Coinstar Announces Second Quarter Results.BELLEVUE Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , 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 and six-month periods ended June June: see month. 30, 2006. Highlights for the second quarter ended June 30, 2006, were as follows: --Revenue -- $130.3 million --EBITDA -- $25.6 million (see Appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. A) --Free cash flow -- $14.2 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 $0.22 (see reconciliation below) --Net income of $4.1 million Highlights for the six months ended June 30, 2006, were as follows: --Revenue -- $256.4 million --EBITDA -- $50.7 million (see Appendix A) --Free cash flow -- $29.8 million (see Appendix A) --Adjusted earnings per fully taxed, fully diluted share of $0.44 (see reconciliation below) --Net income of $8.3 million Included in GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the second 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. including $1.5 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. , $1.5 million in non-cash stock based compensation and non-cash losses in investments in DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. kiosk kiosk Originally, in Islamic architecture, an open circular pavilion consisting of a roof supported by pillars. The word has been applied to a Turkish summer garden pavilion and a type of early Persian mosque. companies and amortization of financing fees totaling $0.5 million. Excluding these items, net of taxes, Coinstar, Inc. reported adjusted net income of $6.1 million. A reconciliation of GAAP earnings per share to adjusted earnings per share is as follows:
Quarter
ended
6/30/06
-------
GAAP fully taxed, fully diluted earnings per share $0.15
Amortization of intangibles, net of tax 0.03
Stock-based compensation, net of tax 0.03
Non-cash losses in investments in DVD kiosk companies
and amortization of financing fees, net of tax 0.01
-----
Adjusted fully taxed, fully diluted earnings per share $0.22
=====
Included in GAAP net income for the first half of 2006 were certain non-cash charges including $2.8 million in amortization of intangible assets, $0.6 million in amortization of financing fees, $2.9 million in non-cash stock based compensation, and our portion of the non-cash losses associated with our investments in DVD kiosk companies totaling $0.6 million. Excluding these items, net of taxes, Coinstar, Inc. reported adjusted net income of $12.2 million. A reconciliation of GAAP earnings per share to adjusted earnings per share is as follows:
Six Months
ended
6/30/06
----------
GAAP fully taxed, fully diluted earnings per share $ 0.30
Amortization of intangibles, net of tax 0.06
Stock based compensation expense, net of tax 0.06
Non-cash losses in investments in DVD kiosk
companies and amortization of financing fees, net
of tax 0.02
----------
Adjusted fully taxed, fully diluted earnings per
share $ 0.44
==========
At June 30, 2006, Coinstar, Inc. had approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $87.7 million in cumulative net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Although Coinstar recorded $3.1 million in tax expense for the second quarter, cash paid for taxes during the three-month period ended June 30, 2006, totaled only $857,000 as a result of these net operating loss carryforwards. "We are pleased with our second quarter results, particularly our ability to generate solid financial performance while continuing to integrate our recently acquired businesses. We are making measurable strides in this regard and expect continued success in the form of new retail customer relationships, increased sales penetration The successful unauthorized breach of a security perimeter. See penetration test. with existing retail accounts, and margin expansion as we leverage our infrastructure," Dave Cole, Chief Executive Officer of Coinstar, Inc. stated. "Beyond the current period, the underlying trend in the business is overwhelmingly positive with regard to the 4th Wall strategy. In fact, we are seeing many of our retail customers embrace more than one Coinstar product, and in the process, materially increasing their square foot profitability. This value proposition should drive our longer term performance and create significant value for our shareholders."
