DALLAS, May 13 /PRNewswire-FirstCall/ -- Blockbuster Inc.
(NYSE: BBI, BBI.B) today announced financial results for the first
quarter ending April 4, 2010.
“During the first quarter we continued progress to recapitalize
our business. We have had encouraging discussions with both
financial and strategic partners and expect to have additional
details to report by our annual stockholders’ meeting in late
June,” stated Jim Keyes, Chairman
and Chief Executive Officer of Blockbuster Inc. “In spite of
competitive challenges, we experienced better domestic rental
same-store comparables trends and achieved a number of goals to
establish a significant competitive advantage going forward.
Most important was our success in securing agreements with
key studio partners to ensure our customers receive day-and-date,
cross-channel access to hot new releases. We now have a 28
day rental advantage on nearly 50 percent of major new
releases.”
Consolidated First Quarter Financial Results
Total revenues for the first quarter of 2010 were $939.4 million, compared to total revenues of
$1.09 billion for the same period one
year ago. Results of the first quarter were primarily
attributable to a 7.1 percent decrease in worldwide same-store
comparables, a further reduction in company-operated stores and
competitive pressures. Consolidated first quarter total revenues
reflect the positive impact of foreign currency exchange rates of
$31.5 million.
Gross profit for the first quarter of 2010 was $502.2 million, compared to $573.3 million in the same period one year ago.
The gross profit results were primarily attributable to a
decline in the company-operated store base worldwide and lower
same-store comparables, which were partially offset by the positive
impact of foreign currency exchange rates of $15.2 million. Gross margin for the first
quarter of 2010 was 53.5 percent as compared to gross margin of
52.8 percent in the same period one year ago.
Operating expenses for the quarter were $531.6 million, compared to $523.1 million in the same period one year ago.
General and administrative (“G&A”) expenses during the
first quarter of 2010 were $484.4
million as compared to $477.9
million in the first quarter of 2009, representing an
increase of $6.5 million, or 1.4
percent. The Company’s G&A results for the first quarter
of 2010 included $20.3 million in
expenses related to store closures, $9.9
million related to severance and $4.1
million professional fees associated with the Company’s
recapitalization initiatives. The Company also incurred unfavorable
foreign currency exchange of $13.4 million. During the first
quarter, Blockbuster invested approximately $10 million in advertising related to online,
direct mail and radio campaigns in an effort to drive domestic
store traffic. Total selling, general and administrative
expenses (“SG&A”) increased $16.0
million, or 3.3 percent, compared to the same period one
year ago.
Operating loss for the first quarter of 2010 was $29.4 million, compared to operating income of
$50.2 million in the first quarter
one year ago. Adjusted operating income, which excludes costs
associated with store closures, including lease terminations,
severance, and professional fees associated with our
recapitalization initiatives, was $8.6
million for the first quarter of 2010, compared to adjusted
operating income of $63.8 million in
the first quarter of 2009, which excluded costs associated with
store closures including lease terminations, severance, an
adjustment for game inventory obsolescence and the favorable
settlement of a future liability.
Net loss for the first quarter of 2010 was $65.4 million, or $0.33 per share, compared to net income of
$27.7 million, or $0.12 per diluted share, in the first quarter of
2009. Adjusted net loss for the first quarter of 2010, which
excludes costs associated with store closures, including lease
termination costs, severance, and professional fees associated with
our recapitalization initiatives, totaled $27.3 million, or $0.14 per share. This compares to adjusted
net income of $40.2 million, or
$0.19 per diluted share, in the first
quarter of 2009. Adjusted net income for the first quarter of
2009 excluded costs associated with store closures including lease
termination costs, severance, an adjustment for game inventory
obsolescence and the favorable settlement of a future liability.
First quarter 2010 adjusted earnings before interest, taxes,
depreciation and amortization (“EBITDA”), which excludes
stock-based compensation expenses, costs associated with lease
terminations, severance, and professional fees related to the
Company’s recapitalization initiatives, was $31.1 million, compared to adjusted EBITDA of
$97.2 million in the same period one
year ago. Adjusted EBITDA for the first quarter of 2009
excluded stock-based compensation expenses, costs associated with
lease terminations, severance, an adjustment for game inventory
obsolescence and the favorable settlement of a future liability.
