Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 28, 2022 | Jun. 30, 2021 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-39741 | ||
Entity Registrant Name | REDBOX ENTERTAINMENT INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 85-2157010 | ||
Entity Address, Address Line One | 1 Tower Lane | ||
Entity Address, Address Line Two | Suite 800, | ||
Entity Address, City or Town | Oakbrook Terrace | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60181 | ||
City Area Code | 630 | ||
Local Phone Number | 756-8000 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Central Index Key | 0001820201 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 143,175,000 | ||
Auditor Name | GRANT THORNTON LLP | ||
Auditor Firm ID | 248 | ||
Auditor Location | Chicago, IL | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Class A common stock, $0.001 Par Value per Share | ||
Trading Symbol | RDBX | ||
Security Exchange Name | NASDAQ | ||
Entity Common Stock, Shares Outstanding | 12,618,516 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 32,770,000 | ||
Warrants to purchase Class A common stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Warrants to purchase Class A common stock | ||
Trading Symbol | RDBXW | ||
Security Exchange Name | NASDAQ |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash, cash equivalents and restricted cash | $ 18,478 | $ 8,927 |
Accounts receivable, net of allowances of $259 at December 31, 2021 and $145 at December 31, 2020 | 10,856 | 8,631 |
Due from related parties, net (Note 18) | 3,813 | 4,112 |
Content library | 25,201 | 26,074 |
Income tax receivable | 10,498 | |
Prepaid expenses and other current assets | 6,667 | 6,949 |
Total current assets | 65,015 | 65,191 |
Property and equipment, net (Note 4) | 40,624 | 63,089 |
Goodwill (Note 5) | 147,523 | 147,523 |
Intangible assets, net (Note 5) | 124,207 | 195,635 |
Other long-term assets | 663 | 1,653 |
Total assets | 378,032 | 473,091 |
Current Liabilities: | ||
Trade payables | 32,266 | 26,719 |
Due to related parties, net (Note 18) | 74 | 449 |
Accrued and other current liabilities (Note 6) | 57,755 | 75,954 |
Current portion of long-term debt (Note 7) | 34,211 | 0 |
Total current liabilities | 124,306 | 103,122 |
Long-term debt, net (Note 7) | 287,355 | 307,474 |
Warrant liability (Note 14) | 17,821 | |
Other long-term liabilities | 11,501 | 19,862 |
Deferred income taxes, net | 41,171 | |
Total liabilities | 440,983 | 471,629 |
Commitments and contingencies (Note 16) | ||
Shareholders' Equity | ||
Common units | 3 | |
Additional paid-in-capital | 302,455 | 223,085 |
Non-controlling interest | (32,456) | |
Accumulated deficit | (332,954) | (221,626) |
Total equity | (62,951) | 1,462 |
Total liabilities and shareholders' equity | 378,032 | $ 473,091 |
Class A Common Stock | ||
Shareholders' Equity | ||
Common stock | 1 | |
Class B Common Stock | ||
Shareholders' Equity | ||
Common stock | $ 3 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounts receivable, allowance for doubtful accounts | $ 259 | $ 145 |
Class A Common Stock | ||
Common stock, par value | $ 0.0001 | |
Common Stock, Shares Authorized | 500,000,000 | |
Common Stock, Shares, Issued | 12,618,516 | |
Common Stock, Shares, Outstanding | 12,618,516 | |
Class B Common Stock | ||
Common stock, par value | $ 0.0001 | |
Common Stock, Shares Authorized | 100,000,000 | |
Common Stock, Shares, Issued | 32,770,000 | |
Common Stock, Shares, Outstanding | 32,770,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net revenue | $ 288,540 | $ 546,191 | $ 858,370 |
Revenue from Contract with Customer, Product and Service [Extensible Enumeration] | us-gaap:EntertainmentMember | us-gaap:EntertainmentMember | us-gaap:EntertainmentMember |
Operating expenses: | |||
Product cost | $ 115,141 | $ 220,999 | $ 359,880 |
Direct operating | 131,926 | 167,090 | 237,490 |
Marketing | 14,806 | 21,214 | 25,813 |
Stock-based compensation expense | 1,994 | 16 | 156 |
General and administrative | 59,436 | 62,219 | 67,002 |
Depreciation and amortization | 108,505 | 136,838 | 138,274 |
Total operating expenses | 431,808 | 608,376 | 828,615 |
Operating (loss) income | (143,268) | (62,185) | 29,755 |
Other expense, net: | |||
Other expense, net | (31,523) | (32,522) | (44,578) |
Total other expense, net | (31,523) | (32,522) | (44,578) |
Loss before income taxes | (174,791) | (94,707) | (14,823) |
Income tax benefit | (34,035) | (25,204) | (7,256) |
Net loss | (140,756) | $ (69,503) | $ (7,567) |
Net loss attributable to non-controlling interest | (27,967) | ||
Net loss attributable to Class A common stockholders | $ (112,789) | ||
Loss per share of Class A common stock: | |||
Basic loss per share (Note 12) | $ (0.58) | ||
Diluted loss per share (Note 12) | $ (0.55) | ||
Weighted average shares of Class A common stock outstanding: | |||
Basic | 12,618,516 | ||
Diluted | 12,618,516 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities: | |||
Net loss | $ (140,756) | $ (69,503) | $ (7,567) |
Adjustments to reconcile net income to net cash flows from operating activities: | |||
Depreciation | 37,701 | 65,537 | 66,534 |
Amortization of intangible assets | 71,429 | 71,428 | 71,428 |
(Gain) loss on sale/disposal of assets | (625) | (127) | 311 |
Stock-based compensation expense | 1,994 | 1 | 156 |
Deferred income taxes | (37,494) | (25,424) | (23,118) |
Amortization of deferred financing costs | 2,815 | 3,574 | 5,371 |
PIK interest added to Senior Facilities | 34,211 | ||
Related party tax payable settlement | 15,777 | ||
Change in fair value of warrant liability | (3,477) | ||
Non-cash rent, interest and other | (2,976) | 2,061 | 130 |
Cash flows from changes in net operating assets and liabilities: | |||
Accounts receivable | (2,225) | 11,133 | 12,534 |
Content library | 873 | 35,829 | 14,963 |
Income tax receivable | 10,498 | (3,065) | (2,063) |
Prepaid expenses and other current assets | 282 | 3,255 | 3,046 |
Other assets | 989 | 795 | (2,066) |
Trade payables | 4,984 | (53,790) | (18,507) |
Change in due to/from related parties | 297 | (1,399) | (2,189) |
Accrued and other liabilities | (23,537) | (10,612) | (16,166) |
Net cash flows (used in) provided by operating activities | (29,240) | 29,693 | 102,797 |
Investing Activities: | |||
Purchases of property and equipment | (13,017) | (21,053) | (33,005) |
Proceeds from disposition of property and equipment | 827 | 1,261 | 1,990 |
Other investments | 750 | (750) | |
Net cash flows used in investing activities | (12,190) | (19,042) | (31,765) |
Financing Activities: | |||
Proceeds from Redbox's borrowings | 31,655 | 32,550 | 7,500 |
Repayments of Redbox's debt obligations | (54,589) | (37,188) | (76,563) |
Business combination (Note 3) | 77,425 | ||
Dividends paid | (373) | (978) | (1,182) |
Principal payments on capital lease obligations | (3,137) | (3,486) | (3,855) |
Net cash flows provided by (used in) financing activities | 50,981 | (9,102) | (74,100) |
Change in cash, cash equivalents and restricted cash | 9,551 | 1,549 | (3,068) |
Cash, cash equivalents and restricted cash: | |||
Beginning of period | 8,927 | 7,378 | 10,446 |
End of period | $ 18,478 | $ 8,927 | $ 7,378 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Class A Common StockCommon Stock | Class A Common Stock | Class B Common StockCommon Stock | Class B Common Stock | Common Units | Additional Paid-in Capital | Accumulated Deficit | Non-controlling Interest | Total |
Balance at the beginning at Dec. 31, 2018 | $ 3 | $ 222,928 | $ (144,312) | $ 78,619 | |||||
Balance at beginning (in shares) at Dec. 31, 2018 | 27,549,660 | ||||||||
Dividends | (297) | (297) | |||||||
Stock-based compensation plans and related activity | 156 | 156 | |||||||
Stock-based compensation plans and related activity (in shares) | 141,219 | ||||||||
Net loss | (7,567) | (7,567) | |||||||
Balance at the end at Dec. 31, 2019 | $ 3 | 223,084 | (152,176) | 70,911 | |||||
Balance at the end (in shares) at Dec. 31, 2019 | 27,690,879 | ||||||||
Dividends | 53 | 53 | |||||||
Stock-based compensation plans and related activity | 1 | 1 | |||||||
Stock-based compensation plans and related activity (in shares) | 108,869 | ||||||||
Net loss | (69,503) | (69,503) | |||||||
Balance at the end at Dec. 31, 2020 | $ 3 | 223,085 | (221,626) | 1,462 | |||||
Balance at the end (in shares) at Dec. 31, 2020 | 27,799,748 | ||||||||
Related party tax payable settlement | 15,777 | 15,777 | |||||||
Shares of Redwood RSUs withheld to satisfy withholding tax obligations | (611) | (611) | |||||||
Stock-based compensation plans and related activity prior to the reverse recapitalization | 862 | 862 | |||||||
Business Combination (Note 3) | $ 1 | $ 3 | $ (3) | 63,027 | 1,461 | $ (5,306) | 59,183 | ||
Business Combination (Note 3) (shares) | 12,618,516 | 32,770,000 | (27,799,748) | ||||||
Stock-based compensation post reverse recapitalization | 315 | 817 | 1,132 | ||||||
Net loss | (112,789) | (27,967) | (140,756) | ||||||
Balance at the end at Dec. 31, 2021 | $ 1 | $ 3 | $ 302,455 | $ (332,954) | $ (32,456) | $ (62,951) | |||
Balance at the end (in shares) at Dec. 31, 2021 | 12,618,516 | 12,618,516 | 32,770,000 | 32,770,000 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Description of Business | |
Description of Business | Note 1: Description of Business Redbox Entertainment Inc., a Delaware company, and subsidiaries (“Redbox” or the “Company”), operates self-serve kiosks in the United States where consumers can rent or purchase movies. As of December 31, 2021, the Company operated a network of approximately 38,000 self-service kiosks, in approximately 33,000 locations primarily at leading grocery stores, mass retailers, drug stores, dollar retailers, and convenience stores in every U.S. state and Puerto Rico (collectively the United States). On October 22, 2021 (the “Closing Date”), we completed the acquisition of Seaport Global Acquisition Corp. (“Seaport”). The acquisition was completed pursuant to a Business Combination Agreement between the Company and Seaport dated May 16, 2021. The Business Combination is accounted for as a reverse recapitalization. Following the closing of the Business Combination, the combined company is organized in an “Up-C” structure in which the business of Redbox is operated by Redwood Intermediate and its subsidiaries and the Company’s only material direct asset consists of equity interests in Redwood Intermediate. Pursuant to the Business Combination Agreement, the transaction was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Seaport has been treated as the “acquired” company for financial reporting purposes. Under this method of accounting, the ongoing financial statements of the registrant will reflect the net assets of Redbox and Seaport at historical cost, with no goodwill or other intangible assets recognized. The shares and corresponding capital amounts prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination Agreement. For additional information on the Business Combination, see Note 3: Business Combination Redbox is an established brand and leading provider in the home video rental market in the United States. The Company is focused on providing its customers with the best value in entertainment and the most choice in how they consume it, through physical media and/or digital services. For its Legacy Business, the Company operates a nationwide network of approximately 38,000 self-service kiosks where consumers can rent or purchase new-release DVDs and Blu-ray Discs TM (“movies”). The Company also generates service revenue by providing installation, merchandising and break-fix services to other kiosk businesses. Finally, the Company also produces, acquires, and distributes movies exclusively through its film distribution label, Redbox Entertainment LLC, providing rights to talent-led films that are distributed across Redbox services as well as through third party digital services. For its Digital Business, the Company provides both transactional and ad-supported digital streaming services, which include 1) Redbox On Demand, a transactional service which provides digital rental or purchase of new release and catalog movies and TV content, 2) Redbox Free On Demand (AVOD), an ad-supported service providing free movies and TV shows on demand, and 3) Redbox Free Live TV (FLTV), a free, ad-supported television service giving access to over 130 linear channels. Redbox is undergoing a significant business expansion and digital transformation. The Company has transitioned from a pure-play DVD rental company to a multi-faceted entertainment company that provides tremendous value and choice by offering DVD rentals as well as multiple digital products across a variety of content windows including transactional (TVOD), ad-supported (AVOD) and being a distributor of feature films with a growing library of original content. Redbox currently conducts its business through two operating segments: (1) Legacy Business and (2) Digital Business. Up until December 2019, the Company also offered video games for rent or purchase through its kiosks. In December 2019, the Company withdrew from the video games business, which represented a very small percentage of its overall business. The Company believes that exiting the video games business allows it to generate more value at the kiosk by making more kiosk slots available for movies its customer seek, which drive the vast majority of its revenue and profitability. The last rental window for video games content expired prior to December 31, 2019. All purchasing, marketing, and distribution operations were discontinued by December 31, 2019. The Company completed final liquidation of its used video game inventory in April 2020, which were not material to the Company’s results of operations |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2021 | |
Basis of presentation | |
Basis of Presentation | Note 2: Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The audited financial information included herein has been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”). All significant intercompany balances and transactions between the Company and its wholly owned subsidiaries have been eliminated in consolidation in the periods presented as discussed below. Certain prior period The Company is an “emerging growth company” (“EGC”), as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “ JOBS Act ”), following the consummation of the merger between the Merger Sub and the Company. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 102(b)(1) of the JOBS Act that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition periods provided by the JOBS Act. As result of this election, its consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Amounts Due From/To Related Parties Any transactions between Redbox and its owners, employees or non-employee directors and any transactions between Redbox and Apollo and its affiliates are settled in cash pursuant to commercial services agreements. With respect to income taxes for all periods presented prior to the Business Combination, while generally the Company is part of a consolidated group for income tax filings, the income tax benefits and provisions, income tax payables, related tax payments and deferred tax balances reported within have been prepared as if the Company operated as a standalone taxpayer. Deferred taxes have been classified as net liabilities in the Consolidated Balance Sheets. The Company remitted cash to Aspen Parent, Inc. or New Outerwall, Inc. to settle any third-party, tax-related obligations, as determined if the Company operated as a standalone taxpayer. Subsequent to the Business Combination, the Company is no longer part of a consolidated group for income tax filings with Aspen Parent, Inc. or New Outerwall, Inc. Aspen Parent, Inc. and New Outerwall, Inc. are affiliates of Apollo. Use of Estimates in Financial Reporting The Company prepares its consolidated financial statements in conformity with U.S. GAAP which requires management to make estimates and assumptions that affect the reported amounts in its consolidated financial statements and notes thereto. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable, including but not limited to the potential impacts arising from COVID-19, and policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts from COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. The most significant estimates and assumptions include the: ● rate at which the economic benefit of the content library is consumed through rental activity; ● useful lives and recoverability of goodwill, definite-lived intangible assets, equipment and other long-lived assets; and ● recognition and measurement of deferred income taxes (including the measurement of uncertain tax positions) It is reasonably possible that the estimates the Company makes may change in the future and could have a material effect on its consolidated financial statements. Summary of Significant Accounting Policies Revenue Recognition The Company recognizes revenue, net of sales tax, when it satisfies its performance obligations by transferring control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Revenue from movie rentals is recognized for the period that the movie is rented and is recorded net of promotional discounts offered to the Company’s consumers, uncollected amounts and refunds that it grants to its customers. Revenue from a direct sale out of the kiosk of previously rented movies is recognized at the time of sale. Revenue from On Demand rentals or purchases is also recognized at the time of sale. On rental transactions for which the related movie has not yet been returned to the kiosk at month-end, revenue is recognized with a corresponding receivable recorded in the balance sheet, net of a reserve for potentially uncollectable amounts that is considered a reduction from gross revenue as collectability is not reasonably assured. A significant portion of the Company’s Legacy Business rental revenue is concentrated in kiosks installed with certain retail partners. Revenue aggregated at the following retailers accounted for 10% or more of the Company’s net revenue for the periods presented: Year Ended December 31, 2021 2020 2019 Wal-Mart Stores Inc. 13.0 % 13.8 % 18.3 % Walgreen Co. 11.9 % 14.6 % 14.7 % Service revenue from the Company’s external kiosk servicing business is recognized as contract obligations related to other kiosk businesses are fulfilled. The Company has service agreements with multiple companies that have national and regional kiosk networks. Services for an external kiosk business may include, but is not limited to, our field team providing break-fix services, merchandising visits, and handling other kiosk-related projects as they arise. Digital advertising revenue from the Company’s media network business is primarily recognized at a point in time when the ad is placed and delivered, based on the customers’ contract price. For revenues generated from distributing and licensing Redbox Entertainment original content to other streaming platforms, the Company evaluates whether it is the principal, and reports revenue on a gross basis, or an agent, and reports revenue on a net basis. Promotional Codes and Gift Cards The Company offers its consumers the option to purchase stored value products in the form of bulk promotional codes and electronic gift cards. There are no expiration dates on these products and the Company does not charge service fees that cause a decrement to customer balances in the case of gift cards. Cash receipts from the sale of promotional codes and gift cards are recorded as deferred revenue in Accrued and other current liabilities and recognized as revenue upon redemption. Additionally, the Company recognizes revenue from non-redeemed or partially redeemed promotional codes and gift cards in proportion to the historical redemption patterns, referred to as “breakage.” Estimated breakage revenue is recognized over time in proportion to actual promotional code and gift card redemptions and is not material in any period presented. As of December 31, 2021 and December 31, 2020, $7.6 million and $7.0 million, respectively, were deferred related to purchased but unredeemed promotional codes and gift cards and are included in Accrued and other current liabilities in the accompanying Consolidated Balance Sheets. Loyalty Program In January 2018, the Company launched Redbox Perks. Redbox Perks allows members to earn points based on transactional and non-transactional activities with Redbox. As customers accumulate points, the Company defers revenue based on its estimate of both the amount of consideration paid by Perks members to earn awards and the value of the eventual award it expects the members to redeem. The Company defers an appropriate amount of revenue so as to properly recognize revenue from Perks members in relation to the benefits of the program. The Company also estimates the quantity of points that will not be redeemed by Perks members (“breakage”). Breakage reduces the amount of revenue deferred from loyalty points over the period of, and in proportion to, the actual redemptions of loyalty points based on observed historical breakage and consumer rental patterns. As of December 31, 2021 and December 31, 2020, $1.9 million and $2.8 million, respectively, of revenue was deferred related to Perks and is included in Accrued and other current liabilities in the accompanying Consolidated Balance Sheets. Product Cost Product cost primarily represents the amortization of the Company’s physical content library and digital revenue sharing costs. Amortization of the content library is calculated using rental decay curves based on historical performance of movies and games over their useful lives to allocate content library costs to the periods over which the related revenues are earned. Given the steepness of the rental decay curve, amortization of the content library is recorded on an accelerated basis with substantially all of the content library cost recognized within the first year. The rental decay curves and salvage value of the Company’s content library are periodically reviewed and evaluated. Advertising Costs Advertising costs, which are included as a component of marketing expenses, include media expenses for national and local advertising, internet advertising, and sponsorship fees. The costs were $2.8 million, $6.3 million and $4.