Other Assets).
On May 10, 2021, the Company completed the sale and used the funds received at closing to pay transaction
expenses and partially fund the May 20, 2021 full redemption of the 4.750% Senior Secured Euro Notes due
February 2023 through the exercise of the make-whole call option. The consideration received, net of $139 million
of cash and restricted cash transferred, was $1.0 billion and resulted in a pre-tax gain on sale of $396 million
($391 million net of tax).
Annual Report and Accounts 2021
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Financial Statements
Summarized financial information for discontinued operations is shown below:
($ in millions)
Total revenue
Operating income (1)
For the year ended December 31,
2021
2020
74
24
Income from discontinued operations before (benefit from) provision for income
taxes
(Benefit from) provision for income taxes on discontinued operations
Gain on sale of discontinued operations before provision for income taxes
Provision for income taxes on sale of discontinued operations
Income from discontinued operations
Less: Net loss attributable to non-controlling interests from discontinued
operations
Income from discontinued operations attributable to IGT PLC
Foreign currency translation adjustments
Other comprehensive income from discontinued operations attributable to IGT
PLC
(1) Includes depreciation and amortization of $3 million and $102 million for the years ended 2021 and 2020, respectively.
396
5
415
23
(1)
(2)
(4)
417
413
414
52
43
7
—
—
36
(5)
41
48
89
Summarized financial information on the sale of the discontinued operations is shown below:
($ in millions)
1,015
Consideration received or receivable
600
Carrying amount of net assets sold
415
Gain on sale before income tax and reclassification of foreign currency translation reserve
Reclassification of foreign currency translation reserve (Note 20) (1)
19
5
Income tax expense on gain
391
Gain on sale after income tax
(1) At December 31, 2020, cumulative foreign currency translation adjustment losses included in other comprehensive income related to
discontinued operations were $16 million.
For the year
ended
December 31,
2021
The Company has continuing involvement with the businesses via a transition services agreement (“TSA”). As part
of the TSA, the Company provides various telecommunications, information technology, and back-office services for
which the Company will continue to receive compensation. These services generally expire after no more than three
years.
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Financial Statements
(♣) The following represents the major classes of assets and liabilities held for sale as part of our discontinued
operations:
($ in millions)
Assets:
Trade and other receivables, net
Other current assets
Systems, equipment and other assets related to contracts, net
Goodwill
Intangible assets, net
Other non-current assets
Assets held for sale
Liabilities:
Accounts payable
Other current liabilities
Other non-current liabilities
Liabilities held for sale
December 31,
2020
62
58
86
520
55
52
833
63
164
23
250
(♦) The Company allocated $512 million of goodwill to discontinued operations using a relative fair value approach.
Prior to the allocation to discontinued operations, the goodwill was included within our Global Gaming segment.
The following represents the major classes of assets and liabilities sold on May 10, 2021 as part of our discontinued
operations:
($ in millions)
Assets:
Trade and other receivables, net
Other current assets
Systems, equipment and other assets related to contracts, net
Goodwill
Intangible assets, net
Other non-current assets
Total assets
Liabilities:
Accounts payable
Other current liabilities
Other non-current liabilities
Total liabilities
May 10, 2021
56
10
88
512
58
39
763
50
81
32
163
At December 31, 2021 and 2020, there were $4 million and $5 million, respectively, of other disposal groups that
meet the requirements to be classified as held for sale included in assets held for sale in our consolidated balance
sheet.
Annual Report and Accounts 2021
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Financial Statements
4. Revenue Recognition
Disaggregation of Revenue
The following tables summarize revenue disaggregated by business segment and the source of the revenue for the
years ended December 31, 2021 and 2020:
($ in millions)
Operating and facilities management contracts
Gaming terminal services
Digital and betting services
Systems, software, and other
Service revenue
Lottery products
Gaming terminals
Other
Product sales
Total revenue
($ in millions)
Operating and facilities management contracts
Gaming terminal services
Digital and betting services
Systems, software, and other
Service revenue
Lottery products
Gaming terminals
Other
Product sales
Total revenue
Sources of Revenue
Service Revenue
For the year ended December 31, 2021
Global
Lottery
Global
Gaming
Digital &
Betting
Total
2,357
—
—
327
2,684
123
—
—
123
2,806
—
424
—
205
628
—
339
143
482
1,110
—
—
163
—
163
—
—
1
1
165
2,357
424
163
532
3,475
123
339
144
606
4,081
For the year ended December 31, 2020
Global
Lottery
Global
Gaming
Digital &
Betting
Total
1,744
—
—
299
2,043
121
—
—
121
2,164
—
295
—
187
483
—
205
148
354
837
—
—
114
—
114
—
—
1
1
115
1,744
295
114
486
2,640
121
205
149
476
3,115
Service revenue is derived from the following sources:
• Operating and facilities management contracts;
• Gaming terminal services;
•
•
Digital and betting services; and
Systems, software, and other
Operating and Facilities Management Contracts – Global Lottery
Our revenue from operating contracts is derived primarily from long-term exclusive operating licenses in Italy. Under
operating contracts, we manage all the activities along the lottery value chain including collecting wagers, paying
out prizes, managing all accounting and other back-office functions, running advertising and promotions, operating
data transmission networks and processing centers, training staff, providing retailers with assistance, and supplying
Annual Report and Accounts 2021
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Financial Statements
materials for the game. In most cases, the arrangement is accounted for as a single performance obligation
composed of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e.,
distinct days of service).
Under operating contracts, we typically satisfy the performance obligation and recognize revenue over time because
the customer simultaneously receives and consumes the benefits provided as we perform the services. The amount
of consideration to which we are typically entitled is variable based on a percentage of sales. Revenue is typically
recognized in the amount that we have the right to invoice the customer as this corresponds directly with the value
to the customer of our performance completed to date. In arrangements where we are performing services on
behalf of the government and the government is considered our customer, revenue is recognized net of prize
payments, taxes, retailer commissions, and remittances to state authorities. Under operating contracts, we are
generally required to pay an upfront license fee. Refer to the Upfront License Fees policy above for further details.
Our revenue from facilities management contracts (“FMC”) is generated by assembling, installing, and operating the
online lottery system and related point-of-sale equipment. Under a typical FMC, we maintain ownership of the
technology and are responsible for capital investments throughout the duration of the contract. FMCs typically
include a wide range of support services that are provided throughout the contract and are part of the integrated
solution that the customer has contracted to obtain. In most cases, the arrangement is accounted for as a single
performance obligation composed of a series of distinct services that are substantially the same and that have the
same pattern of transfer. Under FMCs, we typically satisfy the performance obligation and recognize revenue over
time because the customer simultaneously receives and consumes the benefits provided as we perform the
services. The amount of transaction price to which we are entitled is typically variable based on a percentage of
sales, although under certain of its agreements, the Company receives fees based on a fixed fee arrangement.
Revenue is typically recognized in the amount that we have the right to invoice the customer, as this corresponds
directly with the value to the customer of our completed performance.
Gaming terminal services – Global Gaming
Our revenue from gaming terminal services is generated by providing customers with proprietary land-based
gaming systems and equipment under a variety of recurring revenue or lease arrangements, including a percentage
of amounts wagered, a percentage of net win, or a fixed daily/monthly fee.
Included in gaming terminal services are wide area progressive (“WAP”) systems. WAP systems consist of linked
slot machines located in multiple casino properties, connected to a central computer system. WAP systems include
a Company-sponsored progressive jackpot that increases with every wager until a player wins the top award
combination. Casinos with WAP machines pay a percentage of amounts wagered for services related to the design,
assembly, installation, operation, maintenance, and marketing of the WAP systems, as well as funding and
administration of Company-sponsored progressive jackpots. A portion of the total fee collected is allocated to the
WAP jackpot. Since the jackpot is a payment to the customer, the portion allocated to the jackpot is classified as a
reduction of revenue.
In some arrangements, there is a single performance obligation composed of a series of distinct services that are
substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The amount of
transaction price to which we are entitled typically is variable based on a percentage of wagers. This results in
revenue recognition that corresponds with the value to the customer for the services transferred in the amount that
we have the right to invoice. In other arrangements where the end customer is the player, we record revenue net of
prize payouts once the wagering outcome has been determined.
Digital and betting services – Digital & Betting
We generate revenue from our iGaming solutions by providing gaming operators a license to offer IGT remote game
server games on the operator websites and mobile applications. We typically offer customers a usage-based license
under which we receive a fee based on the net gaming revenue derived by the operator attributable to the IGT
remote game server games. Revenue is typically recognized when the usage occurs.
We provide sports betting technology and services to commercial and tribal operators and lotteries in regulated
markets, primarily in the U.S. In the service contracts to our U.S. licensed sportsbook operators, we host a sports
betting platform and a variety of services including installation, configuration and integration services. For customers
Annual Report and Accounts 2021
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Financial Statements
who want to have an outsourcing model, we also offer trading services with the inclusion of odds setting and risk
management. Under these contracts, we generally record a percentage of net sports revenue over the contractual
term.
Systems, software, and other – Global Lottery
Our lottery contracts generally include other services, including telephone support, software maintenance, hardware
maintenance, and the right to receive unspecified upgrades or enhancements on a when-and-if-available basis, and
other professional services including software development. Fees earned for other services are generally
recognized as service revenue in the period the service is performed (i.e., over the support period).
We also develop technology to enable lotteries to offer commercial services over their existing lottery infrastructure
or over standalone networks separate from the lottery. Leveraging our distribution network and secure transaction
processing, we offer high-volume processing of commercial transactions including prepaid cellular telephone
recharges, bill payments, e-vouchers and retail-based programs, electronic tax payments, stamp duty services,
prepaid card recharges, and money transfers. These services are primarily offered outside of North America. In
most cases, these arrangements are considered to be short in duration. The amount of transaction price that we are
typically entitled to is variable based on the number of transactions processed. Revenue is typically recognized in
the amount that we have the right to invoice the customer as this corresponds directly with the value to the
customer of our completed performance.
Systems, software, and other – Global Gaming
Our gaming contracts generally include other services, including telephone support, software maintenance, content
licensing, royalty fees, hardware maintenance, and the right to receive unspecified updates or enhancements on a
when-and-if-available basis, and other professional services. We also generate revenue from other services,
including video central system monitoring, system support, and sales or usage-based licensing of intellectual
property. Fees earned for other services are generally recognized as service revenue in the period the service is
performed (i.e., over the support period).
Product Sales
Product sales are derived from the following sources:
•
Lottery products;
• Gaming terminals; and
• Other
Lottery products – Global Lottery
Lottery products revenue primarily includes the sale of lottery equipment, lottery systems and printed products.
Our revenue from the sale or sales-type lease of lottery systems and equipment typically includes multiple
performance obligations, where we assemble, sell, deliver, and install a turnkey system (inclusive of point-of-sale
terminals, if applicable) or deliver equipment and license the computer software for a fixed price, and the customer
subsequently operates the system or equipment. Our credit terms are predominantly short-term in nature. We also
grant extended payment terms under contracts where the sale is typically secured by the related equipment sold.
Revenue from the sale of lottery systems and equipment is recognized based upon the contractual terms of each
arrangement. These arrangements generally include customer acceptance provisions and general rights to
terminate the contract if we are in breach of the contract or at the convenience of the customer. In these
arrangements, the performance obligation is satisfied over time if the customer controls the asset as it is created
(i.e., when the asset is built at the customer site) or if our performance does not create an asset with an alternative
use and we have an enforceable right to payment plus a reasonable profit for performance completed to date. If
revenue is not recognized over time, it is generally recognized upon transfer of physical possession of the goods or
the satisfaction of customer acceptance provisions. If the transaction includes multiple performance obligations, it is
accounted for under arrangements with multiple performance obligations, discussed below.
Annual Report and Accounts 2021
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Financial Statements
Our other lottery product sales are primarily derived from the production and sales of instant ticket games under
multi-year contracts. In these arrangements, the performance obligation is generally satisfied at a point in time (i.e.,
upon transfer of control of the game tickets to the customer) based on the contractual terms of each arrangement.
Gaming terminals – Global Gaming
Our revenue from the sale or sales-type lease of gaming terminals includes embedded game content, machine
related equipment, licensing and royalty fees, and component parts. Our credit terms are predominantly short-term
in nature. We also grant extended payment terms under contracts where the sale is typically secured by the related
equipment sold. Revenue from the sale of gaming machines is recognized based upon the contractual terms of
each arrangement, but predominantly upon transfer of physical possession of the goods or the lapse of customer
acceptance provisions. If the sale of gaming machines includes multiple performance obligations, these
arrangements are accounted for under arrangements with multiple performance obligations, discussed below.
Other – Global Gaming
Other gaming product revenue is primarily comprised of gaming system sales, content licensing, perpetual or long-
term software licenses, non-machine related equipment and component parts (including game themes and
electronic conversion kits). Our revenue from the sale of gaming systems typically includes multiple performance
obligations, where we sell, deliver, and install a turnkey system or deliver equipment and license the computer
software for a fixed price, and the customer subsequently operates the system. These arrangements generally
include customer acceptance provisions and general rights to terminate the contract if we are in breach of the
contract. Such arrangements include hardware, software, and professional services. In these arrangements, the
performance obligation is generally satisfied upon transfer of physical possession of the goods or the satisfaction of
customer acceptance provisions.
Other – Digital & Betting
Other digital and betting product revenue is primarily comprised of perpetual software licenses, the sale of
equipment, and component parts.
Contract Balances
Information about contract assets and contract liabilities is as follows:
($ in millions)
Contract assets:
Current
Non-current
Contract liabilities:
Current
Non-current
December 31,
2021
December 31,
2020
Balance Sheet Classification
48
66
114
(104)
(47)
(151)
53 Other current assets
75 Other non-current assets
128
(109) Other current liabilities
(62) Other non-current liabilities
(171)
The amount of revenue recognized during the years ended December 31, 2021 and 2020 that was included in the
contract liabilities balance at the beginning of each period was $108 million and $55 million, respectively.
Annual Report and Accounts 2021
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Financial Statements
Transaction Price Allocated to Remaining Performance Obligations
At December 31, 2021, the transaction price allocated to unsatisfied performance obligations for contracts expected
to be greater than one year, or performance obligations for which we do not have a right to consideration from the
customer in the amount that corresponds to the value to the customer for our performance completed to date,
variable consideration which is not accounted for in accordance with the sales-based or usage-based royalties
guidance, or contracts which are not wholly unperformed, is approximately $978.6 million. Of this amount, we
expect to recognize as revenue approximately 29% within the next 12 months, approximately 34% between 13 and
36 months, approximately 21% between 37 and 60 months, and the remaining balance through December 31,
2031.
5. Trade and Other Receivables, net
Trade and other receivables are recorded at amortized cost, net of allowance for credit losses, and represent a
contractual right to receive money on demand or on fixed or determinable dates that are typically short-term with
payment due within 90 days or less.
($ in millions)
Trade and other receivables, gross
Allowance for credit losses
Trade and other receivables, net
The following table presents the activity in the allowance for credit losses:
($ in millions)
Balance at beginning of year
(Provisions) recoveries, net
Amounts written off as uncollectible
Other
Balance at end of year
December 31,
2021
2020
917
(15)
903
862
(16)
846
December 31,
2021
2020
(16)
(2)
2
—
(15)
(22)
(6)
10
3
(16)
We enter into various factoring agreements with third-party financial institutions to sell certain of our trade
receivables. We factored trade receivables of $1.1 billion and $1.5 billion during the years ended December 31,
2021 and 2020, respectively, under these factoring arrangements, which reduced trade receivables. The cash
received from these arrangements is reflected in net cash provided by operating activities in the consolidated
statement of cash flows. In certain of these factoring arrangements, for ease of administration, we will collect
customer payments related to the factored trade receivables, which we then remit to the financial institutions. At
December 31, 2021 and 2020, we had $57 million and $110 million, respectively, that was collected on behalf of the
financial institutions and recorded as restricted cash and cash equivalents and other current liabilities in the
consolidated balance sheet. The net cash flows relating to these collections are reported in net cash used in
financing activities in the consolidated statement of cash flows.
The following table presents an analysis of our past due trade and other receivables, gross of allowance for credit
losses:
($ in millions)
Current
Past due
December 31, 2021
December 31, 2020
$
802
116
917
%
87.4 %
12.6 %
100.0 %
$
732
129
862
%
85.0 %
15.0 %
100.0 %
Annual Report and Accounts 2021
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Financial Statements
6.
Inventories
($ in millions)
Raw materials
Work in progress
Finished goods
Inventories, gross
Obsolescence reserve
Inventories, net
The following table presents the activity in the obsolescence reserve:
($ in millions)
Balance at beginning of year
Provisions, net
Amounts written off
Other
Balance at end of year
December 31,
2021
2020
107
25
78
211
(28)
183
December 31,
2021
2020
(43)
(1)
11
4
(28)
86
23
103
212
(43)
169
(34)
(34)
24
1
(43)
The cost of inventories related to product sales that were recognized as an expense during 2021 and 2020 was
$321 million and $254 million, respectively.
7. Other Assets
Other Current Assets
($ in millions)
Customer financing receivables, net
Other receivables
Income taxes receivable
Prepaid expenses
Contract assets
Value-added tax receivable
Other
Notes
2021
2020
December 31,
4
170
158
64
54
48
28
66
587
232
11
45
39
53
46
52
480
Annual Report and Accounts 2021
Page | 123
Financial Statements
Other Non-Current Assets
($ in millions)
Upfront license fees, net:
Italian Scratch & Win
Italian Lotto
New Jersey
Indiana
Customer financing receivables, net
Contract assets
Deferred income taxes
Other
Upfront License Fees
Notes
2021
2020
December 31,
680
386
66
9
1,140
92
66
39
84
1,421
845
525
74
10
1,455
84
75
33
93
1,740
4
18
The upfront license fees are being amortized on a straight-line basis as follows:
Upfront License Fee
Italian Scratch & Win
Italian Lotto
New Jersey
Indiana
Customer Financing Receivables
License Term
9 years
9 years
15 years, 9 months
15 years
Amortization
Start Date
October 2019
December 2016
October 2013
July 2013
Customers' payment terms for customer financing receivables are confirmed with a written financing contract, lease
contract, or promissory note and a security agreement is typically signed by the parties granting the Company a
security interest in the related products sold or leased. Customer financing interest income is recognized based on
market rates prevailing at issuance.
Customer financing receivables are recorded at amortized cost, net of any allowance for credit losses, and are
classified in the consolidated balance sheet as follows:
($ in millions)
Customer financing receivables, gross
Allowance for credit losses
Customer financing receivables, net
($ in millions)
Customer financing receivables, gross
Allowance for credit losses
Customer financing receivables, net
Current
Assets
December 31, 2021
Non-Current
Assets
Total
220
(51)
170
111
(20)
92
Current
Assets
December 31, 2020
Non-Current
Assets
Total
275
(43)
232
91
(7)
84
332
(71)
261
365
(50)
316
Annual Report and Accounts 2021
Page | 124
Financial Statements
The following table presents the activity in the allowance for credit losses:
($ in millions)
Balance at beginning of year
Provisions, net
Amounts written off as uncollectible
Other
Balance at end of year
December 31,
2021
2020
(50)
(29)
8
—
(71)
(32)
(37)
24
(5)
(50)
The Company’s customer financing receivable portfolio is composed of customers primarily within the Global
Gaming business segment. We internally assess the credit quality of customer financing receivables using a
number of factors, including, but not limited to, credit scores obtained from external providers, trade references,
bank references, and historical experience. Risk profiles differ based on customer location and are pooled as North
America, Latin America and the Caribbean (“LAC”), and Europe, Middle East and Africa and Asia Pacific (“EMEA &
APAC”). In 2021, we combined the EMEA & APAC regions as these customers have similar credit risk profiles and
we apply the same expected loss rates when determining the allowance requirement.
During the year ended December 31, 2021 and 2020, customer financing receivables, primarily within LAC, of $8
million and $24 million, respectively, were written off as uncollectible due to the impacts of COVID-19. Additionally,
due to the extended duration of the COVID-19 induced shutdowns in LAC and potential future impacts on our
customers caused by COVID-19, we renegotiated payment plans to accommodate for the shutdowns and adjusted
expected loss rates, increasing our allowance for credit losses during the year ended December 31, 2021 and 2020.
At December 31, 2021 and 2020, we had $58 million and $43 million, respectively, of credit loss allowances
associated with the LAC customer financing receivables.
The past due balance, which represents installments that are one day or more past their contractual due date, of
customer financing receivables at amortized cost and the geography credit quality indicator at December 31, 2021
is as follows:
($ in millions)
Past due
Short-term portion not yet due
Long-term portion not yet due
8. Fair Value Measurements
North
America
LAC
EMEA &
APAC
Total
2
35
30
67
77
47
50
174
17
42
32
91
96
124
111
332
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our significant financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2021
and 2020 are as follows:
December 31, 2021
($ in millions)
Assets:
Balance Sheet Location
Level 1
Level 2
Level 3
Total
Fair
Value
Derivative assets
Other current and other non-current assets
Equity investments
Other non-current assets
Liabilities:
Derivative liabilities
Other current and other non-current liabilities
—
6
—
3
—
2
—
—
—
3
6
2
Annual Report and Accounts 2021
Page | 125
Financial Statements
($ in millions)
Assets:
Derivative assets
Equity investments
Liabilities:
Balance Sheet Location
Level 1
Level 2
Level 3
Total
Fair
Value
December 31, 2020
Other current and other non-current assets
Other non-current assets
—
6
—
11
—
10
—
—
—
11
6
10
Derivative liabilities
Other current and other non-current liabilities
Valuation Techniques
Derivative assets and liabilities classified as Level 2 were derived from quoted market prices for similar instruments
or by discounting the future cash flows with adjustments for credit risk as appropriate. All significant inputs were
derived from or corroborated by observable market data including current forward exchange rates and LIBOR rates,
among others.
