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<SEC-DOCUMENT>0001032210-02-000487.txt : 20020415
<SEC-HEADER>0001032210-02-000487.hdr.sgml : 20020415
ACCESSION NUMBER: 0001032210-02-000487
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020328

FILER:

COMPANY DATA:
COMPANY CONFORMED NAME: COINSTAR INC
CENTRAL INDEX KEY: 0000941604
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200]
IRS NUMBER: 913156448
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231

FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-22555
FILM NUMBER: 02589675

BUSINESS ADDRESS:
STREET 1: 1800 114TH AVENUE SE
STREET 2: SUITE 200
CITY: BELLEVUE
STATE: WA
ZIP: 98004
BUSINESS PHONE: 4259438000

MAIL ADDRESS:
STREET 1: 13231 S E 36TH STREET
STREET 2: SUITE 200
CITY: BELLEVUE
STATE: WA
ZIP: 98006
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>d10k405.txt
<DESCRIPTION>FORM 10-K405 FOR THE FISCAL YEAR ENDED 12/31/2001
<TEXT>
<PAGE>

================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

-----------------

FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934

Commission File Number: 000-22555

COINSTAR, INC.
(Exact name of registrant as specified in its charter)

Delaware 94-3156448
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

1800 114th Avenue SE, Bellevue, 98004
Washington (Zip Code)
(Address of principal executive
offices)

(425) 943-8000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

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 preceding 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant, based upon the closing price of Common Stock
on March 15, 2002 as reported on the NASDAQ National Market, was approximately
$458,719,000. Shares of Common Stock held by each executive officer and
director and by each shareholder whose beneficial ownership exceeds 5% of the
outstanding Common Stock at March 15, 2002 have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

As of March 15, 2002, there were 21,685,541 shares of the registrant's
Common Stock outstanding.

================================================================================

<PAGE>

FORM 10-K
Index

<TABLE>
<C> <S> <C>
PART I
Item 1. Business.................................................................. Page 3
Item 2. Properties................................................................ Page 14
Item 3. Legal Proceedings......................................................... Page 14
Item 4. Submission of Matters to a Vote of Security Holders....................... Page 14

PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters.. Page 15
Item 6. Selected Financial and Other Data......................................... Page 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ Page 18
Item 7a. Quantitative and Qualitative Disclosures About Market Risk................ Page 27
Item 8. Financial Statements and Supplementary Data............................... Page 27
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure................................................................ Page 27

PART III
Item 10. Directors and Executive Officers of the Registrant........................ Page 28
Item 11. Executive Compensation.................................................... Page 31
Item 12. Security Ownership of Certain Beneficial Owners and Management............ Page 36
Item 13. Certain Relationships and Related Transactions............................ Page 37

PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......... Page 38

SIGNATURES.......................................................................... Page 40
</TABLE>

<PAGE>

PART I

Item 1. Business.

Our disclosure and analysis in this Annual Report on Form 10-K contains
forward-looking statements regarding our business, prospects and results of
operations that involve risks and uncertainties. Our actual results could
differ materially from the results that may be anticipated by such
forward-looking statements and discussed elsewhere in this report. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed under the captions "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" as well as those
discussed elsewhere in this report. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this report. We undertake no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and in our other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business, prospects and results of
operations.

Summary

We were incorporated in the state of Delaware on October 12, 1993. We own
and operate the only nationwide fully-automated network of self-service
coin-counting machines installed in supermarkets across the United States and
in Canada. We have relationships with 19 of the 20 largest supermarket chains
(excluding mass merchandisers) in the United States, a well-trained field
service organization and a sophisticated, highly secure and scalable two-way,
wide-area communications network. We consider our United States and Canada
business our North American core business segment. Our other business segment
is our United Kingdom operation, which we are developing to leverage the
established platform of our core business. On May 1, 2001, we announced plans
to rollout the Coinstar(R) coin-counting service in the United Kingdom and
reached agreements with Asda Stores Ltd. and Sainsbury's Supermarkets Ltd., two
of the three largest supermarket chains in the United Kingdom, to begin
installing additional machines in their stores. To date, we have installed over
250 machines in the United Kingdom.

In June 2001, we announced that we were taking steps to sell the assets of
our Meals.com subsidiary in order to pursue an orderly wind-down of the
business. In October 2001, we sold certain assets of Meals.com to Nestle USA,
Inc., including certain contracts, web site content and database information,
applicable trademarks, as well as specified software and licenses relating to
the Meals.com web site. All other operations of Meals.com ceased as of
September 30, 2001.

We launched our North American core business with the installation of the
first Coinstar unit in 1993. Since inception, our core business has counted and
processed more than 100 billion coins worth over $4.5 billion in more than 140
million customer transactions. With over 200 retail partners (including
supermarket chains and independent operators), we currently operate more than
9,300 Coinstar units in 130 regional markets across North America. Our North
American network of machines is installed in 46 states, the District of
Columbia and in Canada.

The Coinstar coin-counting unit, which is about the size of an ATM, is
highly accurate, durable, easy to use, easy to service and capable of
processing up to 600 coins per minute. It accepts consumers' loose change and
then prints out a voucher listing the total number of coins counted by
denomination and dollar value, less our processing fee. Consumers may then
apply the vouchers to their retail purchases or redeem the vouchers for cash.
Our coin-counting service provides consumers with a convenient and reliable
means of converting loose coins into spendable cash. Our service also benefits
our retail partners by providing an additional source of revenue, increasing
store traffic, promoting sales and reducing internal store coin handling
expenses.

<PAGE>

Each Coinstar unit is powered by a Pentium(R) PC and is designed to operate
as part of a scalable, two-way, wide-area communications network. Our
sophisticated fully-automated network enables us to track each machine 24 hours
a day and provides key financial data and operating statistics to our field
service representatives, coin transportation partners, processing partners,
banks and our headquarters for analysis and back-up.

Our internal field service organization of approximately 250 technicians is
linked to the Coinstar network, and each field service technician receives a
report every morning via modem detailing which units in his or her technical
service territory require maintenance or repair work. In addition, each
technician receives real-time information throughout the day via wireless
paging. The field service organization provides highly responsive service to
our customers and retail partners by performing preventive maintenance and
repair on each Coinstar unit enabling us to maintain a system-wide unit
availability of 96.5% and 99.9996% accuracy.

Our transportation partners are also linked to the Coinstar network and
receive daily reports that detail which Coinstar units need to be emptied of
accumulated change enabling dynamic route scheduling. The transportation
partners pick up the accumulated change and deliver it to a commercial
processing facility where the coins are sorted. The counts are then re-verified
and checked against the Coinstar network's unit count to ensure accuracy. When
the verification process is complete, the coins are deposited in the local
bank. A wire is sent to the supermarket retailer for 91.1% of the coin value
(as reimbursement for cash paid to the consumer) and the remaining 8.9% of the
coin value is wired to our core business' operating bank account. On a
quarterly basis, we pay 1.0% of the coin value to the supermarket retailer as
revenue sharing.

Financial Information about Industry Segments

See Note 14 to our consolidated financial statements for a summary of net
revenue from unaffiliated customers, operating earnings from continuing
operations and identifiable assets attributable to our business segments for
fiscal years ended 2001, 2000 and 1999.

Significant Coin Recycling Opportunity in the United States

We believe the market for coin recycling is very large and virtually
untapped. Traditionally, banks and other depository institutions have been the
primary means by which consumers could convert coins into cash, but they
typically have provided the service only to their customers and generally only
after the customer has pre-sorted, counted and wrapped the coins--a very
inefficient and labor intensive process. The prevalence of coins in cash
transactions and the lack of a convenient alternative for converting coins into
cash have resulted in the continual accumulation of coins.

Growth Strategy

Our objective is to drive trial and repeat usage of the Coinstar service,
both in North America and in the United Kingdom, and to develop new,
value-added products and services that can be delivered through the Coinstar
network. Key elements of our growth strategy include:

Increasing consumer use of our coin-counting service. In October 2001, we
commissioned NFO WorldGroup, an independent research company, to perform a
study regarding customer awareness and usage of our machines. This study
indicated that we have low market penetration as only approximately 15% of the
people living in markets where Coinstar machines have been installed for 12
months or more have tried our service. However, we enjoy high repeat usage of
the Coinstar service. According to an earlier study performed by NFO WorldGroup
in January 2001, 78% of people who have tried our service indicate the
likelihood to use it again. We believe that through effective marketing we can
build greater awareness of our service that will drive repeat usage to create
recurring revenue streams and enhance the revenue growth of our coin recycling
business.

Expanding the North American core Coinstar network. We plan to selectively
expand our presence in high traffic supermarkets as our primary retail location
because of the prevalence of large regional chains, geographic

<PAGE>

concentration of stores and recurring consumer traffic. We believe an
opportunity exists to increase the number of Coinstar units installed through
increased penetration of existing retail partner stores as well as by entering
into contracts with new partners. Supermarkets offer a large market of
potential consumers, a convenient location for multiple consumer visits and
opportunities for large-scale deployments.

In addition to targeting high traffic supermarkets, we are beginning to
consider ways to reduce the cost to service our Coinstar machines and/or the
cost structure of unit production to allow us to profitably penetrate new
geographic opportunities and new distribution formats, such as high traffic
drug stores, convenience stores and mass merchandisers. If we are successful in
creating new business models with reduced cost structures and can make the unit
economics more attractive in new markets and new distribution formats, we may
be able to significantly expand our viable universe of installations in high
traffic supermarkets beyond the 11,000 to 15,000 unit universe we initially
considered. There can be no assurance, however, that any of the proposed new
business models will result in expansion of our viable universe.

Leveraging the North American core's platform in the United Kingdom. We are
continuing to expand in the United Kingdom. To date, we have installed over 250
Coinstar units in Sainsbury's Supermarkets Ltd and ASDA Stores Ltd and, on a
pilot basis, in Tesco Stores Ltd. These retailers represent the three largest
grocery retailers in the United Kingdom. We believe the United Kingdom offers
an attractive market opportunity given the higher coin value of British
currencies and similar customer profiles to the United States. We estimate that
approximately 1,000 of these supermarket locations are viable primary retail
locations, and believe that we will achieve breakeven EBITDA (defined as
earnings before interest expense, income taxes, depreciation, amortization,
non-cash compensation expense and other income/expense) with approximately 450
to 500 units installed.

Leveraging our existing network of over 9,300 machines in North America, our
core relationships and prime retail locations to provide value-added new
products and services to consumers and our retail partners. Our network of
over 9,300 machines, our relationships with leading supermarket chains and our
prime retail locations form a strategic platform from which we are able to
deliver additional value-added new products and services to consumers and our
retail partners and create additional revenue streams independent of coin
counting. We envision the Coinstar unit as the touch-point for a range of
consumer products and services. For example, we are currently testing a
MasterCard branded prepaid cash card concept on 52 Coinstar machines. If the
business model proves successful, we may begin a rollout by the end of 2002.
There can be no assurance, however, that this business model will prove
successful thereby justifying a full-scale rollout.

The Coinstar Network

Coinstar Unit

Our coin processing unit is comprised of a coin input and cleaning process,
a coin counter that is designed to be jam-resistant, coin collection bins, a
computer, a thermal printer, an input keypad, an internal phone and a color
monitor. Our Coinstar unit is highly accurate, durable, easy to use, easy to
service and capable of processing up to 600 coins per minute. The coin counting
system in our Coinstar unit detects and removes foreign coins, slugs, debris
and damaged coins and directs the coins processed to collection trolleys
located inside the Coinstar unit. Our proprietary technology has enabled our
coin processing units to be available to customers 96.5% of the time. In the
event of any malfunction, our units have a telephone handset so our retail
partners can connect directly to our customer service center using a toll free
number.

Intelligent Communications and Information Systems

Our Coinstar units are controlled by an internal computer that runs a
multi-tasking operating system and are designed to operate as part of a
scalable, two-way, wide-area communications network. In addition to controlling
and coordinating coin sorting and other functions, the computer electronically
records nearly all unit operations. For each coin counting and processing
transaction, the unit produces a unique transaction number, records the dollar
amount, time and duration of the transaction and identifies the number of each
type of coin processed and

<PAGE>

the number of rejected coins. Our network allows Coinstar units to transmit
these key financial data and operating statistics to our headquarters for
analysis and backup. We use this information to accurately track unit coin flow
and operating performance, enabling us to schedule just-in-time coin pick-ups,
provide unit service and perform essential accounting and reporting functions.
In addition, this network enables us to configure and update the units remotely
with a variety of operational and marketing data. The network and associated
features provide the following key benefits:

. Downloadable Information, Software Programs and Systems
Enhancements. With a scalable, two-way, wide-area communications network,
we can send customized information to each Coinstar unit including store
specific advertising, on-screen promotions and coupons. In addition, our
network enables us to download new versions of application and operating
system software to Coinstar units. This ability to perform multiple
functions remotely eliminates costly on-site visits and lowers our per
unit operating costs.

. Enhancement of Field Service Productivity. Each Coinstar unit generates
daily performance and operating reports that are transmitted over the
network to our headquarters for consolidation. We can then electronically
distribute this information through our network to our field service
employees, which enables us to better utilize field service and
transportation personnel. Information on individual unit usage and
operations help us manage the efficiency of coin collection and
transportation activities and reduce downtime resulting from units that
are full of coins.

. Financial Reporting and Reconciliation. We receive financial data and
operating statistics through the network on a daily basis. The financial
and accounting information is reconciled with bank records and coin
collection and transportation processing data logged into the network to
ensure the accuracy, speed and control of each deposit. In addition, our
retail partners automatically receive timely facsimile or email reports
generated by the network detailing information such as transaction volumes
and deposits made for each store.

. Automated Tracking of Coin Collection, Processing and Deposits. Our
two-way, wide-area communications network is securely linked using
sophisticated networking equipment that enables us to accurately track all
coin flow activity from the Coinstar unit to the depository institution.
The Coinstar network is linked with our transportation and coin processing
partners, which enables us to generate key coin tracking data.

. Coinstar Network Scalability. The Coinstar network is scalable to support
the increasing demands resulting from our installation of Coinstar units.
The components of the Coinstar network that reside at headquarters operate
on widely available personal computers with certain reliability features.
In addition, we have built an extensive and secure Intranet on top of our
infrastructure using standard client/server tools provided by leading
industry vendors, allowing for efficient and effective communication
between our employees, supermarket partners and armored car carriers.

Field Service Organization

We have retained a field service organization comprised of approximately 250
dedicated field service employees, supporting personnel as well as third party
providers. Our field service organization provides responsive service to our
retail partners by ensuring the efficient collection and handling of coins and
by performing preventive maintenance and repairs. Key components of the field
service organization include:

. Field Service Personnel. In all our markets, our field service employees
have the primary direct contact with our consumers and retail partners.
Each field service team member is connected to our two-way, wide-area
communications network by laptop computer, mobile phone and pager. Each
Coinstar unit provides specific service information to the responsible
field service employee by directly paging the employee with current
operating information based on a series of predetermined performance
criteria.

. Transportation and Processing Services. Some of our employees provide
limited transportation services for our coin; however, we primarily
contract with third parties to transport and process coin deposited in

<PAGE>

Coinstar units. We believe the use of these contracted resources allows
growth with minimal investment in facilities and equipment. The
transportation service typically includes removing the coin trolleys,
tagging them for deposit, cleaning the Coinstar unit, transporting the
coins for processing at the coin processing facilities and depositing the
coins to our local depository. We have an automated tracking system for
tracking each deposit to each retail partner's account, as well as our
bank account.

. Installation Personnel. An individual account manager manages each
installation. For a typical installation, an operations representative
visits the store prior to the delivery of the Coinstar unit to coordinate
with the store manager on the location of the Coinstar unit within the
store and review site requirements. On the day of delivery, our field
service representative unpacks the unit and conducts a training and
orientation session for store personnel.

Key Benefits of the Coinstar Network to Our Retail Partners

Our retail partner marketing strategy is to significantly increase our
penetration with existing leading retail partners as well as to establish
relationships with new leading retail partners in the largest metropolitan
areas in the United States. We highlight the benefits of our service, which
include:

. Increased Revenues to our Partners. We provide our retail partners an
additional source of revenue through the sharing of 1.0% of the processed
coin value to our supermarket retailer, defined as revenue sharing.

. Increased Store Traffic. We believe the Coinstar unit helps to increase
store traffic by providing consumers with a fun, accurate and convenient
means of converting accumulated change into cash. A January 2001 research
study by NFO WorldGroup indicated that 59% of the Coinstar users were
"very likely" or "somewhat likely" to visit another store to use a
Coinstar unit if no unit were installed in the store they regularly visit.

. Promotes Sales. The January 2001 research study by NFO WorldGroup also
found that Coinstar units promote incremental sales for retailers by
adding new disposable income in shoppers' hands. This study indicated that
forty percent of Coinstar users spend part or all of their cash voucher in
the store. Consumers often view their coin jars as "found money" and
retailers enjoy access to this additional disposable income.

. Reduces Internal Coin Handling Expenses. We offer our retail partners the
ability to process and count their coins without any processing fee
subject to certain restrictions, such as day of the week. We believe that
this service reduces our retail partners' internal coin handling expenses
and losses.

Our Marketing Strategy

Our marketing strategy includes promoting consumer trials of the Coinstar
unit through commercial media, such as selective television and radio
advertising, national and local promotions and through our Coins that Count(R)
program. We are conducting national promotions that increase usage and
awareness while delivering additional value and products to consumers in a
retail environment. For example, during 2001 we ran national promotions with
Warner Home Video and Disney Radio. We also sponsored our own promotion, "Win
Free Groceries for a Year". These types of national promotions through which
the customer receives something in return if they utilize the Coinstar machine
help drive increased traffic to the Coinstar machine and attract new consumers.
On a local basis, we work closely with our retail supermarket partners to
market to their existing customer base. This includes communication through
advertising media already used by our partners, such as cooperative newspaper
advertisements and direct mail circulars, window signs, bag stuffers and
development of local market promotions.

We are also building awareness and attracting new customers by offering the
opportunity to donate coins to non-profit organizations through a
cause-marketing program called Coins that Count. We began the Coins that

<PAGE>

Count cause-marketing program in May 1997, which in part, supports our
philanthropic mission. This philanthropic service provides consumers with a
simple means for making tax-deductible donations. Instead of receiving vouchers
to be redeemed at the retail partner's checkout counter, consumers receive
printed receipts evidencing the value of their donations. A customer who makes
a donation through the Coins that Count program receives a receipt for the
coins deposited, which is fully tax deductible, and the non-profit organization
receives 92.5% of the total funds, which is one of the highest pass-through
rates for non-profit organizations. In 1998, we began a national relationship
with the U.S. Fund for UNICEF as the designated coin processor for their annual
Trick or Treat for Unicef program. During 2000, we initiated a relationship
with the American Red Cross whereby the Coinstar network helps raise money for
Red Cross disaster relief. In 2001, we began a national relationship with the
Leukemia and Lymphoma Society. We also work closely with our supermarket
partners to support numerous other local and regional non-profit organizations.

We continue to test new marketing tactics in order to increase efficiency of
spending. We plan to continue to use effective promotional opportunities in new
markets and in the expansion of existing markets with new and existing retail
partners. In addition to promoting our service in supermarkets, we are also
beginning to consider other business opportunities that will allow us to
partner with non-supermarket and other retailers while maintaining existing
levels of profitability through increased efficiencies.

The Coinstar unit is generally located near the primary entrance areas of
our retail partners and in clear view of the checkout counters or service
centers. We are continually looking at machine design improvements and
increasing the use of sound and animation to attract consumers and stimulate
trials and repeat use.

Product Research and Development

Since inception, we have focused our research and development efforts on
developing and enhancing our operating system and support network for continued
expansion of our network and addition of value-added services. As of December
31, 2001, we employed over 50 software engineers, information technology
specialists and other professional staff in these efforts. We also contract
with a number of specialized outside consultants for additional services.

Manufacturing and Supply

Coinstar units are assembled by two contract manufacturers: NPI Plus and DNE
Manufacturing & Service Company ("DNE"). NPI Plus, a division of Plexus
Corporation, is located in Redmond, Washington and DNE is located in
Wallingford, Connecticut. Both are manufacturing facilities that utilize
several sub-suppliers to provide components and subassemblies. Each Coinstar
unit is manufactured to our proprietary designs and specifications. We own all
designs, documentation, tooling, specialized fixtures and test equipment. Our
contract manufacturers inspect and test each unit for quality assurance prior
to shipment. The use of contract manufacturers has several advantages including
decreasing capital investment in property, plant and equipment, the ability to
leverage contract manufacturers' purchasing relationships for lower material
costs, minimal fixed costs of maintaining unused manufacturing capacity,
greater capacity flexibility and the ability to utilize suppliers' broad
technical and process expertise.

Proprietary Rights

We rely on a combination of patent, copyright, trademark, service mark and
trade secret laws and contractual restrictions to protect our proprietary
rights in products and services. We have also entered into confidentiality and
invention assignment agreements with our employees and contractors.

We have made several technological advances relating to self-service coin
processing that we believe are important to the successful operation of the
Coinstar unit in a self-service environment. These advancements are

<PAGE>

implemented both mechanically and through our wide-area network software. These
technologies enable the Coinstar unit to operate effectively in light of
moisture, dust, lint, dirt, paper, paper clips and other debris with infrequent
clogging or malfunctioning. In addition, these technologies enhance the coin
discrimination capability of the Coinstar unit to significantly reduce the
possibility of miscount or a fraudulent coin going undetected. Since October
1996, Coinstar has received 18 United States patents and 14 international
patents relating to aspects of self-service coin processing.

Competition

We are the first and only company to own and operate a national network of
self-service coin processing machines. We believe that our key competitive
advantages include our technology and expertise developed over the past ten
years, the nationwide Coinstar network, our dedicated field service
organization, the strong relationships we have with a majority of the leading
supermarket chains in the United States and in the United Kingdom and our
proven ability to execute our rollout strategy. We face competition from
supermarket retailers and banks that purchase and service their own
coin-counting equipment. We compete indirectly with manufacturers of devices
that enable consumers to count or sort coins themselves, and we also compete
directly or indirectly with banks and similar depository institutions for coin
conversion customers. Banks are the primary alternative available to consumers
for converting coins into cash, and they generally do not charge a fee for
accepting rolled coins. As the market for coin processing develops, banks and
other businesses may decide to offer additional coin processing services,
either as a customer service or on a self-service basis, and compete directly
with us.

Employees

As of December 31, 2001, we employed 467 full-time employees and 54
part-time employees. Our employees are not represented by a union and
management believes our employee relations are good.

Risk Factors

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks actually occur, our business could be
harmed. In such case, the trading price of our common stock could decline and
you may lose all or part of your investment.

Our ability to maintain sustained profitability remains uncertain. On a
consolidated basis, we achieved net income from continuing operations of $1.7
million for the year ended December 31, 2001. We cannot be certain that we will
maintain existing levels of customer utilization to sustain the level of
profitability that we achieved in 2001, or generate sufficient cash flow to
continue to meet our capital and operating expenses and debt service
obligations. You should not consider prior growth rates in our revenue to be
indicative of our future operating results. The timing and amount of future
revenues will depend almost entirely on our ability to continue to drive new
and repeat customer utilization of our service. Our future operating results
also will depend upon many other factors, including:

. our ability to develop and successfully commercialize product enhancements
and new products and the timing of such product enhancements and new
products,

. the level of product and price competition,

. the processing fee we charge consumers to use our service and the amount
of our fee that we share with our retail partners,

. our success in expanding our network and managing our growth,

<PAGE>

. the successful deployment and operation of our coin processing network,

. our ability to control costs, and

. activities of and acquisitions by competitors.

We rely on one source of revenue. We have derived, and expect to derive for
the near term, substantially all of our revenue from the operation of our
coin-counting units. Accordingly, continued market acceptance of our coin
processing service is critical to our future success. If demand for our coin
processing service does not continue to grow due to technological changes,
competition, market saturation or other factors, our business, financial
condition and results of operations and ability to achieve sufficient cash flow
to service our indebtedness could be seriously harmed. As a consequence, our
future success may be dependent on our ability to develop and commercialize new
products and services. The development and successful commercialization of new
products, services and enhancements pose a variety of technical challenges
requiring us to enhance the capabilities of our network and hire additional
qualified employees. Furthermore, as demonstrated by our strategic alliance
with DataWave and Standard Federal Bank in connection with the testing of our
pre-paid MasterCard product, we may need to enter into relationships with third
parties to assist in the development and commercialization of new products and
enhancements and there can be no assurance that such relationships can be
established or if once established they will prove successful.

Our business is dependent on maintaining our retail partner relationships
which are highly concentrated. The success of our business depends on the
willingness of potential retail partners, primarily supermarkets, to agree to
installation of Coinstar units in their stores and to the continued retention
of those units. We must continue to demonstrate that our Coinstar units provide
a benefit to our retail partners to ensure that such partners do not request
deinstallation of units or develop or purchase their own coin-counting system.

We generally have separate agreements with each of our retail partners
providing for our exclusive right to provide coin processing services in retail
locations. Coinstar units in service in three supermarket chains, The Kroger
Co., Albertson's, Inc. and Safeway accounted for approximately 25%, 13% and
11%, respectively, of our revenue in 2001. The termination of our contracts
with any one or more of our retail partners could seriously harm our business,
financial condition, results of operations and ability to achieve sufficient
cash flow to service our indebtedness.

We depend upon key personnel and need to hire additional personnel. Our
performance is substantially dependent on the continued services of our senior
executive officers, some of whom have employment contracts, and key employees,
whom we employ on an at-will basis. Our long-term success will depend on our
ability to recruit, retain and motivate highly skilled personnel. Competition
for such personnel is intense. We have at times experienced difficulties in
recruiting qualified personnel, and we may experience difficulties in the
future. Any inability to retain our executive officers or other essential
technical and managerial personnel could seriously harm our business, financial
condition and results of operations and our ability to achieve sufficient cash
flow to service our indebtedness.

Our stock price has been and may continue to be volatile. Our stock price
has fluctuated substantially since our initial public offering in July 1997.
The market price of our stock could decline from current levels or continue to
fluctuate. The market price of our stock may be significantly affected by the
following factors:

. operating results below market expectations,

. trends and fluctuations in the use of our Coinstar units,

. changes in, or our failure to meet, financial estimates by securities
analysts,

. period-to-period fluctuations in our financial results,

. announcements of technological innovations or new products or services by
us or our competitors,

<PAGE>

. the termination of one or more retail partner relationships,

. timing of installations relative to financial reporting periods,

. release of analyst reports,

. industry developments,

. market acceptance of the Coinstar service by retail partners and
consumers, and

. economic and other external factors.

In addition, the securities markets have from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. These market fluctuations may seriously
harm the market price of our common stock.

There are many risks associated with doing business in the United
Kingdom. We intend to increase our deployment of Coinstar units in the United
Kingdom. We have only recently begun our expansion in the United Kingdom and,
accordingly, have limited experience operating in that location. Exposure to
exchange rate risks, restrictions on the repatriation of funds, political
instability, adverse changes in tax, tariff and trade regulations, difficulties
with foreign distributors, difficulties in managing an organization that is not
based in the United States and weaker legal protection for intellectual
property rights are risks that could seriously harm the development of our
business in the United Kingdom.

We have substantial indebtedness. As of December 31, 2001, we had
outstanding indebtedness of $62.6 million which included senior subordinated
discount notes, revolving line of credit and our lease obligations. Of this
amount, $61.0 million is related to our senior subordinated discount notes. On
January 3, 2002, we repurchased $10.0 million principal amount of these notes
and on March 15, 2002, we repurchased an additional $15.0 million principal
amount with our $15.0 million term loan with Comerica Bank (formerly Imperial
Bank). Our annual debt service on the senior subordinated discount notes will
be approximately $4.7 million per year through October 2006 at which time the
remaining principal of $36.0 million plus accrued interest will be due. Our
annual debt service on the Comerica term loan, at the current prime rate, will
be approximately $800,000 per year through December 4, 2006 at which time the
principal amount of $15.0 million plus accrued interest will be due. Our
ability to continue to meet our debt service requirements will depend upon
continuing to achieve significant and sustained growth in our expected
operating cash flow, which will be affected by customer usage, prevailing
economic conditions and financial, business and other factors, some of which
are beyond our control. The extent to which we continue to have substantial
indebtedness could have significant consequences which may limit our ability to
obtain additional financing in the future for working capital, capital
expenditures, product research and development, acquisitions and other general
corporate purposes. A substantial portion of our cash flow from operations may
need to be dedicated to the payment of principal and interest on our
indebtedness and therefore not available to finance our business, and our high
degree of indebtedness may make us more vulnerable to economic downturns, limit
our ability to withstand competitive pressures or reduce our flexibility in
responding to changing business and economic conditions.

