Business Segments

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Business Segments

Business 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" as defined by applicable accounting standards). Our three business segments represent separate standalone businesses based on the industries in which we operate. Additional discussion regarding the products and services from which each reportable business segment derives its revenue is included in Note 1 (Description of the Business and Summary of Significant Accounting Policies) in our 2014 Annual Report on Form 10-K.

In connection with the Bally acquisition in the fourth quarter of 2014, 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. Business segment information for the three and nine months ended September 30, 2014 has been adjusted to reflect these changes.

The following tables present revenue, cost of revenue, SG&A, R&D, employee termination and restructuring, D&A, goodwill impairment, operating income (loss) and earnings (loss) from equity investments by business segment for the three and nine months ended September 30,2015 and 2014. Certain unallocated expenses managed at the corporate level, comprised primarily of general and administrative costs and other (expense) income, net, are not allocated to our business segments. Segment results for 2014 below do not include the results of Bally, which we acquired in November 2014. The increase in unallocated corporate costs for the three and nine months ended September 30, 2015 primarily relates to the inclusion of Bally's results.

	Three Months Ended September 30, 2015
	Gaming			Lottery		Interactive		Total
Revenue:
Services	$	244.3		$	45.0	$	51.2	$	340.5
Product sales	184.8			8.7		—		193.5
Instant games	—			137.6		—		137.6
Total revenue	429.1			191.3		51.2		671.6
Cost of services (1)	41.3			27.2		17.0		85.5
Cost of product sales (1)	80.1			7.3		—		87.4
Cost of instant games (1)	—			77.1		—		77.1
Selling, general and administrative	70.3			15.7		16.6		102.6
Research and development	39.4			1.1		5.4		45.9
Employee termination and restructuring	3.2			—		0.5		3.7
Depreciation and amortization	245.1			21.6		5.4		272.1
Goodwill impairment	535.0			—		—		535.0
Segment operating income (loss)	$	(585.3	)	$	41.3	$	6.3	$	(537.7	)
Unallocated corporate costs								(50.5		)
Consolidated operating loss								$	(588.2	)
Earnings from equity investments	$	1.0		$	2.0	$	—	$	3.0

(1) Exclusive of depreciation and amortization.

	Three Months Ended September 30, 2014
	Gaming			Lottery			Interactive		Total
Revenue:
Services	$	96.1		$	48.2		$	38.5	$	182.8
Product sales	68.3			33.7			—		102.0
Instant games	—			130.8			—		130.8
Total revenue	164.4			212.7			38.5		415.6
Cost of services (1)	24.9			30.4			14.3		69.6
Cost of product sales (1)	32.9			27.0			—		59.9
Cost of instant games (1)	—			69.7			—		69.7
Selling, general and administrative	28.7			17.8			13.7		60.2
Research and development	21.5			1.4			3.4		26.3
Employee termination and restructuring	0.9			0.4			0.6		1.9
Depreciation and amortization	66.4			24.9			3.4		94.7
Segment operating income (loss)	$	(10.9	)	$	41.1		$	3.1	$	33.3
Unallocated corporate costs									$	(41.1	)
Consolidated operating loss									$	(7.8	)
Earnings (loss) from equity investments	$	1.3		$	(15.3	)	$	—	$	(14.0	)

(1) Exclusive of depreciation and amortization.

	Nine months ended September 30, 2015
	Gaming			Lottery		Interactive		Total
Revenue:
Services	$	722.6		$	136.5	$	149.7	$	1,008.8
Product sales	582.0			29.0		—		611.0
Instant games	—			402.0		—		402.0
Total revenue	1,304.6			567.5		149.7		2,021.8
Cost of services (1)	139.9			83.1		51.6		274.6
Cost of product sales (1)	268.8			24.4		—		293.2
Cost of instant games (1)	—			212.9		—		212.9
Selling, general and administrative	215.7			49.2		46.9		311.8
Research and development	120.3			4.2		16.3		140.8
Employee termination and restructuring	10.1			0.2		1.5		11.8
Depreciation and amortization	569.9			62.9		15.9		648.7
Goodwill impairment	535.0			—		—		535.0
Segment operating income (loss)	$	(555.1	)	$	130.6	$	17.5	$	(407.0	)
Unallocated corporate costs								(163.2		)
Consolidated operating loss								$	(570.2	)
Earnings from equity investments	$	2.7		$	6.7	$	—	$	9.4

(1) Exclusive of depreciation and amortization.

	Nine months ended September 30, 2014
	Gaming			Lottery			Interactive		Total
Revenue:
Services	$	288.1		$	149.3		$	101.5	$	538.9
Product sales	216.6			72.7			—		289.3
Instant games	—			392.4			—		392.4
Total revenue	504.7			614.4			101.5		1,220.6
Cost of services (1)	73.4			90.4			36.9		200.7
Cost of product sales (1)	103.9			57.3			—		161.2
Cost of instant games (1)	—			212.5			—		212.5
Selling, general and administrative	92.8			56.0			40.1		188.9
Research and development	64.9			2.7			9.4		77.0
Employee termination and restructuring	4.2			1.6			4.7		10.5
Depreciation and amortization	190.9			70.8			9.3		271.0
Segment operating income (loss)	$	(25.4	)	$	123.1		$	1.1	$	98.8
Unallocated corporate costs									(115.1		)
Consolidated operating loss									$	(16.3	)
Earnings (loss) from equity investments	$	3.3		$	(11.1	)	$	—	$	(7.8	)

(1) Exclusive of depreciation and amortization.

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

	Three Months Ended   September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Reportable business segment operating income (loss)	$	(537.7	)	$	33.3		$	(407.0	)	$	98.8
Unallocated corporate costs	(50.5		)	(41.1		)	(163.2		)	(115.1		)
Consolidated operating loss	(588.2		)	(7.8		)	(570.2		)	(16.3		)
Interest expense	(166.8		)	(45.7		)	(497.5		)	(142.9		)
Earnings (loss) from equity investments	3.0			(14.0		)	9.4			(7.8		)
Loss on early extinguishment of debt	—			—			—			(25.9		)
Gain on sale of equity interest	—			—			—			14.5
Other (expense) income, net	(7.5		)	3.1			(17.4		)	9.2
Net loss before income taxes	$	(759.5	)	$	(64.4	)	$	(1,075.7	)	$	(169.2	)

In evaluating segment financial performance, we focus on operating income (loss) as a segment’s measure of profit or loss. Segment operating income (loss) is income (loss) before other (expense) income, net, interest expense, earnings (loss) from equity investments, gain on sale of equity interest, unallocated corporate costs and income tax expense (benefit). The accounting policies of the business segments are the same as those described in our summary of significant accounting policies in Note 1 (Description of the Business and Summary of Significant Accounting Policies) in our 2014 Annual Report on Form 10-K.