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•	mail-delivery and online retailers, like Netflix or Amazon;

•	cable, satellite, and telecommunications providers, like Comcast or DISH Network;

•	traditional movie programmers, like HBO or Showtime;

•	other forms of movie content providers like Internet sites including iTunes, YouTube, Hulu or Google;

•	traditional brick and mortar video retailers, and other DVD kiosk businesses;

•	other retailers like Walmart and other chain stores selling DVDs and video games;

•	other forms of video game rental providers, like GameFly;

•	noncommercial sources like libraries; and

•	general competition from other forms of entertainment such as movie theaters, television and sporting events.

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Changes in consumer content delivery preferences, including increased use of digital video recorders, pay-per-view delivered by cable or satellite providers and similar technologies, digital downloads, online streaming, portable devices, and other mediums, video on demand, subscription video on demand, disposable or download-to-burn DVDs, DVDs with enhanced picture, sound quality or bonus content, or less demand for high volume of new movie content due to such things as larger home DVD and downloaded movie libraries;

•	Increased availability of digital movie content inventory through digital video recorders, pay-per-view delivered by cable or satellite providers and similar technologies, online streaming, digital downloads, portable devices, digital lockers, and other mediums;

•	Decreased quantity and quality of movie content availability for DVD distribution due to movie content failing to appeal to consumers’ tastes, increased focus on digital sales, and other general industry-related factors, including financial disruptions, and labor conflicts;

•	Due to arrangements with certain studios that provide content on a delayed basis, the availability of some new releases in our kiosks may shift to times when consumers are relatively less likely to rent movies, or may be in genres that are off seasonally, such as a holiday movie unavailable until January; and

•	Decreased costs for consumers to purchase or receive movie content, including less expensive DVDs, more aggressive competitor pricing strategies and piracy.

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•	the assumption of known and unknown liabilities of an acquired company, including employee and intellectual property claims and other violations of applicable law;

•	losses related to acquisitions and investments;

•	managing relationships with other investors and the companies in which we have made investments, including, in some cases, as minority partner;

•	reduced liquidity, including through the use of cash resources and incurrence of debt and contingent liabilities in funding acquisitions and investments;

•	entrance into markets in which we have no direct prior experience, such as the digital market through our joint venture, Redbox Instant by Verizon, and where we face competition from many other companies, including those having more experience, better financing, or better relationships with others in the industry, than we have;

•	impairment of goodwill and acquired intangible assets arising from our arrangements and investments;

•	difficulties and expenses in assimilating the operations, products, technology, information systems or personnel of an acquired company, acquired assets or joint ventures;

•	inability to efficiently divest unsuccessful acquisitions and investments;

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•	stockholder dilution if an acquisition is consummated through an issuance of our securities;

•	imposition of restrictive covenants and increased debt service obligations that provide us less flexibility in how we operate our business to the extent we borrow to finance an acquisition or investment;

•	amortization expenses related to acquired intangible assets and other adverse accounting consequences;

•	costs incurred in identifying and performing due diligence on potential targets and negotiating agreements that may or may not be successful, including payment of break-up fees if transactions are not closed; and

•	impairment of relationships with employees, retailers and affiliates of our business and the acquired business.

•	increasing our vulnerability to general adverse economic and industry conditions;

•	requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

•	limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, share repurchases, acquisitions and general corporate or other purposes;

•	limiting our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate, placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting; and

•	exposing us to variability in interest rates, as our Credit Facility bears interest at variable rates determined by prevailing interest rates and our leverage ratio.

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•	the termination, non-renewal or re-negotiation of one or more retailer, supplier, distributor, or other third-party relationships;

•	trends and fluctuations in the use of our different lines of business;

•	operating results below market expectations and changes in, or our failure to meet, financial estimates of securities analysts or our own guidance;

•	acquisition, merger, investment and disposition activities;

•	period-to-period fluctuations in our financial results;

•	share repurchases;

•	announcements of technological innovations or new products or services by us or our competitors;

•	announcements regarding the establishment, modification or termination of relationships regarding the development of new or enhanced products and services;

•	release of analyst reports;

•	the level of demand for our stock, including the amount of short interest in our stock;

•	economic or other external factors, for example, those relating to the current economic environment and fluctuations in the trading price of stocks generally;

•	ineffective internal controls; and;

•	industry developments.

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(1)	Includes 2,810 shares tendered for tax withholding on vesting of restricted stock awards, none of which are included against the dollar value of shares that may be purchased under programs approved by our Board of Directors.

(2)	Includes shares from our Discounted Share Buyback Agreement as described in Note 9: Repurchases of Common Stock in our Notes to Consolidated Financial Statements

(3)	Dollars in thousands

(4)	The maximum dollar value of shares was reduced at the time of our $100.0 million prepayment under the Discounted Stock Buyback Agreement. The shares are included in the total number of shares repurchased amounts in the time period of delivery of the shares to us.

