OUTERWALL INC

CIK:0000941604|SEC Filings

Consolidated Statements Of Comprehensive Income (Loss) - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2016

Jun. 30, 2015

Jun. 30, 2016

Jun. 30, 2015

Statement of Comprehensive Income [Abstract]

Revenue

$ 518,027

$ 545,369

$ 1,053,983

$ 1,154,005

Expenses:

Direct operating

^[1]

351,581

369,619

727,548

774,803

Marketing

7,422

8,047

16,644

16,467

Research and development

1,317

2,039

2,362

4,123

General and administrative

47,681

48,783

95,451

97,339

Restructuring and related costs (Note 9)

401

3,676

15,851

Depreciation and other

33,988

45,174

70,106

87,860

Amortization of intangible assets

3,790

3,309

7,580

6,618

Goodwill impairment

85,890

Total expenses

446,180

562,861

923,367

1,088,951

Operating income (loss)

71,847

(17,492)

130,616

65,054

Other income (expense), net:

Loss from equity method investments, net

(208)

(133)

(415)

(265)

Interest expense, net

(10,301)

(12,183)

(10,543)

(24,254)

Other, net

223

642

1,452

(1,704)

Total other income (expense), net

(10,286)

(11,674)

(9,506)

(26,223)

Income (loss) from continuing operations before income taxes

61,561

(29,166)

121,110

38,831

Income tax expense

(21,013)

(18,185)

(42,111)

(44,027)

Income (loss) from continuing operations

40,548

(47,351)

78,999

(5,196)

Income (loss) from discontinued operations, net of tax

1,735

(4,821)

Net income (loss)

40,548

(45,616)

78,999

(10,017)

Foreign currency translation adjustment

^[2]

(1,680)

^[3],[4]

473

^[5]

(2,229)

^[6],[7]

3,327

^[8]

Comprehensive income (loss)

38,868

(45,143)

76,770

(6,690)

Income (loss) from continuing operations attributable to common shares (Note 11):

Basic

38,615

(47,472)

75,665

(5,465)

Diluted

$ 38,626

$ (47,472)

$ 75,681

$ (5,465)

Basic earnings (loss) per common share (Note 11):

Continuing operations (in usd per share)

$ 2.39

$ (2.66)

$ 4.69

$ (0.30)

Discontinued operations (in usd per share)

0.00

0.10

0.00

(0.27)

Basic earnings (loss) per common share (in usd per share)

2.39

(2.56)

4.69

(0.57)

Diluted earnings (loss) per common share (Note 11):

Continuing operations (in usd per share)

2.38

(2.66)

4.67

(0.30)

Discontinued operations (in usd per share)

0.00

0.10

0.00

(0.27)

Diluted earnings (loss) per common share (in usd per share)

$ 2.38

$ (2.56)

$ 4.67

$ (0.57)

Weighted average common shares used in basic and diluted per share calculations (Note 11):

Weighted average common shares - basic (in shares)

16,149

17,848

16,122

18,057

Weighted average common shares - diluted (in shares)

^[9]

16,244

17,848

16,216

18,057

Dividends paid per common share (in usd per share)

$ 0.60

$ 0.30

$ 0.90

$ 0.60

[1]	“Direct operating” excludes depreciation and other of $24.9 million and $51.1 million for the three and six months ended June 30, 2016, respectively, and $29.6 million and $58.0 million for the three and six months ended June 30, 2015, respectively.
[2]	Foreign currency translation adjustment had no tax effect for the three and six months ended June 30, 2016 and 2015, respectively.
[3]	Foreign currency translation adjustment had no tax effect for the three months ended June 30, 2016.
[4]	Foreign currency translation adjustment had no tax effect for the three months ended June 30, 2016.
[5]	Foreign currency translation adjustment had no tax effect for the three months ended June 30, 2015.
[6]	Foreign currency translation adjustment had no tax effect for the six months ended June 30, 2016.
[7]	Foreign currency translation adjustment had no tax effect for the six months ended June 30, 2016.
[8]	Foreign currency translation adjustment had no tax effect for the six months ended June 30, 2015.
[9]	Participating securities were included in the calculation of diluted earnings per share using the two-class method, as this calculation was more dilutive than the calculation using the treasury stock method.

