Redbox 2011 Annual Report Download - page 84

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resources for the future growth of the Company. Our New Ventures segment consists primarily of our coffee
self-service concept as well as other self-service concepts including refurbished electronics and photo services.
As part of our new reporting structure, during the second quarter of 2011, we completed our evaluation of the
reassignment of goodwill to our New Ventures segment by using a relative fair value approach that is similar to
the approach used when a portion of a segment is to be disposed. We used both the income and cost methods to
estimate the fair value of our New Ventures segment and both the income and market methods to estimate the
fair values of our Redbox and Coin segments. As a result of our evaluation, we did not assign any goodwill to our
New Ventures segment because the amount was immaterial.
During the second quarter of 2011, we exited one of the self-service concepts we were testing, which was
included in our New Ventures segment. Based on our materiality assessment, we consider the results of the
exited self-service concept to be immaterial and therefore have elected not to present it as a discontinued
operation in our Consolidated Statements of Net Income.
Comparability of Segment Results
We have recast prior period results as presented below for the following:
• The addition of our New Ventures segment, which includes our self-service concepts, which were part
of our Coin and Redbox segments prior to the first quarter of 2011; and
• The allocation of share-based payments made to certain movie studios as part of content agreements
from corporate unallocated expenses to direct operating expenses in our Redbox segment beginning in
the first quarter of 2011.
Our analysis and reconciliation of our segment information to the consolidated financial statements that follows
covers our results from continuing operations, which consists of our Redbox, Coin and New Ventures segments.
Unallocated general and administrative expenses relate to share-based compensation.
In thousands
Year Ended December 31, 2011 Redbox Coin
New
Ventures
Corporate
Unallocated Total
Revenue ................................. $1,561,598 $282,382 $ 1,392 $ — $1,845,372
Expenses:
Direct operating ....................... 1,134,167 145,362 3,349 473 1,283,351
Marketing ............................ 22,041 6,142 771 50 29,004
Research and development .............. 74 6,542 4,623 318 11,557
General and administrative .............. 120,384 23,370 10,464 9,139 163,357
Segment operating income (loss) ............. 284,932 100,966 (17,815) (9,980) 358,103
Less: depreciation and amortization ....... (115,430) (31,922) (866) — (148,218)
Operating income (loss) .................... 169,502 69,044 (18,681) (9,980) 209,885
Foreign currency and other, net ........... — — — (1,335) (1,335)
Interest income ....................... — — — 2,161 2,161
Interest expense ....................... — — — (25,983) (25,983)
Income (loss) from continuing operations before
income taxes ........................... $ 169,502 $ 69,044 $(18,681) $(35,137) $ 184,728
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