EX-99.1 3 dex991.htm UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Unaudited Pro Forma Condensed Consolidated Financial Statements

Exhibit 99.1

 

Unaudited Pro Forma Condensed Consolidated Financial Statements

 

On September 8, 2009, we sold our subsidiaries comprising our entertainment services business (the “Entertainment Business”) to National Entertainment Network, Inc. (“National”) for a nominal consideration. National has assumed the operations of the Entertainment Business, including substantially all of the Entertainment Business’s related assets and liabilities. We anticipate that the disposition will be reported under discontinued operations in our Consolidated Statement of Operations for the third quarter of 2009 in our Quarterly Report on Form 10-Q.

 

The following unaudited pro forma condensed consolidated financial statements are based on and should be read in conjunction with our historical consolidated financial statements and related notes included in our Current Report on Form 8-K filed with the SEC on August 24, 2009 for the recast of our 2008 financial statements and our unaudited consolidated financial statements included in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2009 and June 30, 2008.

 

The following unaudited pro forma condensed consolidated statement of operations for the six months ended June 30, 2009 and June 30, 2008 as well as the twelve months ended December 31, 2008, 2007 and 2006 are prepared as though the sale of the Entertainment Business occurred as of the beginning of each of the periods presented and the operating results from the Entertainment Business are excluded from our condensed consolidated financial statements. The following unaudited pro forma condensed consolidated balance sheet as of June 30, 2009 is prepared as if the sale of the Entertainment Business occurred as of June 30, 2009. Pro forma adjustments are described in the Notes to Unaudited Pro Forma Condensed Consolidated Statements, and are based upon available information and certain assumptions that we believe are reasonable. The allocations are preliminary in nature and subject to change following the transaction based on refinements as actual data become available.

 

The following unaudited pro forma condensed consolidated financial statements are presented for illustrative and informational purposes only and are not intended to represent or be indicative of the financial condition or results of operations that would actually have been recorded if the sale of the Entertainment Business had occurred as of or during the periods presented. In addition, the unaudited pro forma condensed consolidated financial statements are not intended to represent our financial position or results of operations for any future date or period.


COINSTAR, INC.

 

Pro Forma Condensed Consolidated Balance Sheet

June 30, 2009

(in thousands)

(unaudited)

 

     Coinstar
Consolidated
Historical
   Pro Forma
Adjustments
    Pro Forma

ASSETS

       

Current assets:

       

Cash and cash equivalents

   $ 58,407    $ (2,500 )(2)    $ 55,907

Cash in machine or in transit

     48,712      (1,956 )(1)      46,756

Cash being processed

     81,133      (4,667 )(1)      76,466

Accounts receivable, net

     60,468      (1,010 )(1)      59,458

Inventory

     97,438      (15,583 )(1)      81,855

Deferred income taxes

     7,191      (1,244 )(1)      5,947

Prepaid expenses and other current assets

     27,407      (2,512 )(1)      24,895
                     

Total current assets

     380,756      (29,472     351,284

Property and equipment, net

     384,912      (33,443 )(1)      351,469

Deferred income taxes

     41,713      83,965 (1), (2), (3)      125,678

Other assets

     12,494      (2,915 )(1)      9,579

Intangible assets, net

     39,038      (4,500 )(1), (4)      34,538

Goodwill

     290,300             290,300
                     

Total assets

   $ 1,149,213    $ 13,635      $ 1,162,848
                     

LIABILITIES AND EQUITY

       

Current Liabilities:

       

Account payable

   $ 109,697    $ (5,966 )(1)    $ 103,731

Accrued payable to retailers and agents

     129,687      (4,667 )(1)      125,020

Other accrued liabilities

     78,186      (3,127 )(1), (2)      75,059

Current portion of long-term debt

     6,545             6,545

Current portion of capital lease obligations

     19,374      (2,583 )(1)      16,791
                     

Total current liabilities

     343,489      (16,343     327,146

Long-term debt and other

     459,144      (389 )(1)      458,755

Capital lease obligations

     15,641      (818 )(1)      14,823

Deferred tax liability

     1,750             1,750
                     

Total liabilities

     820,024      (17,550     802,474

Total equity

     329,189      31,185 (1), (2), (3)      360,374
                     

Total liabilities and equity

   $ 1,149,213    $ 13,635      $ 1,162,848
                     

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.


COINSTAR, INC.

