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Table of Contents
 
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 AND EXCHANGE ACT OF 1934
 
  
 
For The Quarter Ended June 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    
 
SECURITIES AND EXCHANGE ACT OF 1934
 
Commission File Number: 000-22555
 
 
COINSTAR, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
  
94-3156448
(State or other jurisdiction of
incorporation or organization)
  
(IRS Employer
Identification No.)
 
1800 114th Avenue SE, Bellevue, Washington
  
98004
(Address of principal executive offices)
  
(Zip Code)
 
(425) 943-8000
(Registrant’s telephone number, including area code)
 
 
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 preceding 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  ¨
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at July 31, 2002
Common Stock, $0.001 par value
  
21,875,215
 

Table of Contents
COINSTAR, INC.
 
FORM 10-Q
Index
 
PART I.    FINANCIAL INFORMATION
     
           
Item 1.
   
Consolidated Financial Statements:
     
           
       
3
           
       
4
           
       
5
           
       
6
           
       
7
           
Item 2
      
11
           
PART II.    OTHER INFORMATION
     
           
Item 6.
      
24
           
  
25

Table of Contents
PART I.    FINANCIAL INFORMATION
 
Item 1.    Consolidated Financial Statements
 
 
COINSTAR, INC.
 
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
    
June 30,
2002
     
December 31,
2001
  
    
(unaudited)
         
ASSETS
                  
CURRENT ASSETS:
                  
Cash and cash equivalents
   
$
38,624
 
   
$
52,267
 
Cash due to retailers
   
 
61,842
 
   
 
53,668
 
Prepaid expenses and other current assets
   
 
2,337
 
   
 
1,978
 
    
  
Total current assets
   
 
102,803
 
   
 
107,913
 
PROPERTY AND EQUIPMENT:
                  
Coinstar units
   
 
145,629
 
   
 
137,308
 
Computers
   
 
8,581
 
   
 
7,751
 
Office furniture and equipment
   
 
1,279
 
   
 
1,490
 
Leased vehicles
   
 
4,246
 
   
 
4,183
 
Leasehold improvements
   
 
677
 
   
 
572
 
    
  
    
 
160,412
 
   
 
151,304
 
Accumulated depreciation
   
 
(100,677
)
   
 
(89,215
)
    
  
    
 
59,735
 
   
 
62,089
 
OTHER ASSETS
   
 
1,177
 
   
 
1,185
 
    
  
TOTAL
   
$
163,715
 
   
$
171,187
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
CURRENT LIABILITIES:
                  
Accounts payable
   
$
4,590
 
   
$
5,810
 
Accrued liabilities payable to retailers
   
 
61,842
 
   
 
53,668
 
Accrued liabilities
   
 
8,403
 
   
 
11,839
 
Current portion of long-term debt and capital lease obligations
   
 
12,682
 
   
 
898
 
    
  
Total current liabilities
   
 
87,517
 
   
 
72,215
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
   
 
32,122
 
   
 
61,745
 
    
  
Total liabilities
   
 
119,639
 
   
 
133,960
 
STOCKHOLDERS’ EQUITY:
                  
Convertible preferred stock, $0.001 par value—Authorized, 5,000,000 shares; no shares issued and outstanding
   
 
—  
 
   
 
—  
 
Common stock, $0.001 par value—Authorized, 45,000,000 shares; issued and outstanding, 21,852,379 and 21,403,656 shares at 2002 and 2001, respectively
   
 
177,183
 
   
 
171,059
 
Accumulated other comprehensive income
   
 
409
 
   
 
34
 
Accumulated deficit
   
 
(133,516
)
   
 
(133,866
)
    
  
Total stockholders’ equity
   
 
44,076
 
   
 
37,227
 
    
  
TOTAL
   
$
163,715
 
   
$
171,187
 
    
  
 
See notes to consolidated financial statements.

3

Table of Contents
COINSTAR, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    
Six Month Periods Ended
June 30,
     
Three Month Periods Ended
June 30,
  
    
2002
     
2001
     
2002
     
2001
  
REVENUE
   
$
71,083
 
   
$
58,445
 
   
$
37,918
 
   
$
31,245
 
EXPENSES:
                                    
Direct operating
   
 
31,637
 
   
 
26,676
 
   
 
16,448
 
   
 
13,798
 
Regional sales and marketing
   
 
3,323
 
   
 
2,871
 
   
 
2,789
 
   
 
2,501
 
Product research and development
   
 
2,578
 
   
 
1,986
 
   
 
1,344
 
   
 
989
 
Selling, general and administrative
   
 
11,346
 
   
 
10,914
 
   
 
5,572
 
   
 
5,946
 
Depreciation and amortization
   
 
12,973
 
   
 
13,246
 
   
 
6,363
 
   
 
6,483
 
    
  
  
  
Income from operations
   
 
9,226
 
   
 
2,752
 
   
 
5,402
 
   
 
1,528
 
OTHER INCOME (EXPENSE):
                                    
Interest income
   
 
180
 
   
 
383
 
   
 
87
 
   
 
203
 
Interest expense
   
 
(2,718
)
   
 
(4,159
)
   
 
(1,017
)
   
 
(2,080
)
Other
   
 
(30
)
   
 
4
 
   
 
—  
 
   
 
4
 
    
  
  
  
Income (loss) from continuing operations
   
 
6,658
 
   
 
(1,020
)
   
 
4,472
 
   
 
(345
)
DISCONTINUED OPERATIONS:
                                    
Loss from discontinued operations
   
 
—  
 
   
 
(5,737
)
   
 
—  
 
   
 
(2,376
)
Loss on disposal of discontinued operations
   
 
—  
 
   
 
(3,552
)
   
 
—  
 
   
 
(3,552
)
    
  
  
  
Net loss from discontinued operations
   
 
—  
 
   
 
(9,289
)
   
 
—  
 
   
 
(5,928
)
    
  
  
  
Income (loss) before extraordinary item
   
 
6,658
 
   
 
(10,309
)
   
 
4,472
 
   
 
(6,273
)
EXTRAORDINARY ITEM:
                                    
Loss related to early retirement of debt
   
 
(6,308
)
   
 
—  
 
   
 
(3,836
)
   
 
—  
 
    
  
  
  
NET INCOME (LOSS)
   
$
350
 
   
$
(10,309
)
   
$
636
 
   
$
(6,273
)
    
  
  
  
NET INCOME (LOSS) PER SHARE:
                                    
Basic:
                                    
Continuing operations
   
$
0.31
 
   
$
(0.05
)
   
$
0.21
 
   
$
(0.02
)
Discontinued operations
   
 
—  
 
   
 
(0.45
)
   
 
—  
 
   
 
(0.28
)
Extraordinary item
   
 
(0.29
)
   
 
—  
 
   
 
(0.18
)
   
 
—  
 
    
  
  
  
Net income (loss) per share
   
$
0.02
 
   
$
(0.50
)
   
$
0.03
 
   
$
(0.30
)
    
  
  
  
Diluted:
                                    
Continuing operations
   
$
0.29
 
   
$
(0.05
)
   
$
0.20
 
   
$
(0.02
)
Discontinued operations
   
 
—  
 
   
 
(0.45
)
   
 
—
 
   
 
(0.28
)
Extraordinary item
   
 
(0.27
)
   
 
—  
 
   
 
(0.17
)
   
 
—  
 
    
  
  
  
Net income (loss) per share
   
$
0.02
 
   
$
(0.50
)
   
$
0.03
 
   
$
(0.30
)