At December 31, 2021 and 2020, the carrying amounts for cash and cash equivalents, restricted cash, trade and
other receivables, other current assets, accounts payable, and other current liabilities approximated their estimated
fair values because of their short-term nature.
Financial Assets and Liabilities Not Carried at Fair Value
The carrying amounts and fair value hierarchy classification of our significant financial assets and liabilities not
carried at fair value as of December 31, 2021 and 2020 are as follows:
($ in millions)
Assets:
Customer financing receivables, net
Equity investments
Liabilities:
Jackpot liabilities
Debt (1)
($ in millions)
Assets:
Customer financing receivables, net
Equity investments
Liabilities:
Jackpot liabilities
Debt (1)
(1) Excludes short-term borrowings and swap adjustments.
Carrying
Amount
Level 1
Level 2
Level 3
Total Fair
Value
December 31, 2021
261
11
196
6,484
—
—
—
—
—
—
—
6,792
December 31, 2020
245
11
184
—
245
11
184
6,792
Carrying
Amount
Level 1
Level 2
Level 3
Total Fair
Value
316
12
219
8,243
—
—
—
—
—
—
—
8,702
313
12
211
—
313
12
211
8,702
Level 3 equity investments are measured at cost, less impairment, plus or minus changes resulting from observable
price changes, which approximates fair value.
Annual Report and Accounts 2021
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Financial Statements
9. Derivative Financial Instruments
We use selected derivative hedging instruments, principally foreign currency forward contracts and interest rate
swaps, for the purpose of managing currency risks and interest rate risk arising from our operations and sources of
financing.
Cash Flow Hedges
The notional amount of foreign currency forward contracts, designated as cash flow hedges, outstanding at
December 31, 2021 and 2020 were $42 million and $62 million, respectively. The amount recorded within other
comprehensive income (loss) at December 31, 2021 is expected to impact the consolidated statement of operations
in 2022.
Fair Value Hedges
In September 2015, we executed $625 million notional amount of interest rate swaps that effectively converted
$625 million of the 6.250% Senior Secured U.S. Dollar Notes due February 2022 from fixed interest rate debt to
variable rate debt. In March 2021 and August 2020, $425 million and $200 million notional amount of the interest
rate swaps, respectively, were early terminated.
Net Investment Hedges
In October 2018, we executed $200 million notional amount of cross-currency swaps that are a hedge of foreign
exchange risk associated with a net investment in foreign operations. In March 2021 and March 2020, $100 million
notional amount of the cross-currency swaps were early terminated in each respective month.
Derivatives Not Designated as Hedging Instruments
The notional amount of foreign currency forward contracts, not designated as hedging instruments, outstanding at
December 31, 2021 and 2020 was $283 million and $295 million, respectively.
Refer to Note 20 – Shareholders’ Equity - Other Reserves for further information.
10. Financial Risk Management
Our activities expose us to a variety of market risks including interest rate risk and foreign currency exchange rate
risk. Our overall risk management strategy focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on our performance through ongoing operational and finance activities. We
monitor and manage our exposure to such risks both centrally and at the local level, as appropriate, as part of our
overall risk management program with the objective of seeking to reduce the potential adverse effects of such risks
on our results of operations and financial position.
Depending upon the risk assessment, we use selected derivative hedging instruments, including principally interest
rate swaps and foreign currency forward contracts, for the purposes of managing interest rate risk and currency
risks arising from our operations and sources of financing. Our policy is not to enter into such contracts for
speculative purposes. Our accounting policies and disclosures regarding derivatives are set out in Note 2 –
Summary of Significant Accounting Policies, and Note 9 – Derivative Financial Instruments.
The following section provides qualitative and quantitative disclosures on the effects that these risks may have. The
quantitative data reported below does not have any predictive value and does not reflect the complexity of the
markets or reactions which may result from any changes that are assumed to have taken place.
Interest Rate Risk
Indebtedness
Our exposure to changes in market interest rates relates primarily to our cash and financial liabilities which bear
floating interest rates. Our policy is to manage interest cost using a mix of fixed and variable rate debt. We have
Annual Report and Accounts 2021
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Financial Statements
historically used various techniques to mitigate the risks associated with future changes in interest rates, including
entering into interest rate swap and treasury rate lock agreements.
At December 31, 2021 and 2020, approximately 18% and 23% of our debt portfolio was exposed to interest rate
fluctuations, respectively. The Company’s exposure to floating rates of interest primarily relates to the Euro Term
Loan Facilities due January 2027. At December 31, 2020, the Company held $425 million notional amount of
interest rate swaps that were no longer designated as hedging relationships and the fair value of the swaps was
recognized in interest expense with no corresponding offset to debt. At December 31, 2021, the Company no longer
held any interest rate swaps.
A hypothetical 10 basis points increase in interest rates for 2021 and 2020, with all other variables held constant,
would have resulted in lower income from continuing operations before provision for income taxes of approximately
$1 million and $2 million, respectively.
Costs to Fund Jackpot Liabilities
Fluctuations in prime, treasury, and agency rates due to changes in market and other economic conditions directly
impact our cost to fund jackpots and corresponding gaming operating income. If interest rates decline, jackpot cost
increases and operating income decreases. We estimate a hypothetical decline of one percentage point in
applicable interest rates would have reduced operating income by approximately $7 million in 2021 and 2020. We
do not manage this exposure with derivative financial instruments.
Foreign Currency Exchange Rate Risk
We operate on an international basis across a number of geographical locations. We are exposed to (i)
transactional foreign exchange risk when an entity enters into transactions in a currency other than its functional
currency, and (ii) translation foreign exchange risk which arises when we translate the financial statements of our
foreign entities into U.S. dollars for the preparation of the consolidated financial statements.
Transactional Risk
Our subsidiaries generally execute their operating activities in their respective functional currencies. In
circumstances where we enter into transactions in a currency other than the functional currency of the relevant
entity, we seek to minimize our exposure by (i) sharing risk with our customers (for example, in limited
circumstances, but whenever possible, we negotiate clauses into our contracts that allows for price adjustments
should a material change in foreign exchange rates occur), (ii) creating a natural hedge by netting receipts and
payments, (iii) utilizing foreign currency borrowings, and (iv) where applicable, by entering into foreign currency
forward and option contracts.
The principal foreign currency to which we are exposed is the euro. A hypothetical 10% decrease in the U.S. dollar
to euro exchange rate, with all other variables held constant, would have resulted in lower income from continuing
operations before provision for income taxes of approximately $28 million and $363 million for 2021 and 2020,
respectively.
From time to time, we enter into foreign currency forward and option contracts to reduce the exposure associated
with certain firm commitments, variable service revenues, and certain assets and liabilities denominated in foreign
currencies. These contracts generally have average maturities of 12 months or less, and are regularly renewed to
provide continuing coverage throughout the year. It is our policy to negotiate the terms of the hedge derivatives to
match the terms of the hedged item to maximize hedge effectiveness.
At December 31, 2021, the Company had forward contracts for the sale of approximately $121 million of foreign
currency (primarily euro, Colombian peso, South African rand, and British pounds) and the purchase of
approximately $204 million of foreign currency (primarily euro, U.S. dollar, British pounds, and Chilean peso).
At December 31, 2020, we had forward contracts for the sale of approximately $170 million of foreign currency
(primarily South African rand, Canadian dollars, Australian dollars, and British pounds) and the purchase of
approximately $187 million of foreign currency (primarily euro and Polish zlotys).
Annual Report and Accounts 2021
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Financial Statements
Translation Risk
Certain of our subsidiaries are located in countries that are outside of the United States, in particular the Eurozone.
As our reporting currency is the U.S. dollar, the income statements of those entities are converted into U.S. dollars
using the average exchange rate for the period, and while revenues and costs are unchanged in local currency,
changes in exchange rates may lead to effects on the converted balances of revenues, costs and the result in U.S.
dollars. The monetary assets and liabilities of consolidated entities that have a reporting currency other than the
U.S. dollar are translated into U.S. dollars at the period-end foreign exchange rate. The effects of these changes in
foreign exchange rates are recognized directly in the consolidated statement of shareholders' equity within other
reserves.
Our foreign currency exposure primarily arises from changes between the U.S. dollar and the euro. A hypothetical
10% decrease in the U.S. dollar to euro exchange rate, with all other variables held constant, would have increased
equity by $97 million for 2021 and reduced equity by $118 million for 2020.
Capital Management
The primary goal of our capital management strategy is to ensure strong credit ratings and healthy financial ratios in
order to support our business while maximizing corporate value and reducing our financial risks. We consider all
equity and debt to be managed capital of the Company.
We manage our capital structure and make adjustments based on long-term strategy decisions in light of changes
in economic conditions. Additionally, we seek to preserve an optimal weighted average cost of capital and maintain
sufficient financial flexibility to pursue growth opportunities.
Our capital structure is as follows:
($ in millions)
Total Debt (Note 17)
Less: Cash and cash equivalents
Less: Debt issuance costs - Revolving Credit Facilities due July 2024
Total Net Debt
Total Equity
December 31,
2021
2020
6,527
591
10
5,926
8,262
907
14
7,341
1,706
1,225
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Financial Statements
11. Systems, Equipment and Other Assets Related to Contracts, net and Property, Plant and Equipment, net
Systems & Equipment, net consists of the following:
($ in millions)
Net book value
Balance at December 31, 2019
Additions
Depreciation
Disposals
Foreign currency translation
Transfers
Balance at December 31, 2020
Additions
Depreciation
Disposals
Foreign currency translation
Transfers
Balance at December 31, 2021
Balance at December 31,
2020
Cost
Accumulated depreciation
Net book value
Balance at December 31,
2021
Cost
Accumulated depreciation
Net book value
Buildings
Terminals and
Systems
Furniture and
Equipment
Construction
in Progress
Total
—
—
(1)
—
—
1
1
3
—
(4)
—
—
—
2
(1)
1
—
—
—
1,112
29
(312)
(5)
24
101
950
42
(280)
(9)
(23)
146
827
2,615
(1,665)
950
2,479
(1,652)
827
44
2
(13)
—
1
7
41
4
(10)
—
(4)
4
35
150
(109)
41
138
(102)
35
49
142
—
(1)
4
(118)
77
112
—
(4)
(2)
(108)
75
77
—
77
75
—
75
1,206
173
(325)
(7)
30
(9)
1,068
162
(291)
(17)
(29)
43
937
2,844
(1,776)
1,068
2,691
(1,754)
937
Annual Report and Accounts 2021
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Financial Statements
PPE, net consists of the following:
($ in millions)
Net book value
Balance at December 31, 2019
Additions
Depreciation
Impairment
Disposals
Foreign currency translation
Transfers
Balance at December 31, 2020
Additions
Depreciation
Disposals
Foreign currency translation
Transfers
Balance at December 31, 2021
Balance at December 31,
2020
Cost
Accumulated depreciation
Net book value
Balance at December 31,
2021
Cost
Accumulated depreciation
Net book value
Land
Buildings
Furniture and
Equipment
Construction
in Progress
Total
2
—
—
—
(1)
—
—
1
—
—
(1)
1
—
1
1
—
1
1
—
1
21
2
(1)
(1)
(4)
1
—
17
—
(2)
—
(1)
(3)
12
69
(52)
17
58
(46)
12
108
4
(28)
—
—
1
16
99
3
(28)
(6)
—
21
90
263
(163)
99
253
(163)
90
16
19
—
—
—
—
(20)
15
18
—
—
—
(23)
10
15
—
15
10
—
10
147
24
(30)
(1)
(6)
1
(4)
132
22
(29)
(6)
—
(4)
114
347
(215)
132
322
(208)
114
The estimated useful lives of assets are as follows:
Asset
Systems & Equipment
Buildings
Terminals and systems - lottery
Terminals and systems - gaming
Furniture and equipment
PPE
Buildings
Furniture and equipment
Estimated life in years
40
Generally do not exceed 10 years
3-5
Generally do not exceed 10 years
40
5-10
Leasehold improvements are amortized over the shorter of the corresponding lease term or estimated useful life.
Annual Report and Accounts 2021
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Financial Statements
12. Leases
Lessee
We have leases for real estate (warehouses, office space, data centers), vehicles, communication equipment, and
other equipment. Many of our real estate leases include one or more options to renew, while some include
termination options. Certain vehicle and equipment leases include residual value guarantees and options to
purchase the leased asset. Many of our real estate leases include variable payments for maintenance, real estate
taxes, and insurance that are determined based on the actual costs incurred by the landlord.
The classification of our leases in the consolidated balance sheet is as follows:
($ in millions)
Assets:
ROU asset, net (1)
Total lease assets
Liabilities:
Lease liability, current
Lease liability, non-current
Total lease liabilities
Balance Sheet Classification
Right-of-use assets
Other current liabilities
Lease liabilities
December 31,
2021
2020
273
273
51
285
336
(1) ROU assets are recorded net of accumulated amortization of $181 million and $38 million at December 31, 2021 and 2020, respectively.
ROU asset, net, by class of underlying assets is as follows:
($ in millions)
Real estate
Vehicles
Other equipment
Total ROU asset, net
Components of expense related to leases are as follows:
December 31,
2021
2020
248
11
14
273
304
304
59
290
348
272
18
14
304
($ in millions)
Real estate
Vehicles
Other equipment
Total depreciation expense
Interest expense
Variable lease costs (1)
(1) Variable lease costs include immaterial amounts related to short-term leases and sublease income.
For the year ended
December 31,
2021
2020
49
10
6
65
22
23
51
11
6
68
23
21
Annual Report and Accounts 2021
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Financial Statements
Maturities of lease liabilities at December 31, 2021 are as follows ($ in millions):
Year
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Imputed interest
Present value of lease liabilities
Total (1)
70
62
51
45
40
171
439
(103)
336
(1) The maturities above exclude leases that have not yet commenced and such leases are not material in the aggregate.
Cash flow information and non-cash activity related to leases is as follows:
($ in millions)
Cash paid for amounts included in the measurement of lease liabilities:
For the year ended December 31,
2021
2020
Operating cash flows
Finance cash flows
Non-cash activity:
ROU assets obtained in exchange for lease obligations (net of early
terminations)
Lessor
22
62
13
23
61
42
We have various arrangements for lottery and gaming equipment under which we are the lessor.
Our lease arrangements typically have lease terms ranging from one month to 4 years. These leases generally
meet the criteria for operating lease classification, as the lease payments are typically variable based on a
percentage of sales, a percentage of amounts wagered, net win, or a daily fee per active gaming terminal. Our
leases generally do not contain variable payments that are dependent on an index or rate. We provide lessees with
the option to extend the lease, which is considered when evaluating lease classification. Lease income from
operating leases is included within service revenue in the consolidated statement of operations. Operating lease
income was approximately 8% of total revenue for the years ended December 31, 2021 and 2020.
Our finance lease arrangements typically have lease terms ranging from one year to 10 years. We provide lessees
with the option to extend the lease, which is considered when evaluating lease classification. Lease income from
finance leases is included within product sales in the consolidated statement of operations. Total finance lease
income was approximately 1% of total revenue for the years ended December 31, 2021 and 2020. Finance lease
receivables are included within customer financing receivables, net, which are a component of other current assets
and other non-current assets within the consolidated balance sheet. Additional information on customer financing
receivables is included in Note 7 – Other Assets.
Annual Report and Accounts 2021
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Financial Statements
13. Restructuring
During 2021 and 2020, we initiated the following restructuring plans as described below.
2021 Italian Workforce Redundancies
In connection with the sale of our Italian B2C gaming machine, sports betting, and digital gaming businesses,
management agreed to provide to the buyer information technology and back-office services for a period of one to
three years via a TSA. As certain of these services are concluding, during the fourth quarter of 2021 management
performed a detailed review of redundant roles and created a plan to eliminate certain redundancies as TSA
services lapse, by commencing voluntary early retirement programs. We expect to incur approximately $38 million
in severance and related employee costs associated with these early retirement programs through December 31,
2023, as management and the identified employees reach a mutual understanding of the separation benefits. Cash
payments associated with these programs are expected to be made through 2030. During the year ended
December 31, 2021 we incurred $11 million of severance and related employee costs under the plan, within our
Global Lottery segment and corporate support function.
2020 Segment Reorganization
The 2020 segment reorganization plan was a global initiative that simplified our organizational structure and
increased efficiency and effectiveness. During the year ended December 31, 2021 we revised our cost estimates
resulting in a $1 million reduction of expense under the plan. Since the plan’s inception, we incurred severance and
related employee costs primarily within our Global Lottery and Global Gaming segments and corporate support
function totaling $15 million. This plan was substantially completed as of March 31, 2021.
2020 Global Supply Chain Optimization
The 2020 global supply chain optimization plan was an initiative that optimized our global supply chain and footprint
resulting in a significant reduction to our primary manufacturing operations. During the year ended December 31,
2021 we revised our cost estimates resulting in a $1 million reduction of expense under the plan. Since the plan’s
inception, we incurred severance and related employee costs, and other costs of $8 million, primarily within our
Global Gaming segment. This plan was substantially completed as of March 31, 2021.
2020 Technology Organization Consolidation
The 2020 technology organization consolidation plan was an initiative that realigned and consolidated operations,
reduced costs, and improved operational efficiencies within our Technology group. During the year ended December
31, 2021 we revised our cost estimates resulting in a $4 million reduction of expense under the plan. Since the
plan’s inception, we incurred severance and related employee costs of $13 million, primarily within our Global
Gaming segment. This plan was substantially completed as of December 31, 2021.
Annual Report and Accounts 2021
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Financial Statements
Rollforward of Restructuring Liability
The following table presents the activity in the restructuring liabilities for the above plans for the years ended
December 31, 2021 and December 31, 2020:
Severance
and Related
Employee
Costs
Total
Other
($ in millions)
Balance at December 31, 2019
—
2020 segment reorganization plan expense, net
16
2020 global supply chain optimization plan expense, net (1)
8
2020 technology organization consolidation plan expense, net
17
Cash paid for all plans
(18)
Reversals of expense and other
1
Balance at December 31, 2020
24
2021 Italian workforce redundancies plan expense, net
11
Cash paid for all plans
(17)
Reversals of expense and other
(6)
13
Balance at December 31, 2021
(1) Other includes approximately $1 million of asset impairment costs, the offset of which is property, plant and equipment, net in the consolidated
balance sheet.
—
16
5
17
(16)
1
23
11
(17)
(5)
12
—
—
3
—
(2)
—
1
—
—
(1)
1
Restructuring Expense
The following table summarizes consolidated restructuring expense by segment and type of cost:
($ in millions)
Global Lottery
Global Gaming
Digital & Betting
Corporate and Other
Total
($ in millions)
Global Lottery
Global Gaming
Digital & Betting
Corporate and Other
Total
14. Goodwill
For the year ended December 31, 2021
Severance
and Related
Employee
Costs
8
(3)
(1)
2
6
Other
Total
—
(1)
—
—
(1)
For the year ended December 31, 2020
Severance
and Related
Employee
Costs
5
28
2
6
41
Other
Total
—
4
—
—
4
8
(4)
(1)
2
6
5
32
2
6
45
As discussed in Note 22 – Segment Information, we established a dedicated Digital & Betting business segment,
comprising our iGaming and sports betting activities that were previously included within our Global Gaming
business segment. As a result, at September 1, 2021, we allocated a portion of goodwill associated with our Global
Gaming cash-generating unit to the Digital & Betting cash-generating unit using a relative value approach. The
goodwill allocated to the Global Gaming and Digital & Betting cash-generating units was $1.4 billion and $260
Annual Report and Accounts 2021
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Financial Statements
million, respectively, and the estimated recoverable amounts were determined to exceed the carrying values of each
cash-generating unit, which indicated no impairment existed. In addition, we completed an assessment for any
potential goodwill impairment for the former Global Gaming cash-generating unit immediately prior to the
reallocation and determined that no impairment existed.
During 2020, we adopted a new organizational structure focused on two business segments: Global Lottery and
Global Gaming. As a result of the change in cash-generating units, at July 1, 2020, we allocated goodwill to our new
cash-generating units using a relative value approach. The goodwill allocated to the new Global Lottery and Global
Gaming cash-generating units was $3.1 billion and $2.2 billion, respectively, and the estimated recoverable
amounts were determined to exceed the carrying amounts, which indicated no impairment existed. In addition, we
completed an assessment for any potential goodwill impairment for all the former cash-generating units immediately
prior to the reallocation and determined that no impairment existed. Additionally, in connection with the sale of its
Italian B2C gaming machine, sports betting, and digital gaming businesses, the Company allocated $511 million of
goodwill to discontinued operations using a relative value approach. Prior to the allocation to discontinued
operations, the goodwill was included within our Global Gaming cash-generating unit.
