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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2000

                                       OR

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

               For the transition period from           to
                                              ---------    ---------

                         Commission File Number: 0-26580

                        AMERICAN COIN MERCHANDISING, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                   <C>
            DELAWARE                                              84-1093721
    (State or other jurisdiction of                   (IRS Employer Identification Number)
    incorporation or organization)
</TABLE>

                  5660 CENTRAL AVENUE, BOULDER, COLORADO 80301
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (303) 444-2559
                         (Registrant's telephone number)

                Securities registered under Section 12(b) of the
                                 Exchange Act:

              ASCENDING RATE CUMULATIVE TRUST PREFERRED SECURITIES,
                       LIQUIDATION AMOUNT $10 PER SECURITY

         Securities registered under Section 12(g) of the Exchange Act:

                     COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of class)

     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. ( )

     The aggregate market value of the registrant's voting common stock held as
of February 28, 2001 by non-affiliates of the registrant was $13,821,000.

     As of February 28, 2001, issuer had 6,513,919 shares of its $0.01 par value
common stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The information required by Part III (Items 10, 11, 12 and 13) is
incorporated by reference to portions of the registrant's definitive proxy
statement for the 2001 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission within 120 days after the close of the
2000 year.


<PAGE>   2


                        AMERICAN COIN MERCHANDISING, INC.

                           ANNUAL REPORT ON FORM 10-K

                                DECEMBER 31, 2000

                                TABLE OF CONTENTS

                                     PART I

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<CAPTION>
                                                                                                          Page
<S>                                                                                                         <C>
     Item  1  Business.................................................................................     3

     Item  2  Properties...............................................................................    10

                                     PART II

     Item  5  Market for Registrant's Common Equity and Related Stockholder Matters....................    11

     Item  6  Selected Financial Data..................................................................    12

     Item  7  Management's Discussion and Analysis of Financial Condition and Results of Operations....    13

     Item  8  Financial Statements and Supplementary Data..............................................    19


                                    PART III

     Item  10 Directors and Executive Officers of the Registrant.......................................    19

     Item  11 Executive Compensation...................................................................    19

     Item  12 Security Ownership of Certain Beneficial Owners and Management...........................    19

     Item  13 Certain Relationships and Related Transactions...........................................    19

                                     PART IV

     Item  14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........................    20
</TABLE>




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    Statements in this report that are not purely historical are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements with respect to the financial condition
and results of operations of the Company involve risks and uncertainties related
to Shoppe performance and dependence on suppliers and foreign sourcing. These
factors are more fully discussed later in this report under the heading "Risk
Factors." In addition, the Company's results could also be affected by a number
of other risks and uncertainties which are more fully discussed under the
headings "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this report.

                                     PART I

ITEM 1. BUSINESS

    American Coin Merchandising, Inc. (the "Company") is the leading owner,
operator and franchisor in the United States of coin-operated amusement vending
equipment with more than 26,000 pieces of equipment on location. Over 14,000 of
these machines are skill-crane machines ("Shoppes") that dispense plush toys,
watches, jewelry, novelties and other items with the balance of the amusement
vending equipment comprised of video games, kiddie rides and bulk vending
equipment. For up to 50(cent) a play, customers maneuver the skill-crane into
position and attempt to retrieve the desired item in the machine's enclosed
display area before play is ended. The Company's Shoppes are placed in
supermarkets, mass merchandisers, restaurants, bowling centers, truckstops,
bingo halls, bars, warehouse clubs and similar locations ("Retail Accounts") to
take advantage of the regular customer traffic at these locations. The Company
utilizes appealing displays of quality merchandise, new product introductions,
including Company-designed products, licensed products and seasonal items, and
other merchandising techniques to attract new and repeat customers.

BUSINESS STRATEGY

    The Company's business strategy is to differentiate itself from traditional
amusement vending operators and to strengthen its position as a leading owner
and operator of amusement vending equipment in the U.S. The key elements of the
Company's business strategy are as follows:

        Quality Products. The Company's Shoppes offer a mix of products,
    including selected products of higher quality than the carnival-type
    products traditionally associated with skill-crane and other
    prize-dispensing equipment. The plush toys offered in the Company's Shoppes
    are made with 100% polyester fiberfill and high-grade outer covers and the
    watches include dependable movements. In addition, the Company's Shoppes
    offer licensed products featuring recognizable characters (such as Disney
    and Looney Tunes characters), regional-based and theme-based items (such as
    Christmas and Easter items). All products offered in the Shoppes must adhere
    to the Company's safety and quality standards.

        Machine Appearance, Merchandise and Merchandising Techniques. The
    Company's Shoppes are distinctively marked with the SugarLoaf logo and other
    signage that is readily identifiable with the Company in order to create
    brand recognition. In addition, the Shoppes are well lit and are cleaned and
    serviced regularly to maintain their attractive appearance. The Shoppes
    contain an appealing mix of products arranged by size, color, shape and
    type. Products with higher perceived value are prominently displayed, and
    the Company frequently incorporates new items into the merchandise mix to
    maintain the Shoppes' fresh appearance. Management believes the Shoppes'
    appearance and the Company's merchandising techniques are important factors
    in gaining acceptance of the Company's Shoppes by retailers.

        Product Procurement and Company-Designed Product. The Company controls
    product cost by purchasing a significant portion of its products directly
    from manufacturers in large quantities and acquiring merchandise that has
    been discontinued or is subject to substantial "close-out" discounts. The
    Company also controls product cost by pre-packing products that it
    distributes to Company-owned offices and sells to its franchisees and
    non-franchisees for use in filling and merchandising the Shoppes. These
    pre-packed units include a predetermined mix or "recipe" of different types,
    sizes, shapes and colors of product, which achieve the Company's
    merchandising objectives while also controlling average product cost. The
    Company is able to frequently introduce new product in its Toy Shoppes by
    designing a significant portion of the product and by purchasing licensed
    and other product from suppliers. Designing products at various price points
    furthers the Company's objective of controlling product cost. See "Suppliers
    -- Product."

        Vend Ratio and Revenue Management. The Company closely monitors the
    revenue per product dispensed, or the Vend Ratio, of each of its Shoppes to
    maintain customer satisfaction and to optimize Shoppe revenue and



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    profitability. A lower than optimal vend frequency reduces customer
    satisfaction, resulting in less frequent plays and lower revenue at a given
    location, while a higher than optimal vend frequency reduces profitability.
    If the Vend Ratio falls outside of the Company's target range, the route
    merchandiser can influence various factors affecting the Vend Ratio,
    including the mix of products by size and weight, the placement of products
    within the Shoppe's display area, the number of products and the density of
    the products within the Shoppe. If a Shoppe's weekly revenue consistently
    falls below the Company's minimum weekly revenue goal, the Company will
    consider relocating the Shoppe. During 2000, the Company redeployed certain
    underperforming Shoppes as a result of the Company's review of the machines'
    average weekly revenue.

        Location Selection. The Company concentrates its sales efforts on
    placing Shoppes in Retail Accounts such as Wal-Mart, Kmart, Denny's,
    Safeway, Flying J Truckstop and Furrs Family Dining, which have good
    reputations for quality and attract a high level of foot traffic. Within
    these accounts, the Company seeks to secure sites with the greatest
    visibility and accessibility to potential customers. See "Operations --
    Account Acquisition, Location Selection and Shoppe Placement."

        Timely Installation and National Operations. The Company provides Retail
    Accounts with an integrated system of Shoppe and vending installation,
    maintenance, service and an accounting of revenue and commissions on a local
    or national basis. Such services have been deployed rapidly across the
    country to large Retail Accounts.

        Training. The Company conducts comprehensive training for new general
    managers through its "Sugarloaf University" program, which includes a
    five-day seminar and field training held at its corporate offices. It also
    provides operations manuals, training videos and other materials relating to
    office management and route merchandising to assure the achievement of the
    Company's business objectives. See "Operations -- Supervision, Training and
    Support."

SHOPPES

    The Company has sought to position its Shoppes as an entertaining way to
"purchase" quality products. Management believes that the quality of the
Shoppes' products and the entertainment and amusement afforded by their
skill-crane format have broad appeal to adults and adolescents. While
skill-crane machines have been in operation for over 75 years, the Company has
incorporated into its Shoppes several improvements and refinements. The Company
increased the size of the Shoppes to enhance their visibility and to display and
vend more products and created bright, distinctive signage, which is readily
identifiable with the Company. The Company also added exterior lighting,
brightened interior lighting and selected exterior colors of the machines to
attract and focus customer attention on the products in the Shoppes. In
addition, the Company has upgraded the Shoppes' operating mechanisms to achieve
consistency of play and reliability of performance.

    The SugarLoaf Toy Shoppe has been operated by the Company since its
inception. The Company introduced the SugarLoaf Fun Shoppe in 1993, the
SugarLoaf Treasure Shoppe in 1994, the SugarLoaf Bean Bag Shoppe in 1997 and the
SugarLoaf Stop Shoppe in 1998. Management believes that the introduction of new
types of skill-crane and other machines has enabled the Company to capitalize on
its current routes and existing relationships by placing additional machines in
existing locations, thereby increasing revenue at each location with little
incremental service costs. The introductions of SugarLoaf Treasure Shoppes,
SugarLoaf Fun Shoppes, SugarLoaf Bean Bag Shoppes and SugarLoaf Stop Shoppes are
typically made in locations where a SugarLoaf Toy Shoppe is already located.
Currently the Company operates five types of Shoppes as described below.

    The SugarLoaf Toy Shoppe. The SugarLoaf Toy Shoppe features a play price of
50 cents and dispenses plush toys and other toys. The estimated retail values of
products offered in the SugarLoaf Toy Shoppe generally range from $4.00 to
$30.00. As of December 31, 2000, the Company and its franchisees were operating
8,713 SugarLoaf Toy Shoppes.

    The SugarLoaf Treasure Shoppe. The SugarLoaf Treasure Shoppe features a play
price of 50 cents and dispenses jewelry, watches, bolo ties and belt buckles.
The SugarLoaf Treasure Shoppe improves upon traditional skill-crane machines of
this type by dispensing products with estimated retail values ranging from $4.00
to $30.00 instead of carnival-type merchandise of low retail value. As of
December 31, 2000, the Company and its franchisees were operating 1,858
SugarLoaf Treasure Shoppes, approximately 90% of which were placed within
locations in which another Shoppe was already in operation.




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    The SugarLoaf Bean Bag Shoppe. The SugarLoaf Bean Bag Shoppe features a play
price of 50 cents and dispenses Bean-bag type stuffed toys with estimated retail
values ranging from $3.00 to $6.00. As of December 31, 2000, the Company and its
franchisees were operating 2,595 SugarLoaf Bean Bag Shoppes.

    The SugarLoaf Stop Shoppe. The SugarLoaf Stop Shoppe features a play price
of 50 cent and dispenses key-chains featuring NASCAR, bean bags, and licensed
and sports figures. The estimated retail values of products offered in the
SugarLoaf Stop Shoppe generally range from $2.00 to $10.00. As of December 31,
2000, the Company and its franchisees were operating 1,088 SugarLoaf Stop
Shoppes.

    The SugarLoaf Fun Shoppe. The SugarLoaf Fun Shoppe features a play price of
25 cent and dispenses small toys, novelties and candy. The SugarLoaf Fun Shoppe
is designed to appeal primarily to adolescents and children. The estimated
retail values of products offered in the SugarLoaf Fun Shoppe are generally
under $5.00. As of December 31, 2000, the Company and its franchisees were
operating 214 SugarLoaf Fun Shoppes.

    The following chart indicates the number of certain Company-owned amusement
vending equipment in operation at the indicated date:

<TABLE>
<CAPTION>
                                DECEMBER 31, 2000         DECEMBER 31, 1999          DECEMBER 31, 1998
                              --------------------       --------------------       --------------------
          TYPE                NUMBER       PERCENT       NUMBER       PERCENT       NUMBER       PERCENT
          ----                ------       -------       ------       -------       ------       -------
<S>                            <C>           <C>          <C>           <C>          <C>           <C>
Toy Shoppes ...........        7,580         47.6%        6,402         47.5%        6,397         50.9%
Treasure Shoppes ......        1,633         10.3         1,530         11.3         1,447         11.5
Bean Bag Shoppes ......        2,344         14.7         2,151         15.9         1,963         15.6
Stop Shoppes ..........        1,058          6.6           932          6.9           647          5.2
Fun Shoppes ...........          129          0.8           171          1.3           217          1.7
                              ------        -----        ------        -----        ------        -----
  Total Shoppes .......       12,744         80.0        11,186         82.9        10,671         84.9
Video Games ...........        1,792         11.3         1,298          9.6           837          6.7
Kiddie Rides ..........        1,387          8.7         1,011          7.5         1,057          8.4
                              ------        -----        ------        -----        ------        -----
                              15,923        100.0%       13,495        100.0%       12,565        100.0%
                              ======        =====        ======        =====        ======        =====
</TABLE>

OPERATIONS

    Management believes that the Company's operations program provides for
efficient and cost-effective purchasing and distribution of product. In
addition, the Company has a route-servicing system that facilitates the
development of a good working relationship with location managers in regional
and national chain accounts. The Company offers its franchisees the same
training programs, product and machine purchasing programs used by the Company,
and they are required to use substantially the same procedures, systems and
methods the Company employs in its own operations.

