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Coinstar, Inc. Announces Revised 2009 Fourth Quarter and Full Year Results Reflecting Legal Settlement Involving E-Payment Business

Settlement Decreases 2009 Fourth Quarter and Full Year EPS by $0.07; Management Reaffirms 2010 First Quarter and Full Year Guidance

Coinstar, Inc. today announced that the company revised financial results for the fourth quarter and full year ended December 31, 2009, due to a legal settlement involving its E-Payment services business. The revised results are reflected in the Annual Report on Form 10-K to be filed by the company today.

On February 19, 2010, Coinstar settled an action filed by Apparel Sales, Inc. ("ASI") in 2005 against one of the subsidiaries of its E-Payment services business for $4.0 million and ASI has agreed to dismiss its complaint with prejudice. The company had previously accrued for $0.5 million of the $4.0 million settlement expense and as a result, $3.5 million of expense, or approximately ($0.07) per diluted share, is included in the "Proxy, write-off of acquisition costs, and litigation settlement" line item in the Consolidated Statement of Operations for the fourth quarter and full year ended December 31, 2009.

The impact of the settlement is included in the revised financial highlights below.

  For the quarter ended December 31, 2009:




  -- Revenue                                      $   328.0 million
  -- Adjusted EBITDA from continuing 
     operations (See Appendix A)                  $   52.0  million
  -- Income from operations                       $  16.5   million
  -- Income from continuing operations            $   3.4   million
  -- Net income attributable to Coinstar, Inc.    $   3.4   million
  -- Diluted earnings per share from continuing 
     operations attributable to Coinstar, Inc.    $  0.11
  -- Diluted earnings per share attributable to 
     Coinstar, Inc.                               $  0.11

  For the full year ended December 31, 2009:




  --  Revenue                                     $ 1,144.8 million
  --  Adjusted EBITDA from continuing operations 
      (See Appendix A)                            $  199.6  million
  --  Income from operations                      $  84.3   million
  --  Income from continuing operations           $  29.3   million
  --  Net income attributable to Coinstar, Inc.   $  53.7   million
  --  Diluted earnings per share from continuing
      operations attributable to Coinstar, Inc.   $  0.84
  --  Diluted earnings per share attributable to
      Coinstar, Inc.                              $  1.76



Revenue for the fourth quarter of 2009 was $328.0 million, an increase of 43.9 percent compared with revenue of $227.9 million in the fourth quarter of 2008. The increase is primarily due to the growth in DVD revenue, which was $231.8 million in the fourth quarter of 2009, an increase of 73.2 percent compared with $133.8 million in the fourth quarter of 2008.

Income from operations for the fourth quarter was $16.5 million, which includes a pre-tax, non-cash charge of approximately $7.4 million related to goodwill impairment in Coinstar's Money Transfer services business and $3.5 million of expense recognized in the quarter for the ASI settlement. This resulted in an operating margin of 5.0 percent, compared with income from operations of $21.4 million and an operating margin of 9.4 percent in the fourth quarter of 2008. Operating margin also decreased as a result of higher DVD product costs.

Income from continuing operations for the fourth quarter was $3.4 million, including approximately $4.5 million, net of tax, related to the non-cash goodwill impairment charge and $2.1 million of expense, net of tax, related to the ASI settlement, compared with $9.9 million in the fourth quarter of 2008.

Net income attributable to Coinstar, Inc. for the fourth quarter was $3.4 million, or $0.11 per diluted share, including approximately ($0.14) per diluted share related to the non-cash goodwill impairment charge and approximately ($0.07) per diluted share related to the ASI settlement, compared with $4.2 million, or $0.15 per diluted share, in the fourth quarter of 2008.

Revenue for 2009 was $1.1 billion, an increase of 50.3 percent compared with revenue of $761.7 million in 2008. The increase reflects the growth in DVD revenue, which was $773.5 million in 2009, an increase of 99.1 percent compared with $388.5 million in 2008. The growth in DVD revenue for the fourth quarter and the full year was driven by the 8,700 DVD kiosks installed during the year, as well as revenue growth at existing machines.

