<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-26580
AMERICAN COIN MERCHANDISING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1093721
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5660 CENTRAL AVENUE, BOULDER, COLORADO 80301
(Address of principal executive offices)
(Zip Code)
(303) 444-2559
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No[ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS MAY 1, 1999
----- -----------
<S> <C>
Common Stock, $0.01 par value 6,475,069 shares
</TABLE>
<PAGE> 2
AMERICAN COIN MERCHANDISING, INC.
INDEX
<TABLE>
<CAPTION>
PART 1 FINANCIAL INFORMATION. PAGE
<S> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
March 31, 1999 and December 31, 1998............................... 3
Consolidated Condensed Statements of Earnings for the
Three Months Ended March 31, 1999 and 1998......................... 4
Consolidated Condensed Statement of Stockholders' Equity for the
Three Months Ended March 31, 1999.................................. 5
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998......................... 6
Notes to Consolidated Condensed Financial Statements................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 8
PART II OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K.......................................... 12
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS
AMERICAN COIN MERCHANDISING, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------- -------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................................................ $ 2,829,000 $ 2,247,000
Trade accounts and other receivables ..................................................... 1,837,000 1,814,000
Inventories .............................................................................. 11,371,000 12,579,000
Prepaid expenses and other assets ........................................................ 2,187,000 1,581,000
------------- -------------
Total current assets ................................................................. 18,224,000 18,221,000
------------- -------------
Property and equipment, at cost:
Vending machines ......................................................................... 47,308,000 46,704,000
Vehicles ................................................................................. 7,031,000 7,082,000
Office equipment, furniture and fixtures ................................................. 3,272,000 3,074,000
------------- -------------
57,611,000 56,860,000
Less accumulated depreciation ............................................................ (15,151,000) (13,381,000)
------------- -------------
Property and equipment, net .......................................................... 42,460,000 43,479,000
------------- -------------
Placement fees, net of accumulated amortization of $601,000 in 1999 and $480,000 in 1998 .... 780,000 732,000
Costs in excess of assets acquired and other intangible assets, net of accumulated
amortization of $2,452,000 in 1999 and $1,817,000 in 1998 ................................ 47,698,000 48,333,000
Other assets, net of accumulated amortization of $299,000 in 1999 and $199,000 in 1998 ...... 992,000 1,017,000
------------- -------------
Total assets ......................................................................... $ 110,154,000 $ 111,782,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ........................................................ $ 1,872,000 $ 2,155,000
Accounts payable ......................................................................... 3,063,000 3,441,000
Accrued commissions ...................................................................... 1,505,000 1,630,000
Other accrued expenses ................................................................... 1,891,000 1,760,000
------------- -------------
Total current liabilities ............................................................ 8,331,000 8,986,000
Long-term debt, net of current portion ...................................................... 49,447,000 50,310,000
Other liabilities ........................................................................... 1,705,000 2,000,000
Deferred income taxes ....................................................................... 1,346,000 1,346,000
------------- -------------
Total liabilities .................................................................... 60,829,000 62,642,000
------------- -------------
Company obligated mandatorily redeemable preferred securities of subsidiary trust
holding solely junior subordinated debentures ............................................ 15,504,000 15,492,000
Stockholders' equity:
Preferred stock, $.10 par value (Authorized 500,000 shares; none issued) ................. -- --
Common stock, $.01 par value (Authorized 20,000,000 shares; issued and
outstanding 6,475,069 shares) .......................................................... 65,000 65,000
Additional paid-in-capital ............................................................... 21,989,000 21,989,000
Retained earnings ........................................................................ 11,767,000 11,594,000
------------- -------------
Total stockholders' equity ........................................................... 33,821,000 33,648,000
------------- -------------
Total liabilities and stockholders' equity ........................................... $ 110,154,000 $ 111,782,000
============= =============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
AMERICAN COIN MERCHANDISING, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
----------- -----------
<S> <C> <C>
Revenue:
Vending .................................................... $27,766,000 $17,615,000
Franchise and other ........................................ 1,381,000 1,146,000
----------- -----------
Total revenue .......................................... 29,147,000 18,761,000
----------- -----------
Cost of revenue:
Vending, excluding related depreciation and amortization ... 18,215,000 11,580,000
Depreciation and amortization .............................. 1,943,000 1,089,000
----------- -----------
Total cost of vending .................................. 20,158,000 12,669,000
Franchise and other ........................................ 966,000 688,000
----------- -----------
Total cost of revenue .................................. 21,124,000 13,357,000
----------- -----------
Gross profit ........................................... 8,023,000 5,404,000
General and administrative expenses ........................... 5,311,000 3,275,000
Depreciation and amortization ................................. 779,000 188,000
----------- -----------
Operating earnings ..................................... 1,933,000 1,941,000
Interest expense, related parties ............................. -- 11,000
Interest expense, other ....................................... 1,674,000 107,000
----------- -----------
Earnings before income taxes ........................... 259,000 1,823,000
Provision for income taxes .................................... 86,000 638,000
----------- -----------
Net earnings ........................................... $ 173,000 $ 1,185,000
=========== ===========
Basic earnings per share of common stock ............... $ 0.03 $ 0.18
Diluted earnings per share of common stock ............. $ 0.03 $ 0.18
Basic weighted average common shares ................... 6,475,000 6,457,000
Diluted weighted average common shares ................. 6,478,000 6,649,000
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
AMERICAN COIN MERCHANDISING, INC.
