What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-02 compared with 2021-02-26 · 455 added, 350 removed, 718 unchanged (53% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Publ ic Accounting Firm

Report of Independent Registered Public Accounting Firm

(PCAOB ID# 1281 )

Consolidated Balance Sheets

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We have audited the accompanying consolidated balance sheets of Playtika Holding Corp.

and its subsidiaries (the “Company“) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company“) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

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The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of common stock

Description of the Matter On May 26, 2020, the Board of Directors of the Company approved the Playtika Holding Corp.

2020 Incentive Award Plan (the “Plan”) according to which the Company may grant equity awards to its employees, non-employee directors and consultants of the Company and its subsidiaries.

As discussed in Note 1 and Note 10 to the consolidated financial statements, during 2020 the Company granted, in accordance with the Plan, stock options and restricted stock units (RSUs) and recorded stock-based compensation expense of $ 276.0 million.

As the Company’s common stocks were not publicly traded on the dates on which the equity-based awards were granted, the fair value of Company’s common stock was estimated by management with the assistance of a third-party valuation specialist.

The Company, with the assistance of a third-party valuation specialist, used a combination of the income approach and the market approach to estimate the value of its common stock in connection with its stock-based compensation program.

Auditing the Company's valuation of common stock was complex and required auditor’s judgment due to significant assumptions which included, among others, forecasted operating performance, projected future cash flows and estimate of risk-adjusted discount rate to projected cash flows.

How We Addressed the Matter in Our Audit To test the common stock valuation, our audit procedures included, among others, assessing the key assumptions of the valuation of the stock-based awards.

We evaluated the appropriateness of the Company’s estimates, the reasonableness of management’s forecasts of future cash flows and compared the projections to historical results and certain peer companies and also performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions.

In addition, we evaluated the key terms and conditions of awards granted and tested the clerical accuracy of the valuation.

Additionally, we involved our internal valuation specialists to assist us in assessing the valuation methodologies and assumptions used in estimating the fair value of the common stock and evaluating the reasonableness of the discount rate used in the valuation including comparing it against an independently estimated discount rate based on inputs obtained through published surveys and studies.

Valuation of intangible assets acquired and contingent consideration in the acquisition of Reworks Oy.

Description of the Matter As describe in Note 2 to the consolidated financial statements, on August 31, 2021, the Company entered into a purchase agreement pursuant to which the Company (i) acquired 80% of the issued and registered share capital of Reworks Oy (the "Reworks Oy acquisition") for a cash consideration of $400 million, and (ii) will acquire the remaining 20% of the share capital for additional cash consideration in an amount to be determined based on 2022 results, up to $200.0 million.

The transaction was accounted for as a business combination in accordance with ASC 805 "Business Combinations".

The Company recognized developed game and user-based intangible assets in the amount of $143.0 million and recorded contingent consideration liability in the amount of $33.7 million.

The intangible assets and contingent consideration liability were recorded at their estimated fair values as of the date of the acquisition.

These valuations required management to make significant judgments, estimates, and assumptions.

Auditing the Company's accounting for Reworks Oy acquisition was complex due to the significant estimation required by management to determine the fair values of the developed game and user-based intangible assets and contingent consideration liability.

The significant estimations were primarily due to the complexity of the valuation models used by management to measure the fair values and the sensitivity of the respective fair values to the significant underlying assumptions such as forecasted results and discount rates.

These significant assumptions are forward looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit To test the estimated fair value of the contingent consideration liability, we performed audit procedures that included, among others, assessing the terms of the arrangement, including the conditions that must be met for the contingent consideration to become payable.

We also involved our valuation specialists to assist in testing the significant assumptions used in the model, including the completeness and accuracy of the underlying data.

For example, we compared the significant assumptions to current industry, market and economic trends and to the Company's budgets and forecasts.

To test the estimated fair value of the developed game and user base intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of valuation methodologies, evaluating the prospective financial information and testing the completeness and accuracy of underlying data supporting the significant assumptions and estimates.

For example, we compared the significant assumptions to current industry, market and economic trends, historical results of the acquired business and to other relevant factors.

We involved our valuation specialists to assist in our evaluation of the significant assumptions and to assist with reconciling the prospective financial information with other prospective financial information prepared by the Company.

/s/ KOST FORER GABBAY & KASIERER

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A Member of Ernst & Young Global

Tel-Aviv, Israel

February 26, 2021

We have served as the Company’s auditor since 2016.

Tel-Aviv, Israel

March 1, 2022

CONSOLIDATED BALANCE SHEETS

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Cash and cash equivalents $ 1,017.0 $ 520.1

$ 520.1 $ 266.8

Short-term bank deposits 100.1 —

Restricted cash 2.0 3.5

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Intangible assets other than goodwill, net 417.3 327.7

Goodwill 788.1 484.8

Deferred tax assets, net 38.3 28.5

Investment in unconsolidated entities 17.8 1.5

Other non-current assets 13.4 7.3

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Long-term debt 2,422.9 2,209.8

Employee related benefits 16.1 70.2

Contingent consideration 28.7 —

Employee related benefits and other long-term liabilities 23.7 16.1

Operating lease liabilities, long-term 82.3 67.0

Deferred tax liabilities, net 86.4 99.5

Deferred tax liabilities 53.7 86.4

Total liabilities 3,181.0 3,019.7

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Common stock of US $ 0.01 par value:

400.0 shares authorized;

391.1 and 378.0 shares issued and outstanding as of December 31, 2020 and 2019, respectively (1)

1,600.0 shares authorized and 411.1 issued and outstanding at December 31, 2021;

400.0 shares authorized and 391.1 shares issued and outstanding as of December 31, 2020

Additional paid-in capital 1,032.9 462.3

Accumulated other comprehensive income (loss) 16.7 ( 2.9 )

Accumulated other comprehensive income 3.2 16.7

Accumulated deficit ( 1,417.9 ) ( 1,726.4 )

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Total liabilities and stockholders’ deficit $ 2,803.3 $ 1,776.2

(1) Prior period results have been adjusted to reflect the 400-for-1 stock split effected in January 2021.

See Note 10, Stockholders’ Deficit, Equity Transactions and Stock Incentive Plan for details.

The accompanying notes are an integral part of these consolidated financial statements.

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Cost of revenue 729.0 712.2 566.3

Research and development expenses 268.9 210.5 148.3

Sales and marketing expenses 502.0 413.7 293.2

General and administrative expenses 501.2 199.7 179.6

Research and development 386.7 268.9 210.5

Sales and marketing 581.7 502.0 413.7

General and administrative 323.4 501.2 199.7

Total costs and expenses 2,020.8 1,984.3 1,390.2

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Foreign currency translation ( 18.6 ) 19.6 ( 3.2 )

Change in fair value of derivatives 5.1 — —

Total other comprehensive income (loss) ( 13.5 ) 19.6 ( 3.2 )

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Shares Amount Additional

paid-in capital (1)

paid-in capital Accumulated

comprehensive

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Dividend distribution — — — — ( 2,365.9 ) ( 2,365.9 )

Other comprehensive income — — — 0.3 — 0.3

Balance as of December 31, 2018 378.0 3.8 202.1 0.3 258.5 464.7

Net income — — — — 288.9 288.9

Dividend distribution — — — — ( 2,365.9 ) ( 2,365.9 )

Other comprehensive loss — — — ( 3.2 ) — ( 3.2 )

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Balance as of December 31, 2020 391.1 3.9 462.3 16.7 ( 1,726.4 ) ( 1,243.5 )

(1) Prior period results have been adjusted to reflect the 400-for-1 stock split effected in January 2021.

See Note 10, Stockholders’ Deficit, Equity Transactions and Stock Incentive Plan for details.

Net income — — — — 308.5 308.5

Issuance of common stock in the IPO, net of underwriting commission and offering costs 18.5 0.2 467.5 — — 467.7

Stock-based compensation — — 103.1 — — 103.1

Issuance of shares upon vesting of RSUs 1.5 * — — — *

Other comprehensive loss — — — ( 13.5 ) — ( 13.5 )

Balance as of December 31, 2021 411.1 $ 4.1 $ 1,032.9 $ 3.2 $ ( 1,417.9 ) $ ( 377.7 )

* Represents an amount less than 0.1 or $0.1

The accompanying notes are an integral part of these consolidated financial statements.

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(In millions)

Year ending December 31,

Year ended December 31,

2021 2020 2019

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Change in deferred tax, net ( 72.7 ) ( 13.1 ) 40.8

Amortization of loan discount 31.5 15.3 10.3

Change in fair value of contingent consideration ( 5.0 ) 17.4 21.4

Capital gain from sale of investment ( 1.2 ) — —

Loss (gain) from foreign currency ( 0.2 ) ( 10.0 ) 1.8

Non-cash lease expenses 0.2 5.1 4.9

Amortization of loan discount 15.3 10.3 —

Impairment of intangible assets — — 0.8

Changes in operating assets and liabilities:

Accounts receivable ( 7.5 ) ( 1.7 ) ( 15.4 )

Prepaid expenses and other current assets and interest receivable from related parties ( 21.7 ) ( 2.4 ) ( 19.6 )

Prepaid expenses and other current and non-current assets 28.8 ( 21.7 ) ( 2.4 )

Accounts payable 5.9 ( 20.2 ) 8.0

Accrued expenses and other current liabilities and accrued interest to related party 76.7 82.0 89.1

Accrued expenses and other current and non-current liabilities 17.5 59.3 60.6

Net cash provided by operating activities 551.7 517.7 491.9

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Purchase of intangible assets ( 19.1 ) ( 10.7 ) ( 19.9 )

Loan repaid by related party — — 24.0

Payments for business acquisitions, net of cash acquired — ( 422.7 ) ( 179.2 )

Short-term bank deposits, net — — 70.0

Payments for business combination, net of cash acquired ( 394.1 ) — ( 422.7 )

Short-term bank deposits ( 100.0 ) — —

Purchase of long-term investments ( 17.8 ) — —

Other investing activities 2.1 — ( 1.4 )

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Repayments on bank borrowings ( 965.3 ) — ( 2,672.6 )

Proceeds from issuance of unsecured notes, net 178.9 — —

Proceeds from issuance of common stock, net 470.4 ( 2.4 ) —

Payment of debt issuance costs ( 12.0 ) — —

Borrowings under revolving credit facility — 250.0 33.3

Repayment of term loan and revolving credit facility — ( 408.3 ) —

Loan repaid to related party — — ( 24.0 )

Payment of tax withholdings on stock-based payments — ( 15.7 ) —

Payment of deferred offering costs ( 2.4 ) — —

Net cash out flow for business acquisitions and other — ( 4.9 ) —

Distribution to the stockholder — — ( 2,365.9 )

Net cash used in financing activities ( 181.3 ) ( 6.6 ) ( 337.4 )

Net cash provided by (used in) financing activities 559.7 ( 181.3 ) ( 6.6 )

Effect of exchange rate changes on cash and cash equivalents ( 6.6 ) 13.3 ( 2.4 )

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Cash, cash equivalents and restricted cash at the end of the period $ 1,019.0 $ 523.6 $ 272.0

Year ending December 31,

Year ended December 31,

2021 2020 2019

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Non-cash financing and investing activities

Lease asset additions $ 30.0 $ 17.7 $ —

Right-of-use assets acquired under operating leases $ 41.0 $ 30.0 $ 17.7

Contingent consideration related to business acquisition $ 33.7 $ — $ 4.9

Capitalization of stock-based compensation costs $ 2.7 $ — $ —

Accrued offering costs $ — $ 2.6 $ —

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The Company’s games are free-to-play, and the Company seeks to provide novel, curated in-game content and offers to its users, at optimal points in their game journeys to drive user engagement and monetization.

As of December 31, 2020, the Company had operations in Argentina, Australia, Austria, Belarus, Canada, Finland, Germany, India, Israel, Romania, Switzerland, Ukraine, the United Kingdom and the United States.

As of December 31, 2021, the Company had operations in Argentina, Australia, Austria, Belarus, Canada, Finland, Germany, India, Israel, Poland, Romania, Switzerland, Ukraine, the United Kingdom and the United States.

Playtika Holding Corp.’s initial public offering

The Company’s common stock is listed on the Nasdaq Global Select Market under the symbol “PLTK”.

The net proceeds to the Company from the initial public offering were approximately $ 468.0 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, to be used for general corporate purposes, including working capital, operating expenses, capital expenditures, repayment of borrowing under its Term Loan, and potential future acquisitions.

The Company did not receive any proceeds from the sale of shares of common stock in the offering by Playtika Holding UK.

Basis of presentation and consolidation

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(ii) investments in affiliates of 50 % or less but greater than 20 % are generally accounted for using the equity method where the Company has determined that it has significant influence over the entities;

and (iii) investments in affiliates of 20 % or less are generally accounted for at cost minus impairment.

