Reportable Segment Information

9 Months Ended

Sep. 30, 2011

Reportable Segment Information

Reportable Segment Information

(2) Reportable Segment Information

We operate in three reportable segments: Printed Products Group, Lottery Systems Group, and Diversified Gaming Group. During the first quarter of 2011 we reviewed the allocation of overhead expenses to our reportable segments as a result of the realignment of our management structure. Based on this review, we determined to no longer allocate certain overhead expenses to our reportable segments. This change, which was effective January 1, 2011, had no impact on the Company’s consolidated balance sheets or its statements of operations, cash flows or changes in stockholders’ equity for any periods. Prior period reportable segment information has been adjusted to reflect the change in reportable segment reporting.

The following tables set forth revenue, cost of revenue, depreciation, amortization, selling, general and administrative expenses, write-down of assets held for sale, employee termination and restructuring costs, and operating income for the three and nine months ended September 30, 2011 and 2010, by reportable segments. Corporate expenses, including interest expense, other (income) expense and corporate depreciation and amortization, are not allocated to the reportable segments and are presented as unallocated corporate costs.

	Three Months Ended September 30, 2011
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals
Revenue:
Instant tickets	$	126,693	$	—	$	—	$	126,693
Services	—		49,944		31,485		81,429
Sales	2,953		9,640		2,024		14,617
Total revenue	$	129,646	$	59,584	$	33,509	$	222,739
Cost of instant tickets (1)	$	71,785	$	—	$	—	$	71,785
Cost of services (1)	—		26,899		15,663		42,562
Cost of sales (1)	1,906		6,813		1,613		10,332
Selling, general and administrative expenses	13,029		6,626		4,238		23,893
Employee termination and restructuring costs	—		—		1,030		1,030
Depreciation and amortization	8,177		11,939		7,744		27,860
Segment operating income	$	34,749	$	7,307	$	3,221	$	45,277
Unallocated corporate costs							23,901
Consolidated operating income							$	21,376

(1) Exclusive of depreciation and amortization.

	Three Months Ended September 30, 2010
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals
Revenue:
Instant tickets	$	115,968	$	—	$	—	$	115,968
Services	—		46,630		46,183		92,813
Sales	1,024		6,141		5,115		12,280
Total revenue	$	116,992	$	52,771	$	51,298	$	221,061
Cost of instant tickets (1)	$	67,138	$	—	$	—	$	67,138
Cost of services (1)	—		26,450		31,273		57,723
Cost of sales (1)	954		4,063		2,960		7,977
Selling, general and administrative expenses	10,269		5,772		6,117		22,158
Write-down of assets held for sale	—		—		2,155		2,155
Employee termination and restructuring costs	—		—		602		602
Depreciation and amortization	8,184		10,969		8,005		27,158
Segment operating income	$	30,447	$	5,517	$	186	$	36,150
Unallocated corporate costs							14,403
Consolidated operating income							$	21,747

(1) Exclusive of depreciation and amortization.

	Nine Months Ended September 30, 2011
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals
Revenue:
Instant tickets	$	370,972	$	—	$	—	$	370,972
Services	—		150,356		86,916		237,272
Sales	6,810		22,447		2,142		31,399
Total revenue	$	377,782	$	172,803	$	89,058	$	639,643
Cost of instant tickets (1)	$	211,151	$	—	$	—	$	211,151
Cost of services (1)	—		79,087		43,857		122,944
Cost of sales (1)	4,150		15,585		1,648		21,383
Selling, general and administrative expenses	36,521		16,422		10,800		63,743
Employee termination and restructuring costs	—		—		1,030		1,030
Depreciation and amortization	24,745		35,185		27,581		87,511
Segment operating income	$	101,215	$	26,524	$	4,142	$	131,881
Unallocated corporate costs							67,288
Consolidated operating income							$	64,593

(1) Exclusive of depreciation and amortization.

	Nine Months Ended September 30, 2010
	Printed Products Group		Lottery Systems Group		Diversified Gaming Group		Totals
Revenue:
Instant tickets	$	343,506	$	—	$	—	$	343,506
Services	—		148,334		139,193		287,527
Sales	6,625		24,518		8,257		39,400
Total revenue	$	350,131	$	172,852	$	147,450	$	670,433
Cost of instant tickets (1)	$	199,282	$	—	$	—	$	199,282
Cost of services (1)	—		78,760		88,576		167,336
Cost of sales (1)	4,931		17,708		5,204		27,843
Selling, general and administrative expenses	32,239		18,011		17,671		67,921
Write-down of assets held for sale	—		—		8,029		8,029
Employee termination and restructuring costs	—		—		602		602
Depreciation and amortization	25,150		32,622		23,872		81,644
Segment operating income	$	88,529	$	25,751	$	3,496	$	117,776
Unallocated corporate costs							47,995
Consolidated operating income							$	69,781

(1) Exclusive of depreciation and amortization.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Reported segment operating income	$	45,277		$	36,150		$	131,881		$	117,776
Unallocated corporate costs	(23,901		)	(14,403		)	(67,288		)	(47,995		)
Consolidated operating income	21,376			21,747			64,593			69,781
Interest expense	(26,297		)	(24,617		)	(79,161		)	(74,176		)
Earnings from equity investments	8,895			13,031			27,469			42,474
(Loss) on early extinguishment of debt	(4,185		)	(2,236		)	(4,185		)	(2,236		)
Other income (expense), net	(1,711		)	3,011			159			(9,555		)
Income (loss) before income taxes	$	(1,922	)	$	10,936		$	8,875		$	26,288

In evaluating financial performance, we focus on operating income as a segment’s measure of profit or loss. Segment operating income is income before other income (expense), net, interest expense, earnings from equity investments, loss on early extinguishment of debt, unallocated corporate expenses and income taxes. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (see Note 1 of the Notes to Consolidated Financial Statements in our 2010 Annual Report on Form 10-K).