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COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003
NOTE 13: INCOME PER SHARE
Basic net income per share is computed by dividing the net income available to common stockholders for
the period by the weighted average number of common shares outstanding during the period. Diluted net income
per share is computed by dividing the net income for the period by the weighted average number of common and
potential common shares outstanding (if dilutive) during the period. Potential common shares, composed of
incremental common shares issuable upon the exercise of stock options and warrants, are included in the
calculation of diluted net income per share to the extent such shares are dilutive.
The following table sets forth the computation of basic and diluted net income per share for the periods
indicated:
Year ended December 31,
2005 2004 2003
(in thousands)
Numerator:
Net income .................................................... $22,272 $20,368 $19,555
Denominator:
Weighted average shares for basic calculation ........................ 25,767 21,626 21,489
Warrants .................................................. — — 2
Incremental shares from employee stock options .................. 266 333 297
Weighted average shares for diluted calculation ........................... 26,033 21,959 21,788
For the years ended December 31, 2005, 2004 and 2003, options to acquire 1.2 million, 1.3 million and
2.0 million shares of common stock, respectively, were excluded from the computation of net income per
common share because their impact would be antidilutive.
NOTE 14: RETIREMENT PLAN
In July 1995, we adopted a tax-qualified employee savings and retirement plan under Section 401(k) of the
Internal Revenue Code of 1986 for all employees who satisfy the age and service requirements under this plan.
This plan is funded by voluntary employee salary deferral of up to 60% of annual compensation (subject to the
Federal limitation) and a safe harbor employer match equaling 100% of the first 3% and 50% of the 4th and 5th
percent. Additionally, all participating employees are 100% vested for all Coinstar matched contributions. We
contributed $841,000, $787,000 and $898,000 to the plan for the years ended December 31, 2005, 2004 and
2003, respectively.
We also maintain a 401(k) profit sharing plan, which covers substantially all of the employees of our ACMI
subsidiary. Employees are permitted to contribute up to 15% of their eligible compensation. We make
contributions to the plan matching 50% of the employees’ contribution up to 10% of their compensation.
Matching contributions were $611,000 for the year ended December 31, 2005, and $349,000 for the period
July 7, 2004 (acquisition date) through December 31, 2004.
NOTE 15: TERMINATION OF SUPPLIER RELATIONSHIP
Through April 1999, Scan Coin AB of Malmo, Sweden, was our sole source provider of our coin-counting
devices. Coinstar and Scan Coin have been in a contract dispute since September 1998, at which time Scan Coin
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