    Retail Accounts. Currently, the Company's Shoppes are located, in order of
prevalence, in supermarkets, mass merchandisers, restaurants, bingo halls and
bowling centers, bars and similar locations. The Company is focusing on placing
Shoppes in national and regional Retail Accounts to take advantage of the
regular customer traffic of these locations. The following chart identifies some
of the Company's Retail Accounts:

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<CAPTION>
                                                RETAIL ACCOUNTS
                      -------------------------------------------------------------------
MASS MERCHANDISERS       SUPERMARKETS           RESTAURANTS                 OTHER
------------------    -----------------    ---------------------    ---------------------
<S>                   <C>                  <C>                      <C>
Wal Mart              Kroger               Denny's                  Truckstops of America
Kmart                 Safeway              Ponderosa Steak House    Flying J Truckstop
                      Fred Meyer Stores    Shoney's, Inc.
                      Cub Foods            Golden Corral
                      Smith's              Furr's Family Dining
</TABLE>

    The Company or its franchisees provide the Shoppes and pay certain
installation costs, while the retailer provides a site within the location and
electrical power. The retailers are paid commissions based upon a percentage of
gross revenue, which for the year ended December 31, 2000, generally ranged from
25% to 30%, depending on the dollar volume, number of Shoppes installed and
total number of locations the retailer controls. Management believes that
national and regional supermarket, mass merchandise and restaurant chain
accounts are increasingly aware of the economic benefits of amusement vending
equipment such as the Company's Shoppes, which can provide retailers greater
revenue per square foot than alternative uses of available floor space.



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    In individual-location accounts, the Company and its franchisees generally
place Shoppes pursuant to oral agreements with location managers. While the
Company has written agreements with certain major Retail Accounts, the Company
and its franchisees also have placed Shoppes in national and regional Retail
Accounts pursuant to oral or other agreements, which may be terminated at any
time. Management believes that the Company and its franchisees generally have
good relations with their retail accounts.

    Account Acquisition, Location Selection and Shoppe Placement. The Company
acquires new individual-location accounts for the placement of its Shoppes
through regional sales representatives and field office general managers. To
augment its field office general managers' account acquisition activities, the
Company's field sales representatives assist in the marketing effort to national
and regional chain accounts and has entered into new agreements with national
and regional supermarket and mass merchandise chain accounts covering the
placement of Shoppes within the locations of such accounts.

    In August 2000, the Company signed a new two-year agreement with Wal-Mart
that designates the Company as Wal-Mart's principal amusement vending operator.
As of December 31, 2000, the Company had installed more than 7,400 amusement
vending machines in 1,462 Wal-Mart stores nationwide. The Company's largest
account, Wal-Mart accounted for approximately 37% of total revenue in 2000. In
March 2000, the Company signed a new three-year agreement with Safeway that
designates the Company as Safeway's principal operator of skill-cranes through
April 1, 2003. As of December 31, 2000, the Company and its franchisees had
installed more than 739 amusement vending machines in 448 Safeway stores
nationwide. In May 2000, the Company signed a new four-year agreement with
Denny's that designates the Company as Denny's exclusive skill-crane operator
for its company-owned restaurants through June 30, 2005. As of December 31,
2000, the Company and its franchisees had installed 714 Shoppes in company-owned
Denny's restaurants nationwide.

    Once the Company enters into a national or regional chain account agreement,
it contacts each location manager to arrange for a review of the location to
confirm its suitability and to obtain the manager's agreement to the placement
of one or more Shoppes within the location. The Company and its regional sales
representatives or franchisee work together to place Shoppes at national and
regional chain account locations.

    For accounts other than national chain accounts, the Company's regional
sales representatives and general managers identify viable locations, contact
the location's owner or manager to confirm the suitability of the location and
obtain the owner's or manager's agreement to the placement of the Shoppes and
related compensation arrangements. The suitability of a location is based upon a
thorough assessment by the Company, including an analysis of the surrounding
trade area in order to determine the neighborhood demographics, local
regulations, the level of overall retail activity and the cost-effectiveness of
servicing the location through existing route merchandisers. The Company also
reviews each site within the location for its visibility and accessibility to
customers.

    The Company and its franchisees compete for limited sites within
supermarkets with purveyors of seasonal and specialty items and with owners and
operators of other amusement and vending machines, ATM machines and coin
counting and redemption equipment. The Company's amusement vending equipment
also compete with vending machine and coin-operated amusement device operators
for sites in mass merchandise and restaurant chains, bowling centers and other
locations. Competition for such sites is based primarily on the amount of
revenue to the location owner that can be generated by a particular use of a
site. Management believes that the revenue potential of the Company's amusement
vending equipment compares favorably to that of competing uses for available
sites within retail locations.

    OTHER VENDING. The Company has introduced new types of complementary
amusement vending machines at existing Shoppe locations which management
believes will expand the potential customers for the Company. As of December 31,
2000, the Company and its franchisees had 1,412 kiddie rides installed in Retail
Accounts nationwide. In November 1997, the Company purchased the assets of
Quality Amusements Corp. and Quality Entertainment Corp., operators of bulk
vending machines and kiddie rides. In March 1998, the Company purchased the
assets of McCathren Vending Co., another operator of bulk vending machines. Bulk
vending refers to the sale of unsorted confections, nuts, gumballs, toys and
novelty items (in or out of capsules) selected by the customer and dispensed
through vending machines. As of December 31, 2000, the Company and its



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franchisees had 8,015 pieces of bulk vending equipment in operation. In June
1998, the Company acquired the assets of Chilton Vending Co., an operator of
simulator and traditional video games, skill-cranes and redemption equipment. As
of December 31, 2000, the Company and its franchisees had 1,837 simulator and
traditional video games in operation. From time to time, the Company has placed,
and may continue to place in the future, other types of coin-operated vending
machines in retail accounts in order to leverage the Company's existing national
distribution and service network.

    Supervision, Training and Support. The Company's division vice presidents
are primarily responsible for hiring and training the Company's general managers
and for on-going support and supervision of the Company's field offices.

    Each Company field office is managed by an area general manager or general
manager who is responsible for the management of the office, including inventory
management, and training and monitoring route merchandisers. The Company has
developed a comprehensive training program for area general managers, general
managers and franchisees covering office management, new account acquisition,
inventory control, route merchandising, site selection, machine servicing and
all other aspects of the operation of the business. The area general managers
and general managers attend training programs and receive ongoing field
training. The Company considers its route merchandisers to be a key element of
its merchandising efforts. The Company's area general managers and general
managers provide training of route merchandisers in all aspects of route
management, machine servicing, revenue collection, Vend Ratio monitoring and
product merchandising. See "Employees."

    Route Merchandising. Frequent, regular and reliable service and support is
an important element in the operation of the Company's Shoppes and other
amusement vending equipment. The Company's route merchandisers and franchisee
personnel are trained to perform regularly scheduled merchandising and service
procedures. A route merchandiser has a route consisting of 10 to 33 locations,
depending upon volume, which are visited and serviced two to ten times per week.
The route merchandiser cleans and services the Shoppe, takes inventory of the
Shoppe, replaces product as needed, monitors the Vend Ratio and arranges the
product within the Shoppe in accordance with the Company's merchandising
techniques. The route merchandiser records the number of units of product placed
in the Shoppes and the number of plays for both Shoppes and other amusement
vending equipment from nonresettable meters. The meter readings are subsequently
reconciled against actual collections. All collections are delivered to and
verified by another employee at the field office for deposit.

    Inventory Management and Distribution. The Company's distribution system is
designed to allow efficient and cost-effective distribution of its product to
Company field offices and franchise offices. After the product is procured from
the Company's suppliers, it is shipped to a distribution center where it is
sorted and pre-packed. The Company maintains inventory for the products offered
through its Toy Shoppes, Treasure Shoppes, Bean Bag Shoppes, Stop Shoppes and
Fun Shoppes in a warehouse facility in Kent, Washington and in its regional
distribution warehouse centers in Atlanta, Georgia; Clearwater, Florida;
Chicago, Illinois; and Allentown, Pennsylvania. The Company communicates
appropriate product mix requirements to its warehouse employees on a weekly
basis. The warehouse employees sort the products according to the Company's
specified mix requirements and pack the product for each type of Shoppe into
pre-packed units for shipment to Company field offices and franchises on a
weekly basis.

    At December 31, 2000, the Company was operating in 46 states through a
national network of 34 offices. The field offices averaged 4,080 square feet and
comprise a small office area and a warehouse area where out-of-service Shoppes
and other amusement vending equipment are repaired and product inventory is
maintained. Part of the route merchandisers' daily route servicing
responsibilities is to distribute product to Shoppes. Pre-packing aids in
controlling product cost and facilitates new product introductions. Pre-packing
also substantially reduces the warehouse space required for inventory, allowing
the Company-owned and franchise offices to service a greater number of Shoppes
without a commensurate increase in warehouse space. In addition, pre-packing
significantly reduces the time general managers and franchise personnel spend on
inventory management, which allows more time for acquiring new accounts and
monitoring the quality of Shoppe merchandising in the field.

    Management Information Systems. In late 2000, the Company implemented new
financial software and a new centralized data base route management information
system that utilizes customized software for monitoring field office amusement
vending equipment results. The software allows the Company to monitor individual
amusement vending equipment placements, revenue, Vend Ratio for Shoppes and tax
and commission payments through reports generated at the corporate offices. The
software also allows the Company to monitor total vending revenue, average
weekly revenue and equipment on location.



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MERCHANDISING

    Merchandising Mix. The Company offers merchandise for the Shoppes in
pre-pack bags and in bulk. The pre-pack bags include an assortment of exclusive
SugarLoaf designs, along with licensed and other domestic product. The
merchandise variety is regularly updated, and the Company offers at least 1,500
new items each year. Seasonal goods are placed in Shoppes for all major
holidays. The Company also creates several theme product collectibles and many
players attempt to retrieve all of the products in the series.

    Merchandise Sourcing and Vendor Relationships. The Company purchases product
from several overseas factories and has developed good relationships with these
suppliers over the past ten years. The Company also utilizes several domestic
sources and attempts to take advantage of licensed and closeout merchandise.

SUPPLIERS

    Product. The Company maintains a purchasing and development staff at its
corporate headquarters and contracts with foreign and domestic manufacturers and
outside vendors for its supply of products. The SugarLoaf Toy Shoppes offer a
combination of Company-designed products that are manufactured to the Company's
specifications and "off the shelf" products available from foreign manufacturers
and third-party vendors. Since 1988, all Company-designed toys have been
manufactured to its specifications by foreign manufacturers. Currently, the
Company relies on multiple manufacturers in China to produce its custom designs,
each of whom has the capability to produce a range of the toys required by the
Company. Decisions regarding the choice of manufacturer are based on price,
quality of workmanship, reliability and the ability of a manufacturer to meet
the Company's delivery requirements.

    Shoppes. The Company currently purchases Shoppes from three principal
approved crane manufacturers and may seek to add new suppliers. Management
believes that suitable skill-crane machines are available from a number of
domestic and foreign manufacturers.

FRANCHISE RELATIONS

    As of December 31, 2000, the Company had franchise agreements in effect with
10 franchisees covering 14 territories in the U.S. covering, in the aggregate,
1,837 pieces of amusement vending equipment. The Company does not currently
intend to grant any additional franchises. In the event any franchisee proposes
to transfer to any third party its SugarLoaf business or any rights or interests
granted by the franchise agreement, the Company has up to 45 days to exercise a
right of first refusal to purchase such business, rights or interests on the
same terms and conditions as the franchisee's proposed transfer of such business
rights or interests.

COMPETITION

    The Company competes with a number of regional and local operators of
skill-crane machines. Many of these competitors are engaged in aggressive
expansion programs, and the Company has experienced and expects to continue to
experience intense competition for new locations. There can be no assurance that
the Company will be able to compete effectively with these companies in the
future. The Company's amusement vending equipment also competes with other
vending machines, coin-operated amusement devices, coin counting and redemption
machines and seasonal and bulk merchandise for sites in retail locations. There
can be no assurance that the Company will be able to maintain its current sites
in retail locations or that it will be able to obtain sites in the future on
attractive terms or at all. There also are few barriers to entry in the
Company's business, and it would be possible for well-financed vending machine
manufacturers or other vending machine operators with existing relationships
with supermarkets, mass merchandisers and other venues targeted by the Company
to readily compete with the Company in certain markets.

