Coinstar Announces 2003 Revenue of $176.1 Million and $0.90 Per Fully Diluted Share

This compares to fourth quarter 2002 revenue of $41.7 million and net income of $49.4 million or $2.17 per fully diluted share. During the three months ended December 31, 2002, it was determined that after a long period of capital investment and subsequent operating losses, Coinstars business was capable of sustaining long-term profitability. Therefore, as required under FAS 109, the Company recognized its deferred tax asset at that time, deriving a one-time tax benefit of approximately $42.6 million or $1.87 per diluted share in 2002. Excluding the one-time benefit, and assuming a tax rate of 37%, Coinstars net income and diluted earnings per share would have been $4.3 million and $0.19 respectively reflecting an 11% quarter-over-quarter diluted earnings per share gain. The Company paid no federal income taxes in the fourth quarter of 2003 due to its net operating loss carryforwards. For the full year ended December 31, 2003, Coinstar Inc. achieved revenue of $176.1 million and net income of $19.6 million or $0.90 per fully diluted share. This compares to fiscal 2002 revenue of $155.7 million and net income of $58.5 million or $2.58 per fully diluted share. As previously stated, Coinstar recognized its deferred tax asset in fiscal 2002 which resulted in a one-time tax benefit of approximately $42.6 million or $1.87 per diluted share(3). Excluding that one-time gain, and assuming a tax rate of 37% for the full year, Coinstars net income and diluted earnings per share would have been $10.1 million and $0.44 respectively reflecting a 105% increase in diluted earnings per share year-over-year(3). The Company paid no federal income taxes in 2003 due to its net operating loss carryforwards. Recent Events During the fourth quarter, the Company entered into a new multi-year agreement with Kroger Co. The agreement includes certain renewal and termination provisions. The Company also launched its new payroll debit card service in conjunction with FSV Payment Systems Ltd. (FSV). Coinstar plans to expand access to electronic payroll services from FSV to nearly its entire 10,000-plus-machine network. Electronic payroll functionality is currently available at approximately 1,000 Coinstar Centers in supermarkets across the country, and by April of this year, most Coinstar Centers will be enabled with wage statement and balance inquiry features. Also during the quarter, Coinstar made significant progress expanding the prepaid wireless TOP-UP service and the Truth prepaid MasterCard Card. Retailer acceptance was strong during the fourth quarter with the Company now being installed and operating in over 600 locations with these services. This result was approximately 20% higher than previously announced 2003 goals. Share Repurchase For the full year ended December 31, 2003, the Company repurchased 933,714 shares at an average price of $16.37 per share. The aggregate expenditure totaled $15.3 million. For the three months ended December 31, 2003, the Company repurchased 119,800 shares at an average price of $16.55 per share. The aggregate expenditure totaled about $2.0 million. 2004 Expectations Based on the current outlook, the Company is providing guidance for the quarter ending March 31, 2004, as follows: -- Revenue -- $38.5 to $40.5 million -- Fully diluted, fully taxed earnings per share -- $0.15 to $0.20 Coinstar is also providing updated guidance for the full year ending December 31, 2004, as follows: -- Revenue -- $178 to $188 million -- Fully diluted, fully taxed earnings per share -- $0.80 to $0.95