Other Information
Quarter Quarter
ended ended
6/30/06 6/30/05
--------- ---------
Cash paid for capital expenditures (in thousands) $ 8,447 $ 11,176
Installed Base
Coin 13,100 12,400
- Coin to card or e-certificate enabled 6,700 1,300
- E-payment enabled 3,800 3,500
Crane 31,000 21,000
Bulk heads and other 267,000 154,500
POSA terminals 19,500 17,000
Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. For the three months ended June 30, 2006, Coinstar repurchased 213,307 shares of common stock at an average price of $22.59 per share. The aggregate expenditure during the quarter totaled $4.8 million. Year to date, Coinstar has repurchased 228,007 shares at an average price of $22.82. The aggregate expenditure for the year to date period totaled $5.2 million. Third Quarter Expectations Management estimates that revenue for the third quarter ending September September: see month. 30, 2006, will range from $140 million to $150 million. Management estimates that for the third quarter ending September 30, 2006, GAAP earnings per fully diluted, fully taxed, share will range from $0.15 to $0.22 and adjusted fully diluted, fully taxed earnings per share will range from $0.22 to $0.29. Conference Call Coinstar, Inc. announced that a conference call to discuss the second quarter will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the today, Thursday Thursday: see week. , July July: see month. 27, 2006, 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 4th Wall(TM) solutions for the retailers' front of store consisting of self-service coin counting, electronic payment solutions, entertainment services and self-service DVD rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. . The company's products and services can be found at more than 60,000 retail locations including supermarkets Supermarkets, past and present, include: Transnational Originating (HQ) country first. The rest in alphabetical order.
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," "estimate," "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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . The forward-looking statements are not guarantees of future performance and actual results may vary materially from the results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 recent acquisitions, 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., legal or governmental regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. action and uncertainties relating to the ultimate success of new business initiatives. 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 "Risk Factors" described in Item 1A of Part II of our most recent Quarterly Report 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 July 27, 2006. 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, amortization and other. 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 Six Months ended
06/30/06 06/30/06
------------- ----------------
Net income $ 4,119 $ 8,298
Depreciation, amortization and other 14,805 28,991
Interest expense, net 3,594 6,945
Early retirement of debt -- 238
Income taxes 3,111 6,240
------------ -------------
EBITDA $ 25,629 $ 50,712
============ =============
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 rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. from net cash provided by operating activities, the most directly comparable GAAP measure, as follows:
Quarter ended Six Months ended
06/30/06 06/30/06
------------- -----------------
Net cash provided by operating
activities $ 38,707 $ 43,406
Changes in operating assets and
liabilities,
net of acquisitions (16,033) 2,258
Cash paid for capital expenditures (8,447) (15,864)
------------ --------------
FREE CASH FLOW $ 14,227 $ 29,800
============ ==============
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 certain non-cash charges. We believe this measure provides an important comparison to prior period earnings and is representative of our operating results.
Coinstar, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
---------------------------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
-------- --------- -------- --------
REVENUE $130,327 $109,840 $256,359 $215,425
EXPENSES:
Direct operating 86,437 74,389 172,736 147,269
Marketing 3,389 1,975 4,313 2,932
Research and development 1,393 1,516 2,634 2,825
General and administrative 13,811 8,687 26,577 17,279
Depreciation and other 13,295 10,958 26,154 21,764
Amortization of intangible
assets 1,510 1,104 2,837 2,135
-------- --------- -------- --------
Income from operations 10,492 11,211 21,108 21,221
OTHER INCOME (EXPENSE):
Interest income and other,
net 420 379 891 705
Interest expense (3,986) (3,100) (7,718) (5,950)
Income from equity
investments 304 153 495 315
Early retirement of debt -- -- (238) --
-------- --------- -------- --------
Income before income taxes 7,230 8,643 14,538 16,291
Income taxes (3,111) (3,378) (6,240) (6,358)
-------- --------- -------- --------
NET INCOME $ 4,119 $ 5,265 $ 8,298 $ 9,933
======== ========= ======== ========
NET INCOME PER SHARE:
Basic $ 0.15 $ 0.21 $ 0.30 $ 0.39
Diluted $ 0.15 $ 0.21 $ 0.30 $ 0.39
WEIGHTED SHARES OUTSTANDING:
Basic 27,754 25,354 27,735 25,313
Diluted 28,034 25,561 28,011 25,613
CASH PAID FOR CAPITAL
EXPENDITURES $ 8,447 $ 11,176 $ 15,864 $ 24,985
Coinstar, Inc.