We face competition. We face competition from supermarket retailers and
banks that purchase and service their own coin-counting equipment. In addition,
we may face new competition as we seek to develop new products, services and
enhancements. Moreover, new products that we are developing, such as those
involving pre-paid cards, may subject us to competition from companies with
significantly greater marketing, technological and capital resources and
experience.

Many of our potential competitors with respect to the development of new
products, services and enhancements have longer operating histories, greater
name recognition, larger customer bases and significantly greater financial,
technical, marketing and public relations resources than we have. These
potential competitors may succeed in developing technologies, products or
services that are more effective, less costly or more widely

<PAGE>

used than those that have been or are being developed by us or that would
render our technologies or products obsolete or noncompetitive. Competitive
pressures could seriously harm our business, financial condition and results of
operations and our ability to achieve sufficient cash flow to service our
indebtedness.

We depend upon third-party manufacturers, service providers and
suppliers. We do not conduct manufacturing operations and depend, and will
continue to depend, on outside parties for the manufacture of the Coinstar unit
and its key components. We intend to continue to expand our installed base both
domestically and internationally and such expansion may be limited by the
manufacturing capacity of our third-party manufacturers and suppliers. Although
we expect that our current contract manufacturers will be able to produce
sufficient units to meet projected demand, in reality they may not be able to
meet our manufacturing needs in a satisfactory and timely manner. If there is
an unanticipated increase in demand for Coinstar unit installations, we may be
unable to meet such demand due to manufacturing constraints.

We obtain some key hardware components used in the Coinstar units from only
two suppliers. We cannot be certain that we will be able to continue to obtain
an adequate supply of these components in a timely manner or, if necessary,
from alternative sources. If we are unable to obtain sufficient quantities of
components or to locate alternative sources of supply on a timely basis, we may
experience delays in installing or maintaining Coinstar units, either of which
could seriously harm our business, financial condition and results of
operations and ability to achieve sufficient cash flow to service our
indebtedness.

We rely on third-party service providers for substantial support and service
efforts that we currently do not provide directly. In particular, we contract
with armored carriers and other third-party providers to arrange for pick-up,
processing and deposit of coins. We generally contract with one transportation
provider and coin processor to service a particular region. Many of these
service providers do not have long-standing relationships with us and either
party generally can terminate the contracts with advance notice ranging from 30
to 90 days. We do not currently have nor do we expect to have in the
foreseeable future the internal capability to provide back up coin processing
service in the event of sudden disruption in service from a commercial coin
processor. Any failure by us to maintain our existing coin processing
relationships or to establish new relationships on a timely basis or on
acceptable terms would harm our business, financial condition and results of
operations and our ability to achieve sufficient cash flow to service our
indebtedness.

We may be unable to adequately protect or enforce our patents and
proprietary rights. Our success depends, in part, on our ability to protect
our intellectual property and maintain the proprietary nature of our technology
through a combination of patents, licenses and other intellectual property
arrangements, without infringing the proprietary rights of third parties. We
have 18 U.S. patents and 14 international patents relevant to aspects of
self-service coin processing. We also have additional patent applications
pending in the United States and several foreign jurisdictions directed to this
technology.

We cannot assure you that any of our patents will be held valid if
challenged, that any pending patent applications will be issued, or that other
parties will not claim rights in or ownership of our patents and other
proprietary rights. Moreover, patents issued to us may be circumvented or fail
to provide adequate protection to our technologies. Further, our competitors
might independently develop or patent technologies that are substantially
equivalent or superior to our technologies.

Since many patent applications in the United States are not publicly
disclosed until the patent issues, others may have filed applications, which,
if issued as patents, could cover our products. Accordingly, we cannot be
certain that others will not assert claims of patent infringement or
misappropriation against us based on current or pending United States and/or
foreign patents, copyrights or trade secrets or that such claims will not be
successful. In addition, defending our company and our retail partners against
these types of claims, regardless of their merits, could require us to incur
substantial costs and divert the attention of key personnel. Parties making
these types of claims may be able to obtain injunctive or other equitable
relief which could effectively block our ability to provide our coin processing
service and use our processing equipment in the United States and abroad,

<PAGE>

and could result in an award of substantial damages. We cannot assure you that
we could obtain necessary licenses from others at a reasonable cost or at all.
We are engaged in discussions with a former supplier, ScanCoin, in an effort to
clarify certain contract rights and obligations as well as ownership of certain
of our intellectual property.

We also rely on trade secrets to develop and maintain our competitive
position. Although we protect our proprietary technology in part by
confidentiality agreements with our employees, consultants and corporate
partners, we cannot assure you that these agreements will not be breached, that
we will have adequate remedies for any breach or that our trade secrets will
not otherwise become known or be discovered independently by our competitors.
The failure to protect our intellectual property rights effectively or to avoid
infringing the intellectual property rights of others could seriously harm our
business, financial condition and results of operations and ability to achieve
sufficient cash flow to service our indebtedness.

Defects or lack of confidence in, or failures of our operating system could
harm our business. We collect financial and operating data, and monitor
performance of Coinstar units, through a wide-area communications network
connecting each of the Coinstar units with a central computing system at our
headquarters. This information is used to track the flow of coins, verify coin
counts and schedule the dispatch unit service and coin pick-up. The operation
of Coinstar units depends on sophisticated software, computing systems and
communication services that may contain undetected errors or may be subject to
failures. These errors may arise particularly when new services or service
enhancements are added. The accuracy of the coin counting functionality of our
machines is important to our customers; the failure to maintain customer
confidence in our technology and systems, could have a material adverse impact
on our results of operations. Each Coinstar unit is designed to store all data
collected, thereby helping to ensure that critical data is not lost due to an
operating systems failure, our inability to collect the data from our Coinstar
units could lead to a delay in processing coins and crediting the accounts of
our retail partners for vouchers already redeemed. The design of the operating
systems to prevent loss of data may not operate as intended. Any loss or delay
in collecting coin processing data would seriously harm our operations.

We have in the past experienced limited delays and disruptions resulting
from upgrading or improving our operating systems. Although such disruptions
have not had a material effect on our operations, future upgrades or
improvements could result in delays or disruptions that would seriously harm
our operations.

We rely on a long distance telecommunication network that is not owned by us
and is subject to service disruptions. Further, while we have taken significant
steps to protect the security of our network, any breach of security whether
intentional or from a computer virus could seriously harm us. Any service
disruptions, either due to errors or delays in our software or computing
systems or interruptions or breaches in the communications network, or security
breaches of the system, could seriously harm our business, financial condition
and results of operations and ability to achieve sufficient cash flow to
service our indebtedness.

Some anti-takeover provisions may affect the price of our common stock and
make it harder for a third party to acquire us without the consent of our board
of directors. We have implemented anti-takeover provisions that may discourage
takeover attempts and depress the market price of our stock. Provisions of our
certificate of incorporation, bylaws and rights plan could make it more
difficult for a third party to acquire us, even if doing so would be beneficial
to our stockholders. Delaware law also imposes some restrictions on mergers and
other business combinations between us and any acquirer of 15% or more of our
outstanding common stock, and Washington law may impose additional restrictions
on mergers and other business combinations between us and any acquirer of 10%
or more of our outstanding common stock. These provisions may make it harder
for a third party to acquire us without the consent of our board of directors,
even if the offer from a third party may be considered beneficial by some
stockholders.

<PAGE>

Item 2. Properties.

Our principal administrative, marketing and product development facility is
located in a 46,070 square foot facility in Bellevue, Washington, under a lease
that expires in August 2004. We also lease a 10,196 square foot facility in
Bellevue, Washington, under an agreement that expires in March 2002 as well as
an 8,909 square foot facility in Bellevue, Washington, under an agreement that
expires in July 2005. Both of these spaces were occupied by our subsidiary,
Meals.com, and are vacant as a result of the wind-down of Meals.com. We do not
intend to renew the lease for the 10,196 square foot facility that expires in
March 2002.

Item 3. Legal Proceedings.

We are subject to various legal proceedings and claims arising in the
ordinary course of business. Our management does not expect that the results in
any of these legal proceedings would have a material adverse effect on our
financial position, results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth
quarter of 2001.

<PAGE>

PART II

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.

Market Information

Our common stock is traded on the Nasdaq National Market under the symbol
"CSTR". The following table sets forth the high and low bid prices per share as
reported by the Nasdaq National Market for our common stock for each quarter
during the last two fiscal years. The quotations represent inter-dealer prices
without retail markup, markdown or commission and may not necessarily represent
actual transactions.

<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal 2000:
First Quarter............................................. $14.50 $ 9.00
Second Quarter............................................ 12.69 6.69
Third Quarter............................................. 13.56 9.22
Fourth Quarter............................................ 16.75 10.00

Fiscal 2001:
First Quarter............................................. $20.25 $12.50
Second Quarter............................................ 22.25 14.75
Third Quarter............................................. 26.51 15.01
Fourth Quarter............................................ 25.80 17.55
</TABLE>

The last reported sale price of our common stock on the Nasdaq National
Market on March 15, 2002 was $31.20 per share.

Holders

As of March 15, 2002, there were 124 holders of record of our common stock.
This does not include the number of persons whose stock is in nominee or
"street name" accounts through brokers.

Dividends

We have never paid cash dividends on our common stock. We intend to retain
any future earnings to fund the development and growth of our business and
therefore do not anticipate paying any cash dividends in the foreseeable
future. Furthermore, our line of credit agreement prohibits the payment of
dividends without the lender's prior written consent and the indenture
governing our senior subordinated discount notes limits our ability to pay
dividends.

<PAGE>

Item 6. Selected Financial and Other Data.

The following selected financial data is qualified by reference to, and
should be read in conjunction with, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements of Coinstar, Inc. and related Notes thereto included elsewhere in
this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- -------- -------- --------
(Dollars and shares in thousands, except per share,
per unit data and where noted)
<S> <C> <C> <C> <C> <C>
Consolidated Statements of Operations:
Revenue................................................. $ 129,352 $ 102,609 $ 77,688 $ 47,674 $ 25,007
Expenses:
Direct operating...................................... 58,072 48,184 38,836 26,565 17,899
Regional sales and marketing.......................... 9,188 11,368 6,279 3,778 3,088
Product research and development...................... 4,162 3,497 4,892 4,744 6,362
Selling, general and administrative................... 22,245 18,177 13,542 14,112 11,079
Depreciation and amortization......................... 26,349 24,460 20,267 13,237 8,679
---------- ---------- -------- -------- --------
Income (loss) from continuing operations................ 9,336 (3,077) (6,128) (14,762) (22,100)
Other income (expense)
Interest income....................................... 767 1,482 2,350 1,367 2,329
Interest expense...................................... (8,302) (8,517) (11,165) (10,817) (9,822)
Other income (expense)................................ (60) 258 (768) 240 --
---------- ---------- -------- -------- --------
Income (loss) from continuing operations................ 1,741 (9,854) (15,711) (23,972) (29,593)
Discontinued operations:
Loss related to discontinued operations............... (9,127) (12,840) (2,412) -- --
Extraordinary item:
Loss related to early retirement of debt.............. -- -- (3,250) -- --
---------- ---------- -------- -------- --------
Net loss................................................ $ (7,386) $ (22,694) $(21,373) $(23,972) $(29,593)
========== ========== ======== ======== ========
Net income (loss) per share:
Basic:
Continuing operations(1)............................. $ 0.08 $ (0.49) $ (0.86) $ (1.58) $ (3.81)
Discontinued operations(1)........................... (0.43) (0.63) (0.16) -- --
Extraordinary loss(1)................................ -- -- (0.18) -- --
---------- ---------- -------- -------- --------
Net loss per share(1)............................... $ (0.35) $ (1.12) $ (1.20) $ (1.58) $ (3.81)
========== ========== ======== ======== ========
Diluted:
Continuing operations(1)............................. $ 0.08 $ (0.49) $ (0.86) $ (1.58) $ (3.81)
Discontinued operations(1)........................... (0.42) (0.63) (0.16) -- --
Extraordinary loss(1)................................ -- -- (0.18) -- --
---------- ---------- -------- -------- --------
Net loss per share(1)............................... $ (0.34) $ (1.12) $ (1.20) $ (1.58) $ (3.81)
========== ========== ======== ======== ========

Selected Operating Data--North American core business:
Number of new Coinstar units installed during the period 845 1,539 2,130 1,609 1,703
Installed base of Coinstar units at end of the period... 9,327 8,482 6,943 4,813 3,204
Average age of network for the period (months).......... 32.7 25.3 20.1 15.5 10.0
Number of regional markets.............................. 130 122 104 85 66
Dollar value of coins processed......................... $1,434,448 $1,148,037 $871,517 $623,258 $332,526
Revenue................................................. $ 127,816 $ 102,201 $ 77,575 $ 47,674 $ 25,007
Revenue per average installed unit(2)................... 14,575 13,151 13,133 11,942 10,709
Direct contribution(3).................................. 71,214 54,292 38,878 21,015 7,108
Direct contribution margin(%)........................... 55.7% 53.1% 50.1% 44.1% 28.4%
Direct contribution per average installed unit(2)(3).... $ 8,115 $ 7,004 $ 6,588 $ 5,285 $ 3,044
Regional sales and marketing............................ 8,770 11,368 6,381 3,778 3,088
Product research and development........................ 3,962 3,266 4,179 4,744 6,362
Selling, general and administrative..................... 21,171 17,140 12,647 13,433 11,079
EBITDA(4)............................................... 37,311 22,518 15,671 (940) (13,421)
EBITDA margin(%)........................................ 29.2% 22.0% 20.2% (2.0)% (53.7)%

International--United Kingdom business:
International revenue................................... $ 1,645 $ 408 $ 113 $ -- $ --
International operating expenses(5)..................... 3,052 1,352 1,327 585 --
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:(6)
Cash, cash equivalents and short-term investments(7) $105,935 $ 70,684 $ 87,991 $ 41,871 $ 56,803
Total assets........................................ 171,187 156,037 162,443 98,833 103,546
Total debt, including current portion............... 62,643 62,735 61,831 88,056 78,945
Paid in capital..................................... 171,059 161,339 159,053 62,372 61,553
Total stockholders' equity (deficit)................ 37,227 34,842 55,267 (20,039) 3,109
</TABLE>
- ---------------------
(1) See Note 11 to Financial Statements for an explanation of the determination
of the number of shares used in computing loss per share information, basic
and diluted.

(2) Based on actual yearly results divided by the monthly averages of units in
operation over the applicable period.

(3) Direct contribution is defined as revenue less direct operating expenses.
We use direct contribution as a measure of operating performance to assist
in understanding our operating results. Direct contribution is not a
measure of financial performance under accounting principles generally
accepted in the United States of America (GAAP) and should not be
considered in isolation or as an alternative to gross margin, income (loss)
from operations, net income (loss) or any other measure of performance
under GAAP.

(4) EBITDA represents earnings before interest expense, income taxes,
depreciation, amortization, non-cash compensation expense and other
income/expense. EBITDA does not represent and should not be considered as
an alternative to net income (loss) or cash flow from operations as
determined by GAAP. We, however, believe that EBITDA provides useful
information regarding our ability to service and/or incur indebtedness.

(5) International operating expenses exclude depreciation and amortization
charges and represent the costs incurred by our international subsidiary,
Coinstar UK Ltd., located in the United Kingdom.

(6) Excludes balances related to Meals.com, as the operations were discontinued
during 2001. See Note 6 to Financial Statements.

(7) Cash, cash equivalents and short-term investments include funds in transit
of $53.7 million, $42.6 million, $31.4 million and $23.0 million at
December 31, 2001, 2000, 1999 and 1998, respectively, which represent
amounts in transit to our supermarket partners that are being processed by
armored car carriers or residing in Coinstar units. Funds in transit during
1997 are not significant.

<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

The following discussion and analysis should be read in conjunction with the
Financial Statements and related Notes thereto included elsewhere in this
Annual Report on Form 10-K. Except for the historical information, the
following discussion contains forward-looking statements that involve risks and
uncertainties, such as our objectives, expectations and intentions. Our actual
results could differ materially from results that may be anticipated by such
forward-looking statements and discussed elsewhere herein. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed below, those discussed under the caption "Risk Factors", and those
discussed elsewhere in this Form 10-K. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this report. We undertake no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made in this report and in our other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business, prospects and results of
operations.

Overview

We currently derive our revenue from coin processing services generated by
our installed base of Coinstar coin-counting machines located in supermarket
chains in 46 states across the United States, the District of Columbia as well
as in the United Kingdom and Canada. We generate revenue based on a processing
fee charged on the total dollar amount of coins processed in a transaction.
Coin processing fee revenue is recognized at the time the customers' coins are
counted by the Coinstar unit. Overall revenue growth is primarily dependent on
the growth in coin processing volumes of our installed base and, to a lesser
degree, the rate of new installations. Our results to date show that coin
processing volumes per unit generally increase with the length of time the unit
is in operation as trial levels of the service increase, driving initial trial
and repeat usage for the service. There can be no assurance, however, that unit
volumes will continue to increase as a function of the time the unit is in
operation. We believe that coin processing volumes per unit may also be
affected by other factors such as (i) public relations, advertising and other
activities that promote trials of the units, (ii) the amount of consumer
traffic in the stores in which the units are located, and (iii) seasonality. We
believe the seasonality affecting our coin processing volumes mirrors the
seasonality patterns of our supermarket partners.

On May 1, 2001, we announced plans to rollout the Coinstar coin-counting
service in the United Kingdom and reached agreements with Asda Stores Ltd and
Sainsbury's Supermarkets Ltd to begin installing additional machines in their
stores. To date, we have installed over 250 machines in the United Kingdom and
have installed approximately 60 machines in Canada.

Our direct operating expenses are comprised of the regional expenses
associated with Coinstar coin-counting unit operations and support and consist
primarily of coin pick-up and processing, field operations support and related
expenses, retail operations support and the amount of our service fee that we
share with our retail partners. Coin pick-up and processing costs, which
represent a large portion of our direct operating expenses, vary based on the
level of total coin processing volume and the density of the units within a
region. Field service operations and related expenses vary depending on the
number of geographic regions in which Coinstar units are located as well as the
density of the units within a region. Regional sales and marketing expenses are
comprised of ongoing marketing, advertising and public relations efforts in
existing market regions and startup marketing expenses incurred to launch our
services in new regional markets. Product research and development expense
consists of the development costs of the Coinstar unit software, network
applications,

<PAGE>

Coinstar unit improvements and new product development. Selling, general and
administrative expenses are comprised of management compensation,
administrative support for field operations, the customer service center, sales
and marketing support, systems and engineering support, computer network
operations, finance and accounting, human resources and occupancy expenses.
Depreciation and amortization consists primarily of depreciation charges on
Coinstar units and, to a lesser extent, depreciation on furniture and fixtures,
leased automobiles and computer equipment.

Since 1995, we have devoted significant resources to building the sales and
marketing organization, adding administrative personnel and developing the
network systems and infrastructure to support the rapid growth of our installed
base of Coinstar coin-counting units. In 2000, we devoted significant resources
and capital to develop and market the Meals.com products and services, which we
discontinued in June 2001. The cost of this expansion and the significant
depreciation expense of our installed network have resulted in significant
operating losses to date and an accumulated deficit of $133.9 million as of
December 31, 2001. We expect to continue to evaluate new marketing and
promotional programs to increase the breadth and rate of customer utilization
of our Coinstar service and to engage in systems and product research and
development. We believe our prime retail locations form a strategic platform
from which we are able to deliver additional value-added new products and
services to consumers and our retail partners that may create additional
revenue streams independent of coin counting. We envision the Coinstar unit as
the touch-point for a range of consumer products and services and are currently
testing a MasterCard branded prepaid cash card concept on 52 Coinstar machines.
If the business model proves successful, we may begin a rollout by the end of
2002. There can be no assurance, however, that this business model will prove
successful and justify a full-scale rollout.

We believe that our future coin counting revenue growth, operating margin
gains and profitability will be dependent upon an increase in customer usage,
the penetration of our installed base with retail partners in existing markets,
expansion and penetration of installations in new geographies and distribution
formats, and successful ongoing marketing and promotional activities to sustain
the growth in unit coin volume over time. Given the unpredictability of the
timing of installations with retail partners and the resulting revenues, the
growth in coin processing volumes of our installed base and the continued
market acceptance of our services by consumers and retail partners, our
operating results for any quarter are subject to significant variation, and we
believe that period-to-period comparisons of our results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States of America. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to property and equipment, stock based
compensation, income taxes and contingencies. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

Property and equipment: Property and equipment are depreciated over their
useful lives based on the method disclosed in Note 2 of our consolidated
financial statements. We have estimated the useful life of our Coinstar
machines, and are depreciating the respective cost over a five-year period. We
have determined a life of five years is appropriate based on our analysis that
included a review of historical data and trends as well as other relevant
factors. We will continue to evaluate the useful life of our Coinstar units, as
well as our other property and equipment as necessary, and will determine the
need to make changes when, and if, appropriate. Any changes to our estimated
lives may cause actual results to differ based on different assumptions or
conditions.

<PAGE>

Stock-based compensation: We account for stock-based awards to employees
using the intrinsic value method in accordance with Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees. Had
compensation cost for our stock-based compensation been determined consistent
with the method prescribed in Statement of Financial Accounting Standards
("SFAS") No. 123, Accounting for Stock-Based Compensation, our net loss would
have increased from $7.4 million to $12.1 million in 2001.

Income taxes: We record a valuation allowance to reduce our deferred tax
assets to the amount that is more likely than not to be realized. While we have
considered future operating results and ongoing prudent and feasible tax
planning strategies in assessing the need for the valuation allowance, in the
event we were to determine that we would be able to realize our deferred tax
assets in the future in excess of our net recorded amount, an adjustment to the
deferred tax asset would increase income in the period such determination was
made. Likewise, should we determine that we would not be able to realize all or
part of our net deferred tax asset in the future, an adjustment to the deferred
tax asset would be charged to income in the period such determination was made.

Discontinued Operations: We have discontinued the operations of our
subsidiary, Meals.com. This business segment is accounted for as discontinued
operations in accordance with APB Opinion No. 30, Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB
No. 30").

In accordance with APB No. 30, the disposal of our Meals.com business
resulted in a loss of $3.4 million, which was recorded in the year ended
December 31, 2001. Included in this amount is a $2.4 million loss primarily
related to the write-down of assets as well as operating losses of $1.0 million
resulting from the wind-down of the Meals.com business.

Results of Continuing Operations

Our consolidated financial information presents the net effect of
discontinued operations separate from the results of our continuing operations.
Historical financial information has been reclassified to present consistently
the discontinued operations. The discussion and analysis that follows generally
focuses on continuing operations.

The following table shows revenue and expense as a percent of revenue for
the last three years:

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------
2001 2000 1999
----- ----- -----
<S> <C> <C> <C>
Revenue................................ 100.0% 100.0 % 100.0 %
Expenses:
Direct operating.................... 44.9 47.0 50.0
Regional sales and marketing........ 7.1 11.1 8.1
Product research and development.... 3.2 3.4 6.3
Selling, general and administrative. 17.2 17.7 17.4
Depreciation and amortization....... 20.4 23.8 26.1
----- ----- -----
Income (loss) from operations.......... 7.2% (3.0)% (7.9)%
</TABLE>

Years Ended December 31, 2001 and 2000

Revenue

Revenue increased to $129.4 million in 2001 from $102.6 million in 2000. The
increase was due principally to an increase in the number and frequency of
users, the increase in the number of Coinstar units in service during 2001 and
the volume of coins processed by the units in service during this period. The
total installed base

<PAGE>

of Coinstar units increased to 9,576 as of December 31, 2001 from 8,509 units
as of December 31, 2000. The total dollar value of coins processed worldwide
increased to $1.5 billion during 2001 from $1.2 billion in 2000.

Direct Operating Expenses

Direct operating expenses increased to $58.1 million in 2001 from $48.2
million in 2000. The increase in direct operating expenses was attributable
primarily to an increase in the amount paid to our retail partners in the form
of revenue sharing resulting from a 26.1% increase in coin processing revenue,
an increase in coin pick-up and processing costs resulting from the increased
dollar volumes processed during the year, and increases in field service and
machine refurbishment expenses related to our expansion into 16 new
international and domestic regional markets during 2001. Direct operating
expenses as a percentage of revenue decreased to 44.9% in the 2001 period from
47.0% in 2000. The decrease in direct operating expenses as a percentage of
revenue was the result of (i) the realization of coin pick-up and processing
cost economies from regional densities and utilization of cheaper, more
efficient coin pick-up methods, and (ii) a decrease in field service expenses
as a percentage of revenue as we increased the number and density of our
machines in our existing markets.

Regional Sales and Marketing

Regional sales and marketing expenses decreased to $9.2 million in 2001 from
$11.4 million in 2000. The decrease in regional marketing expense was primarily
the result of using a different allocation of advertising media in 2001
including a decreased level of television advertising and an increased level of
radio advertising and national and local promotions. During 2001, we focused on
advertising more efficiently by eliminating less productive markets from our
general advertising campaigns. Regional sales and marketing as a percentage of
revenue decreased to 7.1% in 2001 from 11.1% in 2000.

Product Research and Development

Product research and development expenses increased to $4.2 million in 2001
from $3.5 million in 2000. The increase in product research and development was
due primarily to (i) compensation costs related to our ongoing efforts to
enhance our existing coin processing system and, to a lesser degree, (ii) an
increase in staffing levels related to research and development costs for
developing incremental complementary new product ideas. Product research and
development as a percentage of revenue decreased to 3.2% in 2001 from 3.4% in
2000.

Selling, General and Administrative

Selling, general and administrative expense increased to $22.2 million in
2001 from $18.2 million in 2000. The principal component of such expenses was
(i) increased compensation expenses and (ii) increased professional and
administrative expenses related to professional fees and other general
administrative costs associated with our ongoing operations. Selling, general
and administrative expense as a percentage of revenue decreased to 17.2% in
2001 from 17.7% in 2000.

Depreciation and Amortization

Depreciation and amortization expense increased to $26.3 million in 2001
from $24.5 million in 2000. The increase was due primarily to the increase in
the installed base of Coinstar units and certain capital upgrades and periodic
replacements of certain machine components to existing Coinstar units.
Depreciation and amortization as a percentage of revenue decreased to 20.4% in
2001 from 23.8% in 2000. The decrease in depreciation and amortization as a
percentage of revenue was the result of a larger increase in coin processing
volumes processed through the network (resulting in higher revenue) compared to
a smaller increase in depreciation and amortization expense.

<PAGE>

Other Income and Expense

Interest income decreased to $767,000 in 2001 from $1.5 million in 2000. The
decrease in interest income was attributed to lower interest rates earned on
investments in the twelve months ended December 31, 2001 than in the comparable
period in the prior year.

Interest expense decreased to $8.3 million in 2001 from $8.5 million in
2000. The decrease was attributed, in part, to a decrease in interest rates
from 2000 as well as an adjustment recorded in 2000 following the amendment to
our credit agreement with Comerica Bank (formerly Imperial Bank).

Other income, net of other expense, was not significant in 2001. We
generated other income of $258,000, net of other expense in 2000. Other income
during 2000 was due primarily to subleasing our excess office space.

Income (Loss) from Continuing Operations

In 2001, income from continuing operations was $1.7 million compared to a
loss from continuing operations of $9.9 million in 2000. Income from continuing
operations was due primarily to our improved direct operating margin and a
reduction in regional sales and marketing expenditures. We expect that our coin
processing business segments will continue to reflect improved operating
leverage of the Coinstar network.

Years Ended December 31, 2000 and 1999

Revenue

Revenue increased to $102.6 million in 2000 from $77.7 million in 1999. The
increase was due principally to the increase in the number of Coinstar units in
service during 2000 and the increase in the volume of coins processed by the
units in service during this period. The total installed base of Coinstar units
increased to 8,509 as of December 31, 2000 from 6,952 units as of December 31,
1999. The total dollar value of coins processed worldwide increased to $1.2
billion during 2000 from $873.4 million in 1999.

