[2] Blockbuster Reports Third Quarter 2000 Results.Entertainment Editors DALLAS--(ENTERTAINMENT WIRE)--Oct. 24, 2000 Revenues Increase 7% to $1.19 billion Same Store Revenues Increase For 11th Consecutive Quarter Video Segment Cash Earnings Increase 45% to $33.3 million Blockbuster block·bust·er n. 1. Something, such as a film or book, that sustains widespread popularity and achieves enormous sales. 2. A high-explosive bomb used for demolition purposes. 3. Inc. (NYSE NYSE See: New York Stock Exchange :BBI BBI Blockbuster Inc. (stock symbol) BBI Berlin Brandenburg International (Airport) BBI Broadband-Interactive BBI Browser-Based Interface BBI Best Brains Inc. ), the leading provider of rentable home entertainment, today announced financial results for the third quarter ended September September: see month. 30, 2000. Total revenues increased 7.3% to $1.19 billion for the third quarter of 2000, versus $1.11 billion in the third quarter of 1999, primarily due to a year-over-year net increase of 426 company-operated stores and third quarter same store revenue increases of 1.5%. Rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. revenues increased 7.1% to $1.02 billion from $951.4 million in the prior-year third quarter. Higher same store revenues were driven by strong international revenues. "Blockbuster posted strong results in the third quarter, once again outperforming the industry by an even more significant margin in a quarter of less than optimal studio product releases," said John Antioco, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Blockbuster Inc. "Driven by our eleventh In music or music theory an eleventh is the note eleven scale degrees from the root of a chord and also the interval between the root and the eleventh. Since there are only seven degrees in a diatonic scale the eleventh degree is the same as the subdominant and the interval consecutive quarter of same store revenue gains, we grew our video segment cash earnings and worldwide revenues significantly. On the cost side, we continued to focus on leveraging our video segment infrastructure and assets to generate operating efficiencies on our increasing revenue base. This solid financial performance demonstrates the strength of our overall business strategy and the value of our global brand." Third Quarter Operating Results Gross profit increased 5.9% to $721.7 million for the third quarter of 2000 from $681.4 million in the same period last year. Gross profit as a percentage of revenue for the third quarter of 2000 was 60.5%, compared with 61.2% in the same period last year. Excluding the new media segment, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become grew 1.7% to $132.1 million for the third quarter of 2000 from $129.9 million in the same period last year as a result of increased revenues and effective cost management. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: EBITDA for the third quarter of 2000 decreased 7.4% to $119.1 million from $128.6 million in the same period last year, reflecting the continued investment in new media which began operations in the fourth quarter of 1999. Video segment cash earnings, which excludes the new media segment, grew to $33.3 million, or $0.19 per share, for the third quarter, compared with $22.9 million, or $0.14 per share for the same period last year. Consolidated cash earnings were $22.6 million, or $0.13 per share, for the third quarter, compared with $22.0 million, or $0.14 per share for the same period last year. The Company completed its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. on August 10, 1999, issuing an incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. 31 million shares of common stock. As a result, the Company's earnings per share are not directly comparable. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (general and administrative, advertising, and depreciation and amortization) totaled $704.0 million for the third quarter compared with $652.8 million in the same period last year. As a percentage of revenue, operating expenses were essentially flat at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 59.0% for the third quarter. General and administrative (G&A) expenses totaled $552.5 million for the third quarter, compared with $489.6 million in the same period last year. This increase is a result of the continued investment in new media and growth in the business. Advertising expense decreased 20.7% to $50.1 million for the third quarter. This decrease, in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of a weaker product slate, is a result of a shift in focus from broad media advertising to direct consumer marketing, which utilizes Blockbuster's extensive database and more efficiently deploys media spending. Depreciation and amortization (D&A) for the third quarter of 2000 totaled $101.4 million, including $44.0 million of amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. . D&A for the third quarter of 1999 totaled $100.0 million, including amortization of intangibles of $43.2 million. New Initiatives Complement Core Business In late July July: see month. 