American Coin Merchandising Expects Lower Earnings For Third Quarter
Wednesday, November 4, 1998 07:01 AM
BOULDER, Colo., Nov. 4 /PRNewswire/ -- American Coin Merchandising, Inc. (Nasdaq: AMCN) today announced that it expects earnings for the quarter ended September 30, 1998 to be lower than earnings for the quarter ended June 30, 1998.
"The Company has experienced record revenues and gross profit during the third quarter and expects to continue to experience growth in these areas through the remainder of the year. However, the impact of the amortization of goodwill from our recently completed acquisitions has increased our general and administrative expense over the second quarter levels," said Jerome M. Lapin, president and chief executive officer. "Primarily as a result of the impact of amortization of goodwill, we expect our general and administrative expenses to be approximately $2 million over those reported for the second quarter of 1998. In addition, we have incurred approximately $0.9 million of additional interest expense in the third quarter to fund our investment in acquisitions and additional machines." The higher general and administrative expenses also reflect redundant accounting and management information functions associated with the Company's recent acquisitions. The Company plans to integrate and absorb these separate functions and eliminate certain duplicative costs during the first quarter of 1999.
Since October of 1997, the Company has completed ten acquisitions totaling $50.5 million in purchase price, adding approximately 2,400 skill-crane machines and approximately 2,700 other vending and amusement machines in new retail accounts. The Company added that it does not expect the increased expense levels to prevent it from continuing to place additional machines in accordance with previous plans.
Mr. Lapin added, "We expect that general and administrative and interest expense levels will continue to be higher through the rest of 1998 and into 1999." In addition, the Company has found it necessary to handle its own plush product warehousing in the Seattle area due to increased plush product requirements and insufficient space available at the public warehouse previously used by the Company. During the period of transition to the new warehouse facility, the Company has incurred additional costs associated with moving product from two warehouse facilities that will negatively affect the Company's earnings in the fourth quarter of 1998. Mr. Lapin noted, "We strongly believe that our investments in acquisitions, new machines and corporate infrastructure will enable us to continue in our efforts to enhance stockholder value."
American Coin Merchandising, Inc., headquartered in Boulder, Colorado, and its franchisees own and operate more than 11,500 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.
This news release contains forward looking statements that involve risk and uncertainties. Future events may differ materially from those discussed herein, due to a number of factors, including uncertainties related to the increase in expenses related to acquisitions and the Company's ability to integrate acquired businesses. These factors are more fully discussed in the Company's Prospectus dated September 23, 1998 under the headings "Risk Factors-Growth and Management of Growth" and "Risk Factors-Integration of Acquisitions." In addition, the Company's results could also be affected by a number of other risks and uncertainties which are more fully discussed under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Prospectus dated September 23, 1998.
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