Business Segments and Enterprise-Wide Information

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Business Segments and Enterprise-Wide Information

Note 14: 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 (loss) before depreciation, amortization and other, and share-based compensation granted to executives, non-employee directors and employees (“segment operating income (loss)”). Segment operating income (loss) 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.

Changes in our Organizational Structure

During the first quarter of 2015, we added ecoATM, our electronic device recycling business, as a separate reportable segment. Previously, the results of ecoATM along with those of other self-service concepts were included in our New Ventures segment. The combined results of the other self-service concepts, which include product sampling kiosk concept SAMPLEit, are now included in the All Other reporting category in the reconciliation below as they do not meet quantitative thresholds to be reported as a separate segment. All goodwill previously allocated to the New Ventures segment has been allocated to the ecoATM segment. See Note 6: Goodwill and Other Intangible Assetsfor further information.

Comparability of Segment Results

We have recast prior period results for the following:

• Discontinued operations, consisting of our Redbox operations in Canada which we shut down during the first quarter of 2015. See Note 12: Discontinued Operationsfor further information; and

• The addition of our ecoATM segment and an All Other reporting category, which we added during the first quarter of 2015.

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 ecoATM segments, Corporate Unallocated expenses and All Other. All Other includes the results of other self-service concepts, which we regularly assess to determine whether continued funding or other alternatives are appropriate.

Dollars in thousands
Three Months Ended June 30, 2015	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	438,976		$	80,279		$	26,062		$	52		$	—		$	545,369
Expenses:
Direct operating	301,444			39,358			27,227			1,078			512			369,619
Marketing	4,266			1,232			2,149			258			142			8,047
Research and development	—			—			1,549			1			489			2,039
General and administrative	34,336			7,768			2,094			2,644			1,941			48,783
Goodwill impairment (Note 6)	—			—			85,890			—			—			85,890
Segment operating income (loss)	98,930			31,921			(92,847		)	(3,929		)	(3,084		)	30,991
Less: depreciation, amortization and other	(33,063		)	(8,437		)	(6,305		)	(678		)	—			(48,483		)
Operating income (loss)	65,867			23,484			(99,152		)	(4,607		)	(3,084		)	(17,492		)
Loss from equity method investments, net	—			—			—			—			(133		)	(133		)
Interest expense, net	—			—			—			—			(12,183		)	(12,183		)
Other, net	—			—			—			—			642			642
Income (loss) from continuing operations before income taxes	$	65,867		$	23,484		$	(99,152	)	$	(4,607	)	$	(14,758	)	$	(29,166	)

Dollars in thousands
Three Months Ended June 30, 2014	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	442,838		$	79,880		$	23,799		$	10		$	—		$	546,527
Expenses:
Direct operating	317,376			40,203			22,387			436			1,332			381,734
Marketing	5,533			1,557			927			220			899			9,136
Research and development	18			153			1,391			675			1,175			3,412
General and administrative	33,692			7,169			3,564			573			3,598			48,596
Segment operating income (loss)	86,219			30,798			(4,470		)	(1,894		)	(7,004		)	103,649
Less: depreciation, amortization and other	(38,783		)	(8,921		)	(3,812		)	(136		)	—			(51,652		)
Operating income (loss)	47,436			21,877			(8,282		)	(2,030		)	(7,004		)	51,997
Loss from equity method investments, net	—			—			—			—			(10,541		)	(10,541		)
Interest expense, net	—			—			—			—			(12,932		)	(12,932		)
Other, net	—			—			—			—			1,614			1,614
Income (loss) from continuing operations before income taxes	$	47,436		$	21,877		$	(8,282	)	$	(2,030	)	$	(28,863	)	$	30,138

Dollars in thousands
Six Months Ended June 30, 2015	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	958,509		$	149,609		$	45,811		$	76		$	—		$	1,154,005
Expenses:
Direct operating	644,379			76,621			50,033			2,269			1,501			774,803
Marketing	9,091			2,410			3,879			578			509			16,467
Research and development	—			—			3,005			(84		)	1,202			4,123
General and administrative	68,071			15,563			4,062			5,151			4,492			97,339
Restructuring and lease termination costs (Note 11)	15,174			550			127			—			—			15,851
Goodwill impairment (Note 6)	—			—			85,890			—			—			85,890
Segment operating income (loss)	221,794			54,465			(101,185		)	(7,838		)	(7,704		)	159,532
Less: depreciation, amortization and other	(64,670		)	(16,255		)	(12,207		)	(1,346		)	—			(94,478		)
Operating income (loss)	157,124			38,210			(113,392		)	(9,184		)	(7,704		)	65,054
Loss from equity method investments, net	—			—			—			—			(265		)	(265		)
Interest expense, net	—			—			—			—			(24,254		)	(24,254		)
Other, net	—			—			—			—			(1,704		)	(1,704		)
Income (loss) from continuing operations before income taxes	$	157,124		$	38,210		$	(113,392	)	$	(9,184	)	$	(33,927	)	$	38,831

Dollars in thousands
Six Months Ended June 30, 2014	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	955,887		$	148,633		$	39,745		$	24		$	—		$	1,144,289
Expenses:
Direct operating	680,977			77,926			38,318			844			3,311			801,376
Marketing	9,993			2,563			1,595			381			1,597			16,129
Research and development	26			422			3,175			1,307			1,956			6,886
General and administrative	72,393			14,166			6,443			1,494			6,708			101,204
Restructuring and lease termination costs (Note 11)	534			23			—			—			—			557
Segment operating income (loss)	191,964			53,533			(9,786		)	(4,002		)	(13,572		)	218,137
Less: depreciation, amortization and other	(78,187		)	(17,484		)	(7,524		)	(241		)	—			(103,436		)
Operating income (loss)	113,777			36,049			(17,310		)	(4,243		)	(13,572		)	114,701
Loss from equity method investments, net	—			—			—			—			(19,909		)	(19,909		)
Interest expense, net	—			—			—			—			(22,580		)	(22,580		)
Other, net	—			—			—			—			966			966
Income (loss) from continuing operations before income taxes	$	113,777		$	36,049		$	(17,310	)	$	(4,243	)	$	(55,095	)	$	73,178

Significant Retailer Relationships

The following retailers accounted for 10% or more of our consolidated revenue:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Wal-Mart Stores Inc.	16.4	%	15.1	%	16.4	%	15.2	%
Walgreen Co.	13.5	%	13.7	%	14.0	%	14.0	%
The Kroger Company	10.0	%	9.9	%	9.9	%	9.8	%