Business and Geographic Segments

12 Months Ended

Dec. 31, 2011

Business and Geographic Segments

Business and Geographic Segments

(15) Business and Geographic Segments

        We report our operations in three business segments: Printed Products; Lottery Systems; and Gaming. 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, operating income, capital, lottery and gaming systems expenditures and assets for the years ended (or at) December 31, 2011, 2010 and 2009, respectively, by reportable segments. Corporate expenses and corporate depreciation and amortization are not allocated to the reportable segments and are presented as unallocated corporate costs.

	Year Ended December 31, 2011
	Printed Products		Lottery Systems		Gaming		Totals
Revenue:
Instant tickets	$	493,275	$	—	$	—	$	493,275
Services		—		205,801		125,900		331,701
Sales		9,664		36,528		7,554		53,746
Total revenue		502,939		242,329		133,454		878,722
Cost of instant tickets (1)		281,565		—		—		281,565
Cost of services (1)		—		109,016		62,358		171,374
Cost of sales (1)		5,928		25,134		7,278		38,340
Selling, general and administrative expenses		49,269		23,713		16,408		89,390
Employee termination and restructuring costs		—		—		1,997		1,997
Depreciation and amortization		32,746		46,891		38,435		118,072
Segment operating income	$	133,431	$	37,575	$	6,978	$	177,984
Unallocated corporate costs								94,163
Consolidated operating income							$	83,821
Assets at December 31, 2011	$	922,890	$	727,168	$	498,599
Unallocated assets at December 31, 2011								13,244
Consolidated assets at December 31, 2011							$	2,161,901
Capital, lottery and gaming systems expenditures	$	22,120	$	47,766	$	19,888	$	89,774

(1)

Exclusive of depreciation and amortization.

	Year Ended December 31, 2010
	Printed Products		Lottery Systems		Gaming			Totals
Revenue:
Instant tickets	$	465,090	$	—	$	—		$	465,090
Services		—		199,439		163,699			363,138
Sales		9,222		36,597		8,452			54,271
Total revenue		474,312		236,036		172,151			882,499
Cost of instant tickets (1)		270,787		—		—			270,787
Cost of services (1)		—		104,274		101,760			206,034
Cost of sales (1)		6,981		25,716		5,348			38,045
Selling, general and administrative expenses		46,894		22,973		20,518			90,385
Write-down of assets held for sale		—		—		8,029			8,029
Employee termination and restructuring costs		—		—		602			602
Depreciation and amortization		33,303		64,979		42,983			141,265
Segment operating income (loss)	$	116,347	$	18,094	$	(7,089	)	$	127,352
Unallocated corporate costs									68,616
Consolidated operating income								$	58,736
Assets at December 31, 2010	$	947,736	$	756,593	$	429,003
Unallocated assets at December 31, 2010									18,206
Consolidated assets at December 31, 2010								$	2,151,538
Capital, lottery and gaming systems expenditures	$	19,351	$	47,679	$	41,488		$	108,518

(1)

Exclusive of depreciation and amortization.

	Year Ended December 31, 2009
	Printed Products		Lottery Systems		Gaming			Totals
Revenue:
Instant tickets	$	453,238	$	—	$	—		$	453,238
Services		—		211,015		198,999			410,014
Sales		13,374		46,372		4,751			64,497
Total revenue		466,612		257,387		203,750			927,749
Cost of instant tickets (1)		270,836		—		—			270,836
Cost of services (1)		—		110,660		123,433			234,093
Cost of sales (1)		8,923		32,619		2,997			44,539
Selling, general and administrative expenses		37,411		22,769		24,923			85,103
Write-down of assets held for sale		—		—		54,356			54,356
Employee termination and restructuring costs		2,016		125		433			2,574
Depreciation and amortization		32,982		68,902		49,224			151,108
Segment operating income (loss)	$	114,444	$	22,312	$	(51,616	)	$	85,140
Unallocated corporate costs									83,821
Corporate employee termination costs									1,346
Consolidated operating (loss)								$	(27	)
Assets at December 31, 2009	$	913,767	$	800,825	$	537,731			—
Unallocated assets at December 31, 2009									39,569
Consolidated assets at December 31, 2009								$	2,291,792
Capital, lottery and gaming systems expenditures	$	15,772	$	38,779	$	22,991		$	77,542

(1)

Exclusive of depreciation and amortization.

        In evaluating financial performance, we focus on operating income as a segment's measure of profit or loss. Segment operating income (loss) is income (loss) before other income (expense), net, interest expense, earnings from equity investments, gain (loss) on extinguishment of debt, 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 the reportable segments are the same as those described in the summary of significant accounting policies.

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

	Years Ended December 31,
	2011			2010			2009
Reported segment operating income	$	177,984		$	127,352		$	85,140
Unallocated corporate costs		(94,163	)		(68,616	)		(83,821	)
Corporate employee termination costs		—			—			(1,346	)
Consolidated operating income (loss)		83,821			58,736			(27	)
Interest expense		(104,703	)		(101,613	)		(87,498	)
Other loss		(911	)		(8,594	)		(2,856	)
Earnings from equity investments		29,391			49,090			59,220
Gain (loss) on early extinguishment of debt		(4,185	)		(2,932	)		4,829
Net income (loss) before income taxes	$	3,413		$	(5,313	)	$	(26,332	)

        Sales to international customers originated from the United States amounted to approximately $26,000, $28,000 and $40,000 for the years ended December 31, 2011, 2010 and 2009, respectively. The following represents revenue by customer location and long-lived assets by geographic segment:

	Years Ended December 31,
	2011		2010		2009
Geographic Segments
Revenue:
United States	$	425,665	$	470,639	$	477,175
North America, other than United States		58,103		66,526		53,139
United Kingdom		136,286		87,029		82,628
Europe (1)		183,063		178,578		226,006
Other		75,605		79,727		88,801
Total (2)	$	878,722	$	882,499	$	927,749

	As of December 31,
	2011		2010
Long-lived assets (excluding identifiable intangibles):
United States	$	205,868	$	195,718
North America, other than United States		40,981		47,960
United Kingdom		92,849		115,223
Europe (1)		28,902		26,424
Other		57,888		65,256
Total (3)	$	426,488	$	450,581

(1)

Excluding United Kingdom.

(2)

Total revenues from international customers for the years ended December 31, 2011, 2010 and 2009 were $453,057, $411,860 and $450,514, respectively.

(3)

Total long-lived assets held outside the United States as of December 31, 2011 and 2010 was $220,620 and $254,863, respectively.