Coinstar Announces First Quarter Revenue of $105.6 Million.BELLEVUE, Wash. -- Coinstar, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CSTR CSTR Centre for Speech Technology Research CSTR Canister CSTR Continually Stirred Tank Reactor CSTR Center for Software Testing Research (Florida Tech) CSTR Combat System Trial Rehearsal (US DoD) ) today announced results for the three-month period ended March 31, 2005. Highlights for the first quarter are as follows: --Revenue - $105.6 million --EBITDA - $22.0 million (see Appendix A) --Free cash flow - $5.9 million (see Appendix A) --Adjusted earnings per fully taxed, fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.21 (see reconciliation below) --Net income of $4.7 million Included in GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the quarter were certain non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. primarily related to past acquisitions including $1.0 million in amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , $175,000 in amortization of financing fees and $73,000 in amortization of compensation expense. Excluding these items, net of taxes, Coinstar reported adjusted net income of $5.5 million. A reconciliation of GAAP earnings per share to Adjusted earnings per share is as follows:
GAAP fully taxed, fully diluted earnings per share $0.18
Amortization of intangibles, net of tax 0.02
Amortization of financing fees, net of tax 0.01
Amortization of compensation, net of tax 0.00
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Adjusted fully taxed, fully diluted earnings per
share $0.21
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At March 31, 2005, Coinstar, Inc. had approximately $116.8 million in cumulative net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Although Coinstar recorded $3.0 million in tax expense for the first quarter, cash paid for taxes during the three-month period ending March 31, 2005 totaled only $84,000 as a result of these net operating loss carryforwards. "We are pleased with our first quarter results which saw solid performance in our coin business, strategic progress in e-payments, and acquisitions and integration activity in our entertainment business in line with our expectations," said Dave Cole, Chief Executive Officer of Coinstar, Inc. "As our business evolves, we believe Coinstar will continue to expand and take advantage of a sales force that is now fully integrated and well versed Versed® Midazolam Pharmacology A preoperative sedative in a variety of product and service options. The ability to effectively manage front-of-store solutions will ultimately separate Coinstar from the competition and drive long-term value for our retail customers and shareholders." Recent Events On February 3, 2005, Coinstar announced the initial set of gift cards for its new Coin to Card(TM) program, which allows consumers to convert loose change into gift cards from national retailers and supermarkets. The new offering, which will be expanded in spring, is designed to drive incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. consumer traffic to Coinstar's retail customers and card issuers, while providing a no-fee coin counting option to the consumer. Partners in the program to date include the Starbucks Coffee Company, Hollywood Entertainment, Pier pier, in engineering, term applied to a mass of reinforced concrete or masonry supporting a large structure, such as a bridge. When piers are built on ground of poor bearing value, it is often necessary to drive piles to obtain a firm base. 1 and Linens 'n Things Linens 'n Things, Inc., headquartered in Clifton, New Jersey, is the second-largest large-format retailers of home textiles, housewares and decorative home accessories in the United States, behind Bed Bath & Beyond. . Coinstar will seek additional retail gift cards in the future, including cards in categories such as books, movies, apparel, restaurants and home improvement. On February 24, 2005, the Company announced plans to expand its gift card mall program to feature leading dining, clothing, entertainment, book, home and service cards for shopper convenience. The gift card mall program gives grocery, drug and other retailers a turnkey See turnkey system. , innovative gift card program to drive incremental traffic, sales and profits into the store. We expect the program will include regional and national retail branded gift cards as well as gift cards from online retailers. On March 9, 2005, Coinstar announced its acquisition of Mundo Communications Network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. (MCN MCN Motorcycle News (magazine) MCN Maternal Child Nursing MCN American Journal of Maternal/Child Nursing MCN Motorcycle Consumer News MCN Migrant Clinicians Network MCN Molecular and Cellular Neuroscience ), Inc., one of the nation's leading prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. providers serving 2,300 retail accounts throughout the western
