Redbox 2013 Annual Report Download

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Table of contents

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  • Page 7
    ...2013 (the last business day of the registrant's most recently completed second fiscal quarter), based upon the closing price as reported in the NASDAQ Global Select Market System, was approximately $1.6 billion. The number of shares outstanding of the registrant's Common Stock as of February 3, 2014...

  • Page 8
    ... Securities...Selected Financial Data ...Management's Discussion and Analysis of Financial Condition and Results of Operations...Quantitative and Qualitative Disclosures About Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements With Accountants on Accounting...

  • Page 9
    Special Note Regarding Forward-Looking Statements This Annual Report on Form 10-K ("Annual Report") contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "...

  • Page 10
    ...-top" video distribution service that offers rental of physical DVDs and Blu-ray Discsâ„¢ from our kiosks. Revenue attributable to the rental of DVDs and Blu-ray Discs is recorded within our Redbox segment. Redbox's ownership interest in the joint venture is accounted for using the equity method of...

  • Page 11
    ... we pay retailers a percentage of our revenue. 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...

  • Page 12
    ... retailers and web sites such as Gazelle, as well as brick and mortar stores which buy back used electronics. The business also faces competition from companies in other businesses who also have buyback programs, such as GameStop, Best Buy, Target, Apple, AT&T, Verizon and Sprint. These competitors...

  • Page 13
    ...high volume of new movie content due to such things as larger home DVD and downloaded movie libraries; Increased availability of digital movie content inventory through digital video recorders, pay-per-view delivered by cable or satellite providers and similar technologies, online streaming, digital...

  • Page 14
    ... make DVDs available for rent 28 days after the street date. If we are unable to maintain or renew our current relationships to obtain movie or video game content on acceptable terms, our business, financial condition and results of operations may suffer. Our inability to receive delivery of DVDs...

  • Page 15
    ... service fees paid, or other financial concessions made, to our retailers could significantly increase our direct operating expenses in future periods and harm our business. In addition, we accept payment for DVD and game rentals through debit and credit card transactions. For these payments, we pay...

  • Page 16
    ... Verizon, a joint venture with Verizon Communications to provide "over-the-top" video distribution services that also offers rental of physical DVDs and Blu-ray Discs from our kiosks. As of December 31, 2013, we have invested $52.5 million in cash in the joint venture and granted it a license to use...

  • Page 17
    ... thresholds. Under the joint venture agreement, we have also agreed to certain restrictions on our ability in the United States to participate in the marketing or operation of an "over-the-top" video distribution service, or to provide physical DVD or Blu-Ray disc rental services in connection with...

  • Page 18
    ...to use our cash flow to fund our operations, capital expenditures and future business opportunities; limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, share repurchases, acquisitions and general corporate or...

  • Page 19
    ... support and service efforts that we currently do not provide directly. In particular, we contract with third-party providers to arrange for pick-up, processing and depositing of coins, as well as to provide limited servicing of our kiosks. We generally contract with a single transportation...

  • Page 20
    ... damage our business, reputation, financial position and results of operations. As our business expands to provide new products and services, such as Redbox Instant by Verizon, ecoATM kiosks, and Coinstar's gift card exchange business, we are increasing the amount of consumer data that we collect...

  • Page 21
    ... for data security could expose us to regulatory enforcement actions, card association or other monetary fines or sanctions, or contractual liabilities, limit our ability to provide our products and services, subject us to legal action and related costs and damage our business reputation, financial...

  • Page 22
    ... in laws or enactment of new laws and regulations, that apply, or may in the future apply, to our current or future products or services, changes in governmental authorities' interpretation of the application of various government regulations to our business, or the failure or inability to gain...

  • Page 23
    ...fluctuations in the use of our different lines of business; operating results below market expectations and changes in, or our failure to meet, financial estimates of securities analysts or our own guidance; acquisition, merger, investment and disposition activities; period-to-period fluctuations in...

  • Page 24
    ... plaintiff alleges that Redbox retains personally identifiable information of consumers for a time period in excess of that allowed under the Video Privacy Protection Act, 18 U.S.C. §§ 2710, et seq. A substantially similar complaint was filed in the same court in March 2011 by an Illinois resident...

