Redbox 2013 Annual Report Download - page 73

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64
Other Intangible Assets
The gross amount of our other intangible assets and the related accumulated amortization were as follows:
Amortization
Period
December 31,
Dollars in thousands 2013 2012
Retailer relationships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - 10 years $ 53,295 $ 53,344
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,768)(11,518)
35,527 41,826
Developed technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years 34,000 —
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,833)—
31,167 —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 40 years 16,800 9,404
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,111)(2,261)
12,689 7,143
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79,383 $ 48,969
Amortization expense was as follows:
Year Ended December 31,
Dollars in thousands 2013 2012 2011
Retailer relationships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,250 $ 4,456 $ 2,457
Developed technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,833 — 283
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,850 922 —
Total amortization of intangible assets . . . . . . . . . . . . . . . . . . . . $ 10,933 $ 5,378 $ 2,740
During the third quarter of 2013 we acquired ecoATM resulting in a $41.4 million increase in Other Intangible Assets. See
Note 3: Business Combinations for more information.
Assuming no future impairment, the expected future amortization as of December 31, 2013 is as follows:
Dollars in thousands
Retailer
Relationships
Developed
Technology Other Total
2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,432 $ 6,800 $ 2,449 $ 14,681
2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012 6,800 2,419 13,231
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012 6,800 2,307 13,119
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012 6,800 2,285 13,097
2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,012 3,967 1,664 9,643
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,047 — 1,565 15,612
Total expected amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,527 $ 31,167 $ 12,689 $ 79,383
NOTE 6: EQUITY METHOD INVESTMENTS AND RELATED PARTY TRANSACTIONS
Redbox Instant™ by Verizon
In February 2012, Redbox and Verizon Ventures IV LLC (“Verizon”), a wholly owned subsidiary of Verizon Communications
Inc., entered into a Limited Liability Company Agreement (the “LLC Agreement”) and related arrangements. The LLC
Agreement governs the relationship of the parties with respect to a joint venture, Redbox Instant by Verizon (the “Joint
Venture”) formed for the primary purpose of developing, launching, marketing and operating a nationwide “over-the-top” video
distribution service to provide consumers with access to video programming content, including linear content, delivered via
broadband networks to video enabled viewing devices and offering rental of physical DVDs and Blu-ray™ 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 the formation of the Joint Venture. The Joint Venture board of managers
may request each member to make additional capital contributions, on a pro rata basis relative to its respective ownership
interest. If a member does not make any or all of its requested capital contributions, as the case may be, the other contributing