Redbox 2004 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2004 Redbox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 64

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64

8
to obtain necessary licenses from others at a reasonable cost or at all. For example, we have from time to time engaged in
discussions with a former supplier, ScanCoin AB, in an effort to clarify certain contract rights and obligations as well as
ownership of certain of our intellectual property. In addition, if we instigate litigation to enforce our patents or protect our
other proprietary rights, or to determine the validity and scope of other parties’ proprietary rights, such litigation could cause
us to spend significant financial and management resources.
Our future operating results may fluctuate.
Our future operating results will depend significantly on our ability to continue to drive new and repeat consumer
utilization of our coin-counting services and entertainment services equipment, our ability to develop and commercialize new
products and services and the costs incurred to do so, and our ability to successfully integrate our entertainment business into
our operations. Our operating results have a history of fluctuating and may fluctuate in the future. Our future operating results
also may fluctuate based upon many other factors, including:
• the transaction fee we charge consumers to use our service,
• the amount of service fees that we pay to our retail partners,
• our ability to establish or maintain relationships with significant retail partners,
• the commercial success of our retail partners, which could be affected by such factors as severe weather, strikes or
general economic conditions,
• fluctuations in revenue generated by our coin-counting and entertainment services equipment,
• our ability to effectively manage the product mix of our entertainment services equipment to maximize consumer
preferences,
• fluctuations in interest rates, which affects our debt service obligations,
• the timing of, and our ability to develop and successfully commercialize, product enhancements and new products,
• the level of product and price competition,
• our success in maintaining and expanding our network and managing our growth,
• the successful operation of our coin-counting network,
• activities of and acquisitions or announcements by competitors,
• the impact from any impairment of goodwill related to our acquisitions,
• fluctuations in consumer spending patterns, and
• relationships with manufacturers and suppliers.
In addition, we have historically experienced seasonality in our coin services business, with highest revenues
experienced in the third calendar quarter, followed by the fourth calendar quarter, and relatively lower revenues in the first
half of the year. Our entertainment business has also experienced seasonality, with peak revenues in the fourth quarter and
periods surrounding the Easter holiday season. While our acquisition of the entertainment business may impact the historical
seasonality of the coin-counting business to some degree, we expect our results of operations will continue to fluctuate both
as a result of seasonal fluctuations and our revenue mix between relatively higher margin coin and e-payment services and
relatively lower margin entertainment services.
We depend upon third-party manufacturers, suppliers and service providers.
We currently conduct limited manufacturing operations and depend, and will continue to depend, on outside parties to
manufacture our coin-counting machines and key components of our coin-counting and entertainment services machines. We
intend to continue to expand our installed base for coin-counting machines in North America and in the United Kingdom and
for entertainment services machines in the United States and Mexico. Such expansion may be limited by the manufacturing
capacity of our third-party manufacturers and suppliers. Third-party manufacturers may not be able to meet our
manufacturing needs in a satisfactory and timely manner. If there is an unanticipated increase in demand for coin-counting
machine or entertainment services equipment installations, we may be unable to meet such demand due to manufacturing
constraints.