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(1)	Discontinued operations for all periods presented includes the results of operations from:

◦	our Money Transfer Business, which we met the criteria to classify as a discontinued operation in the second quarter of 2010 and sold in June 2011;

◦	our E-Payment Business, which was sold in the second quarter of 2010; and

◦	our Entertainment Business, which was sold in the third quarter of 2009.

◦	four ventures previously included in our New Ventures operating segment, Orango, Rubi, Crisp Market, and Star Studio which were discontinued during 2013.

(2)	As a result of our ownership interest increase in Redbox from 47.3% to 51.0% on January 18, 2008, we began consolidating Redbox’s financial results at this time. In addition, we purchased the remaining 49.0% of Redbox’s interest in February 2009. There was no non-controlling interest reported after February 2009.

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•	Our Redbox business segment (“Redbox”), where consumers can rent or purchase movies and video games from self-service kiosks is focused on the entertainment consumer sector.

•	Our Coinstar business segment (“Coinstar”) is focused on the money consumer sector and provides self-service kiosks where consumers can convert their coins to cash, convert coins and paper bills to stored value products and exchange gift cards for cash.

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Continue to profitably grow our Redbox business. We believe we will continue to profitably grow Redbox as our Redbox kiosks continue to attract customers. In addition, we believe there are a number of other ways Redbox will continue to grow profitability including through the distribution of more Blu-ray™ discs as well as investment in other customer management tools that will allow for personalized recommendations among other features.

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Leverage our existing platforms to drive new revenue opportunities. We believe that our extensive Redbox and Coinstar networks lend themselves to additional revenue opportunities with limited incremental investments. At Redbox, we launched video game rentals which leverage our existing kiosk infrastructure. In the Coinstar business we have expanded fee-free options, launched a gift card exchange business and introduced other offerings such as with PayPal®. We will continue to develop consumer oriented products and services that take advantage of our existing points of presence.

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Develop and expand Redbox Instant by Verizon. We believe Redbox Instant™ by Verizon provides consumers with a unique and compelling value proposition that combines new release physical and curated digital content. Although we believe that physical DVD rentals will remain a popular content choice with consumers for the foreseeable future, we are committed to addressing the changing needs and preferences of our consumers. We believe there is considerable opportunity for us to grow our consumer base, increase frequency of kiosk use, and achieve strong financial returns from our investment in this joint venture, including through our sale of kiosk rental nights and potential receipt of future dividend distributions if available under the joint venture’s mandatory cash distribution plan.

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Optimize revenues from our existing Redbox and Coinstar kiosk offerings. While we have substantially completed the build out of our Redbox and Coinstar networks in the U.S., we believe we can improve financial performance through kiosk optimization. We will continue to focus on finding attractive locations for our kiosks, including through redeployment of underperforming kiosks to lower kiosk density or higher consumer traffic areas. Specific to Redbox, we have retrofitted a significant percentage of our existing kiosks to provide increased capacity which will enable Redbox to retain discs in the kiosks longer thereby allowing us to provide greater title selection and copy depth to generate incremental rentals. We also continuously improve our proprietary algorithms allowing Redbox to more accurately predict daily film availability and demand at individual kiosk locations.

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Use our expertise to continue to develop innovative automated retail solutions. Through Redbox and Coinstar, we have demonstrated our ability to profitably scale automated retail solutions. We are leveraging those core competencies to identify, evaluate, build or acquire and develop new automated retail concepts through both organic and inorganic opportunities. For example, in the third quarter of 2013, we acquired ecoATM, one of our previous strategic investments, which provides an automated self-service kiosk system where we purchase used mobile phones, tablets and MP3 players for cash.

•

During the fourth quarter of 2013, as a result of a comprehensive operational review, we committed to a restructuring plan intended to, among other things, better align our cost structure with revenue growth in our core businesses. As part of the restructuring plan, we discontinued three concepts; Rubi, Crisp Market and Star Studio, which were previously included in our New Ventures operating segment. Also as part of the restructuring plan, we implemented actions to reduce costs in our continuing operations primarily through workforce reductions across the Company. The closure of the three concepts and the workforce reductions are expected to be substantially complete by the end of the first quarter of 2014. In addition to the three concepts discontinued during the fourth quarter, we discontinued our concept Orango during the second quarter of 2013. The results of these four discontinued concepts and associated impairment and restructuring charges were recorded within loss from discontinued operations, net of tax on our Consolidated Statements of Comprehensive Income. See Note 13: Discontinued Operations and Sale of Business and Note 11: Restructuring in our Notes to Consolidated Financial Statements for further information.