Direct Operating Expenses

Direct operating expenses increased to $48.2 million in 2000 from $38.8
million in 1999. The increase in direct operating expenses was attributable
primarily to an increase in the amount paid to our retail partners in the form
of revenue sharing resulting from a 32.1% increase in revenue, an increase in
coin pick-up and processing costs resulting from the increased dollar volumes
processed during the year and the increase in field service expenses related to
our expansion into 18 new regional markets during 2000. Direct operating
expenses as a percentage of revenue decreased to 47.0% in the 2000 period from
50.0% in 1999. The decrease in direct operating expenses as a percentage of
revenue was the result of (i) the realization of coin pick-up and processing
cost economies from regional densities and utilization of cheaper, more
efficient coin pick-up methods, and (ii) a decrease in per unit field service
expenses as a percentage of revenue as we increased our density in our existing
markets.

Regional Sales and Marketing

Regional sales and marketing expenses increased to $11.4 million in 2000
from $6.3 million in 1999. The increase in regional marketing expense was the
result of an increased level of television advertising and other promotional
activity. Regional sales and marketing as a percentage of revenue increased to
11.1% in 2000 from 8.1% in 1999.

Product Research and Development

Product research and development expenses decreased to $3.5 million in 2000
from $4.9 million in 1999. The decrease in product research and development was
primarily due to lower headcount resulting in decreased

<PAGE>

compensation expense. Product research and development headcount was 20 in
December 2000 compared with 27 in December 1999. Product research and
development as a percentage of revenue decreased to 3.4% in 2000 from 6.3% in
1999.

Selling, General and Administrative

Selling, general and administrative expense increased to $18.2 million in
2000 from $13.5 million in 1999. The principal component of such expenses was
increased staffing and compensation expense. In December 2000, our selling,
general and administrative headcount was 157 compared with 133 in December
1999. Selling, general and administrative expense as a percentage of revenue
increased to 17.7% in 2000 from 17.4% in 1999.

Depreciation and Amortization

Depreciation and amortization expense increased to $24.5 million in 2000
from $20.3 million in 1999. The increase was due primarily to the increase in
the installed base of Coinstar units. Depreciation and amortization, as a
percentage of revenue, decreased to 23.8% in 2000 from 26.1% in 1999. The
decrease, as a percentage of revenue, was the result of a larger increase in
coin processing volumes processed through the network (resulting in higher
revenue) compared to a smaller increase in depreciation and amortization
expense.

Other Income and Expense

Interest income decreased to $1.5 million in 2000 from $2.4 million in 1999.
The decrease in interest income was attributable to a decrease in invested cash
balances in 2000 following the $34.0 million repurchase of our senior
subordinated discount notes in 1999.

Interest expense decreased to $8.5 million in 2000 from $11.2 million in
1999 resulting from the repurchase of $34.0 million of our senior subordinated
discount notes in 1999.

We generated other income of $258,000 in 2000 due primarily to subleasing
our excess office space. In September 2000, the sublessee vacated this excess
office space.

Income (Loss) from Continuing Operations

Net loss from continuing operations decreased to $9.9 million in 2000 from
$15.7 million in 1999. The decrease in the loss from continuing operations was
a result of an improvement in the direct contribution margin from 50% in 1999
to 53% in 2000. In addition, the decrease in our net loss from continuing
operations from 1999 to 2000 was the result of (i) an increase in the direct
contribution margin of our core business in 2000 and (ii) a reduction in the
rate of growth of expenses. These two factors reflect the improved operating
leverage of our Coinstar network.

Income Taxes

At December 31, 2001, 2000 and 1999, we had net deferred tax assets of
approximately $53.6 million, $44.2 million and $35.2 million, respectively,
resulting primarily from net operating loss and credit carryforwards available
to offset future income tax obligations. Such federal carryforwards expire
through 2020. Based upon our history of operating losses and expiration dates
of the loss carryforwards, we have recorded a valuation allowance to the full
extent of our net deferred tax assets.

Liquidity and Capital Resources

As of December 31, 2001, we had cash and cash equivalents of $105.9 million
and working capital of $35.7 million. Cash and cash equivalents include $53.7
million of funds in transit to our retail partners, this

<PAGE>

represents amounts owed to retail partners, which are being processed by
armored car carriers, or residing in Coinstar units. Net cash provided by
continuing operations was $45.4 million for the year ended December 31, 2001,
compared to net cash provided by continuing operations of $25.4 million for
2000. The increase in cash provided by operating activities was primarily the
result of an $11.6 million increase in our net income from continuing
operations and by a $14.9 million increase in accrued liabilities. The increase
in our accrued liabilities resulted primarily from increases in the amounts due
to our partners as a result of higher coin volumes and to a lesser degree, an
increase in accrued compensation and an increase in our liability to our
transportation and coin processing partners.

Net cash used in connection with investing activities from continuing
operations for the year ended December 31, 2001 was $18.5 million compared to
$14.5 million used in 2000. In 2000, cash used in connection with investing
activities resulted primarily from purchases of Coinstar units of $23.3 million
offset by cash generated by sales of marketable securities totaling $9.2
million. There were no sales of marketable securities in 2001. Capital
expenditures during the year ended December 31, 2001 were $18.5 million
compared with $23.3 million in the prior year. Capital expenditures decreased
due to a decrease in Coinstar unit purchases during 2001. As we continue to
selectively install new units nationwide in order to optimize our Coinstar
network and increase our profitability, we expect the rate of installations to
slow compared to historical levels.

Net cash provided by financing activities from continued operations for the
year ended December 31, 2001 was $7.5 million, which was the result of proceeds
received from the exercise of stock options and employee stock purchases of
$8.5 million offset by principal payments paid on capital lease obligations
totaling $1.0 million. Net cash provided by financing activities for 2000 was
$1.0 million, which was the result of proceeds received from the exercise of
stock options and employee stock purchases of $1.8 million offset by principal
payments paid on capital lease obligations.

On June 21, 2001, we entered into a Securities Purchase Agreement with the
minority stockholders of Meals.com pursuant to which we agreed to purchase all
outstanding securities (including preferred stock and warrants) of Meals.com
held by them for a purchase price of $1.0 million. The purchase price was
payable in Coinstar's common stock based on the closing price of the stock on
June 8, 2001, which was $18.99. The shares of common stock issued to the
minority stockholders of Meals.com were registered with the SEC on Form S-3 in
August 2001.

As of December 31, 2001, we had outstanding $61.0 million principal amount
of our 13% senior subordinated discount notes. On January 3, 2002, we
repurchased $10.0 million principal amount of these outstanding notes and on
March 15, 2002, we repurchased an additional $15.0 million principal amount
through the use of our $15.0 million term loan with Comerica Bank (formerly
Imperial Bank). Our annual debt service on the senior subordinated discount
notes will be approximately $4.7 million per year through October 2006 at which
time the remaining principal of $36.0 million plus accrued interest will be
due. Our annual debt service on the term loan with Comerica Bank will be
approximately $800,000 per year through December 4, 2006 at which time the
remaining principal of $15.0 million plus accrued interest will be due. The
indenture governing the senior subordinated discount notes contains restrictive
covenants that, among other restrictions, limit our ability to pay dividends or
make other restricted payments, engage in transactions with affiliates, incur
additional indebtedness, effect asset dispositions, or merge or sell
substantially all our assets.

As of December 31, 2001, we had a secured irrevocable letter of credit with
a bank that totaled $5.5 million. This letter of credit, which expires on March
31, 2002, is available to collateralize certain obligations to third parties.
As of December 31, 2001, no amounts were outstanding under this letter of
credit agreement. In January 2002, we entered into an agreement to secure an
additional irrevocable letter of credit for $3.3 million, which will expire on
March 31, 2002 and is also available to collateralize certain obligations to
third parties.

On February 19, 1999, we entered into a credit agreement with Comerica Bank,
for itself and as agent of Bank Austria Creditanstalt Corporate Finance, Inc.
On September 26, 2000, we amended the credit agreement to

<PAGE>

release Bank Austria from its obligations under the credit agreement and to
release us from our obligation to maintain minimum deposits with Comerica Bank.
On December 21, 2001 we amended the credit agreement to increase the credit
facility and on February 22, 2002, we amended the credit agreement to modify
certain existing covenants. The amended credit agreement provides for a credit
facility of up to $25.0 million, consisting of a revolving loan of $10.0
million and a term loan of $15.0 million. The maturity date of the revolving
loan, as amended, is October 15, 2003. The maturity date of the term loan is
December 4, 2006. If, however, the revolving loan is not renewed, the term loan
becomes payable when the revolving loan matures. As of March 15, 2002, we have
drawn $15.0 million on the term loan and have borrowed $500,000 on the
revolving line of credit.

In connection with the February 19, 1999 credit agreement, we issued to each
of the lenders a warrant to purchase 51,326 shares of our common stock. The
exercise price for the warrants, which would have expired on February 19, 2009,
is $12.177 per share. The value of these warrants are recorded as contributed
capital and represent discounts, which are being amortized ratably over the
term of the related debt. In February and September 2001, the lenders net
exercised their warrants to purchase 18,963 and 17,992 shares, respectively, of
our common stock.

The tables below summarize our contractual obligations and other commercial
commitments as of December 31, 2001:

<TABLE>
<CAPTION>
Contractual Obligations Payments Due by Period
- ----------------------- ------------------------------------------
Less than 1 1 - 3 4 - 5 After 5
As of December 31, 2001 Total year years years years
- ----------------------- ------- ----------- ------ ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Long-term debt......................... $61,480 $ -- $ 500 $60,980 $--
Capital lease obligations.............. 1,821 1,015 806 -- --
Operating leases....................... 3,072 1,189 1,883 -- --
------- ------ ------ ------- ---
Total contractual cash obligations..... $66,373 $2,204 $3,189 $60,980 $--
======= ====== ====== ======= ===
</TABLE>

<TABLE>
<CAPTION>
Other Commercial Commitments Amount of Commitment Expiration Per Period
- ---------------------------- ------------------------------------------
Less than 1 1 - 3 4 - 5 After 5
As of December 31, 2001 Total year years years years
- ----------------------- ------ ----------- ----- ----- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Lines of credit............................. $ -- $ -- $-- $-- $--
Letters of credit........................... 5,500 5,500 -- -- --
Guarantees.................................. -- -- -- -- --
------ ------ --- --- ---
Total commercial commitments................ $5,500 $5,500 $-- $-- $--
====== ====== === === ===
</TABLE>

On March 3, 1999, we acquired from Compucook, Inc., assets consisting of
Internet domain names, software, fixed assets, contracts and web site content.
In consideration of the purchase, we issued 25,000 common stock warrants at an
exercise price of $15.63 per warrant, which expire on March 2, 2004.

We believe existing cash equivalents, short-term investments and amounts
available to us under our credit agreement with Comerica Bank will be
sufficient to fund our cash requirements and capital expenditure needs for at
least the next 12 months. After that time, the extent of additional financing
we need will depend on the success of our business. If we significantly
increase installations beyond planned levels or if unit coin processing volumes
generated are lower than historical levels, our cash needs will increase. Our
future capital requirements will depend on a number of factors, including
customer usage, the timing and number of installations, the type and scope of
service enhancements, our expansion into the United Kingdom and the cost of
developing potential new product and service offerings and product and service
enhancements.

<PAGE>

Quarterly Financial Results

Our quarterly financial information presents the net effect of discontinued
operations separate from the results of our continuing operations. Historical
financial information has been reclassified to present consistently the
discontinued operations.

The following table sets forth selected unaudited quarterly financial
information and operating data for the last eight quarters. This information
has been prepared on the same basis as our audited consolidated financial
statements and includes, in the opinion of management, all normal and recurring
adjustments that management considers necessary for a fair statement of the
quarterly results for the periods. The operating results and data for any
quarter are not necessarily indicative of the results for future periods.

<TABLE>
<CAPTION>
Three month periods ended
------------------------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31, Sept. 30, June 30, March 31,
2001 2001 2001 2001 2000 2000 2000 2000
-------- --------- -------- --------- -------- --------- -------- ---------
(Dollars in thousands except per unit data)

Consolidated Statements of Operations:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue.......................................... $ 35,731 $ 35,176 $ 31,245 $ 27,200 $ 28,251 $ 28,663 $ 24,671 $ 21,024
Expenses:
Direct operating............................... 15,729 15,667 13,798 12,878 12,984 13,045 11,733 10,422
Regional sales and marketing................... 3,141 3,176 2,501 370 2,402 4,906 3,567 493
Product research and development............... 1,068 1,108 989 997 916 907 867 807
Selling, general and administrative............ 5,931 5,400 5,946 4,968 5,510 4,416 4,111 4,140
Depreciation and amortization.................. 6,709 6,394 6,483 6,763 6,635 6,018 6,021 5,786
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from operations.................... 3,153 3,431 1,528 1,224 (196) (629) (1,628) (624)
Other expense, net............................... (1,961) (1,862) (1,873) (1,899) (1,992) (1,669) (1,682) (1,434)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) from continuing
operations...................................... 1,192 1,569 (345) (675) (2,188) (2,298) (3,310) (2,058)
Discontinued operations:
Loss related to discontinued operations........ 162 -- (5,928) (3,361) (5,222) (3,588) (2,148) (1,882)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)................................ $ 1,354 $ 1,569 $ (6,273) $ (4,036) $ (7,410) $ (5,886) $ (5,458) $ (3,940)
======== ======== ======== ======== ======== ======== ======== ========
Net income (loss) per share, basic and diluted:
Continuing operations.......................... $ 0.05 $ 0.07 $ (0.02) $ (0.03) $ (0.11) $ (0.11) $ (0.16) $ (0.10)
Discontinued operations........................ 0.01 -- (0.28) (0.17) (0.25) (0.18) (0.11) (0.10)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) per share................... $ 0.06 $ 0.07 $ (0.30) $ (0.20) $ (0.36) $ (0.29) $ (0.27) $ (0.20)
======== ======== ======== ======== ======== ======== ======== ========

Selected Operating Data--North American
core business:
Number of new Coinstar units installed during the
period.......................................... 487 70 193 95 413 359 337 430
Installed base of Coinstar units at end
of period....................................... 9,327 8,840 8,770 8,577 8,482 8,069 7,710 7,373
Average age of network for the period
(months)........................................ 35.3 33.8 31.9 29.7 27.6 26.2 24.5 22.9
Number of regional markets....................... 130 124 123 123 122 118 110 106
Dollar value of coins processed.................. $393,186 $389,208 $348,255 $303,799 $315,715 $320,655 $276,073 $235,594
Revenue.......................................... 35,005 34,652 31,029 27,130 28,107 28,546 24,576 20,972
Annualized revenue per average installed unit(1). 15,371 15,737 14,406 12,696 13,565 14,495 13,091 11,740
Direct contribution(2)........................... 19,968 19,412 17,461 14,373 15,195 15,569 12,890 10,638
Direct contribution margin (%)................... 57.0% 56.0% 56.3% 53.0% 54.1% 54.5% 52.4% 50.7%
Annualized direct contribution per average
installed unit(1)(2)............................ $ 8,768 $ 8,816 $ 8,102 $ 6,708 $ 7,333 $ 7,906 $ 6,866 $ 5,955
Regional sales and marketing..................... 2,858 3,000 2,535 377 2,402 4,906 3,567 493
Product research and development................. 1,019 1,083 945 915 886 825 804 751
Selling, general and administrative.............. 5,586 4,958 5,685 4,942 4,789 4,281 3,993 4,077
EBITDA(3)........................................ 10,505 10,371 8,296 8,139 7,118 5,557 4,526 5,317
EBITDA margin (%)................................ 30% 30% 27% 30% 25% 19% 18% 25%
</TABLE>
- ---------------------
(1) Calculated based on annualized quarterly results divided by the monthly
averages of units in operation over the applicable period.

(2) Direct contribution is defined as revenue less direct operating expenses.
We use direct contribution as a measure of operating performance to assist
in understanding our operating results. Direct contribution is not a
measure of financial performance under accounting principles generally
accepted in the United States of America (GAAP) and should not be
considered in isolation or an alternative to gross margin, income (loss)
from operations, net income (loss), or any other measure of performance
under GAAP.

(3) EBITDA represents earnings before interest expense, income taxes,
depreciation, amortization, non-cash compensation expense and other
income/expense. EBITDA does not represent and should not be considered as
an alternative to net income (loss) or cash flow from operations as
determined by GAAP. However, we believe that EBITDA provides useful
information regarding our ability to service and/or incur indebtedness.

<PAGE>

Our coin processing volumes appear to be affected by seasonality that
mirrors the seasonality of our supermarket partners. In particular, coin
processing volumes have been lower in the months of January, February,
September and October. There can be no assurance, however, that such seasonal
trends will continue. Any projections of future seasonality are inherently
uncertain due to our lack of comparable companies engaged in the coin
processing business.

In addition to fluctuations in revenue resulting from factors affecting
customer usage, timing of unit installations will result in significant
fluctuations in quarterly results. The rate of installations does not follow a
regular pattern, as it depends principally on installation schedules determined
by agreements between us and our retail distribution partners, variable length
of partner trial periods and the planned coordination of multiple partner
installations in a given geographic region.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to the risk of fluctuating interest rates in the normal
course of business, primarily as a result of our senior revolving debt and
investment activities that generally bear interest at variable rates. Because
the investments have maturities of three months or less, and our revolving debt
is renewable annually, we believe that the risk of material loss is low and
that the carrying amount approximates fair value.

The table below presents principal amounts, at book value, by year of
maturity and related weighted average interest rates. The fair value of
long-term debt (including current maturities) is calculated using quoted market
prices of the same or similar issues with the same remaining term to maturity.

<TABLE>
<CAPTION>
Liabilities Expected Maturity Date December 31, 2001
- ----------- --------------------------------- ------------------
2002 2003 2004 2005 2006 Total Fair Value
(in thousands) ---- ----- ----- ----- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed long-term debt.................. -- -- -- -- $60,980 $60,980 $65,858
Average interest rate................. -- -- -- -- 13.0% 13.0%
Senior revolving debt................. -- $ 500 $ 500 $ 500 $ 500 $ 500 $ 500
Average interest rate(*).............. -- 5.25% 5.25% 5.25% 5.25% 5.25% 5.25%
</TABLE>
- ---------------------
* Interest rate represents Comerica Bank's prime rate plus 50 basis points
(5.25% at December 31, 2001).

Item 8. Financial Statements and Supplementary Data.

See Item 14 for an index to the financial statements and supplementary data
required by this item.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

<PAGE>

PART III

Item 10. Directors and Executive Officers of the Registrant.

Identification of Directors

Ronald A. Weinstein, 60, has been the chairman of the board since August
2001 and a director of Coinstar since March 1992. Since November 1992, he has
served as the managing general partner of the Weinstein Family Limited
Partnership, an investment partnership. Mr. Weinstein also serves as a director
of CelebrateExpress.com, Inc., an on-line party planning service, and Great
Circle Family Foods, LLC, the Southern California area developer of Krispy
Kreme donuts.

David W. Cole, 54, has served as our chief executive officer and director
since October 2001. Prior to joining Coinstar he served as president of The
Torbitt & Castleman Company, a manufacturer of specialty food products from
December 1999 through February 2001. From November 1993 through December 1999,
he served as president of Paragon Trade Brands, a leading manufacturer of
private label disposable diapers. Paragon Trade Brands filed for Chapter 11
Bankruptcy protection on February 16, 1998.

Frances M. Conley, 58, has been a director of Coinstar since August 2001 and
is founder and president of Roanoke Capital, Ltd., a financial consulting and
venture capital firm. Prior to founding Roanoke Capital, Ltd. in 1982, Ms.
Conley held a variety of positions at Rainier National Bank, including senior
vice president and chief administrative officer of the bank's Washington
Division. She also serves as a director for REI and Cutter & Buck.

David M. Eskenazy, 39, has been a director of Coinstar since August 2000.
Mr. Eskenazy has been involved in Coinstar as an investor prior to our initial
public offering and, at that time, served in a board observer capacity on
behalf of one of our largest shareholders, Richard C. Hedreen. Mr. Eskenazy has
served as Vice President of R.C. Hedreen Co., a Seattle area hotel developer
and joint venture partner in Hedreen Joint Venture, since October 1987 in
various capacities relating to finance and investments.

Keith D. Grinstein, 41, has been a director of Coinstar since August 2001
and has served as vice chairman of Nextel International, a telecommunications
company, since August 1998. From November 1995 to August 1998, Mr. Grinstein
served as president and chief executive officer of Nextel International. Mr.
Grinstein's other past experience includes work at AT&T Wireless Services
(formerly McCaw Communications), where he served as president and chief
executive officer of the Aviation Communications Division. Mr. Grinstein also
serves on the board of directors for several public and private companies
including The Ackerley Group, Car Toys, F5 Networks, and Terabeam.

David E. Stitt, 55, has been a director of Coinstar since February 1995. He
has served as managing partner of Banyan Capital Partners, formerly Banyan
Private Equity Management, a private investment firm, since February 1998. From
1985 to February 1998, he was an employee of Vencap, Inc. (formerly, Vencap
Equities Alberta Ltd.), a venture capital firm, most recently as a vice
president. Mr. Stitt is also a director of Premium Brands, Inc., a Toronto
stock exchange listed company.

Ronald B. Woodard, 59, has been a director of Coinstar since August 2001 and
is president and chief executive officer of Seattle-based MagnaDrive
Corporation, a developer of breakthrough technology for torque transfer and
speed control. Mr. Woodard co-founded MagnaDrive in April 1999 after a 32-year
career with The Boeing Company where he held numerous positions including
president of The Boeing Commercial Airplane Group. He currently serves on the
board of directors for Atlas Air, Knowledge Anywhere, the Seattle Symphony and
the University of Puget Sound.

<PAGE>

Identification of Executive Officers

The following table sets forth the name, age and position of our executive
officers as of March 15, 2002:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
David W. Cole...... 54 Chief Executive Officer
Richard P. Stillman 47 Chief Operating Officer
Diane L. Renihan... 36 Chief Financial Officer
Michael L. Doran... 51 Senior Vice President of Software Technology
William W. Booth... 46 Senior Vice President of Retail Development
John P. Reilly..... 37 Vice President of Coin Services
Richard C. Deck.... 32 Chief Accounting Officer
Randy S. Overturf.. 44 Vice President of Field Operations
Gretchen J. Marks.. 41 Vice President of Marketing
Sara L. White...... 52 Vice President of Human Resources
</TABLE>

David W. Cole, has served as our chief executive officer and director since
October 2001. Prior to joining Coinstar he served as president of The Torbitt &
Castleman Company, a manufacturer of specialty food products from December 1999
through February 2001. From November 1993 through December 1999, he served as
president of Paragon Trade Brands, a leading manufacturer of private label
disposable diapers. Paragon Trade Brands filed for Chapter 11 Bankruptcy
protection on February 16, 1998.

Richard P. Stillman, has served as our chief operating officer since
September 2000. He served as our vice president of marketing from September
1999 through August 2000. From April through August 1999, Mr. Stillman served
as head of marketing at Onvia.com, a business-to-business e-services company.
From August 1996 through January 1999, he co-founded and served as vice
president of sales and marketing for Originet Inc., a start-up technology
company providing digital multi-media interactive systems to large retailers.
From February 1995 through July 1996, he served as senior vice president and
group account director for Cole & Weber, an advertising communications firm.

Diane L. Renihan, has served as our chief financial officer since September
2000. She served as our chief accounting officer from February 2000 through
August 2000 and as our corporate controller from December 1999 through January
2000. From May 1995 to December 1999, Ms. Renihan served in various senior
financial positions at Seattle Lighting Fixture Co., a retail distributor of
lighting and related specialty products, including controller, director of
finance and chief financial officer. Ms. Renihan is a certified public
accountant.

Michael L. Doran, has served as our senior vice president of software
technology since September 2000. He served as our vice president of software
technology from September 1998 through August 2000 and as our director of
information systems from August 1996 through September 1998. Prior to that, Mr.
Doran served as senior manager of application services for Snohomish Public
Utility District where he directed automation planning and application
development.

William W. Booth, has served as our senior vice president of retail
development since September 2000. He served as our vice president of retail
development from December 1998 through August 2000 and as our director of
retail development from April 1995 through December 1998. Prior to that, Mr.
Booth served as senior director of retail marketing services for Catalina
Marketing Corporation, a consumer marketing company.

John P. Reilly, has served as our vice president of coin services since
September 2000. He served as our director of coin services from September 1998
through August 2000 and as our manager of coin services from March 1996 through
September 1998. Prior to that, Mr. Reilly served as an account executive for
General Electric Capital Corporation.

<PAGE>

Richard C. Deck, has served as our chief accounting officer since March 2001
and as our corporate controller and treasurer since December 2000. From October
1996 to September 2000, Mr. Deck served as the corporate controller of Concur
Technologies, Inc., a software and service provider of expense management
solutions. Prior to that, Mr. Deck was a senior financial analyst at
Physio-Control International Corporation, a manufacturer and distributor of
cardiac defibrillators. Mr. Deck is a certified public accountant.

Randy S. Overturf, has served as our vice president of field operations
since November 2001 and as our director of field service since June 1999. Prior
to that, Mr. Overturf was our national field service manager since joining
Coinstar in July 1995.

Gretchen J. Marks, has served as our vice president of marketing since
November 2001, as our director of marketing from November 2000 through October
2001 and as our product manager from November 1999 to October 2000. From
November 1997 through October 1999, Ms. Marks attended Columbia University
where she received her masters degree in organizational psychology while
working on various marketing consulting projects. Prior to that, Ms. Marks
worked at Nabisco, Inc. as director of customer marketing.

Sara L. White, has served as our vice president of human resources since
March 2002, our director of organizational development and training from July
2001 through February 2002 and our manager of organizational development and
training from October 1998 through June 2001. Prior to that, Ms. White served
as our coin operations manager since joining Coinstar in January 1997.

Section 16(a) Beneficial Ownership Reporting Compliance.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to report their stock holdings and
transactions to the Securities and Exchange Commission.

To our knowledge, based on a review of the copies of such reports furnished
to us and written representations that no other reports were required, during
the fiscal year ended December 31, 2001, we were in compliance with all other
Section 16(a) filing requirements applicable to our officers, directors and
greater than 10% beneficial owners.

<PAGE>

Item 11. Executive Compensation.

Summary Compensation Table

The following table shows for the fiscal years ended December 31, 2001, 2000
and 1999, compensation awarded or paid to, or earned by, our chief executive
officer and the other four most highly compensated executive officers at
December 31, 2001 (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE(1)

Long-Term
Compensation
Awards
------------
Annual Compensation Securities
------------------- Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation
- --------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David W. Cole(2)..................... 2001 $ 63,638 $ -- 200,000 $11,266
Chief Executive Officer and Director

Richard P. Stillman(3)............... 2001 210,000 177,450 70,000 --
Chief Operating Officer 2000 158,958 19,540 95,000 --
1999 50,613 -- 60,000 --

Diane L. Renihan(4).................. 2001 170,000 153,650 45,000 --
Chief Financial Officer 2000 119,253 10,730 70,000 --
1999 1,923 10,000 10,000 --

M. Carol Lewis(5).................... 2001 170,000 143,650 45,000 --
Chief Administrative Officer 2000 133,500 10,220 70,000 --
1999 115,000 -- 42,000 --

William W. Booth(6).................. 2001 135,000 86,535 15,000 --
Senior Vice President of 2000 125,625 44,930 25,000 --
Retail Development 1999 120,833 19,801 36,000 --
</TABLE>
- ---------------------
(1) As permitted by rules established by the Securities and Exchange
Commission, no amounts are shown with respect to certain perquisites where
such amounts do not exceed the lesser of 10% of the sum of the amount in
the salary and bonus columns or $50,000.

(2) Mr. Cole was hired as our chief executive officer in October 2001. Other
compensation in 2001 represents $11,266 received for moving expenses
pursuant to Mr. Cole's employment agreement. Mr. Cole's option to purchase
200,000 shares of our common stock was granted outside the Coinstar 1997
Stock Incentive Plan, as amended, but is subject to the terms and
conditions of the 1997 plan.

