Redbox 2013 Annual Report Download - page 29

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and financial resources. We believe we have significant opportunities to continue to grow our revenues, profitability and cash
flow by capitalizing on our strengths and favorable industry trends through the execution of the following strategies:
• Continue to profitably grow our Redbox business. We believe we will continue to profitably grow Redbox as our
Redbox kiosks continue to attract customers. In addition, we believe there are a number of other ways Redbox will
continue to grow profitability including through the distribution of more Blu-ray™ discs as well as investment in other
customer management tools that will allow for personalized recommendations among other features.
• Leverage our existing platforms to drive new revenue opportunities. We believe that our extensive Redbox and
Coinstar networks lend themselves to additional revenue opportunities with limited incremental investments. At
Redbox, we launched video game rentals which leverage our existing kiosk infrastructure. In the Coinstar business we
have expanded fee-free options, launched a gift card exchange business and introduced other offerings such as with
PayPal®. We will continue to develop consumer oriented products and services that take advantage of our existing
points of presence.
• Develop and expand Redbox Instant by Verizon. We believe Redbox Instant™ by Verizon provides consumers with a
unique and compelling value proposition that combines new release physical and curated digital content. Although we
believe that physical DVD rentals will remain a popular content choice with consumers for the foreseeable future, we
are committed to addressing the changing needs and preferences of our consumers. We believe there is considerable
opportunity for us to grow our consumer base, increase frequency of kiosk use, and achieve strong financial returns
from our investment in this joint venture, including through our sale of kiosk rental nights and potential receipt of
future dividend distributions if available under the joint venture’s mandatory cash distribution plan.
• Optimize revenues from our existing Redbox and Coinstar kiosk offerings. While we have substantially completed
the build out of our Redbox and Coinstar networks in the U.S., we believe we can improve financial performance
through kiosk optimization. We will continue to focus on finding attractive locations for our kiosks, including through
redeployment of underperforming kiosks to lower kiosk density or higher consumer traffic areas. Specific to Redbox,
we have retrofitted a significant percentage of our existing kiosks to provide increased capacity which will enable
Redbox to retain discs in the kiosks longer thereby allowing us to provide greater title selection and copy depth to
generate incremental rentals. We also continuously improve our proprietary algorithms allowing Redbox to more
accurately predict daily film availability and demand at individual kiosk locations.
• Use our expertise to continue to develop innovative automated retail solutions. Through Redbox and Coinstar, we
have demonstrated our ability to profitably scale automated retail solutions. We are leveraging those core
competencies to identify, evaluate, build or acquire and develop new automated retail concepts through both organic
and inorganic opportunities. For example, in the third quarter of 2013, we acquired ecoATM, one of our 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 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 restructuring plan, we discontinued three concepts; Rubi, Crisp Market and Star Studio, which were
previously included in our New Ventures operating segment. Also as part of the restructuring plan, we implemented
actions to reduce costs in our continuing operations primarily through workforce reductions across the Company. The
closure of the three concepts and the workforce reductions are expected to be substantially complete by the end of the
first quarter of 2014. In addition to the three concepts discontinued during the fourth quarter, we discontinued our
concept Orango during the second quarter of 2013. The results of these four discontinued concepts and associated
impairment and restructuring charges were recorded within loss from discontinued operations, net of tax on our
Consolidated Statements of Comprehensive Income. See Note 13: Discontinued Operations and Sale of Business and
Note 11: Restructuring in our Notes to Consolidated Financial Statements for further information.
• During the fourth quarter of 2013, we entered into the Supplement and Amendment to the Second Amended and
Restated Credit Agreement (the "Supplement and Amendment") which amended our Previous Facility (as defined
hereafter). Pursuant to the Supplement and Amendment, we increased capacity under the revolving line of credit to an
aggregate $600.0 million and entered into an additional term facility in the amount of $200.0 million. See Note 8:
Debt and Other Long-Term Liabilities in our Notes to Consolidated Financial Statements.
• During the year ended December 31, 2013, we retired $133.8 million in principal of our Convertible Senior Notes. See
Note 8: Debt and Other Long-Term Liabilities in our Notes to Consolidated Financial Statements.