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During the fourth quarter of 2013, we entered into the Supplement and Amendment to the Second Amended and Restated Credit Agreement (the "Supplement and Amendment") which amended our Previous Facility (as defined hereafter). Pursuant to the Supplement and Amendment, we increased capacity under the revolving line of credit to an aggregate $600.0 million and entered into an additional term facility in the amount of $200.0 million. See Note 8: Debt and Other Long-Term Liabilities in our Notes to Consolidated Financial Statements.

•	During the year ended December 31, 2013, we retired $133.8 million in principal of our Convertible Senior Notes. See Note 8: Debt and Other Long-Term Liabilities in our Notes to Consolidated Financial Statements.

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•	During the year ended December 31, 2013, we repurchased 3,306,433 shares of our common stock for $195.0 million. See Note 9: Repurchases of Common Stock in our Notes to Consolidated Financial Statements.

•	On July 23, 2013, we completed the acquisition of ecoATM for total consideration transferred of $264.3 million and revalued our previously held 23.0% equity interest at $76.4 million resulting in a gain of $68.4 million which is included in Other income in our Consolidated Statements of Comprehensive Income. See Note 3: Business Combinations in our Notes to Consolidated Financial Statements.

•	During the second quarter of 2013, we finalized our preliminary purchase price allocation for our NCR Asset Acquisition. See Note 3: Business Combinations in our Notes to Consolidated Financial Statements.

•	During the second quarter of 2013, we entered into an arrangement to sell certain kiosks previously acquired from NCR through the sale of a previously consolidated entity for $11.8 million. See Note 4: Property and Equipment and Note 12: Income Taxes From Continuing Operations in our Notes to Consolidated Financial Statements.

•	During the second quarter of 2013, we updated our methodology for amortizing our Redbox content library which resulted in a $21.7 million reduction in Redbox direct operating expenses. See Note 2: Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements.

•	On March 12, 2013, we issued $350.0 million principal amount of 6.000% Senior Notes due 2019. See Note 8: Debt and Other Long-Term Liabilities in our Notes to Consolidated Financial Statements.

•	On March 14, 2013, Redbox Instant by Verizon concluded its public beta launch and began commercial launch of its nationwide “over-the-top” video distribution service delivered via broadband networks combined with physical DVD and Blu-ray™ discs rentals from our kiosks.

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During January 2014, we repurchased 736,000 shares of our common stock with an average price of $67.93 per share for $50.0 million. The repurchases were made under a pre-arranged stock trading plan in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and our policies regarding stock transactions (the “10b5-1 Plan”). The shares repurchased under the 10b5-1 Plan were recorded as treasury shares and made in accordance with current share repurchase authorizations of the Board. See Note 21: Subsequent Events in our Notes to Consolidated Financial Statements.

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On January 30, 2014, Outerwall’s Board of Directors authorized additional common stock repurchases of up to $500.0 million plus the cash proceeds received from the exercise of stock options by our officers, directors, and employees, bringing the total available for repurchases as of February 3, 2014 to approximately $650.0 million, inclusive of the impact of the 10b5-1 Plan repurchases. In connection with this increased authorization, the Board also authorized a tender offer for up to $350.0 million with the option to increase the tender by up to 2% of outstanding shares. We expect to launch with a price range based on a 5% to 20% premium over the last reported sale price on February 6, 2014. Repurchases under the tender offer would come from this existing repurchase authorization. See Note 21: Subsequent Events in our Notes to Consolidated Financial Statements.

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•	$65.8 million increase from our Redbox segment, $141.7 million from new kiosk installations including the acquisition and replacement of NCR kiosks, offset by a $75.9 million decrease from a decline in same store sales due primarily to a considerably weaker start to first quarter’s release schedule;

•	$31.5 million increase from our New Ventures segment primarily due to the acquisition of ecoATM;

•	$9.5 million increase from our Coinstar segment, primarily due to growth of U.S. same store sales as a result of the price increase implemented across all grocery locations in the U.S. in Q4 2013 and revenue from TD Canada Trust locations.

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Increased operating loss within our New Ventures segment for 2013 which includes only the continuing operations related to our ecoATM and SAMPLEit concepts. Our New Ventures segment revenue and expense growth during 2013 was primarily attributable to the results of ecoATM being included within New Ventures upon its acquisition. We expect both revenues and expenses from ecoATM to increase as that business continues grow. During 2013, we discontinued four New Venture concepts, Orango, Rubi, Crisp Market, and Star Studio. The results of these discontinued concepts and associated impairment and restructuring charges were recorded within loss from discontinued operations, net of tax;

•	Increased share based expense not allocated to our segments primarily as a result of $8.7 million in expense associated with rights to receive cash issued as a part of the acquisition of ecoATM; offset partially by

•	Stable operating income in our Redbox segment where revenue growth was offset by:

◦	Increased product costs included in direct operating expenses due to higher content purchases attributable to:

▪	A 19.0% increase in theatrical titles in 2013 driven largely by a weaker release schedule in the third quarter of 2012 due to the Summer Olympics;