  • Page 25
    ... SECURITIES Market Information and Stock Prices Our common stock is traded on the NASDAQ Global Select Market under the symbol "OUTR." The following table sets forth the high and low sale prices per share as reported by the NASDAQ Global Select Market for our common stock for each quarter during...

  • Page 26
    ... total number of shares repurchased amounts in the time period of delivery of the shares to us. Unregistered Sales of Equity Securities On October 26, 2011, we issued 100,000 shares of unregistered restricted common stock to Paramount as partial consideration for licenses to content under a revenue...

  • Page 27
    ...the consolidated financial statements and notes thereto included elsewhere in this Form 10-K. (In thousands, except per share data) Statement of Comprehensive Income Data 2013 2012 Years Ended December 31, 2011 2010 2009 $ Operating income ...$ Income from continuing operations ...$ Revenue ...Loss...

  • Page 28
    ...New Ventures segment results. See Note 3: Business Combinations in our Notes to Consolidated Financial Statements for more information. Strategic Investments and Joint Venture We make strategic investments in external companies that provide automated self-service kiosk solutions. Current investments...

  • Page 29
    ...previous strategic investments, which provides an automated self-service kiosk system where we purchase used mobile phones, tablets and MP3 players for cash. • • • • Recent Events Q4 2013 Events • During the fourth quarter of 2013, as a result of a comprehensive operational review, we...

  • Page 30
    ... Financial Statements. On March 14, 2013, Redbox Instant by Verizon concluded its public beta launch and began commercial launch of its nationwide "over-the-top" video distribution service delivered via broadband networks combined with physical DVD and Blu-rayâ„¢ discs rentals from our kiosks...

  • Page 31
    ... Financial Statements, as well as a weaker release schedule in Q4 2013, down 21.0% from a year ago; Increases in other direct operating expenses including revenue share, payment card processing fees, customer service and support function costs directly attributable to our revenue and kiosk growth...

  • Page 32
    ... New Ventures segment; and Increased loss from equity method investments. For additional information refer to our Segment Results in this Management's Discussion and Analysis of Financial Condition and Results of Operations. Share-Based Payments and Rights to Receive Cash Our share-based payments...

  • Page 33
    ...and employees ("segment operating income"). Segment operating income contains internally allocated costs of our shared services support functions, including but not limited to, corporate executive management, business development, sales, customer service, finance, legal, human resources, information...

  • Page 34
    ... percentage of transaction fees and commissions we pay to our retailers may result in increased expenses. Such variations are based on certain factors, such as total revenue, long-term non-cancelable contracts, installation of our kiosks in high traffic and/or urban or rural locations, new product...

  • Page 35
    Redbox Years Ended December 31, Dollars in thousands, except net revenue per rental amounts 2013 2012 2011 2013 vs. 2012 $ % 2012 vs. 2011 $ % Revenue ...$ 1,974,531 Expenses: Direct operating ...Marketing ...Research and development ...General and administrative ...Segment operating income ...Less...

  • Page 36
    ... Warner Agreement, Redbox agrees to license minimum quantities of theatrical and direct-to-video Blu-ray and DVD titles for rental. The Warner Agreement covers titles that have a street date through December 31, 2014. In January, we signed a five-year renewal with Walgreen Company ("Walgreens"). The...

  • Page 37
    ... and future content purchases are adjusted if results in the current period do not meet expectations but it impacts operating income in the short-term. Increases in revenue share, payment card processing fees, customer service and support function costs directly attributable to our revenue and kiosk...

  • Page 38
    ... video games purchases. Product costs totaled $796.9 million, an increase from $681.8 million in the prior period. In addition, we had increases in revenue share expense and payment card processing fees directly attributable to the revenue growth, higher kiosk field operating costs, allocated sales...

  • Page 39
    ...to timing of advertising and spending to support our programs in 2013; $2.8 million increase in direct operating expenses primarily due to higher revenue share expense attributable to both revenue growth and increased revenue share rates with certain retail partners as a result of long-term contract...

