Redbox 2011 Annual Report Download - page 37

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Redbox
Dollars in thousands, except net
revenue per rental amounts
Year Ended December 31, 2011 vs. 2010 2010 vs. 2009
2011 2010 2009 $ % $ %
Revenue ................... $1,561,598 $1,159,709 $773,430 $401,889 34.7% $386,279 49.9%
Expenses:
Direct operating ......... 1,134,167 859,774 585,192 274,393 31.9% 274,582 46.9%
Marketing .............. 22,041 14,231 8,177 7,810 54.9% 6,054 74.0%
Research and
development .......... 74 — — 74 — — —
General and
administrative ......... 120,384 94,854 78,490 25,530 26.9% 16,364 20.8%
Segment operating income ..... 284,932 190,850 101,571 94,082 49.3% 89,279 87.9%
Depreciation and
amortization .......... (115,430) (93,445) (60,688) (21,985) 23.5% (32,757) 54.0%
Operating income ............ $ 169,502 $ 97,405 $ 40,883 $ 72,097 74.0% $ 56,522 138.3%
Operating income as a
percentage of revenue ....... 10.9% 8.4% 5.3%
Same store sales growth ....... 18.3% 13.0% 27.7%
Effect on change in revenue
from same store sales
growth ................... $ 206,512 $ 98,219 $104,898 $108,293 110.3% $ (6,679) (6.4)%
Ending number of kiosks ...... 35,400 30,200 22,400 5,200 17.2% 7,800 34.8%
Total rentals (in thousands) .... 684,000 534,518 368,746 149,482 28.0% 165,772 45.0%
Net revenue per rental ........ $ 2.28 $ 2.16 $ 2.05 $ 0.12 5.6% $ 0.11 5.4%
2011 Events
• During the second quarter, we launched video game rentals at our kiosks nationwide. We offered video
game titles across three platforms, PLAYSTATION®3, Nintendo Wii™ and Xbox 360®, with a $2.00
daily rental fee;
• During the third quarter, we amended our content agreement with Lions Gate Films, Inc. (“Lionsgate”)
regarding the licensing of minimum quantities of theatrical and direct-to-video DVD and Blu-ray discs.
As a result of the amendment, Lionsgate elected not to exercise its right to early terminate the licensing
arrangement and the term was extended to August 31, 2014;
• During the third quarter, we amended our content agreement with SPHE Scan Based Trading
Corporation (“Sony”) whereby; (i) the scheduled vesting of certain shares of restricted stock was
extended from August 1, 2011 to August 1, 2012 and (ii) the number of weeks we can offer Sony
content was extended from 26 weeks to 52 weeks;
• During the fourth quarter, we entered into an amendment to the revenue sharing license agreement with
Paramount Home Entertainment, Inc. (“Paramount”) which provided, among other things, that;
(i) Paramount waived its current termination right to end the licensing arrangement at the end of 2011,
(ii) Paramount receives, at its sole discretion, the option for two one-year extensions following the
initial five-year agreement term, which currently ends on December 31, 2014 (each exercised extension
would provide for a grant of 50,000 shares of restricted stock vesting at the beginning of each
extension), (iii) the content license period was extended from 26 weeks to 52 weeks and (iv) Paramount
was granted 100,000 shares of restricted stock which will vest according to the vesting schedule of the
current restricted stock purchase agreement with Paramount; and
• During the fourth quarter, we announced that the daily rental fee for renting a standard definition DVD
would increase to $1.20 from $1.00. The daily rental fee of our video games and Blu-ray rentals
29