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Note 14 - Operating Segments
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
NOTE
14.
OPERATING SEGMENTS
 
We report our business segment results by segment in accordance with the “management approach.” The management approach designates the internal reporting used by our chief operating decision maker (“CODM”), who is our Chief Executive Officer (the “CEO”), for making decisions and assessing performance of our reportable segments.
 
See Note
1
for a detailed discussion of our
three
segments. Each segment’s activities include the design, development, acquisition, manufacturing, marketing, distribution, installation and servicing of its product lines. We evaluate the performance of our operating segments based on revenues and segment adjusted EBITDA, which is defined in the paragraph below.
 
Segment revenues include leasing, licensing, or selling of products within each reportable segment. Segment adjusted EBITDA includes the revenues and operating expenses from each segment adjusted for depreciation, amortization, write-downs and other charges, accretion of placement fees, non-cash stock based compensation expense, as well as other costs such as certain acquisitions and integration related costs including restructuring and severance charges; legal and litigation expenses including settlement payments; new jurisdictions and regulatory licensing costs; non-cash charges on capitalized installation and delivery; contract cancellation fees; and other adjustments primarily composed of professional fees incurred by the Company for projects, corporate and public filing compliance and other costs deemed to be non-recurring in nature. Revenues in each segment are attributable to
third
parties and segment operating expenses are directly associated with the product lines included in each segment such as research and development, product approval costs, product-related litigation expenses, sales commissions and other directly-allocable sales expenses. Cost of gaming operations and cost of equipment sales primarily include the cost of products sold, service, manufacturing overhead, shipping and installation.
 
Segment adjusted EBITDA excludes other income and expense, income taxes and certain expenses that are managed outside of the operating segments.
 
The following provides financial information concerning our reportable segments for the 
three
and 
nine
months ended
September 30, 2019
and
2018
(amounts in thousands):   
 
   
Three months ended September 30,
   
Nine months ended September 30,
 
   
2019
   
2018
   
2019
   
2018
 
Revenues by segment
                               
EGM
  $
75,299
    $
71,784
    $
215,932
    $
202,361
 
Table Products
   
2,861
     
2,052
     
7,437
     
5,514
 
Interactive
   
1,217
     
1,690
     
3,559
     
5,329
 
Total Revenues
  $
79,377
    $
75,526
    $
226,928
    $
213,204
 
Adjusted EBITDA by segment
                               
EGM
   
35,825
     
34,026
     
108,088
     
105,197
 
Table Products
   
1,409
     
428
     
2,694
     
684
 
Interactive
   
(447
)    
(877
)    
(1,985
)    
(1,223
)
Subtotal
   
36,787
     
33,577
     
108,797
     
104,658
 
Write-downs and other:
                               
Loss on disposal of long lived assets
   
570
     
363
     
1,015
     
1,383
 
Impairment of long lived assets
   
136
     
204
     
5,343
     
1,199
 
Fair value adjustments to contingent consideration and other items
   
101
     
100
     
501
     
700
 
Depreciation and amortization
   
23,810
     
18,968
     
69,002
     
57,784
 
Accretion of placement fees
(1)
   
1,747
     
1,206
     
4,550
     
3,412
 
Non-cash stock-based compensation expense
   
1,959
     
538
     
5,309
     
9,167
 
Acquisitions and integration related costs including restructuring and severance
   
481
     
746
     
2,944
     
3,156
 
Initial public offering costs and secondary offering
   
(11
)    
859
     
414
     
2,168
 
Legal and litigation expenses including settlement payments
   
1,745
     
(45
)    
1,748
     
789
 
Non-cash charge on capitalized installation and delivery
   
679
     
494
     
1,991
     
1,478
 
Other adjustments
   
(9
)    
34
     
58
     
50
 
Interest expense
   
9,320
     
8,956
     
27,754
     
28,253
 
Interest (income)
   
(42
)    
(89
)    
(112
)    
(162
)
Loss on extinguishment and modification of debt
   
-
     
-
     
-
     
4,608
 
Other (income) expense
   
(106
)    
434
     
5,108
     
10,121
 
(Loss) Income before income taxes
  $
(3,593
)   $
809
    $
(16,828
)   $
(19,448
)
 
(
1
)
Non-cash item related to the accretion of contract rights under development agreements and placement fees.
 
The Company’s CODM does
not
receive a report with a measure of total assets or capital expenditures for each reportable segment as this information is
not
used for the evaluation of segment performance. The CODM assesses the performance of each segment based on adjusted EBITDA and
not
based on assets or capital expenditures due to the fact that
two
of the Company’s reportable segments, Table Products and Interactive, are
not
capital intensive. Any capital expenditure information is provided to the CODM on a consolidated basis. Therefore, the Company has
not
provided asset and capital expenditure information by reportable segment.