 

Pro Forma Condensed Consolidated Statement of Operations

Six Months Ended June 30, 2009

(in thousands, except per share data)

(unaudited)

 

     Coinstar
Consolidated
Historical
    Pro Forma
Adjustments
    Pro
Forma
 

Revenue

   $ 585,123      $ (64,307 )(1)    $ 520,816   

Expenses:

      

Direct operating

     416,179        (60,775 )(1)      355,404   

Marketing

     10,849        (77 )(1)      10,772   

Research and development

     2,556               2,556   

General and administrative

     67,385        (3,431 )(1)      63,954   

Depreciation and other

     48,858        (5,426 )(1)      43,432   

Amortization of intangible assets

     4,372        (460 )(1)(7)      3,912   
                        

Income from operations

     34,924        5,862        40,786   

Other income (expense):

      

Foreign currency loss and other, net

     (63     (6 )(1)      (69

Interest income

     161        (7 )(1)      154   

Interest expense

     (15,186     48 (1)      (15,138
                        

Income before income taxes

     19,836        5,897        25,733   

Income tax expense

     (7,288     (2,182 )(1)      (9,470 )(5) 
                        

Net income before non-controlling interests

     12,548        3,715        16,263   

Less: Net income attributable to non-controlling interests

     (3,627            (3,627
                        

Net income attributable to Coinstar, Inc.

   $ 8,921      $ 3,715      $ 12,636   
                        

Earning per share:

      

Basic

   $ 0.30        $ 0.43   

Diluted

   $ 0.30        $ 0.42   

Weighted shares outstanding:

      

Basic

     29,525          29,525   

Diluted

     29,893          29,893   

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.


COINSTAR, INC.

 

Pro Forma Condensed Statement of Operations

Six Months Ended June 30, 2008

(in thousands, except per share data)

(unaudited)

 

     Coinstar
Consolidated
Historical
    Pro Forma
Adjustments
    Pro Forma  

REVENUE

   $ 410,422      $ (80,057 )(1)    $ 330,365   

EXPENSES

      

Direct operating

     281,819        (71,930 )(1)      209,889   

Marketing

     6,618        (44 )(1)      6,574   

Research and development

     2,421               2,421   

General and administrative

     45,802        (3,010 )(1)      42,792   

Depreciation and other

     35,826        (9,214 )(1)      26,612   

Amortization of intangible assets

     4,640        (458 )(1)(7)      4,182   

Proxy, write-off of acquisition costs and litigation settlement

     3,084               3,084   
                        

Income from operations

     30,212        4,599        34,811   

OTHER INCOME (EXPENSE):

      

Foreign currency loss and other, net

     (2,018     (40 )(1)      (2,058

Interest income

     885        (2 )(1)      883   

Interest expense

     (10,822     143 (1)      (10,679

Loss from equity investments

     (337            (337
                        

Income before income taxes

     17,920        4,700        22,620   

Income tax expense

     (5,097     (1,818 )(1)      (6,915 )(5) 
                        

NET INCOME before non-controlling interests

     12,823        2,882        15,705   

Less: Net income attributable to non-controlling interests

     (7,442            (7,442
                        

NET INCOME attributable to Coinstar, Inc

   $ 5,381      $ 2,882      $ 8,263   
                        

EARNINGS PER SHARE:

      

Basic

   $ 0.19        $ 0.30   

Diluted

   $ 0.19        $ 0.29   

WEIGHTED SHARES OUTSTANDING:

      

Basic

     27,903          27,903   

Diluted

     28,418          28,418   

 

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.


COINSTAR, INC.

 

Pro Forma Condensed Consolidated Statement of Operations

Twelve Months Ended December 31, 2008

(in thousands, except per share data)

(unaudited)

 

     Coinstar
Consolidated
Historical
    Pro Forma
Adjustments
    Pro
Forma
 

Revenue

   $ 911,900      $ (150,219 )(1)    $ 761,681   

Expenses:

      

Direct operating

     634,285        (134,474 )(1)      499,811   

Marketing

     19,303        (106 )(1)      19,197   

Research and development

     4,758               4,758   

General and administrative

     95,234        (6,442 )(1)      88,792   

Depreciation and other

     76,661        (15,192 )(1)      61,469   

Amortization of intangible assets

     9,124        (918 )(1)(7)      8,206   

Proxy, write-off of acquisition costs and litigation settlement

     3,084               3,084   
                        

Income from operations

     69,451        6,913        76,364   

Other income (expenses):

      

Foreign currency loss and other, net

     (3,876     (52 )(1)      (3,928

Interest income

     1,220        (2 )(1)      1,218   

Interest expense

     (21,716     190 (1)      (21,526

Loss from equity investments

     (337            (337
                        

Income before income taxes

     44,742        7,049        51,791   

Income tax expense

     (16,194     (2,096 )(1)      (18,290 )(6) 
                        

Net income before non-controlling interests

     28,548        4,953        33,501   

Less: Net income attributable to non-controlling interests

     (14,436            (14,436
                        

Net income attributable to Coinstar, Inc.

   $ 14,112      $ 4,953      $ 19,065   
                        

Earning per share:

      

Basic

   $ 0.50        $ 0.68   

Diluted

   $ 0.50        $ 0.67   

Weighted shares outstanding:

      

Basic

     28,041          28,041   

Diluted

     28,464          28,464   

 

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.


COINSTAR, INC.

