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American Coin Merchandising Announces Results for Q4 and Year

For the fourth quarter of 2000, revenues increased to $34.4 million compared to $31.2 million for the same period in 1999.

General and administrative expenses for the quarter were $6.4 million and were consistent with the same period last year. EBITDA increased 18.2% to $6.2 million compared to $5.3 million for the comparable period in 1999 (EBITDA is a measure of operating cash flows which represents operating earnings before interest, taxes, depreciation, amortization and non-cash expenses).

Operating earnings increased 5.5% to $2.6 million compared to $2.4 million for the comparable period in 1999. Cash earnings for the quarter were $739,000, or $0.11 per diluted share, compared to $745,000, or $0.12 per diluted share for the same period in 1999.

Earnings before an extraordinary item for the recent quarter were $394,000, or $0.06 per diluted share, compared to earnings before extraordinary items of $400,000, or $0.06 per diluted share for the same period last year. Net earnings for the recent quarter were $229,000, or $0.04 per diluted share, after recognizing the effect of the Company's debt refinancing.

For the year, revenues rose 7.7% to a record $129.8 million compared to $120.5 million for 1999. EBITDA increased 22.7% to $22.7 million compared to $18.5 million for last year. General and administrative expenses decreased 2.3% to $25.1 million compared to $25.7 million in 1999.

Operating earnings were $9.4 million compared to an operating loss of $840,000, which included a one-time charge and reserves of $7.9 million, for the comparable period in 1999. Cash earnings were $2.4 million, or $0.37 per diluted share, compared to $1.6 million, or $0.25 per diluted share for the same period last year. Earnings before an extraordinary item were $1.0 million, or $0.16 per diluted share, compared to a loss of $4.5 million, or $0.70 per diluted share for the prior year. Net earnings for the year were $859,000, or $0.13 per diluted share.

``While we had a solid fourth quarter, our machine averages were impacted by severe weather experienced during late November through December by offices servicing the mid-section of the country through portions of the northeast, as a result, our averages during the quarter were down 2.3% compared to averages achieved during the same period last year,'' said Randall J. Fagundo, President and Chief Executive Officer. ``We continue our focus on improving the financial performance of our machines on location through improved merchandising and continued focus on controlling our general and administrative expenses.'' added Mr. Fagundo.

Mr. Fagundo added, ``During the fourth quarter, we completed a $55 million credit refinancing which includes a $45 million term loan and $10 million revolving credit facility through GE Capital Corporation and Comerica Bank. This facility provides us additional flexibility to expand our amusement vending equipment placements and strengthen our current financial position.

Our continued efforts in reducing inventory levels resulted in a $4.7 million or 31.6% reduction from inventory levels compared to December 31, 1999. With our success in obtaining new accounts throughout the year, we continue to experience positive growth in revenue, operating earnings and EBITDA on a comparable quarterly basis as we continue to benefit from our efforts to reduce the level of our general and administrative expenses.''

2001 Outlook

``Leveraging on our success in obtaining new placement contracts throughout 2000, we anticipate another year of growth in net new placements during 2001,'' said Mr. Fagundo. For 2001, the Company expects between 500 and 1,000 net new placements of amusement vending equipment with vending revenue for the year of between $138 and $143 million and EBITDA of $24 to 26 million. The Company expects net payments on its credit facility and other debt for the year of $8 to $10 million. The Company also expects general and administrative expenses to be 18 to 19 percent of total revenue.

For the first quarter of 2001, the Company expects between 100 and 150 net new placements of amusement vending equipment with vending revenues between $33 and $35 million, representing year-over-year growth of 5 to 13 percent. The Company also expects EBITDA growth of 6 to 11 percent, compared to the first quarter of 2000 and the general and administrative expense percentage to be 18 to 20 percent of total revenue.

A primary key to the financial success of the Company is the weekly revenue generated per machine, which has a history of fluctuating. There can be no assurance that such efforts will continue to have a positive impact on the performance of the amusement vending equipment. The average weekly revenue generated per machine may decline or fluctuate in the future, which could prevent the Company from achieving its financial performance goals.

The Company may not be able 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 machines as well as to maintain or increase the average financial performance of the machines.

The Company's ability to place additional machines depends on a number of factors beyond the Company's control, including general business and economic conditions. Installation of additional machines will also depend, in part, upon the Company's ability to secure additional national and regional retail accounts and to obtain approval to place additional machines in individual locations of such accounts. The Company, its franchisees and their suppliers also may be unable to place and adequately service additional machines, which could have a material adverse effect on the Company's business, financial condition and results of operations.

American Coin Merchandising, Inc., headquartered in Boulder, Colorado, and its franchisees own and operate more than 13,000 coin-operated skill-crane machines throughout the United States. These machines dispense stuffed animals, plush toys, watches, jewelry and other items. The Company's distinctive skill-crane machines are placed in supermarkets, mass merchandisers, bowling centers, bingo halls, bars, restaurants, warehouse clubs and similar locations.

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