Redbox 2013 Annual Report Download - page 20

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other things, economic and political conditions, consumer confidence, interest and tax rates, and financial and housing markets.
With economic uncertainty still affecting potential consumers, we may be impacted by more conservative purchasing
tendencies with fewer non-essential products and services purchases during the coming periods if the current economic
environment continues. In addition, because our business relies in part on consumers initially visiting retailers to purchase
products and services that are not necessarily our products and services, if consumers are visiting retailers less frequently and
being more careful with their money when they do, these tendencies may also negatively impact our business.
Further, our ability to obtain additional funding in the future, if and as needed, through equity issuances or loans, or otherwise
meet our current obligations to third parties, could be adversely affected if the economic environment continues to be difficult.
In addition, the ability of third parties to honor their obligations to us could be negatively impacted, as retailers, suppliers and
other parties deal with the difficult economic environment. Finally, there may be consequences that will ultimately result from
the current economic conditions that are not yet known, and any one or more of these unknown consequences (as well as those
currently being experienced) could potentially have a material adverse effect on our financial condition, operating results and
liquidity, as well as our business generally.
Our business can be adversely affected by severe weather, natural disasters and other events beyond our control, such
as earthquakes, fires, power failures, telecommunication loss and terrorist attacks.
A catastrophic event that results in the destruction or disruption of any of our critical business or information technology
systems could harm our ability to conduct normal business operations and our operating results. For example, our corporate
headquarters and certain critical business operations are located in the Bellevue, Washington area, which is near major
earthquake faults. While we have taken steps to protect the security of critical business processes and systems and have
established certain back-up systems and disaster recovery procedures, any disruptions, whether due to inadequate back-up or
disaster recovery planning, failures of information technology systems, interruptions in the communications network, or other
factors, could seriously harm our business, financial condition and results of operations.
In addition, our operational and financial performance is a direct reflection of consumer use of and the ability to operate and
service our kiosks used in our business. Severe weather, natural disasters and other events beyond our control can, for extended
periods of time, significantly reduce consumer use of our products and services as well as interrupt the ability of our employees
and third-party providers to operate and service our kiosks. For example, in October 2012, Hurricane Sandy caused disruptions
to our normal operations in the impacted region for an extended period of time. In some cases, severe weather, natural disasters
and other events beyond our control may result in extensive damage to, or destruction of, our infrastructure and equipment,
including loss of kiosks used to provide our products and services, which losses may not be fully covered by insurance.
Defects, failures or security breaches in and inadequate upgrades of, or changes to, our operating systems could harm
our business.
The operation of our business depends on sophisticated software, hardware, computer networking and communication services
that may contain undetected errors or may be subject to failures or complications. These errors, failures or complications may
arise particularly when new, changed or enhanced products or services are added. In the past, there have been limited delays
and disruptions resulting from upgrading or improving these operating systems. Future upgrades, improvements or changes that
may be necessary to expand and maintain our business could result in delays or disruptions or may not be timely or
appropriately made, any of which could seriously harm our operations.
Further, certain aspects of the operating systems relating to our business are provided by third parties, including
telecommunications. Accordingly, the effectiveness of these operating systems is, to a certain degree, dependent on the actions
and decisions of third parties over whom we may have limited control.
Failure to adequately comply with information security policies, standards or legal requirements or to safeguard against
breaches of such could adversely affect our operations and could 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, transfer and retain as
part of our business. These activities are subject to laws and regulations, as well as industry standards, in the United States and
other jurisdictions in which our products and services are available. These requirements, which often differ materially and
sometimes conflict among the many jurisdictions in which we operate, are designed to protect the privacy of consumers’
personal information and to prevent that information from being inappropriately used or disclosed. We maintain and review
technical and operational safeguards designed to protect this information and generally require third party vendors and others
with whom we work to do so as well. However, despite those safeguards, it is possible that hackers, employees acting contrary