Income from operations for 2009 was $84.3 million, including approximately $7.4 million related to the pre-tax non-cash charge related to goodwill impairment in Coinstar's Money Transfer services business and $3.5 million of expense recognized for the ASI settlement. This resulted in an operating margin of 7.4 percent, compared with income from operations of $76.4 million and an operating margin of 10.0 percent in 2008. Operating margin for the year also decreased as a result of higher DVD product costs.

Income from continuing operations for the year was $29.3 million, including approximately $4.5 million, net of tax, related to the non-cash goodwill impairment charge and $2.1 million of expense, net of tax, related to the ASI settlement, compared with $33.5 million in 2008.

Net income attributable to Coinstar, Inc. for the year was $53.7 million, or $1.76 per diluted share, including approximately ($0.15) per diluted share related to the non-cash goodwill impairment charge and approximately ($0.07) per diluted share related to the ASI settlement, compared with $14.1 million, or $0.50 per diluted share, in 2008. Both 2009 and 2008 include the impact from discontinued operations from the sale of our Entertainment business of $28.0 million, or $0.92 per diluted share, in 2009 and a loss of ($5.0) million, or ($0.17) per diluted share, in 2008.

Other Information

Cash paid for capital expenditures for the fourth quarter ended December 31, 2009 was $48.3 million, compared with $35.0 million in the fourth quarter of 2008, with the increase primarily due to our investment in DVD kiosks during the fourth quarter of 2009.

2010 Full Year and First Quarter Guidance

Coinstar management reaffirmed guidance for the full year 2010 that was previously provided on February 11, 2010, and guidance for the first quarter of 2010 that was previously provided on February 16, 2010.

For 2010, management expects revenue in the range of $1.465 billion to $1.565 billion, EBITDA in the range of $250 million to $265 million and GAAP EPS attributable to Coinstar, Inc. in the range of $1.50 to $1.65 on a fully diluted basis. For the first quarter of 2010, management expects revenue in the range of $315 million to $335 million, EBITDA in the range of $43 million to $48 million and GAAP EPS attributable to Coinstar, Inc. in the range of $0.08 to $0.14 on a fully diluted basis.

This guidance includes the impact on revenue and costs related to challenges in securing DVD content, as well as the number and timing of planned kiosk installations.

About Coinstar, Inc.

Coinstar, Inc. is a leading provider of automated retail solutions offering convenient services that make life easier for consumers and drive incremental traffic and revenue for its retailers. The company's core automated retail businesses are self-service coin counting and self-service DVD rental. Other Coinstar services include e-payment and money transfer services. The company's services can be found at more than 95,000 points of presence including supermarkets, drug stores, mass merchants, financial institutions, convenience stores, restaurants, and money transfer agents. For more information, visit www.coinstar.com.

Safe Harbor for Forward Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act 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. The forward-looking statements in this release include statements regarding Coinstar, Inc.'s anticipated growth and future operating results. 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 termination, non-renewal or renegotiation on materially adverse terms of our contracts with our significant retailers, payment of increased service fees to retailers, the inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly thereafter, for home entertainment viewing, the effective management of our DVD inventory, the ability to attract new retailers, penetrate new markets and distribution channels and react to changing consumer demands, the ability to achieve the strategic and financial objectives for our entry into or expansion of new businesses, the ability to adequately protect our intellectual property, and the application of substantial federal, state, local and foreign laws and regulations specific to our business. The foregoing list of risks and uncertainties is illustrative, but by no means exhaustive. For more information on factors that may affect future performance, please review "Risk Factors" described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 23, 2010. These forward-looking statements reflect Coinstar, Inc.'s expectations as of the date of this release. Coinstar, Inc. undertakes no obligation to update the information provided herein.

                           (Financial Statements Follow)

                                    Appendix A
                                  (in thousands)



  Non-GAAP Measures

Non-GAAP measures may be provided as a complement to results provided in accordance with United States generally accepted accounting principles ("GAAP"). Non-GAAP measures are not a substitute for measures computed in accordance with GAAP. The definition of adjusted EBITDA from continuing operations, a non-GAAP measure, is provided below to allow the reader to reconcile non-GAAP data to that presented in accordance with GAAP. Our non-GAAP measure may be different from the presentation of financial information by other companies.