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL STOCK-
COMMON PAID-IN RETAINED HOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998 .... $65,000 $21,989,000 $11,594,000 $33,648,000
Net earnings ...... -- -- 173,000 173,000
------- ----------- ----------- -----------
MARCH 31, 1999 ....... $65,000 $21,989,000 $11,767,000 $33,821,000
======= =========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
AMERICAN COIN MERCHANDISING, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
----------- -----------
<S> <C> <C>
Operating activities:
Net earnings ....................................................... $ 173,000 $ 1,185,000
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization .................................. 2,844,000 1,282,000
Compensation expense related to stock options .................. -- 5,000
Changes in operating assets and liabilities:
Trade accounts and other receivables ....................... (23,000) 336,000
Inventories ................................................ 1,208,000 (557,000)
Prepaid expenses and other assets .......................... (681,000) (307,000)
Income taxes payable ....................................... -- 148,000
Accounts payable, accrued expenses and other liabilities ... (667,000) 913,000
----------- -----------
Net cash provided by operating activities .................... 2,854,000 3,005,000
----------- -----------
Investing activities:
Acquisitions of property and equipment, net ........................ (937,000) (3,747,000)
Acquisition of franchisee and others ............................... -- (2,600,000)
Placement fees ..................................................... (189,000) (33,000)
----------- -----------
Net cash used in investing activities ........................ (1,126,000) (6,380,000)
----------- -----------
Financing activities:
Net borrowings (payments) on credit facility ....................... (860,000) 4,714,000
Principal payments on long-term debt ............................... (286,000) (272,000)
Principal payments on notes payable to Control Group ............... -- (337,000)
Acquisition of warrants ............................................ -- (492,000)
Exercise of employee stock options ................................. -- 84,000
----------- -----------
Net cash provided by (used in) financing activities .......... (1,146,000) 3,697,000
----------- -----------
Net increase in cash and cash equivalents .................... 582,000 322,000
Cash and cash equivalents at beginning of period ...................... 2,247,000 1,929,000
----------- -----------
Cash and cash equivalents at end of period ............................ $ 2,829,000 $ 2,251,000
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE> 7
AMERICAN COIN MERCHANDISING, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
American Coin Merchandising, Inc., d/b/a Sugarloaf Creations, Inc. and
American Coin Merchandising Trust I (the "Company") and its franchisees own and
operate coin-operated skill-crane machines ("Shoppes") that dispense stuffed
animals, plush toys, watches, jewelry and other items. The Company's Shoppes are
placed in supermarkets, mass merchandisers, bowling centers, truck stops, bingo
halls, bars, restaurants, warehouse clubs and similar locations. The Company
also operates bulk vending equipment, kiddie rides and video equipment that are
located primarily in supermarkets and mass merchandisers. At March 31, 1999, the
Company had 41 field offices with operations in 41 states and there were 14
Company franchisees operating in 16 territories.
The accompanying consolidated condensed financial statements have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Certain amounts for prior periods have been reclassified to conform
to the March 31, 1999 presentation. Although the Company believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these consolidated condensed financial statements be read in
connection with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1998.
In the opinion of the Company, the accompanying consolidated condensed
financial statements include all adjustments (consisting of normal recurring
accruals and adjustments) required to present fairly the Company's financial
position at March 31, 1999 and December 31, 1998, and the results of its
operations for each of the three month periods ended March 31, 1999 and 1998,
and the cash flows for each of the three month periods then ended.
The operating results for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999.
2. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
A schedule of supplemental cash flow information follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
---------- ----------
<S> <C> <C>
Cash paid during the period:
Interest paid .......................................... $1,659,000 $ 119,000
Income taxes paid ...................................... 47,000 490,000
Significant noncash investing and financing activity--
note payable issued for acquisition of franchisee ...... -- 1,200,000
</TABLE>
3. EARNINGS PER SHARE
Basic earnings and diluted earnings per share are computed by dividing
earnings available to common stockholders by the weighted average number of
common shares outstanding during the period and by all dilutive potential common
shares outstanding during the period, respectively. The weighted average number
of shares used in the computation of basic and dilutive earnings per share were
6,475,069 and 6,477,851, respectively, for the three months ended March 31, 1999
and 6,457,226 and 6,649,240, respectively for the three months ended March 31,
1998.
4. INCOME TAXES
Quarterly income taxes are computed using the anticipated effective tax
rate for the year.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this section and the Company's Form 10-K for the
year ended December 31, 1998.
GENERAL
Substantially all of the Company's revenue and gross profit is derived from
Company-owned Shoppes. The Company's revenue and gross profit in a particular
period is directly related to the number of Shoppes in operation during the
period. Management believes that the Company's business is somewhat seasonal,
with average revenue per machine per week greater during the Easter and
Christmas periods. Vending revenue represents cash receipts from customers using
vending machines and is recognized when collected. The cost of vending revenue
is comprised of the cost of vended product, location commissions, depreciation,
and direct service cost.
Franchise and other revenue represents the Company's percentage of gross
vending revenue generated by Shoppes owned and operated by franchisees, as well
as product sold to franchisees and non-franchisee customers. Product sold to
franchisees and non-franchisees consists of goods to vend in the Shoppes.
Equipment sales to the franchisees have been done on a pass-through basis from
the Company's main suppliers. The Company anticipates that franchise and other
revenue will increase in the future as a result of the sale of product to
non-franchisee customers.
REVENUE
Total revenue for the first three months of 1999 increased 55.4% to $29.1
million from $18.8 million for the same period in 1998.
Vending revenue increased $10.2 million or 57.6% for the first three months
of 1999 to $27.8 million from $17.6 million for the comparable period in 1998,
primarily as a result of a 62.9% increase in the average number of Shoppes in
place during the first three months of 1999 compared to the average number in
place during the same period in 1998.
The Company has recently experienced substantial growth, however, there can
be no assurance that the Company will continue to grow at historical rates or at
all. The Company's ability to generate increased revenue and achieve higher
levels of profitability will depend upon its ability and the ability of its
franchisees to place additional Shoppes as well as to maintain or increase the
average financial performance of the Shoppes. The Company's ability to place
additional Shoppes depends on a number of factors beyond the Company's control,
including general business and economic conditions. Installation of additional
Shoppes will also depend, in part, upon the Company's ability to secure
additional national and regional supermarket, mass merchandiser and restaurant
chain accounts and to obtain approval to place additional Shoppes in individual
locations of such accounts. The Company, its franchisees and their suppliers
also may be unable to place and adequately service additional Shoppes.
The Company has recently completed a number of acquisitions (15
acquisitions since June 1, 1996, including ten acquisitions since October 1,
1997). For example, the Company's results were effected by the interest expense
and amortization of goodwill related to the acquisitions completed in the second
half of 1998. The Company's results were also affected by the costs associated
with the integration of operational and administrative functions. There can be
no assurance that the Company will be able to integrate the businesses it has
acquired successfully or in a timely manner in accordance with its strategic
objectives. Failure to effectively and efficiently integrate acquired businesses
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Franchise and other revenue increased $235,000 or 20.5% to $1.4 million for
the first three months of 1999 as compared to the same period in 1998 due to an
increase in product sales to non-franchisees offset by lower product and machine
sales and franchise royalties from franchisees due to the acquisition of
franchisees by the Company.
COST OF REVENUE AND GROSS PROFIT
The cost of vending operations for the first three months of 1999 increased
$7.5 million or 59.1% to $20.2 million from $12.7 million for the comparable
period in 1998. The vending operations' contribution to gross profit for the
first three months of 1998 increased to $7.6 million, which represents a 53.8%
increase over gross profit from vending operations realized in the same period
in 1998. The vending gross profit achieved during the first quarter of 1999 was
27.4% of vending revenue, which represents a .7 percentage point decrease from
the gross profit percentage achieved during the first quarter of 1998. The
decline in vending margin resulted primarily from higher depreciation and
amortization.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED).
