Redbox 2004 Annual Report Download - page 47

COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS –(Continued)
YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
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Recent accounting pronouncements: In January 2003, the Financial Accounting Standards Board (“FASB”) issued
FASB Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”) and in December 2003 issued FIN 46R.
FIN 46 requires the consolidation of variable interest entities which have one or both of the following attributes (1) the equity
investment at risk is not sufficient to permit the entity to finance its activities without additional financial support from other
parties which is provided by other parties that will absorb some or all of the expected losses of the entity, (2) the equity
investors lack controlling financial interest as evidenced by (i) the ability to make decisions regarding the entity’s activities
through voting or similar rights (ii) the obligation to absorb expected losses, which make it possible for the entity to finance
its activities and (iii) the right to receive expected residual returns of the entity if they occur, which is the compensation for
absorbing the expected losses. FIN 46 was immediately effective for variable interest entities formed after January 31, 2003.
FIN 46R requires the adoption of either FIN 46 or FIN 46R in financial statements of public entities that have interests in
structures that are commonly referred to as special purpose entities for periods ending after December 15, 2003. Application
for all other types of variable interest entities is required in financial statements for periods ending after March 15, 2004. The
adoption of FIN 46 and FIN 46R did not have an effect on our financial position or results of operations.
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-
Based Payment (“SFAS 123R”). SFAS 123R will require that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability
instruments issued. SFAS 123R covers a wide range of share-based compensation arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. SFAS 123R
replaces FASB 123, Accounting for Stock Issued to Employees. SFAS 123R will be effective for us for our third fiscal quarter
ending September 30, 2005. We are in process of evaluating the impact of adopting SFAS 123R and of determining the
impact on our results of operations or financial position.
Reclassifications: Certain reclassifications have been made to the prior period balances to conform to the current
period presentation.
NOTE 3: ACQUISITIONS
ACMI Holdings, Inc.: On July 7, 2004, we acquired ACMI for $235.0 million. As part of this acquisition, we
acquired cash totaling $11.5 million. The acquisition was effected pursuant to the “Agreement and Plan of Merger” dated
May 23, 2004 between ACMI and Coinstar. In addition to the purchase price, we incurred an estimated $4.3 million in
transaction costs, including investment banking fees and amounts relating to legal and accounting charges. The results of
operations of ACMI from July 7, 2004 to December 31, 2004 are included in our statement of operations.
ACMI offers various entertainment services to consumers in mass merchandisers, supermarkets, warehouse clubs,
restaurants, entertainment centers, truck stops and other distribution channels. These entertainment services include skill-
crane machines, bulk vending, kiddie rides and video games. We acquired ACMI in order to add new classes of trade,
broaden our retailer base, diversify services, expand the reach of field service and create a platform for growth across all
businesses, including coin-counting, e-payment and entertainment services.
The total purchase consideration for the acquisition of ACMI consists of the following:
(in thousands)
Cash paid for acquisition of ACMI
(1)................................................................................................................................
...........
$ 235,000
Estimated acquisition related costs
(2) ................................................................................................................................
...........
4,295
$ 239,295
(1)
As part of the acquisition, we acquired cash, cash equivalents and cash-in-machine of approximately $11.5 million.
(2)
Acquisition related costs consist of investment banking, legal and accounting fees and other directly related charges.