Business and Geographic Segments

We report our operations in three business segments—Gaming, Lottery and Interactive—representing our different products and services. These are our reportable segments under ASC 280, Segment Reporting. Each of our business segments is managed by a separate executive who reports to our chief executive officer (who is our "chief operating decision maker" under applicable accounting standards). Our three business segments represent separate standalone businesses based on the industries we operate in. Our Gaming business segment generally sells gaming machines and VLTs, conversion kits and parts, and leases or otherwise provides gaming machines, server-based systems and content, to commercial, tribal and governmental gaming operators. Additionally, through our acquisition of Bally, this business segment also sells and supports specialized casino-management systems-based software and hardware, provides PTG content and sells and leases Utility products, including automatic card shufflers, deck checkers and roulette chip sorters. Our Lottery business segment provides instant lottery games and related value-added services, as well as licensed brands that are printed on instant lottery games and other promotional lottery products. Our Lottery business segment also provides systems products and services generally comprised of point-of-sale terminals, a central system, customized computer software, data communication services, support and/or related equipment. Our Interactive business segment provides social gaming and RMG services to online casino operators through our remote game servers. The products and services from which each reportable segment derives its revenues are further discussed in Note 1 (Description of the Business and Summary of Significant Accounting Policies).

In connection with the Bally acquisition, we reviewed our operating and business segments in light of certain changes in the financial information regularly reviewed by our chief executive officer and other factors. Based on this review, we combined our previous lottery-related Instant Products and Lottery Systems business segments into one "Lottery" segment. We also determined that the interactive operating segment should be disclosed as a separate business segment and not aggregated with the gaming operating segment, reflecting the growth of the interactive operating segment. These changes, which were effective prior to December 31, 2014, had no impact on our consolidated financial statements for any periods. Prior-period business segment information for the years ended December 31, 2013 and 2012 has been adjusted to reflect the changes in business segments.

The following tables present revenue, cost of revenue, SG&A, R&D, employee termination and restructuring, D&A, operating (loss) income from continuing operations, earnings (loss) from equity investments, gaming, lottery and interactive operations expenditures and assets for the years ended (or at) December 31, 2014, 2013 and 2012, respectively, by business segment. Certain unallocated expenses managed at the corporate level, comprised primarily of general and administrative costs and other income (expense), are not allocated to our business segments.



	Year Ended December 31, 2014
	Gaming			Lottery			Interactive		Total
Revenue:
Instant games	$	—		$	533.0		$	—	$	533.0
Services	442.6			201.4			144.5		788.5
Product sales	363.8			101.1			—		464.9
Total revenue	806.4			835.5			144.5		1,786.4
Cost of instant games (1)	—			291.4			—		291.4
Cost of services (1)	111.0			120.8			51.9		283.7
Cost of product sales (1)	195.5			78.8			—		274.3
Selling, general and administrative	235.3			73.3			57.3		365.9
Research and development	98.7			4.6			13.7		117.0
Employee termination and restructuring	15.5			3.5			7.1		26.1
Depreciation and amortization	318.7			97.1			13.3		429.1
Segment operating (loss) income from continuing operations	$	(168.3	)	$	166.0		$	1.2	$	(1.1	)
Unallocated corporate costs									171.6
Consolidated operating loss									$	(172.7	)
Earnings (loss) from equity investments	$	3.3		$	(10.9	)	$	—	$	(7.6	)
Assets at December 31, 2014	$	7,905.5		$	1,425.3		$	185.4
Unallocated assets at December 31, 2014									479.0
Consolidated assets at December 31, 2014									$	9,995.2
Gaming, lottery and interactive capital expenditures	$	160.5		$	58.3		$	5.4	$	224.2

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(1)	Exclusive of depreciation and amortization.



	Year Ended December 31, 2013
	Gaming			Lottery		Interactive		Total
Revenue:
Instant games	$	—		$	516.0	$	—	$	516.0
Services	181.8			203.2		30.0		415.0
Product sales	88.7			71.2		—		159.9
Total revenue	270.5			790.4		30.0		1,090.9
Cost of instant games (1)	—			285.1		—		285.1
Cost of services (1)	77.9			113.8		11.4		203.1
Cost of product sales (1)	56.4			47.1		—		103.5
Selling, general and administrative	87.1			70.7		10.1		167.9
Research and development	17.4			5.5		3.1		26.0
Employee termination and restructuring	6.7			5.1		1.9		13.7
Depreciation and amortization	103.9			94.5		2.7		201.1
Segment operating (loss) income from continuing operations	$	(78.9	)	$	168.6	$	0.8	$	90.5
Unallocated corporate costs								108.8
Consolidated operating loss								$	(18.3	)
Earnings (loss) from equity investments	$	(12.1	)	$	13.6	$	—	$	1.5
Assets at December 31, 2013	$	2,338.7		$	1,601.5	$	83.2
Unallocated assets at December 31, 2013								213.0
Consolidated assets at December 31, 2013								$	4,236.4
Gaming, lottery and interactive capital expenditures	$	75.8		$	79.0	$	3.2	$	158.0

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(1)	Exclusive of depreciation and amortization.