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. Related Parties Receivables or payables that existed as of the balance sheet date, due to or due from Apollo and affiliates of Apollo have been presented as Due from related parties, net and Due to related parties, net in the accompanying Consolidated Balance Sheet and Consolidated Statements of Cash Flows. Additionally, Due to related parties, net includes unpaid dividends related to employees and non-employee directors. Right of offset is assumed for balances between Redbox and the same related counter party and, as such, are presented as net receivables or payables based on the net balances due to or from the respective counter parties as of the balance sheet date. For all periods prior to the Business Combination, Redbox is part of a consolidated filing group; income taxes are paid as a pass through to either Aspen Parent, Inc. or New Outerwall, Inc. Subsequent to the Business Combination, the Company is no longer part of a consolidated group for income tax filings with Aspen Parent, Inc. or New Outerwall, Inc. Aspen Parent, Inc. and New Outerwall, Inc. are affiliates of Apollo. The Company’s income tax obligations are presented as the amounts that would be owed if the Company had been a standalone taxpayer and are included in Accrued and other current liabilities Consolidated Balance Sheet Stock-Based Compensation The Company grants stock-based awards to select employees and non-employee directors of the Company, consisting of restricted stock and performance stock units. Compensation expense is generally recognized for restricted stock units on a graded-vesting basis over the vesting period, which is generally one Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of deposit accounts. The Company’s cash balances with financial institutions may exceed the deposit insurance limits. The Company does not include outstanding amounts due from its payment card service providers for billed transactions in its cash balances, rather they are included in accounts receivable. Restricted Cash Restricted cash balances are cash balances established to secure the Company’s letter of credit requirement to support its insurance obligations and is presented as a short-term asset. See also Note 7: Debt Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts. Accounts receivable balances primarily consist of receivables due from consumers for outstanding rental transactions, amounts due from the Company’s payment card service providers for billed transactions and amounts due from our advertising partners and service business customers. The allowance for doubtful accounts primarily reflects management’s best estimate of amounts related to outstanding rental transactions that will not be collected. The Company determines the allowance based on historical experience and other currently available information. Content Library Content library consists of movies available for rent or purchase through the Company’s kiosks. The Company obtains its movie content primarily through revenue sharing agreements and license agreements with studios, as well as through distributors and other suppliers. The cost of content mainly includes (1) the costs paid to studios and other vendors to acquire content including revenue share as applicable, (2) costs incurred to label, sort, and ship content to the Company’s kiosks for merchandising, (3) costs incurred to destroy content after use if required under contractual arrangements with studios and (4) indirect taxes, if applicable. For content that the Company expects to sell, management determines an estimated salvage value. Content salvage values are estimated based on the historical sales activity. The cost of each title is capitalized and amortized to its estimated salvage value using rental decay curves as discussed above under Product Cost. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets are generally comprised of insurance-related receivables representing estimated amounts due from the Company’s insurance partners in excess of its deductibles, spare parts that are not separately capitalized for use in the repair and maintenance of its kiosks, the value of cases and labels used to vend and track discs, net of amortization, and various prepayments for operating expenses including software licenses when not determined to be a component of property and equipment. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures that extend the life, increase the capacity, or improve the efficiency of property and equipment are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over the following approximate useful lives: Useful Life Redbox kiosks and components 3 Computers and software 2 Leasehold improvements (shorter of life of asset or remaining lease term) 3 Office furniture and equipment 5 Vehicles 3 Internal-Use Software The Company capitalizes costs incurred to develop or obtain internal-use software during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, and it is probable that the project will be completed and the software will be used for the function intended. The Company expenses costs incurred for training, data conversion, and maintenance, as well as spending in the post-implementation stage. A subsequent addition, modification or upgrade to internal-use software is capitalized only to the extent that it enables the software to perform a task it previously could not perform. The internal-use software is included in computers and software under property and equipment in the Company’s Consolidated Balance Sheets. The Company amortizes internal-use software over its estimated useful life on a straight-line basis. Intangible Assets Subject to Amortization The Company’s intangible assets subject to amortization comprise the value of its retailer relationships, the Redbox trade name, its contactable customer list, and developed technology as determined on the date of the Apollo Acquisition. The Company amortizes its intangible assets over their expected useful lives on a straight-line basis as the future pattern of consumption of the economic benefit derived from the identified intangible assets cannot be reliably determined. The Company annually reassess the useful lives of its intangible assets subject to amortization and the methods under which they are amortized. For further information, see Note 5: Goodwill and Other Intangible Assets Goodwill Goodwill represents the excess purchase price of an acquired enterprise or assets over the estimated fair value of identifiable net assets acquired. Goodwill is evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit below its carrying value. As part of the Company’s impairment analysis, fair value of a reporting unit is determined using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates. For further information, see Note 5: Goodwill and Other Intangible Assets Business Combinations The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess purchase price of an acquired enterprise or assets over the estimated fair value of identifiable net assets acquired. Transaction costs associated with business combinations are expensed as incurred. Recoverability of Equipment and Other Long-Lived Assets The Company evaluates the estimated remaining life and recoverability of equipment and other assets, including intangible assets subject to amortization, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Factors that would indicate potential impairment include, but are not limited to, significant decreases in the market value of the long-lived asset(s), a significant change in the long-lived asset’s use or physical condition, and operating or cash flow losses associated with the use of the long-lived asset. When there is an indication of impairment, the Company prepares an estimate of future undiscounted cash flows expected to result from the use of the asset and its eventual disposition to test recoverability. If the sum of the future undiscounted cash flows is less than the carrying value of the asset, it indicates that the long-lived asset is not recoverable, in which case the Company will then compare the estimated fair value to its carrying value. If the estimated fair value is less than the carrying value of the asset, the Company will recognize the impairment loss and adjust the carrying amount of the asset to its estimated fair value. No impairment losses have been recorded during years ended December 31, 2021, 2020 and 2019, respectively. Trade Payables Trade payables are primarily comprised of non-revenue share payments to the Company’s content partners, payments due to its retailer partners, and various other payments due for invoiced goods and services from its operational vendors. Accrued and Other Current Liabilities Accrued and other current liabilities generally consist of estimated total amounts due under contractual revenue-sharing arrangements with the Company’s content providers net of payments made during the respective title’s rental period, employee related liabilities primarily related to compensation, deferred revenue related to stored-value arrangements and the Company’s loyalty program, estimated income taxes payable, sales and rental-related taxes collected from the Company’s consumers on behalf of governmental entities, estimated gross amounts due for insurance claims incurred but not recorded, and various other estimates of amounts due but not invoiced for goods and services from the Company’s operational vendors. Warrant Liabilities The Company classifies its public and private placement warrants as a liability at is fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statements of operations. The Public Warrants are valued at a market price based on a quoted price in an active market. The Company utilizes a Black-Scholes model to value the outstanding private placement warrants (“Private Placement Warrants”) at each reporting period. For further information, see Note 14: Warrant Liability. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, management determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it will recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. Non-controlling Interest The Company presents non-controlling interests as a component of equity on its Consolidated Balance Sheets and reports the portion of its earnings or loss for non-controlling interest as net earnings attributable to non-controlling interests in the Consolidated Statements of Operations. Loss Contingencies The Company accrues estimated liabilities for loss contingencies arising from claims, assessments, litigation and other sources when it is probable that a liability has been incurred and the amount of the claim assessment or damages can be reasonably estimated. The Company believes it has sufficient accruals to cover any obligations resulting from claims, assessments or litigation that have met these criteria. Fair Value of Financial Instruments Certain financial assets and liabilities are required to be carried at fair value. Fair value is the price that would be received to sell an asset, or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes market data or assumptions that it believes market participants would use in pricing the asset or liability, which would maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, including assumptions about risk and the risks inherent in the inputs to the valuation technique. In evaluating the fair value measurement techniques for recording certain financial assets and liabilities, there is a three-level valuation hierarchy under which financial assets and liabilities are designated. The determination of the applicable level within the hierarchy of a particular financial asset or liability depends on the inputs used in valuation as of the measurement date. Valuations based on observable or market-based inputs for identical asset or liabilities (Level 1 measurement) are given the highest level of priority, whereas valuations based on unobservable or internally derived inputs (Level 3 measurement) are given the lowest level of priority. The three levels of the fair value hierarchy are defined as follows: ● Level 1 : Observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2 : Inputs other than Level 1 inputs that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or market-corroborated inputs; or ● Level 3 : Unobservable inputs that reflect the reporting entity’s own assumptions. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying amounts for the Company’s cash equivalents approximate fair value because of the short-term nature of these instruments. The fair value of the Company’s long-term debt approximates its carrying amount, which is presented net of unamortized deferred financing costs. Derivative Instruments The Company is exposed to certain market risks relating to interest rates. The Company actively monitors and attempts to mitigate but does not eliminate these exposures using derivative instruments including interest rate swaps. The Company does not enter into derivative instruments for speculative or trading purposes. The Company recognizes its derivatives as either assets or liabilities and measure those instruments at estimated fair value. The Company presents its derivative positions gross on its Consolidated Balance Sheets. The Company records changes in the fair value of derivatives as a component of other expense, net on its Consolidated Statements of Operations. Recent Accounting Pronouncements Accounting Guidance Adopted: In March 2019, the FASB issued ASU 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials (Subtopic 926-20), in order to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. ASU 2019-02 also requires that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. In addition, 2019-02 requires that an entity test films and license agreements for impairment at a film group level when the film or license agreements are predominantly monetized with other films and license agreements. For private companies, the guidance is effective for reporting periods beginning after December 15, 2020. The adoption of ASU 2019-02 did not have a material impact on the Company’s consolidated financial statements and related disclosures. Accounting Guidance Not Yet Adopted: In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (ASU 2020-04), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuance of LIBOR or another referenced rate. ASU 2020-04 is effective for fiscal years beginning after December 31, 2022. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) to simplify the accounting for income taxes. This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also clarifies and simplifies other areas of ASC 740. This standard is effective for private companies for fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842” or “ASC 842”) related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASC 842 as of January 1, 2022, using the cumulative effect transition approach. The cumulative effect transition approach provides a method for recording existing leases at adoption and not restated comparative periods; rather the effect of the change is recorded at the beginning of the year of adoption. The Company will elect the of practical expedients permitted under the transition guidance within the new standard, which allows us to carryforward historical lease classification. In addition, we are electing the practical expedient to determine the reasonably certain lease term for existing leases. Lastly, we elect the short-term lease recognition exemption for our leases. This means for short-term leases, we will not recognize ROU assets and lease liabilities, and this includes not recognizing ROU asset or lease liabilities for existing short-term leases of those assets in transition. In preparation for adoption of the standard, we have implemented internal controls to enable the preparation of financial information. Although management continues to evaluate the effect of adoption of ASC 842, management currently estimates a recognition of ROU assets of $9.1 million and lease liabilities for operating leases of $9.4 million as of January 1, 2022. The standard did not materially impact our consolidated net earnings and had no impact on cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326). The ASU provides new guidance regarding measurement and recognition of credit impairment for certain financial assets. Such guidance will impact how the Company determines its allowance for estimated uncollectible receivables. This ASU is effective for emerging growth companies that have elected to use private company adoption dates with annual and interim periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination | |
Business Combination | Note 3: Business Combination On October 22, 2021 (the Closing Date), the Company consummated the business combination (the “Business Combination”) contemplated by the business combination agreement, dated as of May 16, 2021 and amended on September 24, 2021 (the “Business Combination Agreement”), by and among Seaport Global Acquisition Corp. (“Seaport”), Seaport Merger Sub LLC, a Delaware limited liability company (“Merger Sub”), Redwood Holdco, LP, a Delaware limited partnership (“Redwood Holdco”), and Redwood Intermediate, LLC, a Delaware limited liability company (“Redwood Intermediate”). Redwood Holdco is controlled by funds affiliated with or controlled by Apollo Global Management, LLC and its subsidiaries (“Apollo” or the “Sponsor”). Upon the Closing Date of the Business Combination, Seaport was reincorporated in the State of Delaware and changed its name to Redbox Entertainment Inc. In connection with the Business Combination, the Company issued 32,770,000 shares of Class B common stock to Redwood Holdco, which have no economic rights, but entitle the holders thereof to one vote per issued share and may be exchanged on a one-for-one basis with Redwood Intermediate common units held by such holders for Class A common stock from time to time. Immediately prior to the Closing, the Company issued an aggregate of 5,000,000 shares of Class A common stock to certain investors (the “PIPE Investors”) for a purchase price of $10.00 per share, for aggregate gross proceeds of $50 million. In addition, immediately prior to the closing of the Business Combination, the Company issued an aggregate of 1,995,989 shares of Class A common stock to certain investors (the “Backstop Subscribers”) for a purchase price of $10.10 per share, for aggregate gross proceeds of approximately $20.2 million. The Business Combination is accounted for as a reverse recapitalization in accordance with US GAAP. Under the guidance in ASC 805, Business Combinations, Seaport is treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the existing controlling equity holder of Redbox having 72.2% of the voting power of the combined company and the operations of Redbox and its subsidiaries constituting the only ongoing operations of the combined company. Following the closing of the Business Combination, the combined company is organized in an “Up-C” structure in which the business of Redbox is operated by Redwood Intermediate and its subsidiaries and the Company’s only material direct asset consists of equity interests in Redwood Intermediate. The Company incurred $14.5 million in direct and incremental costs related to the equity issuance, consisting primarily of investment banking, legal, accounting and other professional fees, which were recorded as a reduction of additional paid-in-capital in the accompanying Consolidated Balance Sheets. The Company also incurred In connection with the consummation of the Business Combination, the Company repaid $50.0 million in outstanding loans under its Senior Facilities including $15.0 million toward outstanding borrowings under the Revolving Credit Facility and $35.0 million toward outstanding borrowings under the Term Loan B and the Term Loan B-1. In connection with the Business Combination, Redwood Holdco and Redwood Intermediate entered into the Tax Receivable Agreement with the Sponsor and Seaport. Under the terms of the Tax Receivable Agreement, the Company generally will be required to pay to Redwood Holdco 85% of the tax savings, if any, that the Company is deemed to realize in certain circumstances as a result of certain tax attributes that exist following the Business Combination and that are created thereafter, including as a result of payments made under the Tax Receivable Agreement. As of the Closing Date and as of December 31, 2021, the liability is not deemed probable. The Company recorded a net deferred tax asset of $19.4 million for the difference between its book value and tax basis at the time of the Business Combination. The Company has assessed the realizability of the deferred tax assets and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. As a result, the Company has recorded a full valuation allowance against its deferred tax asset resulting from the Business Combination. The following table reconciles the elements of the Business Combination to the Consolidated Statements of Cash Flows and the Consolidated Statements of Equity for the twelve months ended December 31, 2021: Dollars in thousands Recapitalization Cash - Seaport's trust and cash, net of redemptions $ 20,405 Cash - PIPE financing 50,000 Cash - Backstop agreement 20,159 Less: Transaction costs paid at close (13,139) Net Business Combination 77,425 Plus: Tax impact, net 4,442 Less: Additional capitalized transaction costs (1,387) Less: Warrant liability assumed (21,297) Net contribution from Business Combination $ 59,183 The number of shares of common stock issued immediately following the consummation of the Business Combination as follows: Class A Class B Common Common Stock Stock Seaport common stock outstanding prior to Business Combination 14,375,000 — Less: redemption of Seaport shares (12,346,223) — Ordinary shares of Seaport 2,028,777 — Seaport sponsor shares 3,593,750 — Shares issued in PIPE financing 5,000,000 — Shares issued pursuant to Backstop Agreement 1,995,989 — Shares to Redwood Holdco shareholders — 32,770,000 Total shares of common stock outstanding immediately after the Business Combination 12,618,516 32,770,000 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment | |
Property and Equipment | Note 4: Property and Equipment December 31, December 31, Dollars in thousands 2021 2020 Kiosks and components $ 190,496 $ 190,416 Computers, servers, and software 99,123 87,113 Leasehold improvements 4,129 3,991 Office furniture and equipment 676 676 Leased Vehicles 11,380 10,678 Property and equipment, at cost $ 305,804 $ 292,874 Accumulated depreciation (265,180) (229,785) Property and equipment, net $ 40,624 $ 63,089 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 5: Goodwill and Other Intangible Assets Goodwill is evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit below its carrying value. During the fourth quarter of 2021, the Company completed a quantitative impairment analysis for goodwill related to its Legacy and Digital reporting units, as a result of the resurgence of COVID-19 due to the Omicron variant on its financial performance As part of the Company’s impairment analysis, the determination of the fair value of the Company’s reporting units requires the Company to make significant estimates and assumptions including the business and financial performance of the Company’s reporting units, as well as how such performance may be impacted by COVID-19. These estimates and assumptions primarily include, but are not limited to: the selection of appropriate peer group companies, control premiums appropriate for acquisitions in the industries in which the Company competes, discount rates, terminal growth rates, forecasts of revenue, operating income, depreciation, amortization and capital expenditures, including considering the impact of COVID-19. Certain events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately affect the estimated fair values of the Company’s reporting units include such items as: (i) a decrease in expected future new release movie titles resulting from the prolonged effects of the COVID-19 pandemic (ii) an increase in competition across streaming platforms resulting in fewer titles available at Redbox or fewer rental transactions and (iii) the inability to achieve cost savings or growth initiative targets within an expected timeframe. Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions, including the impact of COVID- 19, could have a significant impact on either the fair value of the reporting units, the amount of any goodwill impairment charges, or both. These estimates can be affected by a number of factors including, but not limited to, the impact of COVID-19, its severity, duration and its impact on global economies, general economic conditions as well as the Company’s profitability. The Company will continue to monitor these potential impacts, including the impact of COVID-19 and economic, industry and market trends and the impact these may have on its Legacy and Digital reporting units. The following table summarizes the changes in goodwill by reportable segment: Legacy Digital Dollars in thousands Business Business Total Balance as of December 31, 2019 $ 144,014 $ 3,509 $ 147,523 Balance as of December 31, 2020 $ 144,014 $ 3,509 $ 147,523 Balance as of December 31, 2021 $ 144,014 $ 3,509 $ 147,523 The following table summarizes the carrying amounts and accumulated amortization of intangible assets: December 31, 2021 December 31, 2020 Gross Net Gross Net Estimated Carrying Accumulated Carrying Carrying Accumulated Carrying Dollars in thousands Useful Life Amount Amortization Amount Amount Amortization Amount Intangible assets subject to amortization: Contracts with retailers 7 years $ 370,000 $ (278,087) $ 91,913 $ 370,000 $ (225,230) $ 144,770 Trade name 7 years 60,000 (45,095) 14,905 60,000 (36,524) 23,476 Contactable customer list 7 years 40,000 (30,063) 9,937 40,000 (24,349) 15,651 Developed technology 7 years 30,000 (22,548) 7,452 30,000 (18,262) 11,738 Total intangible assets subject to amortization $ 500,000 $ (375,793) $ 124,207 $ 500,000 $ (304,365) $ 195,635 The Company recognized amortization expense of $71.4 million for each of the years ended December 31, 2021, 2020 and 2019, respectively. Based on the amount of intangible assets subject to amortization as of December 31, 2021, the expected amortization for each of the next five fiscal years is as follows: Amortization of Dollars in thousands intangible assets 2022 $ 71,428 2023 52,779 2024 — 2025 — 2026 — Total expected amortization $ 124,207 No impairment of intangible assets were recognized for the years ended December 31, 2021, 2020 and 2019, respectively. |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Accrued and Other Current Liabilities | |
Accrued and Other Current Liabilities | Note 6: Accrued and Other Current Liabilities Accrued and other current liabilities as of December 31, 2021 and 2020, consisted of the following: December 31, December 31, Dollars in thousands 2021 2020 Accrued payroll and other related expenses $ 23,901 $ 24,212 Accrued revenue share 11,786 13,480 Deferred revenue 9,553 10,019 Income taxes payable — 15,777 Other 12,515 12,466 Total accrued and other current liabilities $ 57,755 $ 75,954 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Debt | Note 7: Debt December 31, December 31, Dollars in thousands 2021 2020 Term B Facility $ 271,562 $ 281,563 Paid-In-Kind Interest related to Term Loan Facility 31,480 — Revolving Credit Facility 15,000 30,000 Paid-In-Kind Interest related to Revolving Credit Facility 2,731 — Union Revolving Credit Facility 4,616 2,550 Total debt outstanding $ 325,389 $ 314,113 Less: Unamortized debt issuance costs (3,823) (6,639) Total debt, net $ 321,566 $ 307,474 Portion due within one year $ 34,211 $ — Total long-term debt, net $ 287,355 $ 307,474 On October 20, 2017, Redbox Automated Retail, LLC (“RAR”) entered into a credit agreement (“Credit Agreement”), which provided for: ● a first lien term loan facility (the “Term Loan B”), in an aggregate principal amount of $425.0 million, with a five-year maturity; and ● a first lien revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan B, the “Senior Facilities”), in an aggregate principal amount of up to $30.0 million, with a five-year maturity. The Term Loan B was made available to RAR immediately upon closing and was used in part to retire all $280.0 million of the Company’s existing debt and to settle closing costs associated with the new Term Loan B totaling $19.5 million of which $4.6 million was paid to Apollo Global Securities, LLC, an affiliate of Apollo, for services provided in connection with the financing. The balance of the Term Loan B proceeds were used towards a dividend, occurring on the same day, with total dividends of $160.0 million to equity holders of RAR. Additionally, at the execution of the new Credit Agreement, RAR wrote-off unamortized deferred financing costs of $21.7 million related to the extinguishment of the entire debt under the prior credit agreement. On September 7, 2018, RAR entered into an Incremental Assumption and Amendment Agreement (the “Amendment”) to the Credit Agreement. The Amendment provided for, among other things, (i) an incremental Term B-1 Loan (“Term Loan B-1”) in an original aggregate principal amount of $85.8 million and (ii) the payment of one or more restricted payments to shareholders of RAR in an aggregate amount not to exceed $115.0 million. The proceeds received from the Amendment along with cash flow from the business were used towards a dividend distribution to equity holders of RAR totaling $115.0 million that was paid within five On September 30, 2020, RAR entered into the second amendment to its Credit Agreement (the “Second Amendment”) to, among other things, increase the total net leverage covenant during the remaining term of the Credit Agreement and revise the quarterly amortization payment schedule. On December 28, 2020, RAR entered into a third amendment to its Credit Agreement (the “Third Amendment”). The amendment deferred the December 2020 amortization payment to March 2021. As of December 31, 2020, the Company’s Senior Facilities matured on October 20, 2022, and subsequent to the Amendment, Second Amendment and Third Amendment consisted of: ● the Term Loan B, in an aggregate principal amount of $425.0 million; ● the Term Loan B-1, in an aggregate principal amount of $85.8 million; and ● the Revolving Credit Facility, in an aggregate principal amount of up to $30.0 million. As of December 31, 2021, there was $12.3 million available borrowing capacity under the Revolving Credit Facility. On January 29, 2021, RAR entered into an amendment to its Credit Agreement (the “Fourth Amendment”). The Fourth Amendment provided for, among other things, (i) deferral of principal amortization payments until the maturity date (ii) extension of the maturity date to April 2023, (iii) at RAR’s election, subject to certain liquidity thresholds, payment PIK interest, and, (iv) removal of all financial covenant requirements. In addition, under the Fourth Amendment, RAR incurred an incremental first lien term loan B-2 facility (“Term Loan B-2” and, together with Term Loan B and Term Loan B-1, the “Term Loan Facility”) in an aggregate principal amount of $25.0 million which was provided by New Outerwall Inc. The loan was subsequently assigned to Aspen Parent, Inc., an affiliate of Apollo and therefore a related party of the Company. The proceeds from the loan were used for general corporate purposes. Pursuant to the Fourth Amendment, interest is payable on the Senior Facilities entirely in cash or, for a specified period, could be paid by increasing the principal amount of the Senior Facilities (PIK interest), or through a combination of cash and PIK interest, subject to certain liquidity thresholds. Borrowings under the Senior Facilities bear interest at a rate at RAR’s option, either (a) a London Interbank Offer Rate (“LIBOR”) determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a per annum, in each case plus an applicable margin. The applicable margin for borrowings under the Senior Facilities is In addition to paying interest on outstanding principal under the Senior Facilities, RAR is required to pay a commitment fee at a rate equal to 0.50% per annum to the lenders in respect of the unutilized commitments thereunder. RAR is also required to pay customary agency fees. In connection with the Business Combination, on May 16, 2021, RAR entered into another amendment to its Credit Agreement (the “Fifth Amendment”). The Fifth Amendment, which became effective upon consummation of the Business Combination, provided consent to the planned Business Combination and among other things, extended the Senior Facilities maturity date to October 2023 and subordinated the Term Loan B-2 to the Term Loan B and the Term Loan B-1. In addition, among other things, concurrently with the consummation of the Business Combination, the Company repaid On October 11, 2021, RAR entered into a consent to the Fifth Amendment to make certain additional changes to the Credit Agreement, which became effective upon consummation of the Business Combination, including extending the maturity date of the Senior Facilities to April, 2024 and extending the PIK interest option until December 31, 2022 (subject to a minimum pro forma liquidity). Union Revolving Credit Facility On December 29, 2020, Redbox Entertainment, LLC entered into a four-year, $20.0 million revolving credit facility with Union Bank (the “Union Revolving Credit Facility”). The facility is used exclusively to pay for minimum guarantees, license fees and related distribution expenses for original content obtained under the Company’s Redbox Entertainment label. Borrowings outstanding under the Union Revolving Credit Facility as of December 31, 2021 and December 31, 2020 were $4.6 million and $2.55 million, respectively. Borrowings under the Union Revolving Credit Facility will bear interest at either the alternate base rat or LIBOR (based on an interest period selected by the Company of one month, three months or six months) in each case plus a margin. The alternate base rate loans bear interest at a per annum rate equal to the greatest of (i) the base rate in effect on such date, (ii) the federal funds effective rate in effect on such day plus ½ of 1.0% . The revolving credit facility borrowings that are LIBOR loans bear interest at a per annum rate equal to the applicable LIBOR plus a margin of . The borrowing interest rate for the Union Revolving Credit Facility was for each of the years ended December 31, 2021 and December 31, 2020, respectively. In addition to paying interest on outstanding principal under the Union Revolving Credit Facility, Redbox Entertainment, LLC is required to pay a commitment fee at a rate equal to 0.50% per annum to the lenders in respect of the unutilized commitments thereunder. Dividend Restrictions The Credit Agreement contains certain customary affirmative covenants and negative covenants, including a limitation on the Company’s ability to pay dividends on or make distributions in respect of its capital stock or make other restricted payments. The covenant prohibiting dividends and other restricted payments has certain limited exceptions, including for customary overhead, legal, accounting and other professional fees and expenses; taxes; customary salary, bonus and other benefits; and up to $1.03 million for dividends that were accrued on equity interests that were unvested as of the payment of the Company’s last dividend in 2018 and have subsequently vested. Interest Rates and Fees As of December 31, 2021 and December 31, 2020, the borrowing interest rate for the Senior Facilities was 9.25% and 8.25%, respectively. Amortization and Prepayments Required minimum principal amortization payments under the Senior Facilities, excluding the Revolving Credit Facility, as of December 31, 2021, are as follows: Repayment Dollars in thousands Amount 2022 $ 31,480 2023 — 2024 271,562 Total $ 303,042 As noted above, pursuant to the consent agreement to the Fifth Amendment that RAR entered into on October 11, 2021, the maturity date of the Senior Facilities has been extended to April, 2024. In addition, the Senior Facilities require RAR to prepay outstanding term loan borrowings, subject to certain exceptions, with: ● a certain percentage set forth in the Credit Agreement governing the Senior Facilities of RAR’s annual excess cash flow, as defined under the Senior Facilities; ● a certain percentage of the net cash proceeds of certain non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and reinvestment rights; and ● the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the Senior Facilities. RAR may voluntarily repay outstanding loans that are funded solely by internally generated cash from business operations under the Senior Facilities at any time, without prepayment premium or penalty, except customary “breakage” costs with respect to LIBOR rate loans. All obligations under the Senior Facilities are unconditionally guaranteed by each of RAR’s existing and future direct and indirect material, wholly-owned domestic subsidiaries, subject to certain exceptions, and the direct parent of RAR. The obligations are secured by a pledge of substantially all of RAR’s assets and those of each guarantor, including capital stock of the subsidiary guarantors and 65% of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to certain exceptions, and its capital stock owned by RAR’s direct parent. Such security interests consist of a first-priority lien with respect to the collateral. All obligations under the Union Revolving Credit Facility are guaranteed by all direct and indirect wholly owned subsidiaries of the Company’s Redbox Entertainment entity. Letters of Credit As required under the Senior Facilities, the Company has a letter of credit arrangement to provide for the issuance of standby letters of credit in the amount of $3.4 million and $3.4 million as of December 31, 2021 and 2020, respectively. The arrangement supports the collateral requirements for insurance claims and is good for one year to be renewed annually if necessary. The letter of credit is cash-collateralized at 105% in the amount of $3.4 million and $3.5 million as of December 31, 2021 and 2020, respectively. In October 2021, the Company entered into a letter of credit arrangement of $0.8 million that serves as a security deposit for leased warehouse space and is pledged by an equal amount of cash pledged as collateral. The Company’s letter of credit arrangements are classified as restricted cash and reflect balances of $4.2 million and $3.5 million as of December 31, 2021 and 2020, respectively. |
Interest Rate Derivatives
Interest Rate Derivatives | 12 Months Ended |
Dec. 31, 2021 | |
Interest Rate Derivatives | |
Interest Rate Derivatives | Note 8: Interest Rate Derivatives The Company entered into an interest rate swap on October 22, 2018 to manage its exposure to changes in the interest rates related to its term loan (“Term B Facility”) following the Amendment discussed in Note 7: Debt Under the terms of the agreement, the Company entered into a three-year fixed-for-floating interest rate swap agreement with Nomura Global Financial Products, Inc. for a fixed notional amount of $200.0 million to swap the variable rate portion of interest payments tied to the one-month LIBOR under its term loans for fixed interest payments. The swap effectively locked in an average of a three-year forward curve for the one-month LIBOR at a fixed rate of 3.0335%, resulting in a total interest rate on the $200.0 million notional of 10.2835%. The interest rate swap agreement expired on October 31, 2021. See Note 7: Debt The following table discloses the fair value, as determined using Level 2 inputs, and balance sheet location of the Company’s derivative instrument: Balance Sheet December 31, December 31, Dollars in thousands Location 2021 2020 Derivatives not designated as hedging instruments: Interest rate swap contract Other liabilities $ — $ 4,782 The following table discloses the effect of the Company’s interest rate derivative instrument on the Consolidated Statements of Operations For the years ended December 31, Dollars in thousands 2021 2020 2019 Other expense, net $ (394) $ 4,341 $ 3,946 |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2021 | |
Employee Benefit Plan | |
Employee Benefit Plan | Note 9: Employee Benefit Plan 401(k) Plan The Company sponsors a 401(k) plan for all eligible employees. The plan includes optional employee contributions as a percentage of eligible earnings, subject to Internal Revenue Service limitations. The Company matches up to 100% on the first 3% of participating employees’ contributions and 50% on each of the next 2% (up to a maximum of 4% when the participant contributes at least 5%). The Company’s matching contribution to this plan was $1.8 million and $2.0 million and $2.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 10: Stock-Based Compensation Redbox Equity Plan In 2021, we adopted the Redbox Equity Plan providing for common stock-based awards to employees, non-employee directors and consultants. The Redbox Equity Plan permits the granting of various types of awards including awards of nonqualified stock options, ISOs, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, other cash-based awards, dividend equivalents, and/or performance compensation awards or any combination of the foregoing. The Redbox Equity Plan provides for an aggregate of shares of Class A common stock to be delivered. Restricted stock and restricted stock units may be granted for no consideration other than prior and future services. The purchase price per share for stock options may not be less than the market price of the underlying stock on the date of grant. As of December 31, 2021, approximately shares were available for future awards. A summary of stock-based compensation cost recognized for stock-based payment arrangements is as follows (in thousands): Year Ended December 31, Dollars in thousands 2021 Compensation cost recognized: Restricted stock units $ 996 Total compensation cost $ 996 We have granted 1 3 exercise price. The fair value of restricted stock unit awards was determined based on the fair market value of our shares on the grant date. As of December 31, 2021, there was million of total unrecognized compensation cost related to unvested restricted stock unit awards. A summary of the status of our restricted stock unit awards pursuant to the Redbox Equity Plan and of changes in our restricted stock unit awards outstanding for the year ended December 31, 2021 is as follows: Weighted Average Grant-Date Fair Value Shares Per Share Outstanding at January 1, 2021 — $ — Granted 3,019,853 8.02 Vested and converted — — Forfeited/expired — — Outstanding at December 31, 2021 3,019,853 $ 8.02 Redwood Holdco Management Incentive Plan Pursuant to the Redwood Holdco Management Incentive Plan, the Company recognized stock-based compensation cost of $1.0 million, $0.0 million and $0.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. There is no future cost to be recognized. |
