Redbox 2008 Annual Report Download - page 58

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COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006
NOTE 1: ORGANIZATION AND BUSINESS
Description of company: Incorporated as a Delaware company in 1993, Coinstar, Inc. (the “Company”) is a
multi-national company offering a range of 4th Wall»solutions for retailers’ storefronts. Our services consist of
self-service coin counting, entertainment services such as skill-crane machines, bulk vending machines and kiddie
rides, self-service DVD kiosks where consumers can rent or purchase movies, money transfer services, and
electronic payment (“E-payment”) services such as stored value cards, payroll cards, prepaid debit cards and
prepaid wireless products via point-of-sale terminals and stored value kiosks. Our services, in one form or another,
are offered in supermarkets, mass merchandisers, warehouse clubs, drugstores, universities, shopping malls and
convenience stores in the United States, Canada, Mexico, Puerto Rico, Ireland, the United Kingdom and other
countries. As of December 31, 2008, we had an approximate total of:
Coin-counting machines .................................................. 18,400*
Entertainment services machines............................................ 145,000
DVD kiosks ........................................................... 13,700
Money transfer services locations ........................................... 38,000
E-payment point-of-sale terminals........................................... 23,000
E-payment enabled coin-counting kiosks ...................................... 11,000
* Amount includes 11,000 E-payment enabled coin-counting kiosks.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: The accompanying Consolidated Financial Statements include the accounts of
Coinstar, Inc., our wholly-owned subsidiaries, companies which we have a controlling interest, and other entities in
accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46 (revised December 2003),
Consolidation of Variable Interest Entities (“FIN 46R”). Investments in companies of which we may have
significant influence, but not a controlling interest, are accounted for using the equity method of accounting.
All significant intercompany balances and transactions have been eliminated in consolidation.
In January 2008, we exercised our option to acquire a majority ownership interest in the voting equity of
Redbox Automated Retail, LLC (“Redbox”) and our ownership interest increased from 47.3% to 51.0%. Since our
initial investment in Redbox, we had been accounting for our 47.3% ownership interest under the equity method in
our Consolidated Financial Statements. Effective with the close of this transaction on January 18, 2008, we began
consolidating Redbox’s financial results into our Consolidated Financial Statements.
Use of estimates: The preparation of financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. These judgments are difficult as matters that are inherently uncertain directly
impact their valuation and accounting. Actual results may vary from management’s estimates and assumptions.
Cash in machine or in transit and cash being processed: Cash in machine or in transit represents coin
residing or estimated in our coin-counting, entertainment machines, cash being processed by carriers, cash in our
cash registers and cash deposits in transit. Cash being processed represents cash to be used for settling our accrued
liabilities payable to Coin and Entertainment retailers.
Securities available-for-sale: Our investments are classified as available-for-sale and are stated at fair value.
Our available-for-sale securities have maturities of one year or less and are reported at fair value based on quoted
market prices and are included in the balance sheet caption “prepaid expenses and other current assets.” Changes in
unrealized gains and losses are reported as a separate component of accumulated other comprehensive income.
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