Redbox 2012 Annual Report Download - page 22

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 future operating results may fluctuate.
Our future operating results will depend significantly on our ability to continue to drive new and repeat use of
our Redbox and Coin kiosks, our ability to develop and commercialize new products and services, including
through New Ventures, and the costs incurred to do so, and our ability to successfully integrate acquisitions and
other third-party relationships) into our operations. Our operating results have a history of fluctuating and may
continue to fluctuate based upon many factors, including:
• fluctuations in revenue generated by our Redbox and Coin businesses;
• fluctuations in operating expenses, such as the amortization of our content library, and transaction fees
and commissions we pay to our retailers;
• our ability to establish or maintain effective relationships with significant partners, retailers and
suppliers on acceptable terms, including partners with whom we are jointly managing a business of
which we are a minority owner (such as our joint venture, Redbox Instant by Verizon);
• the amount of service fees that we pay to our retailers;
• the transaction fees we charge consumers to use our services;
• fluctuations in consumer rental patterns, including the number of movies rented per visit, the type of
DVDs they want to rent and for how long, and the level of DVD migration between kiosks;
• the successful operation of our network;
• the commercial success of our retailers, which could be affected by such factors as general economic
conditions, severe weather or strikes;
• the successful use and integration of assets and businesses acquired or invested in, including those
acquired from NCR;
• the level of product and price competition;
• fluctuations in interest rates, which affects our debt service obligations;
• the timing and cost of, and our ability to develop and successfully commercialize, new or enhanced
products and services, including potential offerings made through joint ventures;
• activities of, and acquisitions or announcements by, competitors; and;
• the impact from any impairment of inventory, goodwill, fixed assets or intangibles related to our
acquisitions and divestitures.
We have historically experienced seasonality in our revenue from our Redbox segment. December and the
summer months have historically been high rental months, while September and October have been low rental
months, due, in part, to the beginning of the school year and the introduction of the new fall television season.
However, we have entered into licensing agreements with certain studios that contain delayed rental windows.
This has shifted the availability of certain titles relative to historic patterns, most notably certain titles have
shifted from the fourth quarter holiday season into the first quarter of the following year. Despite this shift, we
believe the fourth quarter will remain our highest revenue quarter, consistent with our historical experience.
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