INTELLECTUAL PROPERTY

    The Company has no patents or patent applications pending and relies
primarily on a combination of trademark, trade dress and unfair competition
laws, trade secrets, confidentiality procedures and agreements to protect its
proprietary rights. The Company owns a number of trademarks that have been
registered with the United States Patent and Trademark Office, including
"Shoppe," "SugarLoaf," "Sugar Loaf," "Toy Shoppe," "Treasure Shoppe," "Fun
Shoppe," "Shoppe of Stickers" and "Kid Shoppe." In addition, the Company claims
common law trademark protection




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for the mark "A Test of Skill." The Company considers its operations manual,
training videos, and other related materials and portions of its licensed
methods to be proprietary and confidential, and the terms of the Company's
franchise agreements require franchisees to maintain the confidentiality of such
information and procedures and to adopt reasonable precautions to prevent
unauthorized disclosure of these secrets and information. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's amusement vending equipment and products or to
obtain and use information that the Company regards as proprietary. The Company
also may be involved from time to time in litigation to determine the
enforceability, scope and validity of proprietary rights. The Company believes
it has significant intellectual property protection for its business. Management
believes that its success is likely to depend more upon merchandising skill,
location selection and consumer support than on legal protection of the
Company's proprietary rights.

GOVERNMENT REGULATION

    The Company's business is subject to federal, state, provincial and local
regulations relating to product labeling and safety, coin-operated games and
franchising. The Federal Hazardous Substances Act, as amended by the Child
Protection Act of 1966, the Child Protection and Toy Safety Act of 1969, the Toy
Safety Act of 1984 and the Child Safety Protection Act of 1994 requires the
labeling of articles that bear or contain a hazardous substance as defined in
such statutes. In addition, the Consumer Product Safety Commission may, under
these statutes, ban from the market toys or other articles intended for use by
children which contain hazardous substances or present a public health or safety
hazard, and require the repurchase and reimbursement of certain expenses by the
manufacturer of such banned toys or other articles.

    The distribution and operation of skill-crane machines may be subject to
federal, state, provincial and local regulations, including gaming regulations,
which vary from jurisdiction to jurisdiction. Certain jurisdictions may require
licenses, permits and approvals to be held by companies and their key personnel
in connection with the distribution or operation of skill-crane machines.
Currently, the Company believes that it has obtained all necessary governmental
licenses, permits and approvals necessary for the distribution or operation of
Shoppes in Company-owned operations. However, no assurance can be given that
such licenses, permits or approvals will be given or renewed in the future.
Franchisees are responsible for their own regulatory compliance.

    As a franchisor, the Company is subject to various federal and state
franchise and business opportunity laws and regulations. The Company does not
currently intend to grant any additional franchises and it believes it is in
material compliance with such laws in the states in which the Company has
offered and sold franchises.

INSURANCE

    The Company carries property, liability, workers' compensation and directors
and officers liability insurance policies, which it believes are customary for
businesses of its size and type. However, there can be no assurance that the
Company's insurance coverage will be adequate or that insurance will continue to
be available to the Company at reasonable rates. The Company may be subject to
claims for personal injuries resulting from the use of its Shoppes or from
products and other merchandise dispensed from the Shoppes. To date, the Company
has not experienced any material product liability claims or costs, and it
currently maintains product liability insurance that it believes to be adequate.
The Company's product liability insurance coverage is limited, however, and
there can be no assurance that such insurance would adequately cover future
product liability costs or claims.

EMPLOYEES

    As of February 28, 2001, the Company had a total of 779 employees, including
51 employees at its headquarters in Boulder, Colorado. None of the Company's
employees are represented by labor unions or covered by any collective
bargaining contract. Management believes it has a good relationship with the
Company's employees.

    Generally, each of the Company's field offices employs approximately 5 to 35
persons, including a general manager, an office assistant and an adequate number
of route merchandisers to properly service the Company's Shoppes and other
amusement vending equipment and equipment service managers. The general manager
is responsible for the daily operations of the office, monitoring route
merchandisers and acquiring new accounts. The area general managers oversee the
operations of certain Company field offices and report directly to the Company's
division vice presidents.




                                       9
<PAGE>   10


    The Company has an incentive bonus program pursuant to which area general
managers, general managers and field office personnel may be eligible to receive
incentive compensation based on office and route profitability. Management
believes that this program rewards excellence in management, gives field office
personnel an incentive to improve operations and results in an overall reduction
in the cost of operations. Corporate personnel are also eligible to receive
incentive compensation based on overall Company performance. In addition, area
general managers, field managers and other corporate personnel are eligible to
receive options to purchase shares of common stock subject to ongoing service
requirements.

ITEM 2. PROPERTIES

    The Company's principal executive offices are located at 5660 Central
Avenue, Boulder, Colorado and the Denver, Colorado operation occupy
approximately 28,000 square feet of office and warehouse space under a lease
that expires February 28, 2003. The Company's fulfillment warehouse in Kent,
Washington occupies approximately 106,000 square feet under a lease that expires
August 31, 2003. The Company's machine repair and refurbishment facility in
Denver, Colorado occupies approximately 11,000 square feet under a lease that
expires September 30, 2003. The Company also is a party to 49 other leases which
are used for office and warehouse space which average approximately 4,080 square
feet, provide for monthly rental payments ranging from $371 to $5,000 and expire
at various times over the period May 1, 2001 to December 31, 2004.





                                       10
<PAGE>   11


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Common Stock Data. The Company's Common Stock began trading publicly on the
over-the-counter market through the Nasdaq National Market under the symbol
"AMCN" on October 16, 1995. On February 7, 2000 the Company transferred to the
Nasdaq Small Cap Market. On February 28, 2001, the number of record holders was
189 and the Company estimates that on that date there were approximately an
additional 1,300 beneficial owners. On February 28, 2001, the closing price
reported on the NASDAQ Small Cap Market for the Common Stock was $2.75. The
following table sets forth for the periods indicated the high and low closing
sale quotations for the Common Stock as reported on the applicable Nasdaq
Market. The prices reported do not include retail mark-up, mark-down or
commissions and may not reflect actual transactions.

<TABLE>
<CAPTION>
                                                                   HIGH            LOW
                                                                   -----          -----
<S>                                                                <C>            <C>
For the Fiscal Year Ended December 31, 1999:
  First Quarter.................................................   $5.94          $4.00
  Second Quarter................................................    8.31           3.69
  Third Quarter.................................................    6.50           3.19
  Fourth Quarter................................................    3.69           2.00
For the Fiscal Year Ended December 31, 2000:
  First Quarter.................................................    3.25           2.44
  Second Quarter................................................    3.00           2.31
  Third Quarter.................................................    2.88           1.75
  Fourth Quarter................................................    3.13           2.00
</TABLE>

    Common Stock Dividends. The Company has not declared or paid a cash dividend
on its Common Stock. The payment of future dividends will be within the
discretion of the Company's Board of Directors and will depend on the earnings,
capital requirements, and restrictions in current and future credit agreements
and operating and financial condition of the Company, among other factors. The
Company's current credit facility limits its payment of dividends while the
credit facility is in place.



                                       11
<PAGE>   12


ITEM 6. SELECTED FINANCIAL DATA

    The selected financial data set forth below has been derived from the
consolidated financial statements of the Company.

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                         ----------------------------------------------------------------
                                                            2000          1999         1998           1997         1996
                                                         ---------     ---------     ---------     ---------    ---------
                                                               (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S>                                                      <C>           <C>           <C>           <C>          <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
  Vending ...........................................    $ 127,076     $ 115,835     $  92,854     $  52,866    $  30,439
  Franchise and other ...............................        2,681         4,630         4,857         6,218        7,828
                                                         ---------     ---------     ---------     ---------    ---------
    Total revenue ...................................      129,757       120,465        97,711        59,084       38,267
                                                         ---------     ---------     ---------     ---------    ---------
Cost of revenue:
  Vending ...........................................       93,315        84,997        66,070        37,506       21,283
  Franchise and other ...............................        1,936         3,104         3,108         3,967        5,659
                                                         ---------     ---------     ---------     ---------    ---------
    Total cost of revenue ...........................       95,251        88,101        69,178        41,473       26,942
                                                         ---------     ---------     ---------     ---------    ---------
    Gross profit ....................................       34,506        32,364        28,533        17,611       11,325
General and administrative expenses .................       25,080        25,668        19,413        10,314        7,053
Write off of costs in excess of assets acquired,
  severance and other costs .........................           --         7,536            --            --           --
                                                         ---------     ---------     ---------     ---------    ---------
    Operating earnings (loss) .......................        9,426          (840)        9,120         7,297        4,272
Interest expense, net ...............................        7,775         6,866         3,368           612          375
                                                         ---------     ---------     ---------     ---------    ---------
    Earnings (loss) before income taxes and
      extraordinary loss ............................        1,651        (7,706)        5,752         6,685        3,897
Income tax benefit (expense) ........................         (627)        3,200        (1,854)       (2,256)      (1,311)
                                                         ---------     ---------     ---------     ---------    ---------
    Earnings (loss) before extraordinary loss .......        1,024        (4,506)        3,898         4,429        2,586
Extraordinary loss on debt refinancing, net of
  income tax  benefit of $101 .......................          165            --            --            --           --
                                                         ---------     ---------     ---------     ---------    ---------
    Net earnings (loss) .............................    $     859     $  (4,506)    $   3,898     $   4,429    $   2,586
                                                         =========     =========     =========     =========    =========

Basic earnings (loss) per share .....................    $    0.13     $   (0.70)    $    0.60     $    0.80    $    0.51
Diluted earnings (loss) per share ...................    $    0.13     $   (0.70)    $    0.58     $    0.78    $    0.48
Basic weighted average common shares ................        6,493         6,475         6,467         5,565        5,092
Diluted weighted average common shares ..............        6,493         6,475         6,713         5,694        5,417

<CAPTION>

                                                            2000          1999         1998           1997         1996
                                                         ---------     ---------     ---------     ---------    ---------
BALANCE SHEET DATA:
Working capital .....................................    $     691     $   9,367     $   9,235     $   3,626    $   2,914
Total assets ........................................      107,907       104,134       111,782        37,077       19,758
Short-term debt and current portion of long-term
  debt ..............................................        7,233         2,463         2,155         1,619        1,109
Long-term debt, excluding current portion ...........       44,224        50,230        50,310         1,292        5,059
Company obligated mandatorily redeemable preferred
  securities of subsidiary trust holding solely
  junior subordinated debentures ....................       15,593        15,542        15,492            --           --
Total stockholders' equity ..........................       30,089        29,154        33,648        30,092       11,676

NUMBER OF SHOPPES:
Company operations ..................................       12,744        11,186        10,671         6,166        3,967
Franchise operations ................................        1,724         1,878         1,998         3,952        3,981
                                                         ---------     ---------     ---------     ---------    ---------
        Total .......................................       14,468        13,064        12,669        10,118        7,948
                                                         =========     =========     =========     =========    =========
</TABLE>



                                       12
<PAGE>   13


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

GENERAL

    The Company and its franchisees own and operate coin-operated amusement
vending equipment with more than 26,000 pieces of equipment on location. Over
14,000 of these machines are Shoppes that dispense plush toys, watches, jewelry,
novelties and other items with the balance of the amusement vending equipment
comprised of video games, kiddie rides and bulk vending equipment. The Company's
Shoppes are placed in Retail Accounts and similar high traffic locations and the
Company typically pays 25-30% of gross revenue to the location owner as a
location commission. At December 31, 2000, the Company was operating in 46
states with a national network of 34 offices and there were 10 Company
franchisees operating in 14 territories in the United States. The Company sells
product vended in the machines to its franchisees and collects continuing
royalties ranging from 2% to 5% of its franchisees' gross machine revenue.

    For the year ended December 31, 2000, 87% of the Company's revenue and gross
profit were derived from Company-owned Shoppes. The Company's revenue and gross
profit in a particular period is directly related to the number of Shoppes in
operation during the period. Management believes that the Company's business is
somewhat seasonal, with average revenue per machine per week historically higher
during the Easter and Christmas periods. Vending revenue represents cash
receipts from customers using amusement vending equipment and is recognized when
collected. The cost of vending revenue is comprised of the cost of vended
products, location commissions, depreciation and direct service cost.

    Franchise and other revenue represents the Company's percentage of gross
vending revenue generated by Shoppes owned and operated by franchisees, as well
as product sold to the franchisees and non-franchisee customers. Product sold to
the franchisees and non-franchisee customers consists of goods to vend in
Shoppes. The Company anticipates that franchise and other revenue will remain
consistent with 2000 levels, subject to further franchisee acquisitions.