Changes in the carrying amount of goodwill consist of the following:
Cash-generating Units
Prior to July 1, 2020
Cash-generating Units
Subsequent to September 1,
2021(1)
North
America
Gaming and
Interactive
North
America
Lottery
International
Italy
Global
Lottery
Global
Gaming
Digital &
Betting
Discontinued
Operations
Total
($ in millions)
Balance at December 31,
2019
Impairment
(103)
—
(193) —
1,395
1,222
1,284
1,641
—
—
—
—
Segment realignment
(1,292)
(1,222)
(1,089) (1,638)
3,072
2,169
Foreign currency translation
Discontinued operations
Balance at December 31,
2020
Segment realignment
Foreign currency translation
—
—
—
—
—
—
—
—
—
—
(2)
(3)
—
—
68
—
29
(511)
—
—
3,140
1,687
—
—
—
—
—
(60)
(260)
(7)
—
260
(4)
Balance at December 31,
2021
(1) From July 1, 2020 to August 31, 2021, we operated under only two business segments: Global Lottery and Global Gaming.
1,420
3,080
—
256
—
—
—
—
— —
—
—
—
(511)
5,031
(296)
—
92
—
—
—
511
—
4,827
—
—
—
(71)
—
4,756
Total goodwill at December 31, 2021, 2020, and 2019 is net of $1.4 billion, $1.4 billion, and $1.1 billion, respectively,
of accumulated impairment losses primarily arising from the former North America Gaming and Interactive and
International segments of $862 million and $550 million in both 2021 and 2020, respectively, and $759 million and
$357 million in 2019, respectively.
Impairment
The process of evaluating potential impairments related to goodwill requires the application of significant judgment.
Goodwill is tested for impairment annually, in the fourth quarter, or whenever events or changes in circumstances
indicate the carrying amount may not be recoverable. If an event occurs that would cause revisions to the estimates
and assumptions used in analyzing the fair value of goodwill, the revision could result in a non-cash impairment loss
that could have a material impact on financial results.
The goodwill impairment test compares the recoverable amount of our three cash-generating units (which are the
same as our reportable segments) with its carrying amount and an impairment loss is recognized for the amount by
which the carrying amount exceeds the cash-generating unit's recoverable amount.
Annual Report and Accounts 2021
Page | 136
Financial Statements
(♦) We estimate the recoverable amount of the cash-generating units using an income approach based on projected
discounted cash flows. The procedures we follow include, but are not limited to, the following:
•
•
•
•
•
•
Analysis of the conditions in, and the economic outlook for, the cash-generating units;
Analysis of general market data, including economic, governmental, and environmental factors;
Review of the history, current state, and future operations of the cash-generating units;
Analysis of financial and operating projections based on historical operating results, industry results, and
expectations;
Analysis of financial, transactional, and trading data for companies engaged in similar lines of business to
develop appropriate valuation multiples and operating comparisons; and
Calculation of our market capitalization, total invested capital, the implied market participant acquisition
premium, and supporting qualitative and quantitative analysis.
(♦) Under the income approach, the recoverable amount of the cash-generating unit is determined based on the
present value of each unit's estimated future cash flows, discounted at a risk-adjusted rate. We use internal
forecasts for a five-year period to estimate future cash flows and estimate long-term future growth rates based on
internal projections of the long-term outlook for each cash-generating unit. We use discount rates that are
commensurate with the risks and uncertainty inherent in each cash-generating unit and in internally developed
forecasts.
Estimating the recoverable amount of cash-generating units requires management to use its judgment in making
estimates and making forecasts that are based on a number of factors including forecasted revenue, forecasted
operating profits, terminal growth rates, and weighted-average costs of capital. Actual results may differ from those
assumed in forecasts.
As permitted by IAS 36, Impairment of Assets, the recoverable amounts resulting from the most recent detailed
calculations were used for the 2021 annual impairment test as the standard’s criteria was considered satisfied: the
margins by which the recoverable amounts exceeded their carrying amounts (commonly referred to as “headroom”)
were substantial; there have been no significant changes in the assets and liabilities; and the likelihood that the
recoverable amount would be less than the carrying amount is remote. The dates of the most recent detailed
recoverable amount calculations and resulting headrooms are as follows:
Global Lottery
Global Gaming
Digital & Betting
Date of most recent
recoverable amount
calculation
December 31, 2020
September 1, 2021
September 1, 2021
Headroom
>50%
>50%
>100%
The key assumptions to which the calculation of fair value less costs of disposals that are most sensitive include the
cash-generating unit’s forecasted EBITDA, long-term growth rates, and discount rate. The values assigned to these
key assumptions reflect IGT’s experience. Reasonably possible changes in any of these key assumptions would not
result in a recoverable amount that would be less than the carrying amounts for each of our cash-generating units.
During the first quarter of 2020, we determined there was an interim goodwill impairment triggering event caused by
COVID-19. As a result of the identified triggering event, we estimated the fair value of each of our former cash-
generating units using an income approach based on projected discounted cash flows. Based principally on lower
forecasted revenue and operating profits caused by lower demand for our commercial gaming products, we
recorded a $296 million non-cash impairment loss with no income tax benefit, of which $193 million and $103 million
was recorded within our former International and North America Gaming cash-generating units, respectively, to
reduce the carrying amount of the cash-generating units to fair value.
Annual Report and Accounts 2021
Page | 137
Financial Statements
15. Intangible Assets, net
Intangible assets at December 31, 2021 and 2020 are summarized as follows:
Customer
relationships
Trademarks
(indefinite-
lived)
($ in millions)
Balance at December 31, 2019
Additions
Amortization
Foreign currency translation
Write-off and other
Balance at December 31, 2020
Additions
Amortization
Foreign currency translation
Write-off and other
Balance at December 31, 2021
December 31, 2020
Cost
Accumulated amortization
Accumulated impairment loss
Weighted average life (in years)
December 31, 2021
Cost
Accumulated amortization
Accumulated impairment loss
Weighted average life (in years)
Trademarks
(definite-lived)
109
—
(15)
—
—
94
—
(15)
—
—
80
245
—
—
—
—
245
—
—
—
—
245
255
—
(10)
245
—
255
—
(10)
245
—
227
(92)
(41)
94
14.1
225
(106)
(39)
80
14.1
Net Book Value
Computer
software and
game library
Licenses
Developed
technologies
Other
Total
158
18
(45)
4
—
134
25
(44)
(3)
(3)
109
925
(784)
(7)
134
5.6
925
(809)
(7)
109
5.6
13
7
(5)
1
(4)
11
3
(4)
(1)
(2)
6
69
(59)
—
11
3.5
65
(58)
—
6
3.5
16
6
(9)
—
—
13
8
(4)
—
—
17
225
(213)
—
13
5.6
233
(216)
—
17
5.6
14
—
(4)
1
—
10
—
(3)
—
—
7
58
(27)
(21)
10
8.9
55
(28)
(20)
7
9.0
1,744
30
(202)
6
(6)
1,572
36
(190)
(5)
(5)
1,409
4,090
(2,388)
(130)
1,572
4,084
(2,549)
(126)
1,409
1,189
—
(123)
1
(2)
1,065
—
(120)
(1)
—
944
2,330
(1,214)
(51)
1,065
15.5
2,327
(1,333)
(49)
944
15.5
Annual Report and Accounts 2021
Page | 138
Financial Statements
Trademarks with indefinite lives have been allocated to the Corporate and Other support function for impairment
testing at December 31, 2021 and 2020.
Intangible asset amortization expense of $190 million and $202 million, which includes computer software
amortization expense of $23 million and $26 million, was recorded in 2021 and 2020.
Amortization expense on intangible assets for the next five years is expected to be as follows ($ in millions):
Year
2022
2023
2024
2025
2026
16. Other Liabilities
Other Current Liabilities
($ in millions)
Employee compensation
Income taxes payable
Redeemable non-controlling interest
Contract liabilities
Accrued interest payable
Accrued expenses
Taxes other than income taxes
Jackpot liabilities
Current financial liabilities
Finance lease liabilities
Other
Other Non-Current Liabilities
($ in millions)
Redeemable non-controlling interest
Jackpot liabilities
Contract liabilities
Other
Amount
185
162
145
121
111
725
Notes
2021
2020
December 31,
4
19
12
171
151
116
104
100
75
72
66
61
51
25
994
90
74
125
109
138
118
96
71
128
59
15
1,023
Notes
2021
2020
December 31,
19
4
240
130
47
72
489
292
148
62
72
574
Redeemable Non-controlling Interest
In 2016, the Parent, through its subsidiary Lottomatica S.p.A. ("Lottomatica"), entered into a consortium (Lottoitalia
S.r.l. or "Lottoitalia") to bid on the Italian Gioco del Lotto service license (the "Lotto License"). Lottoitalia was
awarded management of the Lotto License for a nine-year term, and under the terms of the consortium agreement,
Lottomatica is the principal operating partner fulfilling the requirements of the Lotto License. We consolidate
Lottoitalia due to the Company's risks and rewards of the investment and Lottoitalia's need for funding to finance
planned operations.
Annual Report and Accounts 2021
Page | 139
Financial Statements
We classify the non-controlling interest in Lottoitalia as a financial liability recorded at amortized cost. Changes in
the financial liability, which are recorded within other expense on the consolidated statement of operations, were
$91 million and $72 million for the years ended December 31, 2021 and 2020, respectively.
In connection with the formation of Lottoitalia in 2016, Lottomatica entered into an agreement with Italian Gaming
Holding a.s. ("IGH"), one of the consortium members, which contains a deadlock put/call option in which IGH has
the right, at its discretion, to sell its interest in Lottoitalia to Lottomatica and Lottomatica has a reciprocal call right, in
the event of certain specified events as defined in the agreement. The put/call options expire 60 days following
written notice by either party following the applicable event. The strike price of the options is determined based on a
specified formula as defined in the agreement. The agreement also allows for the extension of Lottoitalia past its
fixed term of December 31, 2026 if agreed to by both, Lottomatica and IGH.
17. Debt
The Company’s long-term debt obligations consist of the following:
December 31, 2021
Principal
Debt issuance
cost, net
Swap and
other
Total
($ in millions)
5.350% Senior Secured U.S. Dollar Notes due October 2023
3.500% Senior Secured Euro Notes due July 2024
6.500% Senior Secured U.S. Dollar Notes due February 2025
4.125% Senior Secured U.S. Dollar Notes due April 2026
3.500% Senior Secured Euro Notes due June 2026
6.250% Senior Secured U.S. Dollar Notes due January 2027
2.375% Senior Secured Euro Notes due April 2028
5.250% Senior Secured U.S. Dollar Notes due January 2029
61
566
1,100
750
849
750
566
750
—
(2)
(7)
(6)
(5)
(5)
(4)
(6)
Senior Secured Notes
5,392
(35)
—
—
—
—
—
—
—
—
—
Euro Term Loan Facilities due January 2027
Long-term debt, less current portion
1,133
6,525
(5)
(40)
(10)
(10)
61
564
1,093
744
844
745
562
744
5,357
1,118
6,475
Short-term borrowings
52
—
—
52
Total debt
6,577
(40)
(10)
6,527
Annual Report and Accounts 2021
Page | 140
Financial Statements
($ in millions)
6.250% Senior Secured U.S. Dollar Notes due February 2022
4.750% Senior Secured Euro Notes due February 2023
5.350% Senior Secured U.S. Dollar Notes due October 2023
3.500% Senior Secured Euro Notes due July 2024
6.500% Senior Secured U.S. Dollar Notes due February 2025
3.500% Senior Secured Euro Notes due June 2026
6.250% Senior Secured U.S. Dollar Notes due January 2027
2.375% Senior Secured Euro Notes due April 2028
5.250% Senior Secured U.S. Dollar Notes due January 2029
Senior Secured Notes
Euro Term Loan Facilities due January 2027
Long-term debt, less current portion
Euro Term Loan Facility due January 2027
Current portion of long-term debt
December 31, 2020
Principal
Debt issuance
cost, net
Swap and
other
Total
1,000
1,043
61
614
1,100
920
750
614
750
6,851
1,055
7,906
393
393
(3)
(5)
—
(4)
(8)
(7)
(6)
(5)
(7)
(45)
(7)
(52)
—
—
7
—
—
—
—
—
—
—
—
7
8
15
—
—
15
1,004
1,038
61
610
1,092
913
744
608
743
6,813
1,056
7,869
393
393
8,262
Total debt
8,299
(52)
At December 31, 2021 and December 31, 2020, $10 million and $24 million, respectively, of debt issuance costs,
net for the Revolving Credit Facilities with no outstanding borrowings, are recorded as other non-current assets in
the consolidated balance sheet.
The principal amount of long-term debt maturing over the next five years and thereafter as of December 31, 2021 is
as follows ($ in millions):
Year
2022
2023
2024
2025
2026
2027 and thereafter
Total principal payments
U.S. Dollar
Denominated
Euro
Denominated
Total
—
61
—
1,100
750
1,500
3,411
—
—
793
227
1,076
1,019
3,115
—
61
793
1,327
1,826
2,519
6,525
Annual Report and Accounts 2021
Page | 141
Financial Statements
Senior Secured Notes
The key terms of our senior secured notes (the “Notes”), which were rated Ba3 and BB by Moody’s Investor Service
(“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”), respectively at December 31, 2021, are as follows:
Principal
(in millions)
$61
Effective
Interest
Rate
5.47%
Issuer Guarantors Collateral Redemption
IGT
**
††
Description
5.350% Senior Secured U.S. Dollar
Notes due October 2023
3.500% Senior Secured Euro Notes
due July 2024
6.500% Senior Secured U.S. Dollar
Notes due February 2025
4.125% Senior Secured U.S. Dollar
Notes due April 2026
3.500% Senior Secured Euro Notes
due June 2026
6.250% Senior Secured U.S. Dollar
Notes due January 2027
2.375% Senior Secured Euro Notes
due April 2028
5.250% Senior Secured U.S. Dollar
Notes due January 2029
€500
3.68% Parent
$1,100
6.71% Parent
$750
4.34% Parent
€750
3.65% Parent
$750
6.41% Parent
€500
2.50% Parent
$750
5.39% Parent
*
*
*
*
*
*
*
†
†
†
†
†
†
†
+
++
++
+++
+++
++
+++
+++
Interest
payments
Semi-annually
in arrears
Semi-annually
in arrears
Semi-annually
in arrears
Semi-annually
in arrears
Semi-annually
in arrears
Semi-annually
in arrears
Semi-annually
in arrears
Semi-annually
in arrears
*
Certain subsidiaries of the Parent.
**
The Parent and certain subsidiaries of the Parent.
†
Ownership interests in certain subsidiaries of the Parent, certain intercompany loans with principal balances
in excess of $10 million and certain accounts receivable.
†† Certain intercompany loans with principal balances in excess of $10 million and certain accounts receivable.
+
++
International Game Technology (“IGT”) may redeem in whole or in part at any time prior to maturity at 100% of
their principal amount together with accrued and unpaid interest and a make-whole premium. IGT may also
redeem in whole or in part at 100% of their principal amount together with accrued and unpaid interest in
connection with certain gaming regulatory events. Upon the occurrence of certain events, IGT will be required
to offer to repurchase all of the notes at a price equal to 101% of their principal amount together with accrued
and unpaid interest.
The Parent may redeem in whole or in part at any time prior to the date which is six months prior to maturity at
100% of their principal amount together with accrued and unpaid interest and a make-whole premium. After
such date, the Parent may redeem in whole or in part at 100% of their principal amount together with accrued
and unpaid interest. The Parent may also redeem in whole but not in part at 100% of their principal amount
together with accrued and unpaid interest in connection with certain tax events. Upon the occurrence of
certain events, the Parent will be required to offer to repurchase all of the notes at a price equal to 101% of
their principal amount together with accrued and unpaid interest.
+++ The Parent may redeem in whole or in part at any time prior to the first date set forth in the redemption price
schedule at 100% of their principal amount together with accrued and unpaid interest and a make-whole
premium. After such date, the Parent may redeem in whole or in part at a redemption price set forth in the
redemption price schedule in the indenture, together with accrued and unpaid interest. The Parent may also
redeem in whole but not in part at 100% of their principal amount together with accrued and unpaid interest in
connection with certain tax events. Upon the occurrence of certain events, the Parent will be required to offer
to repurchase all of the notes at a price equal to 101% of their principal amount together with accrued and
unpaid interest.
Annual Report and Accounts 2021
Page | 142
Financial Statements
The Notes contain customary covenants and events of default. At December 31, 2021, the issuers were in
compliance with the covenants.
On February 11, 2022, the Moody’s rating increased to Ba2 and on February 16, 2022, the S&P’s rating increased
to BB+.
4.750% Senior Secured Euro Notes due February 2023
In May 2021, the Parent used the proceeds from the sale of the Italian B2C gaming machine, sports betting, and
digital gaming businesses and borrowings under the Revolving Credit Facilities to redeem $1.0 billion (€850 million)
of the 4.750% Senior Secured Euro Notes due February 2023 through the exercise of the make-whole call option
for total consideration, excluding interest, of $1.1 billion. The Company recorded a $67 million loss on
extinguishment of debt in connection with the repurchase, which is classified in other expense (income), net in the
consolidated statement of operations for the year ended December 31, 2021.
4.125% Senior Secured U.S. Dollar Notes due April 2026
In March 2021, the Parent issued $750 million of 4.125% Senior Secured U.S. Dollar Notes due April 2026 (the
“4.125% Notes”) at par. The Parent used the proceeds to partially redeem the 6.250% Senior Secured U.S. Dollar
Notes due February 2022.
Interest on the 4.125% Notes is payable semi-annually in arrears.
The 4.125% Notes are guaranteed by certain subsidiaries of the Parent and are secured by ownership interests in
certain subsidiaries of the Parent, certain intercompany loans with principal balances in excess of $10 million and
certain accounts receivable.
Prior to April 15, 2023, the Parent may redeem the 4.125% Notes in whole or in part at 100% of their principal
amount together with accrued and unpaid interest and a make-whole premium. From April 15, 2023 to April 14,
2024, the Parent may redeem the 4.125% Notes in whole or in part at 102.063% of their principal amount together
with accrued and unpaid interest. From April 15, 2024 to April 14, 2025, the Parent may redeem the 4.125% Notes
in whole or in part at 101.031% of their principal amount together with accrued and unpaid interest. On or after April
15, 2025, the Parent may redeem the 4.125% Notes in whole or in part at 100% of their principal amount together
with accrued and unpaid interest. The Parent may also redeem the 4.125% Notes in whole but not in part at 100%
of their principal amount together with accrued and unpaid interest in connection with certain tax events. Upon the
occurrence of certain events, the Parent will be required to offer to repurchase all of the 4.125% Notes at a price
equal to 101% of their principal amount together with accrued and unpaid interest. In certain events of default, the
4.125% Notes outstanding may become due and payable immediately.
6.250% Senior Secured U.S. Dollar Notes due February 2022
In March 2021, the Parent used the proceeds from the sale of the 4.125% Notes and borrowings under the
Revolving Credit Facilities to redeem $1.0 billion of the 6.250% Senior Secured U.S. Dollar Notes due February
2022 for total consideration, excluding interest, of $1.0 billion. The Company recorded an $18 million loss on
extinguishment of debt in connection with the repurchase, of which a $24 million loss is classified in other expense
(income), net and an offsetting gain of $6 million is classified in interest expense, net in the consolidated statement
of operations for the year ended December 31, 2021.
5.250% Senior Secured U.S. Dollar Notes due January 2029
In June 2020, the Parent issued $750 million of 5.250% Senior Secured U.S. Dollar Notes due January 2029 (the
“5.250% Notes”) at par.
The Parent used the net proceeds from the 5.250% Notes to repurchase $500 million of the 6.250% Senior Secured
U.S. Dollar Notes due February 2022 for total consideration, excluding interest, of $525 million. The Company
recorded a $23 million loss on extinguishment of debt in connection with the repurchase, of which a $28 million loss
is classified in other expense (income), net and an offsetting gain of $5 million is classified in interest expense, net
in the consolidated statement of operations for the year ended December 31, 2020.
Annual Report and Accounts 2021
Page | 143
Financial Statements
Interest on the 5.250% Notes is payable semi-annually in arrears.
The 5.250% Notes are guaranteed by certain subsidiaries of the Parent and are secured by ownership interests in
certain subsidiaries of the Parent, certain intercompany loans with principal balances in excess of $10 million and
certain accounts receivable.
Prior to January 15, 2024, the Parent may redeem the 5.250% Notes in whole or in part at 100% of their principal
amount together with accrued and unpaid interest and a make-whole premium. From January 15, 2024 to January
14, 2025, the Parent may redeem the 5.250% Notes in whole or in part at 102.625% of their principal amount
together with accrued and unpaid interest. From January 15, 2025 to January 14, 2026, the Parent may redeem the
5.250% Notes in whole or in part at 101.313% of their principal amount together with accrued and unpaid interest.