Adjusted EBITDA from continuing operations, as defined, represents earnings before net interest expense, income taxes, depreciation, amortization and certain other non-cash charges including the write-off from early retirement of debt, goodwill impairment, and stock-based compensation and share-based expenses from continuing operations. We believe adjusted EBITDA from continuing operations is an important non-GAAP measure as it provides useful information to investors regarding our ability to service, incur or pay down indebtedness. In addition, management uses this non-GAAP measure internally to evaluate performance and manage operations. See below for reconciliation of the most comparable GAAP measure, income from continuing operations, to adjusted EBITDA from continuing operations.

                                                   Three-Month Periods 
                                                    Ended December 31, 
                                                   ------------------- 
                                                       2009     2008
                                                     -------  -------
                                                                     
  Income from continuing operations                   $3,359   $9,928
  Depreciation, amortization and other                26,965   21,455
  Goodwill impairment                                  7,371        -
  Interest expense, net                                9,797    5,298
  Income taxes                                         2,719    5,018
  Stock-based compensation and share-based expense     1,758    2,523
                                                     -------  -------
  Adjusted EBITDA from continuing operations         $51,969  $44,222
                                                     =======  =======
                                                                      
                                                                      
                                                   Twelve-Month Periods 
                                                    Ended December 31, 
                                                   -------------------- 
                                                       2009     2008
                                                     -------- --------
                                                                      
  Income from continuing operations                  $29,263  $33,501
  Depreciation, amortization and other                99,770   69,675
  Goodwill impairment                                  7,371        -
  Interest expense, net                               34,123   20,308
  Income taxes                                        18,950   18,290
  Stock-based compensation and share-based expense     9,081    8,811
  Early retirement of debt                             1,082        -
                                                    -------- --------
  Adjusted EBITDA from continuing operations        $199,640 $150,585
                                                    ======== ========





                                      Coinstar, Inc.
                          Consolidated Statements of Operations
                          (in thousands, except per share data)
                                        (unaudited)


                                 Twelve Month Periods  Three Month Periods 
                                  Ended December 31,    Ended December 31, 
                                 --------------------  ------------------- 
                                     2009      2008      2009      2008 
                                 ----------  --------  --------  -------- 
                                                                          
  REVENUE                        $1,144,791  $761,681  $328,005  $227,864 
  EXPENSES:                                                               
      Direct operating              793,444   494,311   234,390   150,079 
      Marketing                      22,757    19,197     6,152     5,251 
      Research and development        5,312     4,758     1,396     1,180 
      General and administrative    127,033    94,292    31,771    28,503 
      Depreciation and other         91,858    61,469    24,994    19,472 
      Amortization of                                                     
       intangible assets              7,912     8,206     1,971     1,983 
      Proxy, write-off of                                                 
       acquisition costs, and                                             
       litigation settlement          4,762     3,084     3,500         - 
      Goodwill impairment loss        7,371         -     7,371         - 
                                 ----------  --------  --------  -------- 
        Income from operations       84,342    76,364    16,460    21,396 
  OTHER INCOME (EXPENSE):                                                 
      Foreign currency loss and                                           
       other, net                      (924)   (3,928)     (585)   (1,153)
      Interest income                   208     1,218        24       155 
      Interest expense              (34,331)  (21,526)   (9,821)   (5,453)
      (Loss) income from equity                                           
       investments                        -      (337)        -         1 
      Early retirement of debt       (1,082)        -         -         - 
                                 ----------  --------  --------  -------- 
        Income from continuing                                            
         operations before                                                
         income taxes                48,213    51,791     6,078    14,946 
      Income tax expense            (18,950)  (18,290)   (2,719)   (5,018)
                                 ----------  --------  --------  -------- 
  Income from continuing                                                  
   operations                        29,263    33,501     3,359     9,928 
  Income (loss) from                                                      
   discontinued operations, net                                           
   of tax                            28,007    (4,953)        -    (2,061)
                                 ----------  --------  --------  -------- 
  Net income                         57,270    28,548     3,359     7,867 
      Less: Net income                                                    
       attributable to non-                                               
       controlling interests         (3,627)  (14,436)        -    (3,647)
                                 ----------  --------  --------  -------- 
  NET INCOME ATTRIBUTABLE TO                                              
   COINSTAR, INC.                   $53,643   $14,112    $3,359    $4,220 
                                 ==========  ========  ========  ======== 
                                                                          