  • Page 40
    ...the development of internal use software; and $1.2 million decrease in marketing expenses due to lower advertising spend. New Ventures Years Ended December 31, Dollars in thousands 2013 2012 2011 2013 vs. 2012 $ % $ 2012 vs. 2011 % Revenue...$ Expenses: Direct operating...Marketing ...Research and...

  • Page 41
    ...to support growth; $1.1 million increase in direct operating expenses primarily due to the addition of self-service concepts in test markets, increased shared services support costs related primarily to deployment of new kiosks and customer service related activity; $0.6 million increase in research...

  • Page 42
    ... grant of a license to use certain Redbox trademarks to Redbox Instant by Verizon, vi) benefits from release of indemnification reserves upon settlement of the Sigue Note and vii) a tax benefit related to the recognition of a worthless stock deduction in a corporate subsidiary ("Non-Core Adjustments...

  • Page 43
    ... employees as well as share-based payments for content arrangements. Comparing 2013 to 2012 The increase in our core adjusted EBITDA from continuing operations was primarily due to increased operating income in our Redbox and Coinstar segments offset by increased operating loss in our New Ventures...

  • Page 44
    ...our Redbox, Coinstar or New Venture kiosks generate lower than anticipated revenue, then our cash needs may increase. Furthermore, our future capital requirements will depend on a number of factors, including consumer use of our services, the timing and number of machine installations, the number of...

  • Page 45
    ...$157.7 million used for purchases of property and equipment for kiosks and corporate infrastructure, including information technology related to our Enterprise Resource Planning implementation; and $28.0 million used for capital contributions to our Redbox Instant by Verizon Joint Venture; partially...

  • Page 46
    ... stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; enter into transactions with stockholders or affiliates; or effect a consolidation or merger. However, these and other limitations set forth in the Indenture will be subject to a number...

  • Page 47
    ... Previous Facility, except that: (i) until the first business day following the date a compliance certificate is delivered under the Second Amended and Restated Credit Agreement for the fiscal quarter ending March 31, 2014, the applicable interest rates for loans under the Additional Term Facility...

  • Page 48
    ...pay them up to the full face value of the Convertible Notes in cash as well as deliver shares of our common stock for any excess conversion value. The number of potentially issued shares increases as the market price of our common stock increases. As of December 31, 2013, such early conversion event...

  • Page 49
    ... agreement. See Note 3: Business Combinations in our Notes to Consolidated Financial Statements. (3) Income tax liabilities for uncertain tax positions were excluded as we are not able to make a reasonably reliable estimate of the amount and period of related future payments. As of December 31, 2013...

  • Page 50
    ... useful lives and 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. In the second quarter of 2013, the Company completed a review...

  • Page 51
    ...and operating loss and tax credit carryforwards are expected to be recovered or settled. We assess our income tax positions and record tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances and information available at the reporting date. For...

  • Page 52
    ... balance of our outstanding term loans of $344.4 million as of December 31, 2013, an increase or decrease of one percentage point in the interest rate over the next year would increase or decrease our annual interest expense by approximately $3.4 million, before tax benefits. Foreign Exchange Rate...

  • Page 53
    ... 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Unaudited quarterly financial data for each of the eight quarters in the two-year period ended December 31, 2013, recast for the four ventures previously included in our New Ventures operating segment; Orango; Rubi; Crisp Market and Star Studio which...

  • Page 54
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the...

  • Page 55
    ... balance sheets of Outerwall Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated February 6, 2014...

  • Page 56
    ... BALANCE SHEETS (in thousands, except share data) December 31, 2013 2012 (As adjusted) Assets Current Assets: Cash and cash equivalents ...Accounts receivable, net of allowances of $1,826 and $2,003 ...Content library...Deferred income taxes...Prepaid expenses and other current assets...Total...

  • Page 57
    ... STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except per share data) Year Ended December 31, 2013 2012 2011 Revenue ...Expenses: Direct operating(1) ...Marketing ...Research and development ...General and administrative ...Depreciation and other ...Amortization of intangible assets ...Total...

