Redbox 2011 Annual Report Download - page 51

Download and view the complete annual report

Please find page 51 of the 2011 Redbox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

common fair value measurement and disclosure requirements between U.S. GAAP and International Financial
Reporting Standards. ASU 2011-04 amends current fair value measurement and disclosure guidance to include
increased transparency around valuation inputs and investment categorization. ASU 2011-04 is effective for
fiscal years and interim periods beginning after December 15, 2011. We do not believe our adoption of ASU
2011-04 in the first quarter of 2012 will have a material impact on our financial position, results of operations or
cash flows.
In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”).
ASU 2011-05 allows an entity to have the option to present the components of net income and comprehensive
income in either one or two consecutive financial statements. ASU 2011-05 eliminates the current option to
report other comprehensive income and its components in the statement of changes in equity. While the new
guidance changes the presentation of comprehensive income, there are no changes to the components that are
recognized in net income or other comprehensive income under current accounting guidance. ASU 2011-05 is
effective for fiscal years and interim periods beginning after December 15, 2011. In November 2011, the Board
decided to defer the effective date of certain changes related to the presentation of reclassification adjustments. A
final effective date for those changes is expected to be issued soon. While ASU 2011-05 will require us to change
the manner in which we present other comprehensive income and its components on a retrospective basis, we do
not believe our adoption of ASU 2011-05 in the first quarter of 2012 will have a material impact on our financial
position, results of operations or cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Variable Rates of Interest
We are subject to the risk of fluctuating interest rates in the normal course of business, primarily as a result of our
credit facility agreement with a syndicate of lenders led by Bank of America, N.A. and investment activities that
generally bear interest at variable rates. Because our investments have maturities of three months or less and our
credit facility interest rates are based upon either the LIBOR, prime rate or base rate plus an applicable margin,
we believe that the risk of material loss is low and that the carrying amount of these balances approximates fair
value.
Based on the balance of our outstanding term loan of $170.6 million as of December 31, 2011, an increase or
decrease of 1 percentage point in the interest rate over the next year would increase or decrease our annual
interest expense by approximately $1.0 million, net of tax.
Foreign Exchange Rate Fluctuation
We are subject to the risk of foreign exchange rate fluctuation in the normal course of business as a result of our
operations in the United Kingdom, Ireland, and Canada.
43