United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi RiverWest Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century . The acquisition strengthens Coinstar's presence in convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. , travel centers and independent retailers while bolstering sales and service operations. MCN's products and services include prepaid MasterCard(R) cards, prepaid wireless airtime air·time n. 1. The time during which a radio or television station is broadcasting. Also called airspace. 2. The time at which a radio or television program is broadcast. , prepaid long distance, gift card and loyalty programs, and prepaid phone accessories. MCN will operate as a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Coinstar, Inc. under the name, El Toro El To·ro An unincorporated community of southern California southeast of Santa Ana. Founded in the 1890s, it is mainly residential. Population: 62,685. Prepaid Inc. Other Announcements Coinstar, Inc. announced today that Rich Stillman, the company president, will be leaving to accept a position as chief executive officer of a Seattle-based graphic imaging company. "We are very excited for Rich and believe this is an excellent opportunity for his career advancement," said Dave Cole, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Coinstar, Inc. "Rich has made many contributions to the company and he will be missed. We congratulate him on this achievement and wish him well." Second Quarter Expectations Management estimates that revenue for the second quarter ended June 30, 2005 will range from $109 to $115 million. Management estimates that for the second quarter ending June 30, 2005, GAAP earnings per fully diluted, fully taxed, share will range from $0.17 to $0.23 and Adjusted fully diluted, fully taxed earnings per share will range from $0.20 to $0.26. Conference Call Coinstar, Inc. announced that a conference call to discuss the first quarter will be broadcast live over the Internet today, Thursday, May 5, 2005, at 4:30 p.m. Eastern time. The Webcast will be hosted at the About Us - Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Coinstar's Web site at www.coinstar.com. About Coinstar, Inc. Coinstar, Inc. (NASDAQ:CSTR) is a multi-national company offering a range of products and services consisting of coin counting, electronic payment solutions, and entertainment services at retail locations including supermarkets, drug stores, mass merchants, convenience stores, and restaurants. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Coinstar, Inc.'s anticipated growth and future operating results. These are forward-looking statements for purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. The words "believe," "expect," "intend," "anticipate," "goals," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. The forward-looking statements are not guarantees of future performance and actual results may vary materially from the results expressed or implied in such statements. Differences may result from actions taken by Coinstar, Inc., as well as from risks and uncertainties beyond Coinstar, Inc.'s control. Such risks and uncertainties include, but are not limited to, the effect of and financing of the acquisition of ACMI ACMI Aircraft, Crew, Maintenance and Insurance (wet lease) ACMI Art & Creative Materials Institute ACMI Air Combat Maneuvering Instrumentation ACMI American College of Medical Informatics ACMI Australian Center for the Moving Image , the ability to successfully integrate acquired businesses, the ability to bring new and repeat customers to Coinstar(R) machines, the ability to obtain new agreements with potential retailers for the installation of Coinstar machines and the retention of the current agreements with our existing retailers on terms that are not materially adverse to Coinstar, Inc., additional potential competitors, legal or governmental regulatory action and uncertainties relating to the ultimate success of new business initiatives (including e-payment services). The foregoing list of risks and uncertainties is illustrative il·lus·tra·tive adj. Acting or serving as an illustration. il·lus tra·tive·ly adv.Adj. 1. , but by no means exhaustive. For more information on factors that may affect future performance, please review the "Factors That May Affect Our Business, Future Operating Results and Financial Condition" described in each of our recent annual reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission. These forward-looking statements reflect Coinstar, Inc.'s expectations as of May 5, 2005. Coinstar, Inc. undertakes no obligation to update the information provided herein. Appendix A (in thousands unless otherwise noted) Non GAAP measures Non GAAP measures are provided as a complement to results provided in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ("GAAP"). Non GAAP measures are not a substitute for measures computed in accordance with GAAP. Definitions of such non GAAP measurements are provided below. These definitions are provided to allow the reader to reconcile non GAAP data to that presented in accordance with GAAP. Our non GAAP measures may be different from the presentation of financial information by other companies. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become represents earnings before net interest expense, income taxes, depreciation, and amortization. We believe EBITDA is an important non GAAP measure as it provides useful cash flow information regarding our ability to service, incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. or pay down indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. and for purposes of calculating certain debt covenants. In addition, management uses such non GAAP measures internally to evaluate the Company's performance and manage its operations. See below for reconciliation of most comparable GAAP measurements to EBITDA.
