Guarantor Subsidiaries

6 Months Ended

Jun. 30, 2014

Guarantor Subsidiaries Disclosure [Abstract]

Guarantor Subsidiaries [Text Block]

Note 18: Guarantor Subsidiaries

Certain of our wholly-owned subsidiaries have, jointly and severally, fully and unconditionally guaranteed the Senior Notes. Pursuant to SEC regulations, we have presented in columnar format the condensed consolidating financial information for Outerwall Inc., the guarantor subsidiaries on a combined basis, and all non-guarantor subsidiaries on a combined basis in the following tables:

CONSOLIDATING BALANCE SHEETS
(unaudited)
	As of June 30, 2014
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Assets
Current Assets:
Cash and cash equivalents	$	174,853		$	11,423	$	46,950		$	—		$	233,226
Accounts receivable, net of allowances	1,501			41,158		2,309			—			44,968
Content library	—			149,659		2,723			—			152,382
Prepaid expenses and other current assets	42,508			26,448		894			(6,205		)	63,645
Intercompany receivables	141,001			389,994		5,899			(536,894		)	—
Total current assets	359,863			618,682		58,775			(543,099		)	494,221
Property and equipment, net	152,670			286,271		36,799			—			475,740
Deferred income taxes	—			—		8,277			—			8,277
Goodwill and other intangible assets, net	250,078			380,917		—			—			630,995
Other long-term assets	7,276			2,032		417			—			9,725
Investment in related parties	866,658			3,354		—			(870,012		)	—
Total assets	$	1,636,545		$	1,291,256	$	104,268		$	(1,413,111	)	$	1,618,958
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	13,620		$	144,395	$	2,071		$	—		$	160,086
Accrued payable to retailers	75,232			34,666		17,875			—			127,773
Other accrued liabilities	57,046			70,746		3,434			(182		)	131,044
Current portion of long-term debt and other long-term liabilities	52,604			—		404			—			53,008
Deferred income taxes	—			37,451		4			(6,023		)	31,432
Intercompany payables	335,204			129,446		72,244			(536,894		)	—
Total current liabilities	533,706			416,704		96,032			(543,099		)	503,343
Long-term debt and other long-term liabilities	962,161			18,348		1,208			—			981,717
Deferred income taxes	36,727			175		35			—			36,937
Total liabilities	1,532,594			435,227		97,275			(543,099		)	1,521,997
Commitments and contingencies
Debt conversion feature	163			—		—			—			163
Stockholders’ Equity:
Preferred stock	—			—		—			—			—
Common stock	594,007			225,729		12,393			(352,635		)	479,494
Treasury stock	(941,167		)	—		—			—			(941,167		)
Retained earnings	452,079			630,300		(6,303		)	(517,377		)	558,699
Accumulated other comprehensive income (loss)	(1,131		)	—		903			—			(228		)
Total stockholders’ equity	103,788			856,029		6,993			(870,012		)	96,798
Total liabilities and stockholders’ equity	$	1,636,545		$	1,291,256	$	104,268		$	(1,413,111	)	$	1,618,958

