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Business Segments and Enterprise-Wide Information
9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
Business Segments and Enterprise-Wide Information [Text Block]
Note 15: Business Segments and Enterprise-Wide Information
Management, including our chief operating decision maker, who is our CEO, evaluates the performances of our business segments primarily on segment revenue and segment operating income before depreciation, amortization and other, and share-based compensation granted to executives, non-employee directors and employees (“segment operating income”). Segment operating income contains internally allocated costs of our shared service support functions, including but not limited to, corporate executive management, business development, sales, finance, legal, human resources, information technology and risk management. We also review depreciation and amortization allocated to each segment. Share-based payments expense related to share-based compensation granted to executives, non-employee directors and employees and expense related to the rights to receive cash issued in connection with our acquisition of ecoATM are not allocated to our segments and are included in the corporate unallocated column in the analysis and reconciliation below; however, share-based payments expense related to our content arrangements with certain movie studios has been allocated to our Redbox segment and is included within direct operating expenses. Our performance evaluation does not include segment assets.
On July 23, 2013, we completed the acquisition of ecoATM. Prior to July 23, 2013 we held a non-controlling equity interest in ecoATM and reported our share of ecoATM's operating results in loss from equity method investments in our Consolidated Statements of Comprehensive Income. Subsequent to our acquisition of ecoATM on July 23, 2013, the assets acquired and liabilities assumed, as well as the results of operations, with the exception of expense for rights to receive cash which are unallocated corporate expenses, are included in our New Ventures segment as our chief operating decision maker reviews the results in aggregate with other new ventures concepts.
During the year ended December 31, 2013, we discontinued the Rubi, Crisp Market, Orango and Star Studio concepts and accordingly their results of operations were reclassified from the New Ventures segment to Loss from discontinued operations, net of tax in our Consolidated Statements of Comprehensive Income for all periods presented. See Note 13: Discontinued Operations for further information.
Our analysis and reconciliation of our segment information to the consolidated financial statements that follows covers our results of operations, which consists of our Redbox, Coinstar and New Ventures segments. Unallocated general and administrative expenses relate to share-based compensation and expense related to the rights to receive cash issued in connection with our acquisition of ecoATM.
Dollars in thousands
 
Three Months Ended September 30, 2014
Redbox
 
Coinstar
 
New Ventures
 
Corporate Unallocated
 
Total
Revenue
$
438,048

 
$
85,074

 
$
29,742

 
$

 
$
552,864

Expenses:
 
 
 
 
 
 
 
 
 
Direct operating
312,792

 
42,428

 
26,988

 
1,903

 
384,111

Marketing
6,038

 
1,834

 
1,212

 
678

 
9,762

Research and development
15

 
64

 
2,088

 
832

 
2,999

General and administrative
33,527

 
7,313

 
3,885

 
3,139

 
47,864

Segment operating income (loss)
85,676

 
33,435

 
(4,431
)
 
(6,552
)
 
108,128

Less: depreciation, amortization and other
(38,207
)
 
(8,989
)
 
(4,371
)
 

 
(51,567
)
Operating income (loss)
47,469

 
24,446

 
(8,802
)
 
(6,552
)
 
56,561

Loss from equity method investments, net

 

 

 
(11,352
)
 
(11,352
)
Interest expense, net

 

 

 
(12,463
)
 
(12,463
)
Other, net

 

 

 
(3,015
)
 
(3,015
)
Income (loss) from continuing operations before income taxes
$
47,469

 
$
24,446

 
$
(8,802
)
 
$
(33,382
)
 
$
29,731

Dollars in thousands
 
Three Months Ended September 30, 2013
Redbox
 
Coinstar
 
New Ventures
 
Corporate Unallocated
 
Total
Revenue
$
491,694

 
$
79,611

 
$
15,234

 
$

 
$
586,539

Expenses:
 
 
 
 
 
 
 
 
 