Blockbuster ended the first quarter of 2010 with $109.9 million in cash and cash equivalents.
Cash used in operating activities during the quarter was
$50.8 million, compared with
$87.2 million of cash used in
operating activities in the first quarter of 2009. First
quarter free cash flow (“FCF”) (net cash used for operating
activities less capital expenditures) was negative $54.8 million in the first quarter of 2010,
compared with negative FCF of $95.7
million in the same period in 2009.
Reconciliations of adjusted results and other non-GAAP financial
measures are shown in the tables following the text of this press
release.
Same-Store Sales
First quarter 2010 domestic same-store sales decreased 7.8
percent, reflecting rental and retail comparable decreases of 6.4
percent and 13.9 percent, respectively. The domestic rental
and retail comparable results were primarily driven by competitive
pressures. International same-store sales for the first
quarter of 2010 decreased 5.8 percent, reflecting rental and retail
comparable decreases of 6.2 percent and 5.1 percent, respectively.
Worldwide same-store sales for the first quarter of 2010
declined 7.1 percent.
Strategic Alliances
“Through our alliance with NCR we now have over 4,000 kiosks
deployed with the BLOCKBUSTER Express® brand. In addition, we
expanded our digital presence by becoming the premier movie
download experience embedded in T-Mobile’s HTC HD2 smart-phone in
the U.S., and further optimized our domestic company-owned store
portfolio,” said Mr. Keyes. “We continue to work with other studios
to achieve a 28 day cross-channel window and continue to have
discussions with potential strategic partners to strengthen our
virtual exclusivity.”
Outlook
Tom Casey, Executive Vice
President and Chief Financial Officer of Blockbuster Inc, stated,
“We expect the next 12 to 18 months will remain challenging.
For the full year of 2010, we remain focused on the following
financial initiatives: lowering our debt service costs;
aggressively reducing operating expenses; preserving liquidity
through operational efficiencies; and focusing on improving top
line performance. Also, following their liquidation and store
closures, we believe Movie Gallery store closings could favorably
affect hundreds of Blockbuster locations.”
The Company will provide additional business updates and a more
detailed review of its financial and operational results for the
first quarter ended April 4, 2010 in
conjunction with the upcoming conference call as previously
announced and referenced below.
First Quarter 2010 Financial Results Web Cast and Conference
Call
Blockbuster will host a conference call today, Thursday, May 13, 2010, at 4:30 p.m. Eastern Time (“ET”). Investors
and analysts may join the conference call by dialing 1.866.271.6130
with the pass code of 52525796. International callers may
join the teleconference by dialing 1.617.213.8894, with the same
pass code. A telephonic replay will be available beginning
two hours after the conclusion of the call and will be available
until midnight ET on Thursday, May 27, 2010. The replay number
is 1.888.286.8010, with the pass code of 93851186.
International callers interested in listening to the replay
should dial 1.617.801.6888 with the same pass code. A live
web cast (voice only) of the conference call will be accessible
from the Investor Relations section of the Company’s website at
http://investor.blockbuster.com. Following the live voice
only web cast, an archived version will be available on
Blockbuster’s website. Finally, a Podcast of the conference
call will also be available on the Company’s website.
Additional details regarding the Company’s financial and
operational results may be found in its upcoming Quarterly Report
on Form 10-Q for the fiscal quarter ended April 4, 2010, which will be filed with the
Securities and Exchange Commission ("SEC") on May 14, 2010, in the Company's Annual Report on
Form 10-K for the year ended January 3,
2010, and in other filings from time-to-time with the
Securities and Exchange Commission.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements may also be included from time to time in our other
public filings, press releases, our website and oral and written
presentations by management. Specific forward-looking statements
can be identified by the fact that they do not relate strictly to
historical or current facts and include, without limitation, words
such as "may," "will," "expects," "believes," "anticipates,"
"plans," "estimates," "projects," "predicts," "targets," "seeks,"
"could," "intends," "foresees" or the negative of such terms or
other variations on such terms or comparable terminology.