CONSOLIDATING BALANCE SHEETS
(unaudited)
	As of December 31, 2013
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Assets
Current Assets:
Cash and cash equivalents	$	315,250		$	9,639	$	46,548		$	—		$	371,437
Accounts receivable, net of allowances	2,029			45,672		2,595			—			50,296
Content library	37			196,695		3,136			—			199,868
Prepaid expenses and other current assets	67,664			28,234		960			(12,149		)	84,709
Intercompany receivables	180,100			355,418		5,093			(540,611		)	—
Total current assets	565,080			635,658		58,332			(552,760		)	706,310
Property and equipment, net	163,747			320,296		36,822			—			520,865
Deferred income taxes	—			—		6,412			31			6,443
Goodwill and other intangible assets, net	251,150			387,540		—			—			638,690
Other long-term assets	7,156			11,499		420			—			19,075
Investment in related parties	815,243			4,825		—			(820,068		)	—
Total assets	$	1,802,376		$	1,359,818	$	101,986		$	(1,372,797	)	$	1,891,383
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	17,336		$	215,703	$	2,979		$	—		$	236,018
Accrued payable to retailers	71,085			48,126		14,929			—			134,140
Other accrued liabilities	59,444			71,607		3,076			—			134,127
Current portion of long-term debt and other long-term liabilities	103,519			3		367			—			103,889
Deferred income taxes	—			35,292		—			(12,149		)	23,143
Intercompany payables	315,615			154,565		70,432			(540,612		)	—
Total current liabilities	566,999			525,296		91,783			(552,761		)	631,317
Long-term debt and other long-term liabilities	661,627			18,748		1,028			—			681,403
Deferred income taxes	45,307			13,190		—			31			58,528
Total liabilities	1,273,933			557,234		92,811			(552,730		)	1,371,248
Commitments and contingencies
Debt conversion feature	1,446			—		—			—			1,446
Stockholders’ Equity:
Preferred stock	—			—		—			—			—
Common stock	596,995			225,016		12,393			(351,923		)	482,481
Treasury stock	(476,796		)	—		—			—			(476,796		)
Retained earnings	407,959			577,568		(3,612		)	(468,144		)	513,771
Accumulated other comprehensive income (loss)	(1,161		)	—		394			—			(767		)
Total stockholders’ equity	526,997			802,584		9,175			(820,067		)	518,689
Total liabilities and stockholders’ equity	$	1,802,376		$	1,359,818	$	101,986		$	(1,372,797	)	$	1,891,383

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
	Three Months Ended June 30, 2014
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Revenue	$	68,085		$	466,639		$	14,446		$	—		$	549,170
Expenses:
Direct operating	35,401			340,591			10,067			—			386,059
Marketing	1,651			7,351			781			—			9,783
Research and development	832			2,580			—			—			3,412
General and administrative	10,365			38,067			542			—			48,974
Depreciation and other	9,469			37,732			1,979			—			49,180
Amortization of intangible assets	536			3,311			—			—			3,847
Total expenses	58,254			429,632			13,369			—			501,255
Operating income	9,831			37,007			1,077			—			47,915
Other income (expense), net:
Loss from equity method investments, net	(224		)	(10,317		)	—			—			(10,541		)
Interest income (expense), net	(12,971		)	91			(49		)	—			(12,929		)
Other, net	4,114			491			(1,703		)	—			2,902
Total other expense, net	(9,081		)	(9,735		)	(1,752		)	—			(20,568		)
Income (loss) from continuing operations before income taxes	750			27,272			(675		)	—			27,347
Income tax benefit (expense)	920			(6,873		)	416			—			(5,537		)
Income (loss) from continuing operations	1,670			20,399			(259		)	—			21,810
Loss from discontinued operations, net of tax	(94		)	37			—			—			(57		)
Equity in income (loss) of subsidiaries	20,177			(259		)	—			(19,918		)	—
Net Income (loss)	21,753			20,177			(259		)	(19,918		)	21,753
Foreign currency translation adjustment(1)	297			—			(633		)	—			(336		)
Comprehensive income (loss)	$	22,050		$	20,177		$	(892	)	$	(19,918	)	$	21,417

(1) Foreign currency translation adjustment had no tax effect in 2014.

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
	Three Months Ended June 30, 2013
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Revenue	$	63,504		$	477,012		$	12,534		$	—		$	553,050
Expenses:
Direct operating	34,990			318,774			12,640			(2,454		)	363,950
Marketing	1,058			5,376			688			—			7,122
Research and development	2,042			312			—			—			2,354
General and administrative	9,091			42,383			366			2,454			54,294
Depreciation and other	7,252			38,833			1,246			—			47,331
Amortization of intangible assets	569			1,308			—			—			1,877
Total expenses	55,002			406,986			14,940			—			476,928
Operating income (loss)	8,502			70,026			(2,406		)	—			76,122
Other income (expense), net:
Loss from equity method investments, net	(1,435		)	(8,194		)	—			—			(9,629		)
Interest expense, net	(12,010		)	(4		)	(4		)	—			(12,018		)
Other, net	(2,981		)	2,015			(14		)	—			(980		)
Total other expense, net	(16,426		)	(6,183		)	(18		)	—			(22,627		)
Income (loss) from continuing operations before income taxes	(7,924		)	63,843			(2,424		)	—			53,495
Income tax benefit (expense)	19,455			(23,278		)	741			—			(3,082		)
Income (loss) from continuing operations	11,531			40,565			(1,683		)	—			50,413
Loss from discontinued operations, net of tax	(3,304		)	(252		)	—			—			(3,556		)
Equity in income (loss) of subsidiaries	38,630			(1,683		)	—			(36,947		)	—
Net income (loss)	46,857			38,630			(1,683		)	(36,947		)	46,857
Foreign currency translation adjustment(1)	188			—			(430		)	—			(242		)
Comprehensive income (loss)	$	47,045		$	38,630		$	(2,113	)	$	(36,947	)	$	46,615

