BLOCKBUSTER INC - FORM 8-K - EX-99.1 - MONTHLY OPERATING REPORT

Attached files

file	filename
8-K - FORM 8-K - BLOCKBUSTER INC	d8k.htm

Exhibit 99.1

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK


	X
In re:		:	Chapter 11
		:
BLOCKBUSTER INC., et al.¹		:	Case No: 10-14997
		:
Debtors.		:	Jointly Administered
		X

Monthly Operating Report For the Period

From November 1, 2010 to November 28, 2010


DEBTORS’ ADDRESS:		1201 Elm Street
		Dallas, Texas 75270
		Telephone: (214) 854-3000
		Facsimile: (214) 854-4848

DEBTORS’ ATTORNEYS:		Stephen Karotkin
		WEIL, GOTSHAL & MANGES LLP
		767 Fifth Avenue
		New York, New York 10153
		Telephone: (212) 310-8800
		Facsimile: (212) 310-8007
		-and-
		Martin A. Sosland (admitted pro hac vice)
		WEIL, GOTSHAL & MANGES LLP
		200 Crescent Court, Suite 300
		Dallas, Texas 75201
		Telephone: (214) 746-7700
		Facsimile: (214) 746-7700

This Monthly Operating Report (“MOR”) has been prepared solely for the purpose of complying with the monthly reporting requirements applicable in these chapter 11 cases and is in a format acceptable to the United States Trustee. The financial information contained herein is limited in scope and covers a limited time period. Moreover, such information is preliminary and unaudited, and is not prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States.

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.


/s/ Bruce Lewis				12/28/2010
Bruce Lewis
Senior Vice President and Controller
Blockbuster Inc.

The Debtors, together with the last four digits of each Debtor’s federal tax identification number, are Blockbuster Inc. (5102); Blockbuster Canada Inc. (1269); Blockbuster Digital Technologies Inc. (9222); Blockbuster Distribution, Inc. (0610); Blockbuster Gift Card, Inc. (1855); Blockbuster Global Services Inc. (3019); Blockbuster International Spain Inc. (7615); Blockbuster Investments LLC (6313); Blockbuster Procurement LP (2546); Blockbuster Video Italy, Inc (5068); Movielink, LLC (5575); Trading Zone Inc. (8588); and B2 LLC (5219).

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

		Federal Tax I.D. #	52-1655102

CORPORATE MONTHLY OPERATING REPORT


REQUIRED DOCUMENTS	Form No.	Document Attached	Explanation Attached
Schedule of Cash Receipts and Disbursements	MOR-1	x
Bank Reconciliation (or copies of debtor’s bank reconciliations)	MOR-1 (CON’T)	x
Copies of bank statements			x
Cash disbursements journals			x
Statement of Operations	MOR-2	x
Balance Sheet	MOR-3	x
Status of Post-petition Taxes	MOR-4	x
Copies of IRS Form 6123 or payment receipt			x
Copies of tax returns filed during reporting period			x
Summary of Unpaid Post-petition Debts	MOR-4	x
Listing of Aged Accounts Payable			x
Accounts Receivable Reconciliation and Aging	MOR-5	x
Taxes Reconciliation and Aging	MOR-5	x
Payments to Insiders and Professionals	MOR-6	x
Post Petition Status of Secured Notes, Leases Payable	MOR-6	x
Debtor Questionnaire	MOR-7	x

FORM MOR

Page 2 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

(in millions)


	4 weeks ended 11/28/2010			For the Period 9/23/2010-11/28/2010
Cash flows from operating activities:
Net income (loss)	$	(42.1	)	$	(78.6	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and intangible amortization		6.0			22.2
Rental library purchases		(17.1	)		(51.3	)
Rental library amortization		20.6			41.3
Loss on sale of store operations		19.3			19.3
Non-cash share-based compensation		—			—
Gain on sale of store operations		—			—
Deferred taxes and other		(5.9	)		(28.7	)
Reorganization items, net of cash payments		0.1			5.5
Changes in operating assets and liabilities:
Change in receivables		(1.4	)		1.3
Change in merchandise inventories		(14.4	)		(22.7	)
Change in prepaid and other assets		(12.6	)		(5.9	)
Change in accounts payable		35.0			88.1
Change in accrued expenses and other liabilities		(4.1	)		14.1

Net cash provided by (used in) operating activities		(16.6	)		4.6

Cash flows from investing activities:
Capital expenditures		(1.6	)		(4.0	)
Change in restricted cash		0.7			0.8
Proceeds from sale of store operations		3.3			3.3
Other investing activities		0.1			0.1

Net cash provided by (used in) investing activities		2.5			0.2

Cash flows from financing activities:
Proceeds from DIP Financing		53.8			73.8
Repayments on DIP Financing		(30.5	)		(50.5	)
Debt financing costs		—			(4.6	)
Capital lease payments		(0.3	)		(0.7	)

Net cash provided by (used in) financing activities		23.0			18.0

Effect of exchange rate changes on cash		—			—

Net decrease in cash and cash equivalents		8.9			22.8
Cash and cash equivalents at beginning of period		52.2			38.3

