Redbox 2009 Annual Report Download - page 26

of these events could adversely affect our business, financial condition and results of operations. Furthermore,
additions to or changes in the laws, regulations or other industry practices and standards in the United States or
any of the foreign countries in which the money transfer services business operates could also increase our
compliance and other costs of doing business, require significant systems redevelopment, reduce the market for
or value of our products or services or render our products or services less profitable or obsolete, lead to a loss of
agents, and have an adverse effect on our results of operations.
Our money transfer service is and will remain reliant on an effective agent network.
Substantially all of the money transfer services revenue is generated through an agent network spanning
approximately 140 countries as of December 31, 2009. Agents include banks and other financial institutions,
regional micro-finance companies, chain stores and local convenience stores. Transaction volumes at existing
agent locations often increase over time and new agents provide us with additional revenue. If agents decide to
leave our network, or if we are unable to sign new agents, our revenue and profit growth rates may be adversely
affected. Agent attrition might occur for a number of reasons, including a competitor engaging an agent or an
agent’s dissatisfaction with its relationship with us or the revenue derived from that relationship. In addition,
agents may generate fewer transactions or less revenue for various reasons, including changes in economic
circumstances affecting consumers and potential consumers, the appearance of competitors close to our agent
locations or increased competition. Because an agent is a third party that engages in a variety of activities in
addition to providing our services, an agent may encounter business difficulties unrelated to its provision of our
services, which could cause the agent to reduce its number of locations, hours of operation, or cease doing
business altogether. Moreover, we could suffer financial loss and additional liability from the failure for any
reason of our agents to provide good funds in a money transfer. The failure of the agent network to meet our
expectations regarding revenue production and business efficiencies may negatively impact our business,
financial condition and results of operations.
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 business involves the movement of large sums of money, and, as a result, our business is particularly
dependent on our ability to process and settle transactions accurately and efficiently.
Our business involves the movement of large sums of money. For example, our 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. Further, our coin-counting and
DVD services businesses require the effective transfer of large sums of money between many different locations
as well. Because we are responsible for large sums of money that often are substantially greater than the revenues
generated, the success of our 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 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,
among others, 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
or other actions taken by our agents, employees, or third party vendors, we could suffer financial loss, loss of
consumers, regulatory sanctions and damage to our reputation.
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