Similarly, statements that describe our strategies, initiatives,
objectives, plans or goals are forward-looking. These
forward-looking statements are based on management's current
intent, belief, expectations, estimates and projections. These
statements are not guarantees of future performance and involve
risks, uncertainties, assumptions and other factors that are
difficult to predict. Currently, the risks and uncertainties that
may most directly affect our future results include (i) whether our
operating results continue to decline and whether we are able to
generate sufficient cash flows to meet our liquidity needs; (ii)
whether we will have sufficient cash flows from operating
activities and cash on hand to service our indebtedness and finance
the ongoing obligations of our business; and (iii) whether we are
able to execute our transformational strategies, (iv) whether we
are able to execute the strategies to retain our NYSE listing and
obtain requisite approvals to recapitalize or restructure our
balance sheet and capital structure and (v) other factors described
in our filings with the Securities and Exchange Commission,
including the factors discussed under the heading “Risk Factors” in
our annual report on Form 10-K for the year ended January 3, 2010 and under the heading “Disclosure
Regarding Forward-Looking Information” in our quarterly reports on
Form 10-Q. This cautionary statement is provided pursuant to
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These uncertainties may cause our
actual future results to be materially different than those
expressed in our forward-looking statements. We do not
undertake to update our forward-looking statements.
About Blockbuster Inc.
Blockbuster Inc. is a leading global provider of rental and
retail movie and game entertainment. The company provides customers
with convenient access to media entertainment anywhere, any way
they want it - whether in-store, by-mail, through vending kiosks or
digitally to their homes and mobile devices. With a highly
recognized brand and a library of more than 125,000 movie and game
titles, Blockbuster leverages its multichannel presence to serve
nearly 47 million global customers annually. The company may be
accessed worldwide at www.blockbuster.com.
Financial Tables
to Follow
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
COMPARATIVE
FINANCIAL HIGHLIGHTS
|
|
(In millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Base rental revenues
|
$
598.7
|
|
$
704.9
|
|
|
Previously rented product ("PRP")
revenues
|
120.9
|
|
138.3
|
|
|
Total rental
revenues
|
719.6
|
|
843.2
|
|
|
Merchandise sales
|
215.1
|
|
236.7
|
|
|
Other revenues
|
4.7
|
|
6.0
|
|
|
|
939.4
|
|
1,085.9
|
|
|
|
|
|
|
|
Cost of sales:
|
|
|
|
|
|
Cost of rental revenues
|
270.1
|
|
309.9
|
|
|
Cost of merchandise sold
|
167.1
|
|
202.7
|
|
|
Total cost of
sales
|
437.2
|
|
512.6
|
|
|
|
|
|
|
|
Gross profit
|
502.2
|
|
573.3
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
General and administrative
|
484.4
|
|
477.9
|
|
|
Advertising
|
21.0
|
|
11.5
|
|
|
Depreciation and intangible
amortization
|
26.2
|
|
33.7
|
|
|
|
531.6
|
|
523.1
|
|
|
|
|
|
|
|
Operating income (loss)
|
(29.4)
|
|
50.2
|
|
|
|
|
|
|
|
|
Interest expense
|
(33.2)
|
|
(17.5)
|
|
|
Interest income
|
-
|
|
0.2
|
|
|
Other items, net
|
(1.6)
|
|
(0.8)
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before income taxes
|
(64.2)
|
|
32.1
|
|
|
Provision for income taxes
|
(1.1)
|
|
(5.5)
|
|
Income (loss) from continuing
operations