In the opinion of management, all adjustments considered necessary for a fair presentation have been recorded within the accompanying financial statements, and all intercompany balances and transactions have been eliminated in the consolidation.

During September 2019, the Company distributed all of its shares in LaGuardia Venture Limited (“LaGuardia”), an investment company which invested in 2018 a total amount of $ 400 million, to its stockholder as a distribution to the stockholder.

Since the Company and LaGuardia are in dissimilar businesses, had been managed and financed historically as if they were autonomous and had no common facilities and costs, and do not have material financial commitments, guarantees, or contingent liabilities to each other following the spin–off, these financial statements retroactively reflect the omission of LaGuardia as if the Company never had an investment in LaGuardia.

The carrying amount of the Company’s investment in LaGuardia at the date of the spin-off transaction was recorded as a distribution to the stockholder.

The elimination of LaGuardia had no effect on the Company’s consolidated financial statements as of or for the year ended December 31, 2020 and 2019 and had an immaterial effect on the Company's consolidated statements of comprehensive income for the year ended December 31, 2018.

Had this investment been included in the balance sheets as of December 31, 2020 and 2019 it would have represented 18 % and 21 % of the consolidated net assets in the consolidated balance sheets, respectively.

and (iii) investments in affiliates of 20 % or less are generally accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

In the opinion of management, all adjustments considered necessary for a fair presentation have been recorded within the accompanying financial statements, consisting of normal, recurring adjustments, and all intercompany balances and transactions have been eliminated in the consolidation.

Investment in unconsolidated entities

The Company holds certain equity investments in various unconsolidated entities that, based upon the structure of the investment, are not within the scope of equity method investment accounting that would lead to the consolidation conclusions above.

Instead, these investments fall within the scope of ASC 321, Investments - Equity Securities.

As permitted within that guidance, the Company has elected to account for these investments at cost less impairment, adjusted for changes in fair value from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates.

No change to the carrying amounts were recorded in the year ended December 31, 2021.

Use of estimates

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Non-dollar transactions and balances have been remeasured to dollars in accordance with ASC 830, Foreign Currency Matters .

All transaction gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of income comprehensive income as financial income or expenses, as appropriate.

All transaction gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of comprehensive income as financial income or expenses, as appropriate.

For those consolidated subsidiaries whose functional currency has been determined to be a non-dollar currency, assets and liabilities are translated at year-end exchange rates and statement of income items are translated at average exchange rates prevailing during the year.

Such translation adjustments are recorded as a separate component of accumulated other comprehensive income in stockholders' equity.

Significant factors, assumptions, and methodologies used in estimating fair value of equity

As noted in Note 19, Subsequent events, Playtika Holding Corp.’s initial public offering , prior to the initial public offering, the valuation of the Company’s equity considers a number of objective and subjective factors that it believes market participants would consider, including ( a ) the Company’s business, financial condition, and results of operations, including related industry trends affecting its operations;

( b ) its forecasted operating performance and projected future cash flows;

( c ) the liquid or illiquid nature of its common stock;

( d ) liquidation preferences, redemption rights, and other rights and privileges of its common stock;

( e ) market multiples of its most comparable public peers;

and (f) market conditions affecting its industry.

The Company, with the assistance of a third-party valuation expert, used the income approach (discounted cash flow method) and the market approach (guideline public company method and guideline transaction method) to estimate its equity value in connection with its stock-based compensation program discussed below.

The income approach involves applying an appropriate risk-adjusted discount rate to projected cash flows based on forecasted revenue and costs.

The guideline public company method estimates the value of a company by applying market multiples of publicly traded companies in the same or similar lines of business to the results and projected results of the company being valued.

The guideline transaction method estimates the value of a company by applying valuation multiples paid in actual transactions for comparable public and private companies.

In applying the market and income approaches to determine a value of the common stock, a discount was applied to reach the final valuation of the common stock based on the fact that, given the Company was a private company at the time of such valuation, there were impediments to liquidity, including lack of publicly available information and the lack of a trading market.

As of the valuation date, financial forecasts were prepared and used in the computation of the estimated fair value of the Company’s equity for both the market and income approaches.

The financial forecasts were based on assumed revenue growth rates and operating margin levels that considered past experience and future expectations.

The risks associated with achieving these forecasts were assessed in selecting the appropriate cost of capital rates.

The values derived under the market and income approaches were then used to determine an initial estimated fair market value of the Company’s equity.

The initial estimated value was then subjected to a discount for the lack of marketability, which produced the per-share value of $ 18.71 as of May 31, 2020.

In October 2020, the Company updated the valuation of its equity using a market and income approach consistent with the May 2020 valuation, resulting in a per-share value of $ 21.08 as of September 30, 2020.

There is inherent uncertainty in the Company’s forecasts and projections, and if different assumptions and estimates had been made than those described previously, the amount of the equity valuation and stock-based compensation expense could have been materially different.

Such translation adjustments are recorded as a separate component of accumulated other comprehensive income in stockholders' equity (deficit).

Concentration of credit risk and significant customers

Financial instruments, which potentially expose us to concentrations of credit risk, consist primarily of cash and cash equivalents, restricted cash, accounts receivable and other receivables.

The significant majority of the Company's cash and cash equivalents are deposited with a small number of financial institutions with high credit standings.

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, short-term bank deposits, restricted cash, accounts receivable and derivative contracts.

A large percentage of the Company's cash is maintained with three financial institutions with high credit standings.

The Company performs periodic evaluations of the relative credit standing of these financial institutions.

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Cash and cash equivalents consist of cash and highly liquid investments with maturities of three months or less from the date of purchase and are stated at the lower of cost or market value.

Cash equivalents include investments in money market funds that can be redeemed immediately at the current net asset value.

Restricted cash

Restricted cash primarily consists of deposits to secure obligations under the Company's operating lease agreements and to secure company-issued credit cards .

Short-term bank deposits

Bank deposits with maturities of more than three months but less than one year are included in short-term bank deposits.

Such short-term bank deposits are stated at cost which approximates fair market value.

Property and equipment, net

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With respect to new games or updates to existing games, the preliminary project stage remains ongoing until just prior to worldwide launch.

The development costs are expensed as incurred to research and development in the consolidated statement of comprehensive income.

The development costs of new games or updates to existing games are expensed as incurred to research and development in the consolidated statements of comprehensive income.

Capitalized internal use software costs were approximately $ 35.5 million, $ 33.3 million and $ 17.2 million during the years ending December 31, 2021, 2020 and 2019, respectively.

The estimated useful life of costs capitalized is generally three years.

During the years ended December 31, 2020 and 2019, the amortization of capitalized software costs totaled approximately $ 8.9 million and $ 0.3 million, respectively.

There was no amortization of internal use software recorded during the year ended December 31, 2018.

During the years ended December 31, 2021, 2020 and 2019, the amortization of capitalized software costs totaled approximately $ 21.8 million, $ 8.9 million and $ 0.3 million, respectively.

Business combination

The Company applies the provisions of ASC 805, Business Combination and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is

recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates.

Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Significant estimates in valuing certain intangible assets include, but are not limited to future expected cash flows from acquired technology and acquired trademarks and user base from a market participant perspective, useful lives and discount rates.

Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable.

Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired.

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Intangible assets other than goodwill, net

Other intangible assets are amortized over their estimated useful lives using the straight-line method, using the following ranges of useful lives:

Intangible assets other than goodwill are amortized over their estimated useful lives using the straight-line method, using the following ranges of useful lives:

Developed games and acquired technology 1 to 10 years

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Impairment of long-lived assets

The Company’s long-lived assets to be held or used, including right-of-use (“ROU”) assets, and identifiable intangibles that are subject to amortization are tested for impairment as of October 1st of each year, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets.

The Company’s long-lived assets to be held or used, including right-of-use (“ROU”) assets, and identifiable intangible assets that are subject to amortization are tested for impairment as of October 1st of each year, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, in accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets.

Impairment indicators include any significant changes in the manner of the Company’s use of the assets and significant negative industry or economic trends.

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Upon determination that the carrying value of a long-lived asset may not be recoverable based upon a comparison of aggregate undiscounted projected future cash flows to the carrying amount of the asset, an impairment charge is recorded for the excess of the carrying amount over fair value.

Lessee arrangements

The Company is the lessee under non-cancelable for office real estate and data center leases.

The Company is the lessee under non-cancelable office real estate and data center leases.

The Company accounts for its leases under ASU No.

2016-02, Leases (Topic 842) .

Operating lease ROU assets and liabilities are recognized at the commencement date and initially measured based on the present value of lease payments over the defined lease term.

Operating lease ROU assets and liabilities are recognized at the commencement date and initially measured based on the present value of lease payments and lease incentives received over the defined lease term.

The Company’s lease terms may include options to extend or terminate the lease.

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Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The Company’s real estate lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The Company’s lease agreements with lease and non-lease components are accounted for separately.

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The Company’s performance obligation is to display the virtual items within the game over the estimated life of the paying player or until the virtual item is consumed in game play based upon the nature of the virtual item.

The Company categorizes its virtual items as either consumable or durable, and the substantial majority of the Company’s games sell only consumable virtual items.

The Company categorizes its virtual items as either consumable or durable.

The substantial majority of the Company’s games sell only consumable virtual items.

Consumable virtual items represent items that can be consumed by a specific player action and do not provide the player any continuing benefit following consumption.

For the sale of consumable virtual items, the Company recognizes revenue as the items are consumed (i.e.

over time) which is usually up to one month.

For the sale of consumable virtual items, the Company recognizes revenue as the items are consumed which is usually over a period of time of up to one month.

The Company has determined through a review of game play behavior that players generally do not purchase additional virtual currency until their existing virtual currency balances have been substantially consumed.

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Durable virtual items represent items that are accessible to the player over an extended period of time.

The Company sells durable virtual items primarily through games acquired in recent acquisitions.

The Company recognizes revenue from the sale of durable virtual items ratably over the estimated average life of the paying player, which is estimated on a game-by-game basis and generally ranges from three months up to one year.

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The Company used the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with stock options.

As it does not have a history of market prices for its common stock because the stock was not historically publicly traded, the Company used observable data for a group of peer companies that grant options with substantially similar terms to assist in developing its volatility assumption.

As it does not have a long history of market prices for its common stock because the stock was not publicly traded prior to January 2021, the Company used observable data for a group of peer companies that grant options with substantially similar terms to assist in developing its volatility assumption.

The expected volatility of the stock was determined using weighted average measures of the implied volatility and the historical volatility for the Company’s peer group of companies for a period equal to the expected life of the option.

The expected term assumption was derived using the simplified method, which is based on an average between each vesting date and the expiration date of an option.

The weighted-average risk-free interest rate was based on the interest rate for U.S.

Treasury bonds for an equivalent term.

The Company does not anticipate paying cash dividends on its shares of common stock on a go-forward basis.

Treasury bonds.

The expected term assumption was derived using the simplified method, which is based on an average between each vesting date and the expiration date of an option.

This method was chosen because there was no historical option exercise experience due to the Company being privately held.

The Company does not anticipate paying cash dividends on its shares of common stock in the future.

The stock options have a contractual term of 10 years.

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If factors change and the Company employs different assumptions, stock-based compensation cost on future awards may differ significantly from what the Company has recorded in the past.

Lower volatility and shorter expected terms or higher volatility and longer expected terms result in a decrease or increase, respectively, to stock-based compensation determined at the date of grant.

Higher volatility and longer expected terms result in an increase to stock-based compensation determined at the date of grant.

Future stock-based compensation cost and unrecognized stock-based compensation will increase to the extent that the Company grants additional equity awards to employees or assumes unvested equity awards in connection with acquisitions.

If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate any remaining unearned stock-based compensation cost or incur incremental cost.

The Company used the estimated fair value of equity and associated per-share value at the time of grant to determine the compensation cost to be recognized associated with RSUs.

The Company’s stock-based compensation expense is recorded in the financial statement line item relevant to each of the award recipients, which for the awards during 2020 primarily has been general and administrative expenses in the consolidated statements of comprehensive income.

See Note 10, Stockholders’ Deficit, Equity Transactions and Stock Incentive Plan for additional discussion.

If there are any modifications or cancellations of the underlying unvested equity awards, the Company may be required to accelerate any remaining unearned stock-based compensation cost or incur incremental cost.

The Company uses the estimated fair value of equity and associated per-share value at the time of grant to determine the compensation cost to be recognized associated with RSUs granted.

The Company’s stock-based compensation expense is recorded in the financial statement line item relevant to each of the award recipients.

See Note 10, Equity Transactions and Stock Incentive Plan, for additional discussion.

Significant factors, assumptions, and methodologies used in estimating fair value of equity prior to the IPO

Prior to its initial public offering of equity in January 2021, the Company, with the assistance of third-party valuation experts, used a combination of the income approach (the discounted cash flow method) and the market approach (a combination of the guideline public company method and the guideline transaction method) to estimate its equity value in connection with its stock-based compensation program discussed below.

