Acquisitions and Dispositions

Acquisitions

On October 18, 2013, pursuant to the terms of the previously announced merger agreement, dated as of January 30, 2013, the Company completed the acquisition of WMS Industries Inc. ("WMS") through the merger of SG California Merger Sub, Inc. with and into WMS, with WMS continuing as the surviving corporation. As a result of the merger, WMS became a wholly owned subsidiary of the Company. At the effective time of the merger, each share of WMS’s common stock, par value $0.50, issued and outstanding immediately prior to such time, other than shares of WMS common stock owned by WMS (which were cancelled), was automatically cancelled and converted into the right to receive $26.00 per share in cash, without interest.

In addition, at the effective time of the merger, each outstanding WMS stock option, restricted share, restricted stock unit, phantom unit and performance unit (except for certain equity awards that were granted by WMS following January 30, 2013, which were converted into equivalent Company equity awards using a customary exchange ratio) was cancelled in exchange for the right of the holder to receive a lump sum cash payment calculated in accordance with the terms of the merger agreement. The aggregate amount paid by the Company in respect of WMS common stock, stock options, restricted shares, restricted units, phantom units and performance units was approximately $1,500,000. For additional information regarding the merger, please see the full text of the merger agreement, a copy of which is attached as Exhibit 2.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on February 5, 2013, and our Current Report on Form 8-K filed with the SEC on October 18, 2013.

In connection with the merger, the Company and certain of its subsidiaries entered into senior secured credit facilities in an aggregate principal amount of $2,600,000, consisting of a $300,000 revolving credit facility and a $2,300,000 term loan facility, pursuant to a credit agreement, dated as of October 18, 2013. The term loan facility was used, in part, to finance the consideration paid in the merger, to pay off indebtedness under our and WMS's prior credit agreements and to pay related acquisition and financing fees and expenses. For additional information regarding our new credit facilities, see Note 8 of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

We will account for the acquisition of WMS as a business combination in accordance with ASC 805, Business Combinations, and expect that WMS will be included in our Gaming segment. Due to the limited time since the acquisition date, the information required for allocating the purchase price to the fair values of the assets purchased, liabilities assumed and other intangibles identified as of the acquisition date is not yet available. As a result, we are unable as of the date of this Quarterly Report on Form 10-Q to provide the pro forma revenue and earnings of the combined entity. We will include the pro forma financial information and other information required by Item 9.01 of Form 8-K in an amendment to our Current Report on Form 8-K filed with the SEC on October 18, 2013 not later than 71 calendar days after October 24, 2013, the date by which our Current Report on Form 8-K announcing the closing of the acquisition was required to be filed.

In July 2012, we acquired substantially all of the assets of Parspro.com ehf ("Parspro") for approximately $11,800. Parspro is a provider of sports betting systems and related products via point of sale terminals, the internet and mobile devices. Approximately $9,900 of the $11,800 purchase price was in excess of the fair value of the acquired net assets and has been allocated to goodwill. The acquired assets include technology that we have integrated into our Lottery Systems business and our interactive games platform as part of an expanded service offering to lottery customers. The operating results of Parspro have been included in our Lottery Systems segment and have been consolidated in our results of operations since the date of acquisition. Had the operating results of Parspro been included as if the transaction was consummated on January 1, 2011, our pro forma results of operations for the years ended December 31, 2012 and 2011 would not have been materially different.

In June 2012, we acquired 100% of the equity interests of Provoloto for approximately $9,720, subject to certain adjustments, including an estimated earn-out payable to the sellers of approximately $2,000 contingent on the future performance of the acquired business. Provoloto develops and distributes instant lottery tickets and manages instant ticket lotteries for Mexican charities. Approximately $5,100 of the $9,720 purchase price was in excess of the fair value of the acquired net assets and has been allocated to goodwill. The operating results of Provoloto have been included in our Printed Products segment and have been consolidated in our results of operations since the date of acquisition. Had the operating results of Provoloto been included as if the transaction was consummated on January 1, 2011, our pro forma results of operations for the years ended December 31, 2012 and 2011 would not have been materially different.

In June 2012, we acquired ADS/Technology and Gaming, Ltd. ("ADS") for £3,450, subject to certain adjustments. ADS provides maintenance and other services for LBOs in the U.K. Approximately £2,200 of the £3,450 purchase price was in excess of the fair value of the acquired net assets and has been allocated to goodwill. The operating results of ADS have been included in our Gaming segment and have been consolidated in our results of operations since the date of acquisition. Had the operating results of ADS been included as if the transaction was consummated on January 1, 2011, our pro forma results of operations for the years ended December 31, 2012 and 2011 would not have been materially different.

Dispositions

On March 25, 2013, we completed the sale of our installed base of gaming terminals in our pub business to Gamestec, for a purchase price of £534. The revenue and expenses of the discontinued pub operations for the three and nine months ended September 30, 2013 and 2012 were as follows:



	Three Months Ended
	September 30,
	2013			2012
Revenue:
Services	$	2		$	2,840

Operating expenses:
Cost of services (1)	84			1,923
Selling, general and administrative expenses	29			616
Employee termination and restructuring costs	—			13
Depreciation and amortization	—			3,586

Loss from discontinued operations	(111		)	(3,298		)

Other expense, net	—			(119		)
Income tax benefit	26			837

Net loss from discontinued operations	$	(85	)	$	(2,580	)

(1) Exclusive of depreciation and amortization



	Nine Months Ended
	September 30,
	2013			2012
Revenue:
Services	$	1,763		$	9,521

Operating expenses:
Cost of services (1)	2,976			6,826
Selling, general and administrative expenses	983			2,197
Employee termination and restructuring costs	—			883
Depreciation and amortization	597			7,904

Loss from discontinued operations	(2,793		)	(8,289		)

Other expense, net	(46		)	(63		)
Gain on sale of assets	828			—
Income tax benefit	468			2,046

Net loss from discontinued operations	$	(1,543	)	$	(6,306	)

(1) Exclusive of depreciation and amortization

On October 5, 2010, we completed the sale of the racing and venue management business (the "Racing Business") to Sportech Plc ("Sportech"). As part of the purchase price, Sportech agreed to make a cash payment to us on September 30, 2013 of $10,000 plus interest, which was included in notes receivable in our Consolidated Balance Sheets as of December 31, 2012. The payment was received in September 2013 and is reflected as proceeds from sale of Racing Business in our Consolidated Statement of Cash Flows for the nine months ended September 30, 2013.