Business Segments

6 Months Ended

Jun. 30, 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 from equity investments for the three and six months ended June 30,2016 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 June 30, 2016
	Gaming		Lottery		Interactive		Total
Revenue:
Services	$	236.0	$	44.1	$	83.4	$	363.5
Product sales	205.9		8.9		—		214.8
Instant games	—		150.9		—		150.9
Total revenue	441.9		203.9		83.4		729.2
Operating expenses:
Cost of services (1)	44.4		26.8		30.2		101.4
Cost of product sales (1)	93.4		7.3		—		100.7
Cost of instant games (1)	—		74.1		—		74.1
Selling, general and administrative	61.2		17.8		26.8		105.8
Research and development	38.5		2.6		8.4		49.5
Employee termination and restructuring	3.4		0.2		0.5		4.1
Depreciation and amortization	154.3		17.2		3.8		175.3
Segment operating income	$	46.7	$	57.9	$	13.7	$	118.3
Unallocated corporate costs							(59.2		)
Consolidated operating income							$	59.1
Earnings from equity investments	$	1.4	$	6.6	$	—	$	8.0

(1) Exclusive of D&A.

	Three Months Ended June 30, 2015
	Gaming			Lottery		Interactive		Total
Revenue:
Services	$	240.4		$	45.9	$	51.6	$	337.9
Product sales	209.3			8.8		—		218.1
Instant games	—			135.5		—		135.5
Total revenue	449.7			190.2		51.6		691.5
Operating expenses:
Cost of services (1)	53.1			27.5		18.0		98.6
Cost of product sales (1)	100.9			7.0		—		107.9
Cost of instant games (1)	—			68.8		—		68.8
Selling, general and administrative	71.2			16.4		15.2		102.8
Research and development	41.1			1.5		5.4		48.0
Employee termination and restructuring	2.7			—		0.3		3.0
Depreciation and amortization	181.5			20.0		5.4		206.9
Segment operating (loss) income	$	(0.8	)	$	49.0	$	7.3	$	55.5
Unallocated corporate costs								(55.6		)
Consolidated operating loss								$	(0.1	)
Earnings from equity investments	$	1.8		$	1.5	$	—	$	3.3

(1) Exclusive of D&A.

	Six Months Ended June 30, 2016
	Gaming		Lottery		Interactive		Total
Revenue:
Services	$	468.6	$	89.2	$	156.0	$	713.8
Product sales	395.0		17.4		—		412.4
Instant games	—		285.0		—		285.0
Total revenue	863.6		391.6		156.0		1,411.2
Operating expenses:
Cost of services (1)	85.6		54.9		55.8		196.3
Cost of product sales (1)	181.2		13.9		—		195.1
Cost of instant games (1)	—		141.1		—		141.1
Selling, general and administrative	129.1		34.3		51.3		214.7
Research and development	76.7		5.2		15.7		97.6
Employee termination and restructuring	5.0		1.3		0.5		6.8
Depreciation and amortization	295.9		35.0		7.5		338.4
Segment operating income	$	90.1	$	105.9	$	25.2	$	221.2
Unallocated corporate costs							(111.8		)
Consolidated operating income							$	109.4
Earnings from equity investments	$	1.4	$	9.8	$	—	$	11.2

(1) Exclusive of D&A.

	Six Months Ended June 30, 2015
	Gaming		Lottery		Interactive		Total
Revenue:
Services	$	478.3	$	91.5	$	98.5	$	668.3
Product sales	397.2		20.3		—		417.5
Instant games	—		264.4		—		264.4
Total revenue	875.5		376.2		98.5		1,350.2
Operating expenses:
Cost of services (1)	98.6		55.9		34.6		189.1
Cost of product sales (1)	188.7		17.1		—		205.8
Cost of instant games (1)	—		135.8		—		135.8
Selling, general and administrative	145.4		33.5		30.3		209.2
Research and development	80.9		3.1		10.9		94.9
Employee termination and restructuring	6.9		0.2		1.0		8.1
Depreciation and amortization	324.8		41.3		10.5		376.6
Segment operating income	$	30.2	$	89.3	$	11.2	$	130.7
Unallocated corporate costs							(112.7		)
Consolidated operating income							$	18.0
Earnings from equity investments	$	1.7	$	4.7	$	—	$	6.4

(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   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Business segment operating income	$	118.3		$	55.5		$	221.2		$	130.7
Unallocated corporate costs	(59.2		)	(55.6		)	(111.8		)	(112.7		)
Consolidated operating income (loss)	59.1			(0.1		)	109.4			18.0
Interest expense	(165.3		)	(166.4		)	(331.0		)	(330.7		)
Earnings from equity investments	8.0			3.3			11.2			6.4
Gain on early extinguishment of debt	25.2			—			25.2			—
Other income (expense), net	1.7			(4.3		)	2.4			(9.9		)
Net loss before income taxes	$	(71.3	)	$	(167.5	)	$	(182.8	)	$	(316.2	)

In evaluating financial performance, we focus on operating income (loss) as a segment's measure of profit or loss. 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.