    The Company's efforts during the year in reducing inventory levels resulted
in a $4.7 million or 31.6% reduction in inventory compared to December 31, 1999.
With success in obtaining new Retail Accounts throughout the year, the Company
experienced positive growth in revenue, operating earnings and EBITDA on a
comparable quarterly basis. The Company also continued to benefit from
management's efforts to reduce the level of general and administrative expenses.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 VS. YEAR ENDED DECEMBER 31, 1999

Revenue

    The Company's total revenue increased 7.7% from $120.5 million in 1999 to
$129.8 million in 2000. Vending revenue increased $11.2 million or 9.7% in 2000
to $127.1 million, primarily as a result of a 9.6% increase in the average
number of amusement vending equipment in use during 2000, over the average
number of amusement vending equipment in use during 1999.

    Franchise and other revenue decreased $2.0 million or 42.1% in 2000 as
compared to 1999, due to the closure of Plush 4 Play operations in the third
quarter of 1999.

Cost of Revenue and Gross Profit

    The cost of vending operations increased $8.3 million in 2000 to $93.3
million. The vending operations' contribution to 2000 gross profit increased to
$33.8 million, which represents a 9.5% increase over gross profit from vending
operations realized in 1999. The vending gross profit achieved in 2000 was 26.6%
of vending revenue, which is consistent with the gross profit percentage
achieved in 1999. The cash vending gross profit (vending revenue minus cost of
vended product, location commissions and direct service cost) achieved in 2000
was 34.5% of vending revenue, which is 1.1 percentage points higher than in
1999. The increase in cash vending gross profit is attributable to lower costs
associated with product vended partially offset by higher location payments. The
cash vending gross profit




                                       13
<PAGE>   14


achieved during the fourth quarter of 2000 was 34.9%, which is .5 percentage
points higher than the comparable period in 1999.

    Gross profit on franchise and other revenue in 2000 decreased to $745,000,
or 27.8% of franchise and other revenue, which is 5.2 percentage points lower
than the gross margin achieved in 1999. The decrease in gross margin as a
percentage of franchise and other revenue resulted primarily from increased
warehousing costs, lower product sales to franchisees and non-franchisees
resulting from the closure of Plush 4 Play.

Operating Expense

    General and administrative expenses including depreciation and amortization
as a percentage of revenue for 2000 decreased to 19.3%, as compared to 21.3% of
revenue in 1999. The decrease in general and administrative expenses resulted
primarily from the closing of four offices during the year and tighter control
on discretionary spending during the year.

Operating Earnings (Loss)

    Operating earnings in 2000 were $9.4 million or 7.3% of total revenue as
compared to an operating loss of $840,000 in 1999. The increase in operating
results is primarily attributable to the lower cost of products vended through
the Company's Shoppes, the reduction in general and administrative expenses
discussed above, and the write off of costs in excess of assets acquired related
to Plush 4 Play, one-time severance costs and other costs recognized in 1999.

Non Operating Income (Expense)

    Interest expense increased $909,000 to $7.8 million in 2000 as compared to
1999. The Company's interest expense is directly related to its level of
borrowings and changes in the underlying interest rates. In addition, the
Company, in September 1998, issued $17 million of Ascending Rate (10.5% at
December 31, 2000) Cumulative Trust Preferred Securities.

Extraordinary Loss

    The extraordinary loss of $165,000, net of tax benefit, for the year ended
December 31, 2000, relates to the refinancing of the Company's $50 million
reducing revolving loan agreement in December 2000, which was scheduled to
mature in July 2001. The extraordinary loss results from the write-off of loan
origination fees related to the previous credit facility.

Net Earnings (Loss) and Earnings (Loss) Per Share

      The net earnings for the year ended December 31, 2000 were $859,000, as
compared to a net loss of $4.5 million for 1999. Diluted earnings per share for
2000 were $0.13, compared to a diluted net loss per share of $0.70 in 1999.

YEAR ENDED DECEMBER 31, 1999 VS. YEAR ENDED DECEMBER 31, 1998

Revenue

    The Company's total revenue increased 23.3% from $97.7 million in 1998 to
$120.5 million in 1999. Vending revenue increased $23.0 million or 24.7% in 1999
to $115.8 million, primarily as a result of a 26.8% increase in the average
number of Shoppes in use during 1999 over the average number of Shoppes in use
during 1998.

    Franchise and other revenue decreased $227,000 or 4.7% in 1999 as compared
to 1998, due to the acquisition of Company franchises and lower equipment sales
to franchisees.

Cost of Revenue and Gross Profit

    The cost of vending operations increased $18.9 million in 1999 to $85.0
million. The vending operations' contribution to 1999 gross profit increased to
$30.8 million, which represents a 15.1% increase over gross profit from




                                       14
<PAGE>   15


vending operations realized in 1998. The vending gross profit achieved in 1999
was 26.6% of vending revenue, which represents a 2.2 percentage point decrease
from the gross profit percentage achieved in 1998. The cash vending gross profit
(vending revenue minus cost of vended product, location commissions and direct
service cost) achieved in 1999 was 33.4% of vending revenue, which is 1.9
percentage points lower than in 1998. The cash vending gross profit achieved
during the fourth quarter of 1999 was 34.4%, which is .7 percentage points
higher that the comparable period in 1998. In 1999, the decline in vending
margin resulted primarily higher average cost of product and higher location
commissions compared to 1998.

    Gross profit on franchise and other revenue in 1999 decreased to $1.5
million, or 33% of franchise and other revenue, which is 3 percentage points
lower than the gross margin achieved in 1998. The decrease in gross margin as a
percentage of franchise and other revenue resulted primarily from increased
warehousing costs partially offset by lower 1998 equipment sales that are at
lower margins than product sales to franchisees and non-franchisees.

Operating Expense

    General and administrative expense as a percentage of revenue for 1999
increased to 21.3% (excluding the one-time charges recorded in the third quarter
of 1999), as compared to 19.9% of revenue in 1998. The increase in general and
administrative expenses resulted primarily from additional operating offices,
amortization of goodwill and other general and administrative expenses related
to the acquisitions made by the Company during the second half of 1998. The
Company anticipates higher general and administrative expenses to continue into
2001.

Operating Earnings

    The operating loss in 1999 is $840,000 as compared to operating earnings of
$9.1 million, or 9.3% of total revenue for 1998. The decrease in operating
results is primarily attributable to the write off of costs in excess of assets
acquired related to Plush 4 Play, one-time severance costs and other costs
recorded by the Company in the third quarter of 1999.

Non Operating Income (Expense)

    Interest expense increased $3.5 million to $6.9 million in 1999 as compared
to 1998. The Company's interest expense is directly related to its level of
borrowings and changes in the underlying interest rates. In addition, the
Company, in September 1998, issued $17 million of Ascending Rate (10.5% at
December 31, 1999) Cumulative Trust Preferred Securities.

Net Earnings and Earnings Per Share

      The net loss for the year ended December 31, 1999 was $4.5 million, as
compared to net earnings of $3.9 million for 1998. Diluted loss per share for
1999 was $0.70, compared to net earnings per share of $0.58 in 1998.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's primary sources of liquidity and capital resources
historically have been cash flows from operations, borrowings under the
Company's credit facilities and issuances of its equity securities. These
sources of cash flows have been offset by cash used for acquisitions, investment
in amusement vending equipment and payment of long-term borrowings.

    Net cash provided by operating activities was $21.6 million, $7.4 million
and $8.4 million in 2000, 1999 and 1998, respectively. The Company anticipates
that cash will continue to be provided by operations as additional skill-crane
machines and other amusement devices are placed in service. Cash required in the
future is expected to be funded by existing cash and cash provided by operations
and borrowings under the Company's credit facility.

    Net cash used in investing activities was $18.1 million, $9.3 million and
$67.3 million in 2000, 1999 and 1998, respectively. Capital expenditures
amounted to $15.6 million, $8.3 million and $23.5 million in 2000, 1999 and
1998, respectively, of which $15.0 million, $7.9 million and $19.6 million were
used for the acquisition of amusement vending equipment. The acquisition of
franchisees and others used $180,000 and $43.0 million in 1999 and 1998,
respectively.



                                       15
<PAGE>   16


    Net cash used by financing activities was $1.2 million in 2000 and consisted
primarily of borrowings on the credit facilities and principal payments on
long-term debt. Net cash provided by financing activities was $240,000 and $59.2
million in 1999 and 1998, respectively. In 1999 and 1998, activities consisted
primarily of borrowings on the credit facility and principal payments on
long-term debt. In 1998, the Company also issued $15.5 million, net of Trust
Preferred Securities.

    In December 2000 the Company refinanced its $50 million reducing revolving
loan agreement and replaced it with a $55 million senior secured credit
facility. As a result of the refinancing, the Company recorded an after-tax
extraordinary loss of $165,000, or $0.03 per diluted share, related to the
write-off of loan origination fees related to the previous credit facility.

    The $55.0 million senior secured credit facility is comprised of a $10.0
million revolving credit facility and a $45.0 million term loan. Under the
revolving credit facility, the Company may borrow up to $10 million through
December 2003, and at December 31, 2000, there was approximately $5.2 million
outstanding and $4.8 million available under the revolving credit facility.
Under the $45.0 million term loan facility, the Company is required to make
quarterly principal installments that increase in amount over the four and one
half year term of the facility. The revolving credit facility and term loan bear
interest at a floating rate, at the Company's option, equal to either LIBOR plus
the applicable margin or a base rate that is equal to the higher of the prime
rate or the federal funds rate plus one-half percent plus the applicable margin.
The effective rate of interest on both facilities at December 31, 2000 was
11.5%. The credit facility provides that certain financial ratios be met and
places restrictions on, among other things, the incurrence of additional debt
financing and the payment of dividends on common stock. The Company was in
compliance with such financial ratios and restrictions at December 31, 2000.

    The Company may use a portion of its capital resources to effect
acquisitions of franchisees. Because the Company cannot predict the timing or
nature of acquisition opportunities, or the availability of acquisition
financing, the Company cannot determine the extent to which capital resources
may be used. Company management believes that funds expected to be generated
from operations and borrowings available under its credit facility and the
Company's ability to negotiate additional and enhanced credit agreements will be
sufficient to meet the Company's foreseeable operating and capital expenditure
needs.



                                       16
<PAGE>   17


                                  RISK FACTORS

    This report contains forward-looking statements. Because such statements
include risks and uncertainties, actual results could differ materially from
those expressed or implied by such forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and in the sections entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."

    Shoppe Performance. A primary key to the financial success of the Company is
the weekly revenue generated per Shoppe, which has a history of fluctuating. The
Company has attributed some of this fluctuation to the effectiveness of its
product mix and has taken steps to address this problem; however, there can be
no assurance that such efforts will continue to have a positive impact on the
performance of the Shoppes. The average weekly revenue generated per Shoppe may
decline or fluctuate in the future, which could have a material adverse effect
on the Company's business, financial condition and results of operations.

    Growth and Management of Growth. The Company has recently experienced
growth. There can be no assurance that the Company will continue to grow at
historical rates or at all. The Company's ability to generate increased revenue
and achieve higher levels of profitability will depend upon its ability and the
ability of its franchisees to place additional Shoppes in Retail Accounts as
well as to maintain or increase the average financial performance of the
Shoppes. The Company's ability to place additional Shoppes depends on a number
of factors beyond the Company's control, including general business and economic
conditions. Installation of additional Shoppes will also depend, in part, upon
the Company's ability to secure additional national and regional Retail Accounts
and to obtain approval to place additional Shoppes in individual locations of
such accounts. The Company, its franchisees and their suppliers also may be
unable to place and adequately service additional Shoppes, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

    There can be no assurance that the Company will be able to manage its
expanding operations effectively or that it will be able to maintain or
accelerate its growth. The Company's growth has placed, and is expected to
continue to place, significant demands on all aspects of the Company's business,
including Shoppe servicing, merchandising, financial and administrative
personnel and systems. The Company's future operating results are substantially
dependent upon the ability of the Company's officers and key personnel to manage
anticipated growth and increased demand effectively; to attract, train and
retain additional qualified personnel; and to implement and improve technical,
service, administrative, financial control and reporting systems. Either
deterioration in Shoppe performance or the Company's failure to manage growth
effectively could adversely and materially affect the Company's business,
financial condition and results of operations.

    Substantial Indebtedness; Effect of Financial Leverage. The Company intends
to use funds available under its revolving credit facility ($4.8 million at
December 31, 2000) for a number of purposes, including future acquisitions of
franchisees. Further use of funds from the credit facility could result in the
Company incurring additional indebtedness that is substantial in relation to its
stockholders' equity and cash flow available for debt service. As a result of
the issuance of the Ascending Rate Cumulative Trust Preferred Securities and the
amount the Company owes pursuant to its senior secured facilities, fixed charges
could exceed earnings for the foreseeable future. Substantial leverage poses the
risk that the Company may not be able to generate sufficient cash flow to
service its indebtedness, or to adequately fund its operations. There can be no
assurance that the Company will be able to increase its revenue and leverage the
acquisitions it has made to achieve sufficient cash flow to meet its potential
debt service obligations. In particular, there can be no assurance that the
Company's operating cash flow will be sufficient to meet its debt service
obligations under its senior secured facilities. The Company's leverage also
could limit its ability to effect future financings or may otherwise restrict
the Company's operations and growth.

