AMERICAN COIN MERCHANDISING INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)

[X]		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002

or

[ ]		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________

Commission file number: 0-26580

AMERICAN COIN MERCHANDISING, INC.

(Exact name of registrant as specified in its charter)


Delaware		84-1093721
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5660 Central Avenue, Boulder, Colorado 80301
(Address of principal executive offices)
(Zip Code)

(303) 444-2559
(Registrant’s telephone number)

Securities registered under Section 12(b) of the Exchange Act:

Ascending Rate Cumulative Trust Preferred Securities, liquidation amount $10 per security

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

As of November 11, 2002, the registrant had 1,000 shares of its $0.01 par value common stock outstanding. None of the registrant’s common stock is held by non-affiliates of the registrant.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION.
	ITEM 1. FINANCIAL STATEMENTS
		Consolidated Condensed Balance Sheets
		Consolidated Condensed Statements Of Operations
		Consolidated Condensed Statements Of Stockholders’ Equity
		Consolidated Condensed Statements Of Cash Flows
		NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
CERTIFICATIONS
INDEX TO EXHIBITS
EX-99.1 Certifications

AMERICAN COIN MERCHANDISING, INC.

INDEX


			Page

PART I FINANCIAL INFORMATION.
	Item 1. Financial Statements
		Consolidated Condensed Balance Sheets September 30, 2002 (successor) and December 31, 2001 (predecessor)		3
		Consolidated Condensed Statements of Operations for the Three Months and Eight Months Ended September 30, 2002 (successor), One Month Ended January 31, 2002 (predecessor) and Three Months and Nine Months Ended September 30, 2001 (predecessor)		4
		Consolidated Condensed Statements of Stockholders’ Equity for the Eight Months Ended September 30, 2002 (successor) and One Month Ended January 31, 2002 (predecessor)		5
		Consolidated Condensed Statements of Cash Flows for the Eight Months Ended September 30, 2002 (successor), One Month Ended January 31, 2002 (predecessor) and Nine Months Ended September 30, 2001 (predecessor)		6
		Notes to Consolidated Condensed Financial Statements		7
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			10
	Item 3. Quantitative and Qualitative Disclosures About Market Risk			15
	Item 4. Controls and Procedures			15
PART II OTHER INFORMATION.
	Item 6. Exhibits and Reports on Form 8-K			16

PART I. FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS

AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(in thousands, except per share data)


			Successor			Predecessor

			September 30,			December 31,
			2002			2001

ASSETS
Current assets:
	Cash and cash equivalents		$	1,868		$	4,066
	Trade accounts and other receivables, net			855			738
	Income tax receivable			—			725
	Inventories, net			13,179			11,981
	Prepaid expenses and other assets			3,141			2,736

		Total current assets		19,043			20,246

Property and equipment, at cost:
	Vending machines			40,722			71,758
	Vehicles			4,772			5,683
	Office equipment, furniture and fixtures			4,361			5,534

				49,855			82,975
	Less accumulated depreciation			(6,477	)		(38,943	)

		Property and equipment, net		43,378			44,032
Placement fees, net of accumulated amortization of $1,836 in 2002 and $4,758 in 2001				2,143			2,218
Costs in excess of assets acquired and other intangible assets, net of accumulated amortization of $164 in 2002 and $8,481 in 2001				64,767			34,660
Other assets, net of accumulated amortization of $1,024 in 2002 and $1,274 in 2001				6,978			2,206
Deferred tax assets				223			—

		Total assets	$	136,532		$	103,362

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current portion of long-term debt		$	4,705		$	7,700
	Accounts payable			4,542			4,322
	Accrued commissions			2,590			2,766
	Other accrued expenses			1,775			1,807

		Total current liabilities		13,612			16,595

Long-term debt, net of current portion				81,071			37,276
Other liabilities				738			627
Fair value of interest rate collar agreement				1,147			—
Deferred tax liabilities				—			1,457

		Total liabilities		96,568			55,955

Company obligated mandatorily redeemable preferred securities of subsidiary trust holding solely junior subordinated debentures				12,962			15,644
Stockholders’ equity:
	Common stock, $.01 par value (Authorized 1 shares; issued and outstanding 1 shares in 2002 and 6,538 shares in 2001)			—			66
	Additional paid-in-capital			28,000			22,136
	Retained earnings (accumulated deficit)			(998	)		9,561

		Total stockholders’ equity		27,002			31,763

Commitments
		Total liabilities and stockholders’ equity	$	136,532		$	103,362

See accompanying notes to consolidated condensed financial statements.

AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
Consolidated Condensed Statements Of Operations
(in thousands, except per share data)


			Successor			Predecessor			Successor			Predecessor

									Eight Months			One Month			Nine Months
			Three Months Ended						Ended			Ended			Ended
			September 30,						September 30,			January 31,			September 30,
			2002			2001			2002			2002			2001

Revenue:
	Vending		$	35,207		$	34,480		$	92,792		$	10,880		$	102,673
	Franchise and other			573			541			1,521			199			1,717

		Total revenue		35,780			35,021			94,313			11,079			104,390

Cost of revenue:
	Vending, excluding related depreciation and amortization			23,239			23,150			61,720			7,568			68,413
	Depreciation and amortization			3,189			3,019			8,425			1,013			8,928

		Total cost of vending		26,428			26,169			70,145			8,581			77,341
	Franchise and other			84			340			409			192			1,427

		Total cost of revenue		26,512			26,509			70,554			8,773			78,768

		Gross profit		9,268			8,512			23,759			2,306			25,622
General and administrative expenses				5,854			5,858			15,844			3,617			17,191
Depreciation and amortization				246			808			699			96			2,337

		Operating earnings (loss)		3,168			1,846			7,216			(1,407	)		6,094
Other expense:
	Interest expense, net			2,897			1,494			7,684			390			5,021
	Change in fair value of interest rate collar			728			—			1,147			—			—

		Earnings (loss) before income taxes		(457	)		352			(1,615	)		(1,797	)		1,073
Income tax (expense) benefit				172			(134	)		617			683			(408	)

		Earnings (loss) before extraordinary loss		(285	)		218			(998	)		(1,114	)		665
Extraordinary loss on debt refinancing, net of income tax benefit of $656				—			—			—			(1,071	)		—

		Net earnings (loss)	$	(285	)	$	218		$	(998	)	$	(2,185	)	$	665

		Basic and diluted earnings (loss) per share of common stock				$	0.03					$	(0.33	)	$	0.10
		Basic weighted average common shares					6,532						6,545			6,523
		Diluted weighted average common shares					6,809						6,545			6,672

See accompanying notes to consolidated condensed financial statements.

AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
Consolidated Condensed Statements Of Stockholders’ Equity
(in thousands, except per share data)


									Retained Earnings
						Additional Paid-In			(Accumulated			Total Stockholders'
			Common Stock			Capital			Deficit)			Equity

December 31, 2001			$	66		$	22,136		$	9,561		$	31,763
	Exercise of employee stock options			—			29			—			29
	Net loss			—			—			(2,185	)		(2,185	)
	Impact of acquisition acquisition			(66	)		(22,165	)		(7,376	)		(29,607	)

		Balances prior to acquisition		—			—			—			—
	Issuance of equity in Successor Company			—			28,000			—			28,000
	Net loss			—			—			(998	)		(998	)

September 30, 2002			$	—		$	28,000		$	(998	)	$	27,002

See accompanying notes to consolidated condensed financial statements.

AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
Consolidated Condensed Statements Of Cash Flows
(In thousands)


					Successor			Predecessor

					Eight Months			One Month			Nine Months
					Ended			Ended			Ended
					September 30,			January 31,			September 30,
					2002			2002			2001

Operating activities:
	Net earnings (loss)				$	(998	)	$	(2,185	)	$	665
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation and amortization				10,151			1,146			11,664
		Change in fair value of interest rate collar				1,147			—			—
		Changes in operating assets and liabilities:
				Trade accounts and other receivables		512			96			(188	)
				Inventories		(2,608	)		1,233			(4,453	)
				Prepaid expenses and other assets		(767	)		(5,468	)		(301	)
				Accounts payable, accrued expenses and other liabilities		(695	)		(1,260	)		576

			Net cash provided (used) by operating activities			6,742			(6,438	)

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