Business and Geographic Segments

We report our operations in three business segments—Instant Products, Lottery Systems and Gaming—representing our different products and services. These are our reportable segments under ASC 280, Segment Reporting. The Instant Products and Lottery Systems business segments are managed by one executive and the Gaming business segment is managed by a separate executive, both of whom report to our chief executive officer (who is our "chief operating decision maker" under applicable accounting standards). Our three business segments represent the aggregation of similar operating segments. Our Instant Products business segment is comprised solely of our instant products operating segment, which provides instant lottery games and related value-added services, as well as licensed brands that are printed on instant lottery games and other promotional lottery products. Our Lottery Systems business segment is comprised solely of our lottery systems operating segment, which provides products and services generally comprised of a central system, customized computer software, data communication services, support and/or related equipment to lottery operators. Our Gaming business segment includes our gaming operating segment, which generally sells new and used gaming machines, conversion kits and parts, and leases or otherwise provides gaming machines, server-based systems and content, to commercial, tribal and governmental gaming operators. Our interactive operating segment, which provides social gaming entertainment and remote game server services for real money gaming, is aggregated within our Gaming business segment. The products and services from which each reportable segment derives its revenues are disclosed in Note 1 (Description of the Business and Summary of Significant Accounting Policies).

Effective in the fourth quarter of 2013, we revised our operating segments to reflect the re-organization of our business following the WMS acquisition and the financial information regularly reviewed by our chief executive officer. Based on that review, we moved our video systems operating segment from the Lottery Systems business segment to the Gaming business segment. This change, which was effective as of December 31, 2013, had no impact on the Company's consolidated financial statements for any periods. Prior-period reportable segment information for the years ended December 31, 2012 and 2011 has been adjusted to reflect this change.

The following tables present revenue, cost of revenue, SG&A, R&D, employee termination and restructuring costs, depreciation and amortization, operating income (loss) from continuing operations, lottery and gaming capital expenditures and assets for the years ended (or at) December 31, 2013, 2012 and 2011, respectively, by reportable segments. 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.



	Year Ended December 31, 2013
	Instant Products		Lottery Systems			Gaming			Totals
Revenue:
Instant games	$	516.0	$	—		$	—		$	516.0
Services	—		203.2			211.8			415.0
Product sales	13.5		57.7			88.7			159.9
Total revenue	529.5		260.9			300.5			1,090.9
Cost of instant games (1)	285.1		—			—			285.1
Cost of services (1)	—		113.8			89.3			203.1
Cost of product sales (1)	9.3		37.8			56.4			103.5
Selling, general and administrative	48.2		22.5			97.2			167.9
Research and development	0.9		4.6			20.5			26.0
Employee termination and restructuring	4.7		0.4			8.6			13.7
Depreciation and amortization	38.5		56.0			106.6			201.1
Segment operating income (loss) from continuing operations	$	142.8	$	25.8		$	(78.1	)	$	90.5
Unallocated corporate costs									108.8
Consolidated operating loss									$	(18.3	)
Earnings (loss) from equity investments	$	19.3	$	(5.7	)	$	(12.1	)	$	1.5
Assets at December 31, 2013	$	1,146.5	$	455.0		$	2,427.4
Unallocated assets at December 31, 2013									213.0
Consolidated assets at December 31, 2013									$	4,241.9
Lottery and gaming capital expenditures	$	38.3	$	40.7		$	79.0		$	158.0

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(1)	Exclusive of depreciation and amortization.



	Year Ended December 31, 2012
	Instant Products		Lottery Systems		Gaming			Totals
Revenue:
Instant games	$	493.6	$	—	$	—		$	493.6
Services	—		201.1		139.2			340.3
Product sales	11.6		51.9		31.2			94.7
Total revenue	505.2		253.0		170.4			928.6
Cost of instant games (1)	282.5		—		—			282.5
Cost of services (1)	—		109.6		61.1			170.7
Cost of product sales (1)	7.6		35.4		22.1			65.1
Selling, general and administrative	45.2		20.2		28.8			94.2
Research and development	0.4		4.1		2.1			6.6
Employee termination and restructuring	5.9		—		4.7			10.6
Depreciation and amortization	41.0		51.6		57.7			150.3
Segment operating income (loss) from continuing operations	$	122.6	$	32.1	$	(6.1	)	$	148.6
Unallocated corporate costs								85.7
Consolidated operating income								$	62.9
Earnings from equity investments	$	23.4	$	1.7	$	3.0		$	28.1
Assets at December 31, 2012	$	971.2	$	673.8	$	504.6
Unallocated assets at December 31, 2012								37.3
Consolidated assets at December 31, 2012								$	2,186.9
Lottery and gaming capital expenditures	$	26.4	$	39.6	$	42.5		$	108.5

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(1)	Exclusive of depreciation and amortization.