(1) Foreign currency translation adjustment had no tax effect in 2013.

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
	Six Months Ended June 30, 2014
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Revenue	$	126,262		$	995,633		$	27,644		$	—		$	1,149,539
Expenses:
Direct operating	68,469			722,102			20,133			—			810,704
Marketing	2,778			13,161			1,441			—			17,380
Research and development	1,728			5,158			—			—			6,886
General and administrative	20,640			80,416			909			—			101,965
Depreciation and other	18,571			75,912			3,792			—			98,275
Amortization of intangible assets	1,072			6,623			—			—			7,695
Total expenses	113,258			903,372			26,275			—			1,042,905
Operating income (loss)	13,004			92,261			1,369			—			106,634
Other income (expense), net:
Loss from equity method investments, net	(448		)	(19,461		)	—			—			(19,909		)
Interest income (expense), net	(22,602		)	123			(95		)	—			(22,574		)
Other, net	5,721			836			(5,399		)	—			1,158
Total other expense, net	(17,329		)	(18,502		)	(5,494		)	—			(41,325		)
Income (loss) from continuing operations before income taxes	(4,325		)	73,759			(4,125		)	—			65,309
Income tax benefit (expense)	3,248			(24,295		)	1,434			—			(19,613		)
Income (loss) from continuing operations	(1,077		)	49,464			(2,691		)	—			45,696
Loss from discontinued operations, net of tax	(803		)	35			—			—			(768		)
Equity in income (loss) of subsidiaries	46,808			(2,691		)	—			(44,117		)	—
Net income (loss)	44,928			46,808			(2,691		)	(44,117		)	44,928
Foreign currency translation adjustment(1)	30			—			509			—			539
Comprehensive income (loss)	$	44,958		$	46,808		$	(2,182	)	$	(44,117	)	$	45,467

(1) Foreign currency translation adjustment had no tax effect in 2014.

CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
	Six Months Ended June 30, 2013
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Revenue	$	119,080		$	983,724		$	23,553		$	—		$	1,126,357
Expenses:
Direct operating	67,750			681,716			24,090			(4,711		)	768,845
Marketing	2,192			11,163			1,153			—			14,508
Research and development	4,658			3			—			—			4,661
General and administrative	16,802			85,526			716			4,711			107,755
Depreciation and other	14,044			77,573			2,294			—			93,911
Amortization of intangible assets	1,139			2,755			—			—			3,894
Total expenses	106,585			858,736			28,253			—			993,574
Operating income (loss)	12,495			124,988			(4,700		)	—			132,783
Other income (expense), net:
Loss from equity method investments, net	(2,019		)	(14,635		)	—			—			(16,654		)
Interest income (expense), net	(17,954		)	453			(50		)	—			(17,551		)
Other, net	(1,090		)	211			(42		)	—			(921		)
Total other expense, net	(21,063		)	(13,971		)	(92		)	—			(35,126		)
Income (loss) from continuing operations before income taxes	(8,568		)	111,017			(4,792		)	—			97,657
Income tax benefit (expense)	21,563			(42,249		)	1,449			—			(19,237		)
Income (loss) from continuing operations	12,995			68,768			(3,343		)	—			78,420
Loss from discontinued operations, net of tax	(8,251		)	(708		)	—			—			(8,959		)
Equity in income (loss) of subsidiaries	64,717			(3,343		)	—			(61,374		)	—
Net income (loss)	69,461			64,717			(3,343		)	(61,374		)	69,461
Foreign currency translation adjustment(1)	21			—			(2,177		)	—			(2,156		)
Comprehensive income (loss)	$	69,482		$	64,717		$	(5,520	)	$	(61,374	)	$	67,305

(1) Foreign currency translation adjustment had no tax effect in 2013.