(3) Mr. Stillman was hired as our vice president of marketing in September 1999
and was promoted to chief operating officer in September 2000. Of Mr.
Stillman's 2001 bonus, $124,950 was paid in February 2002, but was earned
in 2001 for performance during 2001 and $52,500 was paid in 2001 as a stay
bonus under his employment agreement. Mr. Stillman's 2000 bonus was paid in
February 2001, but was earned in 2000 for performance during 2000.

(4) Ms. Renihan was hired as our corporate controller in December 1999 and
served as our chief accounting officer from February 2000 through September
2000. In September 2000, Ms. Renihan was promoted to chief financial
officer. Of Ms. Renihan's 2001 bonus, $101,150 was paid in February 2002,
but was earned in 2001 for performance during 2001, $42,500 was paid in
2001 as a stay bonus under her employment agreement and $10,000 was awarded
in 2001 as a performance bonus. Ms. Renihan's 2000 bonus was paid in
February 2001, but was earned in 2000 for performance during 2000.

<PAGE>

(5) Ms. Lewis has served as our vice president of corporate organization and
development from September 1998 through August 2000 and was promoted to
chief administrative officer and corporate secretary in September 2000. She
served as our national director of philanthropic services from September
1996 to September 1998. Of Ms. Lewis' 2001 bonus, $101,150 was paid in
February 2002, but was earned in 2001 for performance during 2001 and
$42,500 was paid in 2001 as a stay bonus under her employment agreement.
Ms. Lewis' 2000 bonus was paid in February 2001, but was earned in 2000 for
performance during 2000. Ms. Lewis resigned from her position as chief
administrative officer and corporate secretary effective March 8, 2002.

(6) Mr. Booth's 2001 bonus was paid in February 2002, but was earned in 2001
for performance during 2001. His 2000 bonus was paid in February 2001, but
was earned in 2000 for performance during 2000. His 1999 bonus was paid in
February 2000, but was earned in 1999 for performance during 1999.

Stock Option Grants and Exercises

We grant options to our executive officers under the Coinstar 2000 Equity
Incentive Plan and the 1997 Equity Incentive Plan, as amended. As of December
31, 2001, options to purchase a total of 2,912,350 shares were outstanding
under the plans and options to purchase an aggregate of 248,909 shares remained
available for grant under the plans.

The following tables show, for the fiscal year ended December 31, 2001,
certain information regarding options granted to, exercised by, and held at
year-end by the Named Executive Officers.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
Percent of Potential Realizable Value at
Number of Total Assumed Annual Rates of
Securities Options Stock Price Appreciation for
Underlying Granted in Option Term(3)
Options Fiscal Exercise Price Expiration -----------------------------
Name Granted(1) 2001(2) ($/Share) Date 5%($) 10%($)
---- ---------- ---------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David W. Cole................ 200,000 24.6% $21.24 10/08/11 $2,671,544 $6,770,218
Richard P. Stillman.......... 70,000 8.6% $23.30 12/13/11 1,025,727 2,599,394
Diane L. Renihan............. 45,000 5.5% $23.30 12/13/11 659,396 1,671,039
M. Carol Lewis(4)............ 45,000 5.5% $23.30 12/13/11 659,396 1,671,039
William W. Booth............. 15,000 1.8% $23.30 12/13/11 219,799 557,013
</TABLE>
- ---------------------
(1) The per share exercise price is the fair market value of Coinstar common
stock on the date of grant, and the term of the options is ten years,
subject to earlier termination in the event of termination of employment.
Options generally vest over four years with 25% vesting after the first
year and an additional 2.08333% of the shares vesting upon completion of
each full month thereafter. The options may be accelerated in the event of
specified types of corporate reorganizations. The exercise price may be
paid either in cash or at the discretion of the plan administrator by
delivery of other Coinstar common stock owned for six months, pursuant to a
deferred payment arrangement or in any other form of legal consideration
acceptable to the plan administrator.

(2) Based on an aggregate of 811,749 shares subject to options granted to our
employees in the fiscal year ended December 31, 2001, including the Named
Executive Officers.

(3) The potential realizable value calculated based on the term of the option
at the time of grant (10 years). Stock price appreciation of 5% and 10% is
assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent a prediction of our stock price
performance. Actual gains, if any, are dependent on the actual future
performance of our common stock and no gain to the optionee is possible
unless the stock price increases over the option term, which will benefit
all stockholders.

<PAGE>

(4) Ms. Lewis resigned from her position as chief administrative officer and
corporate secretary effective March 8, 2002. In connection with her
employment agreement, her options became fully vested and exercisable for a
period of 90 days following her termination of employment.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares December 31, 2001 December 31, 2001(2)
Acquired on Value ------------------------------- -------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David W. Cole........... -- $ -- -- 200,000 $ -- $ 752,000
Richard P. Stillman..... -- -- 60,938 164,062 641,848 1,201,792
Diane L. Renihan........ 5,464 64,263 20,161 99,375 250,988 754,715
M. Carol Lewis(3)....... 22,169 357,784 50,848 113,917 699,106 974,519
William W. Booth........ 4,700 116,560 65,975 49,625 1,105,480 470,404
</TABLE>
- ---------------------
(1) Based on the difference between the fair market value on the date of
exercise and the exercise price.

(2) Based on the difference between the fair market value on December 31, 2001
($25.00 per share) and the exercise price.

(3) Ms. Lewis resigned from her position as chief administrative officer and
corporate secretary effective March 8, 2002. In connection with her
employment agreement, her options became fully vested and exercisable for a
period of 90 days following her termination of employment.

Directors Compensation

Each non-employee director receives annual compensation of $10,000 for
service on the board of directors and receives $1,000 for attending board
meetings in person or $500 if attendance is by telephone. Additionally,
non-employee directors receive $250 for attending meetings of committees of
which they are official members. Directors may elect to receive this
compensation in the form of cash or Coinstar common stock.

Each non-employee director also receives stock option grants under the
Amended and Restated 1997 Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"). The Directors' Plan provides for automatic grants of
options to purchase shares of common stock to eligible non-employee directors
of Coinstar. The maximum number of shares of common stock that may be issued
pursuant to options granted under the Directors' Plan is 200,000. As of
December 31, 2001, 2,274 shares remained available for grant under the
Directors' Plan.

During 2001, pursuant to the Directors' Plan, we granted the following
options to our directors. The options were granted at the fair market value of
such stock on the grant date:

<TABLE>
<CAPTION>
Options Grant
Name Granted Price Date
---- ------- ------ --------
<S> <C> <C> <C>
Frances M. Conley...................... 10,000 $23.55 8/10/01
5,000 $20.80 10/01/01
David M. Eskenazy...................... 5,000 $23.55 8/10/01
5,000 $20.80 10/01/01
Keith D. Grinstein..................... 10,000 $23.55 8/10/01
5,000 $20.80 10/01/01
David E. Stitt......................... 5,000 $20.80 10/01/01
Ronald A. Weinstein.................... 5,000 $20.80 10/01/01
Ronald B. Woodard...................... 10,000 $23.55 8/10/01
5,000 $20.80 10/01/01
</TABLE>

<PAGE>

Employment Contracts, Termination of Employment and Change-in-Control
Arrangements

Employment Agreements. In October 2001, we entered into an employment and
change of control agreement with our chief executive officer, David W. Cole.
Under this agreement, we agreed to pay Mr. Cole a specified annual base salary
and an annual cash bonus if he meets certain performance targets applicable to
the bonus. In addition, we agreed to issue him options to purchase 200,000
shares of our common stock. The agreement also provides for benefits to Mr.
Cole if he terminates for "good reason" or is terminated in connection with a
change of control or without "cause" before December 31, 2003. These benefits
include:

. If terminated by us in connection with a change of control or by Mr. Cole
for "good reason", Mr. Cole is eligible to receive separation pay equal to
his annual base salary and accrued obligations equal to:

. his annual base salary through the date of termination,

. the product of (i) his annual bonus with respect to the fiscal year in
which the date of termination occurs and (ii) a fraction, the numerator
of which is the number of days in the current fiscal year through the
date of termination, and the denominator of which is 365; and

. any compensation previously deferred.

. If terminated by us without cause, Mr. Cole will be entitled to receive
(i) termination payments equal to 12 months annual base salary, and (ii)
any unpaid annual base salary that has accrued for services already
performed as of the date of termination.

Such payments described above will be made in equal monthly installments, at
regular payroll intervals.

In June 2001, we entered into employment agreements with Richard P.
Stillman, M. Carol Lewis and Diane L. Renihan. Under the agreements, we agreed
to pay Mr. Stillman, Ms. Lewis and Ms. Renihan a specified annual base salary.
The agreements provide that such executives are eligible to receive an annual
cash bonus if they meet performance targets applicable to such bonus. In
addition, all received a one-time stay bonus equal to three months' base salary
because such executives were employed by us on the date we hired our chief
executive officer.

The agreements also provide such executives with certain benefits if they
terminate their employment for "good reason" or are terminated by us without
"cause" prior to December 31, 2002. These benefits include:

. If terminated without cause or for good reason after the date on which we
hire a new chief executive officer, Mr. Stillman, Ms. Lewis and Ms.
Renihan are entitled to receive termination payments equal to (i) nine
months' annual base salary in the event of such termination prior to April
1, 2002, or (ii) six months' annual base salary for any such termination
thereafter; provided, however, that our obligations to provide such
benefits, will be offset by the amount of salary or pay they receive from
other employment obtained during any salary continuation period following
such termination;

. Continuation of health insurance benefits, including current dependent
coverage, for the period of time following the date of termination equal
to the amount of termination payments such executives are entitled to
receive; and

. Acceleration of 100% of their unvested stock options.

The agreements prohibit Mr. Stillman, Ms. Lewis and Ms. Renihan from
engaging in certain competitive activities for (i) nine months, if their
employment terminates prior to April 1, 2002, or (ii) six months, if their
employment terminates on or after April 1, 2002.

In May 2001, we entered into an employment agreement with William W. Booth.
Under the agreement, we agreed to pay Mr. Booth a specified annual base salary.
In addition, the agreement provides that Mr. Booth is eligible to receive an
annual cash bonus, if he meets performance targets applicable to such bonuses.

<PAGE>

The agreement also provides for his employment term to expire on December
31, 2002 and provide certain benefits if Mr. Booth terminates his employment
for "good reason" or is terminated by us without "cause" prior to such date.
These benefits include:

. If terminated without cause, termination payments equal to six months'
annual base salary;

. If terminated for good reason, termination payments equal to the lesser of
six months' annual base salary and the annual base salary he would have
received if his employment had continued until December 31, 2002; and

. Continuation of health insurance benefits, including current dependent
coverage, for 12 months following the date of termination.

Our obligation to provide such benefits, however, will be offset by the
amount of salary or pay Mr. Booth receives from other employment obtained
during any salary continuation period following such termination.

The agreement also requires Mr. Booth to refrain from divulging confidential
information during the shorter of (a) one year following termination of
employment without cause or for good reason or (b) the period of the severance
payment.

Additional Information with Respect to Compensation Committee Interlocks and
Insider Participation in Compensation Decisions

Our compensation committee consists of Frances M. Conley, David E. Stitt and
Ronald A. Weinstein. No member of our compensation committee serves as a member
of the board of directors or compensation committee of any entity that has one
or more executive officers serving as a member of our board of directors or
compensation committee.

<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The following table shows the number of shares of common stock beneficially
owned on March 15, 2002 by: (i) each director; (ii) each of the Named Executive
Officers listed in the Summary Compensation Table on page 31 who were executive
officers during 2001; (iii) the executive officers and directors of the Company
as a group; and (iv) all those known by us to be beneficial owners of more than
5% of our outstanding common stock.

<TABLE>
<CAPTION>
Number of
Shares Percent of
Beneficially Outstanding
Beneficially Owned Owned(1) Shares
------------------ ------------ -----------
<S> <C> <C>
Snyder Capital Management, L.P.(2).................................... 2,714,150 12.5%
Snyder Capital Management, Inc.
350 California Street, Suite 1460
San Francisco, CA 94104
RS Investment Management Co. LLC(3)................................... 1,531,200 7.1%
388 Market Street, Suite 1700
San Francisco, CA 94111
RS Investment Management L.P.(4)...................................... 1,459,800 6.7%
388 Market Street, Suite 1700
San Francisco, CA 94111
Hedreen Joint Venture(5).............................................. 1,789,846 8.3%
PO Box 9006
Seattle, WA 98109
David W. Cole......................................................... -- *
Richard P. Stillman(6)................................................ 74,284 *
Diane L. Renihan(7)................................................... 25,785 *
M. Carol Lewis(8)..................................................... 154,619 *
William W. Booth(9)................................................... 81,394 *
Frances M. Conley(10)................................................. 68,721 *
David M. Eskenazy(11)................................................. 35,836 *
Keith D. Grinstein(12)................................................ 13,750 *
David E. Stitt(13).................................................... 41,685 *
Ronald A. Weinstein(14)............................................... 287,656 1.3%
Ronald B. Woodard(15)................................................. 14,752 *
All directors and executive officers as a group (17 persons).......... 947,823 4.3%
</TABLE>
- ---------------------
* Represents beneficial ownership of less than 1%.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that
person, shares of common stock subject to options or warrants held by that
person that are currently exercisable or will become exercisable within 60
days of March 15, 2002 are deemed outstanding. These option shares are not
deemed outstanding for the purpose of computing the percentage ownership
of any other person (unless otherwise assumed to be outstanding). Except
as indicated by footnote, and subject to marital community property laws
where applicable, we believe that the persons named in the table above
have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them. As of March 15, 2002, we had
21,685,541 shares of common stock outstanding.

(2) Beneficial ownership of shares as of March 15, 2002 as reported on
Questionnaire for 5% Stockholders signed by Snyder Capital Management,
L.P. on March 15, 2002. Represents 2,714,150 shares over which Snyder
Capital Management, L.P. and Snyder Capital Management, Inc. share
dispositive power and 2,442,950 over which Snyder Capital Management, L.P.
and Snyder Capital Management, Inc. share voting power.

<PAGE>

(3) Beneficial ownership of shares as of December 31, 2001 as reported on Form
13G filed with the Securities and Exchange Commission on February 15, 2002.

(4) Beneficial ownership of shares as of December 31, 2001 as reported on Form
13G filed with the Securities and Exchange Commission on February 15, 2002.

(5) Beneficial ownership of shares as of March 15, 2002 as reported on
Questionnaire for 5% Stockholders signed by Hedreen Joint Venture on March
25, 2002. Represents 1,789,846 shares that Richard C. Hedreen and Hedreen
Joint Venture are deemed to beneficially own pursuant to an operating
agreement whereby certain venturers combined their brokerage accounts for
certain dispositive purposes. Mr. Hedreen has sole voting power over
898,542 shares and Hedreen Joint Venture does not have the power to vote
any of the shares.

(6) Represents 74,084 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(7) Represents 25,785 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(8) Includes 122,354 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(9) Includes 73,497 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(10) Includes 13,750 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(11) Includes 18,750 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(12) Represents 13,750 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(13) Includes 33,750 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

(14) Includes 45,178 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002. Also includes 90,400 shares beneficially
owned by the Weinstein Family Limited Partnership. Mr. Weinstein is a
general partner of the Weinstein Family Limited Partnership.

(15) Includes 13,750 shares issuable upon the exercise of options exercisable
within 60 days of March 15, 2002.

Item 13. Certain Relationships and Related Transactions.

In May and June 2001, we entered into employment agreements with Richard P.
Stillman, Diane L. Renihan, M. Carol Lewis and William W. Booth. In October
2001, we entered into an employment agreement with David W. Cole. Please see
Item 11--Employment Contracts, Termination of Employment and Change-in-Control
Arrangements on page 34 for a summary of such agreements.

There were no other material related party transactions during the year.

<PAGE>

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

The financial statements required by this item are submitted in a separate
section beginning on page 41 of this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
(a)(1) Index to Financial Statements
Independent Auditors' Report.................................................................... 41
Consolidated Balance Sheets..................................................................... 42
Consolidated Statements of Operations........................................................... 43
Consolidated Statements of Changes In Stockholders' Equity...................................... 44
Consolidated Statements of Cash Flows........................................................... 45
Consolidated Notes to Financial Statements...................................................... 46
(a)(2) Index to Financial Statement Schedules
All schedules have been omitted because they are not applicable or not required, or the required
information is included in the financial statements or notes thereto.
(a)(3) Exhibit Index:
</TABLE>

<TABLE>
<CAPTION>
Exhibit Number Description of Document
- -------------- -----------------------
<C> <S>
3.1(1) Amended and Restated Certificate of Incorporation of the Registrant.
3.2(1) Amended and Restated Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1 through 3.2.
4.2(1) Specimen Stock Certificate.
4.3(1) Second Amended and Restated Investor Rights Agreement, dated August 27, 1996, between the
Registrant and certain investors, as amended October 22, 1996.
4.4(1) Indenture between Registrant and The Bank of New York dated October 1, 1996.
4.5(1) Warrant Agreement between Registrant and The Bank of New York dated October 22, 1996.
4.6(1) Senior subordinated discount notes Registration Rights Agreement between Registrant and
Smith Barney Inc. dated October 22, 1996.
4.7(1) Warrant Registration Rights Agreement between Registrant and Smith Barney Inc. dated
October 22, 1996.
4.8(1) Specimen 13% Senior Discount Note Due 2006.
4.9(3) Rights Agreement dated as of November 12, 1998 between Registrant and American Securities
Transfer and Trust, Inc.
4.10(3) Registrant's Certificate of Designation of Series A Preferred Stock. Reference is made to Exhibit
A of Exhibit 4.9.
4.11(3) Form of Rights Certificate. Reference is made to Exhibit B of Exhibit 4.9.
4.12(4) Credit Agreement, dated February 19, 1999, between Coinstar, Inc. and Comerica Bank
(formerly Imperial Bank), for itself and as agent for Bank Austria Creditanstalt Corporate
Finance, Inc.
4.13(7) Fifth Amendment to Credit Agreement between Coinstar, Inc. and Comerica Bank (formerly
Imperial Bank), dated September 26, 2000.
4.14 Seventh Amendment to Credit Agreement between Coinstar, Inc. and Comerica Bank (formerly
Imperial Bank), dated December 21, 2001.
4.15 Eighth Amendment to Credit Agreement between Coinstar, Inc. and Comerica Bank (formerly
Imperial Bank), dated February 22, 2002.
4.16 Ninth Amendment to Credit Agreement between Coinstar, Inc. and Comerica Bank (formerly
Imperial Bank), dated March 22, 2002.
10.1(1) Amended and Restated Registrant's 1997 Equity Incentive Plan.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit Number Description of Document
- -------------- -----------------------
<C> <S>
10.2(1) Registrant's 1997 Employee Stock Purchase Plan.
10.3(11) Amended and Restated Registrant's 1997 Non-Employee Directors' Stock Option Plan.
10.4(1) Form of Indemnity Agreement between the Registrant and its executive officers and directors.
10.5(1) Office Building Lease between Registrant and Factoria Heights dated June 1, 1994, as amended
on January 24, 1997.
10.6(1) Sublease between Registrant and Maruyama U.S., Inc. dated January 15, 1997.
10.7(1) Lease agreement between Registrant and Spieker Properties, L.P. dated January 29, 1997.
10.8(2) Manufacturing Agreement between Registrant and SeaMed Corporation dated May 14, 1998.
10.9(1) Purchase Agreement between Registrant and Smith Barney Inc. dated October 22, 1996.
10.10(11) Registrant's 2000 Equity Incentive Plan.
10.11(8) Amendment No. 1 to Registrant's 1997 Equity Incentive Plan dated March 15, 2001.
10.12(8) Amendment No. 1 to Registrant's 2000 Equity Incentive Plan dated March 15, 2001.
10.13(9) Employment Agreement between William W. Booth and the Registrant dated May 5, 2001.
10.14(9) Employment Agreement between Carol Lewis and the Registrant dated June 18, 2001.
10.15(9) Employment Agreement between Diane Renihan and the Registrant dated June 18, 2001.
10.16(9) Employment Agreement between Richard Stillman and the Registrant dated June 18, 2001.
10.17(9) Agreement between Jens Molbak and the Registrant dated June 14, 2001.
10.18(9) Securities Purchase Agreement Among the Registrant and Certain Stockholders of Meals.com,
Inc., dated as of June 21, 2001.
10.19(9) Form of Release Agreement.
10.20(10) Employment Agreement between Dave Cole and the Registrant dated October 3, 2001.
10.21 Coinstar, Inc. Stock Option Agreement, Grant to Chief Executive Officer
12.1 Ratio of Earnings to Fixed Charges.
21.1(6) Subsidiaries.
23.1 Consent of Deloitte & Touche LLP.
</TABLE>
- ---------------------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-4 (No. 333-33233).

(2) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended June 30, 1998 (File Number 000-22555).

(3) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended September 30, 1998 (File Number 000-22555).

(4) Incorporated by reference to the Registrant's current Report on Form 8-K
filed by Coinstar on March 3, 1999 (File Number 000-22555).

(5) Incorporated by reference to the Current Report on Form 8-K filed by
Coinstar on February 18, 2000 (File Number 000-22555).

(6) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998 (File Number 000-22555).

(7) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended September 30, 2000 (File Number 000-22555).

(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended March 31, 2001 (File Number 000-22555).

(9) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended June 30, 2001 (File Number 000-22555).

(10) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended September 30, 2001 (File Number 000-22555).

(11) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2000.

(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the quarter ended
December 31, 2001.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Coinstar, Inc.

By: /S/ DIANE L. RENIHAN
-----------------------------
Diane L. Renihan
Chief Financial Officer
Date: March 27, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/S/ DAVID W. COLE Chief Executive Officer and March 27, 2002
- ----------------------------- Director
David W. Cole

/S/ DIANE L. RENIHAN Chief Financial Officer March 27, 2002
- -----------------------------
Diane L. Renihan

/S/ RICHARD C. DECK Chief Accounting Officer March 27, 2002
- -----------------------------
Richard C. Deck

/S/ RONALD A. WEINSTEIN Chairman of the Board March 27, 2002
- -----------------------------
Ronald A. Weinstein

/S/ FRAN M. CONLEY Director March 27, 2002
- -----------------------------
Fran M. Conley

/S/ DAVID M. ESKENAZY Director March 27, 2002
- -----------------------------
David M. Eskenazy

/S/ KEITH D. GRINSTEIN Director March 27, 2002
- -----------------------------
Keith D. Grinstein

/S/ DAVID E. STITT Director March 27, 2002
- -----------------------------
David E. Stitt

/S/ RON B. WOODARD Director March 27, 2002
- -----------------------------
Ron B. Woodard

<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Coinstar, Inc. and Subsidiaries
Bellevue, Washington

We have audited the accompanying consolidated balance sheets of Coinstar,
Inc. and subsidiaries (the "Company") as of December 31, 2001 and 2000, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Coinstar, Inc. and
subsidiaries at December 31, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2001, in conformity with accounting principles generally accepted in the
United States of America.

/S/ DELOITTE & TOUCHE LLP

February 15, 2002
(March 15, 2002 as to Notes 4 and 9)
Seattle, Washington

<PAGE>

COINSTAR, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

<TABLE>
<CAPTION>
December 31,
--------------------
2001 2000
--------- ---------
<S> <C> <C>
ASSETS

CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 105,935 $ 70,684
Prepaid expenses and other current assets...................................... 1,978 1,988
Cash and other assets from discontinued operations, net........................ -- 7,137
--------- ---------
Total current assets......................................................... 107,913 79,809
PROPERTY AND EQUIPMENT:
Coinstar units................................................................. 137,308 122,835
Computers...................................................................... 7,751 5,798
Office furniture and equipment................................................. 1,490 1,422
Leased vehicles................................................................ 4,183 3,941
Leasehold improvements......................................................... 572 478
--------- ---------
151,304 134,474
Accumulated depreciation....................................................... (89,215) (66,142)
--------- ---------
62,089 68,332

OTHER ASSETS.................................................................... 1,185 1,497
ASSETS FROM DISCONTINUED OPERATIONS............................................. -- 6,399
--------- ---------
TOTAL........................................................................... $ 171,187 $ 156,037
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable............................................................... $ 5,810 $ 4,045
Accrued liabilities............................................................ 65,507 50,582
Current portion of capital lease obligations................................... 898 920
--------- ---------
Total current liabilities.................................................... 72,215 55,547
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS.................................... 61,745 61,815
--------- ---------
Total liabilities............................................................ 133,960 117,362
MINORITY INTEREST--CONVERTIBLE PREFERRED STOCK.................................. -- 3,833

COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $0.001 par value--Authorized, 5,000,000 shares; no
shares issued and outstanding at 2001 or 2000................................ -- --
Common stock, $0.001 par value--Authorized, 45,000,000 shares; issued and
outstanding, 21,403,656 and 20,388,705 shares at 2001 and 2000, respectively. 171,059 161,339
Accumulated other comprehensive income (loss).................................. 34 (17)
Accumulated deficit............................................................ (133,866) (126,480)
--------- ---------
Total stockholders' equity................................................... 37,227 34,842
--------- ---------
TOTAL........................................................................... $ 171,187 $ 156,037
========= =========
</TABLE>

See notes to consolidated financial statements

<PAGE>

COINSTAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
REVENUE..................................... $129,352 $102,609 $ 77,688
EXPENSES:
Direct operating........................... 58,072 48,184 38,836
Regional sales and marketing............... 9,188 11,368 6,279
Product research and development........... 4,162 3,497 4,892
Selling, general and administrative........ 22,245 18,177 13,542
Depreciation and amortization.............. 26,349 24,460 20,267
-------- -------- --------
Income (loss) from operations.............. 9,336 (3,077) (6,128)
OTHER INCOME (EXPENSE):
Interest income............................ 767 1,482 2,350
Interest expense........................... (8,302) (8,517) (11,165)
Other...................................... (60) 258 (768)
-------- -------- --------
Income (loss) from continuing operations... 1,741 (9,854) (15,711)
DISCONTINUED OPERATIONS:
Loss from discontinued operations.......... (5,737) (12,840) (2,412)
Loss on disposal of discontinued operations (3,390) -- --
-------- -------- --------
Loss before extraordinary item............. (7,386) (22,694) (18,123)
EXTRAORDINARY ITEM:
Loss related to early retirement of debt... -- -- (3,250)
-------- -------- --------
NET LOSS.................................... $ (7,386) $(22,694) $(21,373)
======== ======== ========

NET INCOME (LOSS) PER SHARE:
Basic:
Continuing operations.................... $ 0.08 $ (0.49) $ (0.88)
Discontinued operations.................. (0.43) (0.63) (0.14)
Extraordinary item....................... -- -- (0.18)
-------- -------- --------
Net loss per share..................... $ (0.35) $ (1.12) $ (1.20)
======== ======== ========
Diluted:
Continuing operations.................... $ 0.08 $ (0.49) $ (0.88)
Discontinued operations.................. (0.42) (0.63) (0.14)
Extraordinary item....................... -- -- (0.18)
-------- -------- --------
Net loss per share..................... $ (0.34) $ (1.12) $ (1.20)
======== ======== ========
</TABLE>

See notes to consolidated financial statements

<PAGE>

COINSTAR, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except share data)

