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Movie Gallery Settles Late Fee Class Action

25 Apr, 2002 By: Hive News

Movie Gallery, Inc. has settled a class action lawsuit over the way it charges late fees, but will continue to charge late fees.

“We believe the agreement is fair and is of mutual benefit to both Movie Gallery and its valued customers,'' said chairman and CEO Joe Malugen. “We believe that our

extended viewing fee policy is in no way improper and is a valid component of our rental pricing structure. Nevertheless, after considering the time and resources that must be expended to defend multiple cases, we determined that it was in the best interest of our company and our customers to resolve these cases through agreement. This agreement provides value to our customers and allows our management team to focus on our business.”

Movie Gallery's agreement is very similar to the terms of settlement Blockbuster reached in extended viewing fee class action cases last year. Movie Gallery will provide eligible customers with coupons with values ranging from $9 to $16 that can be used toward movie or game rentals or purchases at Movie Gallery and affiliated stores nationwide.

The chain will also revise its membership agreement to clarify its extended viewing fee policy and is changing its pricing structure on certain of its product offerings.

The agreement received preliminarily court approval April 19, but is subject to a fairness hearing scheduled for Nov. 22.

In a separate action, the company announced it saw an unexpected increase in same-store revenues for the first quarter ended April 7, prompting the chain to raise the range for the quarter's earnings per share.

Same-store sales increased by 0.3 percent compared with its targeted range of flat to slightly negative same-store revenues for the quarter, pushing up the targeted range for first-quarter pro forma earnings per diluted share, which excludes the income statement impact of non-cash compensation expense resulting from variable stock options, to $0.33 to $0.35, from the previously announced targeted range of $0.26 to $0.28. The Company also expects its first-quarter earnings per diluted share to be in the range of $0.32 to $0.35.

The chain announce actual first quarter results May 10 .

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