                                                                          
  BASIC EARNINGS (LOSS) PER SHARE:                                        
  Basic earnings per share from                                           
   continuing operations                                                  
   attributable to Coinstar,                                              
   Inc.                               $0.85     $0.68     $0.11     $0.22 
  Basic earnings (loss) per                                               
   share from discontinued                                                
   operations attributable to                                             
   Coinstar, Inc.                      0.93     (0.18)        -     (0.07)
                                 ----------  --------  --------  -------- 
      Basic earnings per share                                            
       attributable to Coinstar,                                          
       Inc.                           $1.78     $0.50     $0.11     $0.15 
                                 ==========  ========  ========  ======== 
                                                                          
  DILUTED EARNINGS (LOSS) PER SHARE:                                      
  Diluted earnings per share                                              
   from continuing operations                                             
   attributable to Coinstar,                                              
   Inc.                               $0.84     $0.67     $0.11     $0.22 
  Diluted earnings (loss) per                                             
   share from discontinued                                                
   operations attributable to                                             
   Coinstar, Inc.                      0.92     (0.17)        -     (0.07)
                                 ----------  --------  --------  -------- 
      Diluted earnings per                                                
       share attributable to                                              
       Coinstar, Inc.                 $1.76     $0.50     $0.11     $0.15 
                                 ==========  ========  ========  ======== 
                                                                          
  WEIGHTED SHARES OUTSTANDING:                                            
      Basic                          30,152    28,041    30,979    28,190 
      Diluted                        30,514    28,464    31,288    28,334 



                                  Coinstar, Inc.
                          Consolidated Balance Sheets
                        (in thousands, except share data)
                                    (unaudited)


                                             December 31,  December 31, 
                                                 2009          2008 
                                             ------------  ------------
                                                                      
                   ASSETS                                             
    CURRENT ASSETS:                                                   
      Cash and cash equivalents                 $61,280       $66,408 
      Cash in machine or in transit              57,141        34,583 
      Cash being processed                       73,875        91,044 
      Accounts receivable, net of allowance 
       for doubtful accounts of  
       $4,379 and $3,461 at December 31, 
       2009 and December                             
       31, 2008, respectively                    61,371        51,908 
      Inventory and DVD library                 104,367        92,247 
      Deferred income taxes                      12,350         6,881 
      Prepaid expenses and other current                              
       assets                                    20,364        24,715 
                                             ----------    ---------- 
          Total current assets                  390,748       367,786 
    PROPERTY AND EQUIPMENT, NET                 400,289       348,949 
    DEFERRED INCOME TAXES                        99,195         4,338 
    OTHER ASSETS                                 17,172        11,865 
    INTANGIBLE ASSETS, NET                       30,893        43,385 
    GOODWILL                                    284,502       290,391 
                                             ----------    ---------- 
    TOTAL ASSETS                             $1,222,799    $1,066,714 
                                             ==========    ========== 
                                                                      
           LIABILITIES AND EQUITY                                     
    CURRENT LIABILITIES:                                              
      Accounts payable                         $118,918      $132,194 
      Accrued payable to retailers and                                
       agents                                   131,103       132,490 
      Other accrued liabilities                  91,413        87,500 
      Current portion of long-term debt           6,812        11,655 
      Current portion of capital lease                                
       obligations                               26,396        20,264 
                                             ----------    ---------- 
          Total current liabilities             374,642       384,103 
    LONG-TERM DEBT AND OTHER                    409,423       295,942 
    CAPITAL LEASE OBLIGATIONS                    26,326        23,509 
    DEFERRED TAX LIABILITY                           17        12,072 
                                             ----------    ---------- 
    TOTAL LIABILITIES                           810,408       715,626 
                                                                      
                                                                      
                                                                      
    EQUITY:                                                           
      Preferred stock, $0.001 par 
       value-Authorized, 5,000,000 shares; 
       no shares issued and outstanding at 
       December 31, 2009 and December 31, 2008        -             - 
      Common stock, $0.001 par 
       value-Authorized, 45,000,000 shares;   
       33,002,865 and 30,181,151 issued and 
       31,076,784 and 28,255,070 shares        
       outstanding at December 31, 2009 and 
       December 31, 2008, respectively          406,333       369,735 
      Retained earnings (accumulated                                  
       deficit)                                  50,971        (2,672)
      Treasury stock                            (40,831)      (40,831)
      Accumulated other comprehensive loss       (4,082)       (6,204)
                                             ----------    ---------- 
          Total stockholders' equity            412,391       320,028 
                                             ----------    ---------- 
          Non-controlling interest                    -        31,060 
                                             ----------    ---------- 
          Total equity                          412,391       351,088 
                                             ----------    ---------- 
    TOTAL LIABILITIES AND EQUITY             $1,222,799    $1,066,714 
                                             ==========    ========== 



