Dallas – Blockbuster is facing insolvency, the company’s forthcoming 10-K filing
The video-rental chain said its annual report will likely
contain a statement from its accounting firm indicating that “substantial doubt
exists with respect to the company’s ability to continue as a going concern” due
to illiquidity from declining cash flow.
Blockbuster said it will
continue to explore strategic and financing alternatives with its advisor,
Rothschild Inc., and will continue to close stores. The company shut 374 of its
7,000-plus locations in 2009 and plans to close an additional 500 to 545 stores
this year, including 253 which shut in January.
At the same time, it
continues to roll out its Blockbuster Express kiosks, developed through an
alliance with NCR, and expects to have at least 10,000 in place by year’s
In a statement accompanying its fourth-quarter and full-year
results, chairman/CEO Jim Keyes acknowledged that “the next 12 to 18 months will
remain challenging as we balance the secular decline of a single channel with
the ascension of emerging channels, such as vending and
Blockbuster posted a net loss of $558.2 million for 2009.
Revenues declined 20 percent to $4.1 billion from the prior year, while
same-store sales declined 15.6 percent.
The company expects to file its
10-K with the Securities and Exchange Commission by March 19.