    Trade Relations and Dependence on Major Accounts. The Company's largest
account, Wal-Mart, accounted for approximately 37% of total revenue in 2000. The
loss of the Wal-Mart account, or the loss of a significant number of other major
accounts, or a significant reduction in the number of Shoppes and other
amusement vending equipment placed at such accounts, for any reason, could have
a material adverse effect on the Company's business, financial condition and
results of operations.

    Competition. The Company competes with a number of regional and local
operators of skill-crane machines. Many of these competitors are engaged in
aggressive expansion programs, and the Company has experienced and expects to





                                       17
<PAGE>   18


continue to experience intense competition for new locations and acquisition
candidates. There can be no assurance that the Company will be able to compete
effectively with these companies in the future. The Company's amusement vending
equipment also competes with other vending machines, coin-operated amusement
devices, coin counting and redemption machines and seasonal and bulk merchandise
for sites within retail locations. There can be no assurance that the Company
will be able to maintain its current sites in the retail locations or that it
will be able to obtain sites in the future on attractive terms or at all. There
also are few barriers to entry in the Company's business, and it would be
possible for well-financed vending machine manufacturers or other vending
machine operators with existing relationships with Retail Accounts targeted by
the Company to compete readily with the Company in certain markets.

    Dependence on Suppliers and Foreign Sourcing. Substantially all of the plush
toys and other products dispensed from the Shoppes are produced by foreign
manufacturers. A majority are purchased directly by the Company from
manufacturers in China. The Company purchases its other products indirectly from
vendors who obtain a significant percentage of such products from foreign
manufacturers. As a result, the Company is subject to changes in governmental
policies, the imposition of tariffs, import and export controls, transportation
delays and interruptions, political and economic disruptions and labor strikes
that could disrupt the supply of products from such manufacturers. The Company
also could be affected by labor strikes in the sea shipping, trucking and
railroad industries, all of which the Company utilizes to varying degrees.
Although the Company believes that alternative means of transportation would be
available for its products in the event of a labor strike affecting a particular
mode of transportation, such a disruption could increase the Company's
transportation costs and thereby reduce its profit margins in a particular
period. The Company does not have a long-term supply agreement with any of its
crane suppliers. While the Company believes that it will continue to be able to
purchase skill-crane machines from existing or alternative suppliers, no
assurance can be given that skill-cranes will be available on a cost-efficient
basis or that shortages or other disruptions in the Company's sources of supply
for skill-crane machines and components would not have a material and adverse
effect on the Company's business, financial condition and results of operations.

    Seasonality and Variability of Results. The financial performance of
amusement vending equipment is substantially dependent on the level of retail
traffic at a particular location. Accordingly, the business, financial condition
and results of operations of the Company can be materially and adversely
affected by factors that reduce retail traffic at such locations. These include
numerous factors beyond the Company's control such as weather, labor strikes and
other disruptions of the business at Retail Accounts and local and national
business and economic conditions. The Company's results are also linked to
seasonal increases in foot-traffic at Retail Accounts, and disruptions of past
trends, including traditional increases during holiday seasons, could decrease
the Company's revenue. As a result, the Company's operating results may vary
significantly over time. Accordingly, period-to-period comparisons of its
results of operations are not necessarily meaningful and the Company's past
results should not be relied upon as an indication of future performance.

    Changing Consumer Trends; Technological Innovations. Consumer preferences
are constantly changing and difficult to predict, and consumer interest in the
Company's Shoppes or the products dispensed could decline suddenly or other
prize-dispensing equipment or amusement devices could replace the Shoppes in
consumer preference. The Company's success will depend in part on its ability to
offer new and appealing products and on the continuing appeal of its Shoppes'
skill-crane format in both existing markets and in new markets into which the
Company may expand. There can be no assurance that the use of skill-crane
machines and the Company's operating results will not be adversely affected by
changing consumer trends. The Company's business also is susceptible to advances
in the design and manufacture of skill-crane machines and other vending
technology. The Company's failure to anticipate or respond adequately to such
technological changes could adversely affect the Company's business and results
of operations.

    Dependence on Key Employees. The Company's success to date has been
dependent in part upon the efforts and abilities of Randall J. Fagundo (its
Chief Executive Officer and President), W. John Cash (its Senior Vice President,
Chief Financial Officer, Treasurer and Secretary), Robert A. Kaslon (its Senior
Vice President of Merchandising) and certain other key personnel. The Company's
continued success will depend upon its ability to retain a number of its current
key employees and to attract, train and retain new key management and
operational personnel. There can be no assurance that the Company will be able
to retain its existing key employees or attract and retain qualified employees
in the future. The Company does not maintain any "key man" insurance. In
addition, executives or other employees with knowledge of the Company's
operations and policies may leave the Company and establish competitive
businesses. There can be no assurance that the Company would be able to
effectively enforce non-compete provisions against these individuals.



                                       18
<PAGE>   19


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The financial statements and related notes thereto required by this item are
listed and set forth herein beginning on page 22.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Directors of Registrant. Information as to the names, ages, positions and
offices with the Company, terms of office, periods of service, business
experience during the past five years and other directorships held by each
director of the Company is set forth under the caption ELECTION OF DIRECTORS
appearing in the Company's definitive proxy statement for the 2001 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission within 120 days after the close of the 2000 year.

     Executive Officers of the Registrant. At the meeting of the Board of
Directors of the Registrant, which immediately follows the annual meeting of
stockholders, the Board of Directors elects officers of the Registrant. Such
officers hold office until death, resignation, removal from office or until
their successors are chosen and qualified. The names and ages of all executive
officers of the Registrant are set forth under the caption EXECUTIVE OFFICERS
appearing in the Company's definitive proxy statement for the 2001 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission within 120 days after the close of the 2000 year.

     Compliance with Section 16(a) of the Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934 requires the Company's officers and directors
and persons who own more than ten percent of the Company's outstanding common
stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission. Officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Disclosure regarding compliance with
Section 16(a) of the Exchange Act will appear in the Company's definitive proxy
statement for the 2001 Annual Meeting of Stockholders which will be filed with
the Securities and Exchange Commission within 120 days after the close of the
2000 year.

ITEM 11. EXECUTIVE COMPENSATION

     Information concerning remuneration received by the Company's directors and
executive officers and stock options is set forth under the caption EXECUTIVE
COMPENSATION appearing in the Company's definitive proxy statement for the 2001
Annual Meeting of Stockholders which will be filed with the Securities and
Exchange Commission within 120 days after the close of the 2000 year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information as to the security ownership of certain beneficial owners of
the Company and by each of its directors and officers and the amount of such
shares with respect to which certain of the directors and officers have the
right to acquire beneficial ownership, is set forth under the caption SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT appearing in the Company's
definitive proxy statement for the 2001 Annual Meeting of Stockholders which
will be filed with the Securities and Exchange Commission within 120 days after
the close of the 2000 year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information concerning transactions with management and others and certain
business relationships is set forth under the caption CERTAIN TRANSACTIONS
appearing in the Company's definitive proxy statement for the 2001 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission within 120 days after the close of the 2000 year.



                                       19
<PAGE>   20


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
(A)      EXHIBITS
         --------
<S>                <C>
         3.1+   -- Certificate of Incorporation of the Registrant.

         3.2+   -- Bylaws of the Registrant.

         3.3Y   -- Certificate of Designation of Series A Junior Participating
                   Preferred Stock of the Registrant.

         4.1+   -- Reference is made to Exhibits 3.1 and 3.2.

         4.2+   -- Specimen Stock Certificate.

         4.3o   -- Certificate of Trust of American Coin Merchandising Trust
                   I.

         4.4o   -- Trust Agreement of American Coin Merchandising Trust I.

         4.5o   -- Amended and Restated Trust Agreement of American Coin
                   Merchandising Trust I.

         4.6o   -- Form of Junior Subordinated Indenture between the
                   Registrant and Wilmington Trust Company, as Trustee.

         4.7o   -- Form of Guarantee Agreement with respect to Trust Preferred
                   Securities of American Coin Merchandising Trust I.

         4.8o   -- Form of Agreement as to Expenses and Liabilities between
                   the Registrant and American Coin Merchandising Trust I.

         4.9o   -- Form of Certificate Evidencing Trust Preferred Securities.

         4.10o  -- Form of Certificate Evidencing Trust Common Securities.

         4.11o  -- Form of Ascending Rate Junior Subordinated Deferrable
                   Interest Debenture.

         4.12Y  -- Rights Agreement dated as of April 29, 1999 between the
                   Registrant and Norwest Bank Minnesota, N.A.

         4.13Y  -- Form of Rights Certificate.

         10.1+  -- Form of Indemnity Agreement to be entered into between the
                   Registrant and its directors and executive officers.

         10.2+X -- Amended and Restated Stock Option Plan of the Registrant
                   (the "Option Plan").

         10.3+  -- Form of Incentive Stock Option under the Option Plan.

         10.4+  -- Form of Nonstatutory Stock Option under the Option Plan.

         10.5+X -- 1995 Non-Employee Director Stock Option Plan (the "Director
                   Plan").

         10.6+  -- Form of Nonstatutory Stock Option under the Director Plan.

         10.35# -- Commercial Lease Amendment Agreement, between the
                   Registrant and Technical Building Company, dated as of
                   November 20, 1997.

         10.47V -- Premier Amusement Vendor Agreement, dated January 28, 2000,
                   between the Registrant and Best Vendor Co.

         10.48V -- Addendum to Premier Amusement Vendor Agreement, dated
                   January 28, 2000, between the Registrant and Best Vendor Co.

         10.49V -- Addendum #2 to Premier Amusement Vendor Agreement, dated
                   February 14, 2000, between the Registrant and Best Vendor Co.

         10.50@ -- Amusement Vending Agreement, effective as of July 1, 2000,
                   between the Registrant and Denny's Inc.

         10.51@ -- Other Income Supplier Agreement--Coin Operated Equipment,
                   dated August 1, 2000 between the Registrant and Wal-Mart
                   Stores, Inc.

         10.52n -- Credit agreement, dated December 29, 2000, between and
                   among the Registrant and GE Capital and Comerica.

         10.53X -- Consulting Agreement dated December 1, 2000, between the
                   Registrant and John A. Sullivan.

         10.54X -- Executive Employment Agreement dated December 1, 2000,
                   between the Registrant and Randall J. Fagundo.

         10.55X -- Executive Employment Agreement dated December 1, 2000,
                   between the Registrant and W. John Cash.

         23.1   -- Consent of KPMG LLP.
</TABLE>



                                       20
<PAGE>   21


+    Incorporated by reference to the Company's Registration Statement on
     Form SB-2, File No. 33-95446-D.

o    Incorporated by reference to the Company's Registration Statement on
     Form-3, File No. 333-60267.

#    Incorporated by reference to the Company's Annual Report on Form 10-K
     for the year ended December 31, 1997.

Y    Incorporated by reference to the Company's Current Report on Form 8-K,
     dated April 29, 1999.

V    Incorporated by reference to the Company's Quarterly Report on Form
     10-Q for the period ended March 31, 2000.

@    Incorporated by reference to the Company's Quarterly Report on Form
     10-Q for the period ended September 30, 2000.

n    Incorporated by reference to the Company's Current Report on Form 8-K,
     dated January 26, 2001.

X    Indicates management contract or compensatory plan, contract or
     arrangement.

         (b)      REPORTS ON FORM 8-K.

                  None.





                                       21
<PAGE>   22


                        AMERICAN COIN MERCHANDISING, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                                                                 PAGE
<S>                                                                                                              <C>
Independent Auditors' Report..................................................................................    F-1

Consolidated Financial Statements:

     Balance Sheets...........................................................................................    F-2

     Statements of Operations.................................................................................    F-3

     Statements of Stockholders' Equity.......................................................................    F-4

     Statements of Cash Flows.................................................................................    F-5

     Notes to Consolidated Financial Statements...............................................................    F-6
</TABLE>

     All schedules are omitted because of the absence of conditions under which
they are required or because the required information is provided in the
consolidated financial statements or notes thereto.




                                       22
<PAGE>   23


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
American Coin Merchandising, Inc.:

    We have audited the accompanying consolidated balance sheets of American
Coin Merchandising, Inc. and subsidiaries (the "Company") as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Coin Merchandising, Inc. and subsidiaries as of December 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.