The income approach involves applying an appropriate risk-adjusted discount rate to projected cash flows based on forecasted revenue and costs.

The guideline transaction method estimates the value of a company by applying valuation multiples paid in actual transactions for comparable public and private companies.

The values derived under the market and income approaches were used to determine an initial estimated fair market value of the Company’s equity.

The initial estimated value was then subjected to a discount for the lack of marketability based on the impediments to liquidity as a result of the Company’s previous status as a private company, including the lack of publicly available information and the lack of a trading market.

Subsequent to the Company’s initial public offering of equity in January 2021, the Company uses the public trading price of its common stock on the Nasdaq stock exchange as the basis for determining the fair market value for its common stock for purposes of its stock based compensation expense.

There is inherent uncertainty in the Company’s forecasts and projections, and if different assumptions and estimates had been made than those described above, the amount of the equity valuation and stock-based compensation expense could have been materially different.

The Company accounts for income taxes using the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences will reverse.

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The Company implements a two-step approach to recognize and measure uncertain tax positions.

The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including

resolution of any related appeals or litigation processes.

The second step is to measure the tax benefit as the largest amount that is more than 50 % (cumulative basis) likely to be realized upon ultimate settlement.

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See Note 17, Income Taxes, for additional discussion.

Net income per share attributable to common stockholders

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period giving effect to all potentially dilutive securities to the extent they are dilutive.

Employee related benefits

Appreciation and retention plan

The Company adopted the Playtika Holding Corp.

Retention Plan (the “2017-2020 Plan”) effective as of September 23, 2016 in order to retain key employees and reward them for contributing to the success of the Company.

In August 2019, the Company adopted the Playtika Holding Corp.

Retention Plan (the “2021-2024 Retention Plan”) in order to retain key employees and reward them for contributing to the success of the Company.

Under the 2021-2024 Retention Plan, eligible employees may be granted retention awards that let them receive their pro rata portion of a retention pool of $ 25 million per year for each of the plan years, and may also be granted appreciation units which allow the employee to receive their pro-rata portion of an appreciation pool calculated as a specified percentage of Adjusted EBITDA for each of the plan years as described further in Note 15, Appreciation and Retention Plans .

The value of each unit of the 2021-2024 Retention Plan has been amortized into compensation expense using the straight-line method, which will result in the recognition of compensation costs in the same years as the underlying EBITDA used in the plan measurement is earned.

In September 2016, the Company adopted the Playtika Holding Corp.

Retention Plan (the “2017-2020 Plan”).

According to the 2017-2020 Plan, appreciation unit awards were granted to selected eligible employees.

These units provided the right to receive cash payments for each of the years 2017 through 2020 as a percentage (between 1.5% - 2%) of the Company's estimated appreciation in value in excess of $4.4 billion.

The value of each appreciation unit is calculated based on the Company's adjusted EBITDA (as agreed in the 2017-2020 Plan) multiplied by an agreed multiplier.

In addition, an annual retention bonus for each of the four years in the plan, in the amount of $ 25 million will be distributed to selected eligible employees of the 2017-2020 Plan.

The value of each unit has been amortized into compensation expense using the graded-vesting method, which resulted in the recognition of compensation costs over the requisite service period for each separately vesting tranche of the units as though the units were, in substance, multiple units awards.

The value of each appreciation unit was calculated based on the Company's adjusted EBITDA (as agreed in the 2017-2020 Plan) multiplied by an agreed multiplier.

In addition, an annual retention bonus for each of the four years in the 2017-2020 Plan, in the amount of $ 25 million was distributed to selected eligible employees of the 2017-2020 Plan.

The value of each unit of the 2017-2020 Plan was amortized into compensation expense using the graded-vesting method, which resulted in the recognition of compensation costs over the requisite service period for each separately vesting tranche of the units as though the units were, in substance, multiple units awards.

Severance pay

The liability for the Company’s employees in Israel in respect of severance pay is calculated in accordance with Section 14 of the Severance Pay Law 5723-1963 ("Section 14").

Section 14 states that Company's contributions for severance pay shall be in line of severance compensation.

Section 14 states that Company's contributions for severance pay shall be in lieu of severance compensation.

Upon deposit of the related obligation for the employee under Section 14, no additional obligations shall be conducted between the parties regarding the matter of severance pay and no additional payments shall be made by the Company to the employee.

Severance expense for the years ended December 31, 2020, 2019 and 2018 was $ 5.7 million, $ 4.6 million and $ 3.4 million, respectively.

Expense resulting from contributions in accordance with Section 14 for the years ended December 31, 2021, 2020 and 2019 was $ 7.1 million, $ 5.7 million and $ 4.6 million, respectively.

Net income per share attributable to common stockholders

For all periods, basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding.

Diluted net income per share reflects the effect of all potentially dilutive common shares outstanding by dividing net income by the weighted-average of all common and potentially dilutive shares outstanding.

In the event of a loss, diluted shares would not be considered because of their anti-dilutive effect .

Derivative Instruments

The Company uses interest rate swap contracts to reduce its exposure to fluctuating interest rates associated with the Company’s variable rate debt, and to effectively increase the portion of debt upon which the Company pays a fixed interest rate.

The Company’s interest rate swap agreements are designated as cash flow hedges under ASC 815 involving the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional amount.

These hedges are highly effective in offsetting changes

in the Company’s future expected cash flows due to the fluctuation of the one-month LIBOR rate associated with its variable rate debt.

The Company monitors the effectiveness of its hedges on a quarterly basis, both qualitatively and quantitatively.

The Company performed a regression analysis at inception of the hedging relationship and at period end in which it compared the change in the fair value of the swap transaction and the change in fair value of a hypothetical interest rate swap having terms that identically match the terms of the debt's interest rate payments based on 30 observations that are based on historical swap rates.

Based on the regression results, the Company believes that, at inception and at period end, the hedging instrument is expected to be highly effective at offsetting changes in the hedged transactions attributable to the risk being hedged.

For each future reporting period, the Company will continue performing retrospective and prospective assessments of hedge effectiveness in a single regression analysis by updating the regression analysis that was prepared at inception of the hedging relationship.

The Company uses foreign currency derivative contracts to reduce its exposure to fluctuating exchange rates between the United States dollar (as the Company’s functional currency) and certain revenue or expense lines denominated in Israeli Shekels (“ILS”), Polish Zloty (“PLN”) and Romanian Leu (“RON”).

The Company’s derivative contracts are designated as cash flow hedges under ASC 815.

The Company monitors the effectiveness of its hedges on a quarterly basis, both qualitatively and quantitatively, and expects these hedges to remain highly effective at offsetting fluctuations in exchange rates through their respective maturity dates.

The fair value of derivative financial instruments is recognized as an asset or liability at each balance sheet date, with changes in fair value recorded in other comprehensive income on the consolidated statements of comprehensive income until the future underlying transactions occur.

The fair value approximates the amount the Company would pay if these contracts were settled at the respective valuation dates.

The inputs used to measure the fair value of the Company’s interest rate swap agreements are categorized as Level 2 in the fair value hierarchy as established by ASC 820.

The inputs used to measure the fair value of the Company’s foreign currency derivative contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820.

Fair value of financial instruments

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The first two levels in the hierarchy are considered observable inputs and the last is considered unobservable.

The carrying value of accounts receivable and payables and the Company's cash and cash equivalents and restricted cash, approximates fair value due to the short time to expected payment or receipt of cash.

The carrying value of accounts receivable and payables and the Company's cash and cash equivalents, short-term bank deposits and restricted cash, approximates fair value due to the short time to expected payment or receipt of cash.

Accounting standards recently adopted by the Company

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.

This guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019.

As such, the Company adopted this standard effective January 1, 2020, along with ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses and ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses.

The adoption of these standards did not have a significant impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

The amended guidance simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

Under the amended guidance, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value, and an impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed.

The Company adopted this standard prospectively effective January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement .

This guidance adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement.

This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

As such, the Company adopted this standard effective January 1, 2020.

The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract .

This guidance clarifies the accounting treatment for implementation costs for cloud computing arrangements (hosting arrangements) that are service contracts.

The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

As such, the Company adopted this standard effective January 1, 2020.

In December 2019, the FASB issued ASU 2019-12, S implifying the Accounting for Income Taxes .

ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an

interim period and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for income taxes.

This guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Company adopted this standard as of January 1, 2021.

The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements.

This guidance improves consistency of disclosure guidance for various topics.

This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted.

The Company adopted this standard for the year ended December 31, 2020.

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .

As it applies to the Company, ASU 2020-01 requires entities to remeasure their equity securities in accordance with the measurement alternative in Topic 321 upon the occurrence of an observable transaction.

The Company adopted this standard as of January 1, 2021 on a prospective basis.

The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform , which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of LIBOR or by another reference rate expected to be discontinued.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

During the year ended December 31, 2021, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

The Company continues to evaluate the potential impacts of ASU 2020-04 and may apply other elections as applicable as additional changes in the market occur.

Recently issued accounting standards not yet adopted by the Company

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

ASU 2019-12 eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for income taxes.

This guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805).

ASU 2021-21 requires that an acquiring entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) and that at the acquisition date, the acquirer accounts for related revenue contracts in accordance with ASC 606 as if it had originated the contracts.

This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in interim periods.

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BUSINESS COMBINATIONS

On November 29, 2018, the Company acquired all of the issued and outstanding shares of Wooga GmbH ("Wooga") for total consideration of $ 204.1 million in cash.

Wooga is a developer of mobile games, including story-driven experiences.

The Company acquired Wooga to leverage its story-driven games expertise, assembled workforce and existing mobile games in order to expand the Company's game offerings into the field of story-driven games.

Upon acquisition, Wooga became a wholly-owned subsidiary of the Company.

The acquisition was accounted for as a business combination.

The assets acquired and liabilities assumed are recognized at their fair values at the acquisition date.

The goodwill, which is non-deductible for tax purposes, is attributable to synergies between the Company's and Wooga respective games.

Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated statements of comprehensive income.

The following table summarizes the fair values of the assets acquired and liabilities assumed (in millions):

Consideration

Total consideration $ 204.1

Restricted cash acquired ( 1.9 )

Cash acquired ( 13.7 )

Total consideration, net of cash acquired 188.5

Working capital adjustments paid in 2019 ( 9.3 )

Consideration paid in 2018 $ 179.2

Identifiable assets acquired and liabilities assumed

Accounts receivable $ 8.5

Other current assets 1.3

Property and equipment 0.8

Intangible assets other than goodwill 126.0

Goodwill 112.4

Deferred tax liabilities, net ( 25.8 )

Liabilities assumed ( 44.0 )

Total identifiable assets acquired and liabilities assumed $ 179.2

Acquired games included in the above table are being amortized on a straight-line basis over their estimated useful life of seven up to eight years, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized.

The determination of the fair value of the acquired assets and assumed liabilities was completed in 2019 and there were no measurement adjustments.

Transaction costs incurred by the Company in connection with Wooga acquisition, amounted to $ 5.0 million for the year ended December 31, 2018 and were recorded within general and administrative expenses in the consolidated statements of comprehensive income.

Acquisition of Supertreat GmbH

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Transaction costs incurred by the Company in connection with the Supertreat acquisition were approximately $ 1.0 million for the year ended December 31, 2019 and were recorded within general and administrative expenses in the consolidated statements of comprehensive income.

Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated statements of comprehensive income.

For the years ended December 31, 2020 and 2019, the Company recorded expenses of $ 3.7 million and $ 21.4 million, respectively, with respect to the adjustment of the contingent consideration to estimated fair value.

This expense is included within general and administrative expenses in the accompanying consolidated statement of comprehensive income.

This expense is included within general and administrative expenses in the accompanying consolidated statements of comprehensive income.

Acquisition of Seriously Holding Corp

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Transaction costs incurred by the Company in connection with Seriously acquisition, were approximately $ 1.5 million for the year ended December 31, 2020 and were recorded within general and administrative expenses in the consolidated statements of comprehensive income.

Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated statements of comprehensive income.

For the year ended December 31, 2020, the Company recorded expenses of $ 13.7 million with respect to the adjustment of the contingent consideration to estimated fair value.

There were no expenses recorded in the year ended December 31, 2019.

This expense is included within general and administrative expenses in the accompanying consolidated statement of comprehensive income.

This expense is included within general and administrative expenses in the accompanying consolidated statements of comprehensive income.

Acquisition of Reworks OY

On August 31, 2021, the Company entered into a Share Sale and Purchase Agreement (“SPA”) pursuant to which the Company (i) acquired 80 % of all issued and registered shares and options (“Share Capital”) of Reworks Oy, a limited liability company incorporated under the laws of Finland (“Reworks”) in exchange for cash consideration of $ 400 million, subject to customary closing adjustments, and (ii) will acquire the remaining 20 % of the Share Capital for additional cash consideration (“Earnout Payment”) in an amount to be determined based on certain performance metrics during the calendar year 2022.