CONSOLIDATING STATEMENTS OF CASH FLOWS
(unaudited)
	Six Months Ended June 30, 2014
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Operating Activities:
Net income (loss)	$	44,928		$	46,808		$	(2,691	)	$	(44,117	)	$	44,928
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and other	18,554			75,912			3,792			—			98,258
Amortization of intangible assets	1,072			6,623			—			—			7,695
Share-based payments expense	5,451			1,393			—			—			6,844
Windfall excess tax benefits related to share-based payments	(1,953		)	—			—			—			(1,953		)
Deferred income taxes	(2,451		)	(10,855		)	(1,698		)	—			(15,004		)
Impairment Expense(1)	—			—			—			—			—
Loss from equity method investments, net	448			19,461			—			—			19,909
Amortization of deferred financing fees and debt discount	2,522			—			—			—			2,522
Loss from early extinguishment of debt	1,963			—			—			—			1,963
Other	(1,011		)	(180		)	27			—			(1,164		)
Equity in (income) losses of subsidiaries	(46,808		)	2,691			—			44,117			—
Cash flows from changes in operating assets and liabilities:
Accounts receivable, net	528			4,514			289			—			5,331
Content library	36			47,037			413			—			47,486
Prepaid expenses and other current assets	20,618			1,105			98			182			22,003
Other assets	42			979			15			—			1,036
Accounts payable	(3,201		)	(67,218		)	(576		)	—			(70,995		)
Accrued payable to retailers	4,146			(13,460		)	2,591			—			(6,723		)
Other accrued liabilities	(3,874		)	(978		)	318			(182		)	(4,716		)
Net cash flows from operating activities(1)	41,010			113,832			2,578			—			157,420
Investing Activities:
Purchases of property and equipment	(17,458		)	(31,412		)	(4,146		)	—			(53,016		)
Proceeds from sale of property and equipment	750			1,043			—			—			1,793
Cash paid for equity investments	—			(10,500		)	—			—			(10,500		)
Investments in and advances to affiliates	69,392			(71,176		)	1,784			—			—
Net cash flows from (used in) investing activities(1)	52,684			(112,045		)	(2,362		)	—			(61,723		)
Financing Activities:
Proceeds from issuance of senior unsecured notes	295,500			—			—			—			295,500
Proceeds from new borrowing of Credit Facility	505,000			—			—			—			505,000
Principal payments on Credit Facility	(534,375		)	—			—			—			(534,375		)
Financing costs associated with Credit Facility and senior unsecured notes	(2,082		)	—			—			—			(2,082		)
Conversion of convertible debt	(17,724		)	—			—			—			(17,724		)
Repurchases of common stock	(474,480		)	—			—			—			(474,480		)
Principal payments on capital lease obligations and other debt	(6,863		)	(3		)	(215		)	—			(7,081		)
Windfall excess tax benefits related to share-based payments	1,953			—			—			—			1,953
Withholding tax paid on vesting of restricted stock net of proceeds from exercise of stock options	(1,025		)	—			—			—			(1,025		)
Net cash flows from (used in) financing activities(1)	(234,096		)	(3		)	(215		)	—			(234,314		)

	Six Months Ended June 30, 2014
	Outerwall Inc.			Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		Eliminations and Consolidation Reclassifications		Total
Effect of exchange rate changes on cash	5			—		401		—		406
Increase (decrease) in cash and cash equivalents	(140,397		)	1,784		402		—		(138,211		)
Cash and cash equivalents:
Beginning of period	315,250			9,639		46,548		—		371,437
End of period	$	174,853		$	11,423	$	46,950	$	—	$	233,226

(1) During 2013, we discontinued four ventures previously included in our New Ventures operating segment, Orango, Rubi, Crisp Market, and Star Studio. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in all periods presented because they were not material.