2000, as part of a stated intention to participate in additional home entertainment channels, the Company announced an agreement with Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh Broadband Services See broadband and broadband service provider. to launch a Blockbuster entertainment on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front service. Additionally, DIRECTV DirecTV (trademarked as "DIRECTV") is a direct broadcast satellite (DBS) service based in El Segundo, California, USA, that transmits digital satellite television and audio to households in the United States, the Caribbean and Latin America except for Mexico. systems were introduced in approximately 3,800 stores in September with plans to begin offering a co-branded pay-per-view pay-per-view n. A service offered by cable television companies that allows subscribers to view special programs for an additional charge. pay service in 2001. "We are committed to growing our business by offering customers worldwide the latest in home entertainment, and we are very excited about the potential of these two new growth opportunities which complement our core business. Looking ahead, we are confident that the strength of our core business combined with these new ventures will position us to deliver long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , sustainable growth," added Antioco. Nine Month Operating Results Total revenues increased 10.8% to $3.62 billion for the nine-month period, versus $3.27 billion in the same period of 1999. Rental revenues increased 10.1% to $3.07 billion for the nine-month period, versus $2.79 billion in the same period of 1999. This increase was primarily due to a net increase of 426 in the number of company-operated stores since September of last year and same store revenue increases of 5.0%. The nine-month increase in same store revenues was driven by both domestic and international revenue growth. Gross profit increased 7.6% to $2.15 billion for the first nine months of 2000 from $2.00 billion in the same period last year. Gross profit as a percentage of revenue was 59.4% for the first nine months of 2000, compared with 61.1% for the same period last year due primarily to a higher percentage of revenue sharing revenue sharing Funding arrangement in which one government unit grants a portion of its tax income to another government unit. For example, provinces or states may share revenue with local governments, or national governments may share revenue with provinces or states. rentals which have a lower gross margin than traditional purchasing arrangements. Excluding the new media segment, EBITDA grew 12.1% to $419.9 million for the first nine months of 2000 from $374.5 million in the same period last year as a result of increased revenues and effective cost management. Consolidated EBITDA increased 2.5% to $382.6 million from $373.2 million for the first nine months, reflecting the investment in new media. Video segment cash earnings, which excludes the new media segment, grew to $104.9 million, or $0.60 per share, for the first nine months, compared with $61.7 million, or $0.41 per share in the same period last year. Consolidated cash earnings were $74.5 million, or $0.43 per share for the first nine months, compared with $60.8 million, or $0.41 per share in the same period last year. Operating expenses (G&A and advertising and D&A) totaled $2.08 billion for the first nine months, compared with $1.92 billion in the same period last year. As a percentage of revenue, operating expenses for the nine months decreased from 58.7% to 57.5%. G&A expenses totaled $1.60 billion for the first nine months, compared with $1.44 billion in the same period last year. Advertising expense decreased 9.4% to $165.7 million for the first nine months primarily due to the decline in advertising expense in the third quarter. Excluding the new media segment, G&A and advertising as a percentage of sales declined for the first nine months to 47.8% from 49.7%, demonstrating the Company's continued commitment to leverage its infrastructure on an increasing revenue base. D&A for the first nine months of 2000 totaled $313.2 million, including $132.5 million of amortization of intangibles, compared with $291.8 million, including $128.7 million of amortization of intangibles in the same prior year period. Business Outlook The strength in new releases during the fourth quarter is expected to drive strong results of operations. The following are the current expectations for the fourth quarter results of operations: -- The increase in same store revenues is expected to be in the high single digit range. -- Losses associated with the new media segment are expected to be consistent with prior quarters this year. About Blockbuster Blockbuster Inc. (NYSE:BBI) is a publicly traded subsidiary of Viacom
adj. Superior to or notable above all others; outstanding. See Synonyms at dominant, noted. [Middle English, from Latin prae positions in broadcast and cable television, radio, outdoor advertising and online. With programming that appeals to audiences in every demographic See demographics. category across virtually all media, Viacom is a leader in the creation, promotion and distribution of entertainment, news, sports and music. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Blockbuster's operations, including, without limitation, statements relating to business strategy and objectives, growth opportunities and expectations, new initiatives such as entertainment on-demand, pay-per-view and other home entertainment opportunities, marketing plans, and results of operations, including revenue and other financial expectations. These forward-looking statements are based on Blockbuster's current intent, expectations, estimates, and projections and are not guarantees of future performance. These statements involve risks, uncertainties, assumptions, and other factors that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others: consumer interest in, and demand for, newly released videos and other Blockbuster product offerings; the impact of competitive product and service offerings and pricing; the effect of game platform cycles; the impact of technological shifts on Blockbuster's business strategy; consumer acceptance of, and demand for, new technologies; Blockbuster's ability to reach agreements with service, product, and content providers on acceptable commercial terms and the success of these alliances and agreements in developing new products and services; the application of laws relating to intellectual property rights; and other factors, as set forth under the heading "Cautionary Statements" in Blockbuster's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December December: see month. 31, 1999.
BLOCKBUSTER INC.
