Redbox 2011 Annual Report Download - page 19

well as industry standards, in the United States and other jurisdictions in which our products and services are
available. These requirements, which often differ materially and sometimes conflict among the many
jurisdictions in which we operate, are designed to protect the privacy of consumers’ personal information and to
prevent that information from being inappropriately used or disclosed. We maintain and review technical and
operational safeguards designed to protect this information and generally require third party vendors and others
with whom we work to do so as well. However, despite those safeguards, it is possible that hackers, employees
acting contrary to our policies, third-party agents or others could improperly access relevant systems or
improperly obtain or disclose data about our consumers, or that we may be determined not to be in compliance
with applicable legal requirements and industry standards for data security, such as the Payment Card Industry
guidelines. Any breach of relevant security policies that compromises consumer data or determination of
non-compliance with applicable legal requirements or industry standards for data security could expose us to
regulatory enforcement actions, card association or other monetary fines or sanctions, or contractual liabilities,
limit our ability to provide our products and services, subject us to litigation and damage our business reputation,
financial position, 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. Our Coin business requires the effective transfer of
large sums of money between many different locations. 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, secure, and error-free handling of the money. We rely on the ability of our employees and our
operating systems and network to process these transactions in an efficient, uninterrupted and error-free manner.
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 employees,
or third party vendors, we could suffer financial loss, loss of consumers, regulatory sanctions and damage to our
reputation.
Our failure to meet consumer expectations with respect to pricing our products and services may
adversely affect our business and results of operations.
Demand for our products and services may be sensitive to pricing changes. We evaluate and update our pricing
strategies from time to time, and changes we institute may have a significant impact on, among other things, our
revenue and net income. For example, in March 2010, we increased the typical coin-counting transaction fee
from 8.9% to 9.8%, and, in October 2011, we increased the daily rental fee for standard definition DVDs from
$1.00 to $1.20. In the future, other fee increases or pricing changes may deter consumers from using our kiosks
or reduce the frequency of their usage.
We recently experienced changes in our senior management team. The loss of key personnel or the
inability of replacements to quickly and successfully perform in their new roles could adversely affect our
business.
In recent years we experienced significant changes in our senior management team. Further changes in senior
management could result in disruptions to our operations. If we lose (including due to the need to travel between
Redbox, in Oakbrook Terrace, Illinois and Coinstar headquarters in Bellevue, Washington) or terminate the
services of one or more of our current executives or key employees or if one or more of our current or former
executives or key employees joins a competitor or otherwise leaves or competes with us, it could harm our
business and our ability to successfully implement our business plan. Additionally, if we are unable to timely hire
qualified replacements for our executive and other key positions, our ability to execute our business plan could
be harmed. Even if we can timely hire qualified replacements, we would expect to experience operational
disruptions and inefficiencies during any transition.
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