Redbox 2013 Annual Report Download - page 48

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39
The term loans are subject to mandatory debt repayments of the outstanding borrowings. The schedule of future principal
repayments is as follows:
Dollars in thousands Repayment Amount
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,187
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,875
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,313
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 344,375
Convertible Debt
The aggregate outstanding principal of our 4.0% Convertible Senior Notes (the “Convertible Notes”) is $51.1 million. The
Convertible Notes bear interest at a fixed rate of 4.0% per annum, payable semi-annually in arrears on each March 1 and
September 1, and mature on September 1, 2014. The effective interest rate at issuance was 8.5%. As of December 31, 2013, we
were in compliance with all covenants.
The Convertible Notes become convertible (the “Conversion Event”) when the closing price of our common stock exceeds
$52.38, 130% of the Convertible Notes’ conversion price, for at least 20 trading days during the 30 consecutive trading days
prior to each quarter-end date. If the Convertible Notes become convertible and should the holders elect to convert, we will be
required to 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 was met. As a result, the Convertible Notes were classified as
a current liability and the debt conversion feature was classified as temporary equity on our Consolidated Balance Sheets.
During the year ended December 31, 2013 we retired $133.8 million in face value of Convertible Notes, through open market
purchases and the note holders electing to convert, for $172.2 million in cash and the issuance of 272,336 shares of common
stock. The amount by which the total consideration including cash paid and value of the shares issued exceeds the fair value of
the Convertible Notes is recorded as a reduction of stockholders’ equity. The loss from early extinguishment of these
Convertible Notes was approximately $6.0 million and is recorded in interest expense in our Consolidated Statements of
Comprehensive Income.
See Note 8: Debt and Other Long-Term Liabilities in our Notes to Consolidated Financial Statements for more information on
our debt instruments. As of December 31, 2013, we were in compliance with all debt covenants.
Letters of Credit
As of December 31, 2013, we had six irrevocable standby letters of credit that totaled $8.6 million. These standby letters of
credit, which expire at various times through 2014, are used to collateralize certain obligations to third parties. As of December
31, 2013, no amounts were outstanding under these standby letter of credit agreements.
Other Contingencies
During the year ended December 31, 2013, we resolved a previously disclosed loss contingency related to a supply agreement
and recognized a benefit of $11.4 million included in direct operating in our Consolidated Statements of Comprehensive
Income.