The Earnout Payment will be calculated based on the amount of “Company EBITDA” (as defined in the SPA) in calendar year 2022 in excess of $ 10.3 million multiplied by 6.0, not to exceed $ 200 million, as further described in the SPA.

In the event “Company EBITDA” (as defined in the SPA) is $ 10.3 million or less, the Earnout Payment will be $ 1 .

The acquisition was accounted for as a business combination with the Company consolidating Reworks subsequent to the August 31, 2021 closing date.

The assets acquired and liabilities assumed have been recognized at their estimated fair values at the acquisition date, the determination of which was completed in the fourth quarter of 2021 and there were no material

The goodwill, which is non-deductible for tax purposes, is generally attributable to synergies between the Company's and Reworks' respective studio operations and apps.

The acquisition date fair value of the Earnout Payment was estimated by management, with the assistance of third-party valuation specialists, based upon the probability-weighted fair values of multiple discounted cash flow analyses.

The extent to which the actual EBITDA differs from the probability-weighted analysis will result in adjustments to this liability in future periods.

In accordance with ASC 480, this liability has been measured at fair value as of the acquisition date and will be remeasured to fair value on each subsequent reporting date until the contingency is resolved.

The selling shareholders of Reworks include both third-party investors and certain historical employees of Reworks that will continue as employees of Playtika post-acquisition.

The earnout obligation payable to selling employee shareholders that will remain as employees of Playtika had an acquisition date fair value of $ 54.2 million.

As the SPA includes certain forfeiture provisions for selling employee shareholders, the earnout obligation payable to these employee will be recorded as compensation expense over the period that such payment is earned.

As of December 31, 2021, approximately $ 11 million has been recorded as compensation expense and is classified as an employee-related current liability on the Company’s consolidated balance sheet.

The earnout obligation payable to the third-party sellers had an acquisition date fair value of $ 33.7 million.

As this represents an unconditional obligation of the Company to purchase the remaining Share Capital of Reworks at an agreed upon future date, this portion of the total Earnout Payment has been classified as a liability on the Company’s consolidated balance sheet rather than non-controlling interest.

As of December 31, 2021, the fair value of the earnout obligation payable to third-party sellers was $ 28.7 million and has been recorded as contingent consideration on the Company’s consolidated balance sheet.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in millions):

Consideration

Total Consideration $ 438.7

Cash acquired ( 10.9 )

Total consideration, net of cash acquired 427.8

Acquisition date fair value of contingent consideration ( 33.7 )

Consideration paid as of August 31, 2021 $ 394.1

Identifiable assets acquired and liabilities assumed

Accounts receivable $ 9.4

Intangible assets other than goodwill 143.0

Goodwill 312.6

Deferred tax liabilities ( 28.6 )

Contingent consideration ( 33.7 )

Liabilities assumed ( 8.6 )

Total identifiable assets acquired and liabilities assumed $ 394.1

The developed game and user base intangible assets acquired and included in the above table are being amortized on a straight-line basis over their estimated useful life of six years and one year, respectively, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized.

Transaction costs incurred by the Company in connection with Reworks acquisition, were approximately $ 1.0 million for the year ended December 31, 2021, and were recorded within general and administrative expenses in the consolidated statements of comprehensive income.

Pro forma results of operations for this acquisition subsequent to the August 31, 2021 acquisition date have not been presented because the incremental results from Reworks are not material to the consolidated statements of comprehensive income presented herein.

For the year ended December 31, 2021, the Company recorded other income of $ 5.0 million with respect to the adjustment of the contingent consideration to estimated fair value.

The net amount is comprised of a favorable fair value adjustment of $ 6.5 million, partially offset by $ 1.5 million of interest expense included within general and administrative expenses and interest expense, respectively, in the accompanying consolidated statement of comprehensive income.

This adjustment is a result of the Company revising its projections for Reworks 2022 performance based upon the Company’s 2022 annual budget.

Other development transactions

During 2019 and 2018, the Company acquired certain technology assets and assembled workforces to expand the Company’s game portfolio and in-house expertise.

During 2019, the Company acquired certain technology assets and assembled workforces to expand the Company’s game portfolio and in-house expertise.

These acquisitions were not individually or in the aggregate significant.

Each of these transactions did not meet the definition of business combinations and were therefore accounted for under other appropriate accounting guidance.

For the acquired workforce transactions, the Company recorded an aggregate of approximately $ 32.6 million and $ 21.8 million in recruiting expense during the years ending December 31, 2019 and 2018 respectively.

For the acquired workforce transactions, the Company recorded an aggregate of approximately $ 32.6 million in recruiting expense during the year ended December 31, 2019.

These recruiting expenses are included in general and administrative expenses in the consolidated statements of comprehensive income.

For the acquisition of the technology assets, the asset purchase agreement was entered into in October 2019.

Consideration paid or payable under the asset purchase agreement includes an upfront payment of $ 5.0 million, and additional consideration of up to $ 25.0 million based upon the achievement of predefined milestones over a maximum period of approximately 28 months following the acquisition date.

Consideration paid or payable under the asset purchase agreement includes an upfront payment of $ 5.0 million.

In February 2020, the Company acquired an assembled workforce to expand the Company’s game portfolio and in-house expertise for approximately $ 12.1 million.

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INTANGIBLE ASSETS OTHER THAN GOODWILL

The carrying amounts and accumulated amortization expense of the acquired intangible assets other than goodwill, net, including the impact of foreign currency exchange translation, at December 31, 2020 and 2019 were as follows (in millions):

The carrying amounts and accumulated amortization expenses of the acquired intangible assets other than goodwill, net, including the impact of foreign currency exchange translation, at December 31, 2021 and 2020 were as follows (in millions):

December 31, 2021

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The Company has included amortization of acquired intangible assets not directly attributable to revenue-generating activities in operating expenses.

During the year ended December 31, 2018, the Company recorded an impairment of intangible assets of $ 0.8 million, which is included within general and administrative expenses in the consolidated statements of comprehensive income.

There was no impairment of intangible assets in the years ended December 31, 2020 and 2019.

During the years ended December 31, 2021, 2020 and 2019, the Company recorded amortization expense in the amounts of $ 103.0 million, $ 81.6 million and $ 49.4 million, respectively.

There was no impairment of intangible assets in the years ended December 31, 2021, 2020 and 2019.

As of December 31, 2021, the total expected future amortization related to intangible assets was as follows (in millions):

to be included in

2026 and thereafter 82.2

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Accrued expenses 132.7 121.6

Accrued litigation settlement 37.6 —

Deferred revenues 31.6 21.3

Contingent consideration — 26.3

Accrued litigation settlement — 37.6

Total accrued expenses and other current liabilities $ 494.6 $ 484.8

The Company's leases include office real estate and data center leases for its facilities worldwide, which are all classified as operating leases, and which expire on various dates, the latest of which is December 2030.

Certain lease agreements include rental payments that are adjusted periodically for the consumer price index ("CPI").

The ROU and lease liability were calculated using the initial CPI and will not be subsequently adjusted.

The ROU asset and lease liability were calculated using the initial CPI and will not be subsequently adjusted.

Certain leases include renewal options that are reasonably certain to be exercised.

Supplemental balance sheet information related to leases is as follows (in millions):

December 31, 2021

Operating lease right-of-use assets, gross $ 133.9

Accumulated amortization ( 44.5 )

Operating lease right-of-use assets, net $ 89.4

The following is a summary of weighted average remaining lease terms and discount rates for all of the Company's operating leases:

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Weighted average discount rates 3.4 %

Total operating lease cost was $ 16.7 million and $ 12.3 million for the years ended December 31, 2020 and 2019, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 15.4 million and $ 10.2 million for the years ended December 31, 2020 and 2019, respectively.

Total rent expense for the year ended December 31, 2018 was $ 8.0 million.

Total operating lease expense was $ 21.8 million, $ 16.7 million and $ 12.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 21.5 million, $ 15.4 million and $ 10.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Maturities of lease liabilities are as follows (in millions):

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Present value of lease liabilities $ 99.5

The table above excludes approximately $ 25 million in lease obligations associated with leases that are currently under negotiation or that start after January 1, 2022.

December 31, 2021 December 31, 2020

(in millions, except interest rates) Maturity

Interest rate(s) Book value

(In millions)

Term Loan 2028 2.850 % $ 1,843.8 $ 1,885.8 $ 2,314.4

Senior Notes 2029 4.250 % 591.3 600.0 —

Revolving Credit Facility 2026 n/a — — —

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Long-term debt $ 2,422.9 $ 2,466.8 $ 2,209.8

Estimated fair value $ 2,380.9

(1) Book value of debt is net of deferred financing costs of $ 60.6 million and $ 75.9 million at December 31, 2020 and 2019, respectively.

The estimated fair value of the Company’s term loan is based upon the prices at which the Company’s debt traded in the days immediately preceding the balance sheet date.

As the trading volume of the Company’s debt is low relative to the overall debt balance, the Company does not believe that the associated transactions represent an active market, and therefore this indication of value represents a level 2 fair value input as defined in Note 1, O rganization and Summary of Significant Accounting Policies above.

On August 20, 2019, Playtika entered into a $ 2,583 million Senior Secured 363-day bridge loan facility (the "Bridge Facility").

The Bridge Facility was scheduled to mature on August 17, 2020 , subject to certain events that could have changed the maturity date to July 15, 2020.

Debt issuance costs of $ 9.6 million attributable to the long-term bridge loan were amortized as interest expense over the contractual term of the loan using the effective interest rate.

Concurrent with entering the Bridge Facility, the Company entered into an agreement (the "Takeout Agreement") with certain lenders (the "Takeout Arrangers"), pursuant to which the Takeout Arrangers agreed to use commercially reasonable efforts to arrange (1) a financing or a securities offering in an aggregate amount of approximately $ 2,500 million the proceeds of which are to be used to refinance the Bridge Facility (the "Takeout Facility") and (2) an approximately $ 250 million senior secured revolving credit facility, in each case, to be provided to or issued by the Company, as applicable, upon the satisfaction of certain conditions.

The Bridge Facility bore interest initially at a rate of LIBOR plus 2.25 %, with a floor of — % for LIBOR.

On and after November 18, 2019, the interest rate increased to the greater of (i) LIBOR plus 3.25 % and (ii) if the Takeout Facility had

been allocated to the market, LIBOR plus the applicable margin that would be in effect under the Takeout Facility.

On and after December 1, 2019, if the Takeout Facility had not been allocated to the market and the Takeout Arrangers still held any of the Bridge Facility themselves, the Takeout Arrangers could increase the interest rate on the Bridge Facility to LIBOR plus 5.00%, plus an additional 0.50% if the Company's public corporate credit rating was less than B1/B+, plus an additional 0.50% if the Company's public corporate credit rating was less than B2/B .

December 2019 Credit Agreement

On December 10, 2019, the Company entered into new $ 2,750 million senior secured credit facilities (the "Credit Facilities"), consisting of a $ 250 million revolving credit facility (the "Revolving Credit Facility"), and a $ 2,500 million first lien term loan (the "Term Loan").

Book value of debt in the table above is reported net of deferred financing costs and original issue discount of $ 50.7 million and $ 60.6 million at December 31, 2021 and 2020, respectively.

Credit Agreement

On December 10, 2019, the Company entered into $ 2,750 million of senior secured credit facilities (the "Credit Facilities"), consisting of a $ 250 million revolving credit facility (the "Revolving Credit Facility"), and a $ 2,500 million first lien term loan (the "Old Term Loan").

The Credit Facilities were provided pursuant to a Credit Agreement, dated as of December 10, 2019 (the "Credit Agreement"), by and among Playtika, the lenders party thereto, and Credit Suisse, AG, Cayman Islands Branch, as administrative agent (in such capacity, the "Administrative Agent") and collateral agent (in such capacity, the "Collateral Agent").

Proceeds borrowed under the Credit Facilities were used to pay off the outstanding balance on the Bridge Facility.

On June 15, 2020, the Company received $ 100 million of incremental revolving commitments in order to increase the capacity of the Revolving Credit Facility to $ 350 million.

Proceeds borrowed under the Credit Facilities on the closing date were used to pay off the outstanding balance on the Company’s prior debt facility.

On June 15, 2020, the Company increased the capacity of the Revolving Credit Facility to $ 350 million.

On January 15, 2021, the Company increased the borrowing capacity of the Revolving Credit Facility from $ 350 million to $ 550 million.

The Term Loan matures in December 2024 and the Revolving Credit Facility matures in September 2024 and includes a letter of credit sub-facility.

The Term Loan requires scheduled quarterly principal payments in amounts equal to 1.25 % of the original aggregate principal amount of the Term Loan, with the balance due at maturity.

