Coinstar to Acquire Amusement Factory, LLC; Transaction is Expected to Strengthen Market Position of Coinstar's Entertainment Business, Expand Scope of Retail Relationships, and Enhance Operations.BELLEVUE, 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) ), a leader in 4th Wall(TM) services at the retail front end, today announced it has signed a definitive agreement to purchase substantially all of the assets of The Amusement Factory, L.L.C., for approximately $36 million in shares of Coinstar common stock. Amusement Factory is the second largest operator of entertainment services 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 a complete line of amusement vending services for retailers. Combining Amusement Factory with Coinstar, Inc.'s subsidiary American 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 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 ) is expected to create a clear number one operator in retail entertainment services. Amusement Factory has a full line of entertainment services including skill crane machines, bulk vending Bulk Vending is the sale of unsorted confections, nuts, gumballs, toys and novelties (in capsules) selected at random and dispensed generally through non-electrically operated vending machines. , and kiddie rides Kiddie rides are coin-operated rides that appear in amusement parks, malls as well as outside supermarkets and large stores such as K-mart and Sav-On. Once common outside smaller establishments like grocery stores, few grocery stores have one or more kiddie rides in their premises in more than 14,000 locations across the United States. The company, based in Van Nuys, California, distributes its equipment to mass merchants, supermarkets, restaurants, entertainment centers, dollar stores and other distribution channels. As reported by Amusement Factory, the company's revenue for its fiscal year ending December 31, 2004, exceeded $60 million. As of September 30, 2005, Amusement Factory employed approximately 270 people. "Coinstar's 4th Wall program is designed to help retailers increase performance and maximize the profit at the front end of their stores," said Randy Fagundo, President of ACMI. "Following the acquisition, we plan to combine the best practices from both companies and continue to deliver the strongest product, merchandising and service to our retail customers." "We are excited about bringing together the talents and expertise of both Amusement Factory and Coinstar to create a 'best in class' operation for the entertainment services industry," said Fred Simon
The combination of Coinstar and Amusement Factory is expected to strengthen Coinstar's market position, expand the scope of retail relationships and enhance operational efficiencies in its entertainment services line of business. Strengthens Market Position Amusement Factory's 14,000 locations are in 36 states across the United States with a concentration on the West coast and Midwestern states. Coinstar has approximately 47,000 locations in the United States, United Kingdom, Canada, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and Mexico. Bringing the number one and number two entertainment operators together is expected to strengthen Coinstar's leadership position by creating greater route density in the United States. Expands Scope of Retail Relationships Coinstar and Amusement Factory have many top retail accounts in common, allowing the combined companies to better serve their customer base to deliver 4th Wall products and services. Following the acquisition, Coinstar will be able to consolidate offerings for retailers and provide higher quality products and services by combining the best practices of each company. Amusement Factory's leading customers include Wal-Mart and Kroger Co. Enhances Operational Efficiencies Coinstar and Amusement Factory have extensive field services operations, including field staff, regional offices and warehouse facilities. Following the acquisition, Coinstar will seek to eliminate the overlap in the combined organization to improve operational efficiency through facility consolidation, improved route servicing, and enhanced logistics management Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet . Business Outlook Coinstar expects cost savings to be realized from synergies associated with integrating Amusement Factory and Coinstar operations. Field integration of the two companies is expected to start in the second quarter of 2006 and to be substantially complete by the end of 2006. Coinstar expects this transaction to be slightly accretive to Adjusted Earnings Per Share 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. . Coinstar will obtain an independent valuation of certain of Amusement Factory's tangible and intangible assets which will enable Coinstar to determine purchase price allocations including amounts assigned to inventories, 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. Coinstar will give guidance regarding GAAP and adjusted 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 on the first conference call after the independent valuation is complete. The transaction is expected to close in mid to late fourth quarter of this year. The purchase price of approximately $36 million will be funded by issuing shares of Coinstar common stock. As part of the transaction, Coinstar, Inc. will not be assuming any of Amusement Factory's existing debt. Closing is contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent certain customary conditions including securing certain contractual consents. Fred Simon will remain president of the acquired operations and Randy Fagundo will remain president of ACMI. Conference Call Coinstar, Inc. announced that a conference call to discuss the proposed acquisition of Amusement Factory will be broadcast live over the Internet today, Tuesday, Oct. 18, 2005, at 4:30 p.m. Eastern time. The Webcast will be hosted at the "Invest" 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, and entertainment services. The company's products and services can be found at more than 47,000 retail locations including supermarkets, drug stores, mass merchants, 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. , and restaurants. American Coin Merchandising Inc., Cell Cards of Illinois, L.L.C., and Coinstar E-payment Services, Inc. are 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 the assets of The Amusement Factory, L.L.C. the ability to successfully integrate The Amusement Factory, L.L.C. 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 prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. 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. These forward-looking statements reflect Coinstar, Inc.'s expectations as of October 18, 2005. Coinstar, Inc. undertakes no obligation to update the information provided herein. |
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