Business Segments

3 Months Ended

Mar. 31, 2016

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 under applicable accounting standards). Our three business segments represent separate standalone businesses based on the industries in which we operate. Our Gaming business segment generally sells gaming machines, VLTs and conversion kits and parts, leases or otherwise provides gaming machines, server-based systems and content, sells and supports casino-management systems-based software and hardware, and sells and leases PTG content and Shufflers, including automatic card shufflers, deck checkers and roulette chip sorters, to commercial, tribal and governmental gaming operators. Our Lottery business segment provides instant lottery games and related value-added services, as well as licensed brands utilized in instant lottery games and loyalty and reward services. 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. 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 2015 Annual Report on Form 10-K.

The following tables present revenue, cost of revenue, SG&A, R&D, employee termination and restructuring, D&A, operating income and earnings (loss) from equity investments for the three months ended March 31,2016 and 2015, respectively, by business segment. Certain unallocated corporate amounts consisted primarily of general and administrative expenses, other income (expense) and D&A.

	Three Months Ended March 31, 2016
	Gaming		Lottery		Interactive		Total
Revenue:
Services	$	232.6	$	45.1	$	72.6	$	350.3
Product sales	189.1		8.5		—		197.6
Instant games	—		134.1		—		134.1
Total revenue	421.7		187.7		72.6		682.0
Cost of services (1)	41.2		28.1		25.6		94.9
Cost of product sales (1)	87.8		6.6		—		94.4
Cost of instant games (1)	—		67.0		—		67.0
Selling, general and administrative	67.9		16.5		24.5		108.9
Research and development	38.2		2.6		7.3		48.1
Employee termination and restructuring	1.6		1.1		—		2.7
Depreciation and amortization	141.6		17.8		3.7		163.1
Segment operating income	$	43.4	$	48.0	$	11.5	$	102.9
Unallocated corporate costs							(52.6		)
Consolidated operating income							$	50.3
Earnings from equity investments	$	—	$	3.2	$	—	$	3.2

(1) Exclusive of D&A.

	Three Months Ended March 31, 2015
	Gaming			Lottery		Interactive		Total
Revenue:
Services	$	237.9		$	45.6	$	46.9	$	330.4
Product sales	187.9			11.5		—		199.4
Instant games	—			128.9		—		128.9
Total revenue	425.8			186.0		46.9		658.7
Cost of services (1)	45.5			28.4		16.6		90.5
Cost of product sales (1)	87.8			10.1		—		97.9
Cost of instant games (1)	—			67.0		—		67.0
Selling, general and administrative	74.2			17.1		15.1		106.4
Research and development	39.8			1.6		5.5		46.9
Employee termination and restructuring	4.2			0.2		0.7		5.1
Depreciation and amortization	143.3			21.3		5.1		169.7
Segment operating income	$	31.0		$	40.3	$	3.9	$	75.2
Unallocated corporate costs								(57.1		)
Consolidated operating income								$	18.1
(Loss) earnings from equity investments	$	(0.1	)	$	3.2	$	—	$	3.1

(1) Exclusive of D&A.

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

	Three Months Ended   March 31,
	2016			2015
Business segment operating income	$	102.9		$	75.2
Unallocated corporate costs	(52.6		)	(57.1		)
Consolidated operating income	50.3			18.1
Interest expense	(165.7		)	(164.3		)
Earnings from equity investments	3.2			3.1
Other income (expense), net	0.7			(5.6		)
Net loss before income taxes	$	(111.5	)	$	(148.7	)

In evaluating financial performance, we focus on operating income (loss) as a segment's measure of profit or loss. Segment operating income is income before interest expense, earnings (loss) from equity investments, other income (expense), net, unallocated corporate costs and income taxes. The accounting policies of our 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 2015 Annual Report on Form 10-K.