▪	Content purchases in anticipation of higher rental demand, growth in our installed kiosk base, increased content purchases under our Warner agreement which was signed in the fourth quarter of 2012 relative to the January through October 2012 period when we were procuring Warner content through alternative sources;

▪	Increased Blu-ray content purchases as we continue to grow this format; partially offset by

▪	A $31.8 million reduction in product costs due to the content library amortization change as explained in Note 2: Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements, as well as a weaker release schedule in Q4 2013, down 21.0% from a year ago;

◦

Increases in other direct operating expenses including revenue share, payment card processing fees, customer service and support function costs directly attributable to our revenue and kiosk growth and certain costs incurred to service the kiosks that were under the transition services agreement with NCR, offsetting this was a benefit from an $11.4 million reduction in a loss contingency accrual recorded during Q1 2013, of which $11.4 million had been previously expensed in 2012;

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◦	Higher depreciation and amortization expenses primarily due to higher depreciation from the continued investment in our technology infrastructure, incremental depreciation associated with our 2012 installed kiosks, including the NCR kiosks, as well as the launch of Redbox Instant by Verizon; and

◦	Increased general and administrative expenses primarily due to higher expenses related to corporate information technology initiatives including the continued implementation and maintenance of our enterprise resource planning system and professional fees related to the sale of kiosks acquired in our NCR Asset Acquisition.

•	Increased operating income in our Coinstar segment primarily attributable to revenue growth.

•	A gain of $68.4 million on the re-measurement of our previously held equity interest in ecoATM during 2013;

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Lower income tax expenses due to lower pretax income and a lower effective tax rate driven primarily by a tax benefit of $24.3 million related to the non-taxable gain upon the acquisition of ecoATM noted above, a discrete one-time tax benefit of $17.8 million, net of a valuation allowance, related to outside tax basis from a restructuring and sale of a subsidiary and a $16.7 million discrete one-time tax benefit related to the recognition of an outside basis difference in a subsidiary; partially offset by

•	Lower operating income as described above;

•	A $19.5 million gain on a license grant to the Joint Venture during 2012 which did not recur in 2013;

•	Increased interest expense primarily due to the $350.0 million in Senior Notes we issued on March 12, 2013 and loss from early extinguishment or conversion of debt.

•	Higher operating income in our Redbox segment;

•	Lower interest expense due to a lower interest rate on our Credit Facility; and

•	A $19.5 million gain on a license grant to the Joint Venture during 2012; partially offset by

•	Increased income tax expense primarily due to higher pretax income;

•	Lower operating income in our Coinstar segment and higher operating loss in our New Ventures segment; and

•	Increased loss from equity method investments.

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*	Not Meaningful

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*

Excludes kiosks and the impact of kiosks acquired as part of the 2012 NCR Asset Acquisition which occurred on June 22, 2012. We acquired approximately 6,200 active kiosks. Approximately 1,900 of these kiosks remained in service at December 31, 2012. During the first quarter of 2013, we replaced 100 of these kiosks with Redbox kiosks and during the first and second quarters of 2013, we removed but did not replace all remaining kiosks acquired. During the years ended December 31, 2013 and 2012, kiosks acquired as part of the NCR acquisition generated revenue of approximately $2.7 million from 0.8 million rentals and $22.0 million from 7.4 million rentals, respectively.

**	Not Meaningful

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Starting in January in conjunction with our rental revenue sharing agreement entered into on October 19, 2012 (the “Warner Agreement”) with Warner Home Video, a division of Warner Bros. Home Entertainment Inc., we began offering Warner content on a 28-day delay from “street date”. Under the Warner Agreement, Redbox agrees to license minimum quantities of theatrical and direct-to-video Blu-ray and DVD titles for rental. The Warner Agreement covers titles that have a street date through December 31, 2014.

•	In January, we signed a five-year renewal with Walgreen Company (“Walgreens”). The renewal with Walgreens will run through December 31, 2017.

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On January 22, we expanded our Redbox Tickets pilot offering to the Los Angeles market providing customers better access to event tickets at affordable prices. In the second quarter, we concluded our Tickets pilot in Los Angeles and Philadelphia. We were pleased with the consumer response, and our operational capabilities, but did not see the momentum in aggregating ticket inventory that we needed to scale with the existing go-to-market approach.

•	On March 25, we amended the terms of our existing content licensing agreement with Universal Studios Home Entertainment LLC (“Universal”) to extend the end date from August 2014 to December 2014. Universal received, at its sole discretion, the option to extend the agreement for an additional year through December 2015.

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During the second quarter of 2013, we updated our methodology for amortizing our Redbox content library which resulted in a $21.7 million reduction in Redbox direct operating expenses. For the year ended December 31, 2013, the cumulative benefit was a $31.8 million reduction in Redbox direct operating expenses. See Note 2: Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements.