On or after January 15, 2026, the Parent may redeem the 5.250% Notes in whole or in part at 100% of their
principal amount together with accrued and unpaid interest. The Parent may also redeem the 5.250% Notes in
whole but not in part at 100% of their principal amount together with accrued and unpaid interest in connection with
certain tax events. Upon the occurrence of certain events, the Parent will be required to offer to repurchase all of the
5.250% Notes at a price equal to 101% of their principal amount together with accrued and unpaid interest. In
certain events of default, the 5.250% Notes outstanding may become due and payable immediately.
5.500% Senior Secured U.S. Dollar Notes due June 2020
In June 2020, the Parent redeemed the $27 million 5.500% Senior Secured U.S. Dollar Notes due June 2020 when
they matured.
4.750% Senior Secured Euro Notes due March 2020
In March 2020, the Parent redeemed the €388 million ($432 million) 4.750% Senior Secured Euro Notes due March
2020 when they matured.
Euro Term Loan Facilities
The Parent is a party to a Senior Facility Agreement dated July 25, 2017, as amended (the “TLF Agreement”), which
provided for a €1.5 billion term loan facility maturing on January 25, 2023 that was repayable in annual installments
of €320 million due January 25 of each of 2020, 2021 and 2022 with a final installment of €540 million due January
25, 2023. The Parent prepaid the installment due January 25, 2020 with proceeds of the 2.375% Notes issued in
September 2019 and repaid the installment due January 25, 2021 at the due date.
In May 2020, the Company entered into an amendment to the TLF Agreement which modified the TLF Agreement
by, among other things:
•
•
•
•
Providing a waiver of the covenants requiring the Company to maintain a minimum ratio of EBITDA to net
interest costs and a maximum ratio of total net debt to EBITDA from the fiscal quarter ending June 30, 2020
through the fiscal quarter ending June 30, 2021 and established new thresholds for these financial covenants
starting with the fiscal quarter ending September 30, 2021 as described in the amendments;
Providing that the obligation to grant security over additional collateral be waived provided that the public debt
ratings of the Company are not less than BB- or Ba3;
Increasing the margin from 2.75% to 3.25% if the public debt ratings of the Company are B+ or B1 (or lower);
and
Prohibiting restricted payments (including dividends and ordinary share repurchases) during the period
commencing on April 1, 2020 and expiring on June 30, 2021, and permitting restricted payments during the
period commencing on July 1, 2021 and expiring on the maturity date of the respective agreements provided
that the ratio of total net debt to EBITDA as adjusted to reflect the restricted payment is less than specified
thresholds.
In addition, the amendment to the TLF Agreement provided that the margin applicable to all loans under the TLF
Agreement outstanding as of April 11, 2020 was increased to 2.50%.
Annual Report and Accounts 2021
Page | 144
Financial Statements
In July 2021, the Parent entered into an Amendment and Restatement Agreement (the “Amendment and
Restatement Agreement”) with respect to the TLF Agreement. The Amendment and Restatement Agreement among
other things: (i) added a second term loan facility with IGT Lottery Holdings B.V. as the borrower, (ii) increased the
aggregate amount of the term loan facilities (the “Euro Term Loan Facilities”) from €860 million to €1.0 billion (with
each of the Parent and IGT Lottery Holdings B.V. borrowing €500 million), (iii) extended the maturity date of the
Euro Term Loan Facilities to January 25, 2027, (iv) reduced the applicable interest rate by 35 basis points based on
current debt ratings, (v) provided for a maximum decrease or increase of an additional 7.5 basis points in the margin
based on environmental, social and governance factors, and (vi) maintained and extended existing financial
covenant thresholds.
As a result of the Amendment and Restatement Agreement, the Company reclassified the €320 million current
portion of long-term debt to long-term debt.
The borrowers must repay the Euro Term Loan Facilities in installments, as detailed below:
Due Date
January 25, 2024
January 25, 2025
January 25, 2026
January 25, 2027
Amount
(€ in millions)
200
200
200
400
Upon the extinguishment of debt in connection with the Amendment and Restatement Agreement, we recorded a
$2 million loss, which is classified in other expense (income), net and $3 million recovery in interest expense, net in
the consolidated statement of operations for the year ended December 31, 2021. In connection with the
modification, the Company recognized $6 million of debt issuance costs within Interest expense, net and an upfront
interest expense recovery of $9 million within Interest expense, net.
In September 2021, the Company received an upgraded environmental, social, and governance rating and pursuant
to the Amendment and Restatement Agreement, the interest rate was decreased by 4 basis points effective
September 17, 2021.
Interest on the Euro Term Loan Facilities is payable between one and six months in arrears at rates equal to the
applicable EURIBOR plus a margin based on our long-term ratings by Moody’s and S&P. At December 31, 2021
and 2020, the effective interest rate on the Euro Term Loan Facilities was 2.11% and 2.50%, respectively.
The Euro Term Loan Facilities are guaranteed by certain subsidiaries of the Parent and are secured by ownership
interests in certain subsidiaries of the Parent, certain intercompany loans with principal balances in excess of
$10 million and certain accounts receivable.
Upon the occurrence of certain events, the borrowers may be required to prepay the Euro Term Loan Facilities in
full.
The TLF Agreement, as amended by the Amendment and Restatement Agreement, contains customary covenants
(including maintaining a minimum ratio of EBITDA to net interest costs and maximum ratio of total net debt to
EBITDA) and events of default. At December 31, 2021, the Parent was in compliance with the covenants.
Annual Report and Accounts 2021
Page | 145
Financial Statements
Revolving Credit Facilities
The Parent and certain of its subsidiaries are party to a Senior Facilities Agreement dated November 4, 2014, as
amended (the “RCF Agreement”), which provides for the following multi-currency revolving credit facilities (the
“Revolving Credit Facilities”) which mature on July 31, 2024:
Maximum Amount
Available (in millions)
$1,050
Facility
Revolving Credit Facility A
€625
Revolving Credit Facility B
Borrowers
Parent, IGT, and IGT Global Solutions Corporation
Parent, IGT Lottery S.p.A. (formerly Lottomatica Holding
S.r.l), and IGT Lottery Holdings B.V.
Interest on the Revolving Credit Facilities is payable between one and six months in arrears at rates equal to the
applicable LIBOR (or the applicable EURIBOR if the borrower elects to borrow in Euros) with respect to Revolving
Credit Facility A or the applicable EURIBOR (or the applicable LIBOR if the borrower elects to borrow in U.S.
dollars) with respect to Revolving Credit Facility B, plus a margin based on the Parent’s long-term ratings by
Moody’s and S&P. At December 31, 2021 and 2020, there were no balances for the Revolving Credit Facilities.
The RCF Agreement provides that the following fees, which are recorded in interest expense, net in the
consolidated statement of operations, are payable quarterly in arrears:
•
•
Commitment fees - payable on the aggregate undrawn and un-cancelled amount of the Revolving Credit
Facilities depending on the Parent’s long-term ratings by Moody’s and S&P. The applicable rate was 0.928%
at December 31, 2021.
Utilization fees - payable on the aggregate drawn amount of the Revolving Credit Facilities at a rate ranging
from 0.15% to 0.60% dependent on the percentage of the Revolving Credit Facilities utilized. The applicable
rate was 0.15% at December 31, 2021.
The Revolving Credit Facilities are guaranteed by the Parent and certain of its subsidiaries and are secured by
ownership interests in certain subsidiaries and of the Parent, certain intercompany loans with principal balances in
excess of $10 million and certain accounts receivable.
Upon the occurrence of certain events, the borrowers may be required to repay the Revolving Credit Facilities and
the lenders may have the right to cancel their commitments.
At December 31, 2021 the aggregate amounts available to be borrowed under the Revolving Credit Facilities were
$1.7 billion.
The RCF Agreement contains customary covenants (including maintaining a minimum ratio of EBITDA to net
interest costs and a maximum ratio of total net debt to EBITDA) and events of default. At December 31, 2021, the
borrowers were in compliance with the covenants.
In May 2020, the Parent entered into an amendment to the RCF Agreement, which modified the RCF Agreement by,
among other things:
•
•
•
•
Providing a waiver of the covenants requiring the Company to maintain a minimum ratio of EBITDA to net
interest costs and a maximum ratio of total net debt to EBITDA from the fiscal quarter ending June 30, 2020
through the fiscal quarter ending June 30, 2021 and established new thresholds for these financial covenants
starting with the fiscal quarter ending September 30, 2021 as described in the amendments;
Providing that the obligation to grant security over additional collateral be waived provided that the public debt
ratings of the Company are not less than BB- or Ba3;
Increasing the margin from 2.75% to 3.25% if the public debt ratings of the Company are B+ or B1 (or lower);
and
Prohibiting restricted payments (including dividends and ordinary share repurchases) during the period
commencing on April 1, 2020 and expiring on June 30, 2021, and permitting restricted payments during the
period commencing on July 1, 2021 and expiring on the maturity date of the respective agreements provided
Annual Report and Accounts 2021
Page | 146
Financial Statements
that the ratio of total net debt to EBITDA as adjusted to reflect the restricted payment is less than specified
thresholds.
In addition, the amendment to the RCF Agreement provided that the margin applicable to all loans under the RCF
Agreement outstanding as of April 11, 2020 was increased to 2.475%.
The TLF Agreement and the RCF Agreement limit the aggregate amount that the Parent can pay with respect to
dividends and repurchases of ordinary shares in each year to $300 million if our debt ratings by Moody’s or S&P are
lower than Ba1 or BB+, respectively, and $400 million if our debt ratings by Moody’s and S&P are equal to or higher
than Ba1 and BB+, respectively.
In connection with the modification, the Company recognized $10.5 million of debt issuance costs within Other
expense and upfront interest expense of $15.7 million within Interest expense, net.
Other Credit Facilities
The Parent and certain of its subsidiaries may borrow under senior unsecured uncommitted demand credit facilities
made available by several financial institutions. At December 31, 2021, there were $30 million of short-term
borrowings under these facilities with an effective interest rate of 1.63%. At December 31, 2020, there were no
borrowings under these facilities.
Additionally, at December 31, 2021, the Company had a $21 million swingline loan associated with the Revolving
Credit Facilities with an effective interest rate of 3.25%, which is classified in short-term borrowings.
Letters of Credit
The Parent and certain of its subsidiaries may obtain letters of credit under the Revolving Credit Facilities and under
senior unsecured uncommitted demand credit facilities. The letters of credit secure various obligations, including
obligations arising under customer contracts and real estate leases. The following table summarizes the letters of
credit outstanding at December 31, 2021 and 2020 and the weighted-average annual cost of such letters of credit:
($ in millions)
December 31, 2021
December 31, 2020
(1) Represents letters of credit outstanding not under the Revolving Credit Facilities.
Interest Expense, Net
($ in millions)
Senior Secured Notes
Term Loan Facilities
Revolving Credit Facilities
Other
Interest expense
Interest income
Interest expense, net
Letters of Credit
Outstanding (1)
335
427
Weighted-
Average
Annual Cost
1.08 %
1.06 %
For the year ended
December 31,
2021
2020
292
16
26
23
357
(13)
344
344
44
34
22
444
(15)
429
Annual Report and Accounts 2021
Page | 147
Financial Statements
18. Income Taxes
The components of income (loss) from continuing operations before provision for income taxes, determined by tax
jurisdiction, are as follows:
($ in millions)
United Kingdom
United States
Italy
Other
The provision for income taxes consists of:
($ in millions)
Current:
United Kingdom
United States
Italy
Other
Deferred:
United Kingdom
United States
Italy
Other
For the year ended December 31,
2021
2020
57
(19)
344
69
452
(375)
(781)
157
54
(945)
For the year ended December 31,
2021
2020
—
41
155
40
235
3
77
(23)
(16)
41
276
(1)
10
66
31
106
(4)
(64)
—
(16)
(84)
22
Income taxes paid, net of refunds, were $188 million and $89 million in 2021 and 2020.
Annual Report and Accounts 2021
Page | 148
Financial Statements
The Parent is a tax resident in the United Kingdom (the “U.K.”). A reconciliation of the provision for income taxes,
from the amount computed by applying the U.K. statutory main corporation tax rates enacted in each of the Parent’s
calendar year reporting periods to income (loss) from continuing operations before provision for income taxes is as
follows:
($ in millions)
Income (loss) from continuing operations before provision for income taxes
United Kingdom statutory tax rate
Statutory tax expense (benefit)
For the year ended December 31,
2021
2020
452
19.0 %
86
(945)
19.0 %
(180)
Change in valuation allowances
Non-deductible expense
Italy regional tax (“IRAP”) and state taxes
Base erosion and anti-abuse (“BEAT”) tax
Foreign tax and statutory rate differential (1)
Foreign tax expense, net of U.S. federal benefit
Provision to return
GILTI tax
Non-deductible goodwill impairment
Change in unrecognized tax benefits
Italian allowance for corporate equity
Non-taxable foreign exchange gain
Italian patent box tax benefit
Tax law changes
Other
125
47
41
17
12
11
6
5
—
—
(3)
(11)
(27)
(38)
5
276
128
19
9
13
(19)
10
—
3
56
1
(4)
—
—
(20)
5
22
Effective tax rate
61.1 %
(2.3) %
(1) Includes the effects of foreign subsidiaries’ earnings taxed at rates other than the U.K. statutory rate.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES
Act”) to provide certain relief related to the COVID-19 outbreak. Some of the key tax-related provisions of the
CARES Act benefiting the Company include temporary five-year net operating loss carryback provisions,
modifications to the 30% limitation on the deductibility of business interest, and payroll tax deferral.
In the quarter ended September 30, 2020, the U.S. Treasury Department issued final regulations regarding GILTI.
The Company has elected the GILTI high tax exception as allowed by the final regulations and has amended its
2018 and 2019 income tax returns. The benefit of the GILTI high tax exception as well as the NOL carryback
provisions provided in the CARES Act resulted in a tax benefit of $12 million.
Annual Report and Accounts 2021
Page | 149
Financial Statements
The components of deferred tax assets and liabilities are as follows:
($ in millions)
Deferred tax assets:
Italian goodwill tax step-up
Lease liabilities
Provisions not currently deductible for tax purposes
Net operating losses
Section 163(j) interest limitation
Jackpot timing differences
Depreciation and amortization
Inventory reserves
Other
Total deferred tax assets
Deferred tax liabilities:
Acquired intangible assets
Depreciation and amortization
Italian goodwill equity reserve liability
Lease right-of-use assets
Other
Total deferred tax liabilities
Net deferred income tax liability
December 31,
2021
2020
119
64
60
56
50
30
22
10
60
470
461
161
105
57
6
791
(320)
—
71
61
108
97
39
23
2
50
451
506
160
—
63
12
741
(290)
Our net deferred income taxes are recorded in the consolidated balance sheet as follows:
($ in millions)
Deferred income taxes - non-current asset
Deferred income taxes - non-current liability
Notes
7
December 31,
2021
2020
39
(359)
(320)
33
(323)
(290)
As of December 31, 2021, we had recognized deferred tax assets of $470 million. We also have $412 million of
unrecognized deferred tax assets primarily related to net operating losses and §163(j) interest limitation
carryforward. These deferred tax assets were not recorded because the realization of these assets is not probable.
A reconciliation of deferred tax liabilities, net is as follows:
($ in millions)
Balance at beginning of year
Tax expense during the period recognized in income or loss
Adoption of new accounting standards
Translation and other
Balance at end of year
December 31,
2021
2020
(290)
(41)
—
11
(320)
(359)
84
1
(16)
(290)
Annual Report and Accounts 2021
Page | 150
Financial Statements
We have a $197 million gross tax loss carryforward, of which $137 million relates to U.S. Federal, and $60 million
relates to other foreign tax jurisdictions. Carryforwards in certain tax jurisdictions begin to expire in 2031, while
others have an unlimited carryforward period. Portions of the tax loss carryforwards are subject to annual limitations
in most of our significant tax jurisdictions, including the U.K. and U.S. In addition, as of December 31, 2021, we had
U.S. state tax net operating loss carryforwards, resulting in a deferred tax asset (net of U.S. federal tax benefit) of
approximately $13 million. U.S. state tax net operating loss carryforwards generally expire in the years 2027 through
2040.
Additionally, at December 31, 2021 and 2020, we had gross tax loss carryforwards of $910 million and $930 million
that relate primarily to the U.K. No deferred tax assets were recorded for these tax loss carryforwards as realization
is not probable.
Accounting for Uncertainty in Income Taxes
A reconciliation of the unrecognized tax benefits is as follows:
($ in millions)
Balance at beginning of year
Additions to tax positions - current year
Reductions to tax positions - prior years
Lapses in statutes of limitations
Balance at end of year
December 31,
2021
2020
27
1
(1)
—
27
29
—
(2)
(1)
27
At December 31, 2021 and 2020, $27 million of the unrecognized tax benefits, if recognized, would affect our
effective tax rates.
We recognize interest and penalties related to income tax matters in income tax expense. The charges were
nominal for 2021 and 2020. The gross balance of accrued interest and penalties was $21 million at December 31,
2021 and 2020.
We file income tax returns in various jurisdictions of which the United Kingdom, United States, and Italy represent
the major tax jurisdictions. All years prior to 2017 are closed with the Internal Revenue Service. As of December 31,
2021, we are subject to income tax audits in various tax jurisdictions globally, most significantly in Mexico and Italy.
Mexico Tax Audit
Based on a 2006 tax examination, the Company’s Mexican subsidiary, GTECH Mexico S.A. de C.V., was issued an
income tax assessment of approximately Mexican peso (“MXN”) 425 million. The assessment relates to the denial
of a deduction for cost of goods sold and the taxation of intercompany loan proceeds. The Company has
unsuccessfully contested the two issues in the Mexican court system receiving unfavorable decisions by the
Mexican Supreme Court in June 2017 and October 2019, respectively. As of December 31, 2021, based on the
unfavorable decisions received, the Company has recorded a liability of MXN 469 million (approximately $23
million), inclusive of additional interest, penalties, and inflationary adjustments, which is reported within other non-
current liabilities in the consolidated balance sheet.
Italy Tax Audits
The Company’s Italian corporate income tax returns for the calendar years ended December 31, 2015 through
December 31, 2019 are under examination. On October 19, 2020, the Italian tax authorities issued a final audit
report for calendar year 2015. The Company filed a defense memorandum with the Italian Tax Authorities on May
29, 2021 rejecting all findings. On December 9, 2021, the Company received a tax assessment notice for
€15 million relating to calendar year 2015. On February 9, 2022, the Company submitted a voluntary settlement
request which entitles the Company to an automatic 90 day extension. The extension will allow the Italian Tax
Authority to re-examine the preliminary conclusions of the tax police. At the end of the 90 day extension period, if
the parties do not reach a settlement the Company retains the right to appeal the tax assessment before the first
degree Tax Court.
Annual Report and Accounts 2021
Page | 151
Financial Statements
19. Commitments and Contingencies
Commitments
Jackpot Commitments
Jackpot liabilities are recorded as current and non-current liabilities as follows:
($ in millions)
Current liabilities
Non-current liabilities
Future jackpot liabilities as of December 31, 2021 are due as follows:
December 31,
2021
66
130
196
66
31
18
16
13
79
223
(27)
196
($ in millions)
2022
2023
2024
2025
2026
Thereafter
Future jackpot payments due
Unamortized discounts
Total jackpot liabilities
Performance and other bonds
Previous
Winners
Future
Winners
Total
25
20
18
15
13
72
163
41
10
1
1
1
8
60
Certain contracts require us to provide a surety bond as a guarantee of performance for the benefit of customers;
bid and litigation bonds for the benefit of potential customers; and WAP bonds that are used to secure our financial
liability when a player elects to have their WAP jackpot winnings paid over an extended period of time.
These bonds give beneficiaries the right to obtain payment and/or performance from the issuer of the bond if certain
specified events occur. In the case of performance bonds, which generally have a term of one year, such events
include our failure to perform our obligations under the applicable contracts. In general, we would only be liable for
these guarantees in the event of default in our performance of our obligations under each contract, the probability of
which we believe is remote. Accordingly, no liability has been recorded as of December 31, 2021 and 2020 related
to these bonds.
Legal Proceedings
From time to time, the Parent and/or one or more of its subsidiaries are party to legal, regulatory, or administrative
proceedings regarding, among other matters, claims by and against us, and injunctions by third parties arising out of
the ordinary course of business. Licenses are also subject to legal challenges by competitors seeking to annul
awards made to the Company. The Parent and/or one or more of its subsidiaries are also, from time to time,
subjects of, or parties to, ethics and compliance inquiries and investigations related to the Company’s ongoing
operations. At December 31, 2021, provisions for litigation matters amounted to $4 million. With respect to litigation
and other legal proceedings where we have determined that an incremental loss is reasonably possible but we are
unable to determine an estimate of that reasonably possible loss in excess of amounts already accrued, no
additional amounts have been accrued, given the uncertainties of litigation and the inherent difficulty of predicting
the outcome of legal proceedings.
Annual Report and Accounts 2021
Page | 152
Financial Statements
Texas Fun 5’s Instant Ticket Game
IGT Global Solutions Corporation (formerly GTECH Corporation) is party to four lawsuits in Texas state court arising
out of the Fun 5’s instant ticket game sold by the Texas Lottery Commission (“TLC”) from September 14, 2014 to
October 21, 2014. Plaintiffs allege each ticket’s instruction for Game 5 provided a 5x win (five times the prize box
amount) any time the “Money Bag” symbol was revealed in the “5X BOX”. However, TLC awarded a 5x win only
when (1) the “Money Bag” symbol was revealed and (2) three symbols in a pattern were revealed.
