Note 13 - Operating Segments

12 Months Ended

Oct. 31, 2012

Segment Reporting Disclosure [Text Block]

13. OPERATING SEGMENTS

We report segment information based on the “management approach.” The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments.

See Note 1 for a detailed discussion of our four 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 net revenues, gross margin and operating income.

Segment revenues include leasing, licensing, or selling of products within each reportable segment. Segment operating income (loss) includes net revenues attributable to third parties and expenses directly and indirectly associated with the product lines included in each segment. Cost of sales and service and cost of leases and royalties primarily include the cost of products sold, depreciation of leased assets, amortization of product-related intangible assets, service, manufacturing overhead, shipping and installation.  Indirect operating expenses include other costs directly identified with each segment, such as research and development, product approval costs, product-related litigation expenses, amortization of patents and other product-related intellectual property, sales commissions and other directly-allocable sales expenses.  Capital expenditures include amounts reported in our consolidated statements of cash flows for purchases of leased products, property and equipment and intangible assets plus the financed or non-cash portion of these purchases which is excluded from cash flows.

Operating income (loss) for each segment excludes other income and expense, income taxes and certain expenses that are managed outside of the operating segments.

The amounts classified as unallocated corporate expenses consist primarily of costs related to overall corporate management and support functions. These include costs related to executive management, accounting and finance, general sales support, legal and compliance costs, office expenses and other amounts for which allocation to specific segments is not practicable. Segment assets exclude corporate assets.

Assets are allocated to each segment according to the benefits received by the respective segment.  Unallocated corporate assets are primarily comprised of cash and cash equivalents, property and equipment including land, buildings and leasehold improvements, prepaid income taxes, and deferred financing costs.

The following provides financial information concerning our reportable segments of our continuing operations for the years ended October 31:

	Year Ended October31,
	2012			2011			2010
	(In thousands)
Revenue:
Utility	$	93,965		$	82,942		$	77,357
Proprietary Table Games		52,446			43,986			40,430
Electronic Table Systems		31,042			33,937			42,398
Electronic Gaming Machines		81,594			66,906			41,117
Unallocated Corporate		-			-			-
	$	259,047		$	227,771		$	201,302
Gross profit (loss):
Utility	$	57,984		$	49,973		$	47,024
Proprietary Table Games		43,429			35,370			32,356
Electronic Table Systems		14,472			14,564			21,580
Electronic Gaming Machines		49,253			42,648			23,010
Unallocated Corporate		-			-			-
	$	165,138		$	142,555		$	123,970
Operating income (loss):
Utility	$	49,553		$	43,289		$	40,233
Proprietary Table Games		33,270			30,986			27,880
Electronic Table Systems		723			2,301			11,802
Electronic Gaming Machines		35,360			30,462			14,690
Unallocated Corporate		(63,387	)		(60,720	)		(59,263	)
	$	55,519		$	46,318		$	35,342
Depreciation and amortization:
Utility	$	7,510		$	8,312		$	7,924
Proprietary Table Games		6,282			5,653			6,390
Electronic Table Systems		6,592			7,000			5,599
Electronic Gaming Machines		1,316			357			144
Unallocated Corporate		3,504			3,813			2,811
	$	25,204		$	25,135		$	22,868
Capital expenditures:
Utility	$	5,035		$	7,917		$	12,426
Proprietary Table Games		4,495			7,749			1,492
Electronic Table Systems		5,624			6,802			8,470
Electronic Gaming Machines		5,455			1,266			-
Unallocated Corporate		5,845			3,210			5,265
	$	26,454		$	26,944		$	27,653
Assets, end of year:
Utility	$	96,222		$	101,826		$	109,549
Proprietary Table Games		58,556			55,639			52,667
Electronic Table Systems		62,783			70,051			71,081
Electronic Gaming Machines		65,311			44,234			37,773
Unallocated Corporate		48,179			41,137			32,890
	$	331,051		$	312,887		$	303,960

REVENUE BY GEOGRAPHIC AREA

Revenues by geographic area are determined based on the location of our customers. For fiscal 2012, 2011 and 2010, sales to customers outside the United States accounted for 56%, 56% and 51% of consolidated revenue, respectively. No individual customer accounted for more than 10% of consolidated revenue.

The following provides financial information concerning our operations by geographic area for the years ended October 31:

	2012				2011				2010
	(In thousands)
Revenue:
United States	$	114,662	44.3	%	$	100,959	44.3	%	$	98,886	49.1	%
Canada		7,888	3.1	%		7,733	3.4	%		8,032	4.0	%
Other Americas		4,514	1.7	%		5,384	2.4	%		3,443	1.7	%
Europe		10,329	4.0	%		9,995	4.4	%		9,114	4.5	%
Australia		91,993	35.5	%		81,088	35.6	%		61,801	30.7	%
Asia		28,133	10.9	%		20,413	9.0	%		17,930	9.0	%
Other		1,528	0.5	%		2,199	0.9	%		2,096	1.0	%
		259,047	100.0	%	$	227,771	100.0	%	$	201,302	100.0	%
Long-lived assets, end of year:
United States	$	36,751	59.9	%	$	35,776	66.0	%	$	35,942	73.5	%
Other Americas		2,302	3.7	%		1,204	2.2	%		255	0.5	%
Europe		2,535	4.1	%		2,956	5.5	%		2,954	6.1	%
Australia		12,182	19.8	%		11,304	20.8	%		7,847	16.0	%
Asia		7,484	12.2	%		2,776	5.1	%		1,786	3.7	%
Other		191	0.3	%		200	0.4	%		110	0.2	%
	$	61,445	100.0	%	$	54,216	100.0	%	$	48,894	100.0	%

Long-lived assets for fiscal 2012, 2011 and 2010 exclude deferred income taxes, goodwill and other intangible assets.