•	$139.0 million from new kiosk installations that were primarily installed in the second half of 2012 and were not included in our same store sales until the second half of 2013, as well as the replacement of NCR kiosks; and

•	$2.7 million from kiosks acquired from NCR; partially offset by a

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$75.9 million decrease from a 4.1% decline in same store sales due primarily to a considerably weaker start to first quarter’s release schedule, which has a significant influence on Q1 rentals, with only 36.0% of the total Q1 box office (representing titles with total North American box office receipts of at least $5.0 million) available to rent in January versus 50.0% last year, an overall weaker box office during the second and fourth quarters, an increase in single night and discounted rentals for most of the year, as well as cannibalization of rentals as we installed over 5,200 new kiosks during the second half of 2012. Partially offsetting this was growth in Q3 and Q4 in same stores sales from over 4,200 of our 2012 kiosk installations that are now included in same store sales, a significantly stronger box office during the third quarter; up 46.0% from prior year as a result of the Summer Olympics in 2012, as well as substantial growth in Blu-ray and video game disc rentals, which were up 59.3% and 16.3%, respectively. While our same store sales declined from the prior period as noted above, we have seen improvement in 2013 as some of the converted kiosk installs begin contributing to same store sales and product strength compares more favorably year over year. Additionally, we saw improvement in our single versus multiple night rental mix in December as they moved closer to historical averages due to less reliance on discounted rentals both of which drive higher net revenue per rental.

•	$65.8 million increase in revenue as described above; offset by

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•	$42.7 million increase in direct operating expenses comprised of the following;

◦	Product costs increased $33.7 million to $830.6 million due to the following main factors:

▪	Increased content purchases in Q3 as a result of a 19.0% increase in theatrical titles driven largely by a weaker release schedule in Q3 2012 due to the Summer Olympics;

▪	Greater content purchases in anticipation of higher rental demand, growth in our installed kiosk base, increased content purchases under our Warner agreement which was signed in the fourth quarter of 2012 relative to the January through October 2012 period when we were procuring Warner content through alternative sources;

▪	Increased Blu-ray content purchases as we continue to grow this format; partially offset by

▪	A $31.8 million reduction in product costs due to the content library amortization change as explained in Note 2: Summary of Significant Accounting Policies in our Notes to Consolidated Financial Statements, as well as a weaker release schedule in Q4 2013, down 21.0% from a year ago;

▪	Product is typically purchased 6-8 weeks in advance based on forecasted demand and revenue and future content purchases are adjusted if results in the current period do not meet expectations but it impacts operating income in the short-term.

◦	Increases in revenue share, payment card processing fees, customer service and support function costs directly attributable to our revenue and kiosk growth and certain costs incurred to service the kiosks under the transition services agreement with NCR;

◦

Benefiting the period was an $11.4 million reduction in a loss contingency accrual recorded during Q1 2013, of which $11.4 million had been previously expensed in 2012 as well as a $1.4 million reduction in studio related share based expenses primarily due to a larger change in our share price during the period, partially offset by a lower number of unvested shares on the last day of the calculation period;

◦	Direct operating expenses as a percent of revenue for 2013 were 70.1% as compared to 70.2% in the prior period. We expect continued improvement in our financial performance in 2014 by continuing to optimize our kiosk network, which will focus on either removing underperforming kiosks or redeploying them to lower kiosk density or higher consumer traffic areas and allow us to increase our rentals.

•	$14.6 million increase in depreciation and amortization expenses primarily due to higher depreciation from the continued investment in our technology infrastructure, incremental depreciation associated with our 2012 installed kiosks, including the NCR kiosks, as well as the launch of Redbox Instant by Verizon;

•	$6.2 million increase in general and administrative expenses primarily due to higher expenses related to corporate information technology initiatives including the continued implementation and maintenance of our enterprise resource planning system and professional fees related to the sale of kiosks acquired in our NCR Asset Acquisition; and

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$2.5 million increase in marketing costs due to initiatives to increase our revenue by improving consumer insight and data capabilities to offer a better consumer experience through personalized recommendations for the latest new releases, search engine marketing, growth in our SMS and text club messages due to an increase in our subscriber list, promotional email campaigns and social media, as well as our expansion into Canada.

•	$167.5 million from new kiosk installations including the replacement of NCR kiosks;

•	$157.7 million from same store sales growth of 10.2% due primarily to the increase in the standard definition daily rental fee in late October 2011, offset in part by fewer rentals in the third quarter due to a less favorable movie release schedule as the studios released fewer new titles during the 2012 Olympics; and

•	$22.0 million from kiosks acquired from NCR.