                                  Coinstar, Inc.
                       Consolidated Statements of Cash Flows
                                  (in thousands)
                                    (unaudited)

                                                           Year Ended     
                                                          December 31,   
                                                       ------------------
                                                         2009      2008 
                                                       --------  -------- 
                                                                          
  OPERATING ACTIVITIES:                                                   
    Net income                                          $57,270   $28,548 
    Adjustments to reconcile net income to net 
     cash provided by operating 
     activities from continuing operations:                               
        Depreciation and other                           91,858    61,469 
        Amortization of intangible assets and                             
         deferred financing fees                          9,386     8,694 
        Write-off of acquisition costs                    1,262     1,004 
        Non-cash stock-based compensation for                             
         employees                                        7,671     8,811 
        Share-based payments for DVD agreement            1,410         - 
        Deferred income taxes                            14,494    12,121 
        Income from equity investments                        -     3,449 
        (Income) loss from discontinued operations,                       
         net of tax                                     (28,007)    4,953 
        Goodwill impairment loss                          7,371         - 
        Loss on early retirement of debt                  1,082         - 
        Other                                             2,514     1,083 
    Cash (used) provided by changes in operating 
     assets and liabilities from continuing operations,                   
     net of effects of business acquisitions            (50,648)   55,480 
                                                       --------  -------- 
      Net cash provided by operating activities from                      
       continuing operations                            115,663   185,612 
  INVESTING ACTIVITIES:                                                   
        Purchase of property and equipment             (153,470) (150,819)
        Acquisitions, net of cash acquired               (1,229)  (24,829)
        Proceeds from sale of fixed assets                  315         - 
                                                       --------  -------- 
      Net cash used by investing activities from                          
       continuing operations                           (154,384) (175,648)
  FINANCING ACTIVITIES:                                                   
        Principal payments on capital lease                               
         obligations and other debt                     (27,278)  (17,056)
        Proceeds from capital lease financing            22,020         - 
        Net borrowings on credit facility                42,500    13,000 
        Payoff of term loan                             (87,500)        - 
        Convertible debt borrowings, net of                               
         underwriting discount and commissions of                         
         $6,000                                         194,000         - 
        Financing costs associated with revolving                         
         line of credit and convertible debt             (3,984)        - 
        Cash used to purchase remaining non-                              
         controlling interests in Redbox               (113,867)        - 
        Proceeds from exercise of stock options          15,973     8,629 
                                                       --------  -------- 
      Net cash provided by financing activities from                      
       continuing operations                             41,864     4,573 
                                                                          
  Effect of exchange rate changes on cash                 1,105   (10,106)
                                                                          
  NET INCREASE IN CASH AND CASH EQUIVALENTS, 
   CASH IN MACHINE OR IN TRANSIT, AND CASH BEING 
   PROCESSED FROM CONTINUING OPERATIONS                   4,248     4,431 
                                                                          
  CASH FLOWS FROM DISCONTINUED OPERATIONS                (3,987)   (8,988)
                                                                          
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS, 
    CASH IN MACHINE OR IN TRANSIT, AND CASH BEING 
    PROCESSED                                               261    (4,557)
                                                                          
  CASH AND CASH EQUIVALENTS, CASH IN MACHINE OR IN 
   TRANSIT, AND CASH BEING PROCESSED:                                     
        Beginning of period                             192,035   196,592 
                                                       --------  -------- 
        End of period                                  $192,296  $192,035 
                                                       ========  ========

First Call Analyst:
FCMN Contact:

SOURCE: Coinstar, Inc.

CONTACT: Media, Marci Maule, Director of Public Relations,
+1-425-943-8277, marci.maule@coinstar.com, or Investors, Rosemary Moothart,
Director of Investor Relations, +1-425-943-8140,
rosemary.moothart@coinstar.com, both of Coinstar, Inc.