Redbox 2010 Annual Report Download - page 61

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COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010, 2009, AND 2008
NOTE 1: ORGANIZATION AND BUSINESS
Description of Company
We are a leading provider of automated retail solutions offering convenient products and services that benefit
consumers and drive incremental retail traffic and revenue for retailers. Our core offerings in automated retail
include our DVD Services and Coin Services. Our DVD Services consist of self-service DVD kiosks where
consumers can rent or purchase movies. Our Coin Services consist of self-service coin-counting kiosks where
consumers can convert their coin to cash or stored value products. As of December 31, 2010, we had
approximately 30,200 DVD kiosks in 26,100 locations and 18,900 coin-counting kiosks in 18,700 locations
(approximately 12,100 of which offer a variety of stored value products to customers) in supermarkets, drug
stores, mass merchants, financial institutions, convenience stores, and restaurants.
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, and companies in which we have a controlling interest. 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
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 the transaction on January 18, 2008, we began consolidating Redbox’s financial
results into our consolidated financial statements. We purchased the remaining interest in Redbox Automated
Retail, LLC (“Redbox”) in February 2009. For additional information see Note 3: Acquisitions.
Use of Estimates in Financial Reporting
We prepare our financial statements in conformity with accounting principles generally accepted in the U.S.
which requires management to make estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amount of revenues and expenses during the reporting period.
Significant accounting policies and estimates underlying the accompanying consolidated financial statements
include:
• revenue recognition;
• amortization of our DVD library;
• the lives and recoverability of equipment and other long-lived assets;
• the determination of goodwill impairment;
• accounting for income taxes;
• share-based payments;
• callable convertible debt; and
• recognition and reporting of business dispositions
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