The Credit Agreement allows Playtika to request one or more incremental term loan facilities, incremental revolving credit facilities and/or increases to the Term Loan or the Revolving Credit Facility in an aggregate amount of up to the sum of (w) $ 100 million plus (x) the amount of certain voluntary prepayments plus (y) such additional amount so long as, (i) in the case of incremental credit facilities that rank pari passu with the liens on the collateral securing the Credit Facilities, Playtika’s senior secured net leverage ratio on a pro forma basis would not exceed 2.75 to 1.00, (ii) in the case of loans under additional credit facilities that rank junior to the liens on the collateral securing the Credit Agreement, Playtika’s total secured net leverage ratio on a pro forma basis would not exceed 2.75 to 1.00 and (iii) in the case of incremental credit facilities that are unsecured, Playtika’s total net leverage ratio on a pro forma basis would not exceed 2.75 to 1.00 plus (z) $ 200 million of incremental revolving commitments from and after the occurrence of a qualified initial public offering, in each case, subject to certain conditions and receipt of commitments by existing or additional financial institutions or institutional lenders.

On March 11, 2021, the Company amended the Credit Agreement pursuant to an Incremental Assumption Agreement No.

3 and Second Amendment to Credit Agreement (the “Second Amendment”).

The Second Amendment, among other things, effected a refinancing of the Old Term Loan with a new $ 1.9 billion senior secured first lien term loan borrowed under the Credit Agreement (the “New Term Loan”), increased the Revolving Credit Facility to $ 600 million and extended the maturity of the Revolving Credit Facility to March 11, 2026.

The New Term Loan matures on March 11, 2028 and requires scheduled quarterly principal payments in amounts equal to 0.25 % of the original aggregate principal amount of the New Term Loan, with the balance due at maturity.

The Credit Agreement allows the Company to request one or more incremental term loan facilities, incremental revolving credit facilities and/or increases to the New Term Loan or the Revolving Credit Facility in an aggregate amount of up to the sum of (x) the greater of (1) $ 800 million and (2) 1.00 times EBITDA (as defined in the Credit Agreement) plus (y) the amount of certain voluntary prepayments of indebtedness plus (z) such additional amount so long as, (i) in the case of loans under additional credit facilities that are secured by liens on the collateral securing the Credit Agreement, the Company's net total secured leverage ratio on a pro forma basis would not exceed 3.50 to 1.00 (or in the case of incremental facilities to fund certain investments and acquisitions, the net total secured leverage ratio immediately prior to such incurrence) and (iii) in the case of any other loans under additional credit facilities, the Company's fixed charge coverage ratio on a pro forma basis would not be less than 2.00 to 1.00 (or in the case of incremental facilities to fund certain investments and acquisitions, the fixed charge coverage ratio immediately prior to such incurrence), in each case, subject to certain conditions and receipt of commitments by existing or additional financial institutions or institutional lenders.

All future borrowings under the Credit Agreement are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties, subject to certain exceptions.

December 2019 Credit Agreement Interest and Fees

Borrowings under the Credit Agreement bear interest at a rate equal to, at Playtika's option, either (a) LIBOR determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a floor of (i) in the case of the Term Loan, 1.0 % and (ii) in the case of the Revolving Credit Facility, 0.0 % or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by the Administrative Agent and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin.

Such applicable margin shall be (a) with respect to the Term Loan, 6.00% per annum in the case of any LIBOR loan or 5.00% per annum in the case of any base rate loan and (b) in the case of the Revolving Credit Facility, 3.25% per annum in the case of any LIBOR loan and 2.25% per annum in the case of any base rate loan, subject in the case of the Revolving Credit Facility to two 0.25% step-downs based on Playtika's senior secured net leverage ratio.

In addition, on a quarterly basis, Playtika is required to pay each lender under the Revolving Credit Facility a commitment fee in respect of any unused commitments under the Revolving Credit Facility in the amount of 0.50 % of the principal amount of the daily unused commitments of such lender, subject to step-downs to 0.375% and 0.25% based upon Playtika's senior secured leverage ratio.

Playtika is also required to pay customary agency fees as well as letter of credit participation fees on outstanding letters of credit.

The Credit Agreement permits voluntary prepayments and requires mandatory prepayments in certain events including among others, 75 % (subject to three 25% step-downs based on the Company’s senior secured net leverage ratio) of the Company’s excess cash flow to the extent such amount exceeds $ 10 million, certain net cash proceeds from non-ordinary asset sale transactions (subject to reinvestment rights, except in the case of certain material intellectual property and material games), and 100% of net proceeds of any issuance of debt (except for debt permitted to be incurred by the Credit Agreement).

December 2019 Credit Agreement Collateral and Guarantors

The borrowings under the Credit Agreement are guaranteed by certain material, wholly-owned restricted subsidiaries of Playtika that are incorporated under the laws of the United States, England and Wales and the State of Israel (subject to exceptions), and are secured by a pledge of substantially all of the existing and future property and assets of Playtika and the guarantors (subject to exceptions), including a pledge of the capital stock of the domestic subsidiaries held by Playtika and the domestic guarantors and 65% (or 100% in the case of certain of the guarantors) of the capital stock of the first-tier foreign subsidiaries held by Playtika and the domestic guarantors, in each case subject to exceptions.

The Credit Agreement requires that Playtika and the guarantors (a) generate at least 80.0% of the EBITDA (as defined in the Credit Agreement) of Playtika and its restricted subsidiaries for the four fiscal quarters most recently ended prior to the end of each fiscal quarter and (b) own all “Material Intellectual Property” (defined as (i) any intellectual property rights consisting of registered trademarks or copyrights subsisting in the name or logo of any game that generates more than 5%of the EBITDA of Playtika and its restricted subsidiaries for the then most recently ended four fiscal quarters and (ii) any intellectual property rights consisting of registered trademarks or copyrights subsisting in the names or logos of certain material games) on the last day of the four fiscal quarters most recently ended prior to the end of each fiscal quarter.

If Playtika and the guarantors do not satisfy such requirement, then Playtika must cause sufficient additional subsidiaries (which, subject to certain limitations, may include guarantors located in jurisdictions other than the United States, England and Wales and the State of Israel) to become guarantors in order to satisfy such requirement.

Interest and Fees

Borrowings under the Credit Agreement bear interest at a rate equal to, at the Company’s option, either (a) LIBOR determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a floor of 0% or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus 0.50%, (ii) the prime rate as determined by the administrative agent and (iii) the one-month adjusted LIBOR rate plus 1.00%, in each case plus an applicable margin.

Such applicable margin is (x) with respect to the New Term Loan, 2.75% per annum in the case of any LIBOR loan or 1.75% per annum in the case of any base rate loan, subject to one 0.25% step-down based on the Company’s credit ratings and (y) in the case of the Revolving Credit Facility, a range from 2.25% to 3.00% per annum in the case of any LIBOR loan and a range from 1.25% to 2.00% per annum in the case of any base rate loan, based on the Company’s net senior secured leverage ratio.

In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Credit Facility a commitment fee in respect of any unused commitments under the Revolving Credit Facility in the amount of 0.50 % of the principal amount of the daily unused commitments of such lender, subject to step-downs to 0.375% and 0.25% based upon the Company's senior secured leverage ratio.

The Company is also required to pay customary agency fees as well as letter of credit participation fees on outstanding letters of credit.

The Credit Agreement permits voluntary prepayments and requires mandatory prepayments in certain events including among others, 50 % (subject to step-downs to 25 % and 0% based upon the Company’s net total secured leverage ratio) of the Company’s excess cash flow to the extent such amount exceeds $ 10 million, certain net cash proceeds from non-ordinary asset sale transactions (subject to reinvestment rights), and 100% of net proceeds of any issuance of debt (except for debt permitted to be incurred by the Credit Agreement).

If the Company’s total secured leverage ratio remains below 2.0 to 1.0 , consistent with the ratio for the year ended December 31, 2021, the Company’s required excess cash flow percentage for 2022 will step down to 0%.

Collateral and Guarantors

The borrowings under the Credit Agreement are guaranteed by certain material, wholly-owned restricted subsidiaries of the Company, and are secured by a pledge of substantially all of the existing and future property and assets of the Company and the guarantors (subject to exceptions), including a pledge of the capital stock of the domestic subsidiaries held by the Company and the domestic guarantors and 65 % (or 100 % in the case of certain of the guarantors) of the capital stock of the first-tier foreign subsidiaries held by the Company and the domestic guarantors, in each case subject to exceptions.

The Credit Agreement requires that the Company and the guarantors (a) generate at least 80.0 % of the EBITDA of the Company and its restricted subsidiaries for the four fiscal quarters most recently ended prior to the end of each fiscal quarter and (b) own all “Material Intellectual Property” (defined as any intellectual property rights consisting of registered trademarks or copyrights subsisting in the name or logo of any game that generates more than 5 % of the EBITDA of the Company and its restricted subsidiaries for the then most recently ended four fiscal quarters) on the last day of the four fiscal

quarters most recently ended prior to the end of each fiscal quarter.

If the Company and the guarantors do not satisfy such requirement, then the Company must cause sufficient additional subsidiaries (which, subject to certain limitations, may include guarantors located in jurisdictions other than the United States, England and Wales and the State of Israel) to become guarantors in order to satisfy such requirement.

During the year ended December 31, 2021, the Company voluntarily designated certain subsidiaries in Germany, Austria and Finland as additional guarantors.

As of December 31, 2021, the Company was in compliance with these requirements.

December 2019 Credit Agreement Restrictive Covenants

The Revolving Credit Facility includes a maximum first-priority senior secured net leverage ratio financial maintenance covenant of 6.25 to 1.00, which is applicable on the last day of any of the Company’s fiscal quarters on which the aggregate outstanding amount of the Revolving Credit Facility and letters of credit issued under the Revolving Credit Facility (excluding certain undrawn or cash collateralized letters of credit) exceeds 30% of the aggregate amount of the commitments under the Revolving Credit Facility.

At December 31, 2019, the Company’s first-priority senior secured net leverage ratio was 3.5 to 1.00.

At December 31, 2020, the Company’s first-priority senior secured net leverage ratio was 2.09 to 1.00.

In addition, the Credit Agreement includes negative covenants, subject to certain exceptions, restricting or limiting Playtika's ability and the ability of its restricted subsidiaries to, among other things:

Restrictive Covenants

The Revolving Credit Facility includes a maximum first-priority net senior secured leverage ratio financial maintenance covenant of 6.25 to 1.00.

At December 31, 2021, the Company’s first-priority net senior secured leverage ratio was 0.91 to 1.00.

In addition, the Credit Agreement includes negative covenants, subject to certain exceptions, restricting or limiting the Company's ability and the ability of its restricted subsidiaries to, among other things:

(i) make non-ordinary course dispositions of assets;

(ii) make certain mergers and acquisitions;

(iii) complete dividends and stock repurchases and optional redemptions (and optional prepayments) of junior lien debt, unsecured debt and subordinated debt;

(iii) complete dividends and stock repurchases and optional redemptions (and optional prepayments) of subordinated debt;

(iv) incur indebtedness;

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(vii) transact with affiliates;

(viii) change the business of Playtika and its restricted subsidiaries;

(viii) change the business of the Company and its restricted subsidiaries;

(ix) enter into sale/leaseback transactions;

(x) allow limitations on negative pledges and the ability of restricted subsidiaries to pay dividends or make distributions;

(xi) change the fiscal year and (xii) modify junior lien debt, unsecured debt and subordinated debt documents.

Under the Credit Agreement, Playtika may be required to

meet specified leverage ratios in order to take certain actions, such as incurring certain debt or liens or making certain investments.

STOCKHOLDERS’ DEFICIT, EQUITY TRANSACTIONS AND STOCK INCENTIVE PLAN

(xi) change the fiscal year and (xii) modify subordinated debt documents.

Under the Credit Agreement, the Company may be required to meet specified leverage ratios or fixed charge coverage ratios in order to take certain actions, such as incurring certain debt or liens or making certain investments.

Expenses Related to Modification of Debt

The Company accounts for the restructuring of its debt agreements in accordance with the accounting standards applicable to troubled debt restructuring, debt modification and debt extinguishment.

Under the applicable accounting standards, the Company determined that the March 2021 financing transactions qualified for modification accounting.

As a result, the Company expensed $ 14.5 million related to the debt modification, wrote off $ 22.9 million of previously deferred financing costs related to the modification of debt related to the Company’s Old Term Loan and carried over $ 34.9 million of deferred financing costs to the New Term Loan.

Offering of 4.250% Senior Notes due 2029

On March 11, 2021, the Company issued $ 600.0 million aggregate principal amount of its 4.250 % senior notes due 2029 (the “Notes”) under an indenture, dated March 11, 2021 (the “Indenture”), among the Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee (the “Trustee”).

Maturity and Interest

The Notes mature on March 15, 2029 .

Interest on the Notes will accrue at a rate of 4.250 % per annum.

Interest on the Notes payable semi-annually in cash in arrears on March 15 and September 15 of each year, commenced on September 15, 2021.