•	$347.2 million increase in revenue as described above partially offset by:

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$206.7 million increase in direct operating expenses primarily due to a $115.1 million increase in product costs related to higher DVD content purchases resulting from growth in the installed kiosk base and slightly higher video games purchases. Product costs totaled $796.9 million, an increase from $681.8 million in the prior period. In addition, we had increases in revenue share expense and payment card processing fees directly attributable to the revenue growth, higher kiosk field operating costs, allocated sales and customer service expenses due to the growth in the installed kiosk base, and certain costs incurred to service the kiosks under the transition services agreement with NCR. Due to the price increase mentioned above and ongoing investments in process improvements, direct operating expenses as a percent of revenue for 2012 was 70.2%, down 240 basis points from 72.6% in 2011;

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$39.5 million increase in general and administrative expenses primarily due to higher allocated expenses from our shared services support group related to facilities expansion, human resource programs, the continued implementation and maintenance of our Enterprise Resource Planning system, and overall higher costs to support the continued growth in our installed kiosks base. Additionally, contributing to this increase was $3.2 million in costs incurred during 2012 in connection with the NCR Asset Acquisition; and

•	$32.6 increase in depreciation and amortization expenses primarily due to higher depreciation associated with continued growth in our installed kiosk base and disposals of certain kiosk components, as well as higher allocated expenses from our shared services support function from the continued investment in our technology infrastructure.

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In the first quarter of 2013, we began deploying kiosks to TD Canada Trust (“TDCT”) locations as part of a service provider contract to place over 360 kiosks at TDCT locations across Canada. We completed this rollout in the first week of April. Coin processing will be available to personal banking customers at no fee and to business customers and the general public at a competitive rate. We have been servicing coin counting kiosks in multiple financial institutions over the last eight years. The financial institution channel provides an opportunity to us as the majority of bank customers are already converting coins at the teller window. We bring an automated solution to financial institutions allowing reduced teller lines while enhancing the consumer experience.

•	In the first quarter of 2013, we began to rollout an offering with PayPal allowing consumers to access their PayPal accounts. We believe this offering allows us to leverage our existing Coinstar kiosk network to give consumers access to e-payment alternatives. As of December 31, 2013, over 3,900 kiosks were activated with our PayPal services.

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In 2012, the Royal Canadian Mint announced its intention to discontinue minting the Canadian penny. During the first quarter of 2013, the Royal Canadian Mint launched a significant communication campaign to consumers, retailers and financial institutions, and instituted the discontinuation of the Canadian penny. At that time, Coinstar experienced a spike in overall transactions in Canada and consumers transacted large volumes of Canadian pennies. Since the spike in transactions, transactions at our grocery retail locations have declined, resulting in a reduction of same store sales in

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Effective October 1, 2013, we implemented a price increase for all U. S. grocery retail locations for the coin voucher product taking the rate from 9.8% to 10.9% in order to offset increased operating costs such as revenue share payments to retailers, transportation, and processing expenses since the last price increase taken in February 2010. Starting in June 2012, we conducted extensive consumer survey research around price sensitivity with results demonstrating no meaningful reduction in volumes and accordingly, we made the decision to move forward with the price increase.

•	$9.5 million increase in revenue as described above; and

•	$2.2 million decrease in depreciation and amortization expense due to incremental expense associated with one-time expense for internal use software in the nine months ended September 30, 2012 for $2.5 million which did not recur in 2013, offset by lower machine disposal losses; partially offset by

•	$1.3 million increase in marketing expenses primarily due to timing of advertising and spending to support our programs in 2013;

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$2.8 million increase in direct operating expenses primarily due to higher revenue share expense attributable to both revenue growth and increased revenue share rates with certain retail partners as a result of long-term contract renewals; higher coin processing and transportation related expenses arising from higher revenue and incremental costs to outsource the transportation function in Canada in 2013; and

•	$2.5 million increase in research and development expenses primarily due to an increase in kiosk software and hardware engineering efforts for our Coinstar and gift card exchange business kiosks.

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$10.4 million increase in direct operating expenses primarily due to higher revenue share expense from both revenue growth and increased revenue share rates with certain retail partners as a result of long-term contract renewals, higher kiosk telecommunication expenses as a result of the increased number of kiosks and our shift towards more real time connectivity, higher coin processing and transportation related expenses arising from both higher revenue in 2012 offset in the comparative 2011 period by a credit received for previously-processed mutilated coin, and higher allocated expenses from the shared services sales function;

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$4.2 million increase in depreciation and amortization expenses primarily due to higher allocated expenses from our shared services support function from the continued investment in our technology infrastructure and expensing certain internal use software, as well as higher depreciation arising from an increase in the number of kiosks deployed principally due to the Safeway relationship we entered into in 2011, and

•	$3.0 million increase in general and administrative expenses primarily due to higher allocated expenses from our shared services support group related to facilities expansion, human resource programs and the continued

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•	$8.4 million increase in revenue as described above;

•	$2.1 million decrease in research and development expenses primarily due to higher capitalization of certain expenses in 2012 related to the development of internal use software; and

•	$1.2 million decrease in marketing expenses due to lower advertising spend.