Segment Information and Geograp
Segment Information and Geographic Data | 12 Months Ended |
Dec. 31, 2021 | |
Segment Information and Geographic Data | |
Segment Information and Geographic Data | Note 11: Segment Information and Geographic Data The Company currently conducts its business through two operating segments: (1) Legacy Business and (2) Digital Business. For all periods presented, the Company did not operate outside the United States and Puerto Rico (collectively the United States). As such, all of the Company’s long-lived assets are located in the United States. The Company’s Legacy Business operates a network of approximately 38,000 self-service kiosks where consumers can rent or purchase new-release DVDs and Blu-ray Discs TM The Company’s Digital Business provides both transactional and ad-supported digital streaming services, which include 1) Redbox On Demand, a transactional service which provides digital rental or purchase of new release and catalog movies and TV content, 2) Redbox Free On Demand, an ad-supported service providing free movies and TV shows on demand, and 3) Redbox Free Live TV, a free, ad-supported television service giving access to more than 130 linear channels. Furthermore, the Company monetizes digital advertising space in Redbox emails and apps amongst other platforms, which is referred to as media network. Adjusted EBITDA is the profitability metric reported to the chief operating decision maker (“CODM”) for purposes of making decisions about allocation of resources to each segment and assessing performance of each segment. The Company believes this measure is most useful in assessing the underlying performance of its business. Adjusted EBITDA is before integration related costs, efficiency initiatives, and other items. Adjusted EBITDA also excludes the effects of financings, income tax and the non-cash accounting effects of depreciation and intangible asset amortization. As segment assets are not reported to or used by the CODM to measure business performance or allocate resources, total segment assets and capital expenditures are not presented below. Summarized financial information by segment is as follows: For the years ended December 31, Dollars in thousands 2021 2020 2019 Net revenue Legacy Business $ 253,417 $ 506,437 $ 838,627 Digital Business 35,123 39,754 19,743 Total $ 288,540 $ 546,191 $ 858,370 Adjusted EBITDA Legacy Business $ (15,932) $ 109,074 $ 197,887 Digital Business 787 4,702 (2,238) Total $ (15,145) $ 113,776 $ 195,649 The following is a reconciliation of Adjusted EBITDA to loss before income for the years ended December 31, 2021, 2020 and 2019: Year ended December 31, Dollars in thousands 2021 2020 2019 Loss before income taxes $ (174,791) $ (94,707) $ (14,823) Add: Depreciation and amortization 108,505 136,838 138,274 Interest and other expense, net 31,523 32,522 44,578 Business optimization (a) 6,907 19,011 7,687 One-time non-recurring (b) 7,689 10,584 5,326 New business start-up costs (c) 1,004 6,041 3,793 Restructuring related (d) 2,024 3,471 4,432 Stock-based compensation expense 1,994 16 156 Discontinuation of games business (e) — — 6,226 Adjusted EBITDA $ (15,145) $ 113,776 $ 195,649 (a) Business optimization costs include employee retention costs, IT costs as well as consulting costs for certain projects. Retention costs for the years ended 2021, 2020 and 2019 were $4.6 million, $13.9 million and $3.0 million, respectively. In 2020, retention awards were paid out to all employees in light of the COVID pandemic and were in lieu of the Company’s short-term incentive program. IT costs of $2.1 million, $4.8 million and $3.8 million were incurred in 2021, 2020 and 2019, respectively. The Company’s IT project is a complete restructuring of the Company’s technologies as it to moves to a cloud-based infrastructure. (b) Transaction related costs in connection with the Business Combination of $5.2 million were recorded in 2021. All periods include costs related to project costs and initiatives, as well as bank, legal and other fees in connection with the Company’s debt financing activities. (c) Includes costs to support the Company’s On Demand and AVOD offerings, along with costs related to the Company’s service and media network businesses. (d) Restructuring related costs include such items as employee severance charges and costs incurred related to removing kiosks. (e) Reflects EBITDA of the Company’s former video games business, which was wound down in December 2019. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share | |
Earnings Per Share | Note 12: Earnings Per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to common stockholders adjusted for the assumed exchange of all potentially dilutive securities by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements. Basic and diluted loss per share is computed using the two-class method. The Company analyzed the calculation of earnings per share for comparative periods presented and determined that it resulted in values that would not be meaningful to the users of the consolidated financial statements. Therefore, earnings per share information has not been presented for periods prior to the Business Combination. The basic and diluted earnings per share for the year ended December 31, 2021 represent only the period from the Closing Date of the Business Combination to December 31, 2021, the period where the Company had Class A common stock outstanding. The following table sets forth the computation of basic and diluted net loss per share of Class A common stock: Dollars in thousands, except per share amounts Year ended December 31, Basic and Diluted EPS 2021 2020 2019 Numerator: Net loss $ (140,756) $ (69,503) $ (7,567) Less: net loss attributable to legacy Redbox prior to the business combination (105,496) N/A N/A Less: net loss attributable to non-controlling interests (27,967) N/A N/A Net loss attributable to Redbox Entertainment Inc. — Basic and Diluted $ (7,293) N/A N/A Denominator: Weighted average shares of Class A common stock outstanding — Basic and Diluted 12,618,516 N/A N/A Earnings per share of Class A common stock outstanding — Basic and Diluted $ (0.58) N/A N/A Shares of the Company’s Class B common stock do not share in the earnings or losses, are not entitled to receive dividends, or to receive any portion of assets upon liquidation of the Company, and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. As the Company was in a loss position for the years ended December 31, 2021, 2020 and 2019, the Company has determined all potentially dilutive shares would be anti-dilutive in these periods and therefore are excluded from the calculation of diluted weighted average shares outstanding. This results in the calculation of weighted average shares outstanding to be the same for basic and diluted EPS. The following outstanding potentially dilutive shares have been excluded from the calculation of diluted EPS because their effect would have been anti-dilutive: Year ended December 31, 2021 2020 2019 Unvested restricted stock units 110 325 376 Public and private placement warrants 16,843,733 — — |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | Note 13 — Shareholders ’ Equity Preferred Stock outstanding Class A Common Stock outstanding Class B Common Stock -for-one basis with Redwood Intermediate common units held by such holders for Class A common stock. At December 31, 2021, there were outstanding Non-controlling Interest |
Warrant Liability
Warrant Liability | 12 Months Ended |
Dec. 31, 2021 | |
Warrant Liability | |
Warrant Liability | Note 14 — Warrant Liability At December 31, 2021, there were 10,781,250 Public Warrants and 6,062,500 Private Placement Warrants outstanding. Each whole Public Warrant entitles the registered holder to purchase per share. Pursuant to the warrant agreement, a holder of Public Warrants may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. The Public Warrants expire The Company may redeem the Public Warrants under the following conditions: ● In whole and not in part; ● At a price of $0.01 per warrant; ● Upon not less than 30 days ’ prior written notice of redemption (the “ 30 -day redemption period”) to each warrant holder; and ● if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 - trading day period ending on the third trading day prior to the date on which the Company gives proper notice of such redemption and provided certain other conditions are met. The redemption criteria discussed above prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise its warrant prior to the scheduled redemption date. However, the price of the Company’s Class A common stock may fall below the The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants are exercisable on a cashless basis and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. As of December 31, 2021, the Company recorded warrant liabilities of $17.8 million in the consolidated balance sheet. For the year ended December 31, 2021, the Company recognized a gain of |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 15 — Fair Value Measurements FASB ASC Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. ASC 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. Level 2 — Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the condensed balance sheet. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, due to related parties are estimated to approximate the carrying values as of December 31, 2021 due to the short maturities of such instruments. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. December 31, Dollars in thousands Level 2021 Liabilities: Warrant Liability – Public Warrants 1 $ 11,213 Warrant Liability – Private Placement Warrants 3 $ 6,608 Total Warrant Liability $ 17,821 The Public Warrants and Private Placement Warrants are accounted for as liabilities in accordance with ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and are presented within Warrant liabilities on the Company’s Consolidated Balance Sheets. The warrant liabilities were measured at fair value at the closing of the Business Combination and are measured at fair value on a recurring basis, with changes in fair value presented within Other expense, net in the Company’s Consolidated Statements of Operations. Initial Measurement The Company established the initial fair value for the Public Warrants and Private Placement Warrants at the closing of the Business Combination. The initial value of the Public Warrants were classified as Level 1 due to the use of an observable market quote in an active market. The initial value of the Private Placement Warrants, using a Black Scholes model, were classified as Level 3 due to the use of unobservable inputs. The key inputs into the Black Scholes model for the Private Placement Warrants were as follows at closing of the Business Combination: Input (Initial Measurement) Risk-free interest rate 1.20 % Expected term (years) 5.00 Expected volatility 20.2 % Stock price $ 9.62 As of the closing of the Business Combination, the Public Warrants and Private Placement Warrants were determined to be $1.25 and $1.29 per warrant, respectively, for aggregate values of approximately $13.5 million and $7.8 million, respectively. Subsequent Measurement The Public Warrants and Private Placement Warrants are measured at fair value on a recurring basis. The subsequent measurement of the Public Warrants as of December 31, 2021 is classified as Level 1 due to the use of an observable market quote in an active market and the subsequent measurement of the Private Placement Warrants as December 31, 2021 is classified Level 3 due to the use of unobservable inputs. Input (Initial Measurement) Risk-free interest rate 1.20 % Expected term (years) 4.80 Expected volatility 31.4 % Stock price $ 7.41 As of December 31, 2021, the Public Warrants and Private Placement Warrants were determined to be $1.04 and $1.09 per warrant, respectively, for aggregate values of approximately $11.2 million and $6.6 million, respectively. The following table presents the changes in the fair value of warrant liabilities from the closing of the Business Combination to December 31, 2021: Private Warrant Dollars in thousands Public Placement Liabilities Initial measurement at closing of the Business Combination $ 13,477 $ 7,821 $ 21,298 Change in valuation inputs or other assumptions (2,264) (1,213) (3,477) Fair value as of December 31, 2021 $ 11,213 $ 6,608 $ 17,821 Level 3 financial liabilities consist of the Private Placement Warrant liability for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 16: Commitments and Contingencies The Company leases office facilities and certain equipment necessary to maintain its information technology infrastructure. Rent expense, net of sublease income, under the Company’s operating lease agreements was $2.2 million, $2.5 million and $2.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company also leases automobiles under capital leases expiring at various dates through 2021. The Company assesses these leases as they come due as to whether it should purchase, enter into new capital leases, or enter into operating leases. Assets held under capital leases are included in Property and equipment, net on the Consolidated Balance Sheets and include the following: Dollars in thousands December 31, 2021 December 31, 2020 Gross property and equipment $ 11,380 $ 10,677 Accumulated depreciation (7,285) (5,204) Net property and equipment $ 4,095 $ 5,473 As of December 31, 2021, the Company’s future minimum lease payments under contractual lease obligations are as follows: Capital Operating Dollars in thousands Leases Leases(1) 2022 $ 2,116 $ 3,527 2023 1,010 3,045 2024 387 2,244 2025 144 1,687 2026 & Thereafter — — Total minimum lease commitments $ 3,657 $ 10,503 Less: Current portion of capital lease obligations (2,116) Long-term portion of capital lease obligations $ 1,541 (1) Includes all operating leases having an initial or remaining non-cancelable lease term in excess of one year. Content License Agreements The Company licenses minimum quantities of theatrical and direct-to-video titles under licensing agreements with certain movie content providers. Total estimated movie content commitments under the terms of the Company’s content license agreements in effect as of December 31, 2021 is presented in the following table: Dollars in thousands Total 2022 2023 Minimum estimated movie content commitments $ 23,969 $ 19,860 $ 4,109 Legal Matters From time to time the Company is involved in legal proceedings incidental to the conduct of its business. The Company does not believe that any liability that may result from these proceedings will have a material adverse effect on its consolidated financial statements. During 2020, the Company received $7.0 million in connection with a class action settlement specific to credit card fees, which were included in Direct Operating expenses in the Consolidated Statements of Operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes. | |
Income Taxes | Note 17: Income Taxes On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law in response to the COVID-19 pandemic. The impact of the CARES Act was not material to the Company’s financial statements. In further response to the COVID-19 pandemic, on December 27, 2020, the Consolidations Appropriations Act, 2021 (“CAA”) was signed into law. The Company does not expect the CAA to have a material impact on its financial statements. Components of Income Taxes The Company and its consolidated subsidiaries are included as part of the U.S. consolidated income tax group Aspen Parent, Inc. for the periods presented prior to the Business Combination. The income tax benefit and provisions, income tax payables, related tax payments and deferred tax balances have been prepared as if the Company operated as a standalone taxpayer. Subsequent to the Business Combination, the Company is no longer part of a consolidated group for income tax filings with Aspen Parent, Inc. or New Outerwall, Inc. Aspen Parent, Inc. and New Outerwall, Inc. are affiliates of Apollo. The components of pretax loss before income taxes were as follows: Year Ended December 31, Dollars in thousands 2021 2020 2019 U.S. operations $ (174,791) $ (94,707) $ (14,823) Components of Income Tax Benefit The components of income tax benefit were as follows: Year Ended December 31, Dollars in thousands 2021 2020 2019 Current: U.S. Federal $ 3,459 $ (491) $ 11,653 State and local — 711 4,209 Total current $ 3,459 $ 220 $ 15,862 Deferred: U.S. Federal (28,078) (21,489) (19,467) State and local (9,416) (3,935) (3,651) Total deferred $ (37,494) $ (25,424) $ (23,118) Total income tax (benefit) expense $ (34,035) $ (25,204) $ (7,256) Rate Reconciliation The income tax benefit differs from the amount that would result by applying the U.S. statutory rate to income before income taxes as follows: Year Ended December 31, 2021 2020 2019 U.S Federal tax expense at statutory rates 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 3.0 % 3.8 % 8.7 % Valuation allowance (1.5) % (0.2) % (6.8) % Federal research & development credit 0.5 % 2.0 % 7.4 % Uncertain tax benefit on federal research and development credit (0.1) % (0.5) % (3.7) % Release of uncertain tax benefits 0.7 % 0.2 % 22.1 % Effect of non-controlling interest (4.1) % — % — % Other — % 0.4 % 0.2 % Effective tax rate 19.5 % 26.7 % 48.9 % Unrecognized Tax Benefits The aggregate changes in the balance of unrecognized tax benefits were as follows: Year Ended December 31, Dollars in thousands 2021 2020 2019 Balance, beginning of the period $ 2,213 $ 1,935 $ 4,558 Additions based on tax positions related to the current year 13 250 150 Additions for tax positions related to prior years — 215 509 Reductions for tax positions related to prior years (897) — — Deductions for tax positions related to prior years — (187) (1,945) Deductions for tax positions effectively settled (1,151) — (1,337) Balance, end of period $ 178 $ 2,213 $ 1,935 The Company recognizes interest and penalties, if any, related to income tax matters in income tax expense. The Company accrued interest of $0.0 million, $0.0 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021, 2020 and 2019, $0.2 million, $2.2 million and $1.9 million, respectively, of unrecognized tax benefits would favorably impact the effective tax rate if recognized. The Company believes that it is reasonably possible that approximately Tax Years Open for Examination As of December 31, 2021, the years 2018 through 2021 were open under statutes of limitations for possible examination by the U.S. federal and most state tax authorities. During 2021, state examinations were finalized without any material adjustments. There are currently no active examinations by the U.S. federal or state taxing authorities. Deferred Income Taxes Deferred income tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts used for income tax purposes. Future tax benefits for net operating loss and tax credit carryforwards are also recognized to the extent that realization of such benefits is more likely than not. Deferred tax assets, deferred tax liabilities and tax credit carryforwards are measured using enacted tax rates that are expected to apply to taxable income in the years in which the Company expects to recognize those temporary differences and credits. In determining the Company’s tax provisions, management determined the deferred tax assets and liabilities for each separate tax jurisdiction and considered a number of factors including the positive and negative evidence regarding the realization of its deferred tax assets to determine whether a valuation allowance should be recognized with respect to its deferred tax assets. Significant components of the Company’s deferred tax assets and liabilities and in the valuation allowance were as follows: December 31, 2021 2020 Deferred tax assets: Credit carryforwards $ 40 $ 1,117 Net operating loss carryforwards 1,459 — Section 163(j) interest carryforward 410 — Outside basis difference in investments (1) 20,186 — Accrued liabilities and allowances — 1,388 Compensation accruals — 2,750 Asset retirement obligation liability — 1,994 Deferred revenue — 2,237 Hedge liability — 1,200 Other — 253 Gross deferred tax assets 22,095 10,939 Less: Valuation Allowance (22,095) (1,039) Total deferred tax assets $ — $ 9,900 Deferred tax liabilities: Property and equipment — (14,172) Product costs — (3,905) Prepaid expenses — (284) Intangible assets — (30,965) Goodwill — (1,745) Total deferred tax liabilities $ — $ (51,071) Net deferred tax liabilities $ — $ (41,171) (1) This amount is the deferred tax asset the Company recognizes for its book to tax basis difference in its investment in Redwood Intermediate, LLC. Redbox Entertainment, Inc. is organized as a Subchapter C corporation and, on October 22, 2021, as part of the Company’s business combination, became a 27.8% owner of Redwood Intermediate, LLC (see Note 13 — Shareholders’ Equity million, which will be able to offset future taxable income. All net operating loss carryforwards will be carried forward indefinitely. As further described in Note 1 — Summary of Significant Accounting Policies The large increase in the net deferred tax assets in 2021 is primarily due to the Company’s acquisition of 12,618,516 Redwood Intermediate, LLC common units (see Note 13 — Shareholders’ Equity difference in its investment in Redwood Intermediate, LLC are not more likely than not to be recognized. The current and cumulative valuation allowance is $2.7 million and $22.1 million, respectively, for the year ended December 31, 2021. The provision for income tax has been included in the consolidated financial statements. The income tax is based on the amount of taxes due on the Company’s tax returns plus deferred taxes computed based on the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using expected tax rates. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements on a particular tax position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. As of December 31, 2021, and December 21, 2020 the balance of the Company’s uncertain tax positions was million of its currently remaining unrecognized tax benefits, may be recognized by the end of 2022 as a result of a lapse of the statute of limitations. The Company did not recognize any interest or penalties relating to income taxes for the years ended December 31, 2021, 2020, and 2019. On October 22, 2021, the Company entered into a tax receivable agreement (the “Tax Receivable Agreement”) that provides for the payment by the Company to Redwood Holdco, LP of 85% of the amount of tax benefits, if any, the Company actually realizes, or in some circumstances is deemed to realize, as a result of (i) increases in the tax basis from the Business Combination between Redbox Entertainment Inc. and Redwood Holdco, LP, in connection with the consummation of the Business Combination and the related transactions and any future redemptions that are funded by the Company and any future redemptions or exchanges of common units by Redwood Holdco, LP and (ii) certain other tax benefits attributable to payments made under the Tax Receivable Agreement. Redwood Intermediate, LLC intends to make an election under Section 754 of the Internal Revenue Code effective for each tax year in which a redemption or exchange (including a deemed exchange) of common units for cash or stock occur. These tax benefit payments are not conditioned upon Redwood Holdco, LP maintaining a continued ownership interest in Redwood Intermediate, LLC. In general, Redwood Holdco, LP’s rights under the Tax Receivable Agreement are assignable, including to transferees of its common units in Redwood Intermediate, LLC (other than the Company as transferee pursuant to a redemption or exchange of common units in Redwood Intermediate, LLC). The Company expects to benefit from the remaining 15% of the tax benefits, if any, which may be realized. As of December 31, 2021, we have estimated the tax receivable liability of $14.5 million assuming (1) a constant federal income tax rate of 21.0% and a state tax rate of 4.0% (net of any federal benefit), (2) no material changes in tax law, (3) the ability to utilize tax basis and attributes and (4) future tax receivable agreement payments. These amounts are estimates and have been prepared for informational purposes only. If Redwood Holdco were to engage in an Exchange of all of its Redwood Intermediate equity interests as of December 31, 2021, the net present value of the liability we would recognize is approximately $154.3 million. Redwood Intermediate, LLC is subject to partnership audit rules enacted as part of the Bipartisan Budget Act of 2015 (the “Centralized Partnership Audit Regime”). Under the Centralized Partnership Audit Regime, any IRS audit of Redwood Intermediate, LLC would be conducted at the Redwood Intermediate, LLC level, and if the IRS determines an unfavorable adjustment, the default rule is that Redwood Intermediate, LLC would pay an “imputed underpayment” including interest and penalties, if applicable. Redwood Intermediate, LLC may instead elect to make a “push-out” election, in which case the partners for the year that is under audit would be required to take into account the adjustments on their own personal income tax returns. If Redwood Intermediate, LLC does not elect to make a “push-out” election, Redwood Intermediate, LLC will determine the portion of such imputed underpayment attributable to each member and former member, and if necessary may seek reimbursement. If Redwood Intermediate, LLC receives an imputed underpayment, a determination will be made based on the relevant facts and circumstances that exist at that time. Any payments that Redwood Intermediate, LLC ultimately makes on behalf of its current members will be reflected as a distribution, rather than tax expense, at the time such distribution is declared. Change in Valuation Allowance During 2021, the Company increased its valuation allowance against certain of its deferred tax assets to reduce them to the value more likely than not to be realized with a corresponding non-cash charge of $2.7 million to its income tax provision and $18.4 million to additional paid-in-capital. The valuation allowance balance of 31, 2020. Year Ended December 31, Dollars in thousands 2021 2020 2019 Valuation allowance, beginning of year $ 1,039 $ 851 $ 1,224 Valuation allowance recorded (released) through tax expense 2,694 188 (373) Valuation allowance recorded (released) through additional paid-in-capital 18,362 — — Valuation allowance, end of year $ 22,095 $ 1,039 $ 851 |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Related-Party Transactions | Note 18: Related-Party Transactions The Company receives and provides certain operating support under commercial services agreements with affiliates of Apollo, primarily ecoATM. A summary of the amounts due to/from such related parties is presented below: December 31, December 31, Dollars in thousands 2021 2020 Due from related parties, net $ 3,813 $ 4,112 Due to related parties, net $ 74 $ 449 The balance in amounts due to related parties primarily includes the unpaid dividends related to employee and non-employee directors. Revenues from related parties for the years ended December 31, 2021, 2020 and 2019 were $17.8 million, $14.0 million and $8.7 million, respectively. On January 29, 2021, the Company entered into the Fourth Amendment to the Credit Agreement. Provided under the Credit Agreement, the Company incurred additional principal amount under a Term B-2 Loan in an aggregate principal amount of $25.0 million, which was provided by New Outerwall, Inc. The proceeds from the loan will be used for general corporate purposes. The Term B-2 loan ranks pari passu basis with all obligations pursuant to the Credit Agreement. The loan was subsequently assigned to Aspen Parent, Inc., an affiliate of Apollo. See Note 7, Debt With respect to income taxes for all periods presented prior to the Business Combination, while historically the Company is part of a consolidated group for income tax filings, the income tax benefits and provisions, income tax payables, related tax payments and deferred tax balances reported within have been prepared as if the Company operates as a standalone taxpayer. Deferred taxes have been classified as net liabilities in the respective Consolidated Balance Sheets of the Company. Except for certain separate state tax obligations, the Company generally remitted cash to Aspen Parent, Inc. or New Outerwall, Inc., both affiliates of Apollo, to settle any third-party, tax-related obligations, as determined if the Company operated as a standalone taxpayer. Subsequent to the Business Combination, the Company is no longer part of a consolidated group for income tax filings with Aspen Parent, Inc. or New Outerwall, Inc. Income taxes payable balances, which are included in Accrued and other current liabilities in the Company’s Consolidated Balance Sheet, were |
Additional Supplemental Cash Fl
Additional Supplemental Cash Flow Financial Information | 12 Months Ended |
Dec. 31, 2021 | |
Additional Supplemental Cash Flow Financial Information | |
Additional Supplemental Cash Flow Financial Information | Note 19: Additional Supplemental Cash Flow Financial Information Cash, Cash Equivalents and Restricted Cash Year Ended December 31, Dollars in thousands 2021 2020 Cash and cash equivalents $ 14,320 $ 5,401 Restricted cash 4,158 3,526 Cash, cash equivalents and restricted cash $ 18,478 $ 8,927 Cash Interest and Taxes Year Ended December 31, Dollars in thousands 2021 2020 Cash paid during the period for interest $ — $ 29,061 Cash paid (received) during the period for income taxes, net $ (5,494) $ 2,993 Non-cash Transactions Year Ended December 31, Dollars in thousands 2021 2020 Purchases of property and equipment financed by capital lease obligations $ 1,561 $ 338 Purchases of property and equipment included in ending trade payables or accrued and other current liabilities $ 267 $ 653 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | Note 20: Subsequent Events On April 15, 2022, the Company’s subsidiary, Redbox Automated Retail, LLC, entered into a Sixth Amendment to the Credit Agreement (the “Sixth Amendment”), pursuant to which the lenders party thereto will make available additional financing in an aggregate amount equal to $50,000,000. As a condition to the effectiveness of the Sixth Amendment, the Company entered into a Voting and Support Agreement (the “Voting and Support Agreement”) with AP VIII Aspen Holdings, L.P., a Delaware limited partnership (“Aspen Holdings”), Seaport Global SPAC, LLC, a Delaware limited liability company (“Seaport”) and Redwood Holdco, LP, a Delaware limited partnership (“Redwood Holdco”, together with Seaport and Aspen Holdings, the “Stockholders”), pursuant to which, among other things, the Stockholders have each agreed to vote their shares of the Company: (i) in favor of any strategic transaction approved and recommended by our board of directors, or any committee to which the board of directors delegates authority, subject to certain terms and conditions; (ii) in opposition to any strategic transaction involving the Company that has not been approved and recommended to our board of directors; and (iii) in favor of any directors that are proposed or nominated to our board of directors by the Company at any annual meeting of the Company. The parties to the Stockholders Agreement also agreed to consent and waive certain governance and other rights related to the nomination, election and resignation of directors of the Company, the size of the board of directors of the Company, entry into the Voting and Support Agreement, entry into the waiver to the TRA (described below), as applicable, and to waive certain consent rights in connection with the additional financing. The Company further agreed, pursuant to the Voting and Support Agreement, to cause its subsidiaries party to the Union Revolving Credit Facility to (i) permanently reduce a portion of its revolving commitments thereunder in an amount equal to $10.6 million, and (ii) among other agreements, refrain from borrowing under the Union Revolving Credit Facility without the consent of Aspen Holdings and Redwood Holdco (other than with respect to certain scheduled borrowings and borrowings to cover interest, fees and expenses). As a further condition to effectiveness of the Sixth Amendment, the Company has agreed to issue HPS and certain affiliates warrants to purchase shares of Class A common stock. In connection with the execution of the Sixth Amendment, the Company agreed to implement certain changes to the composition and size of the board of directors. In connection with the Company’s entry into the Voting and Support Agreement, Redwood Holdco permanently waived an accelerated termination payment by the Company (or an affiliate of the Company) under that certain Tax Receivable Agreement dated as of October 22, 2021 (“TRA”) that would be payable to Redwood Holdco if a change of control of the Company were to result from the changes to the board of directors of the Company contemplated in the Voting and Support Agreement. Additionally, under the Voting and Support Agreement, the Company and Redwood Holdco agreed, in connection with the consummation of a strategic transaction approved and recommended by our board of directors, to (a) terminate the TRA upon the consummation of any such transaction and (b) waive all claims under the TRA with such waiver being effective upon the consummation of such transaction. Refer to the Company’s Current Report on Form 8-K to be filed on a concurrent basis for additional information regarding the Sixth Amendment, the Voting and Support Agreement and the Warrant Agreement, as well as certain accompanying matters. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Basis of presentation | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue, net of sales tax, when it satisfies its performance obligations by transferring control of promised goods or services to its customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Revenue from movie rentals is recognized for the period that the movie is rented and is recorded net of promotional discounts offered to the Company’s consumers, uncollected amounts and refunds that it grants to its customers. Revenue from a direct sale out of the kiosk of previously rented movies is recognized at the time of sale. Revenue from On Demand rentals or purchases is also recognized at the time of sale. On rental transactions for which the related movie has not yet been returned to the kiosk at month-end, revenue is recognized with a corresponding receivable recorded in the balance sheet, net of a reserve for potentially uncollectable amounts that is considered a reduction from gross revenue as collectability is not reasonably assured. A significant portion of the Company’s Legacy Business rental revenue is concentrated in kiosks installed with certain retail partners. Revenue aggregated at the following retailers accounted for 10% or more of the Company’s net revenue for the periods presented: Year Ended December 31, 2021 2020 2019 Wal-Mart Stores Inc. 13.0 % 13.8 % 18.3 % Walgreen Co. 11.9 % 14.6 % 14.7 % Service revenue from the Company’s external kiosk servicing business is recognized as contract obligations related to other kiosk businesses are fulfilled. The Company has service agreements with multiple companies that have national and regional kiosk networks. Services for an external kiosk business may include, but is not limited to, our field team providing break-fix services, merchandising visits, and handling other kiosk-related projects as they arise. Digital advertising revenue from the Company’s media network business is primarily recognized at a point in time when the ad is placed and delivered, based on the customers’ contract price. For revenues generated from distributing and licensing Redbox Entertainment original content to other streaming platforms, the Company evaluates whether it is the principal, and reports revenue on a gross basis, or an agent, and reports revenue on a net basis. Promotional Codes and Gift Cards The Company offers its consumers the option to purchase stored value products in the form of bulk promotional codes and electronic gift cards. There are no expiration dates on these products and the Company does not charge service fees that cause a decrement to customer balances in the case of gift cards. Cash receipts from the sale of promotional codes and gift cards are recorded as deferred revenue in Accrued and other current liabilities and recognized as revenue upon redemption. Additionally, the Company recognizes revenue from non-redeemed or partially redeemed promotional codes and gift cards in proportion to the historical redemption patterns, referred to as “breakage.” Estimated breakage revenue is recognized over time in proportion to actual promotional code and gift card redemptions and is not material in any period presented. As of December 31, 2021 and December 31, 2020, $7.6 million and $7.0 million, respectively, were deferred related to purchased but unredeemed promotional codes and gift cards and are included in Accrued and other current liabilities in the accompanying Consolidated Balance Sheets. Loyalty Program In January 2018, the Company launched Redbox Perks. Redbox Perks allows members to earn points based on transactional and non-transactional activities with Redbox. As customers accumulate points, the Company defers revenue based on its estimate of both the amount of consideration paid by Perks members to earn awards and the value of the eventual award it expects the members to redeem. The Company defers an appropriate amount of revenue so as to properly recognize revenue from Perks members in relation to the benefits of the program. The Company also estimates the quantity of points that will not be redeemed by Perks members (“breakage”). Breakage reduces the amount of revenue deferred from loyalty points over the period of, and in proportion to, the actual redemptions of loyalty points based on observed historical breakage and consumer rental patterns. As of December 31, 2021 and December 31, 2020, $1.9 million and $2.8 million, respectively, of revenue was deferred related to Perks and is included in Accrued and other current liabilities in the accompanying Consolidated Balance Sheets. |
Product Cost | Product Cost Product cost primarily represents the amortization of the Company’s physical content library and digital revenue sharing costs. Amortization of the content library is calculated using rental decay curves based on historical performance of movies and games over their useful lives to allocate content library costs to the periods over which the related revenues are earned. Given the steepness of the rental decay curve, amortization of the content library is recorded on an accelerated basis with substantially all of the content library cost recognized within the first year. The rental decay curves and salvage value of the Company’s content library are periodically reviewed and evaluated. |
Advertising Costs | Advertising Costs Advertising costs, which are included as a component of marketing expenses, include media expenses for national and local advertising, internet advertising, and sponsorship fees. The costs were $2.8 million, $6.3 million and $4.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Related Parties | Related Parties Receivables or payables that existed as of the balance sheet date, due to or due from Apollo and affiliates of Apollo have been presented as Due from related parties, net and Due to related parties, net in the accompanying Consolidated Balance Sheet and Consolidated Statements of Cash Flows. Additionally, Due to related parties, net includes unpaid dividends related to employees and non-employee directors. Right of offset is assumed for balances between Redbox and the same related counter party and, as such, are presented as net receivables or payables based on the net balances due to or from the respective counter parties as of the balance sheet date. For all periods prior to the Business Combination, Redbox is part of a consolidated filing group; income taxes are paid as a pass through to either Aspen Parent, Inc. or New Outerwall, Inc. Subsequent to the Business Combination, the Company is no longer part of a consolidated group for income tax filings with Aspen Parent, Inc. or New Outerwall, Inc. Aspen Parent, Inc. and New Outerwall, Inc. are affiliates of Apollo. The Company’s income tax obligations are presented as the amounts that would be owed if the Company had been a standalone taxpayer and are included in Accrued and other current liabilities Consolidated Balance Sheet |
Stock-Based Compensation | Stock-Based Compensation The Company grants stock-based awards to select employees and non-employee directors of the Company, consisting of restricted stock and performance stock units. Compensation expense is generally recognized for restricted stock units on a graded-vesting basis over the vesting period, which is generally one |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of deposit accounts. The Company’s cash balances with financial institutions may exceed the deposit insurance limits. The Company does not include outstanding amounts due from its payment card service providers for billed transactions in its cash balances, rather they are included in accounts receivable. |
Restricted Cash | Restricted Cash Restricted cash balances are cash balances established to secure the Company’s letter of credit requirement to support its insurance obligations and is presented as a short-term asset. See also Note 7: Debt |
Accounts Receivable | Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts. Accounts receivable balances primarily consist of receivables due from consumers for outstanding rental transactions, amounts due from the Company’s payment card service providers for billed transactions and amounts due from our advertising partners and service business customers. The allowance for doubtful accounts primarily reflects management’s best estimate of amounts related to outstanding rental transactions that will not be collected. The Company determines the allowance based on historical experience and other currently available information. |
