Redbox 2008 Annual Report Download - page 18

Failure to comply with these laws and regulations could result in, among other things, revocation of required
licenses or permits, loss of approved status, termination of contracts, administrative enforcement actions and fines,
class action lawsuits, cease and desist orders and civil and criminal liability. The occurrence of one or more of these
events, as well as the increased cost of compliance, could materially adversely affect our business, financial
condition and results of operations.
There are risks associated with conducting our business and sourcing goods internationally.
We currently have coin operations in Canada and the United Kingdom and Ireland, DVD operations in the
United Kingdom and entertainment services operations in Mexico. We expect to continue increasing our deploy-
ment of machines and equipment internationally. In addition, as of December 31, 2008, our money transfer services
are offered in approximately 140 countries. Accordingly, political uncertainties, economic changes, civil unrest,
exchange rate fluctuations, restrictions on the repatriation of funds, adverse changes in legal requirements,
including tax, tariff and trade regulations, difficulties with foreign distributors and other difficulties in managing
an organization outside the United States, could seriously harm the development of our business and ability to
operate profitably. Further, as we do more business in an increasing number of countries, our business becomes
more exposed to the impact of the political and economic uncertainties, including government oversight, of foreign
jurisdictions.
For example, substantially all of the plush toys and other products dispensed from our entertainment services
machines are produced by foreign manufacturers, including a majority purchased directly from manufacturers in
China. Further, we purchase other vending products from vendors that obtain a significant percentage of such
products from foreign manufacturers. As a result, we are subject to changes in governmental policies, exchange rate
fluctuations, various product quality standards, the imposition of tariffs, import and export controls, transportation
delays and interruptions and political and economic disruptions which could disrupt the supply and timely delivery
of products manufactured abroad. In addition, we could be affected by labor strikes in the sea shipping, trucking and
railroad industries. A reduction or interruption in supplies or a significant increase in the price of one or more
supplies could have a material adverse effect on our business.
Our money transfer services business requires us to meet specific federal, state, local and foreign laws and
government regulations, subjecting us to additional risk.
The money transfer industry is heavily regulated, both in the United States and internationally. We operate our
money transfer services business under the authority of the licenses and approvals that we have obtained where
required from the various jurisdictions in which we operate. There is no assurance that we will be able to maintain
these licenses and approvals in the future.
In operating the money transfer services business in the United States for example, we are responsible for
compliance with a variety of state laws and regulations, including licensing requirements, applicable to the
business. In addition, we are subject to United States federal anti-money laundering laws, including United States
Department of the Treasury registration requirements and reporting requirements for suspicious and certain other
transactions, and the requirements of the Office of Foreign Assets Control, which prohibit transmitting money to
specified countries or to or on behalf of prohibited individuals or entities. If we were to transmit money to or on
behalf of, or otherwise conduct business with, a prohibited individual or entity, we could be required to pay
significant damages, including fines and penalties, and our ability to conduct business in the United States and other
jurisdictions could be limited. The USA PATRIOT Act and the U.S. Bank Secrecy Act mandate several anti-money
laundering requirements. Any violation of anti-money laundering laws could lead to significant penalties, and could
limit our ability to conduct business in the United States and other jurisdictions.
In addition, the money transfer industry is subject to international regulation, which varies from country to
country. In certain countries in which we operate, we are required to maintain licenses or other governmental
approvals in order to operate this business. As described above, we are responsible for compliance with these laws
and regulatory requirements in those countries in which we operate the money transfer services business. Although
most countries in which we operate this business do not regulate this business to the same degree as the United
States, this could change in the future.
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