(a) Steele, James et al. v. GTECH Corp., filed on December 9, 2014 in Travis County (No. D1GN145114). Through
intervenor actions, over 1,200 plaintiffs claim damages in excess of $500 million. GTECH Corporation’s plea to
the jurisdiction for dismissal based on sovereign immunity was denied. GTECH Corporation appealed. The
appellate court ordered that plaintiffs’ sole remaining claim should be reconsidered. On April 27, 2018, this and
a related matter were appealed to the Texas Supreme Court, which heard arguments on December 3, 2019. On
June 12, 2020, the Texas Supreme Court ruled that Plaintiffs’ could proceed with their fraud allegations in the
lower court; all other claims were dismissed. On March 26, 2021, October 29, 2021 and February 3, 2022 (two
motions), GTECH Corporation filed motions for summary judgment. One such motion was denied on February
25, 2022, while the other three remain pending.
(b) Guerra, Esmeralda v. GTECH Corp. et al., filed on June 10, 2016 in Hidalgo County (No. C277716B). Plaintiff
claims damages in excess of $0.5 million.
(c) Wiggins, Mario & Kimberly v. IGT Global Solutions Corp., filed on September 7, 2016 in Travis County (No.
D1GN16004344). Plaintiffs claim damages in excess of $1 million.
(d) Campos, Osvaldo Guadalupe et al. v. GTECH Corp., filed on October 20, 2016 in Travis County (No.
D1GN16005300). Plaintiffs claim damages in excess of $1 million.
We dispute the claims made in each of these cases and continue to defend against these lawsuits.
Adrienne Benson and Mary Simonson, individually and on behalf of all others similarly situated v. Double
Down Interactive LLC, et al.
On April 9, 2018, a plaintiff, Adrienne Benson, filed a putative class action against the Company’s wholly-owned
subsidiary, International Game Technology, and Double Down Interactive LLC, a Washington limited liability
company in the United States District Court for the Western District of Washington. On July 23, 2018, plaintiff filed a
first amended complaint, adding named plaintiff Mary Simonson, and adding allegations to represent a putative
class of all persons in the United States who purchased and allegedly lost virtual “chips” while playing games
through an online gaming platform called Double Down Casino, which at all times has been operated by Double
Down Interactive LLC. On April 26, 2021, plaintiffs filed a second amended complaint naming IGT, a wholly-owned
subsidiary of International Game Technology, as an additional defendant. Plaintiffs have asserted claims for alleged
violations of Washington’s Recovery of Money Lost at Gambling Act, Washington’s Consumer Protection Act, and
for unjust enrichment, and seeks unspecified money damages (including treble damages as appropriate), the award
of reasonable attorneys’ fees and costs, pre- and post-judgment interest, and injunctive and/or declaratory relief.
International Game Technology acquired Double Down Interactive LLC in 2012 and, effective June 1, 2017, sold
Double Down Interactive LLC to DoubleU Games pursuant to a purchase agreement (the “Purchase Agreement”).
At all times relevant, Double Down Interactive LLC was the sole operator of the Double Down Casino, and
International Game Technology asserts, among other defenses, that it has no liability for the actions of a bona fide
subsidiary.
On May 10, 2018, Double Down Interactive LLC and DoubleU Diamond LLC sent a claim notice (the “DDI Claim
Notice”) to International Game Technology seeking indemnification and reimbursement of defense costs for all
claims against Double U Diamond LLC and its affiliates (the “DoubleU Entities”) in the Benson matter, pursuant to
the Purchase Agreement. On June 7, 2018, International Game Technology responded to the DDI Claim Notice,
rejecting any obligation to indemnify or pay defense costs of the DoubleU Entities, and sent a claim notice to
DoubleU Diamond LLC for indemnification and reimbursement of defense costs for all claims against International
Game Technology in the Benson matter pursuant to the terms of certain agreements with DoubleU Diamond LLC.
On June 17, 2021, IGT sent a claim notice to DoubleU Diamond LLC for indemnification and reimbursement of
defense costs for all claims against IGT in the Benson matter pursuant to the terms of certain agreements with
DoubleU Diamond LLC.
Annual Report and Accounts 2021
Page | 153
Financial Statements
On August 20, 2018, International Game Technology filed a motion to compel arbitration under the Federal
Arbitration Act. The denial of that motion was appealed to the United States Court of Appeals for the Ninth Circuit,
which in turn affirmed the district court by mandate effective February 20, 2020.
International Game Technology filed an answer to the first amended complaint on January 18, 2019, and an answer
to the second amended complaint on May 10, 2021, continuing to deny all material allegations of liability and
damages, and further denying that International Game Technology was responsible for the operation of the Double
Down Casino. International Game Technology amended its answer to the first amended complaint on April 21, 2021.
IGT filed a motion to dismiss the second amended complaint on May 18, 2021, which remains pending.
International Game Technology moved to certify the liability questions to the Washington State Supreme Court,
which was denied on August 11, 2020. International Game Technology’s motion to reconsider the question of
certification was denied on January 15, 2021.
On August 13, 2020, International Game Technology filed a motion to strike the nationwide class allegations from
the amended complaint, which was denied on March 19, 2021.
On September 10, 2020, International Game Technology filed a motion to dismiss and stay the case on the grounds
that the federal court should abstain from deciding the liability questions under Washington law. That motion was
denied on March 24, 2021. On February 25, 2021, plaintiffs filed a motion for class certification and for preliminary
injunction, which remains pending, and has not been set for hearing.
Discovery closed on August 24, 2021. Before the close of discovery, plaintiffs filed motions for leave to take
additional depositions and to make expert disclosures that remain pending.
There is currently no trial date set for this matter.
International Game Technology is vigorously pursuing its defenses. We are currently unable to estimate the amount
or range of reasonably possible loss.
20. Shareholders’ Equity
Shares Authorized and Outstanding
The Board of Directors of the Parent (the “Board”) may issue ordinary shares of the Parent upon shareholder
approval. At the Parent’s 2021 annual general meeting, the shareholders authorized the issuance of up to
136.6 million additional ordinary shares (of which 68.3 million can be issued in connection with an offer by way of
rights issue), with a par value of $0.10 per share, for a period expiring at the end of the 2022 annual general
meeting, or, if sooner, on August 10, 2022, unless previously revoked, varied, or renewed.
Ordinary shares issued and outstanding were as follows:
Ordinary shares issued and outstanding at beginning of year
Ordinary shares issued under restricted stock plans
Ordinary shares issued at end of year
Repurchases of ordinary shares
Ordinary shares outstanding at end of year
Share Repurchase Program
December 31,
2021
204,856,564
331,554
205,188,118
(1,500,000)
203,688,118
2020
204,435,333
421,231
204,856,564
—
204,856,564
On November 15, 2021, the Board authorized a share repurchase program (the “Program”) pursuant to which the
Company may repurchase up to $300 million of the Parent’s outstanding ordinary shares during a period of four
years commencing on November 18, 2021. At the Parent’s 2021 annual general meeting, the Parent’s shareholders
granted authority to repurchase, subject to a maximum repurchase price, up to 20,485,656 of the Parent’s ordinary
shares. This authority remains valid until November 10, 2022, unless previously revoked, varied, or renewed at the
Parent’s 2022 annual general meeting.
Annual Report and Accounts 2021
Page | 154
Financial Statements
The Parent repurchases ordinary shares under the Program at the market price on the trade date and the Parent
cancels repurchased ordinary shares or holds them in treasury. If the Parent holds repurchased ordinary shares in
treasury, all amounts paid to repurchase such shares are recognized as shares held in treasury and presented as a
deduction from equity attributable to the owners until they are reissued or retired. Under the Program, the Parent
repurchased 1.5 million ordinary shares for $41 million during 2021.
For the period January 1, 2022 to February 25, 2022, the Parent repurchased 937,758 ordinary shares for $26
million under the Program.
Dividends
We declared a $0.20 cash dividend per share during the fourth quarter of 2021 and the first quarter of 2020.
The TLF Agreement and the RCF Agreement limit the aggregate amount that the Parent can pay with respect to
dividends and repurchases of ordinary shares in each year based on ratings by Moody’s and S&P. As discussed in
Note 17 – Debt, in May 2020, the Company entered into amendments to these agreements which prohibited
dividends and repurchases of ordinary shares through June 30, 2021.
For the years ended December 31, 2021 and 2020, cash dividends declared were paid by our Parent and were in
accordance with legal and compliance regulations.
Other Reserves
The following table details the changes in other reserves:
Unrealized Gain (Loss) on:
Other Reserves
Attributable
to non-
controlling
interests
Total
Other
Hedges
Balance at December 31, 2020
Foreign
Currency
Translation
200
108
1
108
308
25
19
—
45
353
($ in millions)
Balance at December 31, 2019
Change during period
Reclassified to operations (1)
Other comprehensive income (loss)
Attributable
to IGT PLC
232
47
1
48
280
78
21
—
99
Balance at December 31, 2021
379
(1) Foreign currency translation of approximately $19 million was reclassified into gain on sale of discontinued operations, net of tax on the
consolidated statement of operations for the year ended December 31, 2021. Other foreign currency translation adjustments related to liquidated
subsidiaries were reclassified into foreign exchange (gain) loss, net on the consolidated statement of operations for the year ended December
31, 2020. Unrealized gain on hedges were reclassified into service revenue on the consolidated statement of operations for the year ended
December 31, 2021.
Change during period
Reclassified to operations (1)
Tax effect
Other comprehensive income (loss)
36
(59)
—
(59)
(24)
51
1
—
52
28
4
—
—
—
4
(1)
—
—
(1)
3
(8)
(1)
—
(1)
(9)
3
1
(1)
3
(6)
196
107
1
107
303
27
20
—
47
350
21. Non-Controlling Interests
At December 31, 2021, our material non-controlling interests ("NCIs") were as follows:
Name of subsidiary
Lotterie Nazionali S.r.l. ("LN")
Northstar New Jersey Lottery Group, LLC ("Northstar NJ") (1)
(1) Northstar New Jersey Holding Company LLC, of which we are a 50.15% shareholder, holds the 82.31% ownership in Northstar NJ.
% Ownership
held by
the Company
64.00 %
82.31 %
LN holds a license to operate the Scratch & Win instant lottery game in Italy through September 2028. Northstar NJ
manages a wide range of the lottery’s day-to-day operations in the State of New Jersey, as well as provides
marketing and sales services under a license valid through June 2029.
Annual Report and Accounts 2021
Page | 155
Financial Statements
We are the principal operating partner fulfilling the requirements under the licenses held by the NCIs. As such, we
have the power to direct the activities that significantly affect the NCIs’ economic performance, along with the right
to receive benefits or the obligation to absorb losses that could potentially be significant to the NCIs. As a result, we
concluded we have control over the NCIs and they have been consolidated. Accordingly, the balance sheet and
operating activity of the NCIs are included in our consolidated financial statements and we adjust the net income
(loss) in our consolidated statement of operations to exclude the NCIs’ proportionate share of results. We present
the proportionate share of NCIs as equity in the consolidated balance sheet.
Activity within NCIs were as follows:
($ in millions)
Balance at December 31, 2019
Net income (loss)
Other comprehensive income
Total comprehensive income (loss)
Capital increase
Return of capital
Dividends paid
Other
Balance at December 31, 2020
Net income
Other comprehensive loss
Total comprehensive income
Capital increase
Divestiture of non-controlling interest
Dividends paid
Return of capital
Other
Balance at December 31, 2021
LN
Northstar NJ
All Other
Total
384
19
32
51
—
—
(29)
—
406
73
(28)
46
—
—
(19)
(52)
—
380
52
(37)
—
(37)
—
—
(16)
—
(1)
24
—
24
—
—
—
—
—
24
104
19
28
47
8
(23)
(16)
1
121
2
(24)
(22)
13
(18)
(13)
(12)
3
72
Summarized financial information for our material NCIs is as follows:
Summarized Balance Sheets
($ in millions)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Total liabilities and shareholders' equity
LN
December 31,
Northstar NJ
December 31,
2021
2020
2021
2020
759
691
1,450
511
—
511
939
1,450
724
858
1,582
558
13
570
1,012
1,582
73
69
142
54
2
56
86
142
540
2
59
61
8
(23)
(60)
1
527
100
(52)
48
13
(18)
(33)
(64)
3
476
57
78
135
75
2
78
57
135
Annual Report and Accounts 2021
Page | 156
Financial Statements
Summarized Income Statements
LN
Northstar NJ
($ in millions)
Total revenue
Total operating expenses
Operating income (loss)
Income (loss) before benefit from income taxes
Benefit from income taxes
Net income (loss)
For the year ended December 31,
For the year ended December 31,
2021
2020
2021
2020
522
(264)
258
258
(54)
203
257
(183)
74
74
(22)
53
145
(121)
24
24
—
24
70
(107)
(37)
(37)
—
(37)
Summarized Cash Flow Statements
LN
Northstar NJ
($ in millions)
Net cash flows provided by operating activities
Net cash flows used in investing activities
Net cash flows (used in) provided by financing
activities
22. Segment Information
For the year ended December 31,
For the year ended December 31,
2021
2020
2021
2020
254
(2)
258
(8)
(289)
(137)
21
—
4
2
—
(6)
During the third quarter of 2021, we modified the information that our chief operating decision maker, who was also
our Chief Executive Officer, regularly reviewed for purposes of allocating resources and assessing performance,
prompting a change in management, operating segments, and cash-generating units. As a result, on September 1,
2021, we established a dedicated Digital & Betting business segment, comprising our iGaming and sports betting
activities that were previously included within our Global Gaming business segment. Beginning in the third quarter
of 2021, we report our financial performance based on three business segments: Global Lottery, Global Gaming,
and Digital & Betting, and analyze revenue by segment as well as operating income as the measure of segment
profitability. As such, we have recast our historically presented comparative segment information to conform to the
way we internally manage and monitor segment performance.
Through our three business segments, we operate and provide an integrated portfolio of innovative gaming
technology products and services including online and instant lottery systems, iLottery, instant ticket printing, lottery
management services, commercial services, gaming systems, electronic gaming machines, iGaming, and sports
betting.
The Global Lottery segment has full responsibility for the worldwide traditional lottery and iLottery business,
including sales, operations, product development, technology, and support. The Global Gaming segment has full
responsibility for the worldwide land-based gaming business, including sales, product management, studios, global
manufacturing, operations, and technology. The Digital & Betting segment has full responsibility for the worldwide
iGaming and sports betting activities, that were previously part of our Global Gaming segment.
Our three business segments are supported by central corporate support functions, including finance, people and
transformation, legal, marketing and communications, corporate public affairs, and strategy and corporate
development. Certain support costs that are identifiable and that benefit our business segments are allocated to
them. Each allocation is measured differently based on the specific facts and circumstances of the costs being
allocated. Corporate support function expenses that are not allocated to the business segments, which are
principally composed of selling, general and administrative expenses, are reported as Corporate and Other
expenses, along with goodwill impairment and the depreciation and amortization of acquired tangible and intangible
assets in connection with acquired companies.
Global Lottery
Our Global Lottery segment provides lottery products and services primarily to governmental organizations through
operating contracts, facilities management contracts (“FMCs”), lottery management agreements (“LMAs”), and
product sales contracts.
Annual Report and Accounts 2021
Page | 157
Financial Statements
As part of our lottery product and services, we provide instant and draw-based lottery products, point-of-sale
machines, central processing systems, software, commercial services, instant ticket printing services, and other
related equipment and support services.
We categorize revenue from operating contracts, FMCs, and LMAs as “Operating and facilities management
contracts” and revenue from commercial services, software hosting, software maintenance, and other services not
included within operating contracts, FMCs, or LMAs as service revenue from “Systems, software, and other”.
Revenue included within “Operating and facilities management contracts” include all services required by the
contract, including iLottery and instant ticket printing.
We categorize sales or sales-type leases of lottery terminals, lottery systems, fixed-fee software licenses, and
instant tickets not part of “Operating and facilities management contracts” as product sales from “Lottery products”.
Global Gaming
Our Global Gaming segment provides gaming products and services including software and game content, casino
gaming management systems, video lottery terminals (“VLTs”), VLT central systems, and other related equipment
and support services to commercial and tribal casino operators.
We categorize revenue from Wide Area Progressive services, and operating leases for VLTs and other gaming
machines as service revenue from “Gaming terminal services”. We categorize sales or usage-based royalties
promised in exchange for software intellectual property licenses, and systems as service revenue from “Systems,
software, and other”.
Revenue from the sale or sales-type lease of gaming machines, systems, component parts, and other
miscellaneous equipment and services are categorized as product sales from “Gaming terminals” and revenue from
systems, fixed-fee software licenses, casino gaming management systems, game content, and spare parts as
product sales from “Other”.
Digital & Betting
Our Digital & Betting segment provides iGaming solutions by providing gaming operators a license to offer IGT
remote game server games on operator websites and mobile applications. The segment also provides sports
betting technology and services to commercial and tribal operators and lotteries in regulated markets, primarily in
the U.S. We categorize revenue from iGaming and sports betting as service revenue from “Digital and betting
services”.
Segment information is as follows:
For the year ended December 31, 2021
($ in millions)
Service revenue
Product sales
Total revenue
Operating income (loss)
Depreciation and
amortization
Expenditures for long-lived
assets
Global
Lottery
Global
Gaming
Digital &
Betting
2,684
123
2,806
1,085
250
628
482
1,110
44
137
163
1
165
33
17
Business
Segment
Total
3,475
606
4,081
Corporate
and Other
Total IGT
PLC
—
—
—
3,475
606
4,081
918
579
1,162
(244)
404
175
(123)
(67)
(13)
(203)
(6)
(208)
Annual Report and Accounts 2021
Page | 158
Financial Statements
($ in millions)
Service revenue
Product sales
Total revenue
Operating income (loss)
Depreciation and
amortization
Expenditures for long-lived
assets
Geographical Information
For the year ended December 31, 2020
Global
Lottery
Global
Gaming
Digital &
Betting
Business
Segment
Total
Corporate
and Other
Total IGT
PLC
2,043
121
2,164
644
257
483
354
837
(209)
160
114
1
115
7
16
2,640
476
3,115
442
434
—
—
—
2,640
476
3,115
(533)
(91)
191
625
(149)
(64)
(11)
(224)
(2)
(226)
Revenue from external customers, which is based on the geographical location of our customers, is as follows:
($ in millions)
United States
Italy
United Kingdom
Rest of Europe
All other
Total
For the year ended December 31,
2021
2020
2,123
1,303
72
215
368
4,081
1,666
896
64
209
280
3,115
Revenue from one customer in the Global Lottery segment represented approximately 23% and 19% of
consolidated revenue in 2021 and 2020, respectively.
Long-lived assets, which are comprised of Systems & Equipment and PPE, are based on the geographical location
of the assets as follows:
($ in millions)
United States
Italy
United Kingdom
Rest of Europe
All other
Total
23. Stock-Based Compensation
Incentive Awards
December 31,
2021
2020
761
125
9
93
63
1,051
842
176
14
91
77
1,200
Stock-based incentive awards are provided to directors and employees under the terms of our 2015 and 2021
Equity Incentive Plans (collectively, the “Plan”) as administered by the Board. Awards available under the Plan
principally include stock options, performance share units, restricted share units or any combination thereof. The
maximum number of new shares that may be granted under the Plan is 20.5 million shares. To the extent any award
is forfeited, expires, lapses, or is settled for cash, the award is available for reissue under the Plan. We utilize
authorized and unissued shares to satisfy all shares issued under the Plan.
Annual Report and Accounts 2021
Page | 159
Financial Statements
Stock Options
Stock options are awards that allow the employee to purchase shares of our stock at a fixed price. Stock options are
granted under the Plan at an exercise price not less than the fair market value of a share on the date of grant. In
2021, stock options were granted solely to our former Chief Executive Officer, which will vest in 2024 subject to
certain performance and other criteria, and have a contractual term of approximately seven years. No stock options
were granted in 2020.
Stock Awards
Stock awards are principally made in the form of performance share units (“PSUs”) and restricted share units
(“RSUs”). PSUs are stock awards where the number of shares ultimately received by the employee depends on the
Company’s performance against specified targets, which may include Adjusted EBITDA, Free Cash Flow and Total
Shareholder Return (“TSR”) relative to the Russell Mid Cap Market Index. PSUs typically vest 50% over an
approximate three-year period and 50% over an approximate four-year period (i.e. four years to vest both tranches).
In 2021, a second round of PSUs was granted in lieu of there being no 2020 PSUs that vest 50% over an
approximate two-year period and 50% over an approximate three-year period. Dividend equivalents are not paid
under the Plan. The fair value of each PSU is determined on the grant date or modification date, based on the
Company’s stock price, adjusted for the exclusion of dividend equivalents, and assumes that performance targets
will be achieved. Over the performance period, the number of shares of stock that will be issued is adjusted based
upon the probability of achievement of performance targets. The ultimate number of shares issued and the related
compensation cost recognized as expense is based on a comparison of the final performance metrics to the
specified targets.
