Redbox 2007 Annual Report Download - page 18

Acquisitions and investments involve risks that could harm our business and impair our ability to realize
potential benefits from such acquisitions and investments.
As part of our business strategy, we have in the past sought and may in the future seek to acquire or invest in
businesses, products or technologies that we feel could complement or expand our business. For example, in
October 2007, we purchased substantially all of the assets of DVDXpress and in January 2008 we completed the
acquisition of a majority interest in Redbox, both providers of self-service DVD kiosks, and in January 2008 and
May 2006, we purchased the money transfer services business GroupEx and CMT, respectively. However, we may
be unable to adequately address the financial, legal and operational risks raised by these acquisitions or investments,
which could harm our business and prevent us from realizing the projected benefits of the acquisitions and
investments. Further, the evaluation and negotiation of potential acquisitions and investments, as well as the
integration of acquired businesses, divert management time and other resources. In addition, we cannot assure you
that any particular transaction, even if successfully completed, will ultimately benefit our business. Certain
financial and operational risks related to acquisitions and investments that may have a material impact on our
business are:
• the assumption of known and unknown liabilities of an acquired company, including employee and
intellectual property claims and other violations of applicable law,
• managing relationships with other investors and the companies in which we have made investments,
• use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions and
investments,
• difficulties and expenses in assimilating the operations, products, technology, information systems or
personnel of an acquired company,
• stockholder dilution if an acquisition is consummated through an issuance of our securities,
• amortization expenses related to acquired intangible assets and other adverse accounting consequences,
• costs incurred in identifying and performing due diligence on potential targets that may or may not be
successful,
• impairment of relationships with employees, retailers and affiliates of our business and the acquired
business,
• entrance into markets in which we have no direct prior experience, and
• impairment of goodwill arising from our acquisitions and investments.
Recall of any of the products dispensed by our entertainment services machines or by the entertainment ser-
vices industry generally could adversely affect our entertainment services business.
Our entertainment services machines and the entertainment services industry generally, are subject to
regulation by the Consumer Product Safety Commission and similar state and international regulatory authorities.
The toys and other products dispensed from our entertainment services machines could be subject to involuntary
recalls and other actions by regulatory authorities. Concerns about product safety may lead us to voluntarily recall
or discontinue offering selected products. Potential or actual defects in any of our products distributed through our
entertainment services machines could result in the rejection of our entertainment services products by consumers,
damage to our reputation, lost sales, potential inventory valuation write-downs, excess inventory, diverted
development resources and increased customer service and support costs, any of which could harm our business.
Any such errors, potential or actual defects or recalls may not be covered by insurance or cause our insurance costs
to increase in future periods.
We may be subject to product liability claims if property or people are harmed by our products and services.
Some of the products we sell, especially through our entertainment services machines, may expose us to
product liability claims arising from personal injury, death or property damage. Any such product liability claim
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