  • Page 58
    ... income...Other comprehensive income, net of tax(1) . BALANCE, December 31, 2011 ...Proceeds from exercise of stock options, net ...Adjustments related to tax withholding for share-based compensation ...Share-based payments expense ...Tax benefit on share-based compensation expense ...Repurchases of...

  • Page 59
    ... sale of business, net ...Acquisition of NCR DVD kiosk business ...Cash paid for equity investments...Net cash flows from investing activities ...Financing Activities: Proceeds from issuance of senior unsecured notes ...Proceeds from new borrowing of Credit Facility ...Principal payments on Credit...

  • Page 60
    ... Ventures operating segment, Orango, Rubi, Crisp Market, and Star Studio. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in all periods presented because they were not material. See accompanying Notes to Consolidated Financial Statements...

  • Page 61
    ...of Common Stock ...Share-Based Payments ...Restructuring ...Income Taxes From Continuing Operations ...Discontinued Operations and Sale of Business ...Earnings Per Share ...Other Comprehensive Income ...Business Segments and Enterprise-Wide Information...Retirement Plans ...Fair Value ...Commitments...

  • Page 62
    ... FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2013, 2012, 2011 NOTE 1: ORGANIZATION AND BUSINESS Description of Business We are a leading provider of automated retail solutions offering convenient products and services that benefit consumers and drive incremental retail traffic and revenue...

  • Page 63
    ... useful lives and 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. In the second quarter of 2013, the Company completed a review...

  • Page 64
    ... the costs of movie and game titles. The Company anticipates that this new method will better align the recognition of costs with the related revenue. The Company believes that the change in its content library amortization methodology, made on a prospective basis, is a change in accounting estimate...

  • Page 65
    ...and operating loss and tax credit carryforwards are expected to be recovered or settled. We assess our income tax positions and record tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances and information available at the reporting date. For...

  • Page 66
    ... pay our retailers for the benefit of placing our kiosks in their stores and their agreement to provide certain services on our behalf to our consumers. The fee is generally calculated as a percentage of each coin-counting transaction or as a percentage of our net movie or video game rental revenue...

  • Page 67
    ... exercise of stock options will come from newly issued shares. The expense related to restricted stock granted to movie studios as part of license agreements is adjusted based on the number of unvested shares and market price of our common stock each reporting period. Share-based payment expense is...

  • Page 68
    ... BUSINESS COMBINATIONS Acquisition of ecoATM, Inc., On July 1, 2013, Outerwall Inc., entered into an agreement and plan of merger with ecoATM, Inc., a Delaware corporation ("ecoATM") that provides an automated self-service kiosk system to purchase used mobile phones, tablets and MP3 players for cash...

  • Page 69
    ...382 of the Internal Revenue Code and applicable state tax law. Acquired identifiable intangible assets and their estimated useful life in years are as follows: Dollars in thousands Purchase Price Estimated Useful Life in Years Intangible assets: Developed technology ...$ Trade name ...Covenants not...

  • Page 70
    ... closing date, including the amortization for acquired intangibles which are allocated to our New Ventures segment and expense for rights to receive cash which are unallocated corporate expenses: Year Ended Dollars in thousands December 31, 2013 Revenue ...$ Operating loss...$ Pro forma information...

  • Page 71
    ... identifiable intangible assets: Purchase Price Estimated Useful Life in Years Dollars in thousands Intangible assets: Retailer relationships ...$ Patents ...Trademark and trade name ...Internal use software ...Total ...$ 40,000 6,300 500 160 46,960 10 8 1 1 As of the date of acquisition, we...

  • Page 72
    Sale of Business for more information. This included reclassifying total charges related to our Orango concept of $5.6 million from depreciation and other expense and $0.5 million from direct operating expense for the year ended December 31, 2013 to Loss from discontinued operations, net of tax. ...