COMPARATIVE FINANCIAL HIGHLIGHTS
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenues:
Rental revenues $1,019.0 $ 951.4 $3,072.8 $2,790.7
Merchandise sales 146.1 138.9 478.6 413.5
Other revenues 28.7 22.5 67.9 63.3
-------- -------- -------- --------
1,193.8 1,112.8 3,619.3 3,267.5
-------- -------- -------- --------
Cost of sales:
Cost of rental revenues 364.2 322.8 1,097.3 949.0
Cost of merchandise sold 107.9 108.6 372.6 320.6
-------- -------- -------- --------
472.1 431.4 1,469.9 1,269.6
-------- -------- -------- --------
Gross profit 721.7 681.4 2,149.4 1,997.9
-------- -------- -------- --------
Operating expenses:
General and administrative 552.5 489.6 1,601.1 1,441.8
Advertising 50.1 63.2 165.7 182.9
Depreciation 57.4 56.8 180.7 163.1
Amortization of intangibles 44.0 43.2 132.5 128.7
-------- -------- -------- --------
704.0 652.8 2,080.0 1,916.5
-------- -------- -------- --------
Operating income 17.7 28.6 69.4 81.4
Interest expense (29.0) (30.7) (88.0) (90.6)
Interest income 1.6 0.7 5.2 1.8
Other items, net 0.4 1.7 2.5 1.5
-------- -------- -------- --------
Income (loss) before income
taxes (9.3) 0.3 (10.9) (5.9)
Provision for income taxes (10.1) (17.7) (40.7) (52.4)
Equity in income (loss) of
affiliated companies, net
of tax 0.1 (1.7) 0.3 (4.1)
-------- -------- -------- --------
Net loss $ (19.3) $ (19.1) $ (51.3) $ (62.4)
======== ======== ======== ========
Net loss per share:
Basic and diluted $ (0.11) $ (0.12) $ (0.29) $ (0.42)
======== ======== ======== ========
EBITDA (1) $ 119.1 $ 128.6 $ 382.6 $ 373.2
Cash earnings (2) $ 22.6 $ 22.0 $ 74.5 $ 60.8
Cash earnings per share (2) $ 0.13 $ 0.14 $ 0.43 $ 0.41
Weighted average shares
outstanding:
Basic and diluted (3) 175.0 161.2 175.0 149.8
======== ======== ======== ========
Cash dividends per common
share $ 0.02 $ -- $ 0.06 $ --
======== ======== ======== ========
Same Store Revenues Data:
Worldwide same store
revenue increase (4) 1.5% 5.7% 5.0% 10.3%
BLOCKBUSTER INC.
SUMMARY OPERATING SEGMENT RESULTS
(In millions, except per share amounts)
Three Months Ended September 30,
-----------------------------------------------
Video New Media
Segment Segment Consolidated
--------------- --------------- ---------------
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
EBITDA (1) $132.1 $129.9 $(13.0) $ (1.3) $119.1 $128.6
Net loss $ (8.6) $(18.2) $(10.7) $ (0.9) $(19.3) $(19.1)
Net loss per share:
Basic and diluted $(0.05) $(0.11) $(0.06) $(0.01) $(0.11) $(0.12)
Cash earnings (loss)(2) $ 33.3 $ 22.9 $(10.7) $ (0.9) $ 22.6 $ 22.0
Cash earnings (loss) per
share (2)(5) $ 0.19 $ 0.14 $(0.06) $(0.01) $ 0.13 $ 0.14
Nine Months Ended September 30,
-----------------------------------------------
Video New Media
Segment Segment Consolidated
--------------- --------------- ---------------
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
EBITDA (1) $419.9 $374.5 $(37.3) $ (1.3) $382.6 $373.2
Net loss $(20.9) $(61.5) $(30.4) $ (0.9) $(51.3) $(62.4)
Net loss per share:
Basic and diluted $(0.12) $(0.41) $(0.17) $(0.01) $(0.29) $(0.42)
Cash earnings (loss)(2) $104.9 $ 61.7 $(30.4) $ (0.9) $ 74.5 $ 60.8
Cash earnings (loss) per
share (2)(5) $ 0.60 $ 0.41 $(0.17) $(0.01) $ 0.43 $ 0.41
(1) EBITDA represents net income (loss) before equity in income (loss)
of affiliated companies (net of tax), benefit (provision) for
income taxes, interest income, interest expense, other items
(net), depreciation and amortization of intangibles. EBITDA may
differ in the method of calculation from similarly titled measures
used by other companies.
(2) Cash earnings reflect net income (loss) before intangible
amortization, net of tax.
(3) The weighted average shares outstanding for the three months and
nine months ended September 30, 2000 includes the effect of our
issuance of 31 million incremental shares in our initial public
offering on August 10, 1999.
(4) This represents the increase over the prior comparable period.
(5) The sum of segment cash earnings (loss) per share may not equal
the consolidated total due to rounding.
BLOCKBUSTER INC.
OTHER DATA
(In millions, except worldwide store count information)
September 30, December 31,
Selected Balance Sheet Data: 2000 1999
------------ -----------
Cash and cash equivalents $ 127.9 $ 119.6
Total debt (excluding capital
lease obligations) $ 1,185.1 $ 1,187.1
Worldwide Store Count Information:
Nine Months Ended
September 30,
-----------------
2000 1999
----- -----
Domestic Company-Operated Stores:
Beginning 3,970 3,497
Net additions 227 354
----- -----
Ending 4,197 3,851
----- -----
International Company-Operated Stores:
Beginning 1,909 1,786
Net additions 66 109
----- -----
Ending 1,975 1,895
----- -----
Franchised and/or Joint Venture Stores:
Beginning 1,274 1,098
Net additions 73 16
----- -----
Ending 1,347 1,114
----- -----
Total Stores Worldwide:
Beginning 7,153 6,381
Net additions 366 479
----- -----
Ending 7,519 6,860
----- -----
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