Direct operating
350,759

 
41,833

 
12,114

 
1,267

 
405,973

Marketing
5,883

 
1,352

 
421

 
739

 
8,395

Research and development
69

 
1,428

 
1,358

 
655

 
3,510

General and administrative
44,017

 
7,349

 
6,692

 
2,973

 
61,031

Segment operating income (loss)
90,966

 
27,649

 
(5,351
)
 
(5,634
)
 
107,630

Less: depreciation, amortization and other
(41,478
)
 
(8,539
)
 
(2,419
)
 

 
(52,436
)
Operating income (loss)
49,488

 
19,110

 
(7,770
)
 
(5,634
)
 
55,194

Income from equity method investments, net

 

 

 
57,934

 
57,934

Interest expense, net

 

 

 
(8,402
)
 
(8,402
)
Other, net

 

 

 
(2,402
)
 
(2,402
)
Income (loss) from continuing operations before income taxes
$
49,488

 
$
19,110

 
$
(7,770
)
 
$
41,496

 
$
102,324


Dollars in thousands
 
Nine Months Ended September 30, 2014
Redbox
 
Coinstar
 
New Ventures
 
Corporate Unallocated
 
Total
Revenue
$
1,399,185

 
$
233,707

 
$
69,511

 
$

 
$
1,702,403

Expenses:
 
 
 
 
 
 
 
 
 
Direct operating
1,003,097

 
120,354

 
66,150

 
5,214

 
1,194,815

Marketing
17,282

 
4,397

 
3,188

 
2,275

 
27,142

Research and development
41

 
486

 
6,570

 
2,788

 
9,885

General and administrative
106,658

 
21,502

 
11,822

 
9,847

 
149,829

Segment operating income (loss)
272,107

 
86,968

 
(18,219
)
 
(20,124
)
 
320,732

Less: depreciation, amortization and other
(118,928
)
 
(26,473
)
 
(12,136
)
 

 
(157,537
)
Operating income (loss)
153,179

 
60,495

 
(30,355
)
 
(20,124
)
 
163,195

Loss from equity method investments, net

 

 

 
(31,261
)
 
(31,261
)
Interest expense, net

 

 

 
(35,037
)
 
(35,037
)
Other, net

 

 

 
(1,857
)
 
(1,857
)
Income (loss) from continuing operations before income taxes
$
153,179

 
$
60,495

 
$
(30,355
)
 
$
(88,279
)
 
$
95,040

Dollars in thousands
 
Nine Months Ended September 30, 2013
Redbox
 
Coinstar
 
New Ventures
 
Corporate Unallocated
 
Total
Revenue
$
1,478,132

 
$
219,520

 
$
15,244

 
$

 
$
1,712,896

Expenses:
 
 
 
 
 
 
 
 
 
Direct operating
1,040,706

 
119,290

 
12,848

 
1,974

 
1,174,818

Marketing
18,057

 
3,357

 
596

 
893

 
22,903

Research and development
73

 
5,107

 
2,155

 
836

 
8,171

General and administrative
128,963

 
20,077

 
11,611

 
8,135

 
168,786

Segment operating income (loss)
290,333

 
71,689

 
(11,966
)
 
(11,838
)
 
338,218

Less: depreciation, amortization and other
(122,219
)
 
(25,493
)
 
(2,529
)
 

 
(150,241
)
Operating income (loss)
168,114

 
46,196

 
(14,495
)
 
(11,838
)
 
187,977

Income from equity method investments, net

 

 

 
41,280

 
41,280

Interest expense, net

 

 

 
(25,953
)
 
(25,953
)
Other, net

 

 

 
(3,323
)
 
(3,323
)
Income (loss) from continuing operations before income taxes
$
168,114

 
$
46,196

 
$
(14,495
)
 
$
166

 
$
199,981


Significant Retailer Relationships
Our Redbox and Coinstar kiosks are primarily located within retailers. The following retailers accounted for 10% or more of our consolidated revenue:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
Wal-Mart Stores Inc.
15.4
%
 
14.9
%
 
15.3
%
 
15.1
%
Walgreen Co.
13.2
%
 
14.3
%
 
13.7
%
 
14.7
%
The Kroger Company
9.8
%
 
9.8
%
 
9.8
%
 
10.0
%