Acquisitions

9 Months Ended

Sep. 30, 2011

Acquisitions

Acquisitions

(14) Acquisitions

On April 26, 2011 we entered into a purchase agreement to acquire all of the issued shares of Barcrest Group Limited, a U.K. company, and Cyberview Technology CZ s.r.o., a company incorporated in the Czech Republic (collectively, “Barcrest”), a leading supplier of gaming content and machines in Europe, from subsidiaries of International Game Technology for approximately £33,000 in cash (subject to certain adjustments), plus up to approximately £2,000 in deferred consideration, the payment of which was subject to the satisfaction of certain conditions relating to a third-party contract. On September 23, 2011, we completed the acquisition for approximately £31,406 (or approximately $48,400) in cash, subject to certain post-closing adjustments.  The £2,000 in deferred consideration will not be payable as the conditions relating to the third-party contract were not satisfied.  Barcrest is being integrated into our gaming divisions.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date based on a preliminary purchase price allocation, which is subject to change based on a final purchase price allocation that is expected to be completed in the fourth quarter of 2011:

At Sepember 23, 2011
Cash and cash equivalents	$	1,900
Accounts receivable, net of allowance of doubtful accounts of approximately $2,000 as of September 23, 2011	21,300
Inventories	10,300
Prepaid expenses, deposits and other current assets	1,000
Property and equipment	15,500
Deferred income taxes	700
Intangible assets	12,000
Total identifiable assets acquired	62,700
Accounts Payable	7,700
Accrued Liabilities	8,600
Total liabilities assumed	—
Net identifiable assets acquired	46,400
Goodwill	2,000
Net assets acquired	$	48,400

Of the approximate $12,000 of acquired intangible assets, approximately $900 was allocated to trade names, and not subject to amortization. The remaining $11,100 of intangible assets includes customer lists of approximately $5,700 (with a four-year weighted average useful life) and intellectual property of approximately $5,400 (with a 4.5-year weighted average useful life).

The approximate $2,000 of goodwill was assigned to our Diversified Gaming segment. None of the goodwill is expected to be deductible for income tax purposes.

The Company recognized approximately $1,700 and $4,300 of acquisition-related costs that were expensed in the three and nine months ended September 30, 2011, respectively. These costs are included in selling, general and administrative expenses in our Consolidated Statements of Operations.

Barcrest service and sales revenue for the period September 23, 2011 (date of acquisition) through September 30, 2011 was approximately $800 and $2,000, respectively. Barcrest net income was approximately $400 for the same period.

The following represents our unaudited pro forma revenue and net income (loss) for the three and nine months ended September 30, 2010 and 2011, as if the acquisition of Barcrest had occurred on January 1, 2010.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2010		2011			2010		2011
Revenue (1)	$	242,300	$	236,500		$	723,900	$	682,900
Net income (loss) (2) (3)	$	12,300	$	(4,000	)	$	15,900	$	(1,500	)

(1)	Pro forma adjustment made to eliminate intercompany revenue and costs of approximately $1,300 and $200 recorded for the three months ended September 30, 2011 and 2010, respectively. Pro forma adjustment made to eliminate intercompany revenue and costs of approximately $3,200 and $500 for the nine months ended September 30, 2011 and 2010, respectively.
(2)	Pro forma adjustment made to capitalize development costs in accordance with the Company’s accounting policies including approximately $600 and $500 for the three months ended September 30, 2011 and 2010 , respectively, and approximately $1,700 for the nine months ended September 30, 2011 and 2010.
(3)	Pro forma adjustment made to relect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to intangible assets have been applied on January 1, 2010 including approximately $800 and $700 for the three months ended September 30, 2011 and 2010, respectively and approximately $2,300 and $2,200 for the nine months ended September 30, 2011 and 2010, respectively.