Non GAAP Consolidated Statements of Operations
Excluding Stock Based Compensation Expense(a)
(in thousands, except per share data)
(unaudited)
Income from operations before stock based compensation expense is a
financial measure we use to evaluate the underlying results and
operating performance of our business. The difference between income
from operations (the most comparable GAAP measure) and income from
operations before stock based compensation expense (the non GAAP
measure) reflects the impact of adopting SFAS 123(R) on the current
period results. We believe income from operations before stock based
compensation expense is a useful measure that allows investors to draw
comparisons between operating results reported prior to adoption of
SFAS 123(R) and the current period which may mask underlying trends
and make it difficult to give investors perspective on underlying
business results.
Three months ended June 30, 2006
--------------------------------- Three months
Stock Based ended
GAAP Compensation Pro Forma June 30,
Results Expense(a) Results 2005
--------- ------------- --------- ------------
REVENUE $130,327 $ $130,327 $ 109,840
EXPENSES:
Direct operating 86,437 (264) 86,173 74,389
Marketing 3,389 (35) 3,354 1,975
Research and
development 1,393 (85) 1,308 1,516
General and
administrative 13,811 (871) 12,940 8,687
Depreciation and other 13,295 13,295 10,958
Amortization of
intangible assets 1,510 1,510 1,104
-------- ------------ -------- ----------
Income from operations 10,492 1,255 11,747 11,211
OTHER INCOME (EXPENSE):
Interest income and
other, net 420 420 379
Interest expense (3,986) (3,986) (3,100)
Income from equity
investments 304 304 153
Early retirement of
debt -- -- --
-------- ------------ -------- ----------
Income before income
taxes 7,230 1,255 8,485 8,643
Income taxes (3,111) (282) (3,393) (3,378)
-------- ------------ -------- ----------
NET INCOME $ 4,119 $ 973 $ 5,092 $ 5,265
======== ============ ======== ==========
NET INCOME PER SHARE:
Basic $ 0.15 $ 0.18 $ 0.21
Diluted $ 0.15 $ 0.18 $ 0.21
(a) Stock-based compensation expense represents the incremental
expense recorded as a result of adopting SFAS 123(R), Share-Based
Payment.
Coinstar, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, Dec. 31,
2006 2005
-------------------
CURRENT ASSETS:
Cash and cash equivalents $ 23,700 $ 45,365
Cash in machine or in transit 61,567 60,070
Cash being processed 65,747 69,832
Trade accounts receivable, net of allowance for
doubtful accounts of $962 and $469 at June 30,
2006 and December 31, 2005, respectively 14,947 9,046
Inventory 35,019 31,234
Deferred income taxes 16,441 17,330
Prepaid expenses and other current assets 9,222 11,020
--------- --------
Total current assets 226,643 243,897
PROPERTY AND EQUIPMENT, NET 153,832 148,811
DEFERRED INCOME TAXES 496 5,385
OTHER ASSETS 5,069 5,392
EQUITY INVESTMENTS 19,727 19,966
INTANGIBLE ASSETS, NET 46,110 40,139
GOODWILL 204,582 179,811
--------- --------
TOTAL ASSETS $656,459 $643,401
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 44,310 $ 34,760
Accrued liabilities payable to retailers 73,048 77,175
Other accrued liabilities 30,554 26,941
Current portion of long-term debt and capital
lease obligations 7,749 3,850
--------- --------
Total current liabilities 155,661 142,726
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 194,542 206,628
DEFERRED TAX LIABILITY - NON-CURRENT 2,927 --
--------- --------
Total liabilities 353,130 349,354
STOCKHOLDERS' EQUITY:
Common stock 334,456 328,951
Accumulated deficit (4,860) (13,158)
Treasury stock (27,986) (22,783)
Accumulated other comprehensive income 1,719 1,037
--------- --------
Total stockholders' equity 303,329 294,047
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $656,459 $643,401
========= ========
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