RSUs are stock awards granted to directors that entitle the holder to shares of common stock as the award vests,
typically over a one-year period, and have a contractual term of 10 years. Dividend equivalents are not paid under
the Plan. In 2020, RSUs were also granted to employees, which vest in approximately one- and two-year vesting
periods.
Stock Option Activity
A summary of our stock option activity and related information is as follows:
Weighted-Average
Exercise
Price Per
Share ($)
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic Value
($ in millions)
21.49
20.37
30.12
17.51
17.51
15.53
2.82
2.82
0.38
5
3
Stock
Options
422,500
172,500
(172,500)
422,500
422,500
250,000
Outstanding at January 1, 2021
Granted
Forfeited
Outstanding at December 31, 2021
At December 31, 2021:
Vested and expected to vest
Exercisable
No stock options were exercised in 2021 and 2020.
Annual Report and Accounts 2021
Page | 160
Financial Statements
Fair Value of Stock Options Granted
We estimate the fair value of stock options at the date of grant using a valuation model that incorporates key inputs
and assumptions as detailed in the table below. The weighted-average grant date fair value of stock options granted
during 2021 was $9.82 per share.
Valuation model
Exercise price ($)
Expected option term (in years)
Expected volatility of the Company’s stock (%)
Risk-free interest rate (%)
Dividend yield (%)
2021
Monte Carlo
20.37
2.00
60.00
0.80
—
The expected volatility assumes the historical volatility is indicative of future trends, which may not be the actual
outcome. The expected option term is based on historical data and is not necessarily indicative of exercise patterns
that may occur. Estimates of fair value are not intended to predict actual future events or the value ultimately
realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness
of our original estimates of fair value.
Stock Award Activity
A summary of our stock award activity and related information is as follows:
Nonvested at January 1, 2021
Granted
Vested
Forfeited
Nonvested at December 31, 2021
At December 31, 2021:
Unrecognized cost for nonvested awards ($ in
millions)
Weighted-average future recognition period (in
years)
Weighted-
Average
Grant Date
Fair Value ($)
18.17
26.10
17.19
25.84
21.50
PSUs
3,356,966
3,740,075
(200,995)
(1,595,221)
5,300,825
Weighted-
Average
Grant Date
Fair Value ($)
9.05
22.29
9.05
9.08
10.05
RSUs
2,366,383
79,844
(1,198,742)
(188,013)
1,059,472
85
2.93
5
0.92
The total vest-date fair value of PSUs vested was $3 million in 2021 and 2020. The total vest-date fair value of
RSUs vested was $33 million and $1 million for 2021 and 2020, respectively.
Fair Value of Stock Awards Granted
We estimated the fair value of PSUs at the date of grant using a Monte Carlo simulation valuation model, as the
awards include a market condition. The market condition is based on the Company’s TSR relative to the Russell
Midcap Market Index.
Annual Report and Accounts 2021
Page | 161
Financial Statements
During 2021 and 2020, we estimated the fair value of RSUs at the date of grant based on our stock price. Details of
the grants are as follows:
PSUs granted during the year
Weighted-average grant date fair value ($)
RSUs granted during the year
Weighted-average grant date fair value ($)
Stock-Based Compensation Expense
2021
3,740,075
26.10
2020
—
—
79,844
22.29
2,375,141
9.04
Total compensation cost (recovery) for our stock-based compensation plans is recorded based on the employees’
respective functions as detailed below.
($ in millions)
Cost of services
Selling, general and administrative
Research and development
Stock-based compensation expense before income taxes
Income tax benefit (provision)
Total stock-based compensation, net of tax
For the year ended December 31,
2021
2020
2
30
3
35
8
27
(1)
(5)
(1)
(8)
(2)
(6)
The 2020 recovery results from the reversal of 2019 and 2018 expense due to certain PSUs that were no longer
forecasted to be achieved.
Annual Report and Accounts 2021
Page | 162
Financial Statements
24. Earnings Per Share
The following table presents the computation of basic and diluted income (loss) per share of common stock:
($ in millions and shares in thousands, except per share amounts)
Numerator:
Net income (loss) from continuing operations attributable to IGT PLC
Net income from discontinued operations attributable to IGT PLC
Net income (loss) attributable to IGT PLC
Denominator:
Weighted-average shares - basic
Incremental shares under stock based compensation plans
Weighted-average shares - diluted
Net income (loss) from continuing operations attributable to IGT PLC per
common share - basic
Net income (loss) from continuing operations attributable to IGT PLC per
common share - diluted
Net income from discontinued operations attributable to IGT PLC per common
share - basic
Net income from discontinued operations attributable to IGT PLC per common
share - diluted
Net income (loss) attributable to IGT PLC per common share - basic
Net income (loss) attributable to IGT PLC per common share - diluted
For the year ended December 31,
2021
2020
73
417
490
(974)
41
(933)
204,954
1,846
206,800
204,725
—
204,725
0.36
0.35
2.03
2.01
2.39
2.37
(4.76)
(4.76)
0.20
0.20
(4.56)
(4.56)
Certain stock options to purchase common shares were outstanding, but were excluded from the computation of
diluted earnings per share, because the exercise price of the options was greater than the average market price of
the common shares for the full year, and therefore, the effect would have been antidilutive.
During years when we are in a net loss position, certain outstanding stock options and unvested restricted stock
awards are excluded from the computation of diluted earnings per share because including them would have had an
antidilutive effect.
For the year ended December 31, 2020, stock options and unvested restricted stock awards totaling 0.9 million
shares were excluded from the computation of diluted earnings per share because including them would have had
an antidilutive effect. No shares were antidilutive for the year ended December 31, 2021.
25. Related Party Transactions
We engage in business transactions with certain related parties which include (i) De Agostini entities directly or
indirectly controlled by De Agostini, (ii) other entities and individuals capable of exercising control, joint control, or
significant influence over us, and (iii) our unconsolidated subsidiaries or joint ventures. Members of the Board,
executives with authority for planning, directing, and controlling the activities of the Company and such Directors’
and executives’ close family members are also considered related parties. We may make investments in such
entities, enter into transactions with such entities, or both.
Annual Report and Accounts 2021
Page | 163
Financial Statements
De Agostini Group
We are majority-owned by De Agostini. Amounts receivable from De Agostini and subsidiaries of De Agostini
(collectively, the “De Agostini Group”) are non-interest bearing. Transactions with the De Agostini Group include
payments for support services provided and office space rented pursuant to a lease entered into prior to the
formation of the Company. In addition, certain of our Italian subsidiaries have a tax unit agreement, and in some
cases, a value-added tax agreement, with De Agostini pursuant to which De Agostini consolidates certain Italian
subsidiaries of De Agostini for the collection and payment of taxes to the Italian tax authority.
Related party transactions with the De Agostini Group are as follows:
($ in millions)
Tax-related receivables
Trade payables
Tax-related payables
December 31,
2021
2020
4
1
3
—
5
19
Unconsolidated Subsidiaries, Partnerships and Joint Ventures
From time to time, we make strategic investments in publicly traded and privately held companies that develop
software, hardware, and other technologies or provide services supporting its technologies. We may also purchase
from or make sales to these organizations.
Ringmaster S.r.l.
We have a 50% interest in Ringmaster S.r.l. (“Ringmaster”), an Italian joint venture, that is accounted for using the
equity method of accounting. Ringmaster provides software development services for our interactive gaming
business pursuant to an agreement dated December 7, 2011. Our investment in Ringmaster was $1 million at
December 31, 2021 and 2020.
We incurred $6 million and $7 million in expenses to Ringmaster for the years ended December 31, 2021 and 2020,
respectively.
Connect Ventures One LP and Connect Ventures Two LP
We hold investments in two venture capital funds, Connect Ventures One LP and Connect Ventures Two LP (the
“Connect Ventures”), that are accounted for as equity method investments. De Agostini also holds investments in
the Connect Ventures, and Nicola Drago, the son of director Marco Drago, holds a 10% ownership interest in, and is
a non-executive member of, Connect Ventures LLP, the fund that manages the Connect Ventures.
Our investment in Connect Ventures One LP was $3 million at December 31, 2021 and 2020. Our investment in
Connect Ventures Two LP was $6 million at December 31, 2021 and 2020.
Key Management Personnel - Officer Compensation
Key management personnel are those persons with authority and responsibility for planning, directing, and
controlling the activities of the Company. In 2021 and 2020, key management personnel was composed of 13 and
14 executive officers, respectively, including our Chief Executive Officer and Chief Financial Officer. Officer
compensation for key management personnel for the years ended December 31, 2021 and 2020 is as follows:
($ in millions)
Short-term employee benefits
Stock-based compensation
Post-employment benefits
For the year ended December 31,
2021
2020
25
11
3
39
14
(2)
3
15
Annual Report and Accounts 2021
Page | 164
Financial Statements
26. Employee Information
Employee Benefit Expense
($ in millions)
Wages and salaries
Social security and other benefits
Incentive compensation
Stock-based compensation
Post-employment benefits
Average Number of Employees by Segment
Global Lottery
Global Gaming
Digital & Betting
Corporate and Other
27. Auditors' Remuneration
For the year ended
December 31,
2021
2020
730
185
137
35
13
1,100
743
161
15
(8)
19
931
For the year ended
December 31,
2021
2020
4,376
4,481
406
1,395
10,658
4,466
5,039
424
1,522
11,451
PricewaterhouseCoopers LLP ("PwC U.K.") has been serving as our independent auditor since 2015.
Aggregate fees for professional services and other services rendered by PwC U.K. and its foreign entities belonging
to the PwC network in 2021 and 2020 were as follows:
($ in millions)
Audit services - Parent company and consolidated financial statements
Audit services - Subsidiaries' financial statements
Tax services
For the year ended December 31,
2021
2020
9
1
1
11
10
1
—
11
28. Subsequent Events
On February 25, 2022, the Parent’s wholly-owned subsidiary, IGT Lottery S.p.A. entered into a share sale and
purchase agreement to sell 100% of the share capital of Lis Holding S.p.A., a wholly owned subsidiary of IGT
Lottery S.p.A. that conducts the Company’s Italian commercial services business, to PostePay S.p.A. – Patrimonio
Destinato IMEL, an entity of the Italian postal service provider group, for a purchase price of €700 million. Lis
Holding S.p.A did not meet the criteria for assets held for sale as of December 31, 2021 and therefore remains
presented as a component of continuing operations within our Global Lottery segment. Upon classification as held
for sale in the first quarter of 2022, the Company does not expect to recognize a loss. The transaction is subject to
customary closing conditions and regulatory approvals and is expected to close during the third quarter of 2022.
Annual Report and Accounts 2021
Page | 165
Financial Statements
29. The Parent's Directly and Indirectly Owned Subsidiaries
The Parent had the following subsidiaries for the year ended December 31, 2021:
Name of entity
Acres Gaming Incorporated
Anguilla Lottery and Gaming
Company Limited
Antigua Lottery Company
Limited
Atronic Australien GmbH
Beijing GTECH Computer
Technology Company Limited
BringIt, Inc.
Caribbean Lottery Services,
Inc.
CLS-GTECH Technology
(Beijing) Co., Ltd.
Consorzio Lotterie Nazionali
Cyberview International, Inc.
Data Transfer System Inc.
DoubleDown Interactive B.V.
Dreamport do Brasil Ltda.
Dreamport Suffolk Corporation
Dreamport, Inc.
Eagle Ice AB
Estrela Instantânea Loteria Spe
S.A
Europrint Holdings Limited
GTECH (Gibraltar) Holdings
Limited f/k/a St. Enodoc
Holdings Limited
Address of registered office
6355 South Buffalo Drive, Las
Vegas, Nevada 89113, United
States
AXA Offshore Management Limited
The Law Building PO Box 687, The
Valley, Anguilla, British West Indies
Simon, Rogers Murdoch,
Chancellor Chambers, Island
House, Newgate Street, St. John’s,
Antigua
Weseler Strab 253, Münster,
Germany 48151
R1101-1102, 11F, Viva Plaza, No.
29 Suzhou Street, Haidian District,
Beijing 100080, China
6355 South Buffalo Drive, Las
Vegas, Nevada 89113, United
States
c/o Moore Dodson & Russell P.C.,
14A Norte Gade, Charlotte Amalie,
St. Thomas USVI 00802
2/F Block A, Raycom Info Tech
Park, 2 Kexueyuan South Road,
Zhong Guan Cun, Haidian District,
Beijing, 100190 China
Via Buonconvento, 6 Roma, Italy
6355 South Buffalo Drive, Las
Vegas, Nevada 89113, United
States
1209 Orange Street, Wilmington,
DE 19801, United States
Galwin 2, 1046 AW Amsterdam,
Netherlands
Rua Barao do Triunfo, 88 room
1210, Brooklin Paulista, 04602-000,
Sao Paulo, Brazil
1209 Orange Street, Wilmington,
DE 19801, United States
1209 Orange Street, Wilmington,
DE 19801, United States
Gernandt & Danielson, Box 5747,
Stockholm 11487
City of Barueri, State of São Paulo,
at Calçada das Margaridas, No.
163, Room 02, Centro Comercial,
Zip Code 06453-038 in Brazil
1st Floor, Building 3 Croxley Green
Business Park, Hatters Lane,
Watford, Hertfordshire, England
WD18 8YG
23 Portland House, Glacis Road,
GX11 1AA, Gibraltar
Ownership
%
100
Shareholder
International Game Technology
100
100
100
100
Leeward Islands Lottery Holding
Company, Inc.
Leeward Islands Lottery Holding
Company, Inc.
International Game Technology PLC
IGT Foreign Holdings Corporation
100
IGT
100
Leeward Islands Lottery Holding
Company, Inc.
100
CLS-GTECH Company Limited
63
100
100
100
100
100
100
100
50
IGT Lottery S.p.A.
IGT
IGT Global Solutions Corporation
IGT Interactive C.V.
Dreamport, Inc. (>99.99%); IGT
Foreign Holdings Corporation
(<0.01%)
IGT Global Solutions Corporation
IGT Global Solutions Corporation
International Game Technology
IGT Global Services Limited
100
IGT Global Solutions Corporation
100
IGT Global Services Limited
Annual Report and Accounts 2021
Page | 166
Financial Statements
Name of entity
GTECH Asia Corporation
GTECH Brasil Ltda.
GTECH German Holdings
Corporation GmbH
GTECH Management P.I.
Corporation
GTECH Mexico S.A. de C.V.
Address of registered office
1209 Orange Street, Wilmington,
DE 19801, United States
Rua Barao do Triunfo, 88 room
1211, Brooklin Paulista, 04602-000,
Sao Paulo, Brazil
Weseler Straß 253, Mûnster,48151,
Germany
1209 Orange Street, Wilmington,
DE 19801, United States
Av. Constituyentes 635, Colonia 16
de Septiembre,Mexico City, 11810,
Mexico
GTECH Southern Africa (Pty)
Ltd.
GTECH Ukraine
Ground Floor, Orbach Place, 261
Oxford Road, Illovo 2196, South
Africa
3-A Leiptsygska Street, Kyiv,
Ukraine
GTECH WaterPlace Park
Company, LLC
Hydragraphix LLC
Hudson Alley Software, Inc.
I.G.T. - Argentina S.A.
I.G.T. (Australia) Pty Limited
IGT
IGT (Alderney 1) Limited
IGT (Alderney 2) Limited
IGT (Alderney 4) Limited
IGT (Alderney 5) Limited
IGT (Alderney 7) Limited
IGT (Alderney) Limited
IGT (Gibraltar) Limited
IGT (Gibraltar) Solutions
Limited f/k/a GTECH (Gibraltar)
Limited
IGT (UK1) Limited
1209 Orange Street, Wilmington,
DE 19801, United States
1209 Orange Street, Wilmington,
DE 19801, United States
28 Liberty Street, New York, NY
10005
Hipolito Alferez Bouchard 4191,
Optima Park Tower, 5to piso -
Munro, Argentina
Level 5, 11 Talavera Road,
Macquarie Park, NSW 2113
Australia
701 South Carson Street, Suite
200, Carson City, Nevada 89701,
United States
Inchalla, Le Val, GY93UL, Alderney,
Bristish Channel Islands
Inchalla, Le Val, GY93UL, Alderney,
Bristish Channel Islands
Inchalla, Le Val, GY93UL, Alderney,
Bristish Channel Islands
Inchalla, Le Val, GY93UL, Alderney,
Bristish Channel Islands
Inchalla, Le Val, GY93UL, Alderney,
Bristish Channel Islands
Inchalla, Le Val, GY93UL, Alderney,
Bristish Channel Islands
57 - 63 Line Wall Road, Gibraltar
23 Portland House, Glacis Road,
GX11 1AA, Gibraltar
Quay West Trafford Wharf Road,
Trafford Park, Manchester, M17
1HH, United Kingdom
Ownership
%
100
Shareholder
IGT Global Solutions Corporation
100
100
100
100
100
100
100
100
100
100
100
IGT Global Solutions Corporation
(>99.99%); IGT Foreign Holdings
Corporation (<0.01%)
International Game Technology PLC
IGT Global Solutions Corporation
IGT Global Solutions Corporation
(99.700258% - 100% of Class II); IGT
Foreign Holdings Corporation
(0.343297% - 99.998% of Common);
IGT Latin America Corporation
(0.000006% - .002% of Common)
IGT Global Solutions Corporation
GTECH Asia Corporation (99%);
GTECH Management P.I. Corporation
(1%)
IGT Global Solutions Corporation
IGT Global Solutions Corporation
IGT Global Solutions Corporation
International Game Technology
(96.67%); International Game
Technology S.R.L. (3.33%)
International Game Technology
100
International Game Technology
100
100
100
100
100
100
100
100
IGT (Alderney) Limited
IGT (Alderney) Limited
IGT (Alderney) Limited
IGT (Alderney) Limited
IGT (Alderney) Limited
IGT Interactive C.V.
IGT Interactive C.V.
GTECH (Gibraltar) Holdings Limited
100
IGT Interactive, Inc.
Annual Report and Accounts 2021
Page | 167
Financial Statements
Name of entity
IGT (UK2) Limited
IGT (UK 3) Limited
IGT Asia - Macau, S.A.
IGT ASIA PTE. LTD.
IGT Asiatic Development
Limited
IGT Australasia Corporation f/k/
a GTECH Australasia
Corporation
IGT Austria GmbH f/k/a GTECH
Austria GmbH
IGT Canada D&B ULC
IGT Canada Solutions ULC f/k/
a GTECH Canada ULC
IGT Colombia Ltda. f/k/a
GTECH Colombia Ltda.
IGT Colombia Solutions S.A.S.
IGT Commercial Services, S de
R L CV
IGT Comunicaciones Colombia
Ltda. f/k/a GTECH
Comunicaciones Colombia
Ltda.
IGT Czech Republic LLC f/k/a
GTECH Czech Republic LLC
IGT D&B Holdings Limited
IGT Denmark Corporation f/k/a
GTECH Northern Europe
Corporation
IGT do Brasil Ltda.
IGT Dutch Interactive LLC
IGT EMEA B.V.
IGT Europe Gaming B.V. (f/k/a
IGT-Europe B.V.)
IGT Empowerment Trust
Address of registered office
Quay West Trafford Wharf Road,
Trafford Park, Manchester, M17
1HH, United Kingdom
3rd Floor, 10 Finsbury Square,
London, England EC2A 1AF.
Avenida Comercial de Macau, nos.
251A-301, AIA Tower, 21/F, Room
2101, Macau, China
1 Changi North St 1, 02-01 and
02-03, 498789, Singapore
Jayla Place, Wickhams Cay I, Road
Town, Tortola, British Virgin Islands
1209 Orange Street, Wilmington,
DE 19801, United States
Seering 13-14, 8141
Unterpremstatten, Austria
Queen's Marque, 600 - 1741 Lower
Water Street, Halifax, Nova Scotia,
Canada
Queen's Marque, 600 - 1741 Lower
Water Street, Halifax, Nova Scotia,
Canada
Carrera 45, #108A-50, Piso 5,
Bogata, Colombia
Carrera 45, #108A-50, Piso 5,
Bogata, Colombia
Avenida Constituyentes 635, 16 de
Septiembre, Mexico City, 11810,
Mexico
Carrera 45, #108A-50, Piso 5,
Bogata, Colombia
1209 Orange Street, Wilmington,
DE 19801, United States
2nd Floor Marble Arch House, 66
Seymour Street, London, United
Kingdom, W1H 5BT
1209 Orange Street, Wilmington,
DE 19801, United States
Avenida das Nacoes Unidas,
14171, 15° Andar, City of Sao
Paulo, Brazil
160 Greentree Drive, Suite 101,
Dover, DE 19904, United States
Galwin 2, 1046 AW Amsterdam,
Netherlands
Galwin 2, 1046 AW Amsterdam,
Netherlands
2 Brands Hatch Close, Corner
Indianapolis St, Kyalami Business
Park, Midrand 1685, South Africa
Ownership
%
100
Shareholder
IGT – UK Group Limited
100
100
100
100
100
100
100
International Game Technology PLC
International Game Technology
(99.92%); IGT (0.04%); IGT
International Holdings 1 LLC (0.04%)
International Game Technology
International Game Technology
IGT Global Solutions Corporation
IGT Germany Gaming GmbH
International Game Technology PLC
100
International Game Technology PLC
99.99
100
100
99.99
IGT Global Services Limited
(99.998%); IGT Comunicaciones
Colombia Ltda. (0.001%); Claudia
Mendoza (0.001%)
International Game Technology PLC
IGT Global Solutions Corporation
(99.9%); IGT Foreign Holdings
Corporation (0.1%)
IGT Foreign Holdings Corporation
(>99.99%); Claudia Mendoza
(<0.01%) (Nominee share)
37
IGT Global Solutions Corporation
100
International Game Technology PLC
100
IGT Global Solutions Corporation
100
100
100
100
100
IGT International Treasury B.V.
