Redbox 2010 Annual Report Download - page 49

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expense are recognized in the period of change. If actual forfeitures differ significantly from our estimates, our
results of operations could be materially impacted. For additional information see Note 11: Share-Based
Payments in the Notes to Consolidated Financial Statements.
Callable Convertible Debt
In September 2009, we issued $200 million aggregate principal amount of 4% Convertible Senior Notes (the
“Notes”). We have separately accounted for the liability and the equity components of the Notes based on the
estimated fair value of the debt upon issuance. As one of the conversion events was met on December 31, 2010,
the Notes became convertible in and for the first quarter of 2011 and are reported within the current liability
section in our Consolidated Balance Sheets. The related debt conversion feature was recorded as such in our
Consolidated Balance Sheets. For additional information see Note 8: Debt in our Notes to Consolidated
Financial Statements.
Recognition and Reporting of Business Dispositions
When management commits to a plan to dispose of a business component, it is necessary to determine how the
results will be presented within the financial statements and whether the net assets of that business are
recoverable. Our significant accounting policies and judgments associated with a decision to dispose of a
business are as follows:
• Assets held for sale—We define a business component as held for sale if it meets the requirement of
assets held for sale, in accordance with Accounting Standards Codification (“ASC”) 360-10, at the
balance sheet date. Upon being classified as held for sale, the carrying value of the business component
must be assessed, and the business component held for sale is reported at the lower of its carrying value
or estimated fair value less cost to sell.
• Discontinued operations—We define a business component that has either been disposed of or is
classified as held for sale as discontinued operations if its operations and cash flows are clearly
distinguishable from the rest of the entity; its operations and cash flows have been or will be eliminated
from ongoing operations of the entity as a result of the disposal; and we have no significant continuing
involvement in the operations of the component after the disposal transaction. If a component is
recorded as discontinued operations, the results of operations of the disposed business through the date
of sale and the gain or loss on disposal are presented on a separate line in the income statement for all
periods presented.
For additional information see Note 4: Discontinued Operations, Sale of Assets and Assets Held for Sale in the
Notes to Consolidated Financial Statements.
RECENT ACCOUNTING GUIDANCE
In October 2009, the FASB issued Accounting Standard Update 2009-13, Multiple-Deliverable Arrangements
(“ASU 2009-13”), which amended ASC Topic 605, Revenue Recognition by establishing a hierarchy for
determining the value of each element within a multiple deliverable arrangement. ASU 2009-13 is effective
prospectively for us beginning January 1, 2011 and applies to arrangements entered into on or after that date. Our
adoption of this guidance will not have a material effect on our results of operations, financial position or cash
flows.
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