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 March 31, 2003
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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) 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 April 30, 2003 | |
| Common Stock, $0.001 par value |
21,688,690 |
COINSTAR, INC.
FORM 10-Q
| PART I. FINANCIAL INFORMATION |
||||
| Item 1. |
Consolidated Financial Statements: |
|||
| Consolidated Balance Sheets as of March 31, 2003 (unaudited) and December 31, 2002 |
Page 3 | |||
| Page 4 | ||||
| Page 5 | ||||
| Page 6 | ||||
| Page 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Page 11 | ||
| Item 3. |
Page 22 | |||
| Item 4. |
Page 22 | |||
| PART II. OTHER INFORMATION |
||||
| Item 6. |
Page 23 | |||
| Page 24 | ||||
| Page 25 | ||||
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
COINSTAR, INC.
(in thousands, except share data)
| March 31, 2003 |
December 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ |
34,337 |
|
$ |
41,560 |
| ||
| Cash due to retailers |
|
56,950 |
|
|
61,283 |
| ||
| Deferred income taxes |
|
10,096 |
|
|
10,096 |
| ||
| Prepaid expenses and other current assets |
|
5,044 |
|
|
2,409 |
| ||
| Total current assets |
|
106,427 |
|
|
115,348 |
| ||
| PROPERTY AND EQUIPMENT: |
||||||||
| Coinstar units |
|
161,423 |
|
|
156,182 |
| ||
| Computers |
|
9,389 |
|
|
8,882 |
| ||
| Office furniture and equipment |
|
1,299 |
|
|
1,291 |
| ||
| Leased vehicles |
|
4,464 |
|
|
4,314 |
| ||
| Leasehold improvements |
|
681 |
|
|
681 |
| ||
| Total property and equipment |
|
177,256 |
|
|
171,350 |
| ||
| Accumulated depreciation |
|
(116,282 |
) |
|
(110,807 |
) | ||
| Total property and equipment, net |
|
60,974 |
|
|
60,543 |
| ||
| DEFERRED INCOME TAXES |
|
37,214 |
|
|
39,719 |
| ||
| OTHER ASSETS, NET |
|
1,694 |
|
|
1,026 |
| ||
| TOTAL ASSETS |
$ |
206,309 |
|
$ |
216,636 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ |
1,964 |
|
$ |
3,176 |
| ||
| Accrued liabilities payable to retailers |
|
56,950 |
|
|
61,283 |
| ||
| Accrued liabilities |
|
6,986 |
|
|
10,180 |
| ||
| Current portion of long-term debt and capital lease obligations |
|
16,019 |
|
|
14,916 |
| ||
| Total current liabilities |
|
81,919 |
|
|
89,555 |
| ||
| LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS |
|
18,114 |
|
|
21,830 |
| ||
| Total liabilities |
|
100,033 |
|
|
111,385 |
| ||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Convertible preferred stock, $0.001 par value—Authorized, 5,000,000 shares; no shares issued and outstanding in 2003 or 2002 |
|
— |
|
|
— |
| ||
| Common stock, $0.001 par value—Authorized, 45,000,000 shares; issued and outstanding, 21,677,211 and 21,832,344 shares at 2003 and 2002, respectively |
|
187,896 |
|
|
187,473 |
| ||
| Accumulated deficit |
|
(71,411 |
) |
|
(75,353 |
) | ||
| Treasury stock |
|
(10,486 |
) |
|
(7,496 |
) | ||
| Accumulated other comprehensive income |
|
277 |
|
|
627 |
| ||
| Total stockholders’ equity |
|
106,276 |
|
|
105,251 |
| ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
206,309 |
|
$ |
216,636 |
| ||
See notes to consolidated financial statements.
3
COINSTAR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three Month Periods Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| REVENUE |
$ |
37,997 |
|
$ |
33,165 |
| ||
| EXPENSES: |
||||||||
| Direct operating |
|
17,284 |
|
|
15,189 |
| ||
| Regional sales and marketing |
|
704 |
|
|
534 |
| ||
| Product research and development |
|
1,293 |
|
|
1,234 |
| ||
| Selling, general and administrative |
|
5,833 |
|
|
5,774 |
| ||
| Depreciation and amortization. |
|
6,380 |
|
|
6,610 |
| ||
| Income from operations |
|
6,503 |
|
|
3,824 |
| ||
| OTHER INCOME (EXPENSE): |
||||||||
| Interest income |
|
71 |
|
|
93 |
| ||
| Interest expense |
|
(358 |
) |
|
(1,701 |
) | ||
| Early retirement of debt |
|
— |
|
|
(2,472 |
) | ||
| Other |
|
61 |
|
|
(30 |
) | ||
| Income (loss) before income tax expense |
|
6,277 |
|
|
(286 |
) | ||
| Income tax expense |
|
(2,335 |
) |
|
— |
| ||
| NET INCOME (LOSS) |
$ |
3,942 |
|
$ |
(286 |
) | ||
| NET INCOME (LOSS) PER SHARE: |
||||||||
| Basic |
$ |
0.18 |
|
$ |
(0.01 |
) | ||
| Diluted |
$ |
0.18 |
|
$ |
(0.01 |
) | ||
| WEIGHTED SHARES OUTSTANDING: |
||||||||
| Basic |
|
21,766 |
|
|
21,539 |
| ||
| Diluted |
|
22,148 |
|
|
21,539 |
| ||
See notes to consolidated financial statements.
4
COINSTAR, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Three Month Period Ended March 31, 2003
(in thousands, except share data)
(unaudited)
| Common Stock |
Accumulated Deficit |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
Total |
Comprehensive Income (Loss) |
||||||||||||||||||||||
| Shares |
Amount |
||||||||||||||||||||||||||
| BALANCE, January 1, 2003 |
21,832,344 |
|
$ |
187,473 |
|
$ |
(75,353 |
) |
$ |
(7,496 |
) |
$ |
627 |
|
$ |
105,251 |
|
||||||||||
| Issuance of shares under employee stock purchase plan |
27,788 |
|
|
452 |
|
|
452 |
|
|||||||||||||||||||
| Exercise of stock options |
5,380 |
|
|
52 |
|
|
52 |
|
|||||||||||||||||||
| Stock-based compensation expense |
699 |
|
|
12 |
|
|
12 |
|
|||||||||||||||||||
| Non-cash stock-based compensation |
|
(93 |
) |
|
(93 |
) |
|||||||||||||||||||||
| Repurchase of common stock |
(189,000 |
) |
|
(2,990 |
) |
|
(2,990 |
) |
|||||||||||||||||||
| Comprehensive income: |
|||||||||||||||||||||||||||
| Net income |
|
3,942 |
|
|
3,942 |
|
$ |
3,942 |
</ | ||||||||||||||||||