Coinstar, Inc. Reports Fourth Quarter Revenue Gain

Coinstar, Inc. announced financial results for the fourth quarter and full year ended Dec. 31, 2010.

"We grew our fourth quarter revenue 31 percent over the prior year, and while this was not in line with our expectations, we still delivered $2.03 in earnings per share for the full year," said Paul Davis, chief executive officer of Coinstar, Inc. in a prepared statement. "We have taken definitive steps to correct the issues we encountered with our redbox business in the fourth quarter and will be tracking progress closely. Our coin business remains solid with same store sales growth of approximately 10 percent and redbox increased its unit market share to 29.8 percent. We remain optimistic about our core businesses as well as future opportunities with new automated retail concepts and we are committed to driving continued profitable growth."

"Overall, this was a tremendous year for Coinstar exhibited by our revenue, adjusted EBITDA and EPS growth," said J. Scott Di Valerio, chief financial officer of Coinstar, Inc. "Nonetheless, we did not finish the year as strongly as we expected. We do expect continued growth as we focus on providing a compelling offering to our consumers that is a significant benefit to our retail partners and increases our shareholder value."

Revenue for the fourth quarter of 2010 increased 31 percent to $390.8 million compared with the fourth quarter of 2009, driven primarily by growth in DVD revenue, which increased 38 percent to $319.6 million, and by coin revenue which grew 7 percent to $71.2 million.

Income from operations for the fourth quarter of 2010 was $43.2 million, resulting in an operating margin of 11 percent, including $3.1 million in share-based payments expense related to the company's agreements with Sony Pictures Home Entertainment (Sony) and Paramount Home Entertainment Inc. This compares with income from operations of $29.7 million and an operating margin of 10 percent in the fourth quarter of 2009, which included $0.3 million in share-based payments expense related to the Sony agreement.

Income from continuing operations for the fourth quarter of 2010 was $22.4 million, with diluted earnings per share of $0.68, compared with $11.6 million, and $0.37, in the fourth quarter of 2009.

Coinstar recorded a loss from discontinued operations of $10.7 million, net of tax, or a loss of $0.33 per share, in the fourth quarter.

Net income attributable to Coinstar, Inc. for the fourth quarter of 2010, which includes both continuing and discontinued operations, was $11.7 million, with diluted earnings per share of $0.35. This compares with $3.4 million, and $0.11, in the fourth quarter of 2009.

Revenue for 2010 was $1,436.4 million, an increase of 39 percent compared with 2009. Income from operations for 2010 was $143.2 million compared with income from operations of $104.7 million in 2009.

Income from continuing operations for 2010 was $65.9 million, with diluted earnings per share of $2.03, compared with $43.7 million, and $1.31, in 2009.

Net income attributable to Coinstar, Inc. for 2010 was $51.0 million, with $1.57 per diluted share, including a loss, net of tax, of $14.9 million from discontinued operations. This compares with net income attributable to Coinstar, Inc. of $53.6 million, and $1.76, in 2009, which included income from discontinued operations, net of tax, of $13.6 million offset by a net loss of $3.6 million attributable to non-controlling interests.

Cash paid for capital expenditures for continuing operations for the fourth quarter of 2010 was $38.4 million, compared with $46.5 million in the fourth quarter of 2009. Free cash flow from continuing operations for the fourth quarter of 2010 was $48.6 million, compared with $8.4 million in the fourth quarter of 2009.

Coinstar announced that the company's board of directors authorized the repurchase of an additional $50million of Coinstar's common stock. The company currently has a total authorization to repurchase $74.5million of Coinstar's common stock.

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