KPMG LLP




Boulder, Colorado
February 19, 2001



                                       F-1
<PAGE>   24


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                                                     DECEMBER 31,
                                                                                                   2000        1999
                                                                                                ---------    ---------
<S>                                                                                             <C>          <C>
                                                         ASSETS
Current assets:
   Cash and cash equivalents ............................................................       $   2,986    $     579
   Trade accounts and other receivables, net ............................................             608          691
   Income tax receivable ................................................................           2,098           --
   Inventories, net .....................................................................          10,126       14,806
   Prepaid expenses and other assets ....................................................           1,800        2,260
                                                                                                ---------    ---------
       Total current assets .............................................................          17,618       18,336
                                                                                                ---------    ---------

Property and equipment, at cost:
   Vending machines .....................................................................          67,906       53,079
   Vehicles .............................................................................           6,234        6,866
   Office equipment, furniture and fixtures .............................................           4,557        4,003
                                                                                                ---------    ---------
                                                                                                   78,697       63,948
   Less accumulated depreciation ........................................................         (29,178)     (20,305)
                                                                                                ---------    ---------
       Property and equipment, net ......................................................          49,519       43,643

Placement fees, net of accumulated amortization of $2,339 in 2000 and $1,090 in 1999 ....           2,114          930
Costs in excess of assets acquired and other intangible assets, net of accumulated
   amortization of $6,216 in 2000 and $3,978 in 1999 ....................................          36,009       38,247
Other assets, net of accumulated amortization of $871 in 2000 and $460 in 1999 ..........           2,647        1,350
Deferred tax assets .....................................................................              --        1,628
                                                                                                ---------    ---------

       Total assets .....................................................................       $ 107,907    $ 104,134
                                                                                                =========    =========

                                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt ....................................................       $   7,233    $   2,463
   Accounts payable .....................................................................           6,096        4,167
   Accrued commissions ..................................................................           2,122        1,595
   Other accrued expenses ...............................................................           1,476          744
                                                                                                ---------    ---------
       Total current liabilities ........................................................          16,927        8,969
                                                                                                ---------    ---------

Long-term debt, net of current portion ..................................................          44,224       50,230
Other liabilities .......................................................................             449          239
Deferred tax liabilities ................................................................             625           --
                                                                                                ---------    ---------
       Total liabilities ................................................................          62,225       59,438
                                                                                                ---------    ---------

Company obligated mandatorily redeemable preferred securities of subsidiary trust
   holding solely junior subordinated debentures ........................................          15,593       15,542

Stockholders' equity:
   Preferred stock, $.10 par value (Authorized 500 shares; none issued) .................              --           --
   Common stock, $.01 par value (Authorized 20,000 shares; issued and
     outstanding 6,514 shares in 2000 and 6,480 in 1999) ................................              66           65
   Additional paid-in-capital ...........................................................          22,076       22,001
   Retained earnings ....................................................................           7,947        7,088
                                                                                                ---------    ---------
       Total stockholders' equity .......................................................          30,089       29,154
                                                                                                ---------    ---------
Commitments
       Total liabilities and stockholders' equity .......................................       $ 107,907    $ 104,134
                                                                                                =========    =========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      F-2
<PAGE>   25


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED DECEMBER 31,
                                                                                2000         1999        1998
                                                                             ---------    ---------    ---------
<S>                                                                          <C>          <C>          <C>
Revenue:
   Vending ...........................................................       $ 127,076    $ 115,835    $  92,854
   Franchise and other ...............................................           2,681        4,630        4,857
                                                                             ---------    ---------    ---------
       Total revenue .................................................         129,757      120,465       97,711
                                                                             ---------    ---------    ---------

Cost of revenue:
   Vending, excluding related depreciation and amortization ..........          83,282       77,100       60,066
   Depreciation and amortization .....................................          10,033        7,897        6,004
                                                                             ---------    ---------    ---------
       Total cost of vending .........................................          93,315       84,997       66,070
   Franchise and other ...............................................           1,936        3,104        3,108
                                                                             ---------    ---------    ---------
       Total cost of revenue .........................................          95,251       88,101       69,178
                                                                             ---------    ---------    ---------

       Gross profit ..................................................          34,506       32,364       28,533

General and administrative expenses ..................................          21,924       22,141       17,526
Depreciation and amortization ........................................           3,156        3,527        1,887
Write off of costs in excess of assets acquired, severance and
   other costs .......................................................              --        7,536           --
                                                                             ---------    ---------    ---------
       Operating earnings (loss) .....................................           9,426         (840)       9,120

Interest expense, net ................................................           7,775        6,866        3,368
                                                                             ---------    ---------    ---------
       Earnings (loss) before income taxes and extraordinary loss ....           1,651       (7,706)       5,752

Income tax (expense) benefit .........................................            (627)       3,200       (1,854)
                                                                             ---------    ---------    ---------
       Earnings (loss) before extraordinary loss .....................           1,024       (4,506)       3,898

Extraordinary loss on debt refinancing, net of income tax
   benefit of $101 ...................................................             165           --           --
                                                                             ---------    ---------    ---------
       Net earnings (loss) ...........................................       $     859    $  (4,506)   $   3,898
                                                                             =========    =========    =========

       Basic earnings (loss) per share of common stock ...............       $    0.13    $   (0.70)   $    0.60
       Diluted earnings (loss) per share of common stock .............            0.13        (0.70)        0.58
       Basic weighted average common shares ..........................           6,493        6,475        6,467
       Diluted weighted average common shares ........................           6,493        6,475        6,713
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      F-3
<PAGE>   26


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                  UNEARNED
                                                                                    STOCK                      TOTAL
                                                                   ADDITIONAL      OPTION                      STOCK-
                                                         COMMON     PAID-IN        COMPEN-      RETAINED      HOLDERS'
                                                         STOCK      CAPITAL        SATION       EARNINGS       EQUITY
                                                       --------    ----------     --------      --------      --------
<S>                                                    <C>          <C>           <C>           <C>           <C>
DECEMBER 31, 1997 ................................     $     65     $ 22,352      $    (21)     $  7,696      $ 30,092

   Acquisition of 70,000 warrants to
     purchase common stock .......................           --         (492)           --            --          (492)
   Amortization of deferred compensation .........           --           --            19            --            19
   Exercise of employee stock options ............           --          131            --            --           131
   Termination of employee stock options .........           --           (2)            2            --            --
   Net earnings ..................................           --           --            --         3,898         3,898
                                                       --------     --------      --------      --------      --------
DECEMBER 31, 1998 ................................           65       21,989            --        11,594        33,648

   Issuance of 5,125 shares of common stock
     in employee stock purchase plan .............           --           12            --            --            12
   Net loss ......................................           --           --            --        (4,506)       (4,506)
                                                       --------     --------      --------      --------      --------
DECEMBER 31, 1999 ................................           65       22,001            --         7,088        29,154

   Issuance of 33,725 shares of common stock
     in employee stock purchase plan .............            1           75            --            --            76
   Net earnings ..................................           --           --            --           859           859
                                                       --------     --------      --------      --------      --------
DECEMBER 31, 2000 ................................     $     66     $ 22,076      $     --      $  7,947      $ 30,089
                                                       ========     ========      ========      ========      ========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      F-4
<PAGE>   27


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                     2000          1999          1998
                                                                                   --------      --------      --------
<S>                                                                                <C>           <C>           <C>
Operating activities:
   Net earnings (loss) .......................................................     $    859      $ (4,506)     $  3,898
   Adjustments to reconcile net earnings (loss) to net cash provided
     by operating activities:
       Depreciation and amortization .........................................       13,699        11,950         8,092
       Write off of costs in excess of assets acquired, severance and
         other costs .........................................................           --         7,536            --
       Compensation expense related to stock options .........................           --            --            19
       Deferred income tax expense (benefit) .................................        2,725        (3,200)          925
       Changes in operating assets and liabilities, net of acquisitions:
           Trade accounts and other receivables ..............................       (2,015)        1,123          (878)
           Inventories .......................................................        4,680        (2,227)       (4,046)
           Prepaid expenses and other assets .................................           84        (1,223)       (2,295)
           Income taxes payable ..............................................           --            --          (317)
           Accounts payable, accrued expenses and other liabilities ..........        3,398        (2,086)        2,995
                                                                                   --------      --------      --------
         Net cash provided by operating activities ...........................       23,430         7,367         8,393
                                                                                   --------      --------      --------

Investing activities:
   Acquisitions of property and equipment, net ...............................      (15,618)       (8,267)      (23,475)
   Acquisitions of franchisees and others ....................................           --          (180)      (43,036)
   Placement fees ............................................................       (2,441)         (828)         (746)
                                                                                   --------      --------      --------
         Net cash used in investing activities ...............................      (18,059)       (9,275)      (67,257)
                                                                                   --------      --------      --------
Financing activities:
   Issuance of company obligated mandatorily redeemable
     preferred securities, net of discount and issuance costs ................           --            --        15,479
   Net borrowings (payments) on credit facility, net of issuance costs .......         (576)        2,386        46,610
   Principal payments on long-term debt ......................................       (2,464)       (2,158)       (1,872)
   Principal payments on notes payable to Control Group ......................           --            --          (674)
   Acquisition of warrants ...................................................           --            --          (492)
   Issuance of common stock, net of offering costs ...........................           76            12           131
                                                                                   --------      --------      --------
         Net cash (used) provided by financing activities ....................       (2,964)          240        59,182
                                                                                   --------      --------      --------
         Net increase (decrease) in cash and cash equivalents ................        2,407        (1,668)          318

Cash and cash equivalents at beginning of year ...............................          579         2,247         1,929
                                                                                   --------      --------      --------
Cash and cash equivalents at end of year .....................................     $  2,986      $    579      $  2,247
                                                                                   ========      ========      ========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      F-5
<PAGE>   28


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2000, 1999 AND 1998

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

     American Coin Merchandising, Inc., d/b/a Sugarloaf Creations, Inc. and
American Coin Merchandising Trust I (the "Company") and its franchisees own and
operate coin-operated amusement vending machines. Over 14,000 of these machines
dispense plush toys, watches, jewelry, novelties, and other items. The Company's
amusement vending machines are placed in supermarkets, mass merchandisers,
bowling centers, truck stops, bingo halls, bars, restaurants, warehouse clubs
and similar locations. At December 31, 2000, the Company had 34 field offices
with operations in 46 states. The Company also sells products to franchisees. At
December 31, 2000, there were 10 franchisees operating in 14 territories.

2. ACQUISITIONS

     During 1999, the Company acquired certain assets and the business
operations of one of its franchisees for approximately $180,000 in cash. The
Company has recorded approximately $159,000 of costs in excess of assets
acquired as a result of this acquisition that was accounted for using the
purchase method of accounting.

     During the third quarter of 1999, the Company renegotiated a major contract
that was originally assumed with the acquisition of Plush 4 Play. Company-owned
equipment and personnel replaced the equipment and group operators previously
utilized by Plush 4 Play to service these account locations; therefore,
substantially all of the assets and operations obtained in the Plush 4 Play
acquisition no longer had value to the Company. Accordingly, the remaining $6.3
million of net costs in excess of assets acquired and other costs associated
with the Plush 4 Play acquisition were written off.

     On June 12, 1998, the Company acquired certain assets and the business
operations of its franchisees Suncoast Toys, Inc., NW Toys Co. and Oregon Coin
Company ("Suncoast") for approximately $30,381,000. Of this amount, $29,581,000
was paid in cash with the balance to be paid over a three-year period in
accordance with the terms of the promissory note issued in connection with the
acquisition. The Company has recorded approximately $26,870,000 of costs in
excess of assets acquired as a result of the Suncoast acquisition that was
accounted for using the purchase method of accounting.

     Also during 1998, the Company acquired certain assets and the business
operations of two franchisees, the operating assets of a video game, skill-crane
and redemption company, a bulk vending company, certain assets of a kiddie ride
company and certain assets of a skill-crane vending management and wholesale
distributor of plush products, collectively, for approximately $20,645,000. Of
this amount, $13,455,000 was paid in cash with the balance to be paid over
three-year periods in accordance with the terms of promissory notes issued in
connection with the acquisitions. The Company has recorded approximately
$16,211,000 of costs in excess of assets acquired as a result of these
acquisitions that were accounted for using the purchase method of accounting.
The Company had recognized $2,000,000 of additional consideration in 1998 for a
contingent earn-out as management believed that attaining the earn-out was
probable. Approximately $600,000 was paid to the former owners in 1999 under the
earn-out agreement. The remaining $1,400,000 was removed from costs in excess of
assets acquired and from accrued liabilities in 1999 when the final amount of
the earn-out was determined.

     All of the acquisitions were accounted for by the purchase method. Results
of operations for all of these acquisitions are included in the consolidated
financial statements from the respective acquisition dates forward.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     VENDING

     Vending revenue represents cash receipts from customers using amusement
vending machines and is recognized when collected. The cost of vending is
comprised primarily of the cost of products vended through the machines, the
servicing of machines and commissions paid to retail locations.



                                      F-6
<PAGE>   29


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     FRANCHISE ROYALTIES

     Typically, franchisees are required to pay continuing royalties ranging
from 2% to 5% of gross machine revenue.

     INCOME TAXES

     The Company accounts for income taxes under the asset and liability method
of accounting for income taxes. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and amounts used for income tax
purposes. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be in effect for the year in which those temporary differences
are expected to be recovered or settled. The effects on deferred tax assets and
liabilities of a change in tax rates are recognized in income in the period that
includes the enactment date.

     ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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 revenue and expenses during the reporting
period. Actual results could differ significantly from those estimates.

     CASH EQUIVALENTS

     The Company considers as cash equivalents all highly liquid investments
with an original maturity of three months or less.

     INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method. Inventories consist of purchased items
ready for resale or use in vending operations.

     PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation is calculated on
the straight-line method over the estimated useful lives of the assets that
range from 3 to 10 years.

     COSTS IN EXCESS OF ASSETS ACQUIRED

     Costs in excess of assets acquired represent the purchase amount paid in
excess of the fair value of the tangible net assets acquired and is amortized
using the straight-line method over 20 years.

     IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

     The Company reviews its long-lived assets and intangibles for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of the asset to the future net
cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceed the fair value of the assets.

     PLACEMENT FEES

     Placement fees are stated at cost and amortized on a straight-line basis
over the term of the related contract.

     EARNINGS PER SHARE

     The Company discloses both basic and diluted earnings per share. Basic and
diluted earnings per share are computed by dividing earnings (loss) available to
common stockholders by the weighted average number of common shares outstanding
during the period and by all dilutive potential common shares outstanding during
the year, respectively.

     RECLASSIFICATIONS

     Certain amounts for prior periods have been reclassified to conform to the
December 31, 2000 presentation.



                                      F-7
<PAGE>   30


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

     A schedule of supplemental cash flow information follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                      2000        1999        1998
                                                                           -------     -------      -------
<S>                                                                        <C>         <C>          <C>
Cash paid during the year:
  Interest ...........................................................     $ 7,172     $ 6,914      $ 2,588
  Income taxes .......................................................          69          90        1,803
Significant noncash investing and financing activities:
  Notes payable issued for acquisitions of franchisees and others ....          --          --        5,490
  Earn-out and hold backs related to acquisition .....................          --      (1,442)       2,500
</TABLE>

3. CREDIT FACILITY

    In December 2000 the Company refinanced its $50 million reducing revolving
loan agreement and replaced it with a $55 million senior secured credit
facility. As a result of the refinancing, the Company recorded an after-tax
extraordinary loss of $165,000, or $0.03 per diluted share, related to the
write-off of loan origination fees related to the previous credit facility.

     The Company has a $55.0 million senior secured credit facility comprised of
a $10.0 million revolving credit facility and a $45.0 million term loan. Under
the revolving credit facility, the Company may borrow up to $10 million through
December 2003, and at December 31, 2000, there was approximately $5.2 million
outstanding and $4.8 million available under the revolving credit facility.
Under the $45.0 million term loan facility, the Company is required to make
quarterly principal installments that increase in amount over the four and one
half year term of the facility. The revolving credit facility and term loan bear
interest at a floating rate, at the Company's option, equal to either LIBOR plus
the applicable margin or a base rate that is equal to the higher of the prime
rate or the federal funds rate plus one-half percent plus the applicable margin.
The effective rate of interest on both facilities at December 31, 2000 was
11.5%. The credit facility provides that certain financial ratios be met and
places restrictions on, among other things, the incurrence of additional debt
financing and the payment of dividends on common stock. The Company was in
compliance with such financial ratios and restrictions at December 31, 2000.

4. LONG-TERM DEBT

     Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,
                                                                                         2000          1999
                                                                                       --------      --------
<S>                                                                                    <C>           <C>
Senior secured credit facilities (see note 4) ....................................     $ 50,224      $ 48,996
Notes payable to former franchisees and others, due in monthly and quarterly
  installments with interest ranging from 8% to 9%; due in 2001, secured by
  certain property and equipment .................................................        1,233         3,697
                                                                                       --------      --------
   Total long-term debt ..........................................................       51,457        52,693
Less current portion .............................................................       (7,233)       (2,463)
                                                                                       --------      --------
   Long-term debt, net of current portion ........................................     $ 44,224      $ 50,230
                                                                                       ========      ========
</TABLE>

     The carrying amount of long-term debt approximates its fair value.

     Maturities of long-term debt as of December 31, 2000 are as follows (in
thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S>                             <C>
2001 ......................     $ 7,233
2002 ......................       8,000
2003 ......................      10,000
2004 ......................      12,400
2005 ......................      13,824
                                -------
                                $51,457
                                =======
</TABLE>



                                       F-8
<PAGE>   31


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. MANDATORILY REDEEMABLE PREFERRED SECURITITES

     In September 1998, American Coin Merchandising Trust I (the "Trust"), a
wholly-owned subsidiary trust created under the laws of the State of Delaware,
completed a public offering of $17 million of Ascending Rate (10.5% at December
31, 1998 increasing to 12.0% at September 16, 2005) Cumulative Trust Preferred
Securities (the "Trust Preferred Securities"). The Company recognizes periodic
interest using the interest method over the outstanding term of the debt. The
sole assets of the Trust are American Coin Merchandising, Inc. Ascending Rate
Junior Subordinated Debentures (the "Subordinated Debentures") due September 15,
2028. The obligations of the Trust related to the Trust Preferred Securities are
fully and unconditionally guaranteed by American Coin Merchandising, Inc.
Distributions on the Trust Preferred Securities are payable quarterly by the
Trust. The Trust Securities are subject to mandatory redemption upon the
repayment of the Subordinated Debentures at their stated maturity at $10 per
Trust Preferred Security.

     The Company may cause the Trust to defer the payment of distributions for
successive periods up to eight consecutive quarters. During such periods,
accrued distributions on the Trust Preferred Securities will compound quarterly
and the Company may not declare or pay distributions on its common stock or debt
securities that rank equal or junior to the Trust Preferred Securities.

     Issuance costs of approximately $1.5 million related to the Trust Preferred
Securities were deferred and are being amortized on the interest method over the
period until mandatory redemption at September 15, 2028.

7. INCOME TAXES

     Income tax expense (benefit) consists of the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,    2000         1999         1998
                         -------      -------      -------
<S>                      <C>          <C>          <C>
CURRENT
  Federal ..........     $(1,911)     $    --      $   785
  State ............        (187)          --          144
                         -------      -------      -------
                          (2,098)          --          929
                         -------      -------      -------
DEFERRED
  Federal ..........       2,438       (2,812)         779
  State ............         287         (388)         146
                         -------      -------      -------
                           2,725       (3,200)         925
                         -------      -------      -------
                         $   627      $(3,200)     $ 1,854
                         =======      =======      =======
</TABLE>

     A reconciliation of the expected tax expense (benefit), assuming income
(loss) before taxes is taxed at the statutory federal tax rate of 34%, and the
Company's actual provision for income taxes is as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                                 2000         1999         1998
                                                                       -------      -------      -------
<S>                                                                    <C>          <C>          <C>
Expected tax expense (benefit) at the federal statutory rate .....     $   562      $(2,620)     $ 1,956
State income taxes, net of federal taxes .........................          65         (305)         228
Change in valuation allowance ....................................          --         (270)        (270)
Other, net .......................................................          --           (5)         (60)
                                                                       -------      -------      -------
                                                                       $   627      $(3,200)     $ 1,854
                                                                       =======      =======      =======
</TABLE>




                                       F-9
<PAGE>   32


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     The sources and tax effects of temporary differences between financial
statement carrying amounts and the tax bases of assets and liabilities are as
follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,                                                                           2000         1999
                                                                                     -------      -------
<S>                                                                                  <C>          <C>
DEFERRED TAX ASSETS:
     Costs in excess of assets acquired-basis and amortization differences .....     $   306      $   331
     Net operating loss carry forward ..........................................       3,361        4,755
     Allowance for doubtful receivables ........................................          21           91
     Inventory reserves ........................................................           4          135
     Accrued expenses ..........................................................         149           --
                                                                                     -------      -------
                                                                                       3,841        5,312
DEFERRED TAX LIABILITIES--
     property and equipment-basis and depreciation differences .................      (4,292)      (3,458)
                                                                                     -------      -------
                                                                                     $  (451)     $ 1,854
                                                                                     =======      =======
</TABLE>

     Current deferred tax assets are included in prepaid expenses and other
assets.

8. RETIREMENT PLAN

     The Company maintains a 401(k) profit sharing plan, which covers
substantially all employees. Employees are permitted to contribute up to 15% of
their eligible compensation. The Company makes contributions to the plan
matching 50% of the employees' contribution up to 10% of compensation. The
Company's matching contributions totaled $264,000, $319,000 and $183,000 in
2000, 1999 and 1998, respectively.

     The Company has established a qualified Employee Stock Purchase Plan, the
terms of which allow for qualified employees (as defined) to participate in the
purchase of designated shares of the Company's common stock at a price equal to
the lower of 85% of the closing price at July 1 or the end of each quarterly
stock purchase period. During 2000 and 1999 shares totaling 33,725 and 5,125,
respectively, were purchased under the plan at average prices of $2.23 and $2.34
per share, respectively.

9. COMMITMENTS

     The Company has noncancelable operating leases, primarily for office and
warehouse facilities, vehicles and equipment. These leases expire at various
times over the next four years. Rent expense under these leases totaled
$2,225,000, $2,063,000 and $1,087,000 for the years ended December 31, 2000,
1999 and 1998, respectively.

     Future minimum commitments under operating lease arrangements as of
December 31, 2000 are as follows (in thousands):

<TABLE>
<S>                                <C>
          2001 ...............     $2,130
          2002 ...............      1,504
          2003 ...............        630
          2004 ...............         17
                                   ------
            Total ............     $4,281
                                   ======
</TABLE>

10. STOCK OPTIONS

     The Company has two fixed option plans. Under the terms of the amended and
restated stock option plan (the "Option Plan"), the Company may grant to
employees, consultants and advisors options to purchase up to 1,400,000 shares
of common stock. Under the Option Plan, the Company may grant both incentive
stock options and non-statutory stock options, and the maximum term is ten
years. Non-statutory options may be granted at no less than 85% of the fair
value of the common stock at the date of grant. Stock options granted under the
Option Plan vest over two to five year periods.



                                      F-10
<PAGE>   33


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

     Under terms of the amended 1995 Non-Employee Directors' Stock Option Plan
(the "Directors Plan"), the Company may grant to non-employee directors options
to purchase up to 200,000 shares of common stock. Under the Directors Plan,
options granted vest immediately and have a maximum term of ten years.

     The Company applies APB Opinion No. 25 and related interpretations in
accounting for its plans. Accordingly, no compensation cost has been recognized
for options granted at fair value under the plans. The compensation cost that
has been charged against earnings for options granted at a price less than fair
value was $19,000 in 1998. Had compensation cost for the Company's stock-based
compensation plans been determined consistent with SFAS No. 123, the Company's
net earnings (loss) and diluted earnings (loss) per share would have been
reduced or increased to the pro forma amounts indicated below (in thousands,
except per share data):

<TABLE>
<CAPTION>
                                                      2000          1999          1998
                                                   ---------     ---------      ---------
<S>                                                <C>           <C>            <C>
Net earnings (loss)                As reported     $     859     $  (4,506)     $   3,898
                                   Pro forma             501        (5,336)         3,642

Diluted earnings (loss) per share  As reported     $    0.13     $   (0.70)     $    0.58
                                   Pro forma            0.08         (0.82)          0.54
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 2000, 1999 and 1998: no dividend yield; expected
volatility of 86 percent for 2000, 73 percent for 1999 and 66 percent for 1998;
risk-free interest rates of 5.7 percent in 2000, 6.8 percent in 1999 and 5.0 in
1998; and expected lives of six years.

     A summary of the status of the Company's two fixed stock option plans as of
December 31, 2000, 1999 and 1998, and changes during the years ended on those
dates is presented below:

<TABLE>
<CAPTION>
                                                    2000                     1999                   1998
                                           ------------------------ -----------------------------------------------
                                                     WEIGHTED-                    WEIGHTED-                    WEIGHTED-
                                                     AVERAGE                      AVERAGE                      AVERAGE
                                                     EXERCISE                     EXERCISE                     EXERCISE
      FIXED OPTIONS                    SHARES         PRICE          SHARES         PRICE          SHARES       PRICE
-------------------------             ---------      ---------       -------      ---------       -------      ---------
<S>                                     <C>          <C>             <C>          <C>             <C>          <C>
Outstanding at beginning
   of year .....................        672,017      $   7.10        461,417      $   8.30        316,000      $   7.75
   Granted .....................        399,675          2.65        308,500          5.76        194,950          9.00
   Exercised ...................             --                           --                      (22,165)         5.81
   Forfeited ...................        (62,900)         8.72        (97,900)         8.52        (27,368)         8.88
                                      ---------                      -------                      -------
Outstanding at end of year .....      1,008,792          5.19        672,017          7.10        461,417          8.30
                                      =========                      =======                      =======
Options exercisable at
   year-end ....................        436,187                      280,397                      108,227
</TABLE>

     The following table summarizes information about fixed stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                             OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                         ---------------------------------------------------    -------------------------------
     RANGE                              WEIGHTED AVERAGE
      OF                    NUMBER          REMAINING       WEIGHTED AVERAGE      NUMBER       WEIGHTED AVERAGE
EXERCISE PRICES          OUTSTANDING    CONTRACTUAL LIFE     EXERCISE PRICE     EXERCISABLE     EXERCISE PRICE
---------------          -----------    ----------------    ----------------    -----------    ----------------
<S>                       <C>                  <C>            <C>                <C>               <C>
$2.00 to $3.50              399,675            9.2            $    2.65             99,500         $    2.74
 4.00 to 7.00               349,367            8.0                 5.53            201,407              5.55
7.50 to 10.00               259,750            7.0                 8.62            135,280              8.56
                          ---------                                              ---------
2.00 to 10.00             1,008,792            8.2                 5.19            436,187              5.84
                          =========                                              =========
</TABLE>



                                      F-11
<PAGE>   34


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11.  STOCKHOLDERS' EQUITY

     PREFERRED STOCK

     The Board of Directors has the authority to issue up to 500,000 shares of
$.10 par value preferred stock in one or more series and to fix the rights,
preferences, privileges and distributions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of such series, without any further vote or action by stockholders.
No shares of preferred stock have been issued.