	Year Ended December 31, 2011
	Instant Products		Lottery Systems		Gaming		Totals
Revenue:
Instant games	$	493.3	$	—	$	—	$	493.3
Services	—		197.4		121.5		318.9
Product sales	9.6		32.9		11.2		53.7
Total revenue	502.9		230.3		132.7		865.9
Cost of instant games (1)	281.6		—		—		281.6
Cost of services (1)	—		105.8		56.0		161.8
Cost of product sales (1)	5.9		24.0		8.4		38.3
Selling, general and administrative	48.7		18.5		11.5		78.7
Research and development	0.5		3.2		2.4		6.1
Employee termination and restructuring	—		—		2.0		2.0
Depreciation and amortization	32.8		44.4		33.8		111.0
Segment operating income from continuing operations	$	133.4	$	34.4	$	18.6	$	186.4
Unallocated corporate costs							94.2
Consolidated operating income							$	92.2
Earnings from equity investments	$	26.6	$	2.8	$	—	29.4
Assets at December 31, 2011	$	945.4	$	688.9	$	514.4
Unallocated assets at December 31, 2011							13.2
Consolidated assets at December 31, 2011							$	2,161.9
Lottery and gaming capital expenditures	$	22.1	$	45.2	$	22.5	$	89.8

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(1)	Exclusive of depreciation and amortization.

In evaluating financial performance, we focus on operating (loss) income from continuing operations as a segment's measure of profit or loss. Segment operating (loss) income from continuing operations is (loss) income before interest expense, earnings from equity investments (net of impairment), loss on extinguishment of debt, other (expense) income, net, unallocated corporate costs and income taxes. Certain corporate assets consisting of cash, prepaid expenses, and property, plant and equipment are not allocated to the segments. The accounting policies of our reportable segments are the same as those described above in the summary of significant accounting policies.

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



	Years Ended December 31,
	2013			2012			2011
Reported segment operating income from continuing operations	$	90.5		$	148.6		$	186.4
Unallocated corporate costs	(108.8		)	(85.7		)	(94.2		)
Consolidated operating (loss) income	(18.3		)	62.9			92.2
Interest expense	(119.5		)	(100.0		)	(104.7		)
Earnings from equity investments	1.5			28.1			29.4
Loss on early extinguishment of debt	(5.9		)	(15.5		)	(4.2		)
Other (expense) income, net	(1.1		)	1.3			(0.1		)
Net (loss) income from continuing operations before income taxes	$	(143.3	)	$	(23.2	)	$	12.6

Sales to international customers originating from the U.S. were $18.5 million, $16.6 million and $26.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. The following tables present revenue by customer location and long-lived assets by geographic segment:



	Years Ended December 31,
	2013		2012		2011
Revenue:
United States	$	559.8	$	445.2	$	425.7
North America, other than United States	74.2		66.1		58.1
United Kingdom	157.5		163.7		123.5
Europe, other than the United Kingdom	213.2		187.6		183.0
Other	86.2		66.0		75.6
Total (1)	$	1,090.9	$	928.6	$	865.9



	As of December 31,
	2013		2012
Long-lived assets (excluding identifiable intangibles):
United States	$	579.8	$	192.7
North America, other than United States	47.5		46.5
United Kingdom	85.2		65.8
Europe, other than the United Kingdom	19.6		25.1
Other	40.5		46.8
Total (2)	$	772.6	$	376.9

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(1)	Total revenue from international customers for the years ended December 31, 2013, 2012 and 2011 was $531.1 million, $483.4 million and $440.2 million, respectively.


(2)	Total long-lived assets held outside the United States as of December 31, 2013 and 2012 was $192.8 million and $184.2 million, respectively.