Redbox 2007 Annual Report Download - page 17

Further, failure, either intentional or unintentional, by our agents to comply with the laws and regulatory
requirements of applicable jurisdictions, including anti-money laundering, consumer privacy and information
security restrictions, in connection with our money transfer services business or otherwise, could result in, among
other things, revocation of required licenses or registrations, loss of approved status, termination of contracts with
third parties, administrative enforcement actions and fines, seizure or forfeiture of our funds, class action lawsuits,
cease and desist orders and civil and criminal liability, as well as damage to our reputation. The occurrence of one or
more of these events could materially adversely affect our business, financial condition and results of operations.
Our money transfer services may involve the movement of large sums of money, and, as a result, our busi-
ness is particularly dependent on our ability to process and settle transactions accurately and efficiently.
Our money transfer services business involves the movement of large sums of money. Money transfer services
revenues consist primarily of transaction fees that are charged for the movement of money. These transaction fees
represent only a small fraction of the total amount of money that is moved. Because we are responsible for large
sums of money that are substantially greater than the revenues generated, the success of this business particularly
depends upon the efficient and error-free handling of the money that is remitted and that is used to clear payment
instruments or complete money transfers. We rely on the ability of our agents and employees and our operating
systems and network to process these transactions in an efficient, uninterrupted and error-free manner. In addition,
we rely on third-party vendors in our business, including clearing banks which clear our money orders, official
checks and money transfers, and certain of our telecommunication providers. In the event of a breakdown,
catastrophic event, security breach, improper operation or any other event impacting our systems or network or our
vendors’ systems or processes, or improper action by our agents, employees, or third party vendors, we could suffer
financial loss, loss of customers, regulatory sanctions and damage to our reputation. In addition, we could suffer
financial loss from our failure for any reason to receive good funds from the sender of a money transfer or the
purchaser of other of our money transfer products or services.
Higher petroleum prices may adversely affect our operating results and reduce our profitability.
We purchase a substantial amount of goods overseas, particularly plush toys and other products dispensed from
our entertainment services machines, resulting in significant transportation-related costs. Petroleum-based resins
are used in the manufacture of these products. In addition, we operate a large number of vehicles used by our field
service personnel for the purpose of servicing and maintaining our coin-counting, entertainment and e-payment
services machines. Significant increases in petroleum prices during recent years have negatively impacted our
results of operations. The cost of petroleum is volatile and may increase as a result of natural disasters, political and
geopolitical issues or other reasons beyond our control. Further increases in petroleum prices may have an adverse
affect on our operating results.
Our customers’ ability to access our products and services can be adversely affected by severe weather, nat-
ural disasters and other events beyond our control, such as fires, power failures, telecommunication loss
and terrorist attacks.
Our operational and financial performance is a direct reflection of customer use of and the ability to operate
and service the coin-counting, entertainment and e-payment services machines and equipment used in our business.
Severe weather, natural disasters and other events beyond our control can, for extended periods of time, signif-
icantly reduce customer use of our products and services as well as interrupt the ability of our employees and third-
party providers to operate and service our equipment and machines. In some cases, severe weather, natural disasters
and other events beyond our control may result in extensive damage to or destruction of our infrastructure and
equipment, including loss of machines used to provide our products and services, which losses may not be fully
covered by insurance. For example, hurricanes in the gulf coast region of the United States in 2005 caused damage
and operational interruptions to some of the retail and other locations where our machines are installed.
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