•	On July 23, 2013 we completed our acquisition of ecoATM (See Note 3: Business Combinations in our Notes to Consolidated Financial Statements). The impact of this acquisition on our New Ventures segment operating results is discussed below.

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During 2013, we discontinued four New Venture concepts, Orango, Rubi, Crisp Market and Star Studio. The results of our discontinued concepts and associated impairment and restructuring charges were recorded within loss from discontinued operations, net of tax on our Consolidated Statements of Comprehensive Income. See Note 13: Discontinued Operations and Sale of Business and Note 11: Restructuring in our Notes to Consolidated Financial Statements for further information.

•	$28.1 million increase in direct operating expenses primarily due to results in 2013 including ecoATM since its acquisition and shared services costs associated with adding kiosks to the marketplace;

•	$9.3 million increase in general and administrative expenses primarily due to $5.7 million in transaction expenses related to the acquisition of ecoATM, general and administrative expenses for ecoATM in 2013 since its acquisition, and shared services costs to support concept growth;

•	$6.3 million increase in depreciation and amortization primarily due to results in 2013 including ecoATM since its acquisition and additional depreciation on equipment to support growth;

•	$3.4 million increase in research and development due to results in 2013 including ecoATM since its acquisition and spending to support existing concepts;

•	$1.1 million increase in marketing expense primarily due to results in 2013 including ecoATM since its acquisition and spending initiatives to support growth of existing concepts; partially offset by

•	$31.5 million increase in revenue as described above.

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•	$1.8 million increase in general and administrative expense primarily due to increased shared services support costs to support growth;

•	$1.1 million increase in direct operating expenses primarily due to the addition of self-service concepts in test markets, increased shared services support costs related primarily to deployment of new kiosks and customer service related activity;

•	$0.6 million increase in research and development expenses primarily due to kiosk design and prototype spending; partially offset by

•	$0.3 million increase in revenue as described above.

•	$68.4 million gain on the re-measurement of our previously held equity interest in ecoATM during 2013; and

•	$19.5 million gain on a license grant to the Joint Venture during 2012 which did not recur in 2013.

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•	Core adjusted EBITDA from continuing operations;

•	Core diluted earnings per share (“EPS”) from continuing operations; and

•	Free cash flow.

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(1)	Includes both non-cash share-based compensation for executives, non-employee directors and employees as well as share-based payments for content arrangements.

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•	$24.6 million increase in net income to $174.8 million primarily due to a gain upon the re-measurement of our previously held equity interest upon the acquisition of ecoATM offset by higher interest expense; offset by

•	A $66.0 million decrease in net non-cash expenses included in net income primarily due to the impacts of deferred taxes, the non-cash gain on our previously held equity interest in ecoATM and the loss from extinguishment of callable convertible debt and a $32.7 million increase in non-cash reconciling items due to impairment charges associated with discontinued operations; and

•	A $98.3 million increase in net cash outflows from changes in working capital primarily due to changes in prepaid expenses and other current assets, accounts payable and other accrued liabilities.

•	$244.0 million used for our purchase of ecoATM, net of cash and equivalents acquired;

•	$157.7 million used for purchases of property and equipment for kiosks and corporate infrastructure, including information technology related to our Enterprise Resource Planning implementation; and

•	$28.0 million used for capital contributions to our Redbox Instant by Verizon Joint Venture; partially offset by

•	$22.9 million obtained in principal of note receivable; and

•	$13.3 million obtained in proceeds received from the sale of property and equipment including the sale of NCR kiosks.

•	$400.0 million obtained from borrowings from our Credit Facility;

•	$343.8 million obtained in net proceeds from issuance of our Senior Notes;

•	$172.2 million used to retire a portion of our Convertible Notes;

•	$195.0 million used to repurchase our common stock;

•	$215.3 million used for repayments of our Credit Facility;

•	$14.8 million used to pay capital lease obligations and other debt;

•	$8.5 million obtained from the exercise of stock options; and

•	$3.7 million obtained in excess tax benefits related to share based payments.

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(1)	See Note 19: Commitments and Contingencies in our Notes to Consolidated Financial Statements.

(2)

Excludes any amounts associated with the manufacturing and services agreement entered into as part of the NCR Asset Acquisition, pursuant to which Outerwall, Redbox or an affiliate will purchase goods and services from NCR for a period of five years from June 22, 2012. At the end of the five-year period, if the aggregate amount paid in margin to NCR for goods and services delivered equals less than $25.0 million, Outerwall will pay NCR the difference between such aggregate amount and $25.0 million. As of December 31, 2013, the remaining commitment is $17.9 million under this agreement. See Note 3: Business Combinations in our Notes to Consolidated Financial Statements.

(3)	Income tax liabilities for uncertain tax positions were excluded as we are not able to make a reasonably reliable estimate of the amount and period of related future payments. As of December 31, 2013, we had $2.8 million of gross unrecognized tax benefits for uncertain tax positions.

