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Blockbuster Cash Earnings Up 23% in Strong First Quarter

19 Apr, 2001 By: Hive News

Blockbuster Inc. on Thursday announced strong financialresults for the first quarter ended March 31, 2001, according to PRNewswire.

Total revenues for the first quarter increased 8.0% to $1.31 billion compared with $1.21 billion in the first quarter of 2000, due primarily to a 5.3% increase in worldwide same-store revenues and a net increase of 329 company-operated stores since the first quarter of 2000.

Rental revenues increased 9.1% or $93.5 million to$1.12 billion, compared with $1.02 billion in last year's comparable period, driven by extraordinary growth in DVD rental activity.

Cash earnings (net income before goodwill amortization, net of tax) were $46.5 million, or $0.27 per share, up 23% for the first quarter of 2001, compared with $38.1 million, or $0.22 per share for the same period last year.

EBITDA (earnings before interest, income taxes, depreciation and amortization) for the first quarter of 2001 increased to $160.5 million from $150.3 million in the same period last year. Free cash flow (net income before depreciation and amortization and less capital expenditures) increased67% to $99.9 million for the first quarter of 2001 from $59.9 million for the first quarter of 2000 as a result of continued strong growth in the business and lower capital expenditures.

Gross profit increased 9.0% to $779.2 million for the first quarter of 2001 from $714.7 million in the same period last year. Gross profit as a percentage of revenues for the first quarter of 2001 was 59.6%, slightly higher than the same period last year.

Operating expenses (general and administrative, advertising and depreciation and amortization) totaled $725.4 million for the first quarter, compared with $670.0 million in the same period last year. The increase wasprimarily a result of growth in the number of stores and strategic investments in initiatives to improve customer service.

As a percentage of revenue,operating expenses for the first quarter were essentially flat compared withlast year.

"Blockbuster is off to an excellent start this year, both financially andstrategically," said John Antioco, Blockbuster chairman and c.e.o. "Our core rental business continues to thrive with first quarter DVDrental transactions increasing more than 200% year over year.

"Looking ahead, our DIRECTV and RadioShack alliances will complement our growing rentalbusiness and contribute to our momentum throughout 2001 and beyond."

In support of its strategic mission to evolve into a leading provider of a broad array of home entertainment, Blockbuster launched DIRECTV System sales in nearly 3,800 company-operated stores in the third quarter of 2000, quickly becoming one of the nation's top DIRECTV retailers. Based on this success, Blockbuster plans to co-brand the DIRECTV pay-per-view movie channels laterthis year, potentially giving the company access to a new customer base and anincremental source of revenue.

Additionally, using the successful DIRECTV rollout as a model, Blockbusterannounced a strategic alliance in February with RadioShack and is currently onschedule to install RadioShack stores inside 130 Blockbuster locations thissummer with a nationwide rollout planned for 2002.

Worldwide same store revenues for the second quarter are expected to be flat with the same period last year due to the strong slate of titles in the second quarter of 2000, which led to an 11% increase in same store revenues over 1999. Worldwide same store revenues increases are expected to be in the low single-digit range for the full year.

For the full year, the company expects to add approximately 200-250company-operated stores, the majority of which will be domestic.

Capital expenditures for the full year are expected to be approximately $150-$175 million.

The company continues to be confident it will generate solid cash earnings growth for the full-year 2001.

"We are confident about the continued growth of our core business, our ability to achieve our targeted number of DIRECTV subscribers and the launch of our RadioShack alliance, all of which should position us to deliversustainable growth well into the future," said Antioco.

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