  • Page 73
    ...broadband networks to video enabled viewing devices and offering rental of physical DVDs and Blu-rayâ„¢ discs from Redbox kiosks. Redbox initially acquired a 35.0% ownership interest in the Joint Venture and made an initial capital contribution of $14.0 million in cash in February 2012 subsequent to...

  • Page 74
    ... the Joint Venture, we record revenue attributable with the rental of DVDs and Blu-ray discs from our Redbox kiosks arising from Joint Venture subscribers within our Redbox segment. Redbox has certain rights to cause Verizon to acquire Redbox's interest in the Joint Venture at fair value (generally...

  • Page 75
    ... assets ...Current liabilities ...Long-term liabilities ...Redeemable preferred stock ...Statement of Operations Dollars in thousands 2013 32,832 30,765 46,706 23,905 23,542 $ 29,857 39,828 15,822 6,462 23,696 Years Ended December 31, 2012 2011 Revenue ...$ Cost of sales and service ...Net...

  • Page 76
    ... 31, Dollars in thousands 2013 2012 Payroll related expenses...$ Procurement cost for content library ...Business taxes ...Insurance ...Professional fees ...Service contract provider expenses ...Deferred rent expense ...Accrued interest expense ...Income tax payable ...Other ...Total other accrued...

  • Page 77
    ... stock; purchase or redeem capital stock; make investments or certain other restricted payments; sell assets; enter into transactions with stockholders or affiliates; or effect a consolidation or merger. However, these and other limitations set forth in the Indenture will be subject to a number...

  • Page 78
    ... Previous Facility, except that: (i) until the first business day following the date a compliance certificate is delivered under the Second Amended and Restated Credit Agreement for the fiscal quarter ending March 31, 2014, the applicable interest rates for loans under the Additional Term Facility...

  • Page 79
    ...pay them up to the full face value of the Convertible Notes in cash as well as deliver shares of our common stock for any excess conversion value. The number of potentially issued shares increases as the market price of our common stock increases. As of December 31, 2013, such early conversion event...

  • Page 80
    ... stock options by our officers, directors, and employees. The following repurchases were made during the past three years, shares and dollars in thousands except per share price: Year Ended December 31, Number of Shares Repurchased Average Price per Share Total Purchase Price 2011 ...2012 ...2013...

  • Page 81
    ... 2.3 years 0.9 years Shares of common stock are issued upon exercise of stock options. Certain other information regarding our stock-based awards is as follows: • • Stock options are granted only to our executives and non-employee directors. Options granted during the current year vest annually...

  • Page 82
    ... certain movie studios. The expense related to these agreements is included within direct operating expenses in our Consolidated Statements of Comprehensive Income and is adjusted based on the number of unvested shares and market price of our common stock each reporting period. Information related...

  • Page 83
    ... quarter of 2013, as a result of a comprehensive operational review, we committed to a restructuring plan intended to, among other things, better align our cost structure with revenue growth in our core businesses. As part of the plan, we discontinued three concepts in our New Ventures operating...

  • Page 84
    ... second quarter of 2013, we entered into an arrangement to sell certain NCR kiosks and a series of transactions to reorganize Redbox related subsidiary structures through the sale of a wholly owned subsidiary. As a result of the series of transactions we recorded a discrete one-time tax benefit of...

  • Page 85
    ... tax positions identified because operating loss carryforwards, tax credit carryforwards, and income tax payments on account were sufficient to offset all unrecognized tax benefits. Tax Years Open for Examination As of December 31, 2013 for our major tax jurisdictions, the years 2010 through 2012...

  • Page 86
    ...,190) (83,191) Dollars in thousands 2013 Years Ended December 31, 2012 2011 Increase (decrease) in valuation allowance ...$ 6,898 $ - $ (8,947) The increase in valuation allowance during 2013 was primarily related to capital loss carryforwards generated from the sale of a subsidiary. The...

  • Page 87
    ... million. We ceased Orango operations during the second quarter of 2013 and during the third quarter of 2013 based on then-current information, we estimated the fair value less costs to sell utilizing a cash flow approach was zero and recorded additional impairment charge of $2.6 million. During the...