•	useful lives and salvage values of our content library;

•	determination of goodwill impairment;

•	lives of equipment and other long-lived assets;

•	recognition and measurement of current and long-term deferred income taxes (including the measurement of uncertain tax positions);

•	recognition and measurement of purchase price allocation for business combinations; and

•	loss contingencies.

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(1)	Net income in the third quarter of 2013 includes a $68.4 million gain on the re-measurement of our previously held equity interest in ecoATM to its acquisition date fair value.

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(1)	“Direct operating” excludes depreciation and other of $130.3 million, $127.2 million and $120.4 million for 2013, 2012, and 2011 respectively.

(2)	Foreign currency translation adjustment had no tax effect in 2013, 2012, or 2011.

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(1)	Foreign currency translation adjustment has no tax effect for the years ended December 31, 2013, 2012, and 2011.

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

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(1)	As of December 31, 2013, no kiosks acquired from NCR remained in service. See Note 3: Business Combinations for more information on the NCR Asset Acquisition.

(2)	Includes approximately 700 kiosks acquired through the purchase of ecoATM, Inc. See Note 3: Business Combinations for more information. As of December 31, 2013, there were over 800 ecoATM kiosks in service. Excludes kiosks related to concepts discontinued during the fiscal year ended December 31, 2013, See Note 13: Discontinued Operations and Sale of Business.

•	useful lives and salvage values of our content library;

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•	determination of goodwill impairment;

•	lives and recoverability of equipment and other long-lived assets;

•	recognition and measurement of current and long-term deferred income taxes (including the measurement of uncertain tax positions);

•	recognition and measurement of purchase price allocation for business combination; and

•	loss contingencies.

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Redbox - Revenue from movie and video game rentals is recognized ratably over the term of a consumer’s rental transaction. Revenue from a direct sale out of the kiosk of previously rented movies or video games is recognized at the time of sale. On rental transactions for which the related movie or video game 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 uncollectible amounts. We record revenue net of refunds and applicable sales taxes collected from consumers.

•	Coinstar - Revenue from a coin-counting transaction, which is collected from either consumers or card issuers (in stored value product transactions), is recognized at the time the consumers’ coins are counted by our coin-counting kiosks. Our revenue represents the fee charged for coin-counting transactions.

•

New Ventures - New Ventures revenue is recognized when the sale of product or when the service transaction is complete. For our beauty concept this is at the time the transaction at kiosks is completed, for our ecoATM business revenue is recognized upon the sale and shipment of devices collected at our kiosk to third parties. Our New Ventures segment currently offers refurbished mobile devices and beauty samples to our consumers.

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•	For items reclassified out of accumulated other comprehensive income and into net income in their entirety, the effect of the reclassification on each affected net income line item; and

•	For AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference to other required disclosures under generally accepted accounting standards in the United States ("US GAAP").

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(1)	Pro-forma income from continuing operations includes the acquisition costs of $1.7 million and $4.0 million recorded in the second and third quarters of 2013, respectively.

•	changes in assets and liabilities to record their acquisition date fair values and the resulting changes in certain expenses such as amortization;

•	recognition of the gain on our previously held equity interest as if the acquisition occurred on January 1, 2012;

•	recognition of expense associated with the post-combination rights to receive cash as if they were granted on January 1, 2012;

•	reversals of losses from our equity investment; and

•	the inclusion of the results of operations and the impact on taxes as if ecoATM had been a wholly owned subsidiary since January 1, 2012.

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(1)	In addition to these amounts, the repurchase program approved by our Board of Directors allows for the use of cash proceeds received from the exercise of stock options by our officers, directors, and employees.

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•	Stock options are granted only to our executives and non-employee directors.

•	Options granted during the current year vest annually in equal installments over 4 years, and expire after 10 years.

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(1)

At December 31, 2010 we had an interest rate swap agreement with Wells Fargo Bank to hedge against the variable-rate interest payments on our revolving Credit Facility which expired on March 20, 2011. At December 31, 2010 the fair value of this agreement was a liability of $0.9 million which was reversed from comprehensive income and recognized as interest expense in our Consolidated Statements of Comprehensive Income in the first quarter of 2011.

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•	Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities;

•	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; or

•	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

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(1)	Includes all operating leases having an initial or remaining non-cancelable lease term in excess of one year.

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(1)	Agreement includes, at the studio’s sole discretion, the option for two one-year extensions following the end date.

(2)	Content licensed under the agreement is available for rental on the same day and date as the retail release.

(3)	Content licensed under the agreement is available for rental after a certain number of days following the retail release.

(4)	Agreement includes, at the studio’s sole discretion, the option a one-year extensions following the end date.

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

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(1)	Foreign currency translation adjustment had no tax effect in 2012.

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(1)	Foreign currency translation adjustment had no tax effect in 2011.

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

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

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

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