Segment Reporting Disclosure [Text Block] |
NOTE 13. 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. "Description of the Business and Summary of Significant Accounting Policies" 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:
• | Write-downs and other include items related to loss on disposal or impairment of long-lived assets and fair value adjustments to contingent consideration; |
• | Depreciation, amortization; |
• | Loss on extinguishment and modification of debt primarily relates to the refinancing of long-term debt, in which deferred loan costs and discounts related to old senior secured credit facilities were written-off; |
• | Other adjustments,which are primarily composed of: |
| • | Costs and inventory and receivable valuation charges associated with the COVID-19 pandemic, professional fees incurred for projects, costs incurred related to public offerings, contract cancellation fees and other transaction costs deemed to be non-operating in nature; |
| • | Acquisition and integration-related costs related to the purchase of businesses and to integrate operations and obtain costs synergies; |
| • | Restructuring and severance costs, which primarily relate to costs incurred through the restructuring of the Company’s operations from time to time and other employee severance costs recognized in the periods presented; |
| • | Legal and litigation related costs, which consist of payments to law firms and settlements for matters that are outside the normal course of business; |
• | Other non-cash charges are costs related to non-cash charges and losses on the disposition of assets, non-cash charges on capitalized installation and delivery, which primarily includes the costs to acquire contracts that are expensed over the estimated life of each contract and non-cash charges related to accretion of contract rights under development agreements; and |
• | Non-cash stock-based compensation includes non-cash compensation expense related to grants of options, restricted stock, and other equity awards. |
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 years ended December 31, 2021, 2020, and 2019 (amounts in thousands):
| | 2021 | | | 2020 | | | 2019 | |
Revenues by segment | | | | | | | | | | | | |
EGM | | $ | 237,809 | | | $ | 151,789 | | | $ | 289,642 | |
Table Products | | | 11,879 | | | | 7,969 | | | | 10,194 | |
Interactive | | | 10,008 | | | | 7,249 | | | | 4,878 | |
Total Revenues | | | 259,696 | | | | 167,007 | | | | 304,714 | |
Adjusted EBITDA by segment | | | | | | | | | | | | |
EGM | | | 112,817 | | | | 65,877 | | | | 144,718 | |
Table Products | | | 6,438 | | | | 3,360 | | | | 3,699 | |
Interactive | | | 3,332 | | | | 2,432 | | | | (2,355 | ) |
Subtotal | | | 122,587 | | | | 71,669 | | | | 146,062 | |
| | | | | | | | | | | | |
Write-downs and other: | | | | | | | | | | | | |
Loss on disposal of long lived assets | | | 590 | | | | 2,399 | | | | 1,068 | |
Impairment of long lived assets | | | 2,257 | | | | 134 | | | | 5,343 | |
Fair value adjustments to contingent consideration and other items | | | (56 | ) | | | 796 | | | | 501 | |
Depreciation and amortization | | | 73,938 | | | | 85,722 | | | | 91,474 | |
Interest expense, net of interest income and other | | | 44,473 | | | | 43,982 | | | | 40,707 | |
Loss on extinguishment and modification of debt | | | - | | | | 3,102 | | | | - | |
Other adjustments | | | 3,119 | | | | 8,618 | | | | 5,860 | |
Other non-cash charges | | | 8,393 | | | | 9,712 | | | | 9,078 | |
Non-cash stock compensation | | | 14,643 | | | | 8,457 | | | | 9,001 | |
Loss before income taxes | | $ | (24,770 | ) | | $ | (91,253 | ) | | $ | (16,970 | ) |
The Company’s Chief Operating Decision Maker (the “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.
The following provides financial information concerning our operations by geographic area for the years ended December 31, 2021, 2020, and 2019 (amounts in thousands):
| | Year ended December 31, | |
Revenue: | | 2021 | | | 2020 | | | 2019 | |
United States | | $ | 237,396 | | | $ | 151,187 | | | $ | 258,691 | |
Other | | | 22,300 | | | | 15,820 | | | | 46,023 | |
Total Revenue | | $ | 259,696 | | | $ | 167,007 | | | $ | 304,714 | |
| | Year ended December 31, | |
Long-lived assets: | | 2021 | | | 2020 | | | 2019 | |
United States | | $ | 72,904 | | | $ | 76,879 | | | $ | 89,597 | |
Other | | | 9,406 | | | | 13,623 | | | | 19,132 | |
Total long-lived assets | | $ | 82,310 | | | $ | 90,502 | | | $ | 108,729 | |
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