The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company’s existing and future restricted subsidiaries that guarantee the obligations under the Credit Agreement (the “subsidiary guarantors”).

The Notes and the note guarantees rank equally in right of payment to all of the Company’s and the subsidiary guarantors’ existing and future senior indebtedness and senior in right of payment to all of the Company’s and the subsidiary guarantors’ future subordinated indebtedness.

The Notes and the note guarantees are effectively subordinated to any of the Company’s and the subsidiary guarantors’ existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness, including indebtedness outstanding under the Credit Agreement.

In addition, the Notes and the note guarantees are structurally subordinated to the existing and future liabilities of the Company’s non-guarantor subsidiaries.

The Company may redeem the Notes at any time prior to March 15, 2024 , in whole or in part, at a redemption price equal to 100% of the accrued principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a make-whole premium.

The Company may redeem the Notes at any time on or after March 15, 2024 , in whole or in part, at a redemption price equal to (i) 102.125 % of the principal amount thereof, should such redemption occur before March 15, 2025 , (ii) 101.063 % of the principal amount thereof, should such redemption occur before March 15, 2026 , and (iii) 100.000 % of the principal amount thereof, should such redemption occur on or after March 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, at any time prior to March 15, 2024, the Company may redeem up to 40 % of the original aggregate principal amount of all Notes issued with the net cash proceeds from certain equity offerings at a redemption price of 104.250 % of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date, so long as at least 50 % of the aggregate principal amount of the Notes remains outstanding immediately after the occurrence of such redemption, and the redemption date is within 90 days of the consummation of any such equity offering.

The Indenture contains customary covenants that limit the Company’s ability and, in certain instances, the ability of the Company’s subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies.

These limitations are subject to a number of important exceptions and qualifications set forth in the Indenture.

Change of Control

In the event of a change of control, the Company must offer to repurchase the Notes at a repurchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

Events of Default

Events of default under the Indenture include, among others, the following with respect to the Notes:

default which continues for 30 days in the payment of interest on the Notes;

default in payment of the principal of, or premium, if any, on the Notes;

failure to comply with certain covenants in the Indenture for 60 days (or 120 days with respect to the covenant relating to the provision of financial reports) upon the receipt of notice from the Trustee or holders of at least 25% in aggregate principal amount of the Notes;

acceleration or payment default of indebtedness of the Company or certain of its subsidiaries in excess of a specified amount that remains uncured following the applicable grace period provided in such indebtedness;

final judgments against the Company or certain of its subsidiaries in excess of a specified amount that remains unpaid for 45 days;

and certain events of bankruptcy or insolvency with respect to the Company or certain of its subsidiaries.

In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or certain of its subsidiaries, all Notes then outstanding will become due and payable immediately without further action or notice.

other event of default occurs with respect to the Notes, the Trustee or holders of at least 25% in aggregate principal amount of the Notes may declare all Notes then outstanding to be due and payable immediately.

Scheduled Principal Payments of Long-Term Debt

The scheduled principal payments due on long-term debt are as follows (in millions):

2026 and thereafter 2,409.8

Total $ 2,485.8

EQUITY TRANSACTIONS AND STOCK INCENTIVE PLAN

The following are the rights and privileges of the Company’s common shares:

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All information herein related to the Company’s common stock and stock awards has been retroactively adjusted to give effect to both the May 26, 2020 stock split and the January 5, 2021 stock split.

Stock incentive plan

In January 2021, promptly following the pricing of the Company’s IPO, the number of shares available for issuance under the Playtika Holding Corp.

2020 Incentive Award Plan (the “Plan”) increased by 14,335,499 shares of common stock, which represented 3.5 % of the total number of shares outstanding immediately after the consummation of the IPO.

The number of shares available for grant will increase on January 1st of each year through January 2030 by an amount equal to the lesser of

(i) 3.5 % of the total shares of the Company’s outstanding common stock or (ii) such number of shares determined by the Board of Directors.

On January 1, 2022, the number of shares available for issuance under the Plan increased by 14,041,929 .

In connection with its January 15, 2021 IPO, the Company granted 7,985,297 stock options and 4,299,077 RSUs to certain of its employees.

The stock options and RSUs generally vest 25 % on the first anniversary of the grant date, and the remaining 75 % of the options and RSUs vest in equal quarterly installments during the three years following the first anniversary of the grant date.

Overview of Stock Incentive Plan

On May 26, 2020, the Board of Directors of the Company approved the Playtika Holding Corp.

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The Plan authorizes the issuance of stock options, restricted stock, RSUs, dividend equivalents, stock appreciation rights, performance bonus awards and other incentive awards.

The Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company and its subsidiaries.

In October 2020, the Plan was amended by approval of the Board of Directors to increase the share reserve by 5,854,800 shares from 22,000,000 shares to a total of 27,854,800 .

The Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company.

The maximum number of shares of the Company’s common stock for which grants may be made under the Plan was 42,190,299 shares as of December 31, 2021.

As of December 31, 2021, a total of 386,104 shares of the Company’s common stock remained available for grants of awards under the Plan.

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The following table summarizes the Company’s stock option activity:

Stock Weighted Weighted

Options Average Average Intrinsic

Outstanding Remaining Exercise Value

(in millions) Term (in years) Price (in millions)

Weighted Weighted

Stock Average Average Intrinsic

Options Remaining Exercise Value

Outstanding Term (in years) Price (in millions)

Outstanding at January 1, 2021 8,000,000 9.5 $ 18.71 $ 58.1

Granted 8,857,172 $ 26.77

Cancelled ( 1,007,479 ) $ 26.86

Outstanding at December 31, 2021 15,849,693 8.8 $ 22.70 $ —

Exercisable at December 31, 2021 2,000,000 8.5 $ 18.71 $ —

There was no stock option activity in 2019 and 2018.

The Company expects to issue new shares of common stock upon exercise of stock options.

The Company uses the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with employee incentive stock options, which is affected by the following assumptions regarding complex and subjective variables.

There were no stock options exercised during the years ended December 31, 2021, 2020 or 2019.

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $ 10.16 per share and $ 8.58 per share, respectively.

The Company will issue new shares of common stock upon exercise of stock options.

The Company uses the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with employee stock options, which is affected by the following assumptions regarding complex and subjective variables.

Any changes in these assumptions may materially affect the estimated fair value of the stock-based award.

– Fair value of common stock - As the Company’s common stocks was not publicly traded, the fair value of common stock was estimated by valuation reports prepared by third-party valuation specialists.

– Expected volatility – Given that the Company was a private company at the time of valuation, the Company estimated volatility of 48.02 percent based on the volatilities exhibited by comparable public companies and the Company’s capital structure and utilized the observable data for a group of peer companies that grant options with substantially similar terms to assist in developing its volatility assumption.

– Risk-free interest rate - The risk-free interest rate was estimated based on the yield on a 6.25 -year U.S.

Treasury bonds as of June 26, 2020,

– Expected term - The Company estimated the expected term based on the average time between each vesting date and the expiration date, June 26, 2030, of the equity option awards.

– Fair value of common stock - Prior to the Company’s initial public offering of equity in January 2021, as the Company’s common stock was not publicly traded, the fair value of common stock was estimated by valuation reports prepared by third-party valuation specialists using multiple methods, as more fully discussed in Note 1, O rganization and Summary of Significant Accounting Policies .

Subsequent to the Company’s initial public offering, the Company uses the public trading price of its common stock on the Nasdaq stock market to determine the fair value of its common stock.

– Expected volatility – Prior to the Company’s initial public offering of equity in January 2021, as the Company was a private company at the time of valuation, the Company estimated volatility based on the volatilities exhibited by comparable public companies and the Company’s capital structure and utilized the observable data for a group of peer companies that grant options with substantially similar terms to assist in developing its volatility assumption.

Subsequent to the Company’s initial public offering, the Company continues to estimate volatility in the same manner as it has not yet established sufficient history to estimate volatility of its own.

Expected volatility used in the valuation of options granted in 2021 and 2020 ranged from 38.2 % to 48.0 %.

– Risk-free interest rate - The risk-free interest rate was estimated based on the U.S.

Treasury yield curve in effect at the time of grant and with maturities consistent with the expected term of the respective equity option award.

The risk-free interest rate used in the valuation of options granted in 2021 and 2020 ranged from 0.42 % and 0.98 %.

– Expected term - The Company estimated the expected term based on the average time between the vesting date and expiration date, ten years after the grant date, of the respective equity option award.

– Expected dividend yield - The Company does not anticipate paying cash dividends on its shares of common stock;

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The options granted during 2020 vest over four years , with 25 % vesting on each of the four anniversaries of the grant date.

For options granted during January 2021, 25 % of the options generally vest on the first anniversary of the grant date, and the remaining 75 % of the options vest in equal quarterly installments during the three years following the first anniversary of the grant date .

The Company expects that future option grants generally will follow one of these two different vesting schedules.

For options granted during 2021, 25 % of the options generally vest on the first anniversary of the grant date, and the remaining 75 % of the options vest in equal quarterly installments during the three years following the first anniversary of the grant date.

The stock options have a contractual term of ten years .

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The RSUs vest over four years , with 25% of the RSUs vesting on each of December 31, 2021, 2022, 2023 and 2024, subject to continued service on the applicable vesting date .

For RSUs granted during January 2021, 25 % of the RSUs generally vest on the first anniversary of the grant date, and the remaining 75 % of the RSUs vest in equal quarterly installments during the three years following the first anniversary of the grant date .

The Company expects that future RSU grants generally will follow the vesting schedule used in January 2021.

For RSUs granted during 2021, 25 % of the RSUs generally vest on the first anniversary of the grant date, and the remaining 75 % of the RSUs vest in equal quarterly installments during the three years following the first anniversary of the grant date.

Except as provided in an award agreement between the Company and the employee, if an employee is terminated (voluntarily or involuntarily), any unvested awards as of the date of termination will be forfeited.

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Average Value of

Shares Grant Date Shares Vested

(in millions) Fair Value (in millions)

Grant Date Shares Vested

Shares Fair Value (in millions)

Outstanding at January 1, 2020 —

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Outstanding at December 31, 2020 5,944,800 $ 21.04

There was no RSU activity in 2019 and 2018.

Granted 7,515,510 $ 28.23

Vested ( 1,512,218 ) $ 21.17 $ 26.6

Cancelled ( 573,008 ) $ 30.62

Outstanding at December 31, 2021 11,375,084 $ 25.29

There was no RSU activity in 2019.

Stock-based compensation

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Stock options $ 35.2 $ 8.9

RSUs 67.9 267.1

Total stock-based compensation costs $ 103.1 $ 276.0

There were no stock-based compensation costs in 2019 and 2018.

The following table summarizes stock-based compensation costs, net of amounts capitalized, as reported on the Company’s consolidated statements of comprehensive income (in millions):

Year ended December 31,

Research and development expenses $ 27.7 $ 0.5

Sales and marketing expenses 8.3 0.4

General and administrative expenses 64.4 275.1

Total stock-based compensation costs, net of amounts capitalized $ 100.4 $ 276.0

During the year ended December 31, 2021, the Company capitalized $ 2.7 million of stock-based compensation cost.

There were no stock-based compensation costs in 2019.

As of December 31, 2021, the Company’s unrecognized stock-based compensation expenses related to stock options was approximately $ 104.3 million, which are expected to be recognized over a period of 2.9 years.

As of December 31, 2021, the Company’s unrecognized stock-based compensation expenses related to unvested restricted stock units was approximately $ 244.8 million, which are expected to be recognized over a period of 2.9 years.

DERIVATIVE INSTRUMENTS

Interest Rate Swap Agreements

In March 2021, the Company entered into two interest rate swap agreements, each with a notional value of $ 250 million.

Each of these swap agreements is with a different financial institution as the counterparty to reduce the Company’s counterparty risk.

Each swap requires the Company to pay a fixed interest rate of 0.9275 % in exchange for receiving one-month LIBOR.

The interest rate swap agreements settle monthly commencing in April 2021 through their termination dates on April 30, 2026.

The estimated fair value of the Company’s interest rate swap agreements is derived from a discounted cash flow analysis.

The aggregate fair value of the Company’s interest rate swap agreements was an asset of $ 5.5 million as of December 31, 2021 and was recorded between accrued expenses and other current liabilities and other non-current assets in the accompanying consolidated balance sheets based upon the timing of the underlying expected cash flows.

Foreign currency hedge agreements

The Company has also entered into multiple derivative contracts for the future purchase of ILS, RON and PLN.

At December 31, 2021, we had entered into derivative contracts to purchase certain foreign currencies, including ILS, RON and PLN, at future dates.

The approximate amount of hedges was equal to $71.2 million, and all contracts are expected to mature during the upcoming 12 months..

