Reportable Segment Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Reportable Segment Information

Reportable Segment Information

We report our operations in three business segments —Printed Products, Lottery Systems and Gaming— representing our different products and services.  Each business segment is managed by a separate executive who reports to our Chief Executive Officer (who is the “chief operation decision maker” under applicable accounting standards). Our Printed Products and Lottery Systems business segments represent the aggregation of similar operating segments. Our Printed Products business segment includes our printed products operating segment, which provides instant lottery tickets and related value-added services to lottery operators, and our licensed properties operating segment, which provides licensed brands that are printed on instant lottery tickets and other promotional lottery products.  Our Lottery Systems business segment includes our U.S. lottery systems, international lottery systems, video systems and China lottery operating segments, which operating segments provide similar products and services generally comprised of a central system, customized computer software, data communication services, support and/or related equipment to lottery operators or gaming regulators.  Our Gaming business segment is comprised solely of our gaming operating segment, which generally provides gaming machines, systems and content to commercial gaming operators. The products and services from which each reportable segment derives its revenues are disclosed in Note 1 of the Notes to Consolidated Financial Statements in our 2012 Annual Report on Form 10-K. Certain unallocated expenses managed at the corporate level, comprised primarily of general and administrative costs and other income and expense, are not allocated to our reportable segments. The following tables set forth financial information for the three and nine months ended September 30, 2013 and 2012 by reportable segments. See Note 2 of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q for the impact of our discontinued operations on the results of our Gaming segment for the three and nine months ended September 30, 2013 and 2012.

	Three Months Ended September 30, 2013
	Printed Products		Lottery Systems		Gaming		Total
Revenue:
Instant tickets	$	129,647	$	—	$	—	$	129,647
Services	—		51,167		29,643		80,810
Sales	3,041		17,816		3,093		23,950
Total revenue	132,688		68,983		32,736		234,407
Cost of instant tickets (1)	70,645		—		—		70,645
Cost of services (1)	—		28,436		14,147		42,583
Cost of sales (1)	2,168		9,890		1,253		13,311
Selling, general and administrative	11,549		7,515		5,435		24,499
Employee termination and restructuring costs	—		—		—		—
Depreciation and amortization	9,151		14,887		10,980		35,018
Segment operating income from continuing operations	$	39,175	$	8,255	$	921	$	48,351
Unallocated corporate costs							(22,696		)
Consolidated operating income from continuing operations							$	25,655

(1) Exclusive of depreciation and amortization. 

	Three Months Ended September 30, 2012
	Printed Products		Lottery Systems		Gaming			Total
Revenue:
Instant tickets	$	124,434	$	—	$	—		$	124,434
Services	—		49,391		30,391			79,782
Sales	2,932		12,469		5,020			20,421
Total revenue	127,366		61,860		35,411			224,637
Cost of instant tickets (1)	73,085		—		—			73,085
Cost of services (1)	—		27,852		13,172			41,024
Cost of sales (1)	1,844		6,997		3,943			12,784
Selling, general and administrative	11,430		6,241		8,013			25,684
Employee termination and restructuring costs	287		—		1,530			1,817
Depreciation and amortization	10,426		11,877		13,202			35,505
Segment operating income (loss) from continuing operations	$	30,294	$	8,893	$	(4,449	)	$	34,738
Unallocated corporate costs								(18,233		)
Consolidated operating income from continuing operations								$	16,505

(1) Exclusive of depreciation and amortization.

	Nine Months Ended September 30, 2013
	Printed Products		Lottery Systems		Gaming			Total
Revenue:
Instant tickets	$	378,998	$	—	$	—		$	378,998
Services	—		153,427		94,326			247,753
Sales	10,099		42,619		9,570			62,288
Total revenue	389,097		196,046		103,896			689,039
Cost of instant tickets (1)	210,349		—		—			210,349
Cost of services (1)	—		86,441		48,579			135,020
Cost of sales (1)	7,132		26,450		5,680			39,262
Selling, general and administrative	35,946		21,893		17,716			75,555
Employee termination and restructuring costs	331		—		—			331
Depreciation and amortization	26,963		42,756		40,809			110,528
Segment operating income (loss) from continuing operations	$	108,376	$	18,506	$	(8,888	)	$	117,994
Unallocated corporate costs								(68,758		)
Consolidated operating income from continuing operations								$	49,236

(1) Exclusive of depreciation and amortization.

	Nine Months Ended September 30, 2012
	Printed Products		Lottery Systems		Gaming			Total
Revenue:
Instant tickets	$	367,385	$	—	$	—		$	367,385
Services	—		153,511		98,511			252,022
Sales	8,177		37,446		16,808			62,431
Total revenue	375,562		190,957		115,319			681,838
Cost of instant tickets (1)	211,468		—		—			211,468
Cost of services (1)	—		84,174		43,079			127,253
Cost of sales (1)	5,245		23,681		15,023			43,949
Selling, general and administrative	34,289		19,492		20,418			74,199
Employee termination and restructuring costs	4,794		—		5,074			9,868
Depreciation and amortization	31,242		35,953		33,297			100,492
Segment operating income (loss) from continuing operations	$	88,524	$	27,657	$	(1,572	)	$	114,609
Unallocated corporate costs								(61,779		)
Consolidated operating income from continuing operations								$	52,830

(1) Exclusive of depreciation and amortization.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Reportable segment operating income	$	48,351		$	34,738		$	117,994		$	114,609
Unallocated corporate expenses	(22,696		)	(18,233		)	(68,758		)	(61,779		)
Consolidated operating income	25,655			16,505			49,236			52,830
Interest expense	(25,125		)	(25,990		)	(75,271		)	(75,073		)
Earnings from equity investments	3,381			5,702			13,012			21,462
Loss on early extinguishment of debt	—			(15,464		)	—			(15,464		)
Other (expense) income, net	(45		)	656			(850		)	(30		)
Net income (loss) from continuing operations before income taxes	$	3,866		$	(18,591	)	$	(13,873	)	$	(16,275	)

In evaluating financial performance, we focus on operating income as a segment’s measure of profit or loss. Segment operating income is income before unallocated corporate expenses, interest expense, earnings from equity investments, other income (expense) and income taxes. The accounting policies of the reportable segments are the same as those described in our summary of significant accounting policies (see Note 1 of the Notes to Consolidated Financial Statements in our 2012 Annual Report on Form 10-K).