Business Segments and Enterprise-Wide Information

9 Months Ended

Sep. 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 September 30, 2015	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	395,372		$	85,677		$	30,965		$	41		$	—		$	512,055
Expenses:
Direct operating	269,022			41,249			28,583			786			559			340,199
Marketing	4,180			1,439			1,134			262			116			7,131
Research and development	—			—			1,201			—			313			1,514
General and administrative	31,788			8,502			3,105			933			3,490			47,818
Segment operating income (loss)	90,382			34,487			(3,058		)	(1,940		)	(4,478		)	115,393
Less: depreciation, amortization and other	(27,754		)	(7,942		)	(6,788		)	(704		)	—			(43,188		)
Operating income (loss)	62,628			26,545			(9,846		)	(2,644		)	(4,478		)	72,205
Loss from equity method investments, net	—			—			—			—			(328		)	(328		)
Interest expense, net	—			—			—			—			(11,973		)	(11,973		)
Other, net	—			—			—			—			(1,384		)	(1,384		)
Income (loss) from continuing operations before income taxes	$	62,628		$	26,545		$	(9,846	)	$	(2,644	)	$	(18,163	)	$	58,520

Dollars in thousands
Three Months Ended September 30, 2014	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	435,083		$	85,074		$	29,733		$	9		$	—		$	549,899
Expenses:
Direct operating	308,123			42,428			26,411			577			1,903			379,442
Marketing	5,419			1,834			973			239			678			9,143
Research and development	15			64			1,360			728			832			2,999
General and administrative	33,249			7,313			3,027			858			3,139			47,586
Segment operating income (loss)	88,277			33,435			(2,038		)	(2,393		)	(6,552		)	110,729
Less: depreciation, amortization and other	(36,685		)	(8,989		)	(4,297		)	(74		)	—			(50,045		)
Operating income (loss)	51,592			24,446			(6,335		)	(2,467		)	(6,552		)	60,684
Loss from equity method investments, net	—			—			—			—			(11,352		)	(11,352		)
Interest expense, net	—			—			—			—			(12,465		)	(12,465		)
Other, net	—			—			—			—			(1,352		)	(1,352		)
Income (loss) from continuing operations before income taxes	$	51,592		$	24,446		$	(6,335	)	$	(2,467	)	$	(31,721	)	$	35,515

Dollars in thousands
Nine Months Ended September 30, 2015	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	1,353,881		$	235,286		$	76,776		$	117		$	—		$	1,666,060
Expenses:
Direct operating	913,401			117,870			78,616			3,055			2,060			1,115,002
Marketing	13,271			3,849			5,013			840			625			23,598
Research and development	—			—			4,206			(84		)	1,515			5,637
General and administrative	99,859			24,065			7,167			6,084			7,982			145,157
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)	312,176			88,952			(104,243		)	(9,778		)	(12,182		)	274,925
Less: depreciation, amortization and other	(92,424		)	(24,197		)	(18,995		)	(2,050		)	—			(137,666		)
Operating income (loss)	219,752			64,755			(123,238		)	(11,828		)	(12,182		)	137,259
Loss from equity method investments, net	—			—			—			—			(593		)	(593		)
Interest expense, net	—			—			—			—			(36,227		)	(36,227		)
Other, net	—			—			—			—			(3,088		)	(3,088		)
Income (loss) from continuing operations before income taxes	$	219,752		$	64,755		$	(123,238	)	$	(11,828	)	$	(52,090	)	$	97,351

Dollars in thousands
Nine Months Ended September 30, 2014	Redbox			Coinstar			ecoATM			All Other			Corporate Unallocated			Total
Revenue	$	1,390,970		$	233,707		$	69,478		$	33		$	—		$	1,694,188
Expenses:
Direct operating	989,100			120,354			64,729			1,421			5,214			1,180,818
Marketing	15,412			4,397			2,568			620			2,275			25,272
Research and development	41			486			4,535			2,035			2,788			9,885
General and administrative	105,642			21,479			9,470			2,352			9,847			148,790
Restructuring and lease termination costs (Note 11)	534			23			—			—			—			557
Segment operating income (loss)	280,241			86,968			(11,824		)	(6,395		)	(20,124		)	328,866
Less: depreciation, amortization and other	(114,872		)	(26,473		)	(11,821		)	(315		)	—			(153,481		)
Operating income (loss)	165,369			60,495			(23,645		)	(6,710		)	(20,124		)	175,385
Loss from equity method investments, net	—			—			—			—			(31,261		)	(31,261		)
Interest expense, net	—			—			—			—			(35,045		)	(35,045		)
Other, net	—			—			—			—			(386		)	(386		)
Income (loss) from continuing operations before income taxes	$	165,369		$	60,495		$	(23,645	)	$	(6,710	)	$	(86,816	)	$	108,693

Significant Retailer Relationships

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Wal-Mart Stores Inc.	16.6	%	15.4	%	16.5	%	15.3	%
Walgreen Co.	12.9	%	13.2	%	13.6	%	13.8	%