Accumulated
Common Stock Other
------------------- Comprehensive Accumulated
Shares Amount Income/(Loss) Deficit Total
---------- -------- ------------- ----------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998.......................... 15,217,504 $ 62,372 $ 3 $ (82,413) $(20,038)
Issuance of shares under employee stock purchase
plan............................................... 77,793 672 672
Exercise of stock options........................... 224,453 810 810
Net exercise of common stock warrants............... 100,057 -- --
Issuance of common stock for acquisition of assets.. 25,000 386 386
Issuance of common stock, net of issuance costs of
$6,287............................................. 4,466,400 93,649 93,649
Issuance of common stock for asset purchase option.. 30,000 272 272
Contributed capital for warrants.................... 892 892
Comprehensive income (loss):
Net loss.......................................... (21,373) (21,373)
Other comprehensive income (loss):
Foreign currency translation adjustment......... (4) (4)
--------
Comprehensive income (loss)......................... (21,377)
---------- -------- ---- --------- --------
BALANCE, December 31, 1999.......................... 20,141,207 159,053 (1) (103,786) 55,266
Issuance of shares under employee stock purchase
plan............................................... 82,484 784 784
Exercise of stock options........................... 165,014 997 997
Non-cash stock-based compensation expense........... 505 505
Comprehensive income (loss):
Net loss.......................................... (22,694) (22,694)
Other comprehensive income (loss):
Unrealized loss on short-term investments
available for sale............................. (3) (3)
Foreign currency translation adjustments........ (13) (13)
--------
Comprehensive income (loss)......................... (22,710)
---------- -------- ---- --------- --------
BALANCE, December 31, 2000.......................... 20,388,705 161,339 (17) (126,480) 34,842
Issuance of common stock............................ 3,324 64 64
Issuance of shares under employee stock purchase
plan............................................... 54,319 760 760
Exercise of stock options........................... 867,697 7,701 7,701
Net exercise of common stock warrants............... 36,955 -- --
Stock issued in connection with purchase of minority
interest of subsidiary............................. 52,656 1,000 1,000
Non-cash stock-based compensation expense........... 195 195
Comprehensive income (loss):
Net loss.......................................... (7,386) (7,386)
Other comprehensive income (loss):
Foreign currency translation adjustments........ 51 51
--------
Comprehensive income (loss)......................... (7,335)
---------- -------- ---- --------- --------
BALANCE, December 31, 2001.......................... 21,403,656 $171,059 $ 34 $(133,866) $ 37,227
========== ======== ==== ========= ========
</TABLE>

See notes to consolidated financial statements

<PAGE>

COINSTAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>
Year Ended December 31
----------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss...................................................................... $ (7,386) $(22,694) $(21,373)
Net loss from discontinued operations........................................ 9,127 12,840 2,412
-------- -------- --------
Net income (loss) from continuing operations................................. 1,741 (9,854) (18,961)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization................................................ 26,349 24,460 20,267
Write off of non-cash portion of purchase option............................. -- -- 272
Debt discount amortization................................................... 126 436 8,713
Non-cash stock-based compensation............................................ 195 505 --
Unrealized loss on short-term investments available for sale................. -- (3) --
Unrealized gain (loss) on foreign currency................................... 51 (13) (4)
Cash provided (used) by changes in operating assets and liabilities:
Investment interest receivable............................................... -- 132 45
Prepaid expenses and other current assets.................................... 279 218 (984)
Other assets................................................................. (35) 134 (621)
Accounts payable............................................................. 1,793 (418) 675
Accrued liabilities.......................................................... 14,925 9,759 13,989
-------- -------- --------
Net cash provided by continuing operations.................................... 45,424 25,356 23,391
Net cash provided (used) by discontinued operations........................... 1,429 (19,671) (1,764)
-------- -------- --------
Net cash provided by operations............................................... 46,853 5,685 21,627
INVESTING ACTIVITIES:
Purchases of short-term investments.......................................... -- -- (25,682)
Sales and maturities of short-term investments............................... -- 9,163 20,524
Purchases of fixed assets.................................................... (18,502) (23,322) (36,186)
Net proceeds from the sale of equipment...................................... 8 17 --
Refund of tax on Coinstar units.............................................. -- -- 535
Purchase of intangible assets................................................ -- (362) --
Other........................................................................ -- -- 54
-------- -------- --------
Net cash used by continuing investing activities.............................. (18,494) (14,504) (40,755)
Net cash used by discontinued investing activities............................ (617) (5,681) (322)
-------- -------- --------
Net cash used by investing activities......................................... (19,111) (20,185) (41,077)
FINANCING ACTIVITIES:
Payments on long-term debt................................................... (1,016) (793) (35,174)
Borrowings under long-term debt obligations.................................. -- -- 500
Proceeds from sale of common stock, net of issuance costs.................... 64 -- 93,649
Proceeds from exercise of stock options and issuance of shares under
employee stock purchase plan................................................ 8,461 1,780 1,483
-------- -------- --------
Net cash provided by continuing financing activities.......................... 7,509 987 60,458
Net cash provided by discontinued financing activities........................ -- 5,501 --
-------- -------- --------
Net cash provided by financing activities..................................... 7,509 6,488 60,458

Total net cash provided by continuing operations................................ 34,439 11,839 43,094
Total net cash provided by discontinued operations.............................. 812 (19,851) (2,086)
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................ 35,251 (8,012) 41,008
CASH AND CASH EQUIVALENTS:
Beginning of year............................................................ 70,684 78,696 37,688
-------- -------- --------
End of year.................................................................. $105,935 $ 70,684 $ 78,696
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest....................................... $ 8,160 $ 8,082 $ 247

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchase of vehicles financed by capital lease obligations................... $ 1,027 $ 1,389 $ 1,341
Net exercise of common stock warrants........................................ 723 -- 90
Stock issued in connection with purchase of minority interest of subsidiary.. 1,000 -- --
Purchase of assets with common stock......................................... -- -- 386
Purchase of assets with warrants............................................. -- -- 169
Issuance of warrants under revolving credit facility......................... -- -- 723
Stock issued for purchase option............................................. -- -- 272
</TABLE>

See notes to consolidated financial statements

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 1: ORGANIZATION AND BUSINESS

General: We develop, own and operate a network of automated, self-service
coin-counting and processing machines that provide consumers with a convenient
means to convert loose coins into cash. We have increased our installed base
every year since inception, and as of December 31, 2001, had an installed base
of 9,576 units located in supermarkets and financial institutions in 46 states,
the District of Columbia, the United Kingdom and Canada.

Coinstar International, Inc., our wholly owned subsidiary, was formed in
March 1998 to explore expanding our operations internationally. As of December
31, 2001, Coinstar International has installed 249 Coinstar units in the United
Kingdom and 61 units in Canada.

Meals.com, Inc., was formed in January 1999 as an online and in-store
grocery marketing business. In October 2001, we sold certain assets of
Meals.com, including certain contracts, web site content and database
information, applicable trademarks, as well as specified software and licenses
relating to the Meals.com branded and Nestle branded web sites.

Principles of consolidation: The accompanying consolidated financial
statements include the accounts of Coinstar and our wholly owned subsidiary,
Coinstar International. All significant intercompany balances and transactions
have been eliminated in consolidation. The results of the operations of
Meals.com are presented as discontinued operations (see Note 6) and the amounts
in the financial statements and related notes have been reclassified to reflect
the discontinued operations.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and equivalents: We consider all highly liquid securities purchased
with a maturity of three months or less to be cash equivalents. Cash and cash
equivalents includes funds in transit, which represent amounts being processed
by armored carriers or residing in Coinstar units which are payable to our
partners. These amounts payable to our partners total $53.7 million and $42.6
million at December 31, 2001 and 2000, respectively.

Long-lived assets: We periodically review long-lived assets for impairment
to determine whether any events or circumstances indicate that the carrying
amount of the assets may not be recoverable. Such review includes estimating
expected future cash flows.

Property and equipment: Property and equipment are depreciated using the
straight-line method over the following useful lives:

<TABLE>
<CAPTION>
Type Of Asset Useful Life
------------- ---------------
<S> <C>
Coinstar units............................................. 60 months
Installation costs for Coinstar units...................... 36 months
Office furniture and equipment............................. 60 months
Computers.................................................. 36 months
Leased vehicles............................................ 36 months
Leasehold improvements..................................... 60 to 84 months
</TABLE>

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

In order to achieve volume discounts, we purchase certain components of the
Coinstar units in advance. When a component is placed into service, the cost is
transferred to the appropriate Coinstar equipment account and depreciated
accordingly.

During 1999, we wrote off certain obsolete equipment resulting in a charge
of $483,000 and received a refund for overpaid use tax attributable to Coinstar
units, which resulted in the reduction of the basis of the Coinstar units and a
reduction in depreciation expense.

Other assets: Other assets include lease and other deposits and deferred
financing fees for our long-term debt facilities.

Revenue recognition: Coin processing fees are recognized at the time the
customers' coins are counted by the Coinstar unit. Units in service with the
top three supermarket chains in 2001 accounted for approximately 25.3%, 13.3%
and 10.8% of our revenue. In 2000, the top three supermarket chains accounted
for approximately 27.6%, 11.4% and 11.3% of our revenue and in 1999, the top
two supermarket chains accounted for approximately 31.9%, and 11.2% of our
revenue.

Start-up activities: All start-up costs incurred by us relating to the
development of domestic and international markets and other similar services
are expensed as incurred.

Fair value of financial instruments: The following methods and assumptions
were used to estimate the fair value of each class of financial instruments:

The carrying amounts for cash and cash equivalents, short-term investments,
and accounts payable approximate fair value because of the short maturity of
these instruments. The fair value of our senior subordinated discount notes is
based on the quoted market price on the last day of the year. The fair value of
our senior revolving line, included in long-term debt, approximates the
carrying amount due to its variable rate of interest.

At December 31, 2001 and 2000, the carrying amount and estimated fair value
of such financial instruments for which fair value can be determined are as
follows:

<TABLE>
<CAPTION>
2001 2000
---------------- ----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------
(in thousands)
<S> <C> <C> <C> <C>
Long-term debt $60,986 $66,358 $60,860 $63,309
</TABLE>

Stock-based compensation: We account for stock-based awards to employees
using the intrinsic value method in accordance with Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees. Statement of
Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation, has been adopted by us for disclosure of certain additional
information related to our stock option plans.

Use of estimates: The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Recent Accounting Pronouncements: In June 1998, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which was amended by SFAS Nos. 137 and 138.
This pronouncement, as amended, requires an entity to recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. We have adopted the provisions of SFAS
No. 133 and SFAS No. 138 as of January 1, 2001. The impact of adoption was not
material to the financial statements, taken as a whole.

In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires the
purchase method of accounting for business combinations initiated after June
30, 2001 and eliminates the pooling-of-interests method. SFAS No. 142, which is
effective January 1, 2002, requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential
future impairments of goodwill. SFAS No. 142 also requires us to complete a
transitional goodwill impairment test six months from the date of adoption. We
do not believe that the adoption of SFAS Nos. 141 or 142 will have a
significant impact on our financial position or results of our operations.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made.
Additionally, the associated asset retirement costs will be capitalized as part
of the carrying amount of the long-lived asset. We do not believe that the
adoption of SFAS No. 143, which is effective for companies with fiscal years
beginning after June 15, 2002, will have a significant impact on our financial
position or results of our operations.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting
and reporting for the impairment or disposal of long-lived assets, and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
For Long-Lived Assets To Be Disposed Of, and portions of APB No. 30, Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions. SFAS No. 144 requires the use of one accounting model for
long-lived assets to be disposed of by sale, whether previously held and used
or newly acquired, and broadens the definition of discontinued operations. We
do not believe that the adoption of SFAS No. 144, which is effective for
companies with fiscal years beginning after December 15, 2001, will have a
significant impact on our financial position or results of our operations.

Reclassifications: Certain reclassifications have been made to the prior
year balances to conform to the current year presentation.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 3: ACCRUED LIABILITIES

Accrued liabilities consisted of the following at December 31:

<TABLE>
<CAPTION>
2001 2000
------- -------
(in thousands)
<S> <C> <C>
Funds in transit................................. $53,668 $42,577
Accrued liabilities for payroll related expenses. 4,314 1,792
Accrued liabilities for interest payable......... 1,982 1,982
Accrued liabilities for estimated taxes.......... 2,013 1,917
Accrued liabilities to service contract providers 1,538 690
Other............................................ 1,992 1,624
------- -------
$65,507 $50,582
======= =======
</TABLE>

NOTE 4: LONG-TERM DEBT

Long-term debt consisted of the following at December 31:

<TABLE>
<CAPTION>
2001 2000
------- -------
(in thousands)
<S> <C> <C>
Senior subordinated discount notes $60,980 $60,980
Senior revolving line............. 500 500
Less unamortized discounts........ (494) (620)
------- -------
60,986 60,860
Less current portion.............. -- --
------- -------
Long-term debt.................... $60,986 $60,860
======= =======
</TABLE>

Senior subordinated discount notes: On October 22, 1996, we completed a
private placement offering of 95,000 units, each of which consisted of $1,000
principal amount of 13% senior subordinated discount notes, due at maturity in
2006, and warrants to purchase seven shares of our common stock per unit, at an
exercise price of $0.01 per warrant share, subject to adjustment under certain
circumstances. Imputed interest on the senior subordinated discount notes
accrued until October 1999, at which time interest was payable in semi-annual
installments through maturity.

The senior subordinated discount notes are redeemable at our option, in
whole or in part, at any time on and after October 1, 2001, at specified
redemption prices for the relevant year of redemption, plus accrued and unpaid
interest to the date of redemption.

In the event of a change of control (as defined in the senior subordinated
discount notes), each holder of the senior subordinated discount notes has the
option to require us to repurchase such senior subordinated discount notes at
101% of the accreted value thereof on the date of repurchase plus liquidated
damages. The senior subordinated discount notes are subordinate in rank to all
existing and future senior indebtedness. The indenture pursuant to which the
senior subordinated discount notes were issued contains certain covenants that,
among other things, limit our ability to make dividend payments, make
investments, repurchase outstanding shares of stock, prepay other debt
obligations, incur additional indebtedness, effect asset dispositions, engage
in sale and leaseback transactions, consolidate, merge or sell all or
substantially all of our assets, engage in transactions with affiliates, or
permit our restricted subsidiaries to effect certain transactions.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Subsequent to the completion of our initial public offering and pursuant to
a related Senior Subordinated Discount Notes Registration Rights Agreement (the
"Registration Rights Agreement") between us and the initial purchasers of the
senior subordinated discount notes, we completed an exchange offer of the
senior subordinated discount notes to satisfy its obligations under the
Registration Rights Agreement. The senior subordinated discount notes were
exchanged for otherwise substantially identical notes registered under the
Securities Act of 1933, as amended.

The senior subordinated discount notes were recorded net of discount of
$30.4 million including the warrants issued in connection with the senior
subordinated discount notes which were recorded at $1.0 million as common
stock, each as determined by the relative fair values of the senior
subordinated discount notes and the warrants as of the closing date. In
addition, we recorded deferred financing fees related to the senior
subordinated discount notes of $2.8 million including additional costs
associated with the exchange offer. The deferred financing costs and discount
attributable to the warrants are being amortized over the term of the senior
subordinated discount notes.

Early retirement of debt: In 1999, we recorded an extraordinary charge of
$3.2 million, which consisted of premiums paid on the pre-payment of $34.0
million of senior subordinated discount notes, and the write-off of their
related deferred financing costs.

Principal payments: As of December 31, 2001, scheduled principal payments
on long-term debt are as follows:

<TABLE>
<CAPTION>
(in thousands)
<S> <C>

October 2003.......................................... $ 500
October 2006.......................................... 60,980
-------
61,480
Less unamortized discounts............................ (494)
-------
$60,986
=======
</TABLE>

On January 3, 2002, we repurchased $10.0 million of these outstanding notes
and on March 15, 2002, we repurchased an additional $15.0 million through the
use of our $15.0 million term loan with Comerica Bank (formerly Imperial Bank).
In accordance with these repurchases, we will be recording an extraordinary
charge of $2.5 million in the quarter ending March 31, 2002. Subsequent to
these repurchases, the amount of the senior subordinated discount notes
outstanding is approximately $36.0 million.

Credit Agreement: On February 19, 1999, we entered into a Credit Agreement
with Comerica Bank (formerly Imperial Bank), for itself and as agent of Bank
Austria Creditanstalt Corporate Finance, Inc. ("Bank Austria" and, together
with Comerica Bank, the "Lenders"). On September 26, 2000, we amended the
credit agreement to release Bank Austria from its obligations under the credit
agreement. The amended credit agreement provided for a credit facility of up to
$13.0 million, consisting of a revolving loan of $10.0 million and a term loan
of $3.0 million, and released us from its obligation to maintain minimum
deposits with Comerica Bank. On December 21, 2001 we amended the credit
agreement to increase the credit facility and on February 22, 2002, we amended
the credit agreement to modify certain existing covenants. The amended credit
agreement provides for a credit facility of up to $25.0 million, consisting of
a revolving loan of $10.0 million and a term loan of $15.0 million. The
maturity date of the revolving loan, as amended, is October 15, 2003. The

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

maturity date of the term loan is December 4, 2006. If, however, the revolving
loan is not renewed, any amounts outstanding under the term loan becomes
payable when the revolving loan matures. The amended credit agreement bears
interest at Comerica Bank's prime rate plus 50 basis points (5.25% at December
31, 2001). The amended credit agreement requires us to maintain certain
financial covenants during the term of the agreement, which, among other
things, prohibits us from paying dividends without Comerica Bank's consent.

In connection with the credit agreement, we issued to each of the Lenders a
warrant to purchase 51,326 shares of its common stock. The exercise price for
the warrants was $12.177 per share. The values of the warrants were recorded as
common stock and represent discounts, which are being amortized ratably over
the term of the related debt. The unamortized value, as of September 26, 2000,
of the warrant issued to Bank Austria was recognized as interest expense upon
the release of Bank Austria from the credit agreement. During February 2001,
Comerica Bank net exercised its warrant in full to purchase 18,963 shares of
our common stock. In September 2001, Bank Austria net exercised its warrant in
full to purchase 17,992 shares of our common stock.

NOTE 5: COMMITMENTS

Lease commitments: We have entered into three lease agreements for office
space that commenced April 1, 1997, September 1, 1997 and August 1, 2000 and
which expire on March 31, 2002, August 31, 2004 and July 31, 2005,
respectively. The agreements require us to pay a portion of operating costs and
minimum monthly payments, which escalate annually, based on a stated schedule.
Each agreement allows us to renew each lease for one consecutive period of five
years.

We have entered into capital lease agreements to finance the acquisition of
certain automobiles. We retain title to such assets. These capital leases have
terms of 36 months at imputed interest rates that range from 6.7% to 11.7%.
Assets under capital lease obligations aggregated $4.1 million, and $3.9
million, net of $1.8 million and $1.4 million of accumulated amortization, at
December 31, 2001 and 2000, respectively.

A summary of our minimum lease obligations at December 31, 2001 is as
follows:

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------- ---------
(in thousands)
<S> <C> <C>
2002....................................................... $1,015 $1,189
2003....................................................... 627 1,123
2004....................................................... 179 760
2005....................................................... -- --
------ ------
Total minimum lease commitments............................ 1,821 $3,072
======
Less amounts representing interest......................... (164)
------
Present value of lease obligation.......................... 1,657
Less current portion....................................... (898)
------
Long-term portion.......................................... $ 759
======
</TABLE>

Rental expense was $1.4 million for each of the years ended December 31,
2001, 2000 and 1999, respectively.

Service providers: As of December 31, 2001, we had outstanding service
contracts with several service providers. These contracts generally cover a
one- to two-year period and have cancellation clauses ranging from 30 to 60
days.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Purchase commitments: We have entered into certain purchase agreements with
suppliers of Coinstar units, which require aggregate purchases in the amount of
$4.0 million in 2002.

Concentration of suppliers: We currently buy a significant component of the
Coinstar unit from two suppliers. Although there are a limited number of
suppliers for the component, we believe that other suppliers could provide
similar equipment, which would require certain modifications. Accordingly, a
change in suppliers could cause a delay in manufacturing and a possible
slow-down of growth, which could materially adversely affect future operating
results.

Letter of credit: At December 31, 2001, we had a secured irrevocable letter
of credit with a bank totaling $5.5 million. This letter of credit, which
expires on March 31, 2002, is available to collateralize certain of our
obligations to third parties. At December 31, 2001, no amounts were outstanding
under this letter of credit agreement.

NOTE 6: DISCONTINUED OPERATIONS

We have discontinued the operations of our Meals.com subsidiary. This
business segment is accounted for as discontinued operations in accordance with
APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions ("APB No. 30"). Amounts in the
financial statements and related notes for all periods shown have been
reclassified to reflect the discontinued operations.

In October 2001, we sold certain assets of Meals.com to Nestle USA, Inc.,
including certain contracts, web site content and database information,
applicable trademarks, as well as specified software and licenses relating to
the Meals.com branded and Nestle branded web sites. All other web site
operations of Meals.com ceased as of September 30, 2001. The loss on disposal
of our Meals.com business was $3.4 million. Included in the loss was a
write-down of the value of Meals.com assets totaling $2.4 million and costs
incurred as a result of the wind-down of the Meals.com business, which totaled
$1.0 million.

Summarized below are the operating results for the Meals.com business, which
are included in the accompanying consolidated statements of operations, under
the caption "Loss from discontinued operations." Also included below is the
loss on the disposal of the Meals.com business, which is reported in the
accompanying consolidated statements of operations under the caption "Loss on
disposal of discontinued operations."

<TABLE>
<CAPTION>
Year ended December 31,
--------------------------
2001 2000 1999
------- -------- -------
(in thousands)
<S> <C> <C> <C>
Revenue............................................... $ 619 $ 480 $ 44
Operating expenses.................................... 7,321 15,485 2,306
------- -------- -------
Operating loss..................................... (6,702) (15,005) (2,262)
Interest, other income and minority interest, net..... 965 2,165 (150)
------- -------- -------
Loss from discontinued operations..................... (5,737) (12,840) (2,412)
Loss on disposal of discontinued operations........... (3,390) -- --
------- -------- -------
Loss from discontinued operations.................. $(9,127) $(12,840) $(2,412)
======= ======== =======
</TABLE>

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

For financial reporting purposes, the assets, liabilities and provision for
losses of the discontinued operations are combined and classified in the
accompanying consolidated balance sheets as of December 31, 2001 and 2000 under
the captions "Cash and other current assets from discontinued operations, net"
and "Assets from discontinued operations" and are summarized below. Cash flows
from the discontinued operations are also stated separately on the accompanying
consolidated statements of cash flows.

<TABLE>
<CAPTION>
December 31,
-------------
2001 2000
---- ------
(in thousands)
<S> <C> <C>
Current:
Cash and cash equivalents............................... $ -- $7,990
Prepaid expenses and other current assets............... -- 897
Accounts payable........................................ -- (837)
Accrued liabilities..................................... -- (913)
---- ------
$ -- $7,137
==== ======
Non-current:
Property and equipment and other assets................. $ -- $6,399
==== ======
</TABLE>

NOTE 7: AGREEMENTS WITH MINORITY STOCKHOLDERS OF MEALS.COM

We entered into a Securities Purchase Agreement dated June 21, 2001, with
the minority stockholders of Meals.com, our majority owned subsidiary, pursuant
to which we agreed to purchase all outstanding securities (including preferred
stock and warrants) of Meals.com held by the minority stockholders for a
purchase price of $1.0 million. The purchase price was payable in Coinstar's
common stock based on the closing price of the stock on June 8, 2001, which was
$18.99. The common stock issued to the minority stockholders of Meals.com was
registered with the SEC on Form S-3 in August 2001.

NOTE 8: STOCKHOLDERS' EQUITY

Common Stock

In April 1999, we acquired certain assets consisting of Internet domain
names, fixed assets, contracts and web site content from Nu World Marketing
Limit Inc. In consideration for the purchase, we issued 25,000 shares of common
stock.

In June 1999, we completed a public offering of 4,000,000 shares of our
common stock at a purchase price of $22.375 per share for net proceeds of
approximately $83.8 million, net of issuance costs. In July 1999, the
underwriters exercised their option to purchase additional 466,400 shares of
our common stock at a purchase price of $22.375 per share for net proceeds of
approximately $9.8 million, net of issuance costs.

In October 1999, we issued 30,000 shares of our common stock in partial
consideration for an option to purchase CoinBank Automated Systems, Inc. Upon
the expiration of the option, we decided not to buy CoinBank Automated Systems,
Inc.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Warrants

Certain warrants issued between June 28, 1993 and December 15, 1995 had
expiration dates from June 28, 1998 to December 15, 2000, and have been
recorded at amounts that reflect our best estimate of fair value on the date of
issuance.

On March 3, 1999, we acquired from Compucook, Inc., assets consisting of
Internet domain names, software, fixed assets, contracts, and web site content.
In consideration of the purchase, we issued a warrant to purchase 25,000 shares
of our common stock at an exercise price of $15.63 per share, which expires on
March 2, 2004.

A summary of the warrants outstanding for the three years in the period
ended December 31, 2001, follows:

<TABLE>
<CAPTION>
Common Stock
--------------------------
Number of
Shares Exercise Price
--------- ---------------
<S> <C> <C>
OUTSTANDING, December 31, 1999..................... 1,027,652 $11.40 - $15.63
Forfeited....................................... (900,000) 11.40 - 15.61
---------
OUTSTANDING, December 31, 2000..................... 127,652 12.18 - 15.63
Exercised....................................... (102,652) 12.18
---------
OUTSTANDING, December 31, 2001..................... 25,000 15.63
=========
</TABLE>

NOTE 9: STOCK-BASED COMPENSATION PLANS

Stock Options

During 2001, we granted options to employees under the 2000 Equity Incentive
Plan (the "2000 Plan") and the 1997 Equity Incentive Plan, as amended, (the
"1997 Plan"), which generally vest over four years and expire after 10 years.
The 1997 Plan is an amendment and restatement of our 1992 Stock Option Plan, as
amended. We have reserved a total of 770,000 shares of common stock for
issuance under the 2000 Plan and 3,580,000 shares of common stock for issuance
under the 1997 Plan. Stock options have been granted to officers and employees
to purchase common stock at prices ranging from $0.25 to $24.55 per share,
which represented our best estimate of fair market value at the dates of grant.
We did not recognize any compensation expense related to the options issued
under either the 2000 Plan or the 1997 Plan.

In March 1997, we adopted the Non-Employee Directors' Stock Option Plan,
under which the Board of Directors has provided for the automatic grant of
options to purchase shares of common stock to non-employee directors. We have
reserved a total of 200,000 shares of common stock for issuance under the
Non-Employee Directors' Stock Option Plan. Stock options have been granted to
non-employee directors to purchase our common stock at prices of $7.75 and
$25.13 per share, which represented the fair market value at the date of grant.

In March 2002, an employee resigned and in accordance with her employment
agreement, will receive certain benefits effective March 8, 2002, the date of
her resignation. Such benefits include separation pay totaling approximately
$133,000 payable over a nine-month period, nine months of continued health
insurance benefits, including dependent care coverage, and vesting of all
unvested stock options. In connection with the accelerated stock option
vesting, we will record compensation expense of approximately $450,000 in the
quarter ending March 31, 2002.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

In June 2001, we entered into a separation and consulting agreement with an
employee that provides certain benefits effective June 20, 2001, the date of
the employee's resignation. Such benefits included consulting pay totaling
$500,000 payable over two years, two years' continued health insurance
benefits, including dependent care coverage, and continued vesting of the
employee's unvested stock options. In connection with the continued stock
option vesting, we recorded compensation expense of $181,000 in 2001 for this
individual.

In November 2000, we entered into a separation agreement with an employee
that provides certain benefits effective November 15, 2000, the date of the
employee's resignation. Such benefits included severance pay totaling $300,000
payable over a twelve-month period, one year of continued health insurance
benefits, including dependent care coverage, and vesting of the employee's
unvested stock options. In connection with the accelerated stock option
vesting, we recorded compensation expense of $505,000 in 2000.

