Blockbuster Posts Net Losses

By TWICE Staff -- TWICE, 3/30/2009

DALLAS — Blockbuster reported a net loss of $374.1 million for its fiscal year, ended Jan. 4, triple the adjusted net loss of $124.3 million for the previous fiscal year.

The retailer also reported a fiscal fourth-quarter $359.8 million net loss, compared with adjusted net income of $57.8 million for the prior year's fourth quarter.

Total revenues for the full year were $5.29 billion, compared with $5.54 billion for the full year in 2007. Total revenues for the fourth quarter were $1.38 billion, compared with $1.57 billion for the same period a year ago.

In making the announcement, James W. Keyes, Blockbuster's CEO, said in a prepared statement that the chain has restructured its debut. The chain has reached agreements with lenders to extend its credit lines through Sept. 30, 2010, and the chain will also look at cost reductions, including compensation and lease costs.

Separately, a few days before Blockbuster released its results, investor Mark Wattles has bought 5.7 percent of Blockbuster stock, sending shares of the beleaguered video rental chain sharply higher yesterday.

Wattles is the founder of one-time rival Hollywood Video, and used the proceeds of its sale to acquire Ultimate Electronics and buy a significant stake in Circuit City, where he agitated for changes in management and strategy.

Wattles successfully rebuffed Blockbuster's attempted acquisition of Hollywood Video in 2005 but supported its proposed buyout of Circuit City last year. Blockbuster ultimately walked away from the deal after performing due diligence on the CE chain.

In a filing, Wattles said he is confident that Blockbuster will be able to avoid a rumored bankruptcy by refinancing its credit lines or paying down debt with cash flow. — Reporting by Alan Wolf and Steve Smith