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Coinstar Announces First Quarter 2008 Results
BELLEVUE, Wash., May 01, 2008 (BUSINESS WIRE) -- Coinstar, Inc. (NASDAQ: CSTR) today announced results for the
three months ended March 31, 2008.
Highlights for the three months ended March 31, 2008, were as
follows:
Revenue $190.5 million
EBITDA $ 34.5 million (see Appendix A)
Free Cash Flow $ 1.4 million (see Appendix A)
Adjusted fully taxed, fully
diluted earnings per share $ 0.18 (see reconciliation below)
Net Income $ 2.7 million
Included in GAAP net income for the first quarter of 2008 were
non-cash charges including $2.3 million in amortization of intangible
assets and $2.1 million in non-cash stock based compensation. A
reconciliation of GAAP earnings per share to adjusted earnings per
share for the three months ended March 31, 2008, is as follows:
Three Months Ended
March 31, 2008
------------------
GAAP fully taxed, fully diluted earnings per share $ 0.10
Amortization of intangibles, net of tax 0.04
Stock based compensation expense, net of tax 0.04
------------------
Adjusted fully taxed, fully diluted earnings per
share $ 0.18
==================
The results for the first quarter also reflect two recent
transactions. First, effective January 1, 2008, the Company completed
the previously disclosed acquisition of GroupEx Financial Corporation,
JRJ Express, Inc., and Kimeco, LLC (collectively, "GroupEx"), for an
aggregate purchase price of up to $70.0 million. Second, on January
18, 2008, the Company increased its ownership interest in Redbox from
47.3% to 51.0%. Accordingly, Redbox Automated Retail, LLC results were
consolidated into the Company's financial statements with an offset
recorded to minority interest for the 49% Coinstar does not own. The
consolidation of Redbox resulted in a material increase to revenue and
EBITDA for the first quarter of $57.8 million and $11.5 million,
respectively. See "Redbox Consolidation" below for further
description.
At March 31, 2008, Coinstar had federal and state cumulative net
operating loss carryforwards of approximately $27.8 million and $28.5
million, respectively. In addition, there were foreign net operating
loss carryforwards of approximately $17.8 million. Although Coinstar
recorded $2.5 million in tax expense for the quarter, cash taxes paid
during the quarter were $4.2 million. Taxes paid exceeded tax expense
for the quarter due to the federal alternative minimum tax as well as
higher state tax payments as a result of limitations on the
utilization of state net operating losses.
"We were pleased with our first quarter performance which was
characterized by solid results in Coin processing and e-payments,
better than expected results in our DVD kiosk business and continued
softness in Entertainment, partially driven by previously announced
de-installations," Dave Cole, Chief Executive Officer of Coinstar,
Inc. stated. "Ultimately, we are right on plan for 2008 and have never
been more excited about the 4th Wall bundle."
Redbox Consolidation
As described above, on January 18, 2008, the Company increased its
ownership interest in the voting equity of Redbox from 47.3% to 51.0%.
The Company's purchase was made pursuant to the exercise of its option
under the terms of the original LLC Interest Purchase Agreement. The
Company paid approximately $5.1 million for the additional ownership
interest. The additional ownership interest resulted in step purchase
accounting which added goodwill and intangible assets to the Company's
consolidated financial statements.
Since the Company's original acquisition of an ownership interest
in Redbox in December 2005, Coinstar has accounted for the Redbox
ownership interest under the equity method in its consolidated
financial statements. Following the purchase of a majority voting
equity interest, the Company is required to consolidate Redbox's
financial results into its consolidated financial statements and
recognize a minority interest for the 49% that it does not own in the
financial statements.
Other Information
Installed Base March 31, 2008 March 31, 2007
-------------- --------------
Coin 15,500 13,800
Coin to card, e-payment or
e-certificate enabled 10,700 8,500
Crane 25,000 30,000
Bulk heads and other 205,000 269,000
POSA terminals 18,500 14,000
Redbox and DVDXpress kiosks 7,900 3,000
Net cash paid for capital expenditures for the three months ended
March 31, 2008, was $31.1 million, of which $14.0 million related to
Redbox.
Share Repurchase
During the first quarter, Coinstar did not repurchase shares of
common stock due to anticipated cash needs for capital expenditures.