The price ranges of all options exercised were $0.25 to $13.38 in 1999,
$0.40 to $11.75 in 2000 and $0.40 to $19.25 in 2001. At December 31, 2001,
there were 3,161,259 shares of unissued common stock reserved for issuance
under the 1997 Plan and the 2000 Plan of which 248,909 shares were available
for future grants. Numbers of common stock options under the plans are as
follows as of December 31:

<TABLE>
<CAPTION>
2001 2000 1999
------------------- ------------------- -------------------
Weighted Weighted Weighted
average average average
exercise exercise exercise
Shares price Shares price Shares price
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Number of common shares under option:
Outstanding, beginning of year...... 3,025,664 $11.03 2,801,869 $10.03 1,678,559 $ 7.08
Granted............................. 856,749 22.66 824,000 13.63 1,567,654 12.14
Exercised........................... (888,724) 9.17 (165,014) 6.04 (224,453) 3.61
Canceled or expired................. (81,339) 12.39 (435,191) 11.39 (219,891) 9.01
--------- --------- ---------
Outstanding, end of year............. 2,912,350 14.98 3,025,664 11.03 2,801,869 10.03
========= ========= =========
Exercisable, end of year............. 1,201,548 11.57 1,444,443 9.66 805,063 8.13
========= ========= =========
</TABLE>

The following table summarizes information about common stock options
outstanding at December 31, 2001:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------- ----------------------------------
Number of options Number of options
outstanding at Weighted average exercisable at
December 31, remaining Weighted average December 31, Weighted average
Exercise price 2001 contractual life exercise price 2001 exercise price
- -------------- ----------------- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.25 - $ 7.75 101,437 5.19 $ 3.94 86,980 $ 3.64
8.00 187,039 6.11 8.00 173,531 8.00
8.56 - 10.00 200,117 6.07 9.80 154,850 9.80
10.13 - 14.00 1,044,548 7.54 11.34 549,840 11.37
14.13 - 21.75 738,784 8.95 17.46 159,097 16.10
23.30 - 25.13 640,425 9.79 23.46 77,250 24.19
--------- ---------
2,912,350 1,201,548
========= =========
</TABLE>

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

Stock Purchase Plan

In March 1997, we adopted the Employee Stock Purchase Plan (the "ESPP")
under Section 423(b) of the Internal Revenue Code. Under the ESPP, the Board of
Directors may authorize participation by eligible employees, including
officers, in periodic offerings. During 2001, shareholders approved an increase
of 200,000 shares eligible for issuance under the ESPP, bringing the total
number of shares reserved for issuance to 600,000. Eligible employees may
participate through payroll deductions in amounts related to their basic
compensation. At the end of each offering period, shares are purchased by the
participants at 85% of the lower of the fair market value at the beginning of
the offering period or the end of a purchase period. During December 31, 2001,
stock purchases totaling $760,000 were made as a result of payroll deductions
from employees. Actual shares purchased by participating employees during
December 31, 2001 totaled 54,319 at an average price of $14.00.

Pro forma Net Loss

We apply APB Opinion No. 25 and related interpretations in accounting for
our stock-based compensation plans. Accordingly, no compensation cost has been
recognized for our stock option grants. The weighted average fair value of
options granted during 2001, 2000 and 1999 were $22.66, $13.63 and $8.04,
respectively. The fair value of each option granted during 2001, 2000 and 1999
is estimated on the date of grant using the Black-Scholes option-pricing model
with the following assumptions: four to five year expected life from date of
grant; annualized stock volatility of 78%, 83%, and 84% for 2001, 2000 and
1999, respectively; risk-free interest rates from 3.9% to 6.8%; and no
dividends during the expected term. Had compensation costs for our stock-based
compensation plans been determined based on the fair value at the grant dates
for awards under those plans consistent with the method prescribed in SFAS No.
123, our net loss and net loss per share would have increased to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
December 31,
------------------------------------
2001 2000 1999
-------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C>
Net loss:
As reported.................................... $ (7,386) $(22,694) $(21,373)
Pro forma...................................... (12,058) (26,677) (24,641)
Net loss per share:
Basic:
As reported................................ $ (0.35) $ (1.12) $ (1.20)
Pro forma.................................. (0.58) (1.32) (1.38)
Diluted:
As reported................................ (0.34) (1.12) (1.20)
Pro forma.................................. (0.55) (1.32) (1.38)
</TABLE>

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 10: INCOME TAXES

The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to the net income or loss from continuing
operations. The sources and tax effects of the differences are as follows:

<TABLE>
<CAPTION>
December 31,
-----------------------
2001 2000 1999
------- ------- -------
<S> <C> <C> <C>
Income tax at the federal statutory rate................... 34.0 % (34.0)% (34.0)%
State income taxes, net of federal benefit................. 3.5 % -- --
Research and development credits........................... 6.1 % -- --
Other...................................................... 4.8 % (1.0)% (0.1)%
Valuation allowance changes affecting the provision for
income taxes............................................. (48.4)% 35.0 % 34.1 %
------- ------- -------
0.0 % 0.0 % 0.0 %
======= ======= =======
</TABLE>

Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of our deferred tax assets and liabilities at December 31, 2001 and 2000 as
follows:

<TABLE>
<CAPTION>
December 31,
------------------
2001 2000
-------- --------
(in thousands)
<S> <C> <C>
Depreciation and amortization.............................. $ (3,839) $ (5,195)
-------- --------
Total deferred tax liabilities............................. (3,839) (5,195)
-------- --------
Tax loss and credit carry forwards......................... 48,518 41,486
Subordinated debt discount amortization.................... 7,952 7,140
Other...................................................... 969 794
-------- --------
Total deferred tax assets.................................. 57,439 49,420
-------- --------
Net deferred tax asset..................................... 53,600 44,225
Valuation allowance........................................ (53,600) (44,225)
-------- --------
$ -- $ --
======== ========
</TABLE>

A valuation allowance in the full amount of the net deferred tax asset
balance has been established as we believe sufficient uncertainty exists
regarding the ability to realize such tax assets in the future. The net change
in the valuation allowance during the years ended December 31, 2001, 2000 and
1999 was $9.4 million, $9.0 million and $7.3 million, respectively.

Deferred tax assets of approximately $3.4 million at December 31, 2001
pertain to certain net operating loss carryforwards resulting from the exercise
of employee stock options. When recognized, the tax benefit of these loss
carryforwards are accounted for as a credit to common stock rather than a
reduction of the income tax provision.

At December 31, 2001, we had net operating loss and credit carry forwards in
the amount of $128.9 million that will expire through 2021. Changes in
ownership, as defined by Section 382 of the IRS Code, may limit the amount of
net operating loss carryforwards used in any one year.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 11: INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing the net income
(loss) available to common stockholders for the period by the weighted average
number of common shares outstanding during the period. Diluted net income
(loss) per share is computed by dividing the net income (loss) for the period
by the weighted average number of common and potential common shares
outstanding (if dilutive) during the period. Potential common shares, composed
of incremental common shares issuable upon the exercise of stock options and
warrants, are included in the calculation of diluted net income (loss) per
share to the extent such shares are dilutive.

The following table sets forth the computation of basic and diluted net
income (loss) per share for the periods indicated:

<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------
2001 2000 1999
-------- -------- --------
(in thousands, except share data)
<S> <C> <C> <C>
Numerator:
Net income (loss) from continuing operations......... $ 1,741 $ (9,854) $(15,711)
Net loss from discontinued operations................ (9,127) (12,840) (2,412)
Net loss from extraordinary item..................... -- -- (3,250)
-------- -------- --------
Net loss............................................ $ (7,386) $(22,694) $(21,373)
======== ======== ========
Denominator:
Weighted average shares for basic calculation........ 20,869 20,271 17,857
Warrants............................................ 21 -- --
Incremental shares from employee stock options...... 954 -- --
-------- -------- --------
Weighted average shares for diluted calculation........ 21,844 20,271 17,857
======== ======== ========
</TABLE>

NOTE 12: RETIREMENT PLAN

In July 1995, we adopted a tax-qualified employee savings and retirement
plan under Section 401(k) of the Internal Revenue Code of 1986 for all
employees who satisfy the age and service requirements under this plan. This
plan is funded by voluntary employee salary deferral of up to 15% of annual
compensation and 50% employer matching contributions of up to 6% of annual
compensation. Additionally, all participating employees are 100% vested for all
Coinstar matched contributions. We contributed $566,000, $443,000 and $140,000
to the plan for the years ended December 31, 2001, 2000 and 1999.

NOTE 13: TERMINATION OF SUPPLIER RELATIONSHIP

Through April 1999, Scan Coin AB of Malmo, Sweden, was our sole source
provider of our coin counting devices. Coinstar and Scan Coin have been in a
contract dispute since September 1998, at which time Scan Coin claimed that we
had breached the contract and made claims to certain of our intellectual
property. On May 5, 1999, Scan Coin terminated its agreement with us and
reasserted the breach of contract claim and the claim to certain of our
intellectual property. The parties have been working to settle the dispute
amicably since that time. There is no assurance, however, that the disagreement
will be settled amicably, and litigation may commence.

<PAGE>

COINSTAR, INC.

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS--(Continued)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 14: BUSINESS SEGMENT INFORMATION

Operating segments as defined in SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information, are components of an enterprise for
which separate financial information is available and regularly reviewed by the
chief operating decision-maker.

We are organized into two reportable business segments: our North American
core business (which includes the United States and Canada) and our
International business (which includes the United Kingdom). As mentioned in
Note 6, we discontinued operations of our Meals.com segment. Accordingly,
information regarding Meals.com has been excluded from the segment disclosure
information below.

<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
2001 2000 1999
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Revenue:
North American core business................... $127,707 $102,201 $ 77,574
International business......................... 1,645 408 114
-------- -------- --------
Total revenues................................ $129,352 $102,609 $ 77,688
======== ======== ========
Net income (loss) from continuing operations:
North American core business................... $ 4,092 $ (8,880) $(14,489)
International business......................... (2,351) (974) (1,222)
-------- -------- --------
Total net income (loss)....................... $ 1,741 $ (9,854) $(15,711)
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
December 31,
------------------
2001 2000
-------- --------
(in thousands)
<S> <C> <C>
Total assets:
North American core business............................. $172,598 $157,765
International business................................... 6,327 758
Net assets from discontinued operations.................. -- 13,536
Intercompany eliminations................................ (7,738) (16,022)
-------- --------
Total assets............................................ $171,187 $156,037
======== ========
</TABLE>

<PAGE>

EXHIBIT INDEX

Exhibit Number Description of Document
- -------------- -----------------------
3.1(1) Amended and Restated Certificate of Incorporation of the
Registrant.
3.2(1) Amended and Restated Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1 through 3.2.
4.2(1) Specimen Stock Certificate.
4.3(1) Second Amended and Restated Investor Rights Agreement, dated
August 27, 1996, between the Registrant and certain
investors, as amended October 22, 1996.
4.4(1) Indenture between Registrant and The Bank of New York dated
October 1, 1996.
4.5(1) Warrant Agreement between Registrant and The Bank of New York
dated October 22, 1996.
4.6(1) Senior subordinated discount notes Registration Rights
Agreement between Registrant and Smith Barney Inc. dated
October 22, 1996.
4.7(1) Warrant Registration Rights Agreement between Registrant and
Smith Barney Inc. dated October 22, 1996.
4.8(1) Specimen 13% Senior Discount Note Due 2006.
4.9(3) Rights Agreement dated as of November 12, 1998 between
Registrant and American Securities Transfer and Trust, Inc.
4.10(3) Registrant's Certificate of Designation of Series A Preferred
Stock. Reference is made to Exhibit A of Exhibit 4.9.
4.11(3) Form of Rights Certificate. Reference is made to Exhibit B of
Exhibit 4.9.
4.12(4) Credit Agreement, dated February 19, 1999, between Coinstar,
Inc. and Comerica Bank (formerly Imperial Bank), for itself
and as agent for Bank Austria Creditanstalt Corporate
Finance, Inc.
4.13(7) Fifth Amendment to Credit Agreement between Coinstar, Inc.
and Comerica Bank (formerly Imperial Bank), dated September
26, 2000.
4.14 Seventh Amendment to Credit Agreement between Coinstar, Inc.
and Comerica Bank (formerly Imperial Bank), dated December
21, 2001.
4.15 Eighth Amendment to Credit Agreement between Coinstar, Inc.
and Comerica Bank (formerly Imperial Bank), dated February
22, 2002.
4.16 Ninth Amendment to Credit Agreement between Coinstar, Inc.
and Comerica Bank (formerly Imperial Bank), dated March 22,
2002.
10.1(1) Amended and Restated Registrant's 1997 Equity Incentive Plan.
10.2(1) Registrant's 1997 Employee Stock Purchase Plan.
10.3(11) Amended and Restated Registrant's 1997 Non-Employee
Directors' Stock Option Plan.
10.4(1) Form of Indemnity Agreement between the Registrant and its
executive officers and directors.

<PAGE>

Exhibit Number Description of Document
- -------------- -----------------------
10.5(1) Office Building Lease between Registrant and Factoria Heights
dated June 1, 1994, as amended on January 24, 1997.
10.6(1) Sublease between Registrant and Maruyama U.S., Inc. dated
January 15, 1997.
10.7(1) Lease agreement between Registrant and Spieker Properties,
L.P. dated January 29, 1997.
10.8(2) Manufacturing Agreement between Registrant and SeaMed
Corporation dated May 14, 1998.
10.9(1) Purchase Agreement between Registrant and Smith Barney Inc.
dated October 22, 1996.
10.10(11) Registrant's 2000 Equity Incentive Plan.
10.11(8) Amendment No. 1 to Registrant's 1997 Equity Incentive Plan
dated March 15, 2001.
10.12(8) Amendment No. 1 to Registrant's 2000 Equity Incentive Plan
dated March 15, 2001.
10.13(9) Employment Agreement between William W. Booth and the
Registrant dated May 5, 2001.
10.14(9) Employment Agreement between Carol Lewis and the Registrant
dated June 18, 2001.
10.15(9) Employment Agreement between Diane Renihan and the Registrant
dated June 18, 2001.
10.16(9) Employment Agreement between Richard Stillman and the
Registrant dated June 18, 2001.
10.17(9) Agreement between Jens Molbak and the Registrant dated
June 14, 2001.
10.18(9) Securities Purchase Agreement Among the Registrant and
Certain Stockholders of Meals.com, Inc., dated as of June 21,
2001.
10.19(9) Form of Release Agreement.
10.20(10) Employment Agreement between Dave Cole and the Registrant
dated October 3, 2001.
10.21 Coinstar, Inc. Stock Option Agreement, Grant to Chief
Executive Officer
12.1 Ratio of Earnings to Fixed Charges.
21.1(6) Subsidiaries.
23.1 Consent of Deloitte & Touche LLP.

(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-4 (No. 333-33233).

(2) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 1998 (File Number 000-22555).

(3) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 1998 (File Number 000-22555).

(4) Incorporated by reference to the Registrant's current Report on Form 8-K
filed by Coinstar on March 3, 1999 (File Number 000-22555).

(5) Incorporated by reference to the Current Report on Form 8-K filed by
Coinstar on February 18, 2000 (File Number 000-22555).

(6) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998 (File Number 000-22555).

(7) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2000 (File Number 000-22555).

(8) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 2001 (File Number 000-22555).

(9) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 2001 (File Number 000-22555).

(10) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2001 (File Number 000-22555).

(11) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2000.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.14
<SEQUENCE>3
<FILENAME>dex414.txt
<DESCRIPTION>SEVENTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>

EXHIBIT 4.14

SEVENTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND LIMITED WAIVER
-----------------------------------------------------------------

This SEVENTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND LIMITED
WAIVER (this "Amendment") is entered into as of December 21, 2001, by and among
---------
Coinstar, Inc., a Delaware corporation ("Borrower"), the financial institutions
--------
named on the signature pages hereof (each, a "Lender" and collectively the
------
"Lenders"), and Comerica Bank-California, successor in interest to Imperial
-------
Bank, as Agent for the Lenders ("Agent"), with reference to the following facts:
-----

A. Borrower, Agent, and Lenders are parties to that certain Credit
Agreement dated as of February 19, 1999, as amended (the "Credit Agreement").
----------------

B. The parties desire to further amend the Credit Agreement in
accordance with the terms of this Amendment.

NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

1. Defined Terms. Capitalized terms not otherwise defined herein
-------------
shall have the same meanings as set forth in the Credit Agreement. All
references to "Imperial Bank" in the Loan Documents shall mean and refer to
Comerica Bank-California.

2. Amendments to Credit Agreement. The Credit Agreement is hereby
------------------------------
amended as follows:

(a) The following defined terms in Section 1.1 are amended to
read as follows:

"Consolidated EBITDA": At any date of determination, the net
-------------------
income of Borrower (excluding Foreign Subsidiaries), plus, to the
----
extent deducted in computing such net income, without
duplication, the sum of (a) interest expense (excluding
capitalized interest), (b) income tax expense, (c) depreciation
expense, (d) amortization expense, (e) any extraordinary or
nonrecurring losses and (e) other noncash items reducing such net
income, minus, to the extent added in computing net income,
-----
without duplication, the sum of (i) any extraordinary or
nonrecurring gains and (ii) other noncash items increasing such
consolidated net income, for the twelve months ending on such
date, determined in accordance with GAAP.

"Consolidated Total Debt": At any date of determination, the
-----------------------
sum, determined on a consolidated basis, of all outstanding Loans
and the Letter of Credit Usage under this Agreement, all Debt of
the Borrower and its consolidated Subsidiaries (excluding Foreign
Subsidiaries) that is subordinated to the Debt under this
Agreement, and all other interest-bearing Debt of the Borrower
and its consolidated Subsidiaries (excluding Foreign
Subsidiaries)

<PAGE>

"Consolidated Total Debt Service": For any date of determination, the
-------------------------------
sum, determined on a consolidated basis, of (i) all interest expense of the
Borrower and its consolidated Subsidiaries (excluding Foreign Subsidiaries) with
respect to all Debt (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its consolidated Subsidiaries (excluding Foreign
Subsidiaries), excluding capitalized interest, for the three months ending on
such date multiplied by four, plus (ii) scheduled reductions of principal of all
Debt (other than with respect to the Indenture) of the Borrower and its
consolidated Subsidiaries (excluding Foreign Subsidiaries) for the twelve (12)
months following such date (including that portion of rental payments with
respect to Capital Leases which is or should be applied as a reduction to the
principal of such Capital Leases in accordance with GAAP), plus (iii) fees and
charges for Letter of Credit Usage as set forth in Section 2.5(f) of this
Agreement for the three months ending on such date multiplied by four, provided,
--------
that reductions of principal of the Revolving Loans shall be calculated as
though such Loans were scheduled to be repaid in twelve (12) equal quarterly
installments on the last day of each fiscal quarter of the Borrower commencing
on the Revolving Maturity Date.

"Current Liabilities": As of any applicable date, all amounts that
-------------------
should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of the Borrower (excluding Foreign Subsidiaries) as
at such date, including all Debt that is payable upon demand or within one year
from the date of determination thereof unless such Debt is renewable or
extendable at the option of the Borrower to a date more than one year from the
date of determination, plus, to the extent not already included therein, all
outstanding Loans and the Letter of Credit Usage under this Agreement, and any
other Debt owing to Lenders, but excluding deferred revenue, and excluding
amounts due and payable to retail partners of the Borrower.

"Loans": The Revolving Loans, the Term Loans, the Term Facility B
-----
Loans, and any combination thereof, made to the Borrower pursuant to Section
2.1, Section 2.6, and Section 2.8, respectively.

"Quick Assets": At any date of determination, the total unrestricted
------------
cash, unrestricted cash equivalents, and accounts receivable of the Borrower
(excluding Foreign Subsidiaries), excluding any cash owned by retail partners of
the Borrower, determined in accordance with GAAP.

"Revolving Maturity Date": October 15, 2003.
-----------------------

<PAGE>

(b) The following new defined terms are added to Section 1.1 in
their proper alphabetical order, which shall read as follows:

"Consolidated Capital Expenditures": At any date of
---------------------------------
determination, the dollar amount of gross expenditures (including
obligations under Capital Leases) incurred by the Borrower (excluding
Foreign Subsidiaries) for the twelve months ending on such date, for fixed
assets, real property, plant and equipment, and renewals, improvements and
replacements thereto required to be included in "capital expenditures",
"additions to property, plant or equipment" or comparable items in the
consolidated statement of changes in financial position of the Borrower in
conformity with GAAP, excluding, however, expenditures of insurance
proceeds received as the result of damage or destruction of the property
being replaced, and excluding expenditures financed with the proceeds of
any Debt of the Borrower.

"Term Facility B Commitment": As to Comerica Bank-California,
--------------------------
the lesser of (a) Twelve Million Dollars ($12,000,000) and (b) such
Lender's pro rata share of the Borrowing Base. The term "Term Facility B
---------------
Commitments" shall mean the aggregate Term Facility B Commitments of all
-----------
of the Lenders, as such amount may be reduced pursuant to the terms of
this Agreement.

"Term Facility B Commitment Termination Date": December 4, 2002.
-------------------------------------------

"Term Facility B Loan": As defined in Section 2.8(a).
--------------------

"Term Facility B Maturity Date": December 4, 2006.
-----------------------------

"Term Facility B Notes": As defined in Section 2.8(c).
---------------------

(d) Revolving Commitment Fee. The Borrower agrees to pay to the
------------------------
Agent for the ratable benefit of the Lenders a commitment fee (the
"Revolving Commitment Fee") on the average daily unused portion of the
Revolving Commitments, from December 21, 2001 until the Revolving Maturity
Date, at the rate of (i) 0.50% per annum for so long as the average daily
aggregate balance of Borrower's direct deposit accounts maintained with
the Agent for any quarter is less than $300,000, (ii) 0.30% per annum for
so long as the average daily aggregate balance of Borrower's direct
deposit accounts maintained with the Agent for any quarter is equal to or
greater than $300,000 but less than $600,000, and (iii) 0.15% per annum
for so long as the average daily aggregate balance of Borrower's direct
deposit accounts maintained with the Agent for any quarter is equal to or
greater than $600,000, payable in arrears on the last day of each calendar
quarter commencing on the first such date occurring after December 21,
2001. The Revolving Commitment Fee shall be calculated on the basis of a
360-day year for the actual days elapsed, and shall be non-refundable. For
the purposes of calculating the Revolving Commitment Fee, the Letter of
Credit Usage shall be deemed a usage of the Commitments.

<PAGE>

(d) Section 2.2(a)(ii) is amended to read as follows:

(ii) Term Loans. The aggregate principal amount of the Term
----------
Loans outstanding on the Term Commitment Termination Date shall be
payable in sixteen (16) equal quarterly installments payable on the
last day of each March, June, September and December, commencing on
September 30, 2002, and ending on the Maturity Date, on which date the
remaining outstanding principal amount of the Term Loans, together with
accrued interest thereon shall be due and payable; provided however,
-------- -------
that if this Agreement is not amended in accordance with Section 9.1 to
extend the Revolving Maturity Date beyond October 15, 2003, then the
remaining outstanding principal amount of the Term Loans, together with
accrued interest thereon shall be due and payable on the Revolving
Maturity Date.

(e) A new Section 2.2(a)(iv) is added to the Credit Agreement, which
shall read as follows:

(iv) Term Facility B Loans. Each Term Facility B Loan shall
---------------------
be payable in sixteen (16) equal quarterly installments of principal,
plus accrued interest, payable on the last day of each March, June,
September and December, commencing on the first of such days to occur
after the date such Loan is made, and ending on the Term Facility B
Maturity Date, on which date the remaining outstanding principal amount
of the Term Facility B Loans, together with accrued interest thereon
and any other amounts owing under this Agreement shall be due and
payable; provided however, that if this Agreement is not amended in
-------- -------
accordance with Section 9.1 to extend the Revolving Maturity Date
beyond October 15, 2003, then the remaining outstanding principal
amount of the Term Facility B Loans, together with accrued interest
thereon and any other amounts owing under this Agreement, shall be due
and payable on the Revolving Maturity Date.

(f) Section 2.3(a) is amended to read as follows:

(a) Payment of Interest. Interest with respect to each Loan
-------------------
shall be payable in arrears on each Interest Payment Date for such
Loan, on the maturity date for such Loan, and on the date of any
prepayment.

(g) Section 2.6(d) is amended to read as follows:

(d) Term Commitment Fee. The Borrower agrees to pay to the
-------------------
Agent for the ratable benefit of the Lenders a commitment fee (the
"Term Commitment Fee") on the average daily unused portion of the Term
Commitments, from December 21, 2001 until the Term Commitment
Termination Date, at the rate of (i) 0.50% per annum for so long as the
average daily aggregate balance of Borrower's direct deposit accounts
maintained with the Agent for any quarter is less than $300,000, (ii)
0.30% per annum for so long as the average daily aggregate balance of
Borrower's direct deposit accounts maintained with the Agent for any
quarter is equal to or greater than $300,000 but less than $600,000,
and (iii) 0.15% per annum for so long as the average daily aggregate
balance of Borrower's direct deposit accounts maintained with the Agent
for any quarter is equal to or greater than $600,000, payable in
arrears on the last day of each calendar quarter commencing on the
first such date occurring after December 21, 2001. The Term Commitment
Fee shall be calculated on the basis of a 360-day year for the actual
days elapsed, and shall be non-refundable.

<PAGE>

(h) A new Section 2.8 is added to the Credit Agreement, which shall
read as follows:

2.8 The Term Facility B Loans.
-------------------------

(a) The Term Facility B Commitment. Each Lender agrees,
------------------------------
severally and not jointly, on the terms and conditions hereinafter set
forth, to make Loans (each, a "Term Facility B Loan") to the Borrower
--------------------
from time to time during the period from the date hereof to and
including the Term Facility B Commitment Termination Date in an
aggregate amount not to exceed such Lender's Term Facility B Commitment;
provided, however, that no Lender shall be obligated on any date to make
-------- -------
a Loan which, when added to the outstanding Loans and the Letter of
Credit Usage, would exceed the Borrowing Base. Each Term Facility B Loan
shall be used by the Borrower solely for the redemption of its 13%
Senior Subordinated Discount Notes due 2006 issued pursuant to the
Indenture dated as of October 1, 1996, between the Borrower and The Bank
of New York, as Trustee, in the amount of such Loan. Each Term Facility
B Loan shall consist of a LIBO Rate Loan or a Base Rate Loan, as
determined by the Borrower and notified to the Agent in accordance with
Section 2.8(b) and shall be in a minimum amount of $500,000; provided
that a Term Facility B Loan consisting of a LIBO Rate Loan shall be in a
minimum amount of $2,000,000. Each Term Facility B Loan shall be made on
the same day by the Lenders ratably according to their respective Term
Facility B Commitments. Term Facility B Loans, once repaid, may not be
reborrowed.

(b) Making the Term Facility B Loans.
--------------------------------

(i) The Borrower may borrow under the Term Facility B
Commitments on any Business Day if the Borrowing is to consist of a Base
Rate Loan and on any LIBO Business Day if the Borrowing is to consist of
a LIBO Rate Loan, provided that the Borrower shall give the Agent
irrevocable notice (which notice must be received by the Agent prior to
10:00 A.M., San Francisco time) (i) three (3) LIBO Business Days prior
to the requested Borrowing date in the case of a LIBO Rate Loan, and
(ii) one (1) Business Day prior to the requested Borrowing date in the
case of a Base Rate Loan, specifying (A) the amount of the proposed
Borrowing, (B) the requested date of the Borrowing, (C) whether the
Borrowing is to consist of a LIBO Rate Loan or a Base Rate Loan, and (D)
if the Loan is to be a LIBO Rate Loan, the length of the Interest Period
therefor. Promptly following receipt of such notice, the Agent shall
notify each Lender of the date of the Loan, whether the Loan will be a
Base Rate Loan or a LIBO Rate Loan, the amount of that Lender's pro rata
share of the Loan and, if the Loan is a LIBO Rate Loan, of the
applicable Interest Period. Not later than 1:00 P.M., San Francisco
time, on the date specified for any Loan, each Lender shall deposit
immediately available funds in the amount of its pro rata share of the
Loan to the account of the Agent set forth on the signature pages
hereof. Upon satisfaction of the applicable conditions set forth in
Article IV, the Agent will make available the proceeds of all such Loans
to the Borrower by crediting the account of the Borrower on the books of
the Agent, or as otherwise directed by the Borrower.

<PAGE>

(ii) The notice of Borrowing may be given orally
(including telephonically) or in writing (including telex or facsimile
transmission); provided that any oral notice shall be confirmed in writing
on the same Business Day and all written notices and confirmation shall be
in the form of the Notice of Term Loan attached hereto as Exhibit D. Any
---------
conflict regarding a notice or between an oral notice and a written notice
applicable to the same Borrowing shall be conclusively determined by the
Agent's books and records. The Agent's failure to receive any written
notice of a particular Borrowing shall not relieve the Borrower of its
obligations to repay the Borrowing made and to pay interest thereon. The
Agent shall not incur any liability to the Borrower in acting upon, and
shall be entitled to rely upon, any notice of Borrowing, or any notice of
interest rate conversion or extension or regarding any Letter of Credit,
which the Agent believes in good faith to have been given by a Person duly
authorized to borrow on behalf of the Borrower.

(iii) Unless the Agent shall have received notice from
a Lender prior to the date of any Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Borrowing, the
Agent may assume that such Lender has made such portion available to the
Agent on the date of such Borrowing in accordance with subsection (1) of
this Section 2.8(b) and the Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If and
to the extent that such Lender shall not have so made such ratable portion
available to the Agent, such Lender and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at
the time to such Borrowing and (ii) in the case of such Lender, the Federal
Funds Rate. If such Lender shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Lender's pro rata share
of such Borrowing for purposes of this Agreement. The failure of any Lender
to make available its pro rata share of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder, to make available its
pro rata share of such Borrowing on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make
available its pro rata share of any Borrowing on the date of any Borrowing.