|
(65.3)
|
|
26.6
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued
operations, net of tax
|
(0.1)
|
|
1.1
|
|
|
|
|
|
|
|
Net income (loss)
|
(65.4)
|
|
27.7
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
(1.7)
|
|
(2.8)
|
|
|
|
|
|
|
|
Net income (loss) applicable to common
stockholders
|
$
(67.1)
|
|
$
24.9
|
|
|
|
|
|
|
|
Net income (loss) per common
share:
|
|
|
|
|
Basic
|
|
|
|
|
|
Continuing operations
|
$
(0.33)
|
|
$
0.12
|
|
|
Discontinued operations
|
-
|
|
0.01
|
|
|
Net income (loss)
|
$
(0.33)
|
|
$
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
Basic
|
202.9
|
|
192.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common
share:
|
|
|
|
|
Diluted
|
|
|
|
|
|
Continuing operations
|
$
(0.33)
|
|
$
0.11
|
|
|
Discontinued operations
|
-
|
|
0.01
|
|
|
Net income (loss)
|
$
(0.33)
|
|
$
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding:
|
|
|
|
|
Diluted
|
202.9
|
|
222.8
|
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Revenues by Product
Line:
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
Fiscal Quarter
Ended
|
|
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
|
|
Revenues
|
|
of
Total
|
|
Revenues
|
|
of
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues:
|
|
|
|
|
|
|
|
|
|
|
Movies
|
$
409.9
|
|
63.3%
|
|
$
516.2
|
|
64.1%
|
|
|
|
Games
|
47.2
|
|
7.3%
|
|
54.3
|
|
6.7%
|
|
|
|
PRP
|
94.1
|
|
14.5%
|
|
112.2
|
|
13.9%
|
|
|
Total rental revenues
|
551.2
|
|
85.1%
|
|
682.7
|
|
84.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise sales:
|
|
|
|
|
|
|
|
|
|
|
Movies
|
42.5
|
|
6.6%
|
|
51.1
|
|
6.4%
|
|
|
|
Games
|
5.5
|
|
0.8%
|
|
22.0
|
|
2.7%
|
|
|
|
General merchandise
|
45.1
|
|
7.0%
|
|
45.2
|
|
5.6%
|
|
|
Total merchandise sales
|
93.1
|
|
14.4%
|
|
118.3
|
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties and other
|
3.5
|
|
0.5%
|
|
5.2
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic stores
revenues
|
$
647.8
|
|
100.0%
|
|
$
806.2
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues:
|
|
|
|
|
|
|
|
|
|
|
Movies
|
$
128.8
|
|
44.2%
|
|
$
122.4
|
|
43.8%
|
|
|
|
Games
|
12.8
|
|
4.4%
|
|
12.0
|
|
4.3%
|
|
|
|
PRP
|
26.8
|
|
9.2%
|
|
26.1
|
|
9.3%
|
|
|
Total rental revenues
|
168.4
|
|
57.8%
|
|
160.5
|
|
57.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise sales:
|
|
|
|
|
|
|
|
|
|
|
Movies
|
36.3
|
|
12.4%
|
|
33.1
|
|
11.8%
|
|
|
|
Games
|
59.0
|
|
20.2%
|
|
59.2
|
|
21.2%
|
|
|
|
General merchandise
|
26.7
|
|
9.2%
|
|
26.1
|
|
9.3%
|
|
|
Total merchandise sales
|
122.0
|
|
41.8%
|
|
118.4
|
|
42.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties and other
|
1.2
|
|
0.4%
|
|
0.8
|
|
0.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total international
revenues
|
$
291.6
|
|
100.0%
|
|
$
279.7
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
revenues
|
$
939.4
|
|
|
|
$
1,085.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit by Product
Line:
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
Fiscal Quarter
Ended
|
|
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
|
|
Gross
Profit
|
|
of
Revenue
|
|
Gross
Profit
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
|
$
341.8
|
|
62.0%
|
|
$
425.1
|
|
62.3%
|
|
|
Merchandise
|
17.6
|
|
18.9%
|
|
3.8
|
|
3.2%
|
|
|
Other
|
3.5
|
|
100.0%
|
|
5.2
|
|
100.0%
|
|
|
|
Total domestic stores
|
362.9
|
|
56.0%
|
|
434.1
|
|
53.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
|
107.7
|
|
64.0%
|
|
108.2
|
|
67.4%
|
|
|
Merchandise
|
30.4
|
|
24.9%
|
|
30.2
|
|
25.5%