Under Board authorization, Coinstar has $18.1 million available to
repurchase shares. For the remainder of 2008, Coinstar expects to
repurchase its shares subject to market and other conditions.
Expectations
Management estimates that revenue for the second quarter ending
June 30, 2008 will range from $200 million to $210 million and
earnings per fully taxed, fully diluted share will range from $0.08 to
$0.15. The above estimated earnings per fully taxed, fully diluted
share do not include the costs of the proxy contest disclosed in our
definitive proxy statement filed with the Securities and Exchange
Commission on April 29, 2008.
Management estimates that revenue for the full year 2008 will
range from $850 million to $900 million with EBITDA between $135
million to $145 million. In addition, management estimates that
earnings per fully taxed, fully diluted share will range from $0.60 to
$0.75. The above estimated earnings per fully taxed, fully diluted
share does not include the costs of the proxy contest.
Conference Call
A conference call to discuss the first quarter 2008 results will
be broadcast live over the Internet today, Thursday, May 1, 2008, at
5:00 p.m. Eastern Time. The webcast will be hosted at the "About Us -
Investor Relations" 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, money transfer and self-service DVD
rental. The company's products and services can be found at more than
53,000 retail locations including supermarkets, drug stores, mass
merchants, financial institutions, convenience stores and restaurants.
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, fewer than expected installations, the ability to
attract new retailers, penetrate new markets and distribution
channels, cross-sell our products and services 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 Item 1A of Part I of our most
recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission. 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.
Appendix A
(in thousands unless otherwise noted)
Non GAAP measures
Non GAAP measures are 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. 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, as defined, represents earnings before net interest
expense, income taxes, depreciation, amortization and certain other
non-cash items including stock based compensation expense and minority
interest. We believe EBITDA is an important non GAAP measure as it
provides useful 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 performance and manage operations. See below
for reconciliation of most comparable GAAP measurements to EBITDA,
which includes 100% of EBITDA generated by Redbox.
Three Months Ended
in thousands March 31, 2008
------------------
Net income $ 2,701
Depreciation, amortization and other 19,313
Interest expense, net 4,656
Income taxes 2,512
Stock based compensation 2,114
Minority interest 3,173
------------------
EBITDA $ 34,469
==================
Free cash flow, excluding Redbox: 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. We use free cash flow as a measure to
reflect cash available to service our debt as well as to fund our
expenditures. Free cash flow may be reconciled from net cash provided
by operating activities, the most directly comparable GAAP measure.
The table below reflects Coinstar's free cash flow excluding any net
cash flow from Redbox:
Three Months Ended
in thousands March 31, 2008
-------------------
Net cash provided by operating activities $ 22,516
Changes in operating assets and liabilities 7,764
Cash paid for capital expenditures, net (31,114)
Net free cash flow used by Redbox 2,246
-------------------
FREE CASH FLOW, excluding Redbox $ 1,412
===================
Adjusted fully taxed, fully diluted earnings: 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 Month Periods
Ended March 31
-----------------------
2008 2007
----------- -----------
REVENUE $ 190,519 $ 132,336
EXPENSES
Direct operating 132,610 91,639
Marketing 2,803 1,626
Research and development 1,246 1,341
General and administrative 19,796 12,247
Depreciation and other 16,971 14,468
Amortization of intangible assets 2,342 1,739
----------- -----------
Income from operations 14,751 9,276
OTHER INCOME (EXPENSE):
Interest income and other expense, net (869) 75
Interest expense (4,916) (3,974)
Loss from equity investments (580) (255)
Minority interest (3,173) -
----------- -----------
Income before income taxes 5,213 5,122
Income tax expense (2,512) (2,566)
----------- -----------
