Redbox 2001 Annual Report Download - page 4

2
fellow shareholders
We know something about making stars. Ten years
ago, Coinstar began with little more than a vision:
there had to be a convenient way to turn billions
of dollars worth of coins sitting idle in coin jars
into spendable currency. We have transformed
that concept into a $130 million business, with
an enviable record of consistent, strong growth.
We continued that record in 2001 with another
stellar performance. For our North American core
business, revenues increased 25 percent on a 10
percent increase in the number of installed
machines. Direct contribution expanded 31 percent.
Earnings before interest, taxes, depreciation
and amortization, and non–cash stock–based
compensation (EBITDA) increased 66 percent.
For the first time, we generated positive net
income, totaling $4.2 million, or $0.19 per diluted
share. And we turned free cash flow positive as
well, generating EBITDA less capital expenditures
and net interest expense of $15.3 million.
We have a blueprint for extending that record
into the future. First, we can continue to drive
more people to our Coinstar machines. As we
have demonstrated, we efficiently use marketing—
including a mix of television and radio ads,
national and local promotions, and public relations—
to attract new users. While current market
penetration is low—only 15 percent of people
who live in an area served by a Coinstar machine
have tried our service—repeat usage is very high.
Some 80 percent of people who try Coinstar use
it again and again. By building awareness and
trial usage, we create a recurring revenue stream.
The second part of our growth strategy is to continue
the installation of machines in North America.
We plan to install approximately 800 new machines
in 2002 and another 800 in 2003.
Third, we will continue our rollout in the United
Kingdom. In 2002, we plan to install 200 to 250
new machines in the U.K., bringing the year-end
total to 450 to 500. We remain delighted by that
country’s favorable reception to our service. And
we are on track to reach EBITDA breakeven in
the U.K., on a quarterly basis, by the end of 2002.