Redbox 2007 Annual Report Download - page 35

and scope of service enhancements and the cost of developing potential new product and service offerings and
enhancements.
Off-Balance Sheet Arrangements
As of December 31, 2007, off-balance sheet arrangements are comprised of our operating leases and letters of
credit disclosed in Note 8 to our Consolidated Financial Statements. We have no other off-balance sheet
arrangements that have had or are reasonably likely to have a material current or future effect on our financial
condition or Consolidated Financial Statements.
Contractual Obligations
The tables below summarize our contractual obligations and other commercial commitments as of Decem-
ber 31, 2007:
Contractual Obligations Total
Less than 1
year
1-3
years
4-5
years
After 5
years
Payments Due by Period
(In thousands)
Long-term debt(1)........................ $257,000 $257,000
Capital lease obligations(2) . . . .............. 15,084 7,166 7,482 436
Operating leases(3) ....................... 13,974 4,959 5,813 2,988 214
Purchase obligations(4) .................... 11,378 11,378
Asset retirement obligations(5) .............. 1,610 1,610
Liability for uncertain tax positions(6) ......... 1,200 1,200
Total contractual cash obligations .......... $300,246 $23,503 $13,295 $261,624 $1,824
(1) Long-term debt does not include contractual interest payments as they are variable in nature.
(2) Capital lease obligations represent gross minimum lease payments, which includes interest.
(3) One of our lease agreements is a triple net operating lease. Accordingly, we are responsible for other obligations including, but not limited to,
taxes, insurance, utilities and maintenance as incurred.
(4) Purchase obligations consist of outstanding purchase orders issued in the ordinary course of our business.
(5) Asset retirement obligations represent the fair value of a liability related to the machine removal costs following contract expiration.
(6) Liability for uncertain tax positions represents amounts that we are contingently liable for based on our tax positions which their respective
statute of limitations ends within 4 to 5 years.
Other Commercial Commitments Total
Less than 1
year
1-3
years
4-5
years
After 5
years
Amount of Commitment Expiration by Period
(In thousands)
Letters of credit .................................... $12,428 $12,428
Total commercial commitments ....................... $12,428 $12,428 $— $— $—
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to the risk of fluctuating interest rates in the normal course of business, primarily as a result of
our credit agreement with a syndicate of lenders led by Bank of America, N.A. and investment activities that
generally bear interest at variable rates. Because our investments have maturities of three months or less, and our
credit facility interest rates are based upon either the LIBOR, prime rate or base rate plus an applicable margin, we
believe that the risk of material loss is low and that the carrying amount of these balances approximates fair value.
Based on our outstanding revolving line of credit obligations of $257.0 million as of December 31, 2007, an
increase of 1.0% in interest rates over the next year would increase our annualized interest expense by approx-
imately $2.6 million; a decrease of 1.0% in interest rates over the next year would decrease our annualized interest
expense by approximately $2.6 million. Such potential increases or decreases are based on certain simplified
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