The aggregate fair value of the Company’s derivative contracts was $ 1.3 million as of December 31, 2021 and was recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

FAIR VALUE MEASUREMENTS

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See Note 5, Goodwill and Note 6, Intangible Assets Other Than Goodwill, for more information on the assessment for impairment of goodwill and of intangible assets other than goodwill, respectively.

The Company’s financial liabilities measured at fair value on a recurring basis consisted of the following (in millions):

The following table summarizes the fair value measurement of the Company’s long-term debt at December 31, 2021 (in millions):

December 31, 2021

fair value Level 1 Level 2 Level 3 Total

Contingent consideration payable $ — $ — $ 26.3 $ 26.3

The Company had no financial assets or liabilities measured at fair value as of December 31, 2020.

Face Value Fair Value Fair Value Hierarchy

Term Loan $ 1,885.8 $ 1,876.4 Level 2

Senior Notes 600.0 585.0 Level 2

Total debt $ 2,485.8 $ 2,461.4

The estimated fair value of the Company’s term loan is based upon the prices at which the Company’s debt traded in the days immediately preceding the balance sheet date.

The following table sets forth the assets and liabilities measured at fair value on a recurring basis in the Company’s consolidated balance sheets (in millions):

Fair Value at

Category December 31, 2021

Cash and cash equivalents

Money market funds Level 1 $ 310.2

Prepaid expenses and other current assets

Derivative instruments - foreign currency derivative contracts Level 2 $ 1.3

Other non-current assets:

Derivative instruments - interest rate swaps Level 2 $ 7.9

Accrued expenses and other current liabilities:

Derivative instruments - interest rate swaps Level 2 $ 2.4

Derivative instruments - foreign currency derivative contracts Level 2 —

The Company estimates the fair value of interest rate swap contracts by discounting the future cash flows of both the fixed rate and variable rate interest payments based on market yield curves.

The inputs used to measure the fair value of the Company’s interest rate swap contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820.

The fair value of the Company’s foreign currency contracts approximates the amount the Company would pay or receive if these contracts were settled at the respective valuation dates.

The inputs used to measure the fair value of the Company’s foreign currency contracts are categorized as Level 2 in the fair value hierarchy as established by ASC 820.

The change in fair value of contingent consideration payable was valued using significant unobservable inputs (Level 3), was included in the general and administrative expenses in the Company’s consolidated statements of comprehensive income and consisted of the following (in millions):

Balance as of January 1, 2020 $ 26.3

Recorded in connection with acquisition transactions 4.9

Fair value adjustments based upon post-acquisition performance 21.4

Balance as of December 31, 2019 26.3

Fair value adjustment 17.4

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Balance as of December 31, 2020 —

Recorded in connection with acquisition transactions 33.7

Fair value adjustments based upon post-acquisition performance ( 5.0 )

Balance as of December 31, 2021 $ 28.7

In April 2020, the Company reached an agreement with the former stockholders of Seriously on the early determination of value and settlement of the contingent consideration payable following the Company’s acquisition of Seriously in July 2019.

The impact of this agreement has been recorded within the fair value adjustments for the year ended December 31, 2020.

The Company estimated the fair value of the contingent consideration recorded in connection with the acquisition of Reworks using a probability-weighted discounted cash flow model.

This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820.

The Company had no financial assets or liabilities measured at fair value as of December 31, 2020.

The Company has not elected the fair value measurement option available under U.S.

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COMMITMENTS AND CONTINGENCIES

On October 26, 2020, a patent infringement claim was filed against Playtika Holding Corp., Playtika Ltd.

and Caesars Interactive Entertainment LLC in U.S.

District Court, District of Nevada.

The plaintiff alleges that the defendants are infringing certain patents related to certain of its games and is seeking monetary damages.

We submitted our response to the complaint on February 18, 2021.

Due to the early nature of this case, it is not possible to assess whether this case may be material to the Company.

Playtika Holding Corp.

and Playtika Ltd.

intend to defend the case vigorously.

In December 2016, a copywriter lawsuit was filed against Wooga GmbH (a subsidiary of Playtika) in the regional court of Berlin, Germany.

In December 2016, a copywriter lawsuit was filed against Wooga GmbH (a subsidiary of the Company) in the regional court of Berlin, Germany.

The Plaintiff is suing for additional remuneration to his contributions for a storyline provided for one of Wooga's games and alleged reuse of parts of that storyline in one of Wooga’s other games.

As of December 31, 2021, the Company has recorded in its financial statements a reserve based upon its best estimate outcome.

It is reasonably possible that any final amounts payable in connection with this lawsuit could differ from our currently reserved best estimate.

In April 2018, a putative class action lawsuit, Sean Wilson, et al.

Playtika LTD, Playtika Holding Corp.

and Caesars Interactive Entertainment, Inc.

was filed against the Company in federal district court that is directed against certain of its social casino games, including Caesars Slots , Slotomania , House of Fun and Vegas Downtown Slots .

The plaintiff alleged three causes of action, including that the Company’s social casino games violate Washington State gambling laws, violate Washington State consumer protection laws and a claim of unjust enrichment.

The plaintiff sought certification of a class action, monetary damages and injunctive relief.

In August 2020, the Company entered into a settlement agreement, which remains contingent on final court approval, to settle the Sean Wilson litigation.

Under the terms of the settlement, which will take effect only after final court approval of the proposed class settlement, the Company and CIE will pay a combined total of $ 38.0 million into a settlement fund and all members of the settlement class who do not exclude themselves will release all claims relating to the subject matter of the lawsuit.

In August 2020, the court granted preliminary approval of the settlement agreement, and in February 2021 the court granted final approval of the settlement agreement..

For the year ended December

31, 2020, the Company recorded the amount of settlement in general and administrative expenses in the consolidated statement of comprehensive income.

It is possible that any final amounts payable in connection with this lawsuit could exceed the Company’s currently reserved best estimate.

In November 2013, the Company’s subsidiary, Playtika, Ltd., sent an initial demand letter to Enigmatus s.r.o., a game developer in the Czech Republic, which owns various U.S.

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In December 2016, Enigmatus s.r.o., filed a trademark infringement lawsuit, Enigmatus, s.r.o.

Playtika LTD and Caesars Interactive Entertainment, Inc.

, against Playtika, Ltd.

Playtika LTD and Caesars Interactive Entertainment, Inc., against Playtika, Ltd.

and Caesars Interactive Entertainment LLC in the Federal Court of Canada asserting that the Company’s use of the Slotomania trademarks violates its proprietary and trademark rights.

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As the case is in preliminary stages, the Company cannot estimate what impact, if any, the litigation may have on its results of operations, financial condition or cash flows.

On October 26, 2020, a patent infringement claim was filed against Playtika Holding Corp., Playtika Ltd.

and Caesars Interactive Entertainment LLC in U.S.

District Court, District of Nevada.

The Plaintiff alleged that the defendants are infringing certain patents in the field of communication and the transferring of images between the gaming server and the end device on certain of its social casino games.

The Plaintiff is seeking monetary damages.

On April 7, 2021, following the Company’s preliminary motions for dismissal and stay, the Company’s motion for stay was approved by the court pending ruling on motions to dismiss.

On July 7, 2021, the Court issued an order finding each of the Plaintiff’s asserted patents invalid as failing to comply with certain legal requirements and dismissing the lawsuit as to all parties.

On July 19, 2021, the Plaintiff filed an appeal.

Playtika Holding Corp.

and Playtika Ltd.

intend to defend the case vigorously.

On November 23, 2021, we and our directors and certain of our officers were named in a putative class action lawsuit filed in the United States District Court for the Eastern District of New York (Bar-Asher v.

Playtika Holding Corp.

The complaint is allegedly brought on behalf of a class of purchasers of our securities between January 15, 2021 and November 2, 2021, and alleges violations of federal securities laws arising out of alleged misstatements or omissions by the defendants during the alleged class period.

The complaint seeks, among other things, damages and attorneys’ fees and costs on behalf of the putative class.

As the case is in preliminary stages, the Company cannot estimate what impact, if any, the litigation may have on its results of operations, financial condition or cash flows.”

REVENUE FROM CONTRACTS WITH CUSTOMERS

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Total $ 2,583.0 $ 2,371.5 $ 1,887.6

Revenues through third-party platforms and through the Company’s own proprietary platforms were as follows (in millions):

Revenues through third-party platforms and through the Company’s own Direct-to-Consumer platforms were as follows (in millions):

Year ended December 31,

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Third-party platforms $ 2,054.0 $ 2,048.5 $ 1,693.9

Internal proprietary platforms 323.0 193.7 108.4

Direct-to-Consumer platforms 529.0 323.0 193.7

Total $ 2,583.0 $ 2,371.5 $ 1,887.6

Contract balances

Payments from players for virtual items are collected by platform providers or payment processors and remitted to the Company generally within 45 days after deducting platform or clearing fees.

The Company’s right to receive the payments collected by the platform providers or payment processors is recorded as an accounts receivable as the right to receive

payment is unconditional.

Payments from players for virtual items are collected by platform providers or payment processors and remitted to the Company (net of the platform or clearing fees) generally within 45 days after the player transaction.

The Company’s right to receive the payments collected by the platform providers or payment processors is recorded as an accounts receivable as the right to receive payment is unconditional.

Deferred revenues, which represent a contract liability, represent mostly unrecognized fees billed for virtual items which have not yet been consumed at the balance sheet date.

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APPRECIATION AND RETENTION PLANS

The Company recognized compensation expenses in respect of retention bonus and appreciation unit awards under the 2017-2020 Plan of $ 67.6 million, $ 72.7 million and $ 112.7 million during the years ended on December 31, 2020, 2019 and 2018, respectively.

In addition to awards under the 2017-2020 Plan, the Company has granted retention awards to key individuals associated with acquired companies as an incentive to retain those individuals on a long-term basis.

The Company recognized compensation expenses associated with these development-related retention payments of $ 15.1 million, $ 18.4 million and $ 17.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

In August 2019, the Board approved the Playtika Holding Corporation 2021-2024 Retention Plan (the "2021-2024 Plan").

Under the 2021-2024 Plan, eligible employees may be granted retention awards that let them receive their pro rata portion of a retention pool of $ 25 million per year for each of the plan years, and may also be granted appreciation units which allow the employee to receive their pro-rata portion of an appreciation pool calculated as a specified percentage of Adjusted EBITDA in each of the plan years, determined as follows:

In August 2019, the Board approved the 2021-2024 Retention Plan.

Under the 2021-2024 Retention Plan, eligible employees may be granted retention awards that let them receive their pro rata portion of a retention pool of $25 million per year for each of the plan years, and may also be granted appreciation units which allow the employee to receive their pro-rata portion of an appreciation pool calculated as a specified percentage of Adjusted EBITDA in each of the plan years, determined as follows:

For 2021, (A) 14 % of the 2021-2024 Retention Plan Adjusted EBITDA for such calendar year, less (B) $ 25,000,000 .

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In the event of such a termination, such participant will also remain eligible to receive payments in respect of his or her appreciation units for all vesting dates that have not yet occurred prior to the date of such termination, which payments will be made as and when such payments are made to other appreciation unit holders.

For all other participants, in the event of termination due to death or disability on or after January 1, 2021, but prior to December 31, 2024, the participant will receive a payment in respect of his or her proportionate share (based on the number of retention units outstanding and eligible for payment as of such date) of the unpaid portion of the total retention pool for the remaining term of the 2021-2024 Retention Plan as of the date of termination, pro-rated for the portion of the period between January 1, 2021 and December 31, 2024 that has elapsed prior to termination, payable within 60 days following termination.

of retention units outstanding and eligible for payment as of such date) of the unpaid portion of the total retention pool for the remaining term of the 2021-2024 Retention Plan as of the date of termination, pro-rated for the portion of the period between January 1, 2021 and December 31, 2024 that has elapsed prior to termination, payable within 60 days following termination.

In addition, the participant will retain the right to receive payments for a pro-rated portion of his or her appreciation units for all vesting dates that have not yet occurred prior to the date of such termination, which payments will be made as and when such payments are made to other appreciation unit holders.

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If a participant terminates service for any reason other than as described above, the participant will immediately forfeit all unearned benefits related to his or her unvested retention units and appreciation units.

In October 2020, 43,000 appreciation units held by Mr.

Antokol under the 2021-2024 Retention Plan were cancelled.

Pursuant to an amendment to the 2017-2020 Retention Plan adopted in October 2020, these cancelled appreciation units formerly held by Mr.

Antokol will be considered “retired units” for purposes of the plan, and will be deemed to be outstanding and eligible for payment solely for purposes of determining the per unit value to be paid to participants, but no amounts will be paid to Mr.

Antokol or otherwise with respect to such retired units.

In October 2020, 43,000 appreciation units held under the 2021-2024 Retention Plan were cancelled.

Pursuant to an amendment to the 2021-2024 Retention Plan adopted in October 2020, these cancelled appreciation units are considered “retired units” for purposes of the plan, and will be deemed to be outstanding and eligible for payment solely for purposes of determining the per unit value to be paid to participants, but no amounts will be paid with respect to such retired units.