  • Page 88
    .... Summary Financial Information The disposition and operating results of Rubi, Crisp Market, Orango and Star Studio, and the Money Transfer Business are presented in discontinued operations in our Consolidated Statements of Comprehensive Income for all periods presented. The continuing cash flows...

  • Page 89
    ... Statements of Comprehensive Income: Dollars in thousands 2013 Years Ended December 31, 2012 2011 Revenue: Rubi, Crisp Market, Orango and Star Studio ...Money Transfer Business ...Total revenue ...Pre-tax gain (loss) from discontinued operations: Rubi, Crisp Market, Orango and Star Studio...

  • Page 90
    ... and employees ("segment operating income"). Segment operating income contains internally allocated costs of our shared service support functions, including but not limited to, corporate executive management, business development, sales, finance, legal, human resources, information technology and...

  • Page 91
    ...to receive cash issued in connection with our acquisition of ecoATM. Year Ended December 31, 2013 Dollars in thousands Redbox Coinstar New Ventures Corporate Unallocated Total Revenue ...$ 1,974,531 $ Expenses: Direct operating ...1,383,646 Marketing ...23,010 Research and development ...78 General...

  • Page 92
    Year Ended December, 2011 Dollars in thousands Redbox Coinstar New Ventures Corporate Unallocated Total Revenue ...$ 1,561,598 $ Expenses: Direct operating ...1,134,167 Marketing ...22,041 Research and development ...74 General and administrative ...120,384 Segment operating income (loss)...284,932...

  • Page 93
    ... fair value using the information available on the grant date, which consisted of the expected future discounted and tax-effected cash flows attributable to the projected gross revenue stream of the Joint Venture, estimated market royalty rates of approximately 1.5%, as well as a discount rate of...

  • Page 94
    ... reported the carrying value of our convertible debt, face value less the unamortized debt discount, in our Consolidated Balance Sheets. We estimated the fair value of our senior unsecured notes outstanding using a market rate of approximately 6.0% for similar high-yield debt at December 31, 2013...

  • Page 95
    ... We have entered into certain license agreements to obtain content for movie and video game rentals. A summary of the estimated commitments in relation to these agreements as of December 31, 2013 is presented in the following table: Dollars in thousands Total 2014 Years Ended December 31, 2015 2016...

  • Page 96
    ... agreement is available for rental after a certain number of days following the retail release. (4) Agreement includes, at the studio's sole discretion, the option a one-year extensions following the end date. Revenue Share Commitments Certain of our Retailer agreements include minimum revenue share...

  • Page 97
    ... plaintiff alleges that Redbox retains personally identifiable information of consumers for a time period in excess of that allowed under the Video Privacy Protection Act, 18 U.S.C. §§ 2710, et seq. A substantially similar complaint was filed in the same court in March 2011 by an Illinois resident...

  • Page 98
    ... income taxes...Goodwill and other intangible assets...Other long-term assets...Investment in related parties ...Total assets...$ Liabilities and Stockholders' Equity Current Liabilities: Accounts payable ...$ Accrued payable to retailers ...Other accrued liabilities ...Current callable convertible...

  • Page 99
    ... income taxes...Goodwill and other intangible assets...Other long-term assets...Investment in related parties ...Total assets...$ Liabilities and Stockholders' Equity Current Liabilities: Accounts payable ...$ Accrued payable to retailers ...Other accrued liabilities ...Current portion of long-term...

  • Page 100
    ...) Expenses: Direct operating...Marketing ...Research and development ...General and administrative ...Depreciation and other ...Amortization of intangible assets ...Total expenses ...Operating income (loss) ...Other income (expense), net: Income (loss) from equity method investments, net ...Interest...

  • Page 101
    ...thousands) Expenses: Direct operating...Marketing ...Research and development ...General and administrative ...Depreciation and other ...Amortization of intangible assets ...Total expenses ...Operating income (loss) ...Other income (expense), net: Loss from equity method investments, net ...Interest...

  • Page 102
    ... thousands) Revenue ...$ Expenses: Direct operating ...Marketing...Research and development ...General and administrative ...Depreciation and other...Amortization of intangible assets...Total expenses ...Operating income...Other income (expense): Loss from equity method investments, net ...Interest...