Quarter ended March 31,
2005
----------------------------------------------------------
Net income $4,668
----------------------------------------------------------
Depreciation and amortization 11,837
----------------------------------------------------------
Interest expense, net 2,560
----------------------------------------------------------
Income taxes 2,980
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----------------------------------------------------------
EBITDA $22,045
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Free cash flow: we believe free cash flow is an important non GAAP measure as it provides useful cash flow information regarding our ability to service, incur or pay down indebtedness and repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. our common stock. We use free cash flow as a measure to reflect cash available to service our debt as well as to fund our discretionary and non-discretionary expenditures. Free cash flow may be reconciled from net cash provided by operating activities, the most directly comparable GAAP measure, as follows:
Quarter ended March 31,
2005
----------------------------------------------------------
Net cash provided by operating
activities $13,072
----------------------------------------------------------
Changes in operating assets and
liabilities, net of acquisitions 6,622
----------------------------------------------------------
Capital expenditures (13,809)
------
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Free cash flow $5,885
======
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Adjusted earnings per share: we believe adjusted earnings per share is an important non GAAP measure as it provides useful information about our results from operations excluding one-time or non-cash charges. We believe this measure provides a better comparison to prior period earnings and is more representative of our operating results.
Coinstar, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended
------------------
March 31, March 31,
2005 2004
-------- --------
REVENUE $105,585 $ 43,052
EXPENSES:
Direct operating 72,843 20,218
Sales and marketing 994 1,050
Research and development 1,309 1,441
General and administrative 8,592 5,064
Depreciation and other 10,806 7,915
Amortization of intangible assets 1,031 53
-----------------
Income from operations 10,010 7,311
OTHER INCOME (EXPENSE):
Interest income and other, net 488 69
Interest expense (2,850) (246)
-----------------
Income before income taxes 7,648 7,134
Income taxes (2,980) (2,517)
-----------------
NET INCOME $ 4,668 $ 4,617
=================
NET INCOME PER SHARE:
Basic $ 0.18 $ 0.22
Diluted $ 0.18 $ 0.21
WEIGHTED SHARES OUTSTANDING:
Basic 25,272 21,290
Diluted 25,665 21,533
CAPITAL EXPENDITURES $ 13,809 $ 5,819
Coinstar, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, December 31,
2005 2004
---------------------
CURRENT ASSETS:
Cash and cash equivalents $ 98,318 $ 94,640
Cash being processed 55,664 62,147
Trade accounts receivable, net of
allowance for doubtful accounts
of $548 in 2005 and $481 in 2004,
respectively 5,295 5,283
Inventory 28,792 25,877
Deferred income taxes 18,674 18,833
Prepaid expenses and other current assets 9,472 11,626
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Total current assets 216,215 218,406
PROPERTY AND EQUIPMENT, NET 135,348 131,267
DEFERRED INCOME TAXES 12,128 15,880
OTHER ASSETS 6,180 6,200
INTANGIBLE ASSETS, NET 35,903 35,033
GOODWILL 142,303 140,348
-------------------
TOTAL ASSETS $548,077 $547,134
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 27,855 $ 23,661
Accrued liabilities payable
to retailers 57,246 63,504
Other accrued liabilities 19,572 22,904
Current portion of long-term debt and
capital lease obligations 3,460 3,350
-------------------
Total current liabilities 108,133 113,419
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 207,215 207,569
-------------------
Total liabilities 315,348 320,988
STOCKHOLDERS' EQUITY:
Common stock 284,100 282,046
Accumulated deficit (30,762) (35,430)
Treasury stock (22,783) (22,783)
Accumulated other comprehensive income 2,174 2,313
-------------------
Total stockholders' equity 232,729 226,146
-------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $548,077 $547,134
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