EX-99.1 2 d901552dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Information

On March 31, 2015, Outerwall Inc. (the “Company”) completed the disposal of its Redbox Canada operations. The Redbox Canada operations will be reported as discontinued operations in the Company’s consolidated financial statements starting with the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015.

The following Unaudited Pro Forma Condensed Consolidated Financial Information should be read in conjunction with the Company’s historical audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission on February 5, 2015.

The following Unaudited Pro Forma Condensed Consolidated Statements of Comprehensive Income for the twelve months ended December 31, 2014, 2013, and 2012 are prepared as though the disposal of the Redbox Canada operations occurred as of January 1, 2012 and the operating results of the Redbox Canada operations are excluded from our condensed consolidated financial statements. The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2014 is prepared as if the disposition of the Redbox Canada operations occurred as of December 31, 2014. Pro forma adjustments are described in the Notes to Unaudited Pro Forma Condensed Consolidated Financial Information, and are based upon available information and certain assumptions that we believe are reasonable.

The following Unaudited Pro Forma Condensed Consolidated Financial Information is presented for illustrative and informational purposes only and is not intended to represent or be indicative of the financial condition or results of operations that would actually have been recorded if the disposition of the Redbox Canada operations had occurred as of or during the periods presented. In addition, the Unaudited Pro Forma Condensed Consolidated Financial Information is not intended to represent our financial position or results of operations for any future date or period.


OUTERWALL INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the year ended December 31, 2014

(in thousands, except per share data)

(unaudited)

 

     As Reported     Redbox
Canada
Adjustment
    Pro Forma
Adjustments
     Pro Forma
Outerwall
Inc.
 

Revenue

   $ 2,303,003      $ (11,417   $ —         $ 2,291,586   

Expenses:

         

Direct operating

     1,601,748        (20,027     —           1,581,721   

Marketing

     38,240        (2,947     —           35,293   

Research and development

     13,047        —          —           13,047   

General and administrative

     191,721        (1,078     —           190,643   

Depreciation and other

     195,178        (7,354     —           187,824   

Amortization of intangible assets

     14,692        (38     —           14,654   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total expenses

  2,054,626      (31,444   —        2,023,182   
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

  248,377      20,027      —        268,404   

Other income (expense), net:

Loss from equity method investments, net

  (28,734   —        —        (28,734

Interest expense, net

  (47,636   (8   —        (47,644

Other, net

  (4,873   3,688      —        (1,185
  

 

 

   

 

 

   

 

 

    

 

 

 

Total other income (expense), net

  (81,243   3,680      —        (77,563
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations before income taxes

  167,134      23,707      —        190,841   

Income tax expense

  (59,748   (6,416   —        (66,164
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations

$ 107,386    $ 17,291    $ —      $ 124,677   
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations per share – basic

$ 5.32    $ 6.17   

Income from continuing operations per share – diluted

$ 5.19    $ 6.02   

Weighted average number of shares – basic

  20,192      20,192   

Weighted average number of shares – diluted

  20,699      20,699   


OUTERWALL INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the year ended December 31, 2013

(in thousands, except per share data)

(unaudited)

 

     As Reported     Redbox
Canada
Adjustment
    Pro Forma
Adjustments
     Pro Forma
Outerwall
Inc.
 

Revenue

   $ 2,306,601      $ (6,816   $ —         $ 2,299,785   

Expenses:

         

Direct operating

     1,575,277        (18,278     —           1,556,999   

Marketing

     32,402        (2,175     —           30,227   

Research and development

     13,084        (2     —           13,082   

General and administrative

     221,776        (3,088     —           218,688   

Depreciation and other

     192,161        (2,760     —           189,401   

Amortization of intangible assets

     10,933        (26     —           10,907   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total expenses

  2,045,633      (26,329   —        2,019,304   
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

  260,968      19,513      —        280,481   

Other income (expense), net:

Income from equity method investments, net

  19,928      —        —        19,928   

Interest expense, net

  (32,801   (6   —        (32,807

Other, net

  (5,527   323      —        (5,204
  

 

 

   

 

 

   

 

 

    

 

 

 

Total other income (expense), net

  (18,400   317      —        (18,083
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations before income taxes

  242,568      19,830      —        262,398   

Income tax expense

  (34,477   (5,233   —        (39,710
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations

$ 208,091    $ 14,597    $ —      $ 222,688   
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations per share – basic

$ 7.65    $ 8.18   

Income from continuing operations per share – diluted

$ 7.33    $ 7.85   

Weighted average number of shares – basic

  27,216      27,216   

Weighted average number of shares – diluted

  28,381      28,381   


OUTERWALL INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the year ended December 31, 2012

(in thousands, except per share data)

(unaudited)

 

     As Reported     Redbox
Canada
Adjustment
    Pro Forma
Adjustments
     Pro Forma
Outerwall
Inc.
 