|
|
|
Other
|
1.2
|
|
100.0%
|
|
0.8
|
|
100.0%
|
|
|
|
Total international
|
139.3
|
|
47.8%
|
|
139.2
|
|
49.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
|
$
502.2
|
|
53.5%
|
|
$
573.3
|
|
52.8%
|
|
|
|
|
|
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
|
Selling, General
and Administrative (SG&A) Comparison
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
Fiscal Quarter
Ended
|
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
Percent
|
|
|
|
Percent
|
|
|
|
SG&A
Expense
|
|
of
Revenue
|
|
SG&A
Expense
|
|
of
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
|
|
|
|
|
|
|
Domestic stores
|
$
15.2
|
|
1.6%
|
|
$
6.7
|
|
0.7%
|
|
|
International
|
5.8
|
|
0.6%
|
|
4.8
|
|
0.4%
|
|
General &
Administrative
|
|
|
|
|
|
|
|
|
|
Domestic stores - (4 wall)
|
289.3
|
|
30.8%
|
|
304.8
|
|
28.1%
|
|
|
Domestic stores - other
|
31.7
|
|
3.4%
|
|
36.2
|
|
3.3%
|
|
|
International
|
126.7
|
|
13.5%
|
|
116.9
|
|
10.8%
|
|
|
Unallocated corporate
|
36.7
|
|
3.9%
|
|
20.0
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total SG&A
|
$
505.4
|
|
53.8%
|
|
$
489.4
|
|
45.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facilities
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 4,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
International
|
|
|
|
|
|
|
|
|
|
Total
Number
|
|
Avg
Sq
Footage
|
|
Total
Sq
Footage
|
|
Total
Number
|
|
Avg
Sq
Footage
|
|
Total
Sq
Footage
|
|
|
|
|
(in
thousands)
|
|
(in
thousands)
|
|
|
(in
thousands)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores
|
|
3,240
|
|
5.6
|
|
18,054
|
|
1,674
|
|
3.2
|
|
5,374
|
|
Distribution centers
|
|
39
|
|
N/A
|
|
1,119
|
|
6
|
|
N/A
|
|
170
|
|
Corporate/regional offices
|
|
8
|
|
N/A
|
|
400
|
|
6
|
|
N/A
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
Other Information:
Revenue
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic same-store revenues increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues
|
(6.4)%
|
|
(12.3)%
|
|
|
Merchandise sales
|
(13.9)%
|
|
(3.1)%
|
|
|
Total revenues
|
(7.8)%
|
|
(10.9)%
|
|
|
|
|
|
|
|
International same-store revenues
increase (decrease)
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues
|
(6.2)%
|
|
(8.4)%
|
|
|
Merchandise sales
|
(5.1)%
|
|
(4.2)%
|
|
|
Total revenues
|
(5.8)%
|
|
(6.7)%
|
|
|
|
|
|
|
|
Worldwide same-store revenues increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues
|
(6.3)%
|
|
(11.4)%
|
|
|
Merchandise sales
|
(9.0)%
|
|
(3.7)%
|
|
|
Total revenues
|
(7.1)%
|
|
(9.6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Data:
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
|
Net cash provided by (used in)
operating activities
|
$
(50.8)
|
|
$
(87.2)
|
|
Net cash provided by (used in)
investing activities
|
$
19.3
|
|
$
(8.1)
|
|
Net cash provided by (used in)
financing activities
|
$
(46.5)
|
|
$
48.7
|
|
|
|
|
|
|
|
Capital expenditures
|
$
4.0
|
|
$
8.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Information:
|
|
|
|
|
|
|
April 4,
2010
|
|
January 3,
2010
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
109.9
|
|
$
188.7
|
|
Restricted cash
|
$
35.8
|
|
$
58.5
|
|
Merchandise inventories
|
$
255.2
|
|
$
298.5
|
|
Rental library, net
|
$
319.3
|
|
$
340.7
|
|
Accounts payable
|
$
206.6
|
|
$
300.8
|
|
Total debt (including capital lease
obligations)
|
$
919.6
|
|
$
963.6
|
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Worldwide Store Count
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-Operated
|
|
Franchised
|
|
Total
|
|
|
U.S.
