Coinstar Announces Second Quarter Revenue of $47.8 Million and $0.21 Per Fully Diluted Share.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: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 June June: see month. 30, 2004. Highlights for the second quarter of 2004 were as follows: --Quarterly revenue - $47.8 million --13.7% same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of growth --EBITDA(1) - $14.7 million (see Appendix A) --Free cash flow(2) - $5.7 million (see Appendix A) For the second quarter of 2004, Coinstar Inc. achieved revenue of $47.8 million and net income of $4.6 million or $0.21 per 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. Second quarter results compare favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to second quarter 2003 revenues of $43.1 million and net income of $4.2 million or $0.19 per fully diluted share. "Much like the first quarter of 2004, we are pleased that second quarter results exceeded expectations. We experienced solid same store sales growth and unit placements, and we continued to strengthen our relationships with our retail partners as evidenced by Albertsons' nation-wide nation-wide adj → diffuso/a in tutto il paese adv → in tutto il paese adoption of our e-payment services," stated Dave Cole, Chief Executive Officer of Coinstar. "We are also proud to have achieved these results at a time when we were closing the 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 acquisition and subsequent debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay . The acquisition and funding were completed as planned, and we are now moving forward with a more diversified diversified (di·verˑ·s business platform characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by complementary product lines and broader distribution channels." Recent Events During the second quarter, Coinstar announced a definitive agreement to purchase American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Coin Merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. Inc. ("ACMI") and its parent company, ACMI Holdings, Inc. for $235 million in cash. ACMI, operating as SugarLoaf Creations, is a leading owner and operator of coin-operated Adj. 1. coin-operated - of devices that do not operate without the prior insertion of one or more coins; "a coin-operated telephone" coin-operated adj [machine] → que funciona con monedas amusement Amusement is the state of experiencing humorous and usually entertaining events or situations, and is associated with enjoyment, happiness, laughter and pleasure. Amusement may also be experienced through the recollection of events which have given rise to amusement in the past. vending equipment in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , with more than 167,000 machines in over 18,000 locations including mass merchants, supermarkets, warehouse clubs, restaurants, entertainment centers, and truck stops. The acquisition, which closed on July July: see month. 7, 2004, broadens Coinstar's platform to include over 40,000 distribution points. Concurrent with the closing of the ACMI acquisition on July 7, 2004, the Company announced that it had successfully raised $310 million in debt financing. The new borrowings include a five year, $60 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and a seven year, $250 million term loan. The proceeds were primarily used to fund the acquisition with the balance used for general corporate and working capital purposes. On July 29, 2004, the Company announced that Albertson's, Inc. (NYSE NYSE See: New York Stock Exchange : ABS (Automatic Backup System) See backup program. ), one of its largest retail partners, is rolling out Coinstar's e-payment products and services in over 1,800 grocery and drug store locations in the United States. Coinstar(R) Centers with self-service coin counting are currently installed in more than 1,650 Albertsons supermarkets and more than 150 drug store locations. By the end of this year, Coinstar expects all 1,800 installed Albertsons locations to be equipped with its e-payment services, including prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. 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. and Green Dot(TM) Prepaid MasterCard(R) cards. Also during the quarter Coinstar signed an exclusive agreement with Financial Supermarkets Financial Supermarket A company offering a wide range of financial services (e.g. stock, insurance and real-estate brokerage). Notes: For the consumer, a financial supermarket can offer convenience and efficiency, since his/her money is not being continually shifted from Inc. ("FSI FSI Foreign Service Institute FSI Fluid Structure Interaction FSI Fuel Stratified Injection FSI Federazione Scacchistica Italiana (Italian Chess Federation) FSI Free Standing Insert FSI Flight Simulator "), a wholly-owned subsidiary of Community Bank & Trust located in Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. . Under the terms of the agreement, FSI will market and distribute Coinstar coin-counting machines in banks and other financial institutions throughout the United States. Rich Stillman, President of Coinstar Inc. stated, "As we look to the second half of 2004, we believe our expanded product offerings, advanced technology, and outstanding field service capabilities uniquely position Coinstar to generate significant value for an increasingly diverse set of retailers. We are a single-source supplier for retailers seeking to maximize the revenue per square foot from the front end of their stores." 2004 Expectations Management estimates that revenue for the third quarter ended September 30, 2004, will range from $101.0 to $108.0 million. This estimate includes revenue from ACMI from the purchase date of July 7, 2004 through the close of the third quarter. As stated in Coinstar's May 24, 2004 press release, the Company expects the ACMI transaction to be accretive within the first twelve months, excluding the effects of the 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. . The Company is in the process of obtaining an independent valuation of certain of ACMI's tangible and intangible assets which will enable the Company to determine purchase price allocations including amounts assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to intangible assets and goodwill. As a result, reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share will be impacted by the non-cash accounting charges related to such amortization of intangible assets. Until these valuations are obtained, management cannot estimate GAAP EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for the combined companies. 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, July 29, 2004, 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), founded in 1991, pioneered self-service coin counting to provide consumers a convenient and innovative means to convert loose coins into cash. Today, Coinstar Inc. is a multi-national company offering a range of products consisting of coin counting, electronic payment solutions, and amusement vending at more than 40,000 retail locations including supermarkets, drug stores, mass merchants, truck stops and restaurants. American Coin Merchandising Inc. and Cell Cards of Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , L.L.C., operate as wholly-owned subsidiaries of Coinstar Inc. For more information visit www.coinstar.com. 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 that involve a number of risks and uncertainties. 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. Factors that could cause or contribute to such differences include, but are not limited to, the effect of the acquisition of ACMI, the ability to successfully integrate ACMI's and Coinstar, Inc.'s businesses, the ability to bring new and repeat customers to Coinstar(R) machines, the ability to obtain new agreements with potential retail partners for the installation of Coinstar units and the retention of the current agreements with our existing retail partners on terms that are not materially adverse to the company, additional potential competitors, legal or governmental regulatory action and uncertainties relating to the ultimate success of new business initiatives (including e-payment services), including but not limited to the ability to attract customers and reach agreements with retail and other partners. 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 most recent reports filed with the Securities and Exchange Commission by Coinstar, Inc. and ACMI. These forward-looking statements reflect Coinstar, Inc.'s expectations as of July 29, 2004. 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 with accounting principles generally accepted in the United
States of America ("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 calculated in
accordance with GAAP. Our non GAAP measures may be different from the
presentation of financial information by other companies.
