Redbox 2012 Annual Report Download - page 73

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Redbox Rollout Agreement
In November 2006, our Redbox subsidiary and McDonald’s USA entered into a Rollout Purchase, License and
Service Agreement (the “Rollout Agreement”) giving McDonald’s USA and its franchisees and franchise
marketing cooperatives the right to purchase DVD rental kiosks to be located at selected McDonald’s restaurant
sites for which Redbox subsequently received proceeds. The proceeds under the Rollout Agreement are classified
as debt and the interest rate is based on similar rates that Redbox has with its kiosk sale-leaseback transactions.
The payments made to McDonald’s USA over the contractual term of the Rollout Agreement will reduce the
accrued interest liability and principal. The future payments made under this Rollout Agreement contain a
minimum annual payment as well as the variable payouts based on the license fee earned by McDonald’s USA
and its franchisees through the term of the agreement. The following is the summary in relation to the rollout
agreement. The contractual term for the payments made to McDonald’s USA under the Rollout Agreement is
five years and the minimum annual payment amount in 2012 was $0.4 million.
Expiration dates within the Rollout Agreement began in December 2011 and continue through November 2013.
Any unpaid debt balance under the Rollout Agreement as well as related accrued interest was released upon
expiration and recognized in interest expense, net in our Consolidated Statement of Net Income.
Asset Retirement Obligation
We have entered into agreements with our partners to place kiosks in their stores. Upon contract terminations, we
are obligated to remove the kiosks from the store locations and, accordingly, we recognize the estimated fair
value of the liability under the long-term section of our liabilities in our Consolidated Balance Sheets.
Other Long-Term Liabilities
Included in other long-term liabilities were primarily tenant improvements related to our office building
renovation in Oakbrook Terrace, Illinois and Bellevue, Washington as well as the related unrecognized tax
benefits as follows:
Dollars in thousands December 31,
2012 2011
Tenant improvement and deferred rent .......................... $8,721 $ 9,269
Unrecognized tax benefit .................................... 1,250 1,574
Total other long-term liabilities ........................... $9,971 $10,843
NOTE 9: REPURCHASES OF COMMON STOCK
Board Authorization
The following table presents a summary of our authorized stock repurchase balance:
Dollars in thousands
Board
Authorization
Authorized repurchase—January 1, 2012 ............................. $264,398
Proceeds from the exercise of stock options ....................... 8,966
Repurchase of common stock from open market .................... (64,724)
Repurchase from Accelerated Stock Repurchase Agreement (“ASR
Agreement”) .............................................. (75,000)
Authorized repurchase—December 31, 2012 .......................... $133,640
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