The cash vending gross profit (vending revenue minus cost of vended
product, location commissions and direct service cost) achieved during the first
quarter of 1999 was 34.4% of vending revenue, which is .1 percentage point
higher than the cash vending gross profit achieved during the first quarter of
1998. The cash vending gross profit for the current quarter is also .4
percentage points higher than the cash vending gross profit achieved during the
fourth quarter of 1998. The Company attributes some of the shortfall in fourth
quarter 1998 cash vending gross profit to lower per week average Shoppe revenue
due to an effective product mix. The Company has taken steps to improve Shoppe
performance by redeploying over 300 Shoppes during the first quarter of 1999 and
addressing some of the problems associated with the effectiveness of the product
mix. While the Company has taken these steps, there can be no assurance that
such efforts will continue to have a positive impact on the performance of the
Shoppes.
Substantially all the Company's plush toys and other products dispensed
from the Shoppes are produced by foreign manufacturers. A majority are purchased
directly by the Company from manufacturers in the People's Republic of China
("China"). The Company purchases its other products indirectly from vendors who
obtain a significant percentage of such products from foreign manufacturers. As
a result, the Company is subject to changes in governmental policies, the
imposition of tariffs, import and export controls, transportation delays and
interruptions, political and economic disruptions and labor strikes which could
disrupt the supply of products from such manufacturers. Among other things, the
loss of China's "most favored nation" status under U.S. tariff laws could result
in a substantial increase in the import duty of certain products manufactured in
China, which could result in substantially increased costs for certain products
purchased by the Company which could have a material adverse effect on the
Company's business, financial condition and results of operation.
For the first quarter of 1999, gross profit on franchise and other revenue
decreased to $415,000 or 30.1% of franchise and other revenue, as compared to
$458,000 or 40.0% of franchise and other revenue for the first quarter of 1998.
The decrease in gross margin as a percentage of franchise and other revenue
resulted primarily from lower franchise royalties earned from franchisees due to
the acquisition of franchisees by the Company.
OPERATING EXPENSE
General and administrative expenses and depreciation and amortization as a
percentage of revenue increased to 20.9% for the first three months of 1999, as
compared to 18.5% for the comparable period in 1998. The increase in general and
administrative expenses results primarily from the additional operating and
satellite offices opened, amortization of goodwill and other general and
administrative expenses related to the acquisitions made by the Company during
the second half of 1998. The Company anticipates higher general and
administrative expenses to continue through 1999.
OPERATING EARNINGS
Operating earnings for the first three months of 1999 decreased .4% to $1.9
million, or 6.6% of total revenue, as compared to $1.9 million, or 10.3% of
total revenue for the comparable period in 1998. The decrease in operating
earnings as a percentage of revenue results primarily from the lower gross
margin achieved from the vending operation, lower franchise royalties and the
increase in general and administrative expenses.
NON OPERATING INCOME (EXPENSE)
Interest expense for the first three months of 1999 increased $1.6 million
to $1.7 million as compared to the same period in 1998. The increase in interest
expense relates to the acquisitions made by the Company in the second half of
1998. The Company's interest expense is directly related to its level of
borrowings and changes in the underlying interest rates.
NET EARNINGS AND NET EARNINGS PER SHARE
Net earnings for the first three months of 1999 decreased 85.4% to
$173,000, or .6% of total revenue, as compared to net earnings of $1.2 million
for the comparable period in 1998. Diluted earnings per share for the first
three months of 1999 decreased 83.3% to $0.03, as compared to $0.18 for the
first three months of 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity and capital resources
historically have been cash flows from operations, borrowings under the
Company's bank credit facility and issuance of its equity securities. These
sources of
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED).
cash flows have been offset by cash used for acquisitions, investment in
skill-crane machines, other amusement vending businesses and payment of
long-term borrowings.
Net cash provided by operating activities was $2.9 million and $3.0 million
for the three months ended March 31, 1999 and 1998, respectively. The Company
anticipates that cash will continue to be provided by operations as additional
skill-crane machines and other amusement devices are placed in service. Cash
required in the future is expected to be funded by existing cash and cash
provided by operations, borrowings under the Company's credit facility and the
issuances of debt securities or sale of equity securities.
Net cash used in investing activities was $1.1 million and $6.4 million for
the three months ended March 31, 1999 and 1998, respectively. Capital
expenditures for the three months ended March 31, 1999 and 1998 amounted to
$937,000 and $3.7 million, respectively, of which $774,000 and $2.8 million was
for the acquisition of skill-crane and other machines. The acquisition of a
franchisee and an amusement vending business in 1998 used $2.6 million.
Net cash used by financing activities was $1.1 million for the three months
ended March 31, 1999 while cash provided by financing activities was $3.7
million for the three months ended March 31, 1998. Financing activities consist
of advances and repayments on the Company's credit facility and other debt
obligations and in 1998 the repurchase of warrants.