The Company recognized compensation expenses in respect of retention bonus and appreciation unit awards under the 2021-2024 Plan of $ 112.7 million during the year ended December 31, 2021, and under the 2017-2020 Plan of $ 67.6 million and $ 72.7 million during the years ended December 31, 2020 and 2019, respectively.

The Company has also granted retention awards to key individuals associated with acquired companies as an incentive to retain those individuals on a long-term basis.

The Company recognized compensation expenses associated with these development-related retention payments of $ 21.3 million, $ 15.1 million and $ 18.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

INTEREST EXPENSE AND OTHER, NET

Interest expense and other, net for the years ended December 31, 2020, 2019 and 2018, are as follows (in millions):

I nterest expense and other, net for the years ended December 31, 2021 , 2020 and 2019, are as follows (in millions):

Year ended December 31,

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Total interest expense and other, net $ 153.8 $ 192.8 $ 61.1

Foreign taxation

Israeli taxation

The Company believes that its Israeli subsidiaries qualify as a Preferred Technology Enterprise, a special tax track, under the Israeli Investment Law, 5719-1959 (the “Investment Law”) and accordingly are eligible for a reduced corporate tax rate of 12 % on their preferred technology income, as defined in the Investment Law, beginning from tax year 2017 and onwards .

The Company expects that its Israeli subsidiaries will continue to qualify as a Preferred Technology Enterprise in subsequent tax years.

The Company believes that certain of its Israeli subsidiaries qualify as a Preferred Technology Enterprises, entitled to a special tax track, under the Israeli Investment Law, 5719-1959 (the “Investment Law”) and accordingly are eligible for a reduced corporate tax rate of 12 % on their preferred technology income, as defined in the Investment Law, beginning from tax year 2017 and onwards.

A Preferred Technology Enterprise becomes a Special Preferred Technology Enterprise and is entitled to a reduced corporate tax rate of 6 % on their preferred technology income when the worldwide revenues reach ILS 10 billion annually.

The Company expects that the Israeli subsidiaries qualifying as Preferred Technology Enterprises in the current year will continue to qualify as Preferred Technology Enterprises or become Special Preferred Technology Enterprises in subsequent tax years.

Income not eligible for Preferred Technology Enterprise benefits is taxed at the regular corporate tax rate at 23 % since 2018 and after.

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Net operating loss carry-forwards

The Company has net operating loss carryforwards in certain jurisdictions, including Israel, Germany and U.S.

of $ 31.1 million, $ 16.4 million, and $ 5.3 million, respectively.

The Company has net operating loss carryforwards in certain jurisdictions, including Israel, Germany and Finland of $ 78.7 million, $ 5.6 million, and $ 3.4 million, respectively.

The net operating losses in Israel and Germany are carried forward indefinitely.

A portion of the net operating losses in the U.S.

expire from 2034 through 2038.

The net operating losses in the Finland expire from 2029 through 2031.

The Company’s income tax return is subject to examination by federal, state and non-U.S.

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Deferred tax liabilities

Intangibles assets ( 53.2 ) ( 72.3 )

Intangible assets ( 67.2 ) ( 53.2 )

Undistributed earnings of subsidiaries — ( 46.2 )

Debt issuance costs ( 7.1 ) —

Property and equipment ( 10.3 ) ( 11.5 )

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The Company regularly reviews the deferred tax assets for recoverability based on all of the available positive and negative evidence, with a focus on historical taxable income, projected future taxable income, the expected timing of the reversals of existing taxable temporary differences and tax planning strategies by jurisdiction.

The Company previously considered the earnings in all its non-U.S.

subsidiaries to be indefinitely reinvested and accordingly, recorded no deferred income taxes associated with such earnings.

During the second quarter of 2019, the Company reevaluated its historic assertion and no longer consider the earnings of certain of its non-U.S.

subsidiaries to be indefinitely reinvested since the cash generated from some of the foreign subsidiaries will be used to service the long-term debt in the U.S.

As a result of the change in assertion, the impact of a repatriation of the undistributed earnings resulted in recording a deferred tax liability consisting of potential withholding and distribution taxes of $ 41.7 million as of December

The Company previously considered the earnings of certain of its non-U.S.

subsidiaries to not be indefinitely reinvested since the cash generated from some of the foreign subsidiaries would be used to service the long-term debt in the U.S.

As a result of this assertion, the impact of a repatriation of the undistributed earnings resulted in recording a deferred tax liability consisting of potential withholding and distribution taxes of $ 41.7 million as of December 31, 2019.

For the year ended December 31, 2020, the Company accrued an additional $ 4.5 million of deferred tax liability.

Such deferred taxes were recognized as tax expense.

The change in assertion relates both retroactively, to historical earnings as well as prospectively to future earnings in some of the Company’s non-U.S.

subsidiaries.

For certain of the Company’s non-U.S.

subsidiaries, for which the Company asserts that the undistributed earnings will be indefinitely reinvested, determination of the amount of any deferred income or withholding tax liability on these earnings is not practicable because of the complexities of the hypothetical calculation.

As a result of the changes to the Credit Agreement, primarily a reduction in the interest rate, in addition to other considerations, the Company has reevaluated its assertion and now considers the earnings of all its non-U.S.

subsidiaries to be indefinitely reinvested.

For the year ended December 31, 2021, the Company reversed the previously accrued deferred tax liability and recognized $ 46.2 million of tax benefit.

As of December 31, 2021, the Company asserts that the undistributed earnings of its non-U.S.

subsidiaries will be indefinitely reinvested, and determination of the amount of any deferred income or withholding tax liability on these earnings is not practicable because of the complexities of the hypothetical calculation.

Income before income taxes is comprised as follows (in millions):

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Nondeductible stock-based compensation 2.0 % 14.2 % — %

162(m) Limitation 1.1 % — % — %

GILTI and Foreign adjustments 6.3 % — % — %

Permanent items 0.3 % 2.4 % 1.3 %

2 unchanged sentences

Repatriation of undistributed dividends ( 11.3 ) % 2.3 % 9.5 %

Return-To-Provision Adjustments 1.7 % ( 1.0 ) % ( 1.4 ) %

Other 0.5 % ( 0.2 ) % 2.7 %

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Increases in respect of exchange rate fluctuations 3.9 4.3

Reductions in respect of settlements with authorities ( 12.7 ) —

Reductions in respect of expirations of statute of limitations ( 0.9 ) ( 1.2 )

Balance as of December 31 $ 114.2 $ 91.4

The balance of total unrecognized tax benefits at December 31, 2020 is $ 91.4 million which, if recognized, would affect the effective tax rate in the Company's statements of comprehensive income.

The balance of total unrecognized tax benefits at December 31, 2021 is $ 104.9 million which, if recognized, would affect the effective tax rate in the Company's consolidated statements of comprehensive income.

The balance of the accrual relating to interest and penalties as of December 31, 2021 is $ 9.2 million.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits could change significantly within 12 months of the reporting date as a result of the open examination in Israel.

The nature of this uncertainty primarily relates to qualification of certain income as qualified income under the Preferred Technology Enterprise tax regimes.

However, a reasonable estimate of the range of possible changes cannot be made at this time.

The Company continues to monitor tax implications resulting from new legislation passed in response to the COVID-19 pandemic in the federal, state and foreign jurisdictions where it has an income tax expense.

The impact of COVID-19 pandemic related tax-measures recently enacted were not material for the year ended December 31, 2020.

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table shows a summary of changes in accumulated other comprehensive income (loss), net of tax, by component for the year ended December 31, 2021 (in millions):

Foreign Currency Translation Interest Rate Swaps Foreign Currency Derivative Contracts Total

Balance as of January 1, 2021 $ 16.7 $ — $ — $ 16.7

Other comprehensive income (loss) before reclassifications ( 18.6 ) 2.1 2.0 ( 14.5 )

Amounts reclassified from accumulated other comprehensive income (loss) — 2.1 ( 1.1 ) 1.0

Balance as of December 31, 2021 $ ( 1.9 ) $ 4.2 $ 0.9 $ 3.2

NET INCOME ATTRIBUTABLE TO ORDINARY STOCKHOLDERS

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Net income per share, diluted $ 0.75 $ 0.24 $ 0.76

As the Company only had one class of common shares outstanding prior to June 2020 and had no awards granted under any equity plan, there were no equity awards excluded from the computation of earnings per share for the years ended December 31, 2019 or 2018.

For the year ended December 31, 2020, the Company excluded all outstanding stock options from the calculation of diluted earnings per share as the impact would have been antidilutive.

The following outstanding employee equity awards were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive for the periods presented:

Year ended December 31,

Stock options 7,849,693 8,000,000

RSUs 4,455,989 —

Total 12,305,682 8,000,000

TRANSACTIONS AND BALANCES WITH RELATED PARTIES

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Year ended December 31,

Repayments (made to) Alpha $ — $ ( 24.0 )

Repayments received from Giant HK — 24.0

Loan due to Alpha offset with loan receivable ( 68.0 )

Loan due from Giant HK offset with loan payable 68.0

There were no transactions with related companies in the year ended December 31, 2020.

There were no transactions with related companies in the years ended December 31, 2021 and 2020.

The Company borrowed $ 92 million from Alpha during 2017 and repaid $ 24 million during 2018.

The loan bears interest rate of 4 % per annum.

The loan shall be repaid up to two years from the agreement date and can be extended upon written agreement.

The Company recognized interest expense of $ 1.8 million and $ 3.1 million during the years ended December 31, 2019 and 2018, respectively, related to this loan.

The loan bore interest rate of 4 % per annum.

The loan was to be repaid up to two years from the agreement date and could be extended upon written agreement.

The Company recognized interest expense of $ 1.8 million during the year ended December 31, 2019, related to this loan.

Also, the Company lent $ 92 million to Giant HK during 2017, and received $ 24 million during 2018.

The loan bears interest rate of 4 % per annum.

The loan shall be repaid up to two years from the agreement date and can be extended upon written

The Company recognized interest income of $ 1.8 million and $ 3.1 million during the years ended December 31, 2019 and 2018, respectively, related to this loan.

The loan bore interest rate of 4 % per annum.

The loan was to be repaid up to two years from the agreement date and could be extended upon written agreement.

The Company recognized interest income of $ 1.8 million during the year ended December 31, 2019, related to this loan.

On August 20, 2019, Alpha and Giant HK agreed on the assignment of the agreement described above and accordingly the amount was off-set and the receivable loan balance considered as fully repaid.

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SUBSEQUENT EVENTS

Playtika Holding Corp.’s initial public offering

On January 20, 2021, the Company completed its initial public offering (the “IPO”) of 79,925,000 shares of common stock at a public offering price of $ 27.00 per share, of which the Company sold 18,518,500 shares and Playtika Holding UK II Limited (“Playtika Holding UK”) sold 61,406,500 shares, which included the full exercise of the underwriters’ option to purchase an additional 10,425,000 shares of common stock from Playtika Holding UK.

The Company’s common stock is listed on the Nasdaq Global Select Market under the symbol “PLTK”.

The net proceeds to the Company from the initial public offering were approximately $ 469.3 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, to be used for general corporate purposes, including working capital, operating expenses, capital expenditures, repayment of borrowing under its Term Loan, and potential future acquisitions.

The Company did not receive any proceeds from the sale of shares of common stock in the offering by Playtika Holding UK.

In January 2021, promptly following the pricing of the Company’s IPO, the number of shares available for issuance under the Playtika Holding Corp.

2020 Incentive Award Plan increased by 14,335,499 shares of common stock, which represented 3.5 % of the total number of shares outstanding immediately after the consummation of the IPO.

The number of shares available for grant will increase on January 1st of each year through January 2030 by an amount equal to the lesser of (i) 3.5% of the total shares of the Company’s outstanding common stock or (ii) such number of shares determined by the Board of Directors.

In connection with its January 15, 2021 IPO, the Company granted 7,985,297 stock options and 4,299,077 RSUs to certain of its employees.

The Company will recognize approximately $ 220 million of stock-based compensation expense related to this equity grant over the next four years .

- - - - - - - - - - - - - - - - - - -

On February 7, 2022, the Company’s Compensation Committee approved the grant of performance stock units (“PSUs”) to certain of our executive officers, including our named executive officers, pursuant to the Company’s 2020 Incentive Award Plan, as amended.

Should all of the performance targets be met and all outstanding PSUs vest, the Company expects to recognize approximately $ 54 million in expense over the next four years .

The Company’s Compensation Committee also approved the grant of RSUs and options to certain employees other than our executive officers for which the Company expects to recognize approximately $ 106 million in expense over the next four years .

In February 2022, Russia launched a military invasion into Ukraine.

The Company has a significant research and development center in Ukraine.

At this time, the Company is unable to estimate any specific impact to its business, financial condition or results of operations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data