Consolidated Statements Of Cash Flows - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2016

Jun. 30, 2015

Jun. 30, 2016

Jun. 30, 2015

Operating Activities:

Net income (loss)

$ 40,548

$ (45,616)

$ 78,999

$ (10,017)

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Depreciation and other

33,988

45,174

70,106

93,718

Amortization of intangible assets

3,790

3,309

7,580

6,662

Share-based payments expense

5,174

3,289

9,504

7,192

Windfall excess tax benefits related to share-based payments

(160)

(686)

Deferred income taxes

(10,736)

(1,392)

(18,558)

(3,939)

Restructuring, impairment and related costs

^[1]

361

1,680

Loss from equity method investments, net

208

133

415

265

Amortization of deferred financing fees and debt discount

613

692

1,251

1,385

Gain from early extinguishment of debt

(418)

(11,446)

Goodwill impairment

85,890

Other

(244)

383

(280)

(816)

Cash flows from changes in operating assets and liabilities:

Accounts receivable, net

6,322

3,254

13,185

15,077

Content library

7,723

24,703

40,849

34,659

Prepaid expenses and other current assets

(759)

(18,976)

5,263

(22,082)

Other assets

170

154

333

322

Accounts payable

(17,055)

(20,617)

(52,460)

(17,697)

Accrued payable to retailers

10,248

6,931

(14,398)

(11,510)

Other accrued liabilities

(4,552)

(12,008)

11,521

1,112

Net cash flows from (used in) operating activities

^[2]

75,020

75,143

142,225

181,215

^[3]

Investing Activities:

Purchases of property and equipment

(14,921)

(19,508)

(28,374)

(40,217)

Proceeds from sale of property and equipment

2,817

2,940

Net cash flows from (used in) investing activities

^[2]

(14,903)

(16,691)

(28,282)

(37,277)

^[3]

Financing Activities:

Proceeds from new borrowing on Credit Facility

91,000

77,000

176,000

112,000

Principal payments on Credit Facility

(135,687)

(68,875)

(244,000)

(185,750)

Repurchases of notes (Note 7)

(2,179)

(47,507)

Repurchases of common stock

(22,023)

(62,731)

Dividends paid

(10,084)

(5,417)

(15,122)

(11,019)

Principal payments on capital lease obligations and other debt

(1,451)

(3,033)

(3,077)

(6,278)

Windfall excess tax benefits related to share-based payments

160

686

Withholding tax paid on vesting of restricted stock net of proceeds from exercise of stock options

(47)

1,887

(1,472)

(1,201)

Net cash flows from (used in) financing activities

^[2]

(58,448)

(20,301)

(135,178)

(154,293)

^[3]

Effect of exchange rate changes on cash

(1,471)

1,623

(2,266)

5,367

Change in cash and cash equivalents

198

39,774

(23,501)

(4,988)

Cash and cash equivalents:

Beginning of period

198,850

197,934

222,549

242,696

End of period

199,048

237,708

199,048

237,708

Supplemental disclosure of cash flow information:

Cash paid during the period for interest

8,620

10,933

20,670

22,846

Cash paid during the period for income taxes, net

38,890

53,905

40,951

66,896

Supplemental disclosure of non-cash investing and financing activities:

Purchases of property and equipment financed by capital lease obligations

1,146

257

2,902

977

Purchases of property and equipment included in ending accounts payable

654

4,436

654

4,436

Additional cash flow information

Restructuring, impairment and related costs

^[1]

361

1,680

Impairment of lease related assets

$ 0

6,940

Benefit from lease termination

$ 5,200

[1]	The non-cash restructuring, impairment and related costs in the six months ended June 30, 2015 of $1.7 million is composed of $6.9 million in impairments of lease related assets partially offset by a $5.2 million benefit resulting from the lease termination.
[2]	During the first quarter of 2015 we discontinued our Redbox operations in Canada. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in the 2015 periods presented. See Note 10: Discontinued Operations for cash flow disclosures related to our discontinued Redbox operations in Canada.
[3]	During the first quarter of 2015 we discontinued our Redbox operations in Canada. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in all periods presented. See Note 10: Discontinued Operations for cash flow disclosures related to our discontinued Redbox operations in Canada.

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 199,048	$ 198,850	$ 222,549	$ 237,708	$ 197,934	$ 242,696
Accounts receivable, net of allowances of $806 and $1,272	25,386		38,464
Content library	147,815		188,490
Prepaid expenses and other current assets	47,122		51,368
Total current assets	419,371		500,871
Property and equipment, net	270,414		316,013
Deferred income taxes	2,456		2,606
Goodwill and other intangible assets, net	532,934		540,514
Other long-term assets	1,489		2,207
Total assets	1,226,664		1,362,211
Current Liabilities:
Accounts payable	126,654		184,010
Accrued payable to retailers	100,332		115,098
Other accrued liabilities	155,347		141,437
Current portion of long-term debt and other long-term liabilities	18,418		17,131
Total current liabilities	400,751		457,676
Long-term debt and other long-term liabilities (Note 7)	766,570		893,517
Deferred income taxes	13,442		33,092
Total liabilities	1,180,763		1,384,285
Commitments and contingencies (Note 14)
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value - 5,000,000 shares authorized; no shares issued or outstanding	0		0
Common Stock, Value, Outstanding	489,879		485,163
Treasury stock	(1,149,261)		(1,151,063)
Retained earnings	707,138		643,452
Accumulated other comprehensive income (loss)	(1,855)		374
Total stockholders’ equity (deficit)	45,901	$ 2,200	(22,074)
Total liabilities and stockholders’ equity (deficit)	$ 1,226,664		$ 1,362,211