	Year Ended December 31, 2012
	Gaming			Lottery		Interactive		Total
Revenue:
Instant games	$	—		$	493.6	—		$	493.6
Services	133.1			201.1		6.1		340.3
Product sales	31.2			63.5		—		94.7
Total revenue	164.3			758.2		6.1		928.6
Cost of instant games (1)	—			282.5		—		282.5
Cost of services (1)	60.2			109.6		0.9		170.7
Cost of product sales (1)	22.1			43.0		—		65.1
Selling, general and administrative	28.1			65.4		0.7		94.2
Research and development	2.1			4.5		—		6.6
Employee termination and restructuring	4.7			5.9		—		10.6
Depreciation and amortization	57.7			92.6		—		150.3
Segment operating (loss) income from continuing operations	$	(10.6	)	$	154.7	4.5		$	148.6
Unallocated corporate costs								85.7
Consolidated operating income								$	62.9
Earnings from equity investments	$	3.0		$	25.1	$	—	28.1
Assets at December 31, 2012	$	504.0		$	1,645.0	$	0.6
Unallocated assets at December 31, 2012								37.3
Consolidated assets at December 31, 2012								$	2,186.9
Gaming, lottery and interactive capital expenditures	$	42.5		$	66.0	$	—	$	108.5

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(1)	Exclusive of depreciation and amortization.

In evaluating financial performance, we focus on operating (loss) income from continuing operations as a segment's measure of profit or loss. Segment operating (loss) income from continuing operations is (loss) income before interest expense, earnings (loss) from equity investments (net of impairments), loss on early extinguishment of debt, gain on sale of equity interest, other (expense) income, net, unallocated corporate costs and income taxes. Certain corporate assets consisting of cash, prepaid expenses and property, plant and equipment are not allocated to the segments. The accounting policies of our business segments are the same as those described above in the summary of significant accounting policies.

The following table presents a reconciliation of business segment operating (loss) income to net loss from continuing operations before income taxes for each period:



	Years Ended December 31,
	2014			2013			2012
Reported segment operating (loss) income from continuing operations	$	(1.1	)	$	90.5		$	148.6
Unallocated corporate costs	(171.6		)	(108.8		)	(85.7		)
Consolidated operating (loss) income	(172.7		)	(18.3		)	62.9
Interest expense	(307.2		)	(119.5		)	(100.0		)
Earnings (loss) from equity investments	(7.6		)	1.5			28.1
Loss on early extinguishment of debt	(25.9		)	(5.9		)	(15.5		)
Gain on sale of equity interest	14.5			—			—
Other (expense) income, net	4.0			(1.1		)	1.3
Net loss from continuing operations before income taxes	$	(494.9	)	$	(143.3	)	$	(23.2	)

Sales to international customers originating from the U.S. were $58.1 million, $18.5 million and $16.6 million for the years ended December 31, 2014, 2013 and 2012, respectively. The following tables present revenue by customer location and long-lived assets by geographic segment:



	Years Ended December 31,
	2014		2013		2012
Revenue:
United States	$	1,070.1	$	559.8	$	445.2
North America, other than United States	131.0		74.2		66.1
United Kingdom	162.5		157.5		163.7
Europe, other than the United Kingdom	283.6		213.2		187.6
Other	139.2		86.2		66.0
Total (1)	$	1,786.4	$	1,090.9	$	928.6



	As of December 31,
	2014		2013
Property and equipment, net:
United States	$	771.1	$	580.3
North America, other than United States	59.9		47.5
United Kingdom	96.6		85.2
Europe, other than the United Kingdom	34.2		19.6
Other	51.0		40.5
Total (2)	$	1,012.8	$	773.1

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(1)	Total revenue from international customers for the years ended December 31, 2014, 2013 and 2012 was $716.3 million, $531.1 million and $483.4 million, respectively.


(2)	Total property and equipment held outside the United States as of December 31, 2014 and 2013 was $242.2 million and $192.8 million, respectively.