     WARRANTS

     In March 1998, the Company repurchased for $492,000, including acquisition
costs, warrants exercisable for 70,000 shares of its common stock from an
underwriter. The Company initially issued warrants to purchase 125,000 shares of
its common stock with an exercise price of $8.40 per share as partial
compensation for acting as the Company's underwriter in its initial public
offering in October 1995. After this purchase, the underwriter retained warrants
exercisable for 55,000 shares of the Company's Common Stock; these warrants
expired on October 18, 1999.

12. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES

     CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS:

       SUPPLIERS

     Substantially all of the plush toys and other products dispensed from the
Shoppes are produced by foreign manufacturers. A majority are purchased directly
by the Company from manufacturers in the People's Republic of China ("China").
The Company purchases its other products indirectly from vendors who obtain a
significant percentage of such products from foreign manufacturers. As a result,
the Company is subject to changes in governmental policies, the imposition of
tariffs, import and export controls, transportation delays and interruptions,
political and economic disruptions and labor strikes, which could disrupt the
supply of products from such manufacturers.

       CUSTOMERS

     The Company had amusement vending machines placed with one retail customer
that accounted for 37%, 34% and 37% for the years ended December 31, 2000, 1999
and 1998, respectively, of the Company's revenue.

13.  EARNINGS (LOSS) PER SHARE

     Basic and diluted earnings (loss) per share for 2000, 1999 and 1998 were
computed as follows:

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                           2000            1999            1998
                                                                       -----------     -----------     -----------
<S>                                                                    <C>             <C>             <C>
Earnings (loss) before extraordinary loss .........................    $ 1,024,000     $(4,506,000)    $ 3,898,000
Net earnings (loss) ...............................................        859,000      (4,506,000)      3,898,000


Common shares outstanding at beginning of year ....................      6,480,194       6,475,069       6,452,904
     Effect of shares issued during the year ......................         12,318              14          14,088
                                                                       -----------     -----------     -----------
Basic weighted average common shares ..............................      6,492,512       6,475,083       6,466,992
Incremental shares from assumed conversions:
     Stock options ................................................             --              --         220,334
     Warrants .....................................................             --              --          25,869
                                                                       -----------     -----------     -----------
Diluted weighted average common shares ............................      6,492,512       6,475,083       6,713,195
                                                                       ===========     ===========     ===========
  Basic earnings (loss) per share before extraordinary loss .......    $      0.16     $     (0.70)    $      0.60
  Diluted earnings (loss) per share before extraordinary loss .....           0.16           (0.70)           0.58
  Basic earnings (loss) per share .................................           0.13           (0.70)           0.60
  Diluted earnings (loss) per share ...............................           0.13           (0.70)           0.58
</TABLE>



                                      F-12
<PAGE>   35


               AMERICAN COIN MERCHANDISING, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14.  UNAUDITED QUARTERLY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                              DEC. 31  SEPT. 30    JUNE 30  MAR. 31    DEC. 31   SEPT. 30   JUNE 30    MAR. 31
                                               2000      2000       2000      2000       1999      1999       1999      1999
                                             --------  --------   --------  --------   --------  --------   --------  --------
                                                                   (in thousands, except per share data)
<S>                                          <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Total revenue.............................   $ 34,448  $ 32,933   $ 30,878  $ 31,499   $ 31,190  $ 29,887   $ 30,242  $ 29,147
Total cost of revenue.....................     25,494    24,242     22,704    22,812     22,356    22,317     22,302    21,124
                                               ------    ------     ------    ------     ------    ------     ------    ------
    Gross profit..........................      8,954     8,691      8,174     8,687      8,834     7,570      7,940     8,023
General and administrative expenses             6,394     6,211      6,094     6,381      6,407     6,740      6,431     6,090
Write off of costs in excess of
 assets acquired, severance and
 other costs..............................         --        --         --        --         --     7,536         --        --
                                             --------  --------   --------  --------   --------  --------   --------  --------
    Operating earnings (loss).............      2,560     2,480      2,080     2,306      2,427    (6,706)     1,509     1,933
Interest expense, net.....................      1,928     1,958      1,970     1,919      1,785     1,724      1,686     1,674
                                             --------  --------   --------  --------   --------  --------   --------  --------
    Earnings (loss) before income
        taxes and extraordinary loss......        632       522        110       387        642    (8,430)      (177)      259
Income tax (expense) benefit..............       (239)     (199)       (42)     (147)      (242)    3,469         58       (86)
                                             --------  --------   --------  --------   --------  --------   --------  --------
    Earnings (loss) before
        extraordinary loss................        393       323         68       240        400    (4,961)      (119)      173
Extraordinary loss on debt
 refinancing, net of income tax
 benefit..................................        165        --         --        --         --        --         --        --
                                             --------  --------   --------  --------   --------  --------   --------  --------
    Net earnings (loss)...................   $    228  $    323   $     68  $    240   $    400  $ (4,961)  $   (119) $    173
                                             ========  ========   ========  ========   ========  ========   ========= ========
 Basic and diluted earnings (loss)
  per share before extraordinary loss.....   $   0.06  $   0.05   $   0.01  $   0.04   $   0.06  $  (0.77)  $  (0.02) $   0.03
 Basic and diluted earnings (loss) per
  share...................................       0.04      0.05       0.01      0.04       0.06     (0.77)     (0.02)     0.03
 Basic and diluted weighted average
  common shares...........................      6,505     6,497      6,488     6,480      6,475     6,475      6,475     6,475
</TABLE>




                                      F-13
<PAGE>   36


                                   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, thereto duly authorized.

                                          AMERICAN COIN MERCHANDISING, INC.

                                          By  /s/  Randall J. Fagundo
                                              -----------------------------
                                              Randall J. Fagundo

                                          President and Chief Executive Officer

                                POWER OF ATTORNEY

    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Randall J. Fagundo and W. John Cash, or any of
them, his or her attorney-in-fact, each with the power of substitution, for him
or her in any and all capacities, to sign any amendments to this report, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.

    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.


<TABLE>
<CAPTION>
               SIGNATURE                                    TITLE                               DATE
               ---------                                    -----                               ----
<S>                                              <C>                                       <C>
/s/  JOHN A. SULLIVAN*                           Chairman of the Board                     March 21, 2001
--------------------------------------------
     John A. Sullivan

/s/  RANDALL J. FAGUNDO                          President and Chief Executive             March 21, 2001
--------------------------------------------
     Randall J. Fagundo                          Officer and Director

/s/   W. JOHN CASH*                              Senior Vice President, Chief Financial    March 21, 2001
--------------------------------------------     Officer, Treasurer and Secretary
                                                 (Principal Financial and Accounting
                                                 Officer)

/s/  J. GREGORY THEISEN*                         Director                                  March 21, 2001
--------------------------------------------
     J. Gregory Theisen

/s/  RICHARD D. JONES*                           Director                                  March 21, 2001
--------------------------------------------
     Richard D. Jones

/s/  RICHARD P. BERMINGHAM*                      Director                                  March 21, 2001
--------------------------------------------
     Richard P. Bermingham

/s/  BRUCE W. KRYSIAK*                           Director                                  March 21, 2001
--------------------------------------------
     Bruce W. Krysiak

*  /s/ RANDALL J. FAGUNDO                                                                  March 21, 2001
   -----------------------------------------
       Randall J. Fagundo
       Attorney-in-Fact
</TABLE>



<PAGE>   37


<TABLE>
<CAPTION>
EXHIBIT
NUMBER         DESCRIPTION
--------       -----------
<S>            <C>
  3.1+   --    Certificate of Incorporation of the Registrant.

  3.2+   --    Bylaws of the Registrant.

  3.3Y   --    Certificate of Designation of Series A Junior Participating
               Preferred Stock of the Registrant.

  4.1+   --    Reference is made to Exhibits 3.1 and 3.2.

  4.2+   --    Specimen Stock Certificate.

  4.3o   --    Certificate of Trust of American Coin Merchandising Trust I.

  4.4o   --    Trust Agreement of American Coin Merchandising Trust I.

  4.5o   --    Amended and Restated Trust Agreement of American Coin
               Merchandising Trust I.

  4.6o   --    Form of Junior Subordinated Indenture between the Registrant and
               Wilmington Trust Company, as Trustee.

  4.7o   --    Form of Guarantee Agreement with respect to Trust Preferred
               Securities of American Coin Merchandising Trust I.

  4.8o   --    Form of Agreement as to Expenses and Liabilities between the
               Registrant and American Coin Merchandising Trust I.

  4.9o   --    Form of Certificate Evidencing Trust Preferred Securities.

  4.10o  --    Form of Certificate Evidencing Trust Common Securities.

  4.11o  --    Form of Ascending Rate Junior Subordinated Deferrable Interest
               Debenture.

  4.12Y  --    Rights Agreement dated as of April 29, 1999 between the
               Registrant and Norwest Bank Minnesota, N.A.

  4.13Y  --    Form of Rights Certificate.

  10.1+  --    Form of Indemnity Agreement to be entered into between the
               Registrant and its directors and executive officers.

  10.2+X --    Amended and Restated Stock Option Plan of the Registrant (the
               "Option Plan").

  10.3+  --    Form of Incentive Stock Option under the Option Plan.

  10.4+  --    Form of Nonstatutory Stock Option under the Option Plan.

  10.5+X --    1995 Non-Employee Director Stock Option Plan (the "Director
               Plan").

  10.6+  --    Form of Nonstatutory Stock Option under the Director Plan.

  10.35# --    Commercial Lease Amendment Agreement, between the Registrant and
               Technical Building Company, dated as of November 20, 1997.

  10.47V --    Premier Amusement Vendor Agreement, dated January 28, 2000,
               between the Registrant and Best Vendor Co.

  10.48V --    Addendum to Premier Amusement Vendor Agreement, dated
               January 28, 2000, between the Registrant and Best Vendor Co.

  10.49V --    Addendum #2 to Premier Amusement Vendor Agreement, dated
               February 14, 2000, between the Registrant and Best Vendor Co.

  10.50@ --    Amusement Vending Agreement, effective as of July 1, 2000,
               between the Registrant and Denny's Inc.

  10.51@ --    Other Income Supplier Agreement--Coin Operated Equipment, dated
               August 1, 2000 between the Registrant and Wal-Mart Stores, Inc.

  10.52n --    Credit agreement, dated December 29, 2000, between and among the
               Registrant and GE Capital and Comerica.

  10.53X --    Consulting Agreement dated December 1, 2000, between the
               Registrant and John A. Sullivan.

  10.54X --    Executive Employment Agreement dated December 1, 2000, between
               the Registrant and Randall J. Fagundo.

  10.55X --    Executive Employment Agreement dated December 1, 2000, between
               the Registrant and W. John Cash.

  23.1   --    Consent of KPMG LLP.
</TABLE>


<PAGE>   38


+    Incorporated by reference to the Company's Registration Statement on
     Form SB-2, File No. 33-95446-D.

o    Incorporated by reference to the Company's Registration Statement on
     Form-3, File No. 333-60267.

#    Incorporated by reference to the Company's Annual Report on Form 10-K
     for the year ended December 31, 1997.

Y    Incorporated by reference to the Company's Current Report on Form 8-K,
     dated April 29, 1999.

V    Incorporated by reference to the Company's Quarterly Report on Form
     10-Q for the period ended March 31, 2000.

@    Incorporated by reference to the Company's Quarterly Report on Form
     10-Q for the period ended September 30, 2000.

n    Incorporated by reference to the Company's Current Report on Form 8-K,
     dated January 26, 2001.

X    Indicates management contract or compensatory plan, contract or
     arrangement.

         (b)      REPORTS ON FORM 8-K.

                  None.