Blockbuster Reports Third Quarter 2009 Financial Results
DALLAS -- Blockbuster Inc. (NYSE: BBI, BBI.B), a leading global provider of media entertainment, announced financial results for the third quarter ended October 4, 2009.
"With the capital structure improvements behind us we are returning our focus to the operations of the business," stated Jim Keyes, Chairman and Chief Executive Officer of Blockbuster Inc. "In the fourth quarter we are adding inventory, expanding product assortment, increasing advertising and reaching out to our customers in new and exciting ways. With the addition of BLOCKBUSTER Express branded vending kiosks and the mass market deployment of BLOCKBUSTER On Demand on internet connected devices to millions of homes across the U.S., we have dramatically increased our points of presence and made it more convenient for our customers to access the latest movies and games the way they want."
Consolidated Third Quarter Financial Results
Total revenues for the third quarter of 2009 were $910.5 million as compared to total revenue of $1.16 billion for the same period one year ago. The 21 percent revenue decrease is primarily attributable to a 14 percent decline in same store comparables due to the Company's temporary shift in focus to manage the business for liquidity and the macroeconomic environments. The other factors that affected third quarter total revenue included the reduction in company-operated stores and the negative impacts of foreign currency exchange.
Gross profit for the third quarter of 2009 was $521.6 million, compared to $621.4 million in the same period one year ago. Gross profit results for the third quarter of 2009 were primarily attributable to lower same-store revenues and a $17.3 million negative impact from foreign exchange. In the third quarter of 2009 Blockbuster recorded gross margin of 57.3 percent, representing an increase of 360 basis points as compared to gross margin of 53.7 percent in the third quarter of 2008. The margin increase as a percentage of revenue was primarily driven by a product mix shift from lower margin games hardware, software and accessories to higher margin DVD rental combined with improved studio revenue-sharing arrangements on the top domestic DVD releases during the third quarter.
Operating expenses for the quarter were $531.8 million, compared to $624.9 million in the same period one year ago. General and administrative ("G&A") expenses during the third quarter of 2009 were $475.9 million as compared to $557.8 million in the third quarter of 2008, representing a decrease of $81.9 million, or approximately 15 percent. The Company's G&A results for the third quarter of 2009 include a $14.2 million favorable impact from foreign exchange. Blockbuster's investment in advertising during the third quarter of 2009 was $19.0 million, compared to an advertising investment of $31.3 million during the same period one year ago. Total selling, general and administrative ("SG&A") for the quarter decreased to $494.9 million from $589.1 million in the same period one year ago, a decrease of $94.2 million, or approximately 16 percent.
Operating loss for the third quarter of 2009 was $10.2 million as compared to an operating loss of $3.5 million in the third quarter one year ago. Adjusted operating income, which excludes costs associated with store closures and severance, was $0.2 million for the third quarter of 2009, compared to adjusted operating income of $0.8 million in the third quarter of 2008.
Driven primarily by the write-off of debt financing costs related to the Company's refinancing activities and the sale of the Company's Irish subsidiary, entertainment retailer Xtra-vision Limited, net loss applicable to common stockholders for the third quarter of 2009 was $116.8 million, or $0.60 per diluted share. This compares to net loss applicable to common stockholders of $20.6 million, or $0.11 per diluted share, in the third quarter of 2008. Excluding costs associated with write-off of debt financing costs, store closures and severance, adjusted net loss applicable to common stockholders for the third quarter of 2009 totaled $38.3 million, or $0.20 per diluted share. This compares to an adjusted net loss applicable to common stockholders of $17.8 million, or $0.09 per diluted share, in the third quarter of 2008. Net loss for the third quarter of 2009 was $114.1 million, compared to a net loss of $17.8 million in the third quarter of 2008.
Third quarter 2009 earnings before interest, taxes, depreciation and amortization ("EBITDA") was $26.7 million, compared to $32.3 million in the third quarter of 2008. Adjusted EBITDA, which excludes stock-based compensation expenses, costs associated with lease terminations and severance, was $32.6 million in the third quarter of 2009, compared to adjusted EBITDA of $37.7 million in the same period one year ago.
Reconciliations of adjusted results and other non-GAAP financial measures are shown in the tables following the text of this press release.