|
|
Int’l.
|
|
Total
|
|
U.S.
|
|
Int’l.
|
|
Total
|
|
U.S.
|
|
Int’l.
|
|
Total
|
|
January 3, 2010
|
3,525
|
|
1,695
|
|
5,220
|
|
493
|
|
807
|
|
1,300
|
|
4,018
|
|
2,502
|
|
6,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opened
|
0
|
|
1
|
|
1
|
|
1
|
|
0
|
|
1
|
|
1
|
|
1
|
|
2
|
|
Closed
|
(288)
|
|
(22)
|
|
(310)
|
|
(54)
|
|
(22)
|
|
(76)
|
|
(342)
|
|
(44)
|
|
(386)
|
|
Purchased/(sold)
|
3
|
|
0
|
|
3
|
|
(3)
|
|
0
|
|
(3)
|
|
-
|
|
-
|
|
-
|
|
Net additions/(closures)
|
(285)
|
|
(21)
|
|
(306)
|
|
(56)
|
|
(22)
|
|
(78)
|
|
(341)
|
|
(43)
|
|
(384)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 4, 2010
|
3,240
|
|
1,674
|
|
4,914
|
|
437
|
|
785
|
|
1,222
|
|
3,677
|
|
2,459
|
|
6,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
DISCLOSURES
REGARDING NON-GAAP FINANCIAL INFORMATION
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
For the fiscal quarter ended April 4,
2010, the Company reports adjusted net income (loss), adjusted net
income (loss) per common share and adjusted operating income (loss)
excluding costs incurred for severance, store closures and
professional fees related to recapitalization costs.
Additionally, for the fiscal quarter ended April 5, 2009, the
Company reports adjusted net income (loss), adjusted net income
(loss) per common share and adjusted operating income (loss)
excluding the net loss on a third party games sale and the
favorable settlement of a future liability.
|
|
|
|
Adjusted net income (loss), adjusted
net income (loss) per common share and adjusted operating income
(loss) are non-GAAP financial measures within the meaning of
Regulation G of the Securities and Exchange Commission and are not
measures of operating performance calculated in accordance with
GAAP. As a result, adjusted net income (loss), adjusted net
income (loss) per common share and adjusted operating income (loss)
should not be considered in isolation of, or as a substitute for,
income (loss) from continuing operations, net income (loss) per
common share and operating income (loss) as indicators of operating
performance. Adjusted net income (loss), adjusted net income
(loss) per common share and adjusted operating income (loss), as
the Company calculates them, may not be comparable to similarly
titled measures employed by other companies.
|
|
|
|
Management believes excluding the
recurring and non-recurring items listed below from the Company's
financial results provides investors with a clearer perspective of
the current underlying operating performance of the Company, a
clearer comparison to current period results and greater
transparency regarding supplemental information used by management
in its financial and operational decision making.
