Redbox 2005 Annual Report Download - page 56

COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003
NOTE 7: EARLY RETIREMENT OF DEBT
In connection with our December 20, 2004 stock issuance of 3,450,000 shares, we used some of the net
proceeds to retire a portion of our outstanding principal balance on our term debt. On December 21, 2004, we
retired $41.0 million of our term debt facility. We wrote off approximately $0.7 million of deferred financing
fees associated with this retirement of debt.
Previous to July 7, 2004, we were a party to a credit agreement entered into on April 18, 2002, with Bank of
America, N.A., for itself and as agent for US Bank National Association, Silicon Valley Bank, KeyBank National
Association and Comerica Bank-California. The credit agreement provided for a senior secured credit facility of
$90.0 million, consisting of a revolving loan commitment of $50.0 million and a term loan commitment of $40.0
million. Loans made pursuant to the credit agreement were secured by a first priority security interest in
substantially all of our assets and the assets of our subsidiaries, including the pledge of the subsidiaries’ capital
stock we own. On July 7, 2004, all outstanding debt on this facility was paid in full resulting in a charge totaling
$0.2 million for the write-off of deferred financing fees.
On March 2, 2004 we terminated an interest rate swap. We originally entered into this swap on July 26,
2002, in order to manage our exposure to interest rate and cash flow changes related to our floating interest rate
debt. The notional principal amount of the swap was $10.0 million. In 2004 we recognized approximately
$67,000 as interest expense on our income statement to terminate this interest rate swap.
NOTE 8: COMMITMENTS
Lease commitments: Our corporate administrative, marketing and product development facility is located
in a 46,070 square foot facility in Bellevue, Washington, under a lease that expires December 1, 2009. In
connection with our acquisitions of Amusement Factory and ACMI, we assumed the leases for their respective
corporate headquarters. See discussion in Note 18, Related Party Transactions.
In addition, we have entered into capital lease agreements to finance the acquisition of certain automobiles.
These capital leases have terms of 36 to 60 months at imputed interest rates that range from 3.0% to 16.0%.
Assets under capital lease obligations aggregated $6.2 million and $5.2 million, net of $2.5 million and $2.1
million of accumulated amortization, at December 31, 2005 and 2004, respectively.
A summary of our minimum lease obligations at December 31, 2005 is as follows:
Capital
Leases
Operating
Leases*
(in thousands)
2006 .................................................... $2,133 $ 8,191
2007 .................................................... 1,575 5,957
2008 .................................................... 1,029 2,720
2009 .................................................... 350 1,801
2010 .................................................... 48 460
Thereafter ............................................... — 904
Total minimum lease commitments ........................... 5,135 $20,033
Less amounts representing interest ............................ (830)
Present value of lease obligation ............................. 4,305
Less current portion ....................................... (1,761)
Long-term portion ......................................... $2,544
* One of our lease agreements is a triple net operating lease. Accordingly, we are responsible for other obligations under the lease
including, but not limited to, taxes, insurance, utilities and maintenance as incurred.
52