Revenue

   $ 2,199,884      $ (1,733   $ —         $ 2,198,151   

Expenses:

         

Direct operating

     1,498,819        (6,297     —           1,492,522   

Marketing

     25,979        (1,822     —           24,157   

Research and development

     6,757        —          —           6,757   

General and administrative

     204,519        (987     —           203,532   

Depreciation and other

     179,027        (694     —           178,333   

Amortization of intangible assets

     5,378        (21     —           5,357   
  

 

 

   

 

 

   

 

 

    

 

 

 

Total expenses

  1,920,479      (9,821   —        1,910,658   
  

 

 

   

 

 

   

 

 

    

 

 

 

Operating income

  279,405      8,088      —        287,493   

Other income (expense), net:

Loss from equity method investments, net

  (5,184   —        —        (5,184

Interest expense, net

  (15,648   8      —        (15,640

Other, net

  (180   25      —        (155
  

 

 

   

 

 

   

 

 

    

 

 

 

Total other income (expense), net

  (21,012   33      —        (20,979
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations before income taxes

  258,393      8,121      —        266,514   

Income tax expense

  (97,941   (2,270   —        (100,211
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations

$ 160,452    $ 5,851    $ —      $ 166,303   
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations per share – basic

$ 5.30    $ 5.49   

Income from continuing operations per share – diluted

$ 4.99    $ 5.17   

Weighted average number of shares – basic

  30,305      30,305   

Weighted average number of shares – diluted

  32,174      32,174   


OUTERWALL INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of December 31, 2014

(in thousands, except share data)

(unaudited)

 

     As Reported      Redbox
Canada
Adjustment
    Pro Forma
Adjustments
    Pro Forma
Outerwall
Inc.
 

Assets

         

Current Assets:

         

Cash and cash equivalents

   $ 242,696       $ (1,042   $ —        $ 241,654   

Accounts receivable, net of allowances

     48,590         (1,085     —          47,505   

Content library

     180,121         (3,631     —          176,490   

Prepaid expenses and other current assets

     39,837         (297     5,483  (a)      45,023   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total current assets

  511,244      (6,055   5,483      510,672   

Property and equipment, net

  428,468      (14,826   9,378  (b)    423,020   

Deferred income taxes

  11,378      —        (9,160 )(a)    2,218   

Goodwill and other intangible assets, net

  623,998      (43   —        623,955   

Other long-term assets

  8,231      (67   —        8,164   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

$ 1,583,319    $ (20,991 $ 5,701    $ 1,568,029   
  

 

 

    

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

Current Liabilities:

Accounts payable

$ 168,633    $ (2,673 $ —      $ 165,960   

Accrued payable to retailers

  126,290      (165   —        126,125   

Other accrued liabilities

  137,126      (870   (9,440 )(a)    126,816   

Current portion of long-term debt and other long-term liabilities

  20,416      —        —        20,416   

Deferred income taxes

  21,432      —        (28 )(a)    21,404   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total current liabilities

  473,897      (3,708   (9,468   460,721   

Long-term debt and other long-term liabilities

  973,669      (790   —        972,879   

Deferred income taxes

  38,375      —        (590 )(a)    37,785   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities

  1,485,941      (4,498   (10,058   1,471,385   

Total stockholders’ equity

  97,378      (16,493   15,759      96,644   
  

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

$ 1,583,319    $ (20,991 $ 5,701    $ 1,568,029   
  

 

 

    

 

 

   

 

 

   

 

 

 


Notes To Unaudited Pro Forma Condensed Consolidated Financial Information

Note A – Pro Forma Adjustments

The following is a summary of the pro forma adjustments reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information based on preliminary estimates, which may change as additional information is obtained:

(a)  -  Income Taxes

Reflects the adjustments to income tax payables, receivables, deferred tax assets, and deferred tax liabilities including the estimated benefit arising from a bad debt expense deduction associated with intercompany loan forgiveness which will be retained by the consolidated Company related to the shut-down of Redbox Canada GP.

(b)  -  Redbox Kiosks

Reflects the adjustments to transfer Redbox Canada kiosks to Redbox U.S. as partial satisfaction for intercompany debt. The kiosks will be utilized by the consolidated Company for future deployment into the Redbox U.S. network of kiosks.