Redbox 2005 Annual Report Download - page 18

In addition, the securities markets have experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. These market fluctuations may also seriously
harm the market price of our common stock.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our
financial results or prevent fraud.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent
or detect fraud. Any inability to provide reliable financial reports or prevent or detect fraud could harm our
business. We continue to evaluate our internal control procedures to satisfy the requirements of the Sarbanes-
Oxley Act of 2002, which requires management and our auditors to evaluate and assess the effectiveness of our
internal controls. If we fail to maintain the adequacy of our internal controls, as such standards are modified,
supplemented or amended from time to time, we could be subject to regulatory scrutiny, civil or criminal
penalties or shareholder litigation. In addition, failure to maintain adequate internal controls could result in
financial statements that do not accurately reflect our financial condition.
Our anti-takeover mechanisms may affect the price of our common stock and make it harder for a third party
to acquire us without the consent of our board of directors.
We have implemented anti-takeover provisions that may discourage takeover attempts and depress the
market price of our stock. Provisions in our certificate of incorporation, bylaws and rights plan could make it
more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. Delaware
law also imposes some restrictions on mergers and other business combinations between us and any acquirer of
15% or more of our outstanding common stock. Furthermore, Washington law may impose additional restrictions
on mergers and other business combinations between us and any acquirer of 10% or more of our outstanding
common stock. These provisions may make it harder for a third party to acquire us without the consent of our
board of directors, even if the offer from a third party may be considered beneficial by some stockholders.
Item 2. Properties.
We are headquartered in Bellevue, Washington, where we maintain most of our sales, marketing, research
and development, quality control, customer service operations and administration. In addition, our main
entertainment services office is located in Louisville, Colorado.
Our corporate administrative, marketing and product development facility is located in a 46,070 square foot
facility in Bellevue, Washington, under a lease that expires December 1, 2009.
Our entertainment services office is located in a 31,000 square foot facility in Louisville, Colorado, which is
utilized for administrative, warehouse, pre-pack and field office functions. The lease for this facility expires on
February 28, 2013.
Item 3. Legal Proceedings.
We are subject to various legal proceedings and claims arising in the ordinary course of business. Our
management does not expect that the results in any of these legal proceedings would have a material adverse
effect on our financial position, results of operations or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth quarter of 2005.
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