Reportable Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Reportable Business Segment Information

Reportable Business Segment Information

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 different 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 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 of our lottery systems operating segment, which provides products and services to lottery operators generally comprised of a central system, customized computer software, data communication services, support and/or related equipment.  Our Gaming business segment includes (1) our gaming operating segment, which generally sells new and used gaming machines, conversion kits and parts, and leases or otherwise provides gaming machines, systems and content, to commercial, tribal and governmental gaming operators and (2) our interactive operating segment, which provides social gaming entertainment and game server services for real money gaming. Additional discussion regarding the products and services from which each reportable business segment derives its revenue is included in Note 1 in our 2013 Annual Report on Form 10-K.

Effective in the fourth quarter of 2013, we revised our business and operating segments to reflect the reorganization of our business following the WMS acquisition and changes in 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. Business segment information for the three months ended March 31, 2013 has been adjusted to reflect this change.

The following tables present revenue, cost of revenue, SG&A, R&D, employee termination and restructuring, D&A, operating income (loss) from continuing operations and earnings (loss) from equity investments by business segment for the three months ended March 31, 2014 and 2013. Certain unallocated expenses managed at the corporate level, comprised primarily of general and administrative costs and other income (expense), net, are not allocated to our business segments.

	Three Months Ended March 31, 2014
	Instant Products		Lottery Systems		Gaming			Total
Revenue:
Instant games	$	126.2	$	—	$	—		$	126.2
Services	—		50.1		126.7			176.8
Product sales	3.1		14.5		67.5			85.1
Total revenue	129.3		64.6		194.2			388.1
Cost of instant games (1)	69.9		—		—			69.9
Cost of services (1)	—		30.4		36.1			66.5
Cost of product sales (1)	2.0		11.7		32.7			46.4
Selling, general and administrative	13.0		5.6		45.9			64.5
Research and development	0.2		0.4		25.3			25.9
Employee termination and restructuring	0.4		—		5.2			5.6
Depreciation and amortization	8.2		14.3		63.7			86.2
Segment operating income (loss) from continuing operations	$	35.6	$	2.2	$	(14.7	)	$	23.1
Unallocated corporate costs								35.2
Consolidated operating loss from continuing operations								$	(12.1	)
Earnings (loss) from equity investments	$	5.4	$	0.4	$	(0.3	)	$	5.5

(1) Exclusive of depreciation and amortization.

	Three Months Ended March 31, 2013
	Instant Products		Lottery Systems		Gaming			Total
Revenue:
Instant games	$	122.8	$	—	$	—		$	122.8
Services	—		47.8		34.0			81.8
Product sales	3.5		6.9		4.6			15.0
Total revenue	126.3		54.7		38.6			219.6
Cost of instant games (1)	68.2		—		—			68.2
Cost of services (1)	—		27.8		18.4			46.2
Cost of product sales (1)	2.5		5.2		2.6			10.3
Selling, general and administrative	12.3		5.3		8.1			25.7
Research and development	0.1		1.4		0.4			1.9
Employee termination and restructuring	0.3		—		—			0.3
Depreciation and amortization	9.0		12.6		11.1			32.7
Segment operating income (loss) from continuing operations	$	33.9	$	2.4	$	(2.0	)	$	34.3
Unallocated corporate costs								23.2
Consolidated operating income from continuing operations								$	11.1
Earnings (loss) from equity investments	$	6.3	$	0.1	$	(0.3	)	$	6.1

(1) Exclusive of depreciation and amortization.

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

	Three Months Ended
	March 31,
	2014			2013
Reportable business segment operating income from continuing operations	$	23.1		$	34.3
Unallocated corporate costs	(35.2		)	(23.2		)
Consolidated operating income (loss) from continuing operations	(12.1		)	11.1
Interest expense	(47.9		)	(25.0		)
Earnings from equity investments	5.5			6.1
Gain on sale of equity interest	14.5			—
Other income (expense), net	2.9			(1.0		)
Net loss from continuing operations before income taxes	$	(37.1	)	$	(8.8	)

In evaluating segment financial performance, we focus on operating income as a segment’s measure of profit or loss. Segment operating income is income before other income (expense), net, interest expense, earnings from equity investments, gain on sale of equity interest, unallocated corporate costs and income taxes. The accounting policies of the business segments are the same as those described in our summary of significant accounting policies (see Note 1 in our 2013 Annual Report on Form 10-K).