Under its current credit facility, the Company may borrow up to $55.0
million, less an interest reserve of $2.2 million, at the bank's prime interest
rate (7.75% at March 31, 1999) or, at the Company's option, an interest rate
based on the current LIBOR rate. The interest reserve will be reduced quarterly,
as interest payments are made on the Company's Trust Preferred Securities. The
credit facility is available through July 13, 2001 and at March 31, 1999 there
was a principal amount of approximately $45.7 million outstanding and $6.3
million available under the facility. The credit facility provides that certain
financial ratios be met and places restrictions on, among other things, the
occurrence of additional debt financing and the payment of dividends. The
Company was in compliance with such financial ratios and restrictions at March
31, 1999.
The Company may use a portion of its capital resources to effect
acquisitions of franchisees. Because the Company cannot predict the timing or
nature of acquisition opportunities, or the availability of acquisition
financing, the Company cannot determine the extent to which capital resources
may be used. Company management believes that funds generated from operations,
borrowings available under its credit facility, the Company's ability to
negotiate additional and enhanced credit agreements and to sell additional
equity securities will be sufficient to meet the Company's foreseeable operating
and capital expenditure needs.
YEAR 2000 COMPLIANCE
The Year 2000 issue refers to the fact that certain management information
systems use two digit date fields which recognize dates using the assumption
that the first two digits are "19" (i.e., the number 98 is recognized as the
year 1998). When the year 2000 occurs, these systems could interpret the year as
1900 versus 2000, which in turn, could result in system failures or
miscalculations causing disruptions to the Company and its suppliers.
To address the issue, the Company has established a compliance team that
includes outside consulting staff. The team has instituted a multi-phase plan
that includes; inventorying all computer systems, software and business
equipment to assess the impact of the Year 2000; obtaining documentation from
each software vendor to ascertain their compliance; developing solution plans
related to upgrading, modifying or replacing affected systems; and obtaining
documentation from significant suppliers stating their Year 2000 readiness.
The compliance team has determined that the Company's critical operating
systems, accounting systems, computer systems and business equipment are the
major resources that are affected by the Year 2000 issue. While certain of these
systems will need to be upgraded or replaced, the identified systems and or
programs are primarily "off the shelf" products with Year 2000 updates
available. The Company expects to have these systems fully compliant by June 30,
1999.
As part of its Year 2000 plan, the Company is in the process of contacting
its significant suppliers to determine the extent to which the systems of such
suppliers are Year 2000 compliant. The Company will continue to contact its
suppliers in an effort to minimize any potential Year 2000 compliance impact,
however, it is not possible to guarantee their compliance.
The total cost for the Year 2000 plan has been and is expected to be
minimal.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED).
Management believes that it has an effective plan in place to adequately
address the Year 2000 issue in a timely manner. Nevertheless, failure of third
parties upon which the Company's business relies could result in disruption of
the Company's supply of equipment and other general problems related to daily
operations. In addition, disruptions in the economy generally resulting from
Year 2000 issues could adversely affect the Company. Although, the Company
believes its Year 2000 plan will adequately address the Company's internal
issues, the overall risks associated with the Year 2000 issue cannot be fully
identified until the Company receives more responses from significant suppliers.
Accordingly, the amount of potential liability and lost revenue, if any, cannot
be reasonably estimated at this time.
11
<PAGE> 12
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
11.1 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
12
<PAGE> 13
AMERICAN COIN MERCHANDISING, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN COIN MERCHANDISING, INC.
May 13, 1999 By: /s/ W. John Cash
- ---------------------- -------------------------------
Date W. John Cash
Vice President,
Chief Financial Officer
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
11.1 Statement re: Computation of Per Share Earnings 15
27 Financial Data Schedule 16
</TABLE>
<PAGE> 1
EXHIBIT 11.1
AMERICAN COIN MERCHANDISING, INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---------- ----------
<S> <C> <C>
Net earnings ....................................... $ 173,000 $1,185,000
========== ==========
Common shares outstanding at beginning of period ... 6,475,069 6,452,904
Effect of shares issued during the period ...... -- 4,322
---------- ----------
Basic weighted average common shares ............... 6,475,069 6,457,226
Incremental shares from assumed conversions:
Stock options .................................. 2,782 163,520
Warrants ....................................... -- 28,494
---------- ----------
Diluted weighted average common shares ............. 6,477,851 6,649,240
========== ==========
Basic earnings per share ....................... $ 0.03 $ 0.18
Diluted earnings per share ..................... $ 0.03 $ 0.18
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0
0
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