Property and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property and equipment, including assets under capital leases, consist of the following:



	As of December 31,
	2012			2011
Machinery, equipment and deferred installation costs	$	717,197		$	661,733
Land and buildings	68,449			65,379
Transportation equipment	3,261			3,490
Furniture and fixtures	18,634			12,679
Leasehold improvements	13,304			12,864
Construction in progress	27,777			32,384
Property and equipment, at cost	848,622			788,529
Less: accumulated depreciation	(471,745		)	(362,041		)
Net property and equipment	$	376,877		$	426,488

Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was approximately $122,600, $76,900 and $99,700, respectively. Cost for equipment associated with specific lottery and gaming contracts not yet placed into service are recorded as construction in progress and not depreciated. When the equipment is placed into service the related costs are transferred from construction in progress to machinery and equipment, and we commence depreciation. Depreciation expense is excluded from cost of sales and other operating expenses and is separately stated with amortization expense on the Consolidated Statements of Operations and Comprehensive Income.

As noted in Note 1 (Description of the Business and Summary of Significant Accounting Policies), we assess the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the expected net future undiscounted cash flows to be generated by that asset. If it is determined an impairment has occurred, the amount of the impairment recorded is equal to the excess of the asset's carrying value over its estimated fair value which is generally derived from a discounted cash flow model.

During the fourth quarter of 2012, we recorded long-lived asset impairments of approximately $5,800 related to underperforming U.S. Lottery Systems contracts. See Note 14 (Fair Value Measurements) for additional information. There were no long-lived asset impairment charges recorded as of December 31, 2011. During 2010, we recorded long-lived asset impairment charges of approximately $17,500 related to underperforming U.S. Lottery Systems contracts. During the fourth quarter of 2010, we also recorded an impairment charge of approximately $3,000 related to obsolete Lottery Systems equipment. These impairment charges are included in depreciation and amortization expense in our Consolidated Statements of Operations and Comprehensive Income for the respective years ended December 31, 2012 and 2011 and in accumulated depreciation in our Consolidated Balance Sheet as of December 31, 2012 and 2011, respectively.

In 2012, we recorded long-lived asset impairments of approximately $27,400 related to a write-down of certain undeployed gaming terminals, approximately $3,100 related to the write-down of certain hardware development costs in our licensed properties business and approximately $3,400 related to the reorganization of our Australia printing operations. We recorded accelerated depreciation expense of $6,400 and $8,300 in 2011 and 2010, respectively, as a result of our migration to a new platform technology. We also recorded long-lived asset impairments of approximately $2,500 in 2010 related to obsolete gaming terminals. These impairments are included in depreciation and amortization expense in our Consolidated Statements of Operations and Comprehensive Income for the respective years ended December 31, 2012, 2011 and 2010 and included in accumulated depreciation in our Consolidated Balance Sheets as of December 31, 2012 and 2011, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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