Redbox 2003 Annual Report Download - page 49

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COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
a portion of operating costs and minimum monthly payments, which escalate annually, based on a stated
schedule. Each agreement allows us to renew each lease for one consecutive period of five years and three years,
respectively.
We have entered into capital lease agreements to finance the acquisition of certain automobiles. We retain
title to such assets. These capital leases have terms of 36 months at imputed interest rates that range from 4.1% to
11.7%. Assets under capital lease obligations aggregated $4.0 million and $4.3 million, net of $1.8 million and
$1.6 million of accumulated amortization, at December 31, 2003 and 2002, respectively.
A summary of our minimum lease obligations at December 31, 2003 is as follows:
Capital
Leases
Operating
Leases
(in thousands)
2004 ...................................................... $1,005 $ 568
2005 ...................................................... 735 425
2006 ...................................................... 100 422
2007 ...................................................... — 422
2008 ...................................................... — 468
Thereafter .................................................. — 468
Total minimum lease commitments .............................. 1,840 $2,773
Less amounts representing interest .............................. (129)
Present value of lease obligation ................................ 1,711
Less current portion .......................................... (938)
Long-term portion ........................................... $ 773
Rental expense was $1.4 million for each of the years ended December 31, 2003, 2002 and 2001,
respectively.
Purchase commitments: We have entered into certain purchase agreements with suppliers of Coinstar
units, which in aggregate total purchase commitments of $10.1 million in 2004.
Concentration of suppliers: We currently buy a significant component of the Coinstar unit from two
suppliers. Although there are a limited number of suppliers for the component, we believe that other suppliers
could provide similar equipment, which may require certain modifications. Accordingly, a change in suppliers
could cause a delay in manufacturing and a possible slow-down of growth, which could have a materially
adverse affect on future operating results.
Letter of credit: As of December 31, 2003, we had five irrevocable letters of credit that totaled $11.2
million. These letters of credit, which expire at various times through May 31, 2005, are available to collateralize
certain obligations to third parties. We expect to renew these letters of credit and have an agreement with Bank of
America to automatically renew one of the letters of credit, in three-month increments, through December 31,
2004. As of December 31, 2003, no amounts were outstanding under these letters of credit agreements.
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