Content Library | Content Library Content library consists of movies available for rent or purchase through the Company’s kiosks. The Company obtains its movie content primarily through revenue sharing agreements and license agreements with studios, as well as through distributors and other suppliers. The cost of content mainly includes (1) the costs paid to studios and other vendors to acquire content including revenue share as applicable, (2) costs incurred to label, sort, and ship content to the Company’s kiosks for merchandising, (3) costs incurred to destroy content after use if required under contractual arrangements with studios and (4) indirect taxes, if applicable. For content that the Company expects to sell, management determines an estimated salvage value. Content salvage values are estimated based on the historical sales activity. The cost of each title is capitalized and amortized to its estimated salvage value using rental decay curves as discussed above under Product Cost. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets are generally comprised of insurance-related receivables representing estimated amounts due from the Company’s insurance partners in excess of its deductibles, spare parts that are not separately capitalized for use in the repair and maintenance of its kiosks, the value of cases and labels used to vend and track discs, net of amortization, and various prepayments for operating expenses including software licenses when not determined to be a component of property and equipment. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures that extend the life, increase the capacity, or improve the efficiency of property and equipment are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over the following approximate useful lives: Useful Life Redbox kiosks and components 3 Computers and software 2 Leasehold improvements (shorter of life of asset or remaining lease term) 3 Office furniture and equipment 5 Vehicles 3 |
Internal-Use Software | Internal-Use Software The Company capitalizes costs incurred to develop or obtain internal-use software during the application development stage. Capitalization of software development costs occurs after the preliminary project stage is complete, management authorizes the project, and it is probable that the project will be completed and the software will be used for the function intended. The Company expenses costs incurred for training, data conversion, and maintenance, as well as spending in the post-implementation stage. A subsequent addition, modification or upgrade to internal-use software is capitalized only to the extent that it enables the software to perform a task it previously could not perform. The internal-use software is included in computers and software under property and equipment in the Company’s Consolidated Balance Sheets. The Company amortizes internal-use software over its estimated useful life on a straight-line basis. |
Intangible Assets Subject to Amortization | Intangible Assets Subject to Amortization The Company’s intangible assets subject to amortization comprise the value of its retailer relationships, the Redbox trade name, its contactable customer list, and developed technology as determined on the date of the Apollo Acquisition. The Company amortizes its intangible assets over their expected useful lives on a straight-line basis as the future pattern of consumption of the economic benefit derived from the identified intangible assets cannot be reliably determined. The Company annually reassess the useful lives of its intangible assets subject to amortization and the methods under which they are amortized. For further information, see Note 5: Goodwill and Other Intangible Assets |
Goodwill | Goodwill Goodwill represents the excess purchase price of an acquired enterprise or assets over the estimated fair value of identifiable net assets acquired. Goodwill is evaluated for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit below its carrying value. As part of the Company’s impairment analysis, fair value of a reporting unit is determined using both the income and market approaches. The income approach requires management to estimate a number of factors for each reporting unit, including projected future operating results, economic projections, anticipated future cash flows and discount rates. For further information, see Note 5: Goodwill and Other Intangible Assets |
Business Combinations | Business Combinations The Company recognizes identifiable assets acquired and liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess purchase price of an acquired enterprise or assets over the estimated fair value of identifiable net assets acquired. Transaction costs associated with business combinations are expensed as incurred. |
Recoverability of Equipment and Other Long-Lived Assets | Recoverability of Equipment and Other Long-Lived Assets The Company evaluates the estimated remaining life and recoverability of equipment and other assets, including intangible assets subject to amortization, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Factors that would indicate potential impairment include, but are not limited to, significant decreases in the market value of the long-lived asset(s), a significant change in the long-lived asset’s use or physical condition, and operating or cash flow losses associated with the use of the long-lived asset. When there is an indication of impairment, the Company prepares an estimate of future undiscounted cash flows expected to result from the use of the asset and its eventual disposition to test recoverability. If the sum of the future undiscounted cash flows is less than the carrying value of the asset, it indicates that the long-lived asset is not recoverable, in which case the Company will then compare the estimated fair value to its carrying value. If the estimated fair value is less than the carrying value of the asset, the Company will recognize the impairment loss and adjust the carrying amount of the asset to its estimated fair value. No impairment losses have been recorded during years ended December 31, 2021, 2020 and 2019, respectively. |
Trade Payables | Trade Payables Trade payables are primarily comprised of non-revenue share payments to the Company’s content partners, payments due to its retailer partners, and various other payments due for invoiced goods and services from its operational vendors. |
Accrued and Other Current Liabilities | Accrued and Other Current Liabilities Accrued and other current liabilities generally consist of estimated total amounts due under contractual revenue-sharing arrangements with the Company’s content providers net of payments made during the respective title’s rental period, employee related liabilities primarily related to compensation, deferred revenue related to stored-value arrangements and the Company’s loyalty program, estimated income taxes payable, sales and rental-related taxes collected from the Company’s consumers on behalf of governmental entities, estimated gross amounts due for insurance claims incurred but not recorded, and various other estimates of amounts due but not invoiced for goods and services from the Company’s operational vendors. |
Warrant Liabilities | Warrant Liabilities The Company classifies its public and private placement warrants as a liability at is fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statements of operations. The Public Warrants are valued at a market price based on a quoted price in an active market. The Company utilizes a Black-Scholes model to value the outstanding private placement warrants (“Private Placement Warrants”) at each reporting period. For further information, see Note 14: Warrant Liability. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, management determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, it will recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. |
Non-controlling Interest | Non-controlling Interest The Company presents non-controlling interests as a component of equity on its Consolidated Balance Sheets and reports the portion of its earnings or loss for non-controlling interest as net earnings attributable to non-controlling interests in the Consolidated Statements of Operations. |
Loss Contingencies | Loss Contingencies The Company accrues estimated liabilities for loss contingencies arising from claims, assessments, litigation and other sources when it is probable that a liability has been incurred and the amount of the claim assessment or damages can be reasonably estimated. The Company believes it has sufficient accruals to cover any obligations resulting from claims, assessments or litigation that have met these criteria. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Certain financial assets and liabilities are required to be carried at fair value. Fair value is the price that would be received to sell an asset, or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes market data or assumptions that it believes market participants would use in pricing the asset or liability, which would maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, including assumptions about risk and the risks inherent in the inputs to the valuation technique. In evaluating the fair value measurement techniques for recording certain financial assets and liabilities, there is a three-level valuation hierarchy under which financial assets and liabilities are designated. The determination of the applicable level within the hierarchy of a particular financial asset or liability depends on the inputs used in valuation as of the measurement date. Valuations based on observable or market-based inputs for identical asset or liabilities (Level 1 measurement) are given the highest level of priority, whereas valuations based on unobservable or internally derived inputs (Level 3 measurement) are given the lowest level of priority. The three levels of the fair value hierarchy are defined as follows: ● Level 1 : Observable inputs such as quoted prices in active markets for identical assets or liabilities; ● Level 2 : Inputs other than Level 1 inputs that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or market-corroborated inputs; or ● Level 3 : Unobservable inputs that reflect the reporting entity’s own assumptions. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying amounts for the Company’s cash equivalents approximate fair value because of the short-term nature of these instruments. The fair value of the Company’s long-term debt approximates its carrying amount, which is presented net of unamortized deferred financing costs. |
Derivative Instruments | Derivative Instruments The Company is exposed to certain market risks relating to interest rates. The Company actively monitors and attempts to mitigate but does not eliminate these exposures using derivative instruments including interest rate swaps. The Company does not enter into derivative instruments for speculative or trading purposes. The Company recognizes its derivatives as either assets or liabilities and measure those instruments at estimated fair value. The Company presents its derivative positions gross on its Consolidated Balance Sheets. The Company records changes in the fair value of derivatives as a component of other expense, net on its Consolidated Statements of Operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Guidance Adopted: In March 2019, the FASB issued ASU 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials (Subtopic 926-20), in order to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. ASU 2019-02 also requires that an entity reassess estimates of the use of a film in a film group and account for any changes prospectively. In addition, 2019-02 requires that an entity test films and license agreements for impairment at a film group level when the film or license agreements are predominantly monetized with other films and license agreements. For private companies, the guidance is effective for reporting periods beginning after December 15, 2020. The adoption of ASU 2019-02 did not have a material impact on the Company’s consolidated financial statements and related disclosures. Accounting Guidance Not Yet Adopted: In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (ASU 2020-04), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuance of LIBOR or another referenced rate. ASU 2020-04 is effective for fiscal years beginning after December 31, 2022. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) to simplify the accounting for income taxes. This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also clarifies and simplifies other areas of ASC 740. This standard is effective for private companies for fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842” or “ASC 842”) related to leases to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted ASC 842 as of January 1, 2022, using the cumulative effect transition approach. The cumulative effect transition approach provides a method for recording existing leases at adoption and not restated comparative periods; rather the effect of the change is recorded at the beginning of the year of adoption. The Company will elect the of practical expedients permitted under the transition guidance within the new standard, which allows us to carryforward historical lease classification. In addition, we are electing the practical expedient to determine the reasonably certain lease term for existing leases. Lastly, we elect the short-term lease recognition exemption for our leases. This means for short-term leases, we will not recognize ROU assets and lease liabilities, and this includes not recognizing ROU asset or lease liabilities for existing short-term leases of those assets in transition. In preparation for adoption of the standard, we have implemented internal controls to enable the preparation of financial information. Although management continues to evaluate the effect of adoption of ASC 842, management currently estimates a recognition of ROU assets of $9.1 million and lease liabilities for operating leases of $9.4 million as of January 1, 2022. The standard did not materially impact our consolidated net earnings and had no impact on cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326). The ASU provides new guidance regarding measurement and recognition of credit impairment for certain financial assets. Such guidance will impact how the Company determines its allowance for estimated uncollectible receivables. This ASU is effective for emerging growth companies that have elected to use private company adoption dates with annual and interim periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Basis of presentation | |
Schedule of aggregation of revenue | Year Ended December 31, 2021 2020 2019 Wal-Mart Stores Inc. 13.0 % 13.8 % 18.3 % Walgreen Co. 11.9 % 14.6 % 14.7 % |
Schedule of estimated useful lives of the assets | Useful Life Redbox kiosks and components 3 Computers and software 2 Leasehold improvements (shorter of life of asset or remaining lease term) 3 Office furniture and equipment 5 Vehicles 3 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination | |
Reconciliation of consolidated statement of cash flows and consolidated statement of changes in equity (Details) | Dollars in thousands Recapitalization Cash - Seaport's trust and cash, net of redemptions $ 20,405 Cash - PIPE financing 50,000 Cash - Backstop agreement 20,159 Less: Transaction costs paid at close (13,139) Net Business Combination 77,425 Plus: Tax impact, net 4,442 Less: Additional capitalized transaction costs (1,387) Less: Warrant liability assumed (21,297) Net contribution from Business Combination $ 59,183 |
Schedule of number of shares issued on consummation of business | Class A Class B Common Common Stock Stock Seaport common stock outstanding prior to Business Combination 14,375,000 — Less: redemption of Seaport shares (12,346,223) — Ordinary shares of Seaport 2,028,777 — Seaport sponsor shares 3,593,750 — Shares issued in PIPE financing 5,000,000 — Shares issued pursuant to Backstop Agreement 1,995,989 — Shares to Redwood Holdco shareholders — 32,770,000 Total shares of common stock outstanding immediately after the Business Combination 12,618,516 32,770,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment | |
Schedule of property and equipment | December 31, December 31, Dollars in thousands 2021 2020 Kiosks and components $ 190,496 $ 190,416 Computers, servers, and software 99,123 87,113 Leasehold improvements 4,129 3,991 Office furniture and equipment 676 676 Leased Vehicles 11,380 10,678 Property and equipment, at cost $ 305,804 $ 292,874 Accumulated depreciation (265,180) (229,785) Property and equipment, net $ 40,624 $ 63,089 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Other Intangible Assets | |
Summary of changes in goodwill by reportable segment | Legacy Digital Dollars in thousands Business Business Total Balance as of December 31, 2019 $ 144,014 $ 3,509 $ 147,523 Balance as of December 31, 2020 $ 144,014 $ 3,509 $ 147,523 Balance as of December 31, 2021 $ 144,014 $ 3,509 $ 147,523 |
Summary of carrying amounts and accumulated amortization of intangible assets | December 31, 2021 December 31, 2020 Gross Net Gross Net Estimated Carrying Accumulated Carrying Carrying Accumulated Carrying Dollars in thousands Useful Life Amount Amortization Amount Amount Amortization Amount Intangible assets subject to amortization: Contracts with retailers 7 years $ 370,000 $ (278,087) $ 91,913 $ 370,000 $ (225,230) $ 144,770 Trade name 7 years 60,000 (45,095) 14,905 60,000 (36,524) 23,476 Contactable customer list 7 years 40,000 (30,063) 9,937 40,000 (24,349) 15,651 Developed technology 7 years 30,000 (22,548) 7,452 30,000 (18,262) 11,738 Total intangible assets subject to amortization $ 500,000 $ (375,793) $ 124,207 $ 500,000 $ (304,365) $ 195,635 |
Summary of amortization of intangible assets for each of next five fiscal years | Amortization of Dollars in thousands intangible assets 2022 $ 71,428 2023 52,779 2024 — 2025 — 2026 — Total expected amortization $ 124,207 |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accrued and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | December 31, December 31, Dollars in thousands 2021 2020 Accrued payroll and other related expenses $ 23,901 $ 24,212 Accrued revenue share 11,786 13,480 Deferred revenue 9,553 10,019 Income taxes payable — 15,777 Other 12,515 12,466 Total accrued and other current liabilities $ 57,755 $ 75,954 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Summary of debt | December 31, December 31, Dollars in thousands 2021 2020 Term B Facility $ 271,562 $ 281,563 Paid-In-Kind Interest related to Term Loan Facility 31,480 — Revolving Credit Facility 15,000 30,000 Paid-In-Kind Interest related to Revolving Credit Facility 2,731 — Union Revolving Credit Facility 4,616 2,550 Total debt outstanding $ 325,389 $ 314,113 Less: Unamortized debt issuance costs (3,823) (6,639) Total debt, net $ 321,566 $ 307,474 Portion due within one year $ 34,211 $ — Total long-term debt, net $ 287,355 $ 307,474 |
Summary of required minimum principal amortization payments | Repayment Dollars in thousands Amount 2022 $ 31,480 2023 — 2024 271,562 Total $ 303,042 |
Interest Rate Derivatives (Tabl
Interest Rate Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Interest Rate Derivatives | |
Summary of balance sheet location of the Company's derivative instrument | Balance Sheet December 31, December 31, Dollars in thousands Location 2021 2020 Derivatives not designated as hedging instruments: Interest rate swap contract Other liabilities $ — $ 4,782 |
Summary of effect of company's derivative instrument on the Consolidated Statements of Operations | For the years ended December 31, Dollars in thousands 2021 2020 2019 Other expense, net $ (394) $ 4,341 $ 3,946 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Schedule of compensation cost | A summary of stock-based compensation cost recognized for stock-based payment arrangements is as follows (in thousands): Year Ended December 31, Dollars in thousands 2021 Compensation cost recognized: Restricted stock units $ 996 Total compensation cost $ 996 |
Schedule of restricted stock units | Weighted Average Grant-Date Fair Value Shares Per Share Outstanding at January 1, 2021 — $ — Granted 3,019,853 8.02 Vested and converted — — Forfeited/expired — — Outstanding at December 31, 2021 3,019,853 $ 8.02 |
Segment Information and Geogr_2
Segment Information and Geographic Data (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Information and Geographic Data | |
Summary of financial information by segment | For the years ended December 31, Dollars in thousands 2021 2020 2019 Net revenue Legacy Business $ 253,417 $ 506,437 $ 838,627 Digital Business 35,123 39,754 19,743 Total $ 288,540 $ 546,191 $ 858,370 Adjusted EBITDA Legacy Business $ (15,932) $ 109,074 $ 197,887 Digital Business 787 4,702 (2,238) Total $ (15,145) $ 113,776 $ 195,649 |
Summary of reconciliation of Adjusted EBITDA to (loss) income before income | Year ended December 31, Dollars in thousands 2021 2020 2019 Loss before income taxes $ (174,791) $ (94,707) $ (14,823) Add: Depreciation and amortization 108,505 136,838 138,274 Interest and other expense, net 31,523 32,522 44,578 Business optimization (a) 6,907 19,011 7,687 One-time non-recurring (b) 7,689 10,584 5,326 New business start-up costs (c) 1,004 6,041 3,793 Restructuring related (d) 2,024 3,471 4,432 Stock-based compensation expense 1,994 16 156 Discontinuation of games business (e) — — 6,226 Adjusted EBITDA $ (15,145) $ 113,776 $ 195,649 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share | |
Summary of calculation of EPS | Dollars in thousands, except per share amounts Year ended December 31, Basic and Diluted EPS 2021 2020 2019 Numerator: Net loss $ (140,756) $ (69,503) $ (7,567) Less: net loss attributable to legacy Redbox prior to the business combination (105,496) N/A N/A Less: net loss attributable to non-controlling interests (27,967) N/A N/A Net loss attributable to Redbox Entertainment Inc. — Basic and Diluted $ (7,293) N/A N/A Denominator: Weighted average shares of Class A common stock outstanding — Basic and Diluted 12,618,516 N/A N/A Earnings per share of Class A common stock outstanding — Basic and Diluted $ (0.58) N/A N/A |