  • Page 103
    ...tax benefits related to share-based payments ...Proceeds from exercise of stock options, net ...Net cash flows from financing activities...Effect of exchange rate changes on cash ...Increase (decrease) in cash and cash equivalents(1) ...Cash and cash equivalents: Beginning of period ...End of period...

  • Page 104
    ...tax benefits related to share-based payments ...Proceeds from exercise of stock options, net ...Net cash flows from financing activities...Effect of exchange rate changes on cash ...Increase (decrease) in cash and cash equivalents(1) ...Cash and cash equivalents: Beginning of period ...End of period...

  • Page 105
    ... Credit Facility and senior unsecured notes ...Excess tax benefits related to share-based payments ...Repurchases of common stock ...Proceeds from exercise of stock options...Net cash flows from financing activities ...Effect of exchange rate changes on cash ...Increase (decrease) in cash and cash...

  • Page 106
    ...(170) $ Total 183,416 341,855 During 2013 we discontinued four ventures previously included in our New Ventures operating segment, Orango, Rubi, Crisp Market, and Star Studio. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in all periods...

  • Page 107
    ... the option to increase the tender by up to 2% of outstanding shares. We expect to launch with a price range based on a 5% to 20% premium over the last reported sale price on February 6, 2014. Repurchases under the tender offer would come from this existing repurchase authorization. ITEM 9. CHANGES...

  • Page 108
    Attestation Report of the Independent Registered Public Accounting Firm The attestation report of KPMG LLP, our independent registered public accounting firm, on the effectiveness of our internal control over financial reporting is set forth on page 44. ITEM 9B. OTHER INFORMATION None. 99

  • Page 109
    ... herein by reference to the Proxy Statement relating to our 2014 Annual Meeting of Stockholders. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated herein by reference to the Proxy Statement relating to our 2014 Annual Meeting of Stockholders. 100

  • Page 110
    ... the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form 10-K and the Company's other public filings, which are available without charge through the SEC's website at http://www...

  • Page 111
    ...10.5* 10.6* 10.7* 10.8* Limited Liability Company Agreement of Verizon and Redbox Digital Entertainment Services, LLC, dated as of February 3, 2012.(27) Asset Purchase Agreement by and among Redbox Automated Retail, LLC and NCR Corporation, dated as of February 3, 2012.(27) First Amendment to Asset...

  • Page 112
    ... of Restricted Stock Award and Form of Restricted Stock Award Agreement under the 2011 Incentive Plan for Awards made to Nonemployee Directors on or after June 27, 2013.(33) 1997 Amended and Restated Equity Incentive Plan.(9) Form of 1997 Amended and Restated Equity Incentive Plan Stock Option Grant...

  • Page 113
    ... Stipp, dated June 1, 2011.(29) Change of Control Agreement between Coinstar, Inc. and Maria Stipp, dated June 27, 2011.(29) Offer Letter for Anne Saunders, dated August 7, 2012.(29) Employment Agreement between Redbox Automated Retail, LLC and Anne Saunders, dated August 27, 2012.(29) Change of...

  • Page 114
    ...31, 2011, by and between Coinstar, Inc., Coinstar E-Payment Services Inc., CUHL Holdings Inc., Coinstar UK Holdings Limited, and Sigue Corporation.(25) Second Amendment to Stock Purchase Agreement, by and between Coinstar, Inc., CUHL Holdings Inc., and Sigue Corporation, dated as of May 31, 2012.(28...

  • Page 115
    ...filed on June 2, 2011 (File Number 000-22555). Incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 (File Number 000-22555). Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (File...

  • Page 116
    ... Smith Chief Financial Officer February 6, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 6, 2014: Signature Title /S/ J. Scott Di Valerio...

  • Page 117
    ...Index. All values assume reinvestment of dividends and are plotted below as of December 31 of each fiscal year shown. The stock price performance shown in the graph is historical and not necessarily indicative of future price performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN AMONG OUTERWALL...

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