Redbox 2011 Annual Report Download - page 62

Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less to be cash
equivalents. Our cash equivalents, which consist of money market funds and a certificate of deposit, were $45.4
million and $41.6 million at December 31, 2011 and December 31, 2010, respectively. Our cash balances with
financial institutions may exceed the deposit insurance limits.
Included in our cash and cash equivalents at December 31, 2011 and December 31, 2010 were $82.0 million and
$72.5 million, respectively that we identified for settling our accrued payable to our retailer partners in relation to
our Coin kiosks, which was presented in prior periods as cash being processed in our Consolidated Balance
Sheets.
Accounts Receivable
Accounts receivable represents receivables, net of allowances for doubtful accounts. The allowance for doubtful
accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine
the allowance based on historical experience and other currently available information. When a specific account
is deemed uncollectible, the account is written off against the allowance. Certain information regarding our
allowance for doubtful accounts was as follows (in thousands):
Dollars in thousands Year Ended December 31,
2011 2010 2009
Amount expensed for uncollectible accounts .................. $455 $272 $ 99
Amount charged against the allowance ....................... $— $— $—
Content Library
Our content library, which we called our DVD library in prior years, consists of movies and video games
available for rent or purchase. We obtain our movie and video game content through revenue sharing agreements
and license agreements with studios and game publishers, as well as through distributors and other suppliers. The
content purchases are capitalized and amortized to their estimated salvage value as a component of direct
operating expenses over the usage period. The cost of content mainly includes the cost of the movies and video
games, labor, overhead, freight, and studio revenue sharing expenses. Content salvage values are estimated based
on the amounts that we have historically recovered on disposal. For purchased content that we expect to be sold
at the end of its useful life, an estimated salvage value is provided. For licensed content that we do not expect to
sell, no salvage value is provided. The useful lives and salvage value of our content library are periodically
reviewed and evaluated. The amortization charges are recorded on an accelerated basis, reflecting higher rentals
of movies and video games in the first few weeks after release, and substantially all of the amortization expense
is recognized within one year of purchase.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Expenditures that extend the life,
increase the capacity, or improve the efficiency of property and equipment are capitalized, while expenditures for
repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over
the following approximate useful lives:
Useful Life
Coin-counting kiosks and components ..................................... 2to10years
Redbox kiosks ....................................................... 5years
Computers and software ................................................ 3-5years
Office furniture and equipment .......................................... 5-7years
Leased vehicles ....................................................... Lease term
Leasehold improvements ............................................... Shorter of lease term or
useful life of improvement
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