CSTR

Coinstar, Inc.

We are a leading provider of automated retail solutions offering convenient products and services that benefit consumers and drive incremental retail traffic and revenue for retailers. Our core offerings in automated retail include our Coin and DVD businesses. Our Coin services consist of self-service coin-counting kiosks where consumers can convert their coin to cash, a gift card or an e-certificate, among other options. Our DVD services consist of self-service DVD kiosks where consumers can rent or purchase movies. Our products and services also include money transfer services and electronic payment (“E-payment”) services. Our products and services can currently be found at more than 95,000 points of presence including supermarkets, drug stores, mass merchants, financial institutions, convenience stores, restaurants, and money transfer agent locations. We were incorporated in Delaware on October 12, 1993.

On January 1, 2008, we exercised our option to acquire a majority ownership interest in the voting equity of Redbox Automated Retail, LLC (“Redbox”) under the terms of the LLC Interest Purchase Agreement dated November 17, 2005. In conjunction with the option exercise and payment of $5.1 million, our ownership interest increased from 47.3% to 51.0%. Since our original investment in Redbox, we had been accounting for our 47.3% ownership interest under the equity method in our Consolidated Financial Statements. Effective with the close of this transaction on January 18, 2008, we began consolidating Redbox’s financial results into our Consolidated Financial Statements. On February 26, 2009, we purchased the remaining outstanding interests of Redbox from GetAMovie, Inc and other minority interest holders. The total consideration paid for the 2009 Redbox transaction was $162.4 million including cash of $113.9 million and Coinstar common stock of $48.5 million. Redbox is now a wholly-owned subsidiary of Coinstar.

On January 1, 2008, we acquired GroupEx Financial Corporation, JRJ Express Inc. and Kimeco, LLC (collectively, “GroupEx”), for an aggregate purchase price of $70.0 million. GroupEx provides money transfer services throughout the United States, Mexico and Guatemala.

On September 8, 2009, we sold our subsidiaries comprising our Entertainment Business (“Entertainment Business”) to National Entertainment Network, Inc (“National”) for nominal consideration. With the transaction, National assumed the operations of the Entertainment Business, including substantially all of the Entertainment Business’s related assets and liabilities. We have presented the disposition of our Entertainment Business as well as the operating loss from our Entertainment Business under discontinued operations in our Consolidated Statement of Operations, for all periods presented. The cash flows related to our Entertainment Business have
been separately disclosed in our Consolidated Statement of Cash Flows under the operating, investing, and financing positions attributable to our discontinued operations.

We are headquartered in Bellevue, Washington. Our Redbox subsidiary has office space in Oakbrook Terrace, Illinois. Our main E-payment office is located in Rosemont, Illinois. We also have money transfer offices in La Mirada, California and London, England.

As of December 31, 2009, we had approximately 2,600 employees. We have more than 1,200 field service employees throughout the United States and internationally who have broadened our geographic reach to develop and maintain strong relationships with retailers.

In early 2008, we assessed our business segments due to changes in our business and product lines as well as our organizational structure. We redefined our business segments from North America and International to Coin and Entertainment services, DVD services, Money Transfer services and E-payment services. With the sale of the Entertainment Business on September 8, 2009, we now report Coin services as its own segment.

Coin services

We launched our Coin services business with the installation of the first Coinstar® coin-counting machine in the early 1990s and in 2001 we began offering our services in the United Kingdom. We are the leader in the self-service coin-counting services market in the United States. We own and operate the only multi-national fully automated network of self-service coin-counting machines across the United States, Canada, Puerto Rico, Ireland and the United Kingdom. We estimate that at any one time, there is $7.0 billion to $10.0 billion worth of coin sitting idle in households in the United States. In 2009, consumers processed more than $2.9 billion worth of coin through our coin-counting machines.

We own and service all of our coin-counting machines, providing a convenient and trouble free service to retailers. Coin-counting revenue is generated through transaction fees from our consumers and retailers. Consumers feed loose change into the machines, which count the change and then dispense vouchers or, in some cases, issue E-payment products, at the consumer’s election. Each voucher lists the dollar value of coins counted, less our transaction fee. When consumers elect to have a stored value card or e-certificate issued, the transaction fee normally charged to the consumer is charged instead to the card issuers for the coin-counting services.

Since inception, our coin-counting machines have counted and processed more than 440.6 billion coins worth more than $24.5 billion in more than 661.5 million self-service coin-counting transactions. We own and operate more than 19,200 coin-counting machines in the United States, Canada, Puerto Rico, Ireland and the United Kingdom (approximately 12,500 of which are E-payment enabled). Coin services revenue comprised 23% of total consolidated revenue for 2009.

DVD services

Through our subsidiaries Redbox and DVDXpress we offer self-service DVD rentals through 22,400 kiosks where consumers can rent or purchase movies. Our DVD kiosks are installed primarily at leading grocery stores, mass retailers, drug stores, restaurants and convenience stores. Our DVD kiosks supply the functionality of a traditional video rental store, yet typically occupy an area of less than ten square feet. Consumers use a touch screen to select their DVD, swipe a valid credit or debit card, and receive their movie(s). The process is designed to be fast, efficient and fully automated with no membership fees. DVD services revenue comprised 67% of total consolidated revenue for 2009.

Typically, the DVD rental price is a flat fee plus tax for one night and if the consumer chooses to keep the DVD for additional nights, the consumer is charged for each additional night. Redbox consumers may reserve a movie online or via an iPhone and pick the DVD up at the selected Redbox location; the DVD can be returned to any Redbox location. Our DVD kiosks are available in all states in the continental United States, Puerto Rico and the United Kingdom and offer our consumers a convenient home entertainment solution. We generate revenue primarily through fees charged to rent or purchase a DVD, and pay retailers a percentage of our revenue. We obtain our inventory of DVD titles and copy depth through licensing arrangements with certain studios, pursuant to which we agree to license minimum quantities of theatrical and direct-to-video DVDs for rental at our kiosks. In addition, we also obtain inventory from certain wholesale distributors and third-party retailers. In each case, our goal is to achieve satisfactory availability rates to meet consumer demand while also maximizing our margins.

Money Transfer services

Through our subsidiaries Coinstar Money Transfer and GroupEx, we offer money transfer services globally, with a network of 49,000 locations across 140 countries. Our money transfer services provides an easy to use, reliable and cost effective way to send money around the world and is specially suited for individuals away from home who need to send money to their family and friends or to manage their personal finances. Money Transfer services revenue comprised 8% of total consolidated revenue for 2009.

E-payment services

We offer E-payment services, including activating and reloading value on prepaid wireless accounts, selling stored value cards, loading and reloading prepaid debit cards and prepaid phone cards, selling prepaid phones and providing payroll card services. We offer various E-payment services in the United States and the United Kingdom through 25,000 point-of-sale terminals, 300 stand-alone E-payment kiosks and 12,500 E-payment-enabled coin-counting machines in supermarkets, drugstores, universities, shopping malls, and convenience stores. E-payment services revenue comprised 2% of total consolidated revenue for 2009.