Recent Highlights
•Announced exclusive mobile integration deal with Motorola
•Entered strategic alliance with top-10 cable MSO
•Rolled out BLOCKBUSTER On Demand® digital movie rental services on a wide assortment of Samsung and TiVo devices, bringing premium digital movie titles to millions of homes across America
•Completed offering of $675 million of senior secured notes ("Notes"); Proceeds used to repay amended revolving credit facility, term loan B and Canadian credit facility, reducing 2010 amortization payments by over $300 million and extending debt maturities
•Enhanced liquidity through reduction of letters of credit and sale of Ireland entertainment retailer Xtra-vision Limited
Click to read the rest of the press release
"With the capital structure improvements behind us we are returning our focus to the operations of the business," stated Jim Keyes, Chairman and Chief Executive Officer of Blockbuster Inc. "In the fourth quarter we are adding inventory, expanding product assortment, increasing advertising and reaching out to our customers in new and exciting ways. With the addition of BLOCKBUSTER Express branded vending kiosks and the mass market deployment of BLOCKBUSTER On Demand on internet connected devices to millions of homes across the U.S., we have dramatically increased our points of presence and made it more convenient for our customers to access the latest movies and games the way they want."
Consolidated Third Quarter Financial Results
Total revenues for the third quarter of 2009 were $910.5 million as compared to total revenue of $1.16 billion for the same period one year ago. The 21 percent revenue decrease is primarily attributable to a 14 percent decline in same store comparables due to the Company's temporary shift in focus to manage the business for liquidity and the macroeconomic environments. The other factors that affected third quarter total revenue included the reduction in company-operated stores and the negative impacts of foreign currency exchange.
Gross profit for the third quarter of 2009 was $521.6 million, compared to $621.4 million in the same period one year ago. Gross profit results for the third quarter of 2009 were primarily attributable to lower same-store revenues and a $17.3 million negative impact from foreign exchange. In the third quarter of 2009 Blockbuster recorded gross margin of 57.3 percent, representing an increase of 360 basis points as compared to gross margin of 53.7 percent in the third quarter of 2008. The margin increase as a percentage of revenue was primarily driven by a product mix shift from lower margin games hardware, software and accessories to higher margin DVD rental combined with improved studio revenue-sharing arrangements on the top domestic DVD releases during the third quarter.
Operating expenses for the quarter were $531.8 million, compared to $624.9 million in the same period one year ago. General and administrative ("G&A") expenses during the third quarter of 2009 were $475.9 million as compared to $557.8 million in the third quarter of 2008, representing a decrease of $81.9 million, or approximately 15 percent. The Company's G&A results for the third quarter of 2009 include a $14.2 million favorable impact from foreign exchange. Blockbuster's investment in advertising during the third quarter of 2009 was $19.0 million, compared to an advertising investment of $31.3 million during the same period one year ago. Total selling, general and administrative ("SG&A") for the quarter decreased to $494.9 million from $589.1 million in the same period one year ago, a decrease of $94.2 million, or approximately 16 percent.
Operating loss for the third quarter of 2009 was $10.2 million as compared to an operating loss of $3.5 million in the third quarter one year ago. Adjusted operating income, which excludes costs associated with store closures and severance, was $0.2 million for the third quarter of 2009, compared to adjusted operating income of $0.8 million in the third quarter of 2008.
Driven primarily by the write-off of debt financing costs related to the Company's refinancing activities and the sale of the Company's Irish subsidiary, entertainment retailer Xtra-vision Limited, net loss applicable to common stockholders for the third quarter of 2009 was $116.8 million, or $0.60 per diluted share. This compares to net loss applicable to common stockholders of $20.6 million, or $0.11 per diluted share, in the third quarter of 2008. Excluding costs associated with write-off of debt financing costs, store closures and severance, adjusted net loss applicable to common stockholders for the third quarter of 2009 totaled $38.3 million, or $0.20 per diluted share. This compares to an adjusted net loss applicable to common stockholders of $17.8 million, or $0.09 per diluted share, in the third quarter of 2008. Net loss for the third quarter of 2009 was $114.1 million, compared to a net loss of $17.8 million in the third quarter of 2008.
Third quarter 2009 earnings before interest, taxes, depreciation and amortization ("EBITDA") was $26.7 million, compared to $32.3 million in the third quarter of 2008. Adjusted EBITDA, which excludes stock-based compensation expenses, costs associated with lease terminations and severance, was $32.6 million in the third quarter of 2009, compared to adjusted EBITDA of $37.7 million in the same period one year ago.
Reconciliations of adjusted results and other non-GAAP financial measures are shown in the tables following the text of this press release.
Recent Highlights
•Announced exclusive mobile integration deal with Motorola
•Entered strategic alliance with top-10 cable MSO
•Rolled out BLOCKBUSTER On Demand® digital movie rental services on a wide assortment of Samsung and TiVo devices, bringing premium digital movie titles to millions of homes across America
•Completed offering of $675 million of senior secured notes ("Notes"); Proceeds used to repay amended revolving credit facility, term loan B and Canadian credit facility, reducing 2010 amortization payments by over $300 million and extending debt maturities
•Enhanced liquidity through reduction of letters of credit and sale of Ireland entertainment retailer Xtra-vision Limited
Click to read the rest of the press release
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