(99.99%); IGT International Treasury
Holding LLC (0.01%)
IGT Interactive Holdings 2 C.V.
IGT-Europe B.V.
International Game Technology
IGT International Treasury B.V.
(74.9%); International Game
Technology Afrida (Pty) Ltd. (25.1%)
Annual Report and Accounts 2021
Page | 168
Financial Statements
Name of entity
IGT Far East Pte Ltd f/k/a
GTECH Far East Pte Ltd
IGT Foreign Holdings
Corporation f/k/a GTECH
Foreign Holdings Corporation
IGT France SARL f/k/a GTECH
France SARL
IGT Games SAS f/k/a GTECH
SAS
IGT Games and Participations
S.r.l. (f/k/a Lottomatica Giochi e
Partecipazioni S.r.l.)
IGT Georgia Gaming LLC
IGT Germany Gaming GmbH f/
k/a GTECH Germany GmbH
IGT Germany GmbH f/k/a
GTECH GmbH
IGT Global Services Limited f/k/
a GTECH Global Services
Corporation Limited
IGT Global Solutions
Corporation f/k/a GTECH
Corporation
IGT Hong Kong Limited
IGT India Private Limited f/k/a
GTECH India Private Limited
IGT Indiana, LLC f/k/a GTECH
Indiana, LLC
IGT Interactive C.V.
Address of registered office
8 Marina Boulevard, #05-02,
Marina Bay Financial Centre,
018981, Singapore
1209 Orange Street, Wilmington,
DE 19801, United States
19, Boulevard Malesherbes, 75008
Paris, France
Carrera 45, #108A-50, Piso 5,
Bogata, Colombia
Viale del Campo Boario, 56/d
Roma, Italy
71 Vazha Pshavela Ave., Office 5,
Tbilisi, Georgia
Weseler Straß 253, Mûnster,48151,
Germany
Weseler Straß 253, Mûnster,48151,
Germany
Grigori Afxentiou, 27, 6021,
Larnaca, Cyprus
Ownership
%
100
Shareholder
IGT Global Services Limited
100
IGT Global Solutions Corporation
100
100
100
100
100
100
100
IGT Foreign Holdings Corporation
IGT Global Services Limited (80%);
IGT Comunicaciones Colombia Ltda.
(10%); IGT Foreign Holdings
Corporation (10%)
International Game Technology PLC
IGT Europe Gaming B.V.
GTECH German Holdings Corporation
GmbH
IGT Global Services Limited
IGT Global Solutions Corporation
1209 Orange Street, Wilmington,
DE 19801, United States
100
IGT Lottery S.p.A.
26th Floor, No. 8 Queen's Road
Central. Hong Kong, China
3rd Floor, B Block, iLabs Centre,
Plot No 18, Sy No 64(p), Madhapur,
Hyderabad, Telangana, India
500081
334 North Senate Avenue,
Indianapolis, IN 46204
Galwin 2, 1046 AW Amsterdam,
Netherlands
100
100
100
100
IGT Interactive Holdings 2 C.V. Galwin 2, 1046 AW, Amsterdam,
100
Netherlands
IGT Interactive, Inc.
160 Greentree Drive, Suite 101,
Dover, DE 19904, United States
160 Greentree Drive, Suite 101,
IGT International Holdings 1
LLC
Dover, DE 19904, United States
IGT International Treasury B.V. Galwin 2, 1046 AW, Amsterdam,
Netherlands
1209 Orange Street, Wilmington,
DE 19801
Riverside One, Sir John
Rogerson's Quay, Dublin 2, Ireland
IGT International Treasury
Holding LLC
IGT Ireland Operations Limited
f/k/a GTECH Ireland Operations
Limited
IGT Italia Gaming Machines
Solutions S.r.l. f/k/a Spielo
International Italy S.r.l.
100
100
100
100
100
Viale del Campo Boario, 56/d
Roma, Italy
100
IGT Lottery S.p.A.
Annual Report and Accounts 2021
Page | 169
IGT Asiatic Development Limited
IGT Global Services Limited (99.99%);
IGT Far East Pte Ltd. (0.01%)
IGT Global Solutions Corporation
IGT (35.8274668%); IGT Interactive
Holdings 2 C.V. (32.5220680%);
International Game Technology
(31.6504432%); IGT Dutch Interactive
LLC (0.0000220%)
IGT Interactive, Inc. (13.831555%);
International Game Technology
(86.168444%); IGT International
Holdings 1 LLC (0.000001%)
International Game Technology
International Game Technology
International Game Technology
IGT International Treasury B.V.
IGT Global Services Limited
Financial Statements
Name of entity
IGT Japan K.K.
IGT Juegos S.A.S.
IGT Korea Yuhan Chaekim
Hoesa a/k/a IGT Korea LLC
IGT Latin America Corporation
f/k/a GTECH Latin America
Corporation
IGT Lottery Holdings B.V.
IGT Lottery S.p.A. (f/k/a
Lottomatica Holding S.r.l.)
IGT Malta Casino Holdings
Limited f/k/a GTECH Malta
Holdings Limited
IGT Malta Casino Limited f/k/a
GTECH Malta Casino Limited
IGT Malta Interactive Limited f/
k/a GTECH Malta Poker
Limited f/k/a Boss Media Malta
Poker Ltd.
IGT Mexico Lottery S. de R.L.
de C.V. f/k/a GTECH Servicios
de México, S. de R.L. de C.V.
Address of registered office
Oak Minami-Azabu Building 2F,
3-19-23 Minami-Azabu, Minato-ku,
Tokyo, 106-0047, Japan
Carrera 45, #108A-50, Piso 5,
Bogata, Colombia
16th, 17th Fl, Teheran-ro 134,
Gangnam-gu, Seoul, Korea
1209 Orange Street, Wilmington,
DE 19801, United States
Galwin 2, 1046 AW Amsterdam,
Netherlands
Viale del Campo Boario, 56/d
Roma, Italy
2, Belvedere Court, Triq Il- Qaliet,
St. Julians STJ 3255, Malta
2, Belvedere Court, Triq Il- Qaliet,
St. Julians STJ 3255, Malta
2, Belvedere Court, Triq Il- Qaliet,
St. Julians STJ 3255, Malta
Av. Constituyentes 635, 16 de
Septiembre, Mexico City, Mexico
11810
IGT Monaco S.A.M. f/k/a
GTECH Monaco S.A.M.
IGT Peru Solutions S.A. f/ka
GTECH Peru S.A.
7, Rue Du Gabian, Le Gildo Pastor-
Bloc C-8 ETG-N° 22, 98000,
Monaco
Av. El Derby Nro.254, Oficina 606 -
Surco, Lima – Peru
AL. JEROZOLIMSKIE, nr 92,
00-807, Warsaw, Poland
1209 Orange Street, Wilmington,
DE 19801, United States
Av. Constituyentes No. 635, Col. 16
de Septiembre, Mexico City,
Mexico 11810
Avenida El Rosal N 5.108
Santiago, Chile 8580000
Edificio Avant BCN, Selva 12,
Planta 1, Modula A2, El Prat de
Llobregat, Barcelona 08820, Spain
Edificio Avant, Parque de Negocios
Mas Blau, Calle Selva 12, planta
1a, Modulo A2, El Prat de
Llobregat, 08820, Barcelona, Spain
Hälsingegatan 40 12tr, 113 43
Stockholm, Sweden
Honnorsgatan 2, Vaxjo 35053,
Sweden
IGT Poland Sp. z.o.o. f/k/a
GTECH Poland Sp. z o.o.
IGT Slovakia Corporation f/k/a
GTECH Slovakia Corporation
IGT SME, S. de. R.L. de C.V.
IGT SOLUTIONS CHILE SpA
IGT Spain Lottery, S.LU. f/k/a
GTECH Global Lottery S.L.
IGT Spain Operations, S.A. f/k/
a GTECH Spain S.A.
IGT SWEDEN AB f/k/a GTECH
Sweden AB
IGT Sweden Interactive AB f/k/a
GTECH Sweden Interactive AB
f/k/a Boss Media AB
IGT Sweden Investment AB f/k/
a GTECH Sweden Investment
AB
Ownership
%
100
Shareholder
IGT International Treasury B.V.
100
100
80
100
100
IGT Peru Solutions S.A. (60%); IGT
Games S.A.S. (40%)
IGT Global Services Limited
IGT Global Solutions Corporation
(80%); Computers and Controls
(Holdings) Limited (20%)
International Game Technology PLC
IGT Lottery Holdings B.V.
99.99
IGT Sweden Interactive AB
99.99
IGT Malta Casino Holdings Limited
99.99
IGT Malta Casino Holdings Limited
100
96
100
100
100
100
100
100
IGT Global Solutions Corporation
(99.9%); IGT Foreign Holdings
Corporation Holdings Corporation
(0.1%)
IGT Austria GmbH (96%); Katarzyna
Szorc (1%); Frederik Andreacchio
(1%)
IGT Germany Gaming GmbH
(99.999971%); GTECH German
Holdings Corporation GmbH
(0.000029%)
IGT Global Solutions Corporation
IGT Global Solutions Corporation
IGT Global Solutions Corporation
(99%); IGT Foreign Holdings
Corporation (1%)
International Game Technology PLC
IGT Global Services Limited
100
IGT Spain Lottery S.L.U.
100
100
IGT Global Services Limited
IGT Europe Gaming B.V.
Honnorsgatan 2, Vaxjo 35053,
Sweden
100
IGT Sweden Interactive AB
Annual Report and Accounts 2021
Page | 170
Financial Statements
Name of entity
IGT Technology Development
(Beijing) Co. Ltd.
IGT Turkey Teknik Hizmetler Ve
Musavirlik Anonim f/k/a GTECH
Avrasya Teknik Hizmetler Ve
Musavirlik A.S.
IGT U.K. Limited f/k/a GTECH
U.K. Limited
IGT UK Games Limited f/k/a
GTECH UK Games Limited
IGT UK Interactive Holdings
Limited f/k/a GTECH Sports
Betting Solutions Limited
IGT UK Interactive Limited f/k/a
GTECH UK Interactive Limited
IGT US D&B (G) LLC
IGT US D&B (L) LLC
IGT US D&B Holdings LLC
IGT VIA DOMINICAN
REPUBLIC, SAS f/k/a GTECH
VIA DR, SAS
IGT Worldwide Services
Corporation f/k/a GTECH
Worldwide Services
Corporation
IGT-Canada Inc.
IGT-China, Inc.
IGT-Íslandi ehf. (IGT-Iceland
plc)
IGT-Latvia SIA
IGT-Mexicana de Juegos, S. de
R.L. de C.V.
IGT-UK Gaming Limited
IGT-UK Group Limited
IMA S.r.l.
Innoka Oy
International Game Technology
Address of registered office
11F, Viva Plaza, No. 29 Suzhou
Street, Haidian District, Beijing
100080, P.R. China
Nasuh Akar Mahallesi. Turkocagi
cad. 1400. sok. No: 34/2, Balgat,
Ankara, Turkey
1st Floor Building, 3 Croxley Green
Business Park, Hatters Lane,
Watford, WD18 8YG, United
Kingdom
1 Bridgewater Place Water Lane,
Leeds, West Yorkshire LS11 5QR
3rd Floor 10 Finsbury Square,
London, EC2A 1AF, United
Kingdom
3rd Floor 10 Finsbury Square,
London, EC2A 1AF, United
Kingdom
1209 Orange Street, Wilmington,
DE 19801, United States
1209 Orange Street, Wilmington,
DE 19801, United States
1209 Orange Street, Wilmington,
DE 19801, United States
Avenida Estrella Sadhala, Esquina
Bartolome Colon, Edificio Hache,
Primer Piso, Santiago, Dominican
Republic
1209 Orange Street, Wilmington,
DE 19801, United States
600-1134 Grande Allee O, bureau
600, Quebec (Quebec) G1S1E5,
Canada
160 Greentree Drive, Suite 101,
Dover, DE 19904, United States
Sigtuni 3800, Selfoss, Iceland
Krisjana Valdemara Street 33-19.
Riga, Latvia
Andres Bello 45 Piso 14, Col.
Polanco, Chapultepec, Deleg.
Miguel Hidalgo, D.F.C.P. 11560,
Mexico
Quay West, Trafford Wharf Road,
Trafford Park, Manchester, M17
1HH, United Kingdom
Quay West Trafford Wharf Road,
Trafford Park, Manchester, M17
1HH, United Kingdom
Viale del Campo Boario, 56/d
Roma, Italy
Aku Korhosen tie 4, 00440 Helsinki,
Finland
701 South Carson Strret, Suite 200,
Carson City, Nevada 89701
Ownership
%
100
Shareholder
IGT Hong Kong Limited
100
IGT Global Solutions Corporation
100
IGT Global Solutions Corporation
100
100
IGT Sweden Interactive AB
International Game Technology PLC
100
IGT UK Interactive Holdings Limited
100
100
100
100
IGT
IGT Global Solutions Corporation
IGT D&B Holdings Limited
IGT Global Services Limited
(99.9666%); IGT Ireland Operations
Limited (0.0333%)
100
IGT Global Solutions Corporation
100
International Game Technology
100
100
100
100
International Game Technology
International Game Technology
International Game Technology
IGT (99.99%); International Game
Technology (0.01%)
100
IGT – UK Group Limited
100
International Game Technology
51
81
IGT Europe Gaming B.V.
IGT Global Services Limited
100
International Game Technology PLC
Annual Report and Accounts 2021
Page | 171
Financial Statements
Name of entity
International Game Technology
(NZ) Limited
International Game Technology
España, S.L.
International Game Technology
S.R.L.
International Game Technology
Services Limited
International Game Technology-
Africa (Pty) Ltd.
Address of registered office
Birchwood Park, Unit 4, 483 Hutt
Road, Lower Hutt, New Zeland
Pza de Pablo Ruiz Picasso 1, Torre
Picasso, 5, 28020 Madrid
Av. Pardo y Aliaga No. 695, Oficina
11, distrito de San Isidro, provincia
y departamento de Lima
27 Grigori, 6021, Larnaca, Cyprus
2 Brands Hatch Close, Corner
Indianapolis St, Kyalami Business
Park, Midrand 1685, South Africa
International Gaming
Technology Brasil Servicos de
Dados Ltda
Calcada Das Margaridas, 163, Sala
02, Barueri, Sao Paulo, 06453-038,
Brazil
LB Participacões E Loterias
Ltda.
LB Produtos Lotéricos E
Licenciamentos Ltda.
Leeward Islands Lottery
Holding Company, Inc.
LIS Holding S.p.A. (f/k/a
Lottomatica Italia Servizi S.p.A.)
LIS Pay S.p.A. (fka CartaLis
Istituto di Moneta Elettronica
S.p.A.)
Lotterie Nazionali S.r.l.
Lottery Equipment Company
LOTTOITALIA S.r.l.
Loxley GTECH Technology
Co., Ltd.
Northstar New Jersey Holding
Company, LLC
Northstar New Jersey Lottery
Group, LLC
Northstar SupplyCo New
Jersey, LLC
Online Transaction
Technologies S.à.r.l. à Associé
Unique
Orbita Sp. z o.o.
Oy IGT Finland AB f/k/a Oy
GTECH Finland Ab
PCC Giochi e Servizi S.p.A.
Calcada das Margaridas No. 163
Sala 02, CV 1237 Centro
Comercial de Alphaville, Barueri
Sao Paulo Brazil 06453-038
Calcada das Margaridas No. 163
Sala 02, CV 1237 Centro
Comercial de Alphaville, Barueri
Sao Paulo Brazil 06453-038
C18, The Sands Complex, Bay
Road, Basseterre, St. Christopher,
St. Kitts
Via Bracco, 6, Milano, Italy
Via Bracco, 6, Milano, Italy
Viale del Campo Boario, 56/d
Roma, Italy
c/o Shevchenko, Didkovskiy and
Parnters LLC, 2-A Kostyantynivska
Street, 5th Floor, Kyiv, Ukraine
Viale del Campo Boario, 56/d
Roma, Italy
102 Na Ranong Road, Klongtoey,
Bangkok Metropolis, Thailand
820 Bear Tavern Road, West
Trenton, NJ 08628, United States
820 Bear Tavern Road, West
Trenton, NJ 08628, United States
820 Bear Tavern Road, West
Trenton, NJ 08628, United States
Twin Center West, Angle Bd
Zerktouni et Al Massira El Khadra,
Casablanca, Morocco
Aleje Jerozolimskie 92, 00-807
Warsaw, Poland
c/o Veikkaus Oy, Aku Korhosen tie
2-4, 00440 Veikkaus, Vantaa,
Finland
Viale del Campo Boario, 56/d
Roma, Italy
Ownership
%
100
Shareholder
I.G.T. (Australia) Pty Limited
100
100
100
100
IGT-Europe B.V.
IGT (99.991%); IGT International
Holdings 1 LLC (0.009%)
International Game Technology PLC
IGT International Treasury B.V.
(74.9%); IGT Empowerment Trust
(25.1%)
100
IGT Global Solutions Corporation
100
100
IGT Games and Participations S.r.L.
(>99.99%); International Game
Technology PLC (<0.01%)
LB Participacões E Loterias Ltda.
(>99.99%); International Game
Technology PLC (<0.01%)
100
IGT Global Services Limited
100
100
64
100
IGT Lottery S.p.A.
Lis Holding S.p.A.
IGT Lottery S.p.A.
GTECH Asia Corporation (99.994%);
GTECH Management P.I. Corporation
(0.006%)
61.5
IGT Lottery S.p.A.
49
IGT Global Services Limited (10%);
IGT Global Solutions Corporation
(39%)
50.15
IGT Global Solutions Corporation
82.31
70
Northstar New Jersey Holding
Company, LLC
IGT Global Solutions Corporation
100
IGT Foreign Holdings Corporation
100
100
IGT Global Solutions Corporation
IGT Global Solutions Corporation
100
IGT Lottery S.p.A.
Annual Report and Accounts 2021
Page | 172
Financial Statements
Name of entity
Playyoo SA
Powerhouse Technologies, Inc.
Probability (Gibraltar) Limited
Prodigal Lottery Services, N.V.
Retail Display and Service
Handlers, LLC
SB Industria E Comercio Ltda.
SED Multitel S.r.l.
Servicios Corporativos y de
Administracion, S. de R.L. de
C.V.
St. Kitts and Nevis Lottery
Company, Ltd.
Technology Risk Management
Services, Inc.
UTE LOGISTA IGT f/k/a UTE
Logista-GTECH, Law 18/1982,
No. 1
VIA TECH Servicios SpA
VLC, Inc.
Your Sales S.r.L.
ZEST GAMING MEXICO, S.A.
DE C.V.
Address of registered office
Via Cantonale 19, Lugano 6900,
Switzerland
6355 South Buffalo Drive, Las
Vegas, Nevada, 89113, United
States
Suite 23, Portland House Glacis
Road, GX11 1AA, Gibraltar
63A Walter J.A. Nisbeth Road,
Pondfill Philipsburg, St. Maarten
1209 Orange Street, Wilmington,
DE 19801, United States
Rua Rio Pauini 30, A, Quadra F,
conjunto Manauense, Bairro Nossa
Senhora das Graças, CEP
69053-001, Cidade de Manaus,
Estado do Amazonas
Viale del Campo Boario, 56/d
Roma, Italy
Andres Bello 45 Piso 14, Col.
Polanco, Chapultepec, Deleg.
Miguel Hidalgo, D.F.C.P. 11560,
Mexico
C18, The Sands Complex, Bay
Road, Basseterre, St. Kitts
1209 Orange Street, Wilmington,
DE 19801, United States
Trigo n° 39, Polfgono Industrial
Polvoranca, Madrid, 18104 Spain
Isadora Goyenechea, 3447 Piso
19, 2215-21, Las Condes,
Santiago, Chile
6355 South Buffalo Drive, Las
Vegas, Nevada, 89113, United
States
Viale del Campo Boario, 56/d
Roma, Italy
Campos Eliseos169, Col. Polanco,
Mexico City, 11560, Mexico
Joint Ventures
CLS-GTECH Company Limited PO Box 957, Offshore
Telling IGT Information
Technology (Shenzhen) Co.,
Ltd.
Ringmaster S.r.l.