 

Pro Forma Condensed Statement of Operations

Twelve Months Ended December 31, 2007

(in thousands, except per share data)

(unaudited)

 

     Coinstar
Consolidated
Historical
    Pro Forma
Adjustments
    Pro Forma  

REVENUE

   $ 546,297      $ (238,912 )(1)    $ 307,385   

EXPENSES

      

Direct operating

     356,042        (203,241 )(1)      152,801   

Marketing

     11,899        (427 )(1)      11,472   

Research and development

     5,153               5,153   

General and administrative

     55,193        (11,826 )(1)      43,367   

Depreciation and other

     58,841        (29,023 )(1)      29,818   

Amortization of intangible assets

     7,331        (2,123 )(1)(7)      5,208   

Impairment loss and excess inventory charge

     65,220        (65,220 )(1)        
                        

Income (loss) from operations

     (13,382     72,948        59,566   

OTHER INCOME (EXPENSE):

      

Foreign currency loss and other, net

     650        (16 )(1)      634   

Interest income

     1,698        (24 )(1)      1,674   

Interest expense

     (17,069     569 (1)      (16,500

Loss from equity investments

     1,333               1,333   

Early retirement of debt

     (1,794            (1,794
                        

Income (loss) before income taxes

     (28,564     73,477        44,913   

Income tax expense

     6,311        (28,429 )(1)      (22,118 )(6) 
                        

NET INCOME (LOSS) before non-controlling interests

     (22,253     45,048        22,795   

Less: Net income attributable to non-controlling interests.

                     
                        

NET INCOME (LOSS) attributable to Coinstar, Inc.

   $ (22,253   $ 45,048      $ 22,795   
                        

EARNINGS PER SHARE:

      

Basic

   $ (0.80     $ 0.82   

Diluted

   $ (0.80     $ 0.82   

WEIGHTED SHARES OUTSTANDING:

      

Basic

     27,805          27,805   

Diluted

     27,805          27,805   

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.


Coinstar, Inc.

 

Pro Forma Condensed Statement of Operations

Twelve Months Ended December 31, 2006

(in thousands, except per share data)

(unaudited)

 

     Coinstar
Consolidated
Historical
    Pro Forma
Adjustments
    Pro Forma  

REVENUE

   $ 534,442      $ (273,490 )(1)    $ 260,952   

EXPENSES

      

Direct operating

     359,534        (216,782 )(1)      142,752   

Marketing

     14,420        (309 )(1)      14,111   

Research and development

     5,246               5,246   

General and administrative

     50,977        (17,213 )(1)      33,764   

Depreciation and other

     52,836        (25,301 )(1)      27,535   

Amortization of intangible assets

     6,220        (2,142 )(1)(7)      4,078   
                        

Income from operations

     45,209        (11,743     33,466   

OTHER INCOME (EXPENSE):

      

Foreign currency loss and other, net

     161        (48 )(1)      113   

Interest income

     1,382        (39 )(1)      1,343   

Interest expense

     (15,748     442 (1)      (15,306

Loss from equity investments

     (66            (66

Early retirement of debt

     (238            (238
                        

Income before income taxes

     30,700        (11,388     19,312   

Income tax expense

     (12,073     4,531 (1)      (7,542 )(6) 
                        

NET INCOME before non-controlling interests

     18,627        (6,857     11,770   

Less: Net income attributable to non-controlling interests

                     
                        

NET INCOME attributable to Coinstar, Inc

   $ 18,627      $ (6,857   $ 11,770   
                        

EARNINGS PER SHARE:

      

Basic

   $ 0.67        $ 0.43   

Diluted

   $ 0.66        $ 0.42   

WEIGHTED SHARES OUTSTANDING:

      

Basic

     27,686          27,686   

Diluted

     28,028          28,028   

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.


COINSTAR, INC.

 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

  1.   Reflects the elimination of the financial operations, assets, liabilities and accumulated other comprehensive income amounts associated with the Entertainment Business.

 

  2.   Reflects the cash contribution and accrued costs related to the sale of the Entertainment Business.

 

  3.   Reflects (a) the elimination of deferred taxes related to the assets and liabilities of the Entertainment Business offset by (b) the anticipated tax loss carryforward to be realized upon the disposition of the Entertainment Business.

 

  4.   Represents the value of our customer relationship intangible assets attributable from those customers who have contracts with the Entertainment Business exclusively.

 

  5.   The pro forma income tax expense for the six months ended June 30, 2009 and 2008 is calculated based on our consolidated results with and without the Entertainment Business’s results of operations. This results in an effective tax rate attributable to Coinstar, Inc. of 42.8% and 45.6%, respectively.

 

  6.   The pro forma income tax expense for the twelve months ended December 31, 2008, 2007 and 2006 is calculated based on our consolidated results with and without the Entertainment Business’s results of operations. This results in an effective tax rate attributable to Coinstar, Inc. of 49.0%, 49.2% and 39.1%, respectively.

 

  7.   The pro forma adjustment for the amortization of the intangible assets is related to the intangible assets of the Entertainment Business as described in note 3 above.