Redbox 2003 Annual Report Download - page 43

COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001
NOTE 1: ORGANIZATION AND BUSINESS
General: We were incorporated in the state of Delaware on October 12, 1993. We own and operate the
only multi-national fully-automated network of self-service coin-counting machines. Our machines are installed
primarily in supermarkets across the United States, in Canada and in the United Kingdom. We have relationships
with 18 of the 20 largest supermarket chains (excluding mass merchandisers) in the United States and two of the
three largest chains in the United Kingdom, a well-trained field service organization and a sophisticated, highly
secure and scalable two-way, wide-area communications network.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: The accompanying consolidated financial statements include the accounts of
our North American business and our wholly-owned International business in the United Kingdom. All
significant intercompany balances and transactions have been eliminated in consolidation.
Cash, cash equivalents and cash being processed: We consider all highly liquid securities purchased with
a maturity at purchase of three months or less to be cash equivalents. As of December 31, 2003, we had cash and
cash equivalents of $99.7 million, which consisted of cash, coin and cash equivalents available for our operations
of $38.9 million and cash being processed of $60.8 million. Cash and cash equivalents includes $5.1 million of
coins residing in Coinstar machines or being processed by armored car carriers.
Cash being processed represents coin residing in Coinstar units or being processed by armored car carriers,
which we are specifically obligated to use to settle our accrued liabilities payable to retailers. We have the
contractual right and obligation to pick up and process all coins in our machines, although in certain
circumstances, we may not be able to immediately access the coins until they have been deposited into one of our
regional bank accounts.
Securities available-for-sale: Our investments are classified as available-for-sale and are stated at fair
value in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Our available-for-sale securities have maturities of one year
or less and are reported at fair value based on quoted market prices. Changes in unrealized gains and losses are
reported as a separate component of accumulated other comprehensive income.
Long-lived assets: We periodically review long-lived assets for impairment to determine whether any
events or circumstances indicate that the carrying amount of the assets may not be recoverable. Such review
includes estimating expected future cash flows.
Property and equipment: Property and equipment are depreciated using the straight-line method over the
following useful lives:
Type Of Asset Useful Life
Coinstar units .................................................... 5years
Computers ....................................................... 3years
Office furniture and equipment ...................................... 5years
Leased vehicles ................................................... 3years
Leasehold improvements ........................................... 5to7years
39