|
|
|
|
|
|
|
Management uses these non-GAAP
financial measures as an internal measure of business operating
performance, to establish operational goals, to allocate resources
and to analyze trends. Income (loss) from continuing
operations is the financial measure calculated and presented in
accordance with GAAP that is most comparable to adjusted net income
(loss). Operating income (loss) is the financial measure
calculated and presented in accordance with GAAP that is most
comparable to adjusted operating income (loss).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
Reconciliation of adjusted net income
(loss):
|
|
|
|
|
Income (loss) from continuing
operations
|
$
(65.3)
|
|
$
26.6
|
|
|
|
|
|
|
Adjustments to reconcile income (loss)
from continuing operations to adjusted net income
(loss):
|
|
|
|
|
Store closure
costs including lease terminations (recurring)
|
24.0
|
|
3.4
|
|
Severance
costs
|
9.9
|
|
1.1
|
|
Net loss on a
third party games sale (non-recurring)
|
-
|
|
16.7
|
|
Settlement of
future liability (non-recurring)
|
-
|
|
(7.6)
|
|
Professional fees
related to recapitalization costs (non-recurring)
|
4.1
|
|
-
|
|
|
|
|
|
|
Adjusted net income (loss)
|
(27.3)
|
|
40.2
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
dividends
|
(1.7)
|
|
(2.8)
|
|
|
|
|
|
|
Adjusted net income (loss) applicable
to common stockholders
|
$
(29.0)
|
|
$
37.4
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) per common
share - basic and diluted
|
$
(0.14)
|
|
$
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of adjusted operating
income (loss):
|
|
|
|
|
Operating income (loss)
|
$
(29.4)
|
|
$
50.2
|
|
|
|
|
|
|
Adjustments to reconcile operating
income (loss) to adjusted operating income (loss):
|
|
|
|
|
Store closure
costs including lease terminations (recurring)
|
24.0
|
|
3.4
|
|
Severance
costs
|
9.9
|
|
1.1
|
|
Net loss on a
third party games sale (non-recurring)
|
-
|
|
16.7
|
|
Settlement of
future liability (non-recurring)
|
-
|
|
(7.6)
|
|
Professional fees
related to recapitalization costs (non-recurring)
|
4.1
|
|
-
|
|
Adjusted operating income
(loss)
|
$
8.6
|
|
$
63.8
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
DISCLOSURES
REGARDING NON-GAAP FINANCIAL INFORMATION
|
|
(Dollars in
millions)
|
|
|
|
For the fiscal quarter ended April 4,
2010, the Company reports adjusted earnings before interest, taxes,
depreciation and amortization ("adjusted EBITDA") excluding costs
incurred for stock compensation, severance, store closures, and
professional fees related restructuring costs. Additionally,
for the fiscal quarter ended April 5, 2009, the Company reports
adjusted EBITDA excluding a net loss on a third party games sale
and the favorable settlement of a future liability.
|
|
|
|
|
|
|
EBITDA and adjusted EBITDA are
non-GAAP financial measures within the meaning of Regulation G of
the Securities and Exchange Commission and are not a measure of
operating performance calculated in accordance with GAAP. As
a result, EBITDA and adjusted EBITDA should not be considered in
isolation of, or as a substitute for, net income (loss) as an
indicator of operating performance. EBITDA and adjusted
EBITDA, as the Company calculates it, may not be comparable to
similarly titled measures employed by other companies.
|
|
|
|
|
|
|
Management believes excluding the
recurring and non-recurring items listed under EBITDA below from
the Company's financial results provides investors with a clearer
perspective of the current underlying operating performance of the
Company, a clearer comparison to current period results and greater
transparency regarding supplemental information used by management
in its financial and operational decision making.
|
|
|
|
|
|
|
In addition, management believes that
adjusting the Company's financial results to exclude income (loss)
from discontinued operations, net of tax, taxes, interest and other
income, net and depreciation and amortization of intangibles also
provides investors with a clearer perspective of the current
underlying operating performance of the Company and a clearer
comparison to current period results.
|
|
|
|
|
|
|
Management uses EBITDA and adjusted
EBITDA as an internal measure of business operating performance, to
establish operational goals, to allocate resources and to analyze
trends. Net income (loss) is the financial measure calculated
and presented in accordance with GAAP that is most comparable to
EBITDA and adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
Reconciliation of adjusted
EBITDA:
|
|
|
|
|
Net income (loss)
|
$
(65.4)
|
|
$
27.7
|
|
Adjustments to reconcile net income
(loss) to adjusted EBITDA:
|
|
|
|
|
(Income) loss from
discontinued operations, net of tax
|
0.1
|
|
(1.1)
|
|
Provision for
income taxes
|
1.1
|
|
5.5
|
|
Interest and other
income, net
|
34.8
|
|
18.1
|
|
Depreciation and
intangible amortization
|
26.2
|
|
33.7
|
|
EBITDA
|
(3.2)
|
|
83.9
|
|
|
|
|
|
|
Lease termination
costs incurred for store closures (recurring)
|
20.3
|
|
1.1
|
|
Severance
costs
|
9.9
|
|
1.1
|
|
Stock compensation
(recurring)
|
-
|
|
2.0
|
|
Net loss on a
third party games sale (non-recurring)
|
-
|
|
16.7
|
|
Settlement of
future liability (non-recurring)
|
-
|
|
(7.6)
|
|
Professional fees
related to recapitalization costs (non-recurring)
|
4.1
|
|
-
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
31.1
|
|
$
97.2
|
|
|
|
|
|
BLOCKBUSTER
INC.
