Slide 1: Investor Presentation May 2008
www.coinstar.com NASDAQ: CSTR Investor Presentation May 2008
Slide 2: Forward-Looking Statements
Forward-Looking Statements Various remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially
Slide 3: Additional information
Additional information On April 30, 2008, Coinstar began mailing to its stockholders a definitive proxy statement with a WHITE Proxy Card and other materials in connection with Coinstar's 2008 Annual Meeting of Stockholders. STOCKHOLDERS ARE URGED TO READ COINSTAR'S DEFINITIVE PROXY STATEMENT AND AN
Slide 4: Attendees
Attendees David W. Cole, Chief Executive Officer, Director Brian V. Turner, Chief Financial Officer Deborah L. Bevier, Director David M. Eskenazy, Director Robert D. Sznewajs, Director
Slide 5: About Coinstar, Inc.
About Coinstar, Inc. Founded in 1991: Self-service Coin Counting category pioneer & market leader Multi-national, multi-product company 140 countries including US, UK, Canada, Mexico, China, Italy, Russia Coin Counting, E-Payment, Entertainment Services, Money Transfer, DVD Rental kiosks Extensive d
Slide 6: Agenda
Agenda I. Record of Superior Execution II. Segment Performance III. 4th WallTM Accomplishments IV. Corporate Governance V. Conclusion VI. Appendix
Slide 7: Superior Execution
Superior Execution Board and management have a history of execution Implemented successful 4th Wall Strategy in July 2003, resulting in share price appreciation of more than 200%1 Outperformed S&P 500 over last three and five year periods by 80% and 32%, respectively2 Accomplished, experienced, inde
Slide 8: Coinstar: Prior to 4th Wall Strategy
Coinstar: Prior to 4th Wall Strategy 2003 Revenues: $176mm EBITDA: $59mm Product lines: 1 Customer base: 285 grocery customers Machine locations: 10,700
Slide 9: Coinstar: Realization of 4th Wall Strategy
Coinstar: Realization of 4th Wall Strategy Revenues: $546mm EBITDA: $126mm Product lines: 5 Customer base: >3,000 diversified retail customers Machine/agent locations: 85,000 2007 2003 Revenues: $176mm EBITDA: $59mm Product lines: 1 Customer base: 285 grocery customers Machine locations: 10,700
Slide 10: Realization of 4th Wall Strategy
Diversified from one product line to five product lines Improved channel diversification moving from the grocery segment to a diversified retail customer base Larger global customer opportunity 250% revenue increase since 2003 Doubling of EBITDA since 2003 Greater than 200% increase in share price s
Slide 11: Agenda
Agenda I. Record of Superior Execution II. Segment Performance III. 4th WallTM Accomplishments IV. Corporate Governance V. Conclusion VI. Appendix
Slide 12: Coin Counting
Coin Counting Units Deployed Ever Tried Levels1 Volume Processed (in billions) 16% CAGR 25% CAGR Undisputed market leader with over 80% share of retail self service coin counting in the US Presence in key markets including the US, UK, Canada and Ireland Over 70 US and international patents Profitabl
Slide 13: E-Pay Products and Services
E-Pay Products and Services Prepaid Wireless Airtime Prepaid Long Distance Cards Prepaid Debit Cards Stored Value Cards Money Transfer Services E-Payment Gross Revenue (in millions) 86% CAGR Commission Revenue Growth (in millions) 107% CAGR Installed E-Pay enabled units (in thousands) 19% CAGR 17 25
Slide 14: Money Transfer
Money Transfer Top 10 4th Wall item Top 5 money transfer company in terms of agent locations & countries Over 35,000 locations in over 140 countries Technology and compliance infrastructures in place Industry estimate - $30 billion in fees by 20101 1 Raymond James - Transaction Processing - The Chan
Slide 15: Entertainment
Entertainment Leading owner/operator of coin-operated entertainment services in the US1 Macroeconomic environment and Wal-Mart de-installation has impacted performance Entertainment business delivered key cross-selling successes Entertainment Has Provided Access to Key Customers and Significant Cros
Slide 16: DVD Kiosks
DVD Kiosks Purchased DVDXpress and owns 51% of Redbox Self service movie rentals at $1.00 - $1.49 per night Category net income positive as of Q4 2007 Redbox IPO announced on 5/1/08 Since our first investment in Redbox, Coinstar's share price has appreciated more than 50% Total DVD Kiosks DVD Rental
Slide 17: Agenda
