Redbox 2006 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 of the 2006 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 76

  • 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
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
facility. Additionally, on December 7, 2005 we signed an asset purchase option agreement that allows Coinstar to
purchase substantially all of DVDXpress’ business assets and liabilities in exchange for any outstanding debt and
accrued interest on the credit facility plus $10,000 and contingent consideration of up to $3.5 million based on
achievement of specific conditions. Effective December 7, 2005, we have consolidated the fair value of
DVDXpress’ financial results into our consolidated financial statements in accordance with FIN 46R.
ACMI Holdings, Inc.: On July 7, 2004, we acquired ACMI for $235.0 million. As part of this acquisition,
we acquired cash totaling $11.5 million. The acquisition was effected pursuant to the “Agreement and Plan of
Merger” dated May 23, 2004 between ACMI and Coinstar. ACMI offered various entertainment services,
including skill-crane machines, bulk vending, kiddie rides and video games to consumers in mass merchandisers,
supermarkets, warehouse clubs, restaurants, entertainment centers, truck stops and other distribution channels. In
addition to the purchase price, we incurred $4.3 million in transaction costs, including investment banking fees
and amounts relating to legal and accounting charges. The results of operations of ACMI since July 7, 2004, are
included in our statement of operations. Goodwill of approximately $136.1 million resulted from the acquisition
and is not being amortized, consistent with the guidance in SFAS 142. Of this amount, approximately
$39.0 million is deductible for tax purposes. Based on identified assets of $34.4 million and assuming no
subsequent impairment of the underlying assets, the annual estimated aggregate amortization expense will
approximate $3.4 million each year through July 2014.
NOTE 4: PROPERTY AND EQUIPMENT
Property and equipment, net, consisted of the following at December 31:
2006 2005
(in thousands)
Coin, entertainment and e-payment machines ................ $345,938 $ 308,151
Computers ............................................ 10,732 6,962
Office furniture and equipment ........................... 6,018 4,332
Vehicles ............................................. 18,514 6,549
Leasehold improvements ................................ 2,353 2,290
383,555 328,284
Accumulated depreciation and amortization ................. (222,593) (179,473)
$ 160,962 $ 148,811
During 2006 and 2005, there were no significant changes in our business, nor any changes in events or
circumstances that would suggest the carrying value of fixed assets were impaired. In 2004, we recorded a charge
of approximately $1.9 million for the write down of certain equipment of our prepaid services. This charge is
reported in the line item titled “depreciation and other” in our consolidated statements of operations.
58