Redbox 2005 Annual Report Download - page 6

inception, our coin-counting machines have counted and processed more than 260 billion coins worth more than
$13.0 billion in more than 370 million self-service coin-counting transactions. We now own and operate more
than 12,800 coin-counting machines in the United States, Canada and the United Kingdom and more than
320,000 entertainment services machines in the United States and Mexico. We also utilize more than 19,300
point-of-sale terminals and own and operate approximately 360 stand-alone e-payment kiosks for e-payment
services in the United States and the United Kingdom. In addition, approximately 5,800 of our 12,800 coin-
counting machines are e-payment enabled.
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. As of December 31, 2005, we had approximately
2,000 employees. We believe our employee relations are good. We were incorporated in Delaware on
October 12, 1993.
Coin services
We are the leader in the self-service coin-counting services market. We own and operate the only multi-
national fully automated network of self-service coin-counting machines across the United States, in Canada,
Puerto Rico and in the United Kingdom. We estimate that at any one time, there is approximately $10.5 billion
worth of coin sitting idle in households in the United States. In 2005, consumers processed more than $2.3 billion
worth of coin through our coin-counting machines.
We own and service all of our coin-counting machines, providing a “turn-key, headache-free” service to
retailers. Our machines are easy to use, highly accurate, durable, easy to service and capable of processing up to
600 coins per minute. Consumers feed loose change into the machines, which count the change and then dispense
vouchers or, in some cases, issue e-payment products, at the consumer’s election. Each voucher lists the dollar
value of coins counted, less our transaction fee, which is typically 8.9% of the value of each coin to cash
transaction. Our patented, proprietary technology helps us to maintain high up-time, remotely monitor
performance and minimize the potential for losses associated with voucher fraud.
Since we pay a percentage of our transaction fees to our retail partners, our coin services benefit our retail
partners by providing an additional source of revenue. In addition, third party studies show that our coin services
increase foot traffic in our retail partners’ stores and that approximately 45% of our customers spend all or a part
of the proceeds of their vouchers in the store. Our leading coin services retail partners include The Kroger Co.
and Albertson’s, Inc. supermarket chains.
Entertainment services
We estimate that the market for our entertainment services is approximately $1.1 billion in the United
States. We are the leading owner and operator of skill-crane and bulk vending machines in the United States.
Our entertainment services machines consist primarily of skill-crane machines, bulk vending and kiddie
rides, which are installed in more than 33,000 retail locations, totaling more than 320,000 pieces of equipment.
The majority of our entertainment services revenue is derived from skill-crane machines that dispense plush toys,
novelties and other items. For each play, customers maneuver the skill-crane into position and attempt to retrieve
the desired item in the machine’s enclosed display area before play is ended. We utilize displays of quality
merchandise, new product introductions and other merchandising techniques to attract new and repeat customers.
Our leading entertainment services partners include Wal-Mart, Inc. and Kmart, a subsidiary of Sears Holdings
Corporation.
Since we pay our retail partners a portion of the fee per play, our entertainment services machines, like our
coin-counting machines, provide an additional revenue stream for our retail partners. In addition, our
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