Agenda I. Record of Superior Execution II. Segment Performance III. 4th WallTM Accomplishments IV. Corporate Governance V. Conclusion VI. Appendix
Slide 18: Leading 4th Wall Category Captain for Retailers
Leading 4th Wall Category Captain for Retailers E-Payment DVD Rental Coin Entertainment Money Transfer Coffee
Slide 19: Key Accomplishments: Growing Units and Market Penetration
4th Wall Strategy Key Accomplishments: Growing Units and Market Penetration Installed units (in 000's) DVD 2-year CAGR: 179% Coin 3-year CAGR: 8% E-Pay 3 year CAGR: 18% 1 2 7 12 13 14 15 17 25 23 28 2004 2005 2006 2007 DVD kiosks Coin machines E-Pay enabled machines
Slide 20: Key Accomplishments: Significant Growth in Revenue and EBITDA
4th Wall Strategy Key Accomplishments: Significant Growth in Revenue and EBITDA Revenue ($ in millions) EBITDA ($ in millions) 37% CAGR 18% CAGR $850 - 900 $135 - 145 1 1 1 Estimated range based on Coinstar guidance Strong Growth Expected to Continue: $1bn in Revenues by 2010 & $200mm in EBITDA run-
Slide 21: Superior Stock Price Performance
Source: Bloomberg total return analysis as of 5/16/08 1Coinstar peer set includes: Blockbuster, Global Payments, Hastings Entertainment, Int'l Game Tech, MoneyGram, Netflix, The Brink's Co., Western Union; Companies excluded from peer set in periods prior to IPO 4th Wall Strategy Key Accomplishments
Slide 22: Operating Metrics Exceed Peer Averages
4th Wall Strategy Key Accomplishments: Operating Metrics Exceeds Peer Averages CY2003 - CY20071 Revenue CAGR (%) Coinstar Peer Companies Peer Median = 7.8% CY20071 EBITDA Margin (%) Source: SEC filings, Company website 1Hastings Entertainment as of FYE 1/31/2008, IGT as of 11/30/2007; remaining peer
Slide 23: 4th Wall Strategy - First Quarter Update
4th Wall Strategy - First Quarter Update Coinstar achieved a 52-week high share price after reporting Q1 '08 results, beating consensus expectations Q1 revenue of $190.5mm (44% YoY growth) EBITDA of $34.5mm (29% YoY growth) Coinstar announced efforts with Wal-Mart focused on optimizing 4th Wall prod
Slide 24: Share Price Performance Supports Board's Actions and Strategy
Share Price Performance Supports Board's Actions and Strategy Stock Price Performance Since Launch of 4th Wall Strategy 7/03 12/03 12/04 12/05 12/06 12/07 5/08 7/25/07: Announces Acquisition of GroupEx 2/7/08: Agreement to Expand Coinstar Centers and Redbox at Wal-Mart Locations 11/18/05: Announces
Slide 25: Execution Recognized by Wall Street
"Management's ability to execute is very encouraging as is its progress in achieving its stated strategic goals." Wall Street Strategies 5/9/2008 "We have always been bullish on Coinstar's growth prospects, but the company managed to surprise us. Growth accelerated, and Coinstar expects to hit a run
Slide 26: Key Industry Participants Commend Coinstar's 4th Wall Strategy
Key Industry Participants Commend Coinstar's 4th Wall Strategy 2008 Named by Supervalu as Category Captain for their 4th Wall Supplier of the Year - -Wal-Mart Ride Vendor of the Year - -Wal-Mart Crane Vendor of the Year - -Wal-Mart Bulk Vendor of the Year - -Wal-Mart Video Vendor of the Year - -Wal-
Slide 27: Even Shamrock Has Publicly Supported Coinstar
Even Shamrock Has Publicly Supported Coinstar and Our Diversified 4th Wall Strategy "We love this business. Coinstar, what they want to be is they want to be the leading provider of fourth wall retail options...what management has been doing, and it's somewhat of a savvy strategy"1 - -- Chris Kiper,
Slide 28: Agenda
Agenda I. Record of Superior Execution II. Segment Performance III. 4th WallTM Accomplishments IV. Corporate Governance V. Conclusion VI. Appendix
Slide 29: The Truth About Shamrock
The Truth About Shamrock Shamrock offers NO plan and NO new ideas for enhancing stockholder value One size does NOT fit all - Shamrock's "cookie cutter" approach and recycled recommendations not appropriate for a strong performing company like Coinstar Every strategic suggestion made by Shamrock are
Slide 30: Coinstar Has a Strong Board in Place
Coinstar Has a Strong Board in Place Name Year appointed Background information Keith D. Grinstein Chairman Audit Compensation Nominating & Governance August 2001 n Partner at Second Avenue Partners (a venture capital fund) n Director of TrueBlue, NetSuite, and F5 Networks n 1996 - - 1999 - - Presid