(c) Term Facility B Notes. The Term Facility B Loans made
---------------------
by the Lenders pursuant hereto shall be evidenced by promissory notes of
the Borrower, substantially in the form of Exhibit L (the "Term Facility B
--------- ---------------
Notes"), payable to the order of each Lender and representing the
-----
obligation of the Borrower to pay the unpaid principal amount of the Term
Facility B Loans made by that Lender, with interest thereon as prescribed
in Section 2.3. Each Lender is hereby authorized to record in its books and
records and on any schedule annexed to its Term Facility B Note, the date
and amount of the Term Facility B Loans made by that Lender and the date
and amount of each payment of principal thereof, and in the case of LIBO
Rate Loans, the Interest Period and interest rate with respect thereto, and
any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded; provided that failure by any Lender to
effect such recordation shall not affect the Borrower's obligations
hereunder. Prior to the transfer of a Term Facility B Note, the
transferring Lender shall record such information on any schedule annexed
to and forming a part of such Term Facility B Note.

<PAGE>

(d) Term Facility B Commitment Fee. The Borrower agrees to
------------------------------
pay to the Agent for the ratable benefit of the Lenders a commitment fee
(the "Term Facility B Commitment Fee") on the average daily unused portion
------------------------------
of the Term Facility B Commitments, from December 21, 2001 until the Term
Facility B Commitment Termination Date, at the rate of (i) 0.50% per annum
for so long as the average daily aggregate balance of Borrower's direct
deposit accounts maintained with the Agent for any quarter is less than
$300,000, (ii) 0.30% per annum for so long as the average daily aggregate
balance of Borrower's direct deposit accounts maintained with the Agent for
any quarter is equal to or greater than $300,000 but less than $600,000,
and (iii) 0.15% per annum for so long as the average daily aggregate
balance of Borrower's direct deposit accounts maintained with the Agent for
any quarter is equal to or greater than $600,000, payable in arrears on the
last day of each calendar quarter commencing on the first such date
occurring after December 21, 2001. The Term Commitment Fee shall be
calculated on the basis of a 360-day year for the actual days elapsed, and
shall be non-refundable.

(i) Section 6.2(a) is amended to read as follows:

(a) Direct Contribution Margin to Coinstar Processing Revenue.
---------------------------------------------------------
Permit the ratio of Direct Contribution Margin to Coinstar Processing
Revenue to be less than 0.52 to 1.0 as of the last day of any calendar
month from and after December 21, 2001.

(j) Section 6.2(b) is amended to read as follows:

(b) Modified Fixed Charge Ratio. Permit the ratio of (a) the
---------------------------
difference of Consolidated EBITDA minus Consolidated Capital Expenditures
-----
to (b) Consolidated Total Debt Service to be less than 1.40 to 1.0 as of
the last day of any calendar month from and after December 21, 2001.

(k) Section 6.2(c) is amended to read as follows:

(c) Consolidated EBITDA to Consolidated Total Debt Service.
------------------------------------------------------
Permit the ratio of Consolidated EBITDA to Consolidated Total Debt Service
to be less than 2.0 to 1.0 as of the last day of any calendar month from
and after December 21, 2001.

(l) Section 6.2(d) is amended to read as follows:

(d) Consolidated Total Debt to Consolidated EBITDA. Permit the
----------------------------------------------
ratio of Consolidated Total Debt to Consolidated EBITDA to be greater than:
(i) 2.50 to 1.0 as of the last day of any calendar month during the period
from December 21, 2001 through June 30, 2002; or (ii) 2.25 to 1.0 as of the
last day of any calendar month from and after July 1, 2002.

<PAGE>

(m) Section 6.2(e) is amended to read as follows:

(e) Adjusted Quick Ratio. Permit the ratio of Quick Assets to
--------------------
Current Liabilities to be less than: (i) 1.10 to 1.0 as of the last day of
any calendar month through December 31, 2001; (ii) 1.25 to 1.0 as of the
last day of any calendar month during the period from January 1, 2002
through June 30, 2002; (iii) 1.40 to 1.0 as of the last day of any calendar
month during the period from July 1, 2002 through September 30, 2002; or
(iv) 1.50 to 1.0 as of the last day of any calendar month from and after
October 1, 2002.

(n) Section 6.2(z) is amended to read as follows:

(z) Restrictions on Transfers to Subsidiaries; Restrictions on
----------------------------------------------------------
Expenditures for Electronic Commerce. Notwithstanding any other provisions
------------------------------------
of this Agreement to the contrary, allow the total aggregate amounts of any
(a) consideration given in any Acquisition from a Domestic Subsidiary or a
Foreign Person pursuant to Section 6.2(k)(ii)(iv), (b) loans to,
Investments in, or guaranties of the obligations of any Domestic or Foreign
Subsidiaries pursuant to Section 6.2(l)(v), (c) Contingent Liabilities in
favor of any Domestic or Foreign Subsidiaries pursuant to Section
6.2(m)(iv), (d) sales, leases, or transfers of assets to Domestic or
Foreign Subsidiaries pursuant to Section 6.2(n)(iii), (e) amounts
transferred to any Domestic or Foreign Subsidiaries from and after December
21, 2001, and (f) amounts expended or used by the Borrower or any
Subsidiary for the development of electronic commerce or internet-related
business, in each case individually or in the aggregate, to exceed
$16,000,000 at any time.

(o) Exhibit F is deleted and replaced with Exhibit F hereto.
--------- ---------

(p) Exhibit G is deleted and replaced with Exhibit G hereto.
--------- ---------

(q) Exhibit L shall be in the form of Exhibit L hereto.
--------- ---------

3. Consent and Limited Waiver with respect to Redemption of Notes under
--------------------------------------------------------------------
Indenture. Subject to the terms and conditions contained herein, and in reliance
- ---------
on the representations and warranties of the Borrower set forth herein, Lenders
hereby (a) consent to the redemption by Borrower of certain of its 13% Senior
Subordinated Discount Notes due 2006 issued pursuant to the Indenture dated as
of October 1, 1996, between the Borrower and The Bank of New York, as Trustee,
and (b) waive the provisions of Section 6.2(r) of the Credit Agreement with
respect to such redemption; provided that (i) at the time of and immediately
--------
following any such redemption there shall exist no condition or event that
constitutes an Event of Default or Potential Event of Default; (ii) the Borrower
shall not use any proceeds of Revolving Loans for the redemption of such Notes,
(iii) the Term Facility B Loans shall be used solely for the redemption of such
Notes, and (iv) the total consideration paid in redemption of such Notes shall
not exceed Fifty Million Dollars ($50,000,000) in the aggregate during the term
of the Credit Agreement. Without limiting the generality of the provisions of
Section 9.1 of the Credit Agreement, the consent and waiver set forth herein
shall be limited precisely as written, and nothing in this Agreement shall be
deemed to (i) constitute a waiver of compliance by the Borrower with Section
6.2(r) of the Credit Agreement in any other instance, or (ii) constitute a
waiver of any other Event of Default or other failure by Borrower to perform in
accordance with the Loan Documents or this Agreement, or (iii) prejudice any
right or remedy that the Lender may now have or may have in the future under or
in connection with the Credit Agreement or the Loan Documents.

<PAGE>

4. Limited Waiver with respect to Tangible Net Worth Covenant. Subject to
----------------------------------------------------------
the terms and conditions contained herein, and in reliance on the
representations and warranties of the Borrower set forth herein, Lenders hereby
waive the Borrower's obligation to comply with Section 6.2(e) of the Credit
Agreement as of September 30, 2001. Without limiting the generality of the
provisions of Section 9.1 of the Credit Agreement, the waiver set forth herein
shall be limited precisely as written, and nothing in this Agreement shall be
deemed to (i) constitute a waiver of compliance by the Borrower with Section
6.2(e) in any other instance, or (ii) constitute a waiver of any other Event of
Default or other failure by Borrower to perform in accordance with the Loan
Documents or this Agreement, or (iii) prejudice any right or remedy that the
Lender may now have or may have in the future under or in connection with the
Credit Agreement or the Loan Documents.

5. Updated Exhibits. On or before January 9, 2002, the Borrower shall
----------------
deliver to the Agent updated Exhibits A, B and C to the Intellectual Property
---------- - -
Security Agreement, and deliver any schedules or notices required pursuant to
Section 6.1(i) of the Credit Agreement.

6. Conditions to Effectiveness.
---------------------------

This Amendment shall become effective as of December 21, 2001 (the
"Effective Date"), only upon:

(a) receipt by the Agent of the following (each of which shall be in
form and substance satisfactory to the Agent and its counsel):

(i) counterparts of this Amendment duly executed on behalf of
the Borrower and the Lenders;

(ii) copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower, authorizing the execution and delivery of
this Amendment;

(iii) a promissory note in favor of Comerica Bank-California, in
the form of Exhibit L hereto;
---------

(iv) control agreements by certain Persons;

(v) a stock pledge agreement with respect to Coinstar
International, Inc., and certificates representing the pledged shares referred
to therein, accompanied by undated stock powers executed in blank;

(b) receipt by Comerica Bank-California of a nonrefundable commitment
fee in the amount of $35,000;

<PAGE>

(d) completion of such other matters and delivery of such other
agreements, documents and certificates as the Agent or any Lender may reasonably
request.

7. Representations and Warranties. In order to induce the Lenders to
------------------------------
enter into this Amendment, the Borrower represents and warrants to the Lenders
that the following statements are true, correct and complete as of the effective
date of this Amendment:

(a) Corporate Power and Authority. The Borrower has all requisite
-----------------------------
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement"). The
Certificate of Incorporation and Bylaws of the Borrower have not been amended
since the copies previously delivered to the Lenders.

(b) Authorization of Agreements. The execution and delivery of this
---------------------------
Amendment and the performance by the Borrower of the Amended Agreement have been
duly authorized by all necessary corporate action on the part of the Borrower.

(c) No Conflict. The execution and delivery by the Borrower of this
-----------
Amendment do not and will not contravene (i) any law or any governmental rule or
regulation applicable to the Borrower, except to the extent not resulting in a
Material Adverse Effect, (ii) the Certificate of Incorporation or Bylaws of the
Borrower, (iii) any order, judgment or decree of any court or other agency of
government binding on the Borrower, or (iv) any material agreement or instrument
binding on the Borrower, except to the extent not resulting in a Material
Adverse Effect.

(d) Governmental Consents. The execution and delivery by the Borrower
---------------------
of this Amendment and the performance by the Borrower of the Amended Agreement
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body (except routine reports required
pursuant to the Securities and Exchange Act of 1934, as amended, which reports
will be made in the ordinary course of business).

(e) Binding Obligation. This Amendment and the Amended Agreement have
------------------
been duly executed and delivered by the Borrower and are the binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws and equitable principles relating to or affecting creditors' rights.

(f) Incorporation of Representations and Warranties From Credit
-----------------------------------------------------------
Agreement. Subject to compliance by Borrower with Section 5 of this Amendment,
- ---------
the representations and warranties contained in Section 5.1 of the Credit
Agreement are correct on and as of the effective date of this Amendment as
though made on and as of such date (except to the extent they relate
specifically to any earlier date, in which case such representations and
warranties shall continue to have been correct as of such date).

<PAGE>

(g) Absence of Default. No event has occurred and is continuing or will
------------------
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.

8. Miscellaneous.
-------------

(a) Reference to and Effect on the Credit Agreement and the Other Loan
------------------------------------------------------------------
Documents.
- ---------

(i) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to the "Credit Agreement," "thereunder," "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Amended Agreement.

(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.

(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the Agent
or Lenders under the Credit Agreement or any of the other Loan Documents.

(b) Fees and Expenses. All costs and expenses of the Agent and Lenders,
-----------------
including, but not limited to, reasonable attorneys' fees, incurred by the Agent
and Lenders in the preparation and negotiation of this Amendment constitute
costs and expenses in connection with the amendment and restructuring of the
Loan Documents, and as such are payable by the Borrower in accordance with
Section 9.5 of the Credit Agreement.

(c) Headings. Section and subsection headings in this Amendment are
--------
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

(d) Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
--------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

(e) Counterparts. This Amendment may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

[REMAINDER INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

BORROWER:

COINSTAR, INC.

By: /s/ Diane L. Renihan

Title: CFO

AGENT:

COMERICA BANK-CALIFORNIA, SUCCESSOR
IN INTEREST TO IMPERIAL BANK

By: /s/ Jeff Roberts

Title: Asst. Vice President

LENDER:

COMERICA BANK-CALIFORNIA, SUCCESSOR
IN INTEREST TO IMPERIAL BANK

By: /s/ Jeff Roberts

Title: Asst. Vice President

<PAGE>

EXHIBIT F

[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE

1. This Compliance Certificate ("Compliance Certificate") is executed
and delivered by Coinstar, Inc., a Delaware corporation (the "Borrower") to
Comerica Bank-California, successor in interest to Imperial Bank (the "Agent")
pursuant to Section 6.1(a)(iv)(B) of the Credit Agreement dated as of February
19, 1999 among the Borrower, the financial institutions named therein and the
Agent. Any terms used herein and not defined herein shall have the meanings
defined in the Credit Agreement. This Compliance Certificate covers the
Borrower's:

Calendar month ended _________, 19__
Fiscal quarter ended _________, 19__
Fiscal year ended ________, 19__

2. The following paragraphs set forth calculations in compliance with
obligations pursuant to Section 6.2(a), (b), (c), (d), (e), (f), (g) and (z) of
the Credit Agreement, as of the end of the fiscal period set forth in paragraph
1 hereof.

A. Direct Contribution Margin to Coinstar
--------------------------------------
Processing Revenue (Sec. 6.2(a)):
---------------------------------

(a) Direct Contribution Margin $__________

(b) Coinstar Processing Revenue $__________

Ratio (a) : (b) ___________

Minimum Permitted Ratio: 0.52 to 1.0

B. Modified Fixed Charge Ratio (Sec. 6.2(b)):
------------------------------------------

(a) Consolidated EBITDA minus
-----
Consolidated Capital Expenditures $__________

(b) Consolidated Total Debt Service ___________

Ratio (a) : (b) ___________

Minimum Permitted Ratio: 1.40 to 1

C. Consolidated EBITDA to Consolidated Total
-----------------------------------------
Debt Service (Sec. 6.2(c)):
---------------------------

(a) Consolidated EBITDA $__________

(b) Consolidated Total Debt Service $__________

Ratio (a) to (b) ___________

Minimum Permitted Ratio: 2.0 to 1.0

F-1

<PAGE>

D. Consolidated Total Debt to Consolidated
---------------------------------------
EBITDA (Sec. 6.2(d)):
---------------------

(a) Consolidated Total Debt $__________

(b) Consolidated EBITDA $__________

Ratio (a) to (b) ___________

Maximum Permitted Ratio: (i) 2.50 to 1.0 as of
the last day of any calendar month during the
period from December 21, 2001 through June 30,
2002; or (ii) 2.25 to 1.0 as of the last day
of any calendar month from and after July 1, 2002.

E. Adjusted Quick Ratio (Sec. 6.2(e)):
----------------------------------

(a) Quick Assets $__________

(b) Current Liabilities $__________

Ratio (a) to (b) ___________

Minimum Permitted Ratio: (i) 1.10 to 1.0 as of
the last day of any calendar month through
December 31, 2001; (ii) 1.25 to 1.0 as of the last
day of any calendar month during the period from
January 1, 2002 through June 30, 2002; (iii) 1.40
to 1.0 as of the last day of any calendar month
during the period from July 1, 2002 through
September 30, 2002; or (iv) 1.50 to 1.0 as of the
last day of any calendar month from and after
October 1, 2002.

F. Transfers to Subsidiaries; Electronic Commerce
----------------------------------------------
(Sec. 6.2(z))
-------------

(a) Acquisitions from Domestic Subsidiaries or $__________
Foreign Persons

(b) Loans to, Investments in, guarantees of $__________
obligations of Domestic or Foreign Subsidiaries

F-2

<PAGE>

(d) Sales, leases, transfers of assets to $__________
Domestic or Foreign Subsidiaries

(e) Amounts transferred to Domestic or $__________
Foreign Subsidiaries prior to closing

(f) Amounts used for Electronic Commerce $__________
or Internet Related Business

Total: $__________

Total must not exceed $16,000,000

3. The undersigned has reviewed the terms of the Credit Agreement and has
made, or caused to be made under his/her supervision, a review in reasonable
detail of the transactions and condition of the Borrower and its Domestic
Subsidiaries during the fiscal period covered by this Compliance Certificate.
The undersigned does not (either as a result of such review or otherwise) have
any knowledge of the existence as of the date of this Compliance Certificate of
any condition or event that constitutes an Event of Default or a Potential Event
of Default, with the exception set forth below in response to which the Borrower
is taking or proposes to take the following actions (if none, so state):

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

4. The undersigned hereby certifies that the representations and warranties
contained in the Agreement and the other Loan Documents are true and correct in
all material respects on and as of the date hereof (except to the extent they
relate specifically to any earlier date, in which case such representations and
warranties shall continue to have been correct as of such date).

F-3

<PAGE>

5. This Compliance Certificate is executed on _______________, ____ by the
Chief Executive Officer, Chief Financial Officer, Treasurer or Controller of the
Borrower. The undersigned hereby certifies that each and every matter contained
herein is derived from the Borrower's books and records and is, to the best
knowledge of the undersigned, true and correct.

COINSTAR, INC.,
A Delaware corporation

By: ____________________________

Title: _________________________

F-4

<PAGE>

EXHIBIT G

PRICING GRID

The "Applicable Margin" shall mean the variable number of percentage points
-----------------
determined in accordance with the grid set forth below, based upon the
Borrower's ratio of Consolidated EBITDA to Consolidated Total Debt Service as at
the end of each fiscal quarter (the "Consolidated Debt Service Coverage Ratio"),
as determined by the Agent with reference to the Borrower's most recently
delivered financial statements and Compliance Certificate. The Applicable Margin
shall be adjusted on a quarterly basis, effective five (5) Business Days
following Agent's receipt of Borrower's financial statements, Compliance
Certificate and reports on Form 10-Q as required to be submitted pursuant to
Section 6.1(a); provided that if Borrower shall not have timely delivered such
--------
financial statements, reports on Form 10-Q and Compliance Certificate in
accordance with Section 6.1(a), then commencing on the date upon which such
financial statements should have been delivered and continuing until such
financial statements are actually delivered, it shall be assumed for purposes of
determining said rates that Borrower's Consolidated Debt Service Coverage Ratio
is less than or equal to 1.50 to 1.0.

- --------------------------------------------------------------------------------
Level Ratio of Consolidated Applicable Margin Applicable Margin for
EBITDA to for LIBO Rate Loans Base Rate Loans
Consolidated Total Debt
Service
- --------------------------------------------------------------------------------
I. Less than or equal 3.50% 2.00%
to 1.50 to 1.0
- --------------------------------------------------------------------------------
II. Less than or equal 3.00% 1.50%
to 1.75 to 1.0 but greater
than 1.50 to 1.0
- --------------------------------------------------------------------------------
III. Less than or equal to 2.0 2.50% 1.00%
to 1.0 but greater
than 1.75 to 1.0
- --------------------------------------------------------------------------------
IV. Greater than 2.0 to 1.0 2.00% 0.50%
- --------------------------------------------------------------------------------

G-1

<PAGE>

EXHIBIT L
COINSTAR, INC.

TERM FACIITY B NOTE

San Jose, California
$12,000,000 December 21, 2001

FOR VALUE RECEIVED, Coinstar, Inc., a Delaware corporation (the
"Borrower"), promises to pay to the order of Comerica Bank-California (the
--------
"Lender") the principal amount of Twelve Million Dollars ($12,000,000), or, if
------
less, the aggregate amount of Term Facility B Loans (as defined in the Credit
Agreement referred to below) made by the Lender to the Borrower pursuant to the
Credit Agreement referred to below. Each Term Facility B Loan shall be payable
in sixteen (16) equal quarterly installments on the last day of March, June,
September and December of each year, commencing on the first of such days to
occur after the date such Term Facility B Loan is made, and ending on the Term
Facility B Maturity Date (as defined in the Credit Agreement). All unpaid
amounts of principal and interest shall be due and payable in full on the Term
Facility B Maturity Date.

The Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Credit Agreement.
Notwithstanding any other limitations contained in this Note, Lender does not
intend to charge and the Borrower shall not be required to pay any interest or
other fees or charges in excess of the maximum permitted by applicable law. Any
payments in excess of such maximum shall be refunded to the Borrower or credited
against principal.

All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Agent described in the Credit Agreement. Until notified of the
transfer of this Note, the Borrower shall be entitled to deem the Lender or such
person who has been so identified by the transferor in writing to the Borrower
as the holder of this Note, as the owner and holder of this Note. Each of the
Lender and any subsequent holder of this Note agrees that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make notation of any payment
made on this Note shall not limit or otherwise affect the obligation of the
Borrower hereunder with respect to payments of principal or interest on this
Note.

This Note is referred to in, and is entitled to the benefits of, the Credit
Agreement dated as of February 19, 1999 (the "Credit Agreement") among the
----------------
Borrower, the financial institutions named therein and Comerica Bank-California,
successor in interest to Imperial Bank as Agent. The Credit Agreement, among
other things (i) provides for the making of advances (the "Loans") by the Lender
-----
to the Borrower on the date hereof in an aggregate amount not to exceed at any
time outstanding the U.S. dollar amounts stated therein, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.

L-1

<PAGE>

The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.

No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.

The Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note. The
Borrower hereby consents to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.

This Note shall be governed by, and construed in accordance with, the laws
of the state of California without giving effect to its choice of law doctrine.

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above written.

Coinstar, Inc.

By: ________________________

Title: _____________________

L-2

<PAGE>

COINSTAR, INC.

TERM FACILITY B NOTE

San Jose, California
$12,000,000 December 21, 2001

<PAGE>

The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.

This Note shall be governed by, and construed in accordance with, the laws
of the state of California without giving effect to its choice of law doctrine.

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and the place first
above written.

Coinstar, Inc.

By: /s/ Diane L. Renihan

Title: CFO

<PAGE>

STOCK PLEDGE AGREEMENT
----------------------

THIS STOCK PLEDGE AGREEMENT is entered into as of December 21, 2001, by and
among COINSTAR, INC., a Delaware corporation (the "Borrower") and COMERICA
BANK-CALIFORNIA, SUCCESSOR IN INTEREST TO IMPERIAL BANK (the "Agent").

Recitals
--------

A. Borrower, certain financial institutions (each, a "Lender" and
collectively, the "Lenders"), and Agent have entered into a Credit Agreement
dated as of February 19, 1999, as amended (said Credit Agreement, as it may
hereafter be amended from time to time, being the "Credit Agreement," the terms
defined in the Credit Agreement and not otherwise defined herein being used
herein as defined in the Credit Agreement), pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Borrower.

B. Borrower has asked Agent and Lenders to amend the Credit Agreement, and
they have agreed, provided, among other things, Borrower enters into this
Agreement. To secure the Secured Obligations, as defined in the Security
Agreement, Borrower has agreed to pledge to Agent the shares of stock listed on
Exhibit A hereto (the "Shares").
- ---------

NOW, THEREFORE, Borrower and Agent agree as follows:

1. Pledge of Securities.
--------------------

(a) Borrower hereby pledges, assigns and delivers to Agent, for the
benefit of Agent and Lenders, and grants to Agent, for the benefit of Agent and
Lenders, a security interest in the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing
(all hereinafter called the "Pledged Collateral"), as security for the prompt
performance of all of Borrower's Secured Obligations, as defined in the Security
Agreement (the "Secured Indebtedness").

(b) The term "Pledged Collateral" shall also include any securities,
instruments or distributions of any kind issuable, issued or received by
Borrower upon conversion of, in respect of, or in exchange for any other Pledged
Collateral, including, but not limited to, those arising from a stock dividend,
stock split, reclassification, reorganization, merger, consolidation, sale of
assets or other exchange of securities or any dividends or other distributions
of any kind upon or with respect to the Pledged Collateral.

(c) The certificate or certificates for the securities included in the
Pledged Collateral, accompanied by an instrument of assignment duly executed in
blank by Borrower, have been, or will be immediately upon the subsequent receipt
thereof by Borrower, delivered by Borrower to Agent. Borrower shall cause the
books of each corporation whose stock is part of the Pledged Collateral to
reflect the pledge of the Shares. Upon the occurrence of an Event of Default
hereunder, Agent may effect the transfer of any securities included in the
Pledged

<PAGE>

Collateral into the name of Agent and cause new certificates representing
such securities to be issued in the name of Agent. Borrower will execute and
deliver such documents, and take or cause to be taken such actions, as Agent may
reasonably request to perfect or continue the perfection of Agent's security
interest in the Pledged Collateral.

2. Representations, Warranties and Covenants. Borrower represents and
-----------------------------------------
warrants to and covenants with Agent that:

(a) The Pledged Collateral is owned by Borrower free and clear of any
security interests, liens or encumbrances;

(b) Borrower has full power and authority to create a first lien on
the Pledged Collateral in favor of Agent and no disability or contractual
obligation exists which would prohibit Borrower from pledging the Pledged
Collateral pursuant to this Pledge Agreement, and Borrower will not assign,
create or permit to exist any other claim to, lien or encumbrance upon, or
security interest in any of the Pledged Collateral;

(d) The Shares represent the percentage of the issued and outstanding
stock of the Subsidiary listed on Exhibit A, there are no agreements that
---------
require such Subsidiary to issue any additional shares of such Subsidiaries, and
there are no outstanding options to purchase such additional shares;

(e) The Shares have been duly authorized and validly issued, and are
fully paid and non-assessable; and

(f) Except as set forth in the Schedule, the Pledged Collateral is not
the subject of any present or threatened suit, action, arbitration,
administrative or other proceeding, and Borrower knows of no reasonable grounds
for the institution of any such proceedings.

All the above representations and warranties shall survive the making of
this Agreement.

3. Voting Prior to Demand. Unless an Event of Default (as defined below)
----------------------
shall have occurred and be continuing, Borrower shall be entitled to exercise
all voting rights with respect to the Pledged Collateral and to give consents,
waivers and ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights of Borrower to
vote and give consents, waiver and ratifications shall upon notice to Borrower
cease in case such an Event of Default hereunder shall occur and be continuing.

4. Events of Default. Each of the following shall constitute an event of
-----------------
default ("Event of Default") hereunder:

(a) The occurrence of an Event of Default under the Credit Agreement;
or

<PAGE>

(b) The breach of any provision of this Agreement by Borrower or the
failure by Borrower to observe or perform any of the provisions of this
Agreement.

5. Agent's Remedies Upon Default.
-----------------------------

(a) Upon the occurrence and during the continuance of an Event of
Default, Agent shall have the right to exercise all such rights as a secured
party under the Uniform Commercial Code of the State of California as it, in its
sole judgment, shall deem necessary or appropriate, including the right to sell
all or any part of the Pledged Collateral at one or more public or private sales
upon ten (10) days' written notice to Borrower, and any such sale or sales may
be made for cash, upon credit, or for future delivery, and in connection
therewith, Agent may grant options, provided that any such terms or options
shall, in the best judgment of Agent, be extended only in order to obtain the
best possible price.

(b) Borrower recognizes that Agent may be unable to effect a public
sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended ("Act"), so
that Agent may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Pledged Collateral for their own account, for investment and
without a view to the distribution or resale thereof. Borrower understands that
private sales so made may be at prices and on other terms less favorable to the
seller than if the Pledged Collateral were sold at public sales, and agrees that
Agent has no obligation to delay the sale of any of the Pledged Collateral for
the period of time necessary (even if Agent would agree), to register such
securities for sale under the Act. Borrower agrees that private sales made under
the foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.

(c) After the sale of any of the Pledged Collateral, Agent may deduct
all reasonable legal and other expenses and attorney's fees for preserving,
collecting, selling and delivering the Pledged Collateral and for enforcing its
rights with respect to the Secured Indebtedness, and shall apply the residue of
the proceeds to the Secured Indebtedness in such manner as Agent in its
reasonable discretion shall determine, and shall pay the balance, if any to
Borrower.