Incorporations Centre, Road Town,
Tortola, British Virgin Islands
503D, Tian An Chuangxin Keji
Square (Phase II) East Block, the
Interchange of Binhe Road and
Xiangmihu Road, Shatou Street,
Futian District, Shenzhen, China
Corso Francia, 110 - Torino, Italy
Ownership
%
100
Shareholder
IGT UK Interactive Limited
100
International Game Technology
100
100
100
100
100
100
100
100
50
IGT UK Interactive Limited
Leeward Islands Lottery Holding
Company, Inc.
IGT Global Solutions Corporation
IGT Global Solutions Corporation
(˃99.99%); IGT Foreign Holdings
Corporation (˂0.01%)
IGT Lottery S.p.A.
International Game Technology
(99.97%); IGT (0.03%)
Leeward Islands Lottery Holding
Company, Inc.
IGT Global Solutions Corporation
IGT Spain Lottery S.L.U.
100
IGT Global Services Limited
100
Powerhouse Technologies, Inc.
100
100
50
49
IGT Lottery S.p.A.
International Game Technology PLC
(99%); IGT Spain Lottery S.L.U. (1%)
IGT Global Services Limited
IGT Global Services Limited
50
IGT Lottery S.p.A..
Annual Report and Accounts 2021
Page | 173
Financial Statements
FINANCIAL STATEMENTS
INTERNATIONAL GAME TECHNOLOGY PLC
INDEX TO PARENT COMPANY FINANCIAL STATEMENTS
Parent Balance Sheet at December 31, 2021 and 2020 ...........................................................................................
175
Parent Statement of Shareholders' Equity for the years ended December 31, 2021 and 2020 ..........................
176
Notes to the Parent Financial Statements ....................................................................................................................
177
Annual Report and Accounts 2021
Page | 174
Financial Statements
International Game Technology PLC
Parent Balance Sheet
($ in millions)
Notes
2021
2020
December 31,
Assets
Current assets:
Cash and cash equivalents
Intercompany loans receivable
Receivables from related parties
Other current assets
Total current assets
Property, plant and equipment, net
Right-of-use assets
Investments in subsidiaries
Intercompany loans receivable
Other non-current assets
Total non-current assets
Total assets
Liabilities and shareholders' equity
Current liabilities:
Accounts payable
Current portion of long-term debt
Loans payable to related parties
Payables to related parties
Other current liabilities
Total current liabilities
Long-term debt, less current portion
Lease liabilities
Loans payable to related parties
Other non-current liabilities
Total non-current liabilities
Total liabilities
Shareholders' equity
Share capital
Share premium
Retained earnings
Other reserves
Total shareholders' equity
Total liabilities and shareholders' equity
6
3
4
4
6
29
85
19
1
134
2
7
4,799
6,143
23
10,974
11,109
2
—
96
448
32
577
5,851
7
584
3
6,445
7,022
21
21
3,903
142
4,087
11,109
125
77
13
6
220
1
9
4,786
7,673
37
12,507
12,726
7
393
104
248
56
807
7,808
9
353
2
8,173
8,979
20
21
3,567
139
3,747
12,726
Net income (loss) was $396 million and $(345) million for the years ended December 31, 2021 and 2020, respectively. As
permitted by section 408 of the Companies Act 2006, no statement of comprehensive income for International Game Technology
PLC is shown.
The Parent financial statements were approved by the Board of Directors on March 10, 2022 and signed on its behalf on
March 16, 2022 by:
Vincent Sadusky
Chief Executive Officer
Company registration number: 09127533
The accompanying notes are an integral part of these Parent financial statements.
Annual Report and Accounts 2021
Page | 175
Financial Statements
International Game Technology PLC
Parent Statement of Shareholders' Equity
($ in millions)
Balance at December 31, 2019
Net loss
Other comprehensive loss
Total comprehensive loss
Stock-based compensation
Shares issued under stock award plans
Non-cash investment in subsidiaries
Dividends paid
Balance at December 31, 2020
Net income
Other comprehensive income
Total comprehensive income
Non-cash investment in subsidiaries
Stock-based compensation
Shares issued under stock award plans
Dividends paid
Repurchases of ordinary shares
Balance at December 31, 2021
Share Capital
Share Premium
20
—
—
—
—
—
—
—
20
—
—
—
—
—
—
—
—
21
21
—
—
—
—
—
—
—
21
—
—
—
—
—
—
—
—
21
Retained
Earnings
Other Reserves
Total Equity
3,960
145
4,146
(345)
—
(345)
2
(1)
(9)
(41)
3,567
396
—
396
27
8
(12)
(41)
(41)
—
(6)
(6)
—
—
—
—
139
—
3
3
—
—
—
—
—
(345)
(6)
(350)
2
(1)
(9)
(41)
3,747
396
3
398
27
8
(12)
(41)
(41)
3,903
142
4,087
For further information related to shareholders' equity, refer to Note 20 – Shareholders' Equity, in the notes to the
consolidated financial statements included herein.
The accompanying notes are an integral part of these Parent financial statements.
Annual Report and Accounts 2021
Page | 176
Financial Statements
International Game Technology PLC
Notes to the Parent Financial Statements
1. Description of Business
The principal activities of International Game Technology PLC (the "Parent") are to make investments and provide
loans to its consolidated subsidiaries. All references to the "Company" refer to the business and operations of the
Parent and its consolidated subsidiaries.
2. Summary of Significant Accounting Policies
Basis of Preparation
The accompanying financial statements and notes of the Parent have been prepared in accordance with Financial
Reporting Standard 101 "Reduced Disclosure Framework ("FRS 101") and the Companies Act 2006 applicable to
companies reporting under FRS 101. The amendments to FRS 101 issued in March 2018 and effective immediately
have been applied. The Parent financial statements are stated in millions of U.S. dollars unless otherwise indicated
and are computed based on the amounts in thousands. Certain amounts in columns and rows within tables may not
foot due to rounding.
In the transition from IFRS, the Company has made no measurement and recognition adjustments. In applying FRS
101, various disclosure amendments to the financial statements have been applied from Adopted IFRS disclosure
requirements. The results of the Company herein have not been impacted due to the adoption FRS 101. The
comparative information has been amended where necessary to reflect the disclosure requirements of FRS 101.
In preparing these financial statements, the Company applies the recognition, measurement, and disclosure
requirements of Adopted IFRSs, but makes amendments where necessary in order to comply with the Companies
Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions have been taken.
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements. The following exemptions available under FRS 101 have been applied:
•
The following paragraphs of IAS 1, Presentation of Financial Statements:
▪
▪
▪
▪
▪
▪
▪
10(d) (statement of cash flows);
16 (statement of compliance with all IFRS);
38 (comparative information requirements in respect of Paragraph 79(a)(iv) of IAS 1)
38A (requirement for minimum of two primary statements, including cash flow statements);
38B-D (additional comparative information);
111 (cash flow statement information);
134-136 (capital management disclosures);
•
•
•
•
•
•
•
IAS 7, Statement of Cash Flows
Paragraphs 30 and 31 of IAS 8, Accounting Policies, Changes in Estimates and Errors (requirement for the
disclosure of information when an entity has not applied a new IFRS that has been issued and is not yet
effective);
IFRS 7, Financial Instruments: Disclosures;
Paragraphs 91 to 99 of IFRS 13, Fair Value Measurement (disclosure of valuation techniques and inputs used
for fair value measurement of assets and liabilities);
The requirements of IAS 24, Related Party Disclosures to disclose related party transactions entered into
between two or more members of a group;
Paragraph 17 of IAS 24, Related Party Disclosures (key management compensation); and
Paragraphs 45(b) and 46 to 52 of IFRS 2, Share-Based Payment (details of the number and weighted- average
exercise prices of stock options and stock awards, and how the fair value of stock options and stock awards
was determined).
Annual Report and Accounts 2021
Page | 177
Financial Statements
Summary of Significant Accounting Policies
The accounting policies used in the preparation of the Parent financial statements are the same as those used in
the preparation of the consolidated financial statements, in accordance with the Companies Act 2006. Refer to Note
2 – Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included
herein. In addition to those accounting policies, the following accounting policy for investments in subsidiaries also
applies to the Parent financial statements: Investments in subsidiaries are held at cost less accumulated impairment
losses, if any.
3. Investments in Subsidiaries
($ in millions)
International Game Technology
IGT Lottery Holdings B.V. (1)
IGT Lottery S.p.A. (formerly Lottomatica Holding S.r.l.) (1)
Other
Country of
Incorporation
United States
Netherlands
Italy
December 31,
2021
2020
3,673
883
—
242
4,799
3,699
—
845
242
4,786
(1) 100% ownership of IGT Lottery S.p.A. (formerly Lottomatica Holding S.r.l.) transferred to IGT Lottery Holdings B.V. effective April 30, 2021.
A review of the potential impairment of an investment is carried out by the Directors if events or changes in
circumstances indicate that the carrying value of the investment may not be recoverable. Such impairment reviews
are performed in accordance with IAS 36, Impairment of Assets. Each direct subsidiary of the Parent is reviewed as
a cash-generating unit ("CGU") and for each identified CGU, the Directors consider, among other factors, the
relationship between the subsidiaries net assets and the carrying value of the investment when reviewing for
indicators of impairment. As of December 31, 2021, the carrying value of the investment in each directly owned
subsidiary is supported by the respective subsidiaries' underlying net assets, indicating no potential impairment. As
no other impairment indicators were identified as of the balance sheet date, the Directors have concluded that the
investment in subsidiary balance was fully recoverable and no impairment was required as of December 31, 2021.
For a complete list of the Parent's subsidiaries, refer to Note 29 – The Parent's Directly and Indirectly Owned
Subsidiaries, in the notes to the consolidated financial statements included herein.
Annual Report and Accounts 2021
Page | 178
Financial Statements
4. Debt
The principal balance of each debt obligation reconciles to the balance sheet is as follows:
($ in millions)
3.500% Senior Secured Euro Notes due July 2024
6.500% Senior Secured U.S. Dollar Notes due February 2025
4.125% Senior Secured U.S. Dollar Notes due April 2026
3.500% Senior Secured Euro Notes due June 2026
6.250% Senior Secured U.S. Dollar Notes due January 2027
2.375% Senior Secured Euro Notes due April 2028
5.250% Senior Secured U.S. Dollar Notes due January 2029
Senior Secured Notes, long-term
Euro Term Loan Facility due January 2027
Euro Revolving Credit Facilities due July 2024 (1)
U.S. Dollar Revolving Credit Facilities due July 2024 (1)
Long-term debt, less current portion
December 31, 2021
Principal
Debt
issuance
cost, net
Swap and
other
Total
566
1,100
750
849
750
566
750
5,332
566
—
—
5,898
(3)
(7)
(6)
(5)
(5)
(4)
(6)
(36)
(2)
—
—
(38)
—
—
—
—
—
—
—
—
(9)
—
—
(9)
564
1,093
744
844
745
562
744
5,296
555
—
—
5,851
Total Debt
(1) $9 million of debt issuance costs, net presented in other non-current assets.
5,898
(38)
(9)
5,851
($ in millions)
6.250% Senior Secured U.S. Dollar Notes due February 2022
4.750% Senior Secured Euro Notes due February 2023
3.500% Senior Secured Euro Notes due July 2024
6.500% Senior Secured U.S. Dollar Notes due February 2025
3.500% Senior Secured Euro Notes due June 2026
6.250% Senior Secured U.S. Dollar Notes due January 2027
2.375% Senior Secured Euro Notes due April 2028
5.250% Senior Secured U.S. Dollar Notes due January 2029
Senior Secured Notes, long-term
Euro Term Loan Facility due January 2027
Euro Revolving Credit Facilities due July 2024 (1)
U.S. Dollar Revolving Credit Facilities due July 2024 (1)
Long-term debt, less current portion
Euro Term Loan Facility due January 2027
Current portion of long-term debt
December 31, 2020
Principal
Debt
issuance
cost, net
Swap
Total
1,000
1,043
614
1,100
920
750
614
750
6,790
1,055
—
—
7,846
393
393
(3)
(5)
(4)
(8)
(7)
(6)
(5)
(7)
(45)
(7)
—
—
(52)
—
—
7
—
—
—
—
—
—
—
7
8
—
—
15
—
—
15
1,004
1,038
610
1,092
913
744
608
744
6,752
1,056
—
—
7,808
393
393
8,201
Total Debt
(1) $12 million of debt issuance costs, net presented in other non-current assets.
8,238
(52)
Annual Report and Accounts 2021
Page | 179
Financial Statements
Principal payments for each debt obligation, excluding short-term borrowings, for the next five years and thereafter
are as follows: (in millions):
Year
2022
2023
2024
2025
2026
2027 and thereafter
Total principal payments
U.S. Dollar
Denominated
Euro
Denominated
Total
—
—
—
1,100
750
1,500
3,350
—
—
680
113
963
793
2,548
—
—
680
1,213
1,713
2,293
5,898
For further information related to debt, refer to Note 17 – Debt, in the notes to the consolidated financial statements
included herein.
5.
Income Taxes
The provision for income taxes consists of:
($ in millions)
Current:
Withholding tax
Current tax on income for the year
For the year ended December 31,
2021
2020
1
(1)
—
—
—
—
No income taxes were paid in 2021. Income taxes paid, net of refunds in 2020 was $0.5 million. There were no
deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020.
The Parent is a tax resident in the United Kingdom ("U.K."). A reconciliation of the provision for income taxes, with
the amount computed by applying the weighted average rate of the U.K. statutory main corporation tax rates
enacted in each of the Parent's calendar year reporting periods to income (loss) before provision for income taxes is
as follows:
($ in millions)
Income (loss) before provision for income taxes
United Kingdom statutory tax rate
Statutory tax expense (benefit)
Non-deductible debt costs
Change in unrecognized deferred tax asset
Foreign withholding taxes
Unrealized foreign exchange
Non-taxable dividend income
Other
For the year ended December 31,
2021
2020
396
19.0 %
75
(344)
19.0 %
(65)
7
3
1
(11)
(75)
1
—
24
46
—
14
(20)
1
—
Effective tax rate
0.6 %
(0.1) %
The Parent's effective income tax rate was 0.6% in 2021 compared to (0.1)% in 2020. The principal drivers of the
tax rate increase is the level of pre-tax income in 2021 compared to a pre-tax loss in 2020.
Annual Report and Accounts 2021
Page | 180
Financial Statements
Changes to the U.K. corporate tax rates were substantively enacted as part of Finance Bill 2015 (on October 26,
2015) and Finance Bill 2016 (on September 7, 2016). These changes, which include reductions to the main tax rate
to 17% on April 1, 2020, have been superseded by the Finance Bill 2021 resulting with the U.K. corporate tax rate
remaining at 19% for 2021.
Net Operating Losses
At December 31, 2021 and 2020, the Parent had gross tax loss carryforwards of $631 million and $638 million,
respectively, that relate to the U.K. No deferred tax assets were recorded for these tax loss carryforwards as
realization is not probable. These tax loss carryforwards may be carried forward indefinitely notwithstanding that
they offset only 50% of taxable income (above a £5.0 million full allowance threshold) in a given year.
6. Leases
The Parent has a lease for its registered office in London that is effective from March 25, 2015 to March 25, 2025
and a lease for another location in London that is utilized entirely by a subsidiary, which is effective from January 14,
2016 to January 13, 2026. Leasehold improvements made to the Parent's registered office in London are capitalized
and depreciated from the date placed in service through March 25, 2025, in accordance with the Company's
depreciation policy.
The classification of our leases in the balance sheet are as follows:
December 31,
2021
December 31,
2020
($ in millions)
Assets
ROU asset, net (1)
Total lease assets
Liabilities
Lease liability, current
Lease liability, non-current
Total lease liabilities
Balance Sheet Classification
Right-of-use assets
Other current liabilities
Lease liabilities
7
7
2
7
9
(1) ROU assets are recorded net of accumulated amortization of $6 million and $4 million at December 31, 2021 and December 31, 2020,
respectively.
Maturities of lease liabilities at December 31, 2021 are as follows ($ in millions):
Year
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Imputed interest
Present value of lease liabilities
Total
9
9
2
9
12
3
3
3
1
—
—
10
—
9
Annual Report and Accounts 2021
Page | 181
Financial Statements
7. Stock-Based Compensation
Stock-based incentive awards are provided to directors and employees under the terms of our 2015 and 2021
Equity Incentive Plans (collectively, the “Plan”) as administered by the Board. Awards available under the Plan
principally include stock options, performance share units, restricted share units or any combination thereof. The
maximum number of new shares that may be granted under the Plan is 20.5 million shares. To the extent any award
is forfeited, expires, lapses, or is settled for cash, the award is available for reissue under the Plan. We utilize
authorized and unissued shares to satisfy all shares issued under the Plan.
Stock Options
Stock options are awards that allow the employee to purchase shares of our stock at a fixed price. Stock options are
granted under the Plan at an exercise price not less than the fair market value of a share on the date of grant. In
2021, stock options were granted solely to our former Chief Executive Officer, which will vest in 2024 subject to
certain performance and other criteria, and have a contractual term of approximately seven years. No stock options
were granted in 2020.
Stock Awards
Stock awards are principally made in the form of performance share units (“PSUs”) and restricted share units
(“RSUs”). PSUs are stock awards where the number of shares ultimately received by the employee depends on the
Company’s performance against specified targets, which may include Adjusted EBITDA, Free Cash Flow and Total
Shareholder Return (“TSR”) relative to the Russell Mid Cap Market Index. PSUs typically vest 50% over an
approximate three-year period and 50% over an approximate four-year period (i.e. four years to vest both tranches).
In 2021, a second round of PSUs was granted in lieu of there being no 2020 PSUs that vest 50% over an
approximate two-year period and 50% over an approximate three-year period. Dividend equivalents are not paid
under the Plan. The fair value of each PSU is determined on the grant date or modification date, based on the
Company’s stock price, adjusted for the exclusion of dividend equivalents, and assumes that performance targets
will be achieved. Over the performance period, the number of shares of stock that will be issued is adjusted based
upon the probability of achievement of performance targets. The ultimate number of shares issued and the related
compensation cost recognized as expense is based on a comparison of the final performance metrics to the
specified targets.
RSUs are stock awards granted to directors that entitle the holder to shares of common stock as the award vests,
typically over a one-year period, and have a contractual term of 10 years. Dividend equivalents are not paid under
the Plan. In 2020, RSUs were also granted to employees, which will vest in approximately one- and two-year
vesting periods.
8. Employee Information
Employee Benefit Expense
($ in millions)
Stock-based compensation
Incentive compensation
Wages and salaries
Social security and other benefits
For the year ended December 31,
2021
2020
8
4
2
1
14
2
—
2
6
9
The Parent had 6 and 10 people employed in corporate support roles as of December 31, 2021 and 2020,
respectively.
Annual Report and Accounts 2021
Page | 182
Financial Statements
9. Auditors' Remuneration
Aggregate fees for audit services rendered by PricewaterhouseCoopers LLP, which consist of professional services
performed in connection with the Parent's annual financial statements, were $154,500 and $150,000 for the years
ended December 31, 2021 and 2020, respectively.
10. Subsequent Events
Refer to Note 28 – Subsequent Events, in the notes to the consolidated financial statements included herein.
Annual Report and Accounts 2021
Page | 183
Additional Information
INVESTOR INFORMATION
Listing
The ordinary shares of
International Game
Technology PLC are listed on the New York Stock
Exchange under ticker symbol IGT.
News releases
Additional company information including news
releases,
and
information on corporate governance are available
at www.IGT.com.
announcements,
earnings
Investor contact
Investor Relations Department
International Game Technology
10 Memorial Boulevard
Providence, RI 02903
Phone: +1 (401) 392-7077
E-mail: investor.relations@igt.com
Share transfer agent and Registrar
Computershare Shareholder Services
Regular Mail:
Computershare
PO Box 43001
Providence, RI 02940-3001
Overnight Mail Delivery:
Computershare
250 Royall Street
Canton, MA 02021
www-us.computershare.com/investor
FORWARD-LOOKING STATEMENTS
The intention of this document is to provide information to shareholders and is not designed to be relied upon by any other party
or for any other purpose.
This document includes forward-looking statements concerning the Company and other matters. These statements may
discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial
condition, or otherwise, based on current beliefs as well as assumptions made, and information currently available. Forward-
looking statements may be accompanied by words such as “aim,” “anticipate,” “believe,” “plan,” “could,” “would,” “should,”
“shall,” “continue,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,”
“project,” or the negative or other variations of them. These forward-looking statements speak only as of the date on which such
statements are made and are subject to various risks and uncertainties, many of which are outside the Company’s control.
Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect,
actual results may differ materially from those predicted in the forward-looking statements and from past results, performance,
or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to
differ materially from those in the forward-looking statements include (but are not limited to) changes in legislation,
governmental regulations, or the enforcement thereof that could affect the Company; international, national, or local economic,
social, or political conditions that could adversely affect the Company or its customers; and the Company’s international
operations, which are subject to the risks of currency fluctuations and foreign exchange controls.
Except as required under applicable law, the Company does not assume any obligation to update these forward-looking
statements. Nothing in this document is intended, or is to be construed, as a profit forecast or to be interpreted to mean that
earnings per share of the Parent for the current or any future financial years will necessarily match or exceed the historical
published earnings per share of the Parent, as applicable. All forward-looking statements contained in this document are
qualified in their entirety by this cautionary statement.
Annual Report and Accounts 2021
Page | 184