Schedule of anti-dilutive shares | Year ended December 31, 2021 2020 2019 Unvested restricted stock units 110 325 376 Public and private placement warrants 16,843,733 — — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Schedule of Company's assets and liabilities that are measured at fair value on a recurring basis | The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. December 31, Dollars in thousands Level 2021 Liabilities: Warrant Liability – Public Warrants 1 $ 11,213 Warrant Liability – Private Placement Warrants 3 $ 6,608 Total Warrant Liability $ 17,821 |
Schedule of key inputs into the Monte Carlo simulation model for the Public Warrants and Private Placement Warrants | Input (Initial Measurement) Risk-free interest rate 1.20 % Expected term (years) 5.00 Expected volatility 20.2 % Stock price $ 9.62 Input (Initial Measurement) Risk-free interest rate 1.20 % Expected term (years) 4.80 Expected volatility 31.4 % Stock price $ 7.41 |
Schedule of changes in the fair value of warrant liabilities | Private Warrant Dollars in thousands Public Placement Liabilities Initial measurement at closing of the Business Combination $ 13,477 $ 7,821 $ 21,298 Change in valuation inputs or other assumptions (2,264) (1,213) (3,477) Fair value as of December 31, 2021 $ 11,213 $ 6,608 $ 17,821 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Summary of assets held under capital leases included in property and equipment, net | Dollars in thousands December 31, 2021 December 31, 2020 Gross property and equipment $ 11,380 $ 10,677 Accumulated depreciation (7,285) (5,204) Net property and equipment $ 4,095 $ 5,473 |
Summary of future minimum lease payments under operating leases | Capital Operating Dollars in thousands Leases Leases(1) 2022 $ 2,116 $ 3,527 2023 1,010 3,045 2024 387 2,244 2025 144 1,687 2026 & Thereafter — — Total minimum lease commitments $ 3,657 $ 10,503 Less: Current portion of capital lease obligations (2,116) Long-term portion of capital lease obligations $ 1,541 (1) Includes all operating leases having an initial or remaining non-cancelable lease term in excess of one year. |
Schedule of future minimum lease payments under capital leases | Capital Operating Dollars in thousands Leases Leases(1) 2022 $ 2,116 $ 3,527 2023 1,010 3,045 2024 387 2,244 2025 144 1,687 2026 & Thereafter — — Total minimum lease commitments $ 3,657 $ 10,503 Less: Current portion of capital lease obligations (2,116) Long-term portion of capital lease obligations $ 1,541 (1) Includes all operating leases having an initial or remaining non-cancelable lease term in excess of one year. |
Summary of minimum estimated movie content commitments | Dollars in thousands Total 2022 2023 Minimum estimated movie content commitments $ 23,969 $ 19,860 $ 4,109 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes. | |
Summary of components of (loss) income before income taxes | Year Ended December 31, Dollars in thousands 2021 2020 2019 U.S. operations $ (174,791) $ (94,707) $ (14,823) |
Summary of components of income tax (benefit) expense | Year Ended December 31, Dollars in thousands 2021 2020 2019 Current: U.S. Federal $ 3,459 $ (491) $ 11,653 State and local — 711 4,209 Total current $ 3,459 $ 220 $ 15,862 Deferred: U.S. Federal (28,078) (21,489) (19,467) State and local (9,416) (3,935) (3,651) Total deferred $ (37,494) $ (25,424) $ (23,118) Total income tax (benefit) expense $ (34,035) $ (25,204) $ (7,256) |
Summary of income tax expense differs from the amount that would result by applying the U.S. statutory rate to income before income taxes | Year Ended December 31, 2021 2020 2019 U.S Federal tax expense at statutory rates 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 3.0 % 3.8 % 8.7 % Valuation allowance (1.5) % (0.2) % (6.8) % Federal research & development credit 0.5 % 2.0 % 7.4 % Uncertain tax benefit on federal research and development credit (0.1) % (0.5) % (3.7) % Release of uncertain tax benefits 0.7 % 0.2 % 22.1 % Effect of non-controlling interest (4.1) % — % — % Other — % 0.4 % 0.2 % Effective tax rate 19.5 % 26.7 % 48.9 % |
Summary of aggregate changes in the balance of unrecognized tax benefits | Year Ended December 31, Dollars in thousands 2021 2020 2019 Balance, beginning of the period $ 2,213 $ 1,935 $ 4,558 Additions based on tax positions related to the current year 13 250 150 Additions for tax positions related to prior years — 215 509 Reductions for tax positions related to prior years (897) — — Deductions for tax positions related to prior years — (187) (1,945) Deductions for tax positions effectively settled (1,151) — (1,337) Balance, end of period $ 178 $ 2,213 $ 1,935 |
Summary of significant components of the Company's deferred tax assets and liabilities | December 31, 2021 2020 Deferred tax assets: Credit carryforwards $ 40 $ 1,117 Net operating loss carryforwards 1,459 — Section 163(j) interest carryforward 410 — Outside basis difference in investments (1) 20,186 — Accrued liabilities and allowances — 1,388 Compensation accruals — 2,750 Asset retirement obligation liability — 1,994 Deferred revenue — 2,237 Hedge liability — 1,200 Other — 253 Gross deferred tax assets 22,095 10,939 Less: Valuation Allowance (22,095) (1,039) Total deferred tax assets $ — $ 9,900 Deferred tax liabilities: Property and equipment — (14,172) Product costs — (3,905) Prepaid expenses — (284) Intangible assets — (30,965) Goodwill — (1,745) Total deferred tax liabilities $ — $ (51,071) Net deferred tax liabilities $ — $ (41,171) (1) This amount is the deferred tax asset the Company recognizes for its book to tax basis difference in its investment in Redwood Intermediate, LLC. |
Summary of state tax credits before valuation allowances and related expiration periods | Year Ended December 31, Dollars in thousands 2021 2020 2019 Valuation allowance, beginning of year $ 1,039 $ 851 $ 1,224 Valuation allowance recorded (released) through tax expense 2,694 188 (373) Valuation allowance recorded (released) through additional paid-in-capital 18,362 — — Valuation allowance, end of year $ 22,095 $ 1,039 $ 851 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Summary of the amounts due to from such related parties | December 31, December 31, Dollars in thousands 2021 2020 Due from related parties, net $ 3,813 $ 4,112 Due to related parties, net $ 74 $ 449 |
Additional Supplemental Cash _2
Additional Supplemental Cash Flow Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Additional Supplemental Cash Flow Financial Information | |
Schedule of supplemental cash flow financial information | Cash, Cash Equivalents and Restricted Cash Year Ended December 31, Dollars in thousands 2021 2020 Cash and cash equivalents $ 14,320 $ 5,401 Restricted cash 4,158 3,526 Cash, cash equivalents and restricted cash $ 18,478 $ 8,927 Cash Interest and Taxes Year Ended December 31, Dollars in thousands 2021 2020 Cash paid during the period for interest $ — $ 29,061 Cash paid (received) during the period for income taxes, net $ (5,494) $ 2,993 Non-cash Transactions Year Ended December 31, Dollars in thousands 2021 2020 Purchases of property and equipment financed by capital lease obligations $ 1,561 $ 338 Purchases of property and equipment included in ending trade payables or accrued and other current liabilities $ 267 $ 653 |
Description of Business (Detail
Description of Business (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021USD ($)itemsegment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Oct. 22, 2021 | |
Network operations in number of self-service kiosks | item | 38,000 | |||
Network operations in number of locations | item | 33,000 | |||
Access given for minimum number of linear channels | item | 130 | |||
Number of operating segments | segment | 2 | |||
Cash flows from operations | $ | $ (29,240) | $ 29,693 | $ 102,797 | |
Accumulated deficit | $ | (332,954) | $ (221,626) | ||
Working capital | $ | $ (59,300) | |||
Seaport Global Acquisition Corp | ||||
Voting power in combined entity (in percentage) | 72.20% |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Promotional codes and gift cards | $ 7,600 | $ 7,000 | |
Deferred Perks | 1,900 | 2,800 | |
Advertising costs | 2,800 | 6,300 | $ 4,300 |
Impairment losses | $ 0 | $ 0 | $ 0 |
Lease, Practical Expedients, Package [true false] | true | ||
Lease, Practical Expedient, Use of Hindsight [true false] | true | ||
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjustment | |||
ROU assets | $ 9,100 | ||
Operating lease liability | $ 9,400 | ||
Maximum | |||
Vesting period | 3 years | ||
Minimum | |||
Vesting period | 1 year |
Basis of Presentation - Schedul
Basis of Presentation - Schedule of Aggregation of Revenue (Details) - Customer concentration - Revenue | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Wal-Mart Stores Inc. | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 13.00% | 13.80% | 18.30% |
Walgreen Co. | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 11.90% | 14.60% | 14.70% |
Basis of Presentation - Sched_2
Basis of Presentation - Schedule of Estimated Useful Lives of the Assets (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Maximum | Kiosks and components | |
Estimated useful life | 5 years |
Maximum | Computers, servers, and software | |
Estimated useful life | 3 years |
Maximum | Leasehold improvements | |
Estimated useful life | 6 years |
Maximum | Office furniture and equipment | |
Estimated useful life | 7 years |
Maximum | Leased Vehicles | |
Estimated useful life | 4 years |
Minimum | Kiosks and components | |
Estimated useful life | 3 years |
Minimum | Computers, servers, and software | |
Estimated useful life | 2 years |
Minimum | Leasehold improvements | |
Estimated useful life | 3 years |
Minimum | Office furniture and equipment | |
Estimated useful life | 5 years |
Minimum | Leased Vehicles | |
Estimated useful life | 3 years |
Business Combination (Details)
Business Combination (Details) $ / shares in Units, $ in Thousands | Oct. 22, 2021USD ($)Vote$ / sharesshares | May 16, 2021USD ($) | Dec. 31, 2021USD ($)shares |
Business Acquisition [Line Items] | |||
Number of votes per share | Vote | 1 | ||
Exchange ratio | 1.00% | ||
Shares issued in PIPE financing | shares | 5,000,000 | ||
Share price | $ / shares | $ 10 | ||
Cash - PIPE financing | $ 50,000 | ||
Shares issued pursuant to Backstop Agreement | shares | 1,995,989 | ||
Share price in Bankstop agreements | $ / shares | $ 10.10 | ||
Proceeds from Backstop agreement | $ 20,200 | ||
Direct and incremental costs | 14,500 | ||
Indirect and incremental costs | $ 7,000 | ||
Tax receivable agreement tax savings percentage | 85.00% | ||
Deferred tax asset | $ 19,400 | $ 20,186 | |
Revolving Credit Facility | |||
Business Acquisition [Line Items] | |||
Repayment of debt | 15,000 | $ 15,000 | |
Term Loan B-1 facility | |||
Business Acquisition [Line Items] | |||
Repayment of debt | 35,000 | ||
Term Loan B and Term Loan B-1 | |||
Business Acquisition [Line Items] | |||
Repayment of debt | 35,000 | ||
Senior Facilities | |||
Business Acquisition [Line Items] | |||
Repayment of debt | $ 50,000 | $ 50,000 | |
Seaport Global Acquisition Corp | |||
Business Acquisition [Line Items] | |||
Cash - PIPE financing | $ 50,000 | ||
Voting interest (as a percent) | 72.20% | ||
Seaport Global Acquisition Corp | Class B Common Stock | |||
Business Acquisition [Line Items] | |||
Shares issued | shares | 32,770,000 | 32,770,000 |
Business Combination - Reconcil
Business Combination - Reconciliation of Consolidated Statement of Cash Flows and Consolidated Statement of Changes in Equity (Details) - USD ($) $ in Thousands | Oct. 22, 2021 | Dec. 31, 2021 |
Business Combination | ||
Cash - PIPE financing | $ 50,000 | |
Seaport | ||
Business Combination | ||
Cash - Seaport's trust and cash, net of redemptions | $ 20,405 | |
Cash - PIPE financing | 50,000 | |
Cash - Backstop agreement | 20,159 | |
Less: Transaction costs paid at close | (13,139) | |
Net Business Combination | 77,425 | |
Plus: Tax impact, net | 4,442 | |
Less: Additional capitalized transaction costs | (1,387) | |
Less: Warrant liability assumed | (21,297) | |
Net contribution from Business Combination | $ 59,183 |
Business Combination - Common S
Business Combination - Common Shares Issued (Details) - Seaport - shares | Oct. 22, 2021 | Dec. 31, 2021 |
Class A Common Stock | ||
Business Combination | ||
Seaport common stock outstanding prior to Business Combination | 14,375,000 | |
Less: redemption of Seaport shares | (12,346,223) | |
Ordinary shares of Seaport | 2,028,777 | |
Seaport sponsor shares | 3,593,750 | |
Shares issued in PIPE financing | 5,000,000 | |
Shares issued pursuant to Backstop Agreement | 1,995,989 | |
Total shares of common stock outstanding immediately after the Business Combination | 12,618,516 | |
Class B Common Stock | ||
Business Combination | ||
Shares to Redwood Holdco shareholders | 32,770,000 | 32,770,000 |
Total shares of common stock outstanding immediately after the Business Combination | 32,770,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 305,804 | $ 292,874 |
Accumulated depreciation | (265,180) | (229,785) |
Net property and equipment | 40,624 | 63,089 |
Kiosks and components | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 190,496 | 190,416 |
Computers, servers, and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 99,123 | 87,113 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 4,129 | 3,991 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 676 | 676 |
Leased Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 11,380 | $ 10,678 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill [Line Items] | |||
Goodwill | $ 147,523 | $ 147,523 | $ 147,523 |
Legacy Business | |||
Goodwill [Line Items] | |||
Goodwill | 144,014 | 144,014 | 144,014 |
Digital Business | |||
Goodwill [Line Items] | |||
Goodwill | $ 3,509 | $ 3,509 | $ 3,509 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible asset (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 500,000 | $ 500,000 |
Accumulated Amortization | (375,793) | (304,365) |
Net Carrying Amount | $ 124,207 | 195,635 |
Contracts with retailers | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 7 years | |
Gross Carrying Amount | $ 370,000 | 370,000 |
Accumulated Amortization | (278,087) | (225,230) |
Net Carrying Amount | $ 91,913 | 144,770 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 7 years | |
Gross Carrying Amount | $ 60,000 | 60,000 |
Accumulated Amortization | (45,095) | (36,524) |
Net Carrying Amount | $ 14,905 | 23,476 |
Contactable customer list | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 7 years | |
Gross Carrying Amount | $ 40,000 | 40,000 |
Accumulated Amortization | (30,063) | (24,349) |
Net Carrying Amount | $ 9,937 | 15,651 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Life | 7 years | |
Gross Carrying Amount | $ 30,000 | 30,000 |
Accumulated Amortization | (22,548) | (18,262) |
Net Carrying Amount | $ 7,452 | $ 11,738 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Other Intangible Assets | |||
2022 | $ 71,428 | ||
2023 | 52,779 | ||
Net Carrying Amount | 124,207 | $ 195,635 | |
Amortization of intangible assets | 71,429 | 71,428 | $ 71,428 |
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Accrued and Other Current Lia_3
Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued and Other Current Liabilities | ||
Accrued payroll and other related expenses | $ 23,901 | $ 24,212 |
Accrued revenue share | 11,786 | 13,480 |
Deferred revenue | 9,553 | 10,019 |
Income taxes payable | 15,777 | |
Other | 12,515 | 12,466 |
Total accrued and other current liabilities | $ 57,755 | $ 75,954 |
Debt - Summary of debt (Details
Debt - Summary of debt (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 325,389 | $ 314,113 |
Less: Unamortized debt issuance costs | (3,823) | (6,639) |
Total debt, net | 321,566 | 307,474 |
Portion due within one year | 34,211 | 0 |
Total long-term debt, net | 287,355 | 307,474 |
Term B Facility | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | 271,562 | 281,563 |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Paid-In-Kind Interest | 31,480 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Paid-In-Kind Interest | 2,731 | |
Total debt outstanding | 15,000 | 30,000 |
Union Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 4,616 | $ 2,550 |
Debt - Credit Agreements (Detai
Debt - Credit Agreements (Details) - USD ($) $ in Millions | Oct. 20, 2017 | Dec. 31, 2020 |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Aggregate principal amount | $ 425 | |
Term of debt | 5 years | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 30 | $ 30 |
Term of debt | 5 years |
Debt - Term Loan and Amendment
Debt - Term Loan and Amendment Agreement (Details) - USD ($) $ in Millions | Oct. 22, 2021 | May 16, 2021 | Sep. 07, 2018 | Oct. 20, 2017 | Dec. 31, 2021 | Dec. 31, 2020 |
Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Retirement of existing debt outstanding | $ 280 | |||||
Cost associated with debt | 19.5 | |||||
Dividends to equity holders | 160 | |||||
Write-off unamortized deferred financing costs | 21.7 | |||||
Aggregate principal amount | 425 | |||||
Term Loan B-1 facility | ||||||
Debt Instrument [Line Items] | ||||||
Retirement of existing debt outstanding | $ 35 | |||||
Cost associated with debt | $ 3.7 | |||||
Dividends to equity holders | 115 | |||||
Aggregate principal amount | 85.8 | $ 85.8 | ||||
Payment of one or more restricted payments to shareholders | $ 115 | |||||
Number of business days within which dividend was paid | 5 days | |||||
Term B Facility | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal amount | 425 | |||||
Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Retirement of existing debt outstanding | $ 15 | $ 15 | ||||
Debt available borrowing capacity | $ 12.3 | |||||
Maximum borrowing capacity | 30 | $ 30 | ||||
Apollo Global Securities, LLC | Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Cost associated with debt | $ 4.6 |
Debt - Union Revolving and Incr
Debt - Union Revolving and Incremental Fourth Amendment (Details) - USD ($) $ in Thousands | Oct. 22, 2021 | May 16, 2021 | Jan. 29, 2021 | Dec. 29, 2020 | Oct. 20, 2017 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 07, 2018 |
Union Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Term of debt | 4 years | |||||||
Maximum borrowing capacity | $ 20,000 | |||||||
Borrowings outstanding | $ 4,600 | $ 2,550 | ||||||
Commitment fee (as a percent) | 0.50% | |||||||
Borrowing interest rate | 4.25% | 4.25% | ||||||
Union Revolving Credit Facility | Federal funds rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Spread on variable rate | 0.50% | |||||||
Union Revolving Credit Facility | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Spread on variable rate | 1.00% | |||||||
Senior Facilities | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayment of debt | $ 50,000 | $ 50,000 | ||||||
Commitment fee (as a percent) | 0.50% | |||||||
Borrowing interest rate | 9.25% | 8.25% | ||||||
Senior Facilities | Federal funds rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate, floor | 0.50% | |||||||
Senior Facilities | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Spread on variable rate | 1.00% | |||||||
Interest rate, floor | 1.00% | |||||||
Eurocurrency Borrowings | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing interest rate | 7.25% | |||||||
Borrowing interest rate, if PIK interest paid | 8.25% | |||||||
ABR Borrowings | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing interest rate | 6.25% | |||||||
Borrowing interest rate, if PIK interest paid | 7.25% | |||||||
Term Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Term of debt | 5 years | |||||||
Repayment of debt | $ 280,000 | |||||||
Aggregate principal amount | $ 425,000 | |||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Term of debt | 5 years | |||||||
Maximum borrowing capacity | $ 30,000 | $ 30,000 | ||||||
Repayment of debt | $ 15,000 | 15,000 | ||||||
Revolving Credit Facility | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Borrowing interest rate | 0.50% | |||||||
Term Loan B-1 facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Repayment of debt | $ 35,000 | |||||||
Aggregate principal amount | $ 85,800 | $ 85,800 | ||||||
Term Loan B-1 facility | New Outerwall | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate principal amount | $ 25,000 |
Debt - First lien term loan (De
Debt - First lien term loan (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Debt | |
Maximum dividends payments | $ 1,030 |
Debt - Interest Rates and Fees
Debt - Interest Rates and Fees (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Senior Facilities | ||
Debt Instrument [Line Items] | ||
Borrowing interest rate | 9.25% | 8.25% |
Debt - Amortization and Prepaym
Debt - Amortization and Prepayments (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Required minimum principal amortization payments | ||
Total | $ 325,389 | $ 314,113 |
Senior Facilities | ||
Required minimum principal amortization payments | ||
2022 | 31,480 | |
2024 | 271,562 | |
Total | $ 303,042 |
Debt - Collateral and Guarantor
Debt - Collateral and Guarantors (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Capital stock of the first-tier foreign subsidiaries pledged (as a percent) | 65.00% |
Debt - Letters of Credit (Detai
Debt - Letters of Credit (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Oct. 31, 2021 | Dec. 31, 2020 | |
Standby Letters of Credit | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 3.4 | $ 3.4 | |
Term of debt | 1 year | ||
Cash-collateralized (as a percent) | 105.00% | ||
Cash-collateralized through restricted cash balance | $ 3.4 | 3.5 | |
Letter of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Line of credit | $ 0.8 | ||
Restricted cash | $ 4.2 | $ 3.5 |
Debt - Summary of debt (Detai_2
Debt - Summary of debt (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 325,389 | $ 314,113 |
Less: Unamortized debt issuance costs | (3,823) | (6,639) |
Total debt, net | 321,566 | 307,474 |
