Redbox 2005 Annual Report Download - page 48

COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003
its carrying amount including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill
of the reporting unit is considered not impaired and the second test is not performed. The second step of the
impairment test is performed when required and compares the implied fair value of the reporting unit goodwill
with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the
implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.
Based on the annual goodwill test for impairment we performed during the quarter ended December 31, 2005, we
determined there is no impairment of our goodwill. Goodwill consisted of approximately $136.1 and $134.2
million related to the acquisition of American Coin Merchandising, Inc. (collectively referred to as “ACMI”),
$23.2 and $0.0 million related to the acquisition of The Amusement Factory L.L.C. (“Amusement Factory”) and
$20.2 and $6.1 million resulting from other acquisitions at December 31, 2005 and 2004, respectively.
Our intangible assets are comprised primarily of retailer relationships acquired in connection with our
acquisition of ACMI in 2004, Amusement Factory in 2005 and other smaller acquisitions during 2004 and 2005.
A third-party consultant used expectations of future cash flows to estimate the fair value of the acquired retailer
relationships. We amortize our intangible assets on a straight-line basis over their expected useful lives, which
range from 3 to 10 years.
The gross carrying amounts and related accumulated amortization as well as the range of estimated useful
lives of identifiable intangible assets at the reported balance sheet dates were as follows:
Range of
Estimated
Useful Lives
(in years)
Estimated
Weighted
Average
Useful Lives
(in years)
December 31,
(in thousands)
2005 2004
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
Intangible assets:
Retailer relationships .......... 3-10 9.25 $45,446 $6,099 $36,229 $1,831
Other identifiable intangible
assets .................... 3-5 0.14 1,401 609 956 321
Total .......................... 9.39 $46,847 $6,708 $37,185 $2,152
Based on identifiable intangible assets recorded as of December 31, 2005, and assuming no subsequent
impairment of the underlying assets, the annual estimated aggregate future amortization expenses are as follows:
(in thousands)
2006 .......................................................... $ 5,311
2007 .......................................................... 5,279
2008 .......................................................... 5,019
2009 .......................................................... 4,800
2010 .......................................................... 4,298
Thereafter ...................................................... 15,432
$40,139
Impairment of long-lived assets: Long-lived assets, such as property and equipment and purchased
intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used
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