NET INCOME $ 2,701 $ 2,556
=========== ===========
NET INCOME PER SHARE:
Basic $ 0.10 $ 0.09
Diluted $ 0.10 $ 0.09
WEIGHTED SHARES OUTSTANDING:
Basic 27,783 27,777
Diluted 28,236 28,287
Coinstar, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, December 31,
2008 2007
----------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 29,021 $ 18,497
Cash in machine or in transit 54,619 78,097
Cash being processed 117,903 99,998
Trade accounts receivable, net of allowance
for doubtful accounts of $1,685 and $1,489
at March 31, 2008 and December 31, 2007,
respectively 63,093 49,809
Inventory 63,786 33,360
Deferred income taxes 853 3,459
Prepaid expenses and other current assets 31,631 18,747
----------- ------------
Total current assets 360,906 301,967
PROPERTY AND EQUIPMENT, NET 264,453 146,041
DEFERRED INCOME TAXES 14,260 16,447
OTHER ASSETS 9,450 15,150
EQUITY INVESTMENTS 3,461 33,052
INTANGIBLE ASSETS, NET 50,480 34,457
GOODWILL 290,890 221,459
----------- ------------
TOTAL ASSETS $ 993,900 $ 768,573
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 83,977 $ 49,829
Accrued payable to retailers and agents 119,906 99,998
Other accrued liabilities 69,409 40,911
Current portion of long-term debt and
capital lease obligations 15,101 6,505
----------- ------------
Total current liabilities 288,393 197,243
LONG-TERM DEBT, CAPITAL LEASE OBLIGATIONS AND
OTHER 361,674 266,146
DEFERRED TAX LIABILITY 67 54
MINORITY INTEREST 27,587 -
----------- ------------
TOTAL LIABILITIES 677,721 463,443
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value--
Authorized, 5,000,000 shares; no shares
issued and outstanding at March 31, 2008
and December 31, 2007 - -
Common stock, $0.001 par value--Authorized,
45,000,000 shares; 29,852,730 and
29,665,125 issued and 27,926,649 and
27,739,044 shares outstanding at March 31,
2008 and December 31, 2007, respectively 359,578 354,509
Accumulated deficit (14,083) (16,784)
Treasury stock (40,831) (40,831)
Accumulated other comprehensive income 11,515 8,236
----------- ------------
Total stockholders' equity 316,179 305,130
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 993,900 $ 768,573
=========== ============
COINSTAR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Month Periods
Ended March 31
--------------------
2008 2007
---------- ---------
OPERATING ACTIVITIES:
Net income $ 2,701 $ 2,556
Adjustments to reconcile income from operations
to net cash provided by operating activities:
Depreciation and other 16,971 14,468
Amortization of intangible assets 2,342 1,739
Amortization of deferred financing fees 102 188
Non-cash stock-based compensation 2,114 1,684
Excess tax benefit from exercise of stock
options (148) (884)
Deferred income taxes 2,449 1,942
Loss (income) from equity investments 580 (74)
Minority interest 3,173 -
Other (4) 84
Cash provided (used) by changes in operating
assets and liabilities, net of effects of
business acquisitions:
Accounts receivable 13,989 2,280
Inventory (3,380) 3,287
Prepaid expenses and other current assets (4,008) (1,336)
Other assets (138) (1,362)
Accounts payable 1,848 (15,717)
Accrued liabilities payable to retailers (8,864) (16,966)
Accrued liabilities (7,211) (4,518)
---------- ---------
Net cash provided (used) by operating
activities 22,516 (12,629)
INVESTING ACTIVITIES:
Purchase of property and equipment (31,883) (18,126)
Acquisitions, net of cash acquired (21,485) (227)
Proceeds from sale of fixed assets 769 241
---------- ---------
Net cash used by investing activities (52,599) (18,112)
FINANCING ACTIVITIES:
Principal payments on long-term debt,
revolver loan, and capital lease obligations (115,079) (2,291)
Additional borrowings on credit facility 145,500 -
Excess tax benefit from exercise of stock
options 148 884
Repurchase of common stock - (3,495)
Proceeds from exercise of stock options 3,093 1,028
---------- ---------
Net cash provided (used) by financing
activities 33,662 (3,874)
Effect of exchange rate changes on cash 1,372 61
NET INCREASE(DECREASE) IN CASH AND CASH
EQUIVALENTS, CASH IN MACHINE OR IN TRANSIT, AND
CASH BEING PROCESSED 4,951 (34,554)
CASH AND CASH EQUIVALENTS, CASH IN MACHINE OR IN
TRANSIT, AND CASH BEING PROCESSED:
Beginning of period 196,592 178,164
---------- ---------
End of period $ 201,543 $143,610
========== =========
SOURCE: Coinstar, Inc.
Coinstar, Inc.
Brian Turner, Chief Financial Officer, 425-943-8000
or
Media Contact:
Marci Maule, Director Public Relations, 425-943-8277
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