Slide 31: Strong Corporate Governance Policies and Practices
Strong Corporate Governance Policies and Practices Substantial majority of independent directors Six independent directors and CEO Independent Chairman Roles of Chairman and CEO split since June 2001 All committees comprised of independent directors Directors limited as to number of other public com
Slide 32: Stockholder Representative Process
Stockholder Representative Process Board intends to commence process to add additional independent director selected from candidates proposed by Coinstar's major stockholders Decision based on input from major stockholders Major stockholders support the addition of a significant stockholder represen
Slide 33: 50% Performance-Based Compensation Aligned with Stockholder Interests
50% Performance-Based Compensation Aligned with Stockholder Interests Compensation Philosophy & Policy Objectives Remain aligned with the goal of enhancing stockholder value Attract, motivate and retain top executives Reflect compensation standards and practices among peers Compensation Guidelines "
Slide 34: Shamrock's Nominees Fail to Enhance Composition of Coinstar's Board
Shamrock's Nominees Fail to Enhance Composition of Coinstar's Board Vice Chairman, COO, Shamrock Holdings Advisory panel member, Shamrock Activist Value Fund VP, Shamrock Capital Advisors NO meaningful experience in the markets in which Coinstar operates Redundant tax experience Board already includ
Slide 35: Comparison of Qualifications of Coinstar's and Shamrock's Nominees
Comparison of Qualifications of Coinstar's Nominees with Shamrock's Nominees *As disclosed in public filings Qualification Coinstar Shamrock* Number of independent nominees 3 0 Number of nominees who have served as independent directors of public companies 3 0 Number of public company boards that no
Slide 36: ROIC
ROIC Adjusted ROIC Methodology 3 Methodology 4 Methodology 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column 15 Column 16 2001 0.0111 0.0597 0.0591 0.0992 0.1033 2002 0.1572 0.1412 0.132 0.2077 0.2157 2003 0.165 0.165 0.1473 0.2017 0.2086 2004 0.09 0.09 0
Slide 37: Shamrock Has Overseen Significant Declines in Value - iPass
5/23/05: Shamrock files initial 13D disclosing 7.2% ownership of IPAS shares; called publicly for several changes in the company's overall corporate governance structure Shamrock Has Overseen Significant Declines in Value - iPass Source: FactSet, company filings Note: Based upon simple price appreci
Slide 38: Shamrock Has Overseen Significant Declines in Value - Collectors Universe
Shamrock Has Overseen Significant Declines in Value - Collectors Universe 12/13/05: Shamrock files initial 13-D disclosing 5.3% ownership of CLCT shares 7/23/07: Shamrock associate Michael McConnell is elected to CLCT's Board of Directors Shamrock's investment in Collectors Universe Source: FactSet,
Slide 39: Agenda
Agenda I. Record of Superior Execution II. Segment Performance III. 4th WallTM Accomplishments IV. Corporate Governance V. Conclusion VI. Appendix
Slide 40: Superior Execution
Superior Execution Coinstar Board and management have a history of superior execution Accomplished, experienced, independent Board of Directors Outstanding operating performance Superior financial performance Strong growth expected to continue Solid corporate governance practices and policies
Slide 41: Conclusion: Vote the WHITE Proxy Card
Conclusion We Believe the Choice of Directors is Clear. Vote the WHITE Proxy Card "For" the Coinstar Directors
Slide 42: Agenda
Agenda I. Record of Superior Execution II. Segment Performance III. 4th WallTM Accomplishments IV. Corporate Governance V. Conclusion VI. Appendix
Slide 43: Non GAAP measures
Non GAAP measures are provided as a complement to results provided in accordance with United States generally accepted accounting principles ("GAAP"). Non GAAP measures are not a substitute for measures computed in accordance with GAAP. Definitions of such non GAAP measurements are provided below. T
Slide 44: Reconciliation of EBITDA to Net Income
Reconciliation of EBITDA to Net Income (in millions) 2003 2004 2005 2006 2007 1Q08 Net Income 20 $ 20 $ 22 $ 19 $ (22) $ 3 $ Depreciation & Amortization 27 37 50 59 66 19 Stock Option Expense 6 6 2 Interest Expense/(Income) 1 6 12 14 15 5 Early Retirement of Debt 1 2 Impairment 65 Minority interest