Redbox 2005 Annual Report Download - page 14

Acquisitions involve risks that could harm our business and impair our ability to realize potential benefits
from such acquisitions.
As part of our business strategy, we have in the past sought and may in the future seek to acquire or invest in
businesses, products or technologies that we feel could complement or expand our business. We may be unable
to adequately address the financial, legal and operational risks raised by acquisitions, which could harm our
business and prevent us from realizing the projected benefits of the acquisitions. Further, the evaluation and
negotiation of potential acquisitions, as well as the integration of an acquired business, will divert management
time and other resources. In addition, we cannot assure you that any particular transaction, even if successfully
completed, will ultimately benefit our business. Certain financial and operational risks related to acquisitions that
may have a material impact on our business are:
• use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions,
• stockholder dilution if an acquisition is consummated through an issuance of our securities,
• amortization expenses related to acquired intangible assets and other adverse accounting consequences,
• costs incurred in identifying and performing due diligence on potential acquisition targets that may or
may not be successful,
• difficulties and expenses in assimilating the operations, products, technology, information systems or
personnel of the acquired company,
• impairment of relationships with employees, retailers and affiliates of our business and the acquired
business,
• the assumption of known and unknown liabilities of the acquired company, including intellectual
property claims,
• entrance into markets in which we have no direct prior experience, and
• impairment of goodwill arising from our acquisitions.
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 new lines of business into our operations. Our operating results have a history of fluctuating. Our future
operating results also may fluctuate based upon several factors, including:
• the transaction fee we charge consumers to use our services,
• 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,
• fluctuations in product cost and of operations caused by various factors including rising petroleum costs,
labor costs and transportation costs,
• 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,
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