Redbox 2011 Annual Report Download - page 24

There are risks associated with conducting our business and sourcing goods internationally.
We currently have Coin operations in Canada, the United Kingdom and Ireland. We expect to continue our
deployment of kiosks internationally. Accordingly, political uncertainties, economic changes, exchange rate
fluctuations, restrictions on the repatriation of funds, adverse changes in legal requirements, including tax, tariff
and trade regulations, difficulties with foreign distributors and other difficulties in managing an organization
outside the United States, could seriously harm the development of our business and ability to operate profitably.
Further, as we do more business in an increasing number of countries, our business becomes more exposed to the
impact of the political and economic uncertainties, including government oversight, of foreign jurisdictions.
We purchase products from vendors that obtain a significant percentage of such products from foreign
manufacturers. As a result, we are subject to changes in governmental policies, exchange rate fluctuations,
various product quality standards, the imposition of tariffs, import and export controls, transportation delays and
interruptions and political and economic disruptions which could disrupt the supply and timely delivery of
products manufactured abroad. In addition, we could be affected by labor strikes in the sea shipping, trucking and
railroad industries. A reduction or interruption in supplies, or a significant increase in the price of one or more
supplies could have a material adverse effect on our business.
Acquisitions and investments involve risks that could harm our business and impair our ability to realize
potential benefits from such acquisitions and investments.
As part of our business strategy, we have in the past sought, and may in the future seek, to acquire or invest in
businesses, products or technologies that we feel could complement or expand our business. For example, in
February 2012, Redbox entered into an agreement to acquire certain assets of NCR Corporation related to its
self-service DVD kiosk business and also entered into a joint venture arrangement with Verizon to launch a
nationwide “over-the-top” video distribution and offer rental of physical DVDs and Blu-ray Discs®from DVD
rental kiosks. However, we may be unable to adequately address the financial, legal and operational risks raised
by such acquisitions or investments and may not successfully close (in the case of the NCR acquisition, we have
applied for applicable governmental anti-trust approvals, but may not receive such approvals) or integrate these
acquisitions or investments, which could harm our business and prevent us from realizing the projected benefits
of the acquisitions and investments. In addition, we will not have the right or power to direct the management or
policies of the joint venture with Verizon in the manner we may desire, and other participants may take action
contrary to our interests, although we may be called to invest additional sums nonetheless. Further, the evaluation
and negotiation of potential acquisitions and investments, as well as the integration of acquired businesses, divert
management time and other resources. In addition, we cannot assure you that any particular transaction, even if
successfully completed, will ultimately benefit our business. Certain financial and operational risks related to
acquisitions and investments that may have a material impact on our business are:
• the assumption of known and unknown liabilities of an acquired company, including employee and
intellectual property claims and other violations of applicable law;
• losses related to acquisitions and investments;
• managing relationships with other investors and the companies in which we have made investments,
including, in some cases, as minority partner;
• reduced liquidity, including through the use of cash resources and incurrence of debt and contingent
liabilities in funding acquisitions and investments;
• difficulties and expenses in assimilating the operations, products, technology, information systems or
personnel of an acquired company, acquired assets or joint ventures;
• inability to efficiently divest unsuccessful acquisitions and investments;
• stockholder dilution if an acquisition is consummated through an issuance of our securities;
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