6. Release of Pledged Collateral. The pledge of and grant of a security
-----------------------------
interest in the Pledged Collateral pursuant to this Agreement shall be of no
further force or effect and, subject to the terms of the Credit Agreement, the
Pledged Collateral shall be returned to Borrower upon payment in full of the
Secured Obligations.

7. Miscellaneous.
-------------

(a) All notices, consents, approvals and other communications required
or permitted hereunder shall be addressed to the receiving party at the address
set forth below its signature. All such communications shall be delivered
personally or by facsimile or by courier or sent by first class mail, postage
prepaid. Communications by mail shall be deemed delivered upon receipt.

<PAGE>

(b) This Agreement shall be construed in accordance with, and the
rights of the parties shall be governed by, the law of the State of California.

(d) This Agreement and the agreements and instruments executed in
connection therewith constitute the entire agreement between Agent and Borrower
with respect to the subject matter hereof and supersede all prior agreements,
understandings, offers and negotiations, oral or written.

(e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which shall together constitute
one and the same document.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.

Borrower:

COINSTAR, INC.

By: /s/ Diane L. Renihan

Title: CFO

Agent:

COMERICA BANK-CALIFORNIA,
SUCCESSOR IN INTEREST TO
IMPERIAL BANK

By: /s/ Jeff Roberts

Title: Asst. Vice President

<PAGE>

EXHIBIT A
---------

Shares
------

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Stock Issuer Class of Stock Par Value Number of Shares Percentage of
- ------------ -------- ----- --------- ---------------- -------------
Stock Certificate Outstanding
----- ----------- -----------
No(s) Shares
----- ------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Coinstar
International,
Inc. Common Stock 650 65%
- ----------------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

ASSIGNMENT SEPARATE FROM CERTIFICATE
------------------------------------

FOR VALUE RECEIVED, COINSTAR, INC., a Delaware corporation, hereby
sells, assigns and transfers unto _____________ (________________) shares of the
_____________ stock of COINSTAR INTERNATIONAL, INC., a Canadian corporation (the
"Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No. _________ herewith, and does hereby irrevocably
constitute and appoint ______________________ its attorney to transfer the said
stock on the books of the Company with full power of substitution in the
premises.

COINSTAR, INC.

Dated:_____________, ____ By: /s/ Diane L. Renihan

Name: Diane L. Renihan

Title: CFO

In Presence of:

/s/ Donald Dewey
----------------

<PAGE>

CORPORATE RESOLUTIONS TO BORROW

I, the undersigned Secretary or Assistant Secretary of Coinstar, Inc. (the
"Corporation"), HEREBY CERTIFY that the Corporation is organized and existing
under and by virtue of the laws of the State of Delaware.

I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation and Bylaws of the
Corporation, each of which is in full force and effect on the date hereof.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation (or
by other duly authorized corporate action in lieu of a meeting), duly called and
held, at which a quorum was present and voting, the following resolutions were
adopted.

BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:

NAMES POSITIONS ACTUAL SIGNATURES

Diane L. Renihan CFO /s/ Diane L. Renihan
- -------------------------- ------------------ --------------------------

__________________________ __________________ __________________________

acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:

Execute Amendment. To execute and deliver to the Agent and the Lenders that
certain Seventh Amendment to Credit Agreement, Consent and Limited Waiver dated
as of December 21, 2001 among the Corporation, the financial institutions listed
on the signature pages thereof (the "Lenders"), and Comerica Bank-California,
successor in interest to Imperial Bank, as agent for the Lenders (the "Agent"),
in substantially the form attached hereto (the "Amendment").

Borrow Money. To borrow from time to time from Lenders on such terms as may
be agreed upon between the officers, employees, or agents and Bank, such sum or
sums of money as in their judgment should be borrowed, without limitation,
including such sums as are specified in that certain Credit Agreement dated as
of February 19, 1999, as amended from time to time (the "Credit Agreement").

<PAGE>

Execute Notes. To execute and deliver to the Lenders the promissory note or
notes of the Corporation, on Lenders' forms, at such rates of interest and on
such terms as may be agreed upon, evidencing the sums of money so borrowed or
any indebtedness of the Corporation to Lenders, and also to execute and deliver
to Lenders one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, or any portion of
the notes.

Grant Security. To grant a security interest to the Agent, for the benefit
of the Lenders, in the Collateral described in that certain security agreement
(the "Security Agreement") dated concurrently with the Credit Agreement, among
the Corporation and the Agent, and related intellectual property security
agreement (the "Intellectual Property Security Agreement") which security
interest shall secure all of the Corporation's obligations, as described in the
Security Agreement and other documents executed in connection therewith and/or
acknowledged thereby.

Negotiate Items. To draw, endorse, and discount with Lenders all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with the Agent or any Lender, or
to cause such other disposition of the proceeds derived therefrom as they may
deem advisable.

Letters of Credit; Foreign Exchange. To execute letters of credit
applications, foreign exchange agreements and other related documents pertaining
to the Lenders' issuance of letters of credit and foreign exchange contracts.

Issue Notice to Trustee. To issue and deliver to the Trustee under the
Indenture relating to the Corporation's 13% Senior Subordinated Discount Notes
due 2006 a notice designating the Debt under Section 2.1 of the Credit Agreement
as "Designated Senior Debt" for purposes of the Indenture.

Further Acts. From time to time to take such additional actions and to
execute and deliver such additional certificates, instruments, notices and
documents, and from time to time to amend the Credit Agreement, the Security
Agreement, the Intellectual Property Security Agreement and any related
instrument or document in such manner as may be required by the forms thereof or
applicable law or as such officer may deem necessary, advisable or proper in
order to carry out and perform the obligations of the Corporation under the
Credit Agreement, the Security Agreement and the Intellectual Property Security
Agreement or under any other instrument or document executed pursuant to or in
connection with such agreements; such officer's approval thereof to be
conclusively evidenced by the performance of any such action or the execution
and delivery of any such certificate, instrument, notice, or document.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and the Lenders may rely on these Resolutions until written notice of
their revocation shall have been delivered to and received by the Lenders. Any
such notice shall not affect any of the Corporation's agreements or commitments
in effect at the time notice is given.

<PAGE>

I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand on December 21, 2001 and
attest that the signatures set opposite the names listed above are their genuine
signatures.

CERTIFIED TO AND ATTESTED BY:

X /s/ M. Carol Lewis

- -------------------------------------------------------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.15
<SEQUENCE>4
<FILENAME>dex415.txt
<DESCRIPTION>EIGHTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>

EXHIBIT 4.15
------------

EIGHTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND LIMITED WAIVER
- ----------------------------------------------------------------

This EIGHTH AMENDMENT TO CREDIT AGREEMENT, CONSENT AND LIMITED WAIVER (this
"Amendment") is entered into as of February 22, 2002, by and among Coinstar,
---------
Inc., a Delaware corporation ("Borrower"), the financial institutions named on
--------
the signature pages hereof (each, a "Lender" and collectively the "Lenders"),
------ -------
and Comerica Bank-California, successor in interest to Imperial Bank, as Agent
for the Lenders ("Agent"), with reference to the following facts:
-----

A. Borrower, Agent, and Lenders are parties to that certain Credit
Agreement dated as of February 19, 1999, as amended (the "Credit Agreement").
----------------

B. The parties desire to further amend the Credit Agreement in accordance
with the terms of this Amendment.

NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

1. Defined Terms. Capitalized terms not otherwise defined herein shall
-------------
have the same meanings as set forth in the Credit Agreement. All references to
"Imperial Bank" in the Loan Documents shall mean and refer to Comerica
Bank-California.

2. Amendments to Credit Agreement. The Credit Agreement is hereby amended
------------------------------
as follows:

(a) Section 6.2(e) is amended to read as follows:

(e) Adjusted Liquidity Ratio. Permit the ratio of Quick
------------------------
Assets to all Debt (including without limitation any Contingent
Obligations) owing to Bank to be less than 1.25 to 1.00 as of the last day
of any calendar month.

(b) Exhibit F is deleted and replaced with Exhibit F hereto.
--------- ---------

(d) Each Term Note, Revolving Promissory Note, and Term Facility B
Note executed in connection with the Credit Agreement is hereby amended to
conform to the changes in the Credit Agreement effected by this Amendment.

<PAGE>

Bank of New York, as Trustee, and (b) waive the provisions of Section 6.2(r) of
the Credit Agreement with respect to such redemption; provided that (i) at the
--------
time of and immediately following any such redemption there shall exist no
condition or event that constitutes an Event of Default or Potential Event of
Default; (ii) the Borrower shall not use any proceeds of Revolving Loans for the
redemption of such Notes, and (iii) the Term Facility B Loans shall be used
solely for the redemption of such Notes. Without limiting the generality of the
provisions of Section 9.1 of the Credit Agreement, the consent and waiver set
forth herein shall be limited precisely as written, and nothing in this
Amendment shall be deemed to (i) constitute a waiver of compliance by the
Borrower with Section 6.2(r) of the Credit Agreement in any other instance, or
(ii) constitute a waiver of any other Event of Default or other failure by
Borrower to perform in accordance with the Loan Documents or this Amendment, or
(iii) prejudice any right or remedy that the Lender may now have or may have in
the future under or in connection with the Credit Agreement or the Loan
Documents. This Consent and Limited Waiver amends and replaces in its entirety
the Consent and Limited Waiver set forth in Section 3 of the Seventh Amendment
to Credit Agreement, Consent, and Limited Waiver between Borrower and Lenders
dated as of December 21, 2001.

4. Conditions to Effectiveness.
---------------------------

This Amendment shall become effective as of February 22, 2002 (the
"Effective Date"), only upon:

(a) receipt by the Agent of the following (each of which shall be in
form and substance satisfactory to the Agent and its counsel): counterparts of
this Amendment duly executed on behalf of the Borrower and the Lenders; and

(b) completion of such other matters and delivery of such other
agreements, documents and certificates as the Agent or any Lender may reasonably
request.

5. Representations and Warranties. In order to induce the Lenders to
------------------------------
enter into this Amendment, the Borrower represents and warrants to the Lenders
that the following statements are true, correct and complete as of the effective
date of this Amendment:

<PAGE>

agreement or instrument binding on the Borrower, except to the extent not
resulting in a Material Adverse Effect.

(g) Absence of Default. No event has occurred and is continuing or
------------------
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.

6. Miscellaneous.
-------------

(a) Reference to and Effect on the Credit Agreement and the Other
-------------------------------------------------------------
Loan Documents.
- --------------

(i) On and after the Effective Date, each reference in the
Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement," "thereunder," "thereof" or words
of like import referring to the Credit Agreement, shall mean and be a reference
to the Amended Agreement.

(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.

<PAGE>

(b) Fees and Expenses. All costs and expenses of the Agent and
-----------------
Lenders, including, but not limited to, reasonable attorneys' fees, incurred by
the Agent and Lenders in the preparation and negotiation of this Amendment
constitute costs and expenses in connection with the amendment and restructuring
of the Loan Documents, and as such are payable by the Borrower in accordance
with Section 9.5 of the Credit Agreement.

(d) Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
--------------
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

[REMAINDER INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

BORROWER:

COINSTAR, INC.

By: /s/ Diane L. Renihan

Title: CFO

AGENT:

COMERICA BANK-CALIFORNIA, SUCCESSOR
IN INTEREST TO IMPERIAL BANK

By: /s/ Jeff Roberts

Title: Asst. Vice President

LENDER:

COMERICA BANK-CALIFORNIA, SUCCESSOR
IN INTEREST TO IMPERIAL BANK

By: /s/ Jeff Roberts

Title: Asst. Vice President

<PAGE>

EXHIBIT F

[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE

Calendar month ended _________, 20__
Fiscal quarter ended _________, 20__
Fiscal year ended ________, 20__

A. Direct Contribution Margin to Coinstar
--------------------------------------
Processing Revenue (Sec. 6.2(a)):
---------------------------------

(a) Direct Contribution Margin $__________

(b) Coinstar Processing Revenue $__________

Ratio (a) : (b) ___________

Minimum Permitted Ratio: 0.52 to 1.0

B. Modified Fixed Charge Ratio (Sec. 6.2(b)):
------------------------------------------

(a) Consolidated EBITDA minus $__________
-----
Consolidated Capital Expenditures

(b) Consolidated Total Debt Service ___________

Ratio (a) : (b) ___________

Minimum Permitted Ratio: 1.40 to 1

C. Consolidated EBITDA to Consolidated Total
------------------------------------------
Debt Service (Sec. 6.2(c)):
--------------------------
(a) Consolidated EBITDA $__________

(b) Consolidated Total Debt Service $__________

<PAGE>

Ratio (a) to (b) ___________

Minimum Permitted Ratio: 2.0 to 1.0

D. Consolidated Total Debt to Consolidated
----------------------------------------
EBITDA (Sec. 6.2(d)):
---------------------

(a) Consolidated Total Debt $__________

(b) Consolidated EBITDA $__________

Ratio (a) to (b) ___________

Maximum Permitted Ratio: (i) 2.50 to 1.0 as of the last day
of any calendar month during the period from December 21,
2001 through June 30, 2002; or (ii) 2.25 to 1.0 as of the
last day of any calendar month from and after July 1, 2002.

E. Adjusted Liquidity Ratio (Sec. 6.2(e)):
--------------------------------------

(a) Quick Assets $__________

(b) Bank Indebtedness $__________

Ratio (a) to (b) ___________

Minimum Permitted Ratio: 1.25 to 1.0.

F. Transfers to Subsidiaries; Electronic Commerce
----------------------------------------------
(Sec. 6.2(z))
-------------

(a) Acquisitions from Domestic Subsidiaries $__________
or Foreign Persons

(b) Loans to, Investments in, guarantees of $__________
obligations of Domestic or Foreign Subsidiaries

(d) Sales, leases, transfers of assets to
Domestic or Foreign Subsidiaries $__________

(e) Amounts transferred to Domestic or $__________
Foreign Subsidiaries prior to closing

<PAGE>

(f) Amounts used for Electronic Commerce $__________
or Internet Related Business

Total: $__________

Total must not exceed $16,000,000

3. The undersigned has reviewed the terms of the Credit Agreement and
has made, or caused to be made under his/her supervision, a review in reasonable
detail of the transactions and condition of the Borrower and its Domestic
Subsidiaries during the fiscal period covered by this Compliance Certificate.
The undersigned does not (either as a result of such review or otherwise) have
any knowledge of the existence as of the date of this Compliance Certificate of
any condition or event that constitutes an Event of Default or a Potential Event
of Default, with the exception set forth below in response to which the Borrower
is taking or proposes to take the following actions (if none, so state):

4. The undersigned hereby certifies that the representations and
warranties contained in the Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date hereof (except to the
extent they relate specifically to any earlier date, in which case such
representations and warranties shall continue to have been correct as of such
date).

<PAGE>

5. This Compliance Certificate is executed on _______________, ____ by
the Chief Executive Officer, Chief Financial Officer, Treasurer or Controller of
the Borrower. The undersigned hereby certifies that each and every matter
contained herein is derived from the Borrower's books and records and is, to the
best knowledge of the undersigned, true and correct.

COINSTAR, INC.,
A Delaware corporation

By:_________________________

Title:______________________

<PAGE>

EXHIBIT G

PRICING GRID

The "Applicable Margin" shall mean the variable number of percentage
-----------------
points determined in accordance with the grid set forth below, based upon the
Borrower's ratio of Consolidated EBITDA to Consolidated Total Debt Service as at
the end of each fiscal quarter (the "Consolidated Debt Service Coverage Ratio"),
as determined by the Agent with reference to the Borrower's most recently
delivered financial statements and Compliance Certificate. The Applicable Margin
shall be adjusted on a quarterly basis, effective five (5) Business Days
following Agent's receipt of Borrower's financial statements, Compliance
Certificate and reports on Form 10-Q as required to be submitted pursuant to
Section 6.1(a); provided that if Borrower shall not have timely delivered such
--------
financial statements, reports on Form 10-Q and Compliance Certificate in
accordance with Section 6.1(a), then commencing on the date upon which such
financial statements should have been delivered and continuing until such
financial statements are actually delivered, it shall be assumed for purposes of
determining said rates that Borrower's Consolidated Debt Service Coverage Ratio
is less than or equal to 1.50 to 1.0.

<TABLE>
- ------------ ------------------------------- ---------------------- ------------------------
<S> <C> <C> <C>
Level Ratio of Consolidated Applicable Margin Applicable Margin for
EBITDA to Consolidated for LIBO Rate Loans Base Rate Loans
Total Debt Service
- ------------ ------------------------------- ---------------------- ------------------------
I. Less than or equal to 4.00% 2.00%
1.50 to 1.0

- ------------ ------------------------------- ---------------------- ------------------------
II. Less than or equal to 3.50% 1.50%
1.75 to 1.0 but greater
than 1.50 to 1.0

- ------------ ------------------------------- ---------------------- ------------------------
III. Less than or equal to 2.0 3.00% 1.00%
to 1.0 but greater than
1.75 to 1.0

- ------------ ------------------------------- ---------------------- ------------------------
IV. Greater than 2.0 to 1.0 2.50% 0.50%
- ------------ ------------------------------- ---------------------- ------------------------
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.16
<SEQUENCE>5
<FILENAME>dex416.txt
<DESCRIPTION>NINTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>

EXHIBIT 4.16

NINTH AMENDMENT TO CREDIT AGREEMENT
-----------------------------------

This NINTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into
as of March 22, 2002, by and among Coinstar, Inc., a Delaware corporation
("Borrower"), the financial institutions named on the signature pages hereof
(each, a "Lender" and collectively the "Lenders"), and Comerica Bank-California,
as Agent for the Lenders ("Agent"), with reference to the following facts:

A. Borrower, Agent, and Lenders are parties to that certain Credit
Agreement dated as of February 19, 1999, as amended (the "Credit Agreement").

B. The parties desire to further amend the Credit Agreement in accordance
with the terms of this Amendment.

NOW, THEREFORE, in consideration of the promises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

1. Defined Terms. Capitalized terms not otherwise defined herein shall have
the same meanings as set forth in the Credit Agreement. All references to
"Imperial Bank" in the Loan Documents shall mean and refer to Comerica
Bank-California.

2. Amendments to Credit Agreement. The Credit Agreement is hereby amended
as follows:

(a) Section 2.2(a)(iv) is amended to read as follows:

(iv) Term Facility B Loans. Each Term Facility B Loan shall be
payable in sixteen (16) equal quarterly installments of principal, plus
accrued interest, payable on the thirteenth (13th) day of each March, June,
September and December, commencing on the first of such days to occur after
the date such Loan is made, and ending on the Term Facility B Maturity
Date, on which date the remaining outstanding principal amount of the Term
Facility B Loans, together with accrued interest thereon and any other
amounts owing under this Agreement shall be due and payable; provided
however, that if this Agreement is not amended in accordance with Section
9.1 to extend the Revolving Maturity Date beyond October 15, 2003, then the
remaining outstanding principal amount of the Term Facility B Loans,
together with accrued interest thereon and any other amounts owing under
this Agreement, shall be due and payable on the Revolving Maturity Date.

(b) The Term Facility B Note executed in connection with the Credit
Agreement is hereby amended to conform to the changes in the Credit Agreement
effected by this Amendment.

<PAGE>

3. Conditions to Effectiveness.

This Amendment shall become effective as of March 22, 2002 (the "Effective
Date"), only upon:

(a) receipt by the Agent of the following (each of which shall be in
form and substance satisfactory to the Agent and its counsel):

(i) counterparts of this Amendment duly executed on behalf of the
Borrower and the Lenders;

(ii) copies of resolutions of the Board of Directors or other
authorizing documents of the Borrower, authorizing the execution and
delivery of this Amendment;

(b) completion of such other matters and delivery of such other
agreements, documents and certificates as the Agent or any Lender may reasonably
request.

4. Representations and Warranties. In order to induce the Lenders to enter
into this Amendment, the Borrower represents and warrants to the Lenders that
the following statements are true, correct and complete as of the effective date
of this Amendment:

(a) Corporate Power and Authority. The Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement"). The
Certificate of Incorporation and Bylaws of the Borrower have not been amended
since the copies previously delivered to the Lenders.

(b) Authorization of Agreements. The execution and delivery of this
Amendment and the performance by the Borrower of the Amended Agreement have been
duly authorized by all necessary corporate action on the part of the Borrower.

(c) No Conflict. The execution and delivery by the Borrower of this
Amendment do not and will not contravene (i) any law or any governmental rule or
regulation applicable to the Borrower, except to the extent not resulting in a
Material Adverse Effect, (ii) the Certificate of Incorporation or Bylaws of the
Borrower, (iii) any order, judgment or decree of any court or other agency of
government binding on the Borrower, or (iv) any material agreement or instrument
binding on the Borrower, except to the extent not resulting in a Material
Adverse Effect.

(d) Governmental Consents. The execution and delivery by the Borrower of
this Amendment and the performance by the Borrower of the Amended Agreement do
not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body (except routine reports required
pursuant to the Securities and Exchange Act of 1934, as amended, which reports
will be made in the ordinary course of business).

<PAGE>

(e) Binding Obligation. This Amendment and the Amended Agreement have
been duly executed and delivered by the Borrower and are the binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws and equitable principles relating to or affecting creditors' rights.

(f) Incorporation of Representations and Warranties From Credit
Agreement. Subject to compliance by Borrower with Section 5 of this Amendment,
the representations and warranties contained in Section 5.1 of the Credit
Agreement are correct on and as of the effective date of this Amendment as
though made on and as of such date (except to the extent they relate
specifically to any earlier date, in which case such representations and
warranties shall continue to have been correct as of such date).

(g) Absence of Default. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.

5. Miscellaneous.

(a) Reference to and Effect on the Credit Agreement and the Other Loan
Documents.

(i) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement," "thereunder," "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Amended Agreement.

(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.

(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the
Agent or Lenders under the Credit Agreement or any of the other Loan
Documents.

(b) Fees and Expenses. All costs and expenses of the Agent and Lenders,
including, but not limited to, reasonable attorneys' fees, incurred by the Agent
and Lenders in the preparation and negotiation of this Amendment constitute
costs and expenses in connection with the amendment and restructuring of the
Loan Documents, and as such are payable by the Borrower in accordance with
Section 9.5 of the Credit Agreement.

(c) Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

<PAGE>

(d) Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

(e) Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

[REMAINDER INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

BORROWER:

COINSTAR, INC.

By: /s/ Diane L. Renihan
--------------------------------
Title: CFO

AGENT:

COMERICA BANK-CALIFORNIA

By: /s/ Jeff Roberts
--------------------------------
Title: Vice President

LENDER:

COMERICA BANK-CALIFORNIA

By: /s/ Jeff Roberts
--------------------------------
Title: Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>6
<FILENAME>dex1021.txt
<DESCRIPTION>COINSTAR, INC. STOCK OPTION AGREEMENT
<TEXT>
<PAGE>

EXHIBIT 10.21

COINSTAR, INC.
STOCK OPTION AGREEMENT

GRANT TO CHIEF EXECUTIVE OFFICER

THIS AGREEMENT is made between Coinstar, Inc. ("Coinstar") and David Cole
("Employee").

GRANT DATE: The effective date of this Agreement is October 8, 2001 (the "Grant
Date").

GRANT: The Board of Directors hereby grants to Employee an Option to purchase
200,000 shares (the "Shares") of Coinstar Common Stock at the exercise price of
$21.24 per share ("Option"). The Option is granted outside the Coinstar 1997
Amended and Restated Stock Option Plan (the "Plan") but, except as expressly
provided otherwise herein, is subject to the terms and conditions of the Plan.

NONQUALIFIED STOCK OPTION: This Option is granted as a nonqualified stock
option, which is not intended to qualify as an "incentive stock option" as that
term is used under Section 422 of the Internal Revenue Code of 1986, as amended.

TERM: The term of the Option is ten years from the Grant Date, unless sooner
terminated.

EXERCISE AND TRANSFERABLITY: Your option is not transferable except by will, by
the laws of descent and distribution or pursuant to a domestic relations order
and is only exercisable by you during your lifetime or by a transferee pursuant
to a domestic relations order.

TERMINATION OF OPTION: The unvested portion of the Option shall terminate
automatically upon termination of employment or services for any reason. The
vested portion of the Option shall remain exercisable until the earliest of:

(a) the tenth anniversary of the Grant Date;

(b) three months after termination of either employment or services
(whether as a director, consultant or other service provider) with Coinstar or a
related corporation for any reason other than for cause or by reason of
disability or death;

(d) immediately upon termination for cause (as defined in the Plan).

If Employee dies while the Option is still exercisable, the Option shall
remain exercisable until the earlier of (i) the tenth anniversary of the Grant
Date and (ii) one year from the date of death.

<PAGE>

It is Employee's responsibility to be aware of the date on which the Option
terminates and is no longer exercisable.

VESTING AND EXERCISABILITY:

The Option will vest and become exercisable according to the following schedule:

Portion of Total Option
Period of Continuous Service Which Is
From Vesting Base Date Vested and Exercisable
---------------------- ----------------------
One year from Vesting Base Date 25%

Each month completed thereafter An additional 2.08333%

Four years from Vesting Base Date 100%

TERMS OF PAYMENT: The Option price shall be payable in full at the time of
exercise in cash, by personal check of Employee, in Coinstar Common Stock
("Stock") (which has been held for at least six months) or any other form of
consideration permitted by Coinstar, or a combination hereof, as Employee may
determine. Stock delivered as full or partial payment upon exercise shall be
valued at the fair market value of the Stock on the date of exercise, where the
term "fair market value" is defined as the closing price of Stock reported by
NASDAQ on the date of exercise.

DIVIDEND, STOCK SPLIT, COMBINATION OR RECLASSIFICATION: If, from time to time,
during the term of this Agreement, there is any stock dividend, stock split,
combination of shares, or reclassification of the outstanding Stock, then any
and all new, substituted or additional shares to which Employee is entitled by
reason of this Agreement shall be included in the word "Shares" for all purposes
of this Agreement with the same force and effect as the shares presently subject
to this Agreement and there shall be a corresponding adjustment to the price for
each share.

Please execute the acceptance and acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned. By your
signature below, Employee also acknowledges receipt of the Plan and the Plan
Summary.

COINSTAR, INC.
By: /s/ M. Carol Lewis
----------------------------
Carol Lewis
Its: Chief Administrative Officer

ACCEPTED AND ACKNOWLEDGED:

EMPLOYEE

/s/ David W. Cole
- --------------------------
David Cole

-2-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>7
<FILENAME>dex121.txt
<DESCRIPTION>RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>
<PAGE>

EXHIBIT 12.1

COINSTAR, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
2001 2000 1999 1998 1997
<S> <C> <C> <C> <C> <C>
EARNINGS:
Net Income (loss) from continuing operations $ 1,741 $ (9,854) $(15,711) $ (2,397) $ (2,959)
--------------------------------------------------------------------

ADD BACK FIXED CHARGES:

Interest expense including
amortization of deferred
financing costs............................... 8,302 8,517 11,164 10,817 9,821
Assumed interest component of
rent expense (1).............................. 477 469 450 455 297
--------------------------------------------------------------------

Total fixed charges........................... 8,779 8,986 11,614 11,272 10,118
--------------------------------------------------------------------

Adjusted earnings (loss)...................... $10,520 $ (868) $ (4,097) $ 8,875 $ 7,159
====================================================================

Ratio of earnings (deficiency) to fixed
charges....................................... 1.20 (0.10) (0.35) 0.79 0.71
====================================================================

Deficiency of earnings to fixed
charges....................................... $ (9,854) $(15,711) $ (2,397) $ (2,959)
======================================================
</TABLE>

(1) Estimated as one-third of operating lease expenses

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>8
<FILENAME>dex231.txt
<DESCRIPTION>CONSENT OF DELOITTE AND TOUCHE LLP
<TEXT>
<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement Nos.
333-30985, 333-89975 and 333-63108 of Coinstar, Inc. and Subsidiaries on Form
S-8 of our report dated February 15, 2002 (March 15, 2002 as to Notes 4 and 9),
included in this Annual Report on Form 10-K of Coinstar, Inc. and Subsidiaries
for the year ended December 31, 2001.

DELOITTE & TOUCHE LLP

Seattle, Washington
March 22, 2002

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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