Portion due within one year | 34,211 | 0 |
Total long-term debt, net | 287,355 | 307,474 |
Term B Facility | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | 271,562 | 281,563 |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Paid-In-Kind Interest | 31,480 | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Paid-In-Kind Interest | 2,731 | |
Total debt outstanding | 15,000 | 30,000 |
Union Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt outstanding | $ 4,616 | $ 2,550 |
Interest Rate Derivatives - Nar
Interest Rate Derivatives - Narratives (Details) - Interest rate swap agreement $ in Millions | Oct. 22, 2018USD ($) |
Derivative [Line Items] | |
Term of agreement | 3 years |
Fixed notional amount | $ 200 |
Fixed interest rate | 3.0335% |
Total interest rate | 10.2835 |
Interest Rate Derivatives - Bal
Interest Rate Derivatives - Balance sheet location (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Other Liabilities | Interest rate swap agreement | Derivatives not designated as hedging instrument | |
Derivative [Line Items] | |
Interest rate swap contract | $ 4,782 |
Interest Rate Derivatives - Con
Interest Rate Derivatives - Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Interest rate swap agreement | Derivatives not designated as hedging instrument | |||
Derivative [Line Items] | |||
Other (income) expense, net | $ (394) | $ 4,341 | $ 3,946 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Employee Benefit Plan | |||
Employer matching contribution on 3% participating employees' contributions | 100.00% | ||
Percentage of employees' gross pay for which the employer contributes a 100% matching contribution to a defined contribution plan. | 3.00% | ||
Employer matching contribution on 2% participating employees' contributions | 50.00% | ||
Percentage of participating employees' contributions for 50% employer matching contribution | 2.00% | ||
Employer matching contribution | $ 1.8 | $ 2 | $ 2.1 |
Maximum percentage | 4.00% | ||
Minimum percentage | 5.00% |
Stock-Based Compensation - Redb
Stock-Based Compensation - Redbox Equity Plan (Details) - Redbox Equity Plan - Class A Common Stock | Dec. 31, 2021shares |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |
Aggregate shares to be delivered | 3,404,139 |
Shares available for future awards | 384,286 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Compensation Cost (Details) | 12 Months Ended | ||
Dec. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Compensation cost | $ 1,994,000 | $ 16,000 | $ 156,000 |
Minimum | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Vesting period | 1 year | ||
Maximum | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Vesting period | 3 years | ||
Redbox Equity Plan | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Compensation cost | $ 996,000 | ||
Restricted Stock Units (RSUs) [Member] | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Number of shares receivable for each unit | 1 | ||
Exercise price | $ / shares | $ 0 | ||
Unrecognized compensation cost | $ 23,100,000 | ||
Restricted Stock Units (RSUs) [Member] | Minimum | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Vesting period | 1 year | ||
Restricted Stock Units (RSUs) [Member] | Maximum | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Vesting period | 3 years | ||
Restricted Stock Units (RSUs) [Member] | Redbox Equity Plan | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Compensation cost | $ 996,000 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of restricted stock awards (Details) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Shares, Granted | shares | 3,019,853 |
Shares, Ending balance | shares | 3,019,853 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Fair Value per Share, Beginning balance | $ 8.02 |
Fair Value per Share, Granted | 8.02 |
Fair Value per Share, Ending balance | $ 8.02 |
Stock-Based Compensation - Redw
Stock-Based Compensation - Redwood Holdco Management Incentive Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost | $ 1,994 | $ 16 | $ 156 |
Redwood Holdco Management Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation cost | $ 1,000 | $ 0 | $ 200 |
Segment Information and Geogr_3
Segment Information and Geographic Data (Details) | 12 Months Ended |
Dec. 31, 2021itemsegment | |
Segment Information and Geographic Data | |
Number of operating segments | segment | 2 |
Number of self-service kiosks where consumers can rent or purchase new-release DVDs and Blu-ray DiscsTM | 38,000 |
Number of linear channels | 130 |
Segment Information and Geogr_4
Segment Information and Geographic Data - Summarized financial information by segment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Net revenue | $ 288,540 | $ 546,191 | $ 858,370 |
Adjusted EBITDA | (15,145) | 113,776 | 195,649 |
Legacy Business | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 253,417 | 506,437 | 838,627 |
Adjusted EBITDA | (15,932) | 109,074 | 197,887 |
Digital Business | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 35,123 | 39,754 | 19,743 |
Adjusted EBITDA | $ 787 | $ 4,702 | $ (2,238) |
Segment Information and Geogr_5
Segment Information and Geographic Data - Reconciliation of Adjusted EBITDA to (loss) income before income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Information and Geographic Data | |||
Loss before income taxes | $ (174,791) | $ (94,707) | $ (14,823) |
Depreciation and amortization | 108,505 | 136,838 | 138,274 |
Interest and other expense, net | 31,523 | 32,522 | 44,578 |
Business optimization(a) | 6,907 | 19,011 | 7,687 |
One-time non-recurring(b) | 7,689 | 10,584 | 5,326 |
New business start-up costs(c) | 1,004 | 6,041 | 3,793 |
Restructuring related(d) | 2,024 | 3,471 | 4,432 |
Stock-based compensation expense | 1,994 | 16 | 156 |
Discontinuation of games business(e) | 6,226 | ||
Adjusted EBITDA | $ (15,145) | $ 113,776 | $ 195,649 |
Segment Information and Geogr_6
Segment Information and Geographic Data - Business optimization costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Information and Geographic Data | |||
Retention costs | $ 4.6 | $ 13.9 | $ 3 |
IT costs | 2.1 | $ 4.8 | $ 3.8 |
Acquisition related costs | $ 5.2 |
Earnings Per Share - Calculatio
Earnings Per Share - Calculation of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Basic EPS | |||
Net loss | $ (140,756) | $ (69,503) | $ (7,567) |
Less: net loss attributable to legacy Redbox prior to the business combination | (105,496) | ||
Less: net loss attributable to non-controlling interests | (27,967) | ||
Net loss attributable to Redbox Entertainment Inc. basic | (7,293) | ||
Net loss attributable to Redbox Entertainment Inc. diluted | $ (6,910) | ||
Diluted EPS | |||
Weighted average shares outstanding for earnings (loss) per share, Basic | 12,618,516 | ||
Weighted average shares used in computing net loss per share attributable to common shareholders- diluted | 12,618,516 | ||
Earnings per share, Basic | $ (0.58) | ||
Earnings Per Share, Diluted | $ (0.55) |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Unvested restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 110 | 325 | 376 |
Public and private placement warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share | 16,843,733 |
Shareholders' Equity - Preferre
Shareholders' Equity - Preferred Stock (Details) | Dec. 31, 2021$ / sharesshares |
Stockholders' Equity | |
Preferred shares, shares authorized | 1,000,000 |
Preferred shares, par value | $ / shares | $ 0.0001 |
Preferred stock, shares issued | 0 |
Preferred stock, shares outstanding | 0 |
Shareholders' Equity - Common S
Shareholders' Equity - Common Stock - Non-controlling Interest (Details) | 12 Months Ended | |
Dec. 31, 2021$ / sharesshares | Oct. 22, 2021 | |
Class of Stock [Line Items] | ||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 1 | |
Redwood Holdco | ||
Class of Stock [Line Items] | ||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 72.20% | 72.20% |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized | shares | 500,000,000 | |
Common stock, par value | $ / shares | $ 0.0001 | |
Common shares, votes per share | $ / shares | 1 | |
Common stock, shares issued | shares | 12,618,516 | |
Common stock, shares outstanding | shares | 12,618,516 | |
Common Stock, Number Of Votes Per Share | $ / shares | 1 | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized | shares | 100,000,000 | |
Common stock, par value | $ / shares | $ 0.0001 | |
Common shares, votes per share | $ / shares | 1 | |
Common stock, shares issued | shares | 32,770,000 | |
Common stock, shares outstanding | shares | 32,770,000 | |
Common Stock, Number Of Votes Per Share | $ / shares | 1 |
Warrant Liability (Details)
Warrant Liability (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 02, 2020 | Dec. 31, 2021 |
Class of Warrant or Right [Line Items] | ||
Share price | $ 11.50 | |
Class of Warrant or Right, Outstanding | 17,800,000 | |
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right | 1 | |
Fair Value Adjustment of Warrants | $ (3,477) | |
Public Warrants | ||
Class of Warrant or Right [Line Items] | ||
Exercise price of warrant | $ 11.50 | |
Warrant term | 5 years | |
Redemption price per public warrant (in dollars per share) | $ 0.01 | |
Minimum threshold written notice period for redemption of public warrants | 30 days | |
Stock price trigger for redemption of public warrants (in dollars per share) | $ 18 | |
Threshold trading days for redemption of public warrants | 20 days | |
Threshold consecutive trading days for redemption of public warrants | 30 days | |
Class of Warrant or Right, Outstanding | 10,781,250 | |
Fair Value Adjustment of Warrants | $ 13,500 | $ 11,200 |
Private Placement Warrants | ||
Class of Warrant or Right [Line Items] | ||
Class of Warrant or Right, Outstanding | 6,062,500 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring $ in Thousands | Dec. 31, 2021USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | $ 17,821 |
(Level 1) | Public Warrants | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | 11,213 |
(Level 3) | Private Placement Warrants | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | $ 6,608 |
Fair Value Measurements - Monte
Fair Value Measurements - Monte Carlo (Details) | Dec. 31, 2021$ / shares | Dec. 02, 2020 |
Risk-free interest rate | Initial Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 1.20 | |
Risk-free interest rate | Subsequent Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 1.20 | |
Expected term remaining (years) | Initial Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 5 | |
Expected term remaining (years) | Subsequent Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 4.80 | |
Expected volatility | Initial Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 20.2 | |
Expected volatility | Subsequent Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 31.4 | |
Stock price | Initial Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 9.62 | |
Stock price | Subsequent Measurement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 7.41 |
Fair Value Measurements - Subse
Fair Value Measurements - Subsequent Measurement (Details) $ / shares in Units, $ in Thousands | Dec. 02, 2020USD ($)$ / shares | Dec. 31, 2021USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value Adjustment of Warrants | $ (3,477) | |
Public Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Initial measurement on December 2, 2020 | 13,477 | |
Change in valuation inputs or other assumptions | (2,264) | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | 11,213 | |
Price per warrant | $ / shares | $ 1.25 | |
Fair Value Adjustment of Warrants | $ 13,500 | $ 11,200 |
Derivative Liability, Measurement Input | 1.04 | |
Private Placement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Initial measurement on December 2, 2020 | $ 7,821 | |
Change in valuation inputs or other assumptions | (1,213) | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | 6,608 | |
Price per warrant | $ / shares | $ 1.29 | |
Fair Value Adjustment of Warrants | $ 7,800 | $ 6,600 |
Derivative Liability, Measurement Input | 1.09 | |
Warrant [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Initial measurement on December 2, 2020 | $ 21,298 | |
Change in valuation inputs or other assumptions | (3,477) | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value, Ending Balance | $ 17,821 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies | |||
Rent expense, net of sublease income | $ 2.2 | $ 2.5 | $ 2.6 |
Commitments and Contingencies -
Commitments and Contingencies - Assets held under capital leases are included in Property and equipment, net on the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | $ 305,804 | $ 292,874 |
Accumulated depreciation | (265,180) | (229,785) |
Net property and equipment | 40,624 | 63,089 |
Assets held under capital leases | ||
Property, Plant and Equipment [Line Items] | ||
Gross property and equipment | 11,380 | 10,677 |
Accumulated depreciation | (7,285) | (5,204) |
Net property and equipment | $ 4,095 | $ 5,473 |
Commitments and Contingencies_3
Commitments and Contingencies - Company's future minimum lease payments under contractual lease obligations (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Future minimum lease payments under contractual lease obligations capital leases | |
2022 | $ 2,116 |
2023 | 1,010 |
2024 | 387 |
2025 | 144 |
Total minimum lease commitments | 3,657 |
Less: Current potion of capital lease obligations | (2,116) |
Long-term portion of capital lease obligations | 1,541 |
Future minimum lease payments under contractual lease obligations operating leases | |
2022 | 3,527 |
2023 | 3,045 |
2024 | 2,244 |
2025 | 1,687 |
Total minimum lease commitments | $ 10,503 |
Commitments and Contingencies_4
Commitments and Contingencies - Total estimated movie content commitments (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Minimum estimated movie content commitments | |
2022 | $ 19,860 |
2023 | 4,109 |
Contractual Obligation, Total | $ 23,969 |
Commitments and Contingencies_5
Commitments and Contingencies - Class action settlement specific to credit card fees (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Commitments and Contingencies | |
Amount received in settlement specific to credit card fees | $ 7 |
Income Taxes - Components of (l
Income Taxes - Components of (loss) income before income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes. | |||
U.S. operations | $ (174,791) | $ (94,707) | $ (14,823) |
Income Taxes - Components of in
Income Taxes - Components of income tax (benefit) expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||
U.S. Federal | $ 3,459 | $ (491) | $ 11,653 |
State and local | 711 | 4,209 | |
Total current | 3,459 | 220 | 15,862 |
Deferred: | |||
U.S. Federal | (28,078) | (21,489) | (19,467) |
State and local | (9,416) | (3,935) | (3,651) |
Total deferred | (37,494) | (25,424) | (23,118) |
Total income tax (benefit) expense | $ (34,035) | $ (25,204) | $ (7,256) |
Income Taxes - Rate Reconciliat
Income Taxes - Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income tax expense differs from the amount that would result by applying the U.S. statutory rate to income before income taxes | |||
U.S Federal tax expense at statutory rates | 21.00% | 21.00% | 21.00% |
State income taxes, net of federal benefit | 3.00% | 3.80% | 8.70% |
Valuation allowance | (1.50%) | (0.20%) | (6.80%) |
Federal research & development credit | 0.50% | 2.00% | 7.40% |
Uncertain tax benefit on federal research and development credit | (0.10%) | (0.50%) | (3.70%) |
Release of uncertain tax benefits | 0.70% | 0.20% | 22.10% |
Effect of non-controlling interest | (4.10%) | ||
Other | 0.40% | 0.20% | |
Effective tax rate | 19.50% | 26.70% | 48.90% |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Thousands | Jan. 01, 2022USD ($) | Dec. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Changes in the balance of unrecognized tax benefits | ||||
Balance, beginning of the period | $ 178 | $ 2,213 | $ 1,935 | $ 4,558 |
Additions based on tax positions related to the current year | 13 | 250 | 150 | |
Additions for tax positions related to prior years | 215 | 509 | ||
Reductions for tax positions related to prior years | $ (100) | (897) | ||
Deductions for tax positions related to prior years | (187) | (1,945) | ||
Deductions for tax positions effectively settled | (1,151) | (1,337) | ||
Balance, end of period | 178 | 2,213 | 1,935 | |
Interest related to unrecognized tax benefits | 0 | 0 | 300 | |
Unrecognized tax benefits would favorably impact the effective tax rate if recognized | $ 200 | $ 2,200 | $ 1,900 | |
Number of state examination finalized | item | 2 |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Oct. 22, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | |||||
Credit carryforwards | $ 40 | $ 1,117 | |||
Net operating loss carryforwards | 1,459 | ||||
Section 163(j) interest carryforward | 410 | ||||
Outside basis difference in investments | 20,186 | $ 19,400 | |||
Accrued liabilities and allowances | 1,388 | ||||
Compensation accruals | 2,750 | ||||
Asset retirement obligation liability | 1,994 | ||||
Deferred revenue | 2,237 | ||||
Hedge liability | 1,200 | ||||
Deferred tax asset | 253 | ||||
Gross deferred tax assets | 22,095 | 10,939 | |||
Less: Valuation Allowance | $ (22,095) | (1,039) | $ (851) | $ (1,224) | |
Deferred tax asset, net of allowance | 9,900 | ||||
Deferred tax liabilities: | |||||
Property and equipment | (14,172) | ||||
Product costs | (3,905) | ||||
Prepaid expenses | (284) | ||||
Intangible assets | (30,965) | ||||
Goodwill | (1,745) | ||||
Total deferred tax liabilities | (51,071) | ||||
Net deferred tax liabilities | $ (41,171) |
Income Taxes - Deferred Incom_2
Income Taxes - Deferred Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | Jan. 01, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Oct. 22, 2021 |
Tax Credit Carryforward [Line Items] | |||||
Deferred tax asset | $ 20,186 | $ 19,400 | |||
Gross deferred tax assets | 22,095 | $ 10,939 | |||
Current valuation allowance | 2,700 | ||||
Cumulative valuation allowance | 22,100 | ||||
Uncertain tax positions | 200 | $ 2,200 | |||
Amount of remaining unrecognized tax benefits | $ 100 | 897 | |||
Tax receivable agreement tax savings percentage | 85.00% | ||||
Tax receivable agreement potential tax benefit percentage | 15.00% | ||||
Estimated Tax Receivable Liability | $ 14,500 | ||||
U.S Federal tax expense at statutory rates | 21.00% | 21.00% | 21.00% | ||
State tax rate, net of federal benefit | 4.00% | ||||
Net present value of liability if all Redwood Intermediate equity interest are exchanged | $ 154,300 | ||||
Redwood Intermediate | |||||
Tax Credit Carryforward [Line Items] | |||||
Gross deferred tax assets | 19,400 | ||||
Current valuation allowance | $ 19,400 | ||||
Shares acquired | 12,618,516 | ||||
Subchapter C Corporation | |||||
Tax Credit Carryforward [Line Items] | |||||
Net operating loss carryforwards | $ 5,800 | ||||
Subchapter C Corporation | Redwood Intermediate | |||||
Tax Credit Carryforward [Line Items] | |||||
Business combination ownership percentage | 27.80% |
Income Taxes - Change in Valuat
Income Taxes - Change in Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes. | |||
Non-cash charge to income tax provision | $ 2,700 | ||
Valuation allowance, beginning of year | 1,039 | $ 851 | $ 1,224 |
Valuation Allowance, Deferred Tax Asset, Release Through Tax Expense | 2,694 | 188 | (373) |
Valuation Allowance, Deferred Tax Asset, Release Through Additional Paid In Capital | 18,362 | ||
Valuation allowance, end of year | $ 22,095 | $ 1,039 | $ 851 |
Related-Party Transactions - Su
Related-Party Transactions - Summary of Related Parties (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Related Party Transactions | ||
Due from related parties, net | $ 3,813 | $ 4,112 |
Due to related party | $ 74 | $ 449 |
Related-Party Transactions - Na
Related-Party Transactions - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 29, 2021 | |
Related Party Transaction [Line Items] | ||||
Related party revenues | $ 17.8 | $ 14 | $ 8.7 | |
New Outerwall, Inc. | Term B-2 Loan | ||||
Related Party Transaction [Line Items] | ||||
Aggregate principal amount | $ 25 | |||
Aspen Parent, Inc. or New Outerwall, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Accrued and other current liabilities | $ 0 | $ 15.8 |
Additional Supplemental Cash _3
Additional Supplemental Cash Flow Financial Information (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Additional Supplemental Cash Flow Financial Information | ||||
Cash and cash equivalents | $ 14,320 | $ 5,401 | ||
Restricted cash | 4,158 | 3,526 | ||
Cash, cash equivalents and restricted cash | $ 18,478 | $ 8,927 | $ 7,378 | $ 10,446 |
Additional Supplemental Cash _4
Additional Supplemental Cash Flow Financial Information - Cash Interest and Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Additional Supplemental Cash Flow Financial Information | ||
Cash paid during the period for interest | $ 29,061 | |
Cash paid during the period for income taxes, net | $ (5,494) | $ 2,993 |
Additional Supplemental Cash _5
Additional Supplemental Cash Flow Financial Information - Non Cash Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Additional Supplemental Cash Flow Financial Information | ||
Purchases of property and equipment financed by capital lease obligations | $ 1,561 | $ 338 |
Purchases of property and equipment included in ending trade payables or accrued and other current liabilities | $ 267 | $ 653 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - Revolving Credit Facility | Apr. 15, 2022USD ($) |
Subsequent Event [Line Items] | |
Credit agreement increase in amount available | $ 50,000,000 |
Revolving credit facility permanently reduced portion | $ 10,600,000 |