CONSOLIDATING STATEMENTS OF CASH FLOWS
(unaudited)
	Six Months Ended June 30, 2013
(in thousands)	Outerwall Inc.			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Operating Activities:
Net income (loss)	$	69,461		$	64,717		$	(3,343	)	$	(61,374	)	$	69,461
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and other	14,642			77,573			2,294			—			94,509
Amortization of intangible assets	1,139			2,755			—			—			3,894
Share-based payments expense	5,063			3,617			—			—			8,680
Windfall excess tax benefits related to share-based payments	(3,029		)	—			—			—			(3,029		)
Deferred income taxes	10,915			(46,283		)	(1,543		)	—			(36,911		)
Impairment Expense	2,676			—			—			—			2,676
Loss from equity method investments, net	2,019			14,635			—			—			16,654
Amortization of deferred financing fees and debt discount	4,047			—			—			—			4,047
Loss from early extinguishment of debt	5,949			—			—			—			5,949
Other	(1,536		)	(272		)	(3		)	—			(1,811		)
Equity in (income) losses of subsidiaries	(64,717		)	3,343			—			61,374			—
Cash flows from changes in operating assets and liabilities:
Accounts receivable, net	(555		)	(791		)	(1,304		)	—			(2,650		)
Content library	680			5,459			(1,227		)	—			4,912
Prepaid expenses and other current assets	(3,176		)	(6,951		)	(484		)	—			(10,611		)
Other assets	145			744			13			—			902
Accounts payable	3,221			(59,380		)	347			354			(55,458		)
Accrued payable to retailers	2,869			(5,097		)	1,955			—			(273		)
Other accrued liabilities	1,542			(16,177		)	(128		)	—			(14,763		)
Net cash flows from (used in) operating activities(1)	51,355			37,892			(3,423		)	354			86,178
Investing Activities:
Purchases of property and equipment	(32,037		)	(40,988		)	(11,219		)	—			(84,244		)
Proceeds from sale of property and equipment	12,079			750			3			—			12,832
Net sales (purchases) of short term investments	(10,000		)	—			—			—			(10,000		)
Receipt of note receivable principal	95			—			—			—			95
Cash paid for equity investments	—			(14,000		)	—			—			(14,000		)
Investments in and advances to affiliates	(31,177		)	20,373			10,804			—			—
Net cash flows used in investing activities(1)	(61,040		)	(33,865		)	(412		)	—			(95,317		)
Financing Activities:
Proceeds from issuance of senior unsecured notes	343,769			—			—			—			343,769
Proceeds from new borrowing on Credit Facility	—			—			—			—			—
Principal payments on Credit Facility	(6,562		)	—			—			—			(6,562		)
Financing costs associated with Credit Facility and senior unsecured notes	(444		)	—			—			—			(444		)
Conversion of convertible debt	(169,634		)	—			—			—			(169,634		)
Repurchases of common stock	(71,388		)	—			—			—			(71,388		)
Principal payments on capital lease obligations and other debt	(7,053		)	(203		)	(195		)	—			(7,451		)
Windfall excess tax benefits related to share-based payments	3,029			—			—			—			3,029
Withholding tax paid on vesting of restricted stock net of proceeds from exercise of stock options	6,745			—			—			—			6,745
Net cash flows from (used in) financing activities(1)	98,462			(203		)	(195		)	—			98,064

	Six Months Ended June 30, 2013
	Outerwall Inc.		Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			Eliminations and Consolidation Reclassifications			Total
Effect of exchange rate changes on cash	21		—		(1,595		)	—			(1,574		)
Increase (decrease) in cash and cash equivalents	88,798		3,824		(5,625		)	354			87,351
Cash and cash equivalents:
Beginning of period	242,489		—		40,759			(354		)	282,894
End of period	$	331,287	$	3,824	$	35,134		$	—		$	370,245

(1) During 2013, we discontinued four ventures previously included in our New Ventures operating segment, Orango, Rubi, Crisp Market, and Star Studio. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in all periods presented because they were not material.