750004--3/2/2009--SCIENTIFIC_GAMES

related topics

{debt, indebtedness, cash}

{stock, price, operating}

{regulation, government, change}

{cost, operation, labor}

{product, market, service}

{customer, product, revenue}

{cost, regulation, environmental}

{system, service, information}

{acquisition, growth, future}

{competitive, industry, competition}

{tax, income, asset}

{property, intellectual, protect}

{condition, economic, financial}

{personnel, key, retain}

{product, liability, claim}

{operation, international, foreign}

We operate in highly competitive industries and our success depends on our ability to effectively compete with numerous domestic and foreign businesses. The current economic slowdown may adversely affect our business and financial condition in ways that we cannot predict. Our business is subject to evolving technology. We are heavily dependent on our ability to renew our long-term contracts with our customers and we could lose substantial revenue and profits if we are unable to renew certain of our contracts. We may not have sufficient cash flows from operating activities, cash on hand and available borrowings under our credit facilities to bid on new contracts, service our indebtedness and meet our other cash needs. These obligations require a significant amount of cash. Our credit facilities and the indentures governing our senior subordinated notes and our convertible debentures impose certain restrictions. Failure to comply with any of these restrictions could result in acceleration of the maturity of our debt. Were this to occur, we would not have sufficient cash to pay our accelerated indebtedness. The holders of our convertible debentures have the right to require us to repurchase some or all of their convertible debentures in June 2010, and our notes issued in 2004 will mature in December 2012. The maturity of borrowings under our credit agreement will be accelerated to March 2010 or September 2012, respectively, if certain conditions related to our convertible debentures or our notes issued in 2004, as applicable, are not satisfied. Our business depends on the protection of our intellectual property and proprietary information. Our business competes on the basis of the security and integrity of our systems and products. Our industry is subject to strict government regulations that may limit our existing operations and have a negative impact on our ability to grow. Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit our existing operations. Our ability to complete future acquisitions of gaming and related businesses and integrate those businesses successfully could limit our future growth. Our revenues fluctuate due to seasonal, weather and other variations and you should not rely upon our periodic operating results as indications of future performance. Our success depends in part on our ability to develop, enhance and/or introduce successful gaming concepts and game content. We are dependent on our suppliers and contract manufacturers, and any failure of these parties to meet our performance and quality standards or requirements could cause us to incur additional costs or lose customers. We may be liable for product defects or other claims relating to our products. We have foreign operations, which subjects us to additional risks. We recognize significant earnings from our cooperative investment in CLN but we do not control distributions of its cash. Certain holders of our common stock exert significant influence over the Company and may make decisions with which other stockholders may disagree. If certain of our key personnel leave us, our business will be significantly adversely affected. We could incur costs in the event of violations of or liabilities under environmental laws. Failure to perform under our lottery contracts may result in litigation, substantial monetary liquidated damages and contract termination. Labor disputes may have an adverse effect on our operations. The price of our common stock has been volatile and may continue to be volatile.

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750004--3/2/2009--SCIENTIFIC_GAMES_CORP