Redbox 2003 Annual Report Download - page 48

COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
EBITDA, a minimum fixed charge coverage ratio, a maximum consolidated leverage ratio and a minimum net
cash balance, all as defined in the agreement.
Quarterly principal payments on the outstanding term loan began September 30, 2002 and are based upon
the repayment terms as specified in the agreement. Our current principal payments are $3.8 million per quarter
and our principal payments will increase to $4.3 million per quarter beginning June 30, 2004, with all remaining
principal and interest due May 20, 2005, the maturity date of the credit facility. Commitment fees on the unused
portion of the facility, initially equal to 40 basis points, may vary and are based on our maintaining certain
consolidated leverage ratios. As of December 31, 2003, commitment fees on the unused portion of the facility
were equal to 20 basis points.
Principal payments: As of December 31, 2003, scheduled principal payments on long-term debt are as
follows:
(in thousands)
2004 ................................................... $13,250
2005 ................................................... 2,500
$15,750
Interest rate swap: On July 26, 2002, we entered into an interest rate swap in order to manage our
exposure to future interest rate and cash flow changes related to our floating interest rate debt. We entered into
this swap in order to comply with certain of our credit facility requirements with Bank of America. The notional
principal amount of the swap is $10.0 million, the maturity date is August 21, 2004 and the interest rate reset
dates of the swap match those of the underlying debt. On October 10, 2003, we renegotiated our existing credit
agreement and the requirement to maintain an interest rate swap has been eliminated from the credit agreement.
We have recognized the fair value of the interest rate swap as a liability of $95,000 at December 31, 2003.
Any change in the fair value of the interest rate swap is reported in accumulated other comprehensive income.
Because the critical terms of the interest rate swap and the underlying obligation are the same, there was no
ineffectiveness recorded in the consolidated statements.
NOTE 6: EARLY RETIREMENT OF DEBT
During the first two quarters of 2002, we repurchased our 13% senior subordinated discount notes with our
available cash, and $43.0 million of debt from a newly acquired $90.0 million credit facility with Bank of
America. In connection with these repurchases, we recorded a $6.3 million charge associated with the write-off
of the remaining debt acquisition costs and the payment of premium associated with the early retirement of the
indebtedness.
NOTE 7: COMMITMENTS
Lease commitments: Our principal administrative, marketing and product development facility is located
in a 46,070 square foot facility in Bellevue, Washington, under a lease that renewed on January 1, 2004 and
expires December 1, 2009. The future minimum payments of this new lease are at a lower monthly rate than
under the prior lease terms. We also lease a 24,367 square foot warehouse facility in Kent, Washington under a
lease agreement that commenced on April 1, 2002 and expires March 31, 2005. The agreements require us to pay
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