|
|
DISCLOSURES
REGARDING NON-GAAP FINANCIAL INFORMATION
|
|
(Dollars in
millions)
|
|
|
|
|
Free cash flow reflects the Company's
net cash flow provided by (used in) operating activities less
capital expenditures. The Company uses free cash flow, among
other things, to evaluate its operating performance and as a
measure of liquidity. Management believes free cash flow
provides investors with an important perspective on the cash
available for debt service, acquisitions and stockholders after
making the capital investments required to support ongoing business
operations and long-term value creation. The Company believes
the presentation of free cash flow is relevant and useful for
investors because it allows investors to view performance in a
manner similar to the method used by management and helps improve
their ability to understand the Company's operating performance.
In addition, free cash flow is also a measure used by the
Company's investors and analysts for purposes of valuation and
comparing the operating performance of the Company to other
companies in its industry.
|
|
|
|
Free cash flow is a non-GAAP financial
measure within the meaning of Regulation G of the Securities and
Exchange Commission and is not a measure of performance calculated
in accordance with GAAP. As a result, free cash flow should
not be considered in isolation of, or as a substitute for, net
income (loss) as an indicator of operating performance or net cash
flow provided by (used in) operating activities as a measure of
liquidity. Free cash flow, as the Company calculates it, may
not be comparable to similarly titled measures employed by other
companies. In addition, free cash flow does not necessarily
represent funds available for discretionary use and is not
necessarily a measure of the Company's ability to fund its cash
needs. As the Company uses free cash flow as a measure of
performance and as a measure of liquidity, the tables below
reconcile free cash flow to both net income (loss) and net cash
flow provided by (used in) operating activities, the most directly
comparable financial measures reported under GAAP.
|
|
|
|
The following table provides a
reconciliation of net cash provided by (used in) operating
activities to free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
Net cash provided by (used in)
operating activities
|
$
(50.8)
|
|
$
(87.2)
|
|
|
|
|
|
|
Adjustments to reconcile net cash
provided by (used in) operating activities to free cash
flow:
|
|
|
|
|
Capital
expenditures
|
(4.0)
|
|
(8.5)
|
|
|
|
|
|
|
Free cash flow
|
$
(54.8)
|
|
$
(95.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a
reconciliation of net income (loss) to free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter
Ended
|
|
|
April 4,
2010
|
|
April 5,
2009
|
|
|
|
|
|
|
Net income (loss)
|
$
(65.4)
|
|
$
27.7
|
|
|
|
|
|
|
Adjustments to reconcile net income
(loss) to free cash flow:
|
|
|
|
|
Depreciation and
intangible amortization
|
26.2
|
|
34.8
|
|
Non-cash
share-based compensation expense
|
-
|
|
2.0
|
|
Capital
expenditures
|
(4.0)
|
|
(8.5)
|
|
Rental library
purchases, net of rental amortization
|
22.8
|
|
3.1
|
|
Changes in
operating assets and liabilities
|
(38.5)
|
|
(155.6)
|
|
Changes in
deferred taxes and other
|
4.1
|
|
0.8
|
|
Loss on
extinguishment of debt
|
-
|
|
-
|
|
|
|
|
|
|
Free cash flow
|
$
(54.8)
|
|
$
(95.7)
|
|
|
|
|
|
SOURCE Blockbuster Inc.