1) EBITDA 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 or pay down
indebtedness 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
June 30, 2004
-------------
Net cash provided by operating activities $ 21,963
Changes in operating assets and liabilities (7,535)
Other non-cash items(A) (12)
Net interest expense 110
Cash paid for taxes 139
----------
EBITDA $ 14,665
==========
(A) other non-cash items generally consist of non-cash stock-based
compensation
2) 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 our common
stock. Free cash flow may be reconciled from net cash provided by
operating activities, the most directly comparable GAAP measure, as
follows:
Quarter ended
June 30, 2004
-------------
Net cash provided by operating activities $ 21,963
Changes in operating assets and liabilities (7,535)
Capital expenditures (8,696)
----------
Free cash flow $ 5,732
==========
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,
2004 2003 2004 2003
------- ------- ------- -------
REVENUE $ 47,825 $ 43,102 $ 90,877 $ 81,099
EXPENSES:
Direct operating 23,093 19,077 43,311 36,813
Sales and marketing 3,666 3,384 4,716 4,514
Product research and
development 1,556 1,524 2,997 2,817
General and administrative 4,890 5,228 9,954 10,183
Depreciation and
amortization and other 7,534 6,680 15,502 13,060
------- ------- ------- -------
Income from operations 7,086 7,209 14,397 13,712
OTHER INCOME (EXPENSE):
Interest income and
other, net 61 52 130 184
Interest expense (126) (336) (372) (694)
------- ------- ------- -------
Income before income
taxes 7,021 6,925 14,155 13,202
Income taxes (2,470) (2,676) (4,987) (5,011)
------- ------- ------- -------
NET INCOME $ 4,551 $ 4,249 $ 9,168 $ 8,191
======= ======= ======= =======
NET INCOME PER SHARE:
Basic $ 0.21 $ 0.20 $ 0.43 $ 0.38
Diluted $ 0.21 $ 0.19 $ 0.43 $ 0.37
WEIGHTED SHARES OUTSTANDING:
Basic 21,357 21,545 21,325 21,655
Diluted 21,593 21,942 21,565 22,045
CAPITAL EXPENDITURES $ 8,696 $ 4,969 $ 14,515 $ 11,538
Coinstar, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, December 31,
2004 2003
----------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 43,543 $ 38,882
Cash being processed 56,198 60,782
Trade accounts receivable, net of
allowance of $87 2,500 -
Inventory 2,622 -
Deferred income taxes 7,337 10,161
Prepaid expenses and other current assets 3,976 3,043
----------- ----------
Total current assets 116,176 112,868
PROPERTY AND EQUIPMENT:
Coinstar units 185,259 176,329
Computers 9,174 9,197
Office furniture and equipment 1,451 1,382
Leased vehicles 4,063 3,957
Leasehold improvements 716 705
----------- ----------
Total property and equipment 200,663 191,570
Accumulated depreciation and amortization (138,887) (130,800)
----------- ----------
Total property and equipment, net 61,776 60,770
DEFERRED INCOME TAXES 27,059 28,665
OTHER ASSETS 3,906 699
GOODWILL 3,979 454
INTANGIBLE ASSETS, net of accumulated
amortization of $276 in 2004 and $138
in 2003 1,410 618
----------- ----------
TOTAL ASSETS $ 214,306 $ 204,074
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,789 $ 2,128
Accrued liabilities payable to retailers 56,198 60,782
Other accrued liabilities 11,445 9,513
Current portion of long-term debt and
capital lease obligations 9,169 14,188
----------- ----------
Total current liabilities 86,601 86,611
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 899 3,273
----------- ----------
Total liabilities 87,500 89,884
STOCKHOLDERS' EQUITY:
Common stock 194,748 191,370
Accumulated deficit (46,630) (55,798)
Treasury stock (22,783) (22,783)
Accumulated other comprehensive income 1,471 1,401
----------- ----------
Total stockholders' equity 126,806 114,190
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 214,306 $ 204,074
=========== ==========
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