Cash and cash equivalents at end of period	$	61.1		$	61.1

FORM MOR-1

Page 3 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

BANK RECONCILIATIONS

Continuation Sheet for MOR-1


GL#	Bank Name	Bank Balance		Deposits & Transfers in Transit			O/S, Bank Service Charges, Adjustments to GL			Other Reconciling Items			GL Balance
575.1017.0003	Wachovia ProCo	$	257,250	$	—		$	—		$	—		$	257,250
80017.1017.0005	JPM Chase Lockbox		35,899		(345	)		—			(4,993	)		30,561
25.1017.0006	Wells Fargo Avista Funding		280,047		—			—			—			280,047
03101.1017.0006	Wachovia Funding		2,186,080		—			—			—			2,186,080
03501.1017.0006	JPM Chase Met Life Funding		52,268		—			—			—			52,268
03101.1019	Wachovia Cash Concentration		—		2,137,812			—			—			2,137,812
25.1024	Right of Setoff		—		—			—			—			123,460
25.1025	Wells Fargo Avista Disbursements		—		—			(277,679	)		—			(277,679	)
575.1025	Wachovia ProCo AP Disbursements		—		—			(1,098	)		—			(1,098	)
03101.1025	Wachovia AP Disbursements		—		—			(1,729,705	)		—			(1,729,705	)
03501.1025	BofA Sedgwick Ins Disbursements		83,007		—			(205,434	)		(703	)		(123,131	)
80017.1025	BofA AP Disbursements		—		—			(506	)		—			(506	)
03101.1026	Wachovia EFT		—		—			—			0			0
03101.1032	Wachovia Payroll Disbursements		—		—			(674,522	)		49,507			(625,014	)
xxxxx.10370000	Single Store depository only accounts*		—		—			—			—			1,506,489
xxxxx.10380000	Store concentration accounts		4,601,501		4,627,278			(35,578	)		(78,861	)		9,114,340
03101.10390000	Bank of New York Returned Checks		1,358					(55	)		—			1,303
xxxxx.10480000	Cash - Store Drawer		—		—			—			—			2,284,350
1049.0001	OL NRP Sale-Corp E-Comm		—		(4,303	)		—			—			(4,303	)
1049.0002	OL NRP Return - Corp Ecomm		—		1,819			—			—			1,819
1049.0005	Ecomm Tender Clearing		—		13,771			—			—			13,771
1049.0006	Ecomm Refund Clearing				335			—			—			335
1049.0008	Ecomm Digital Rental		—		(288	)		—			—			(288	)
1049.0009	Ecomm Digital Rental Refund				123									123
1049.0010	Host Payment Tender Clearing		—		—			—			—			16,808
xxxxx.1060.0001	Mastercard/Visa Draft Capture		—		11,991,929						(5,439	)		11,986,491
xxxxx.1060.0002	American Express Draft Capture		—		1,116,705			—			(2,927	)		1,113,779
xxxxx.1060.0004	Discover Draft Capture		—		748,701			—			(870	)		747,832
xxxxx.1060.0006	Debit Card Draft Capture		—		4,240,413			—			(3,940	)		4,236,473
xxxxx.1060.0007	E-check Draft Capture		—		66,368			—			0			66,368
xxxxx.1060.0011	Paypal Draft Capture		—		41,961			—			0			41,962
03101.1078.0004	Wachovia Overnight Investment		36,332,000		(8,871,783	)		—			—			27,460,217
25.1078.0005	Citigroup Investments		193,843		—			—			—			193,843

	Total Cash & Cash Equivalents	$	44,023,253	$	16,110,498		$	(2,924,577	)	$	(48,224	)	$	61,092,056

*	Single store depository accounts are reconciled one month in arrears.

Note: Due to the voluminous nature of the request for the Debtors’ bank statements and disbursement journals, summaries of these requests have been provided.

FORM MOR-1 (CONT.)

Page 4 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

STATEMENT OF OPERATIONS (Income Statement)

(in millions)


	4 weeks ended 11/28/2010			For the Period 9/23/2010-11/28/2010
Revenues:
Base rental revenues	$	98.0		$	224.4
Previously rented product (“PRP”) revenues		18.8			43.9

Total rental revenues		116.8			268.3
Merchandise sales		22.4			45.4
Other revenues		3.4			6.7

		142.6			320.4

Cost of sales:
Cost of rental revenues		41.8			89.9
Cost of merchandise sold		17.3			34.9

Total cost of sales		59.1			124.8

Gross profit		83.5			195.6

Operating expenses:
General and administrative		83.8			198.9
Advertising		9.0			11.2
Depreciation and intangible amortization		6.0			22.2
Impairment of goodwill and other long-lived assets		—			—

		98.8			232.3

Operating income (loss)		(15.3	)		(36.7	)
Interest expense		0.3			0.7
Interest income		—			—
Other items, net		0.4			0.3

Income (loss) from continuing operations before reorganization items and income taxes		(16.0	)		(37.7	)
Reorganization items, net		4.0			15.8
Benefit (provision) for income taxes		0.2			0.5
Equity in income of non-debtor subsidiaries		2.6			5.3

Income (loss) from continuing operations		(22.8	)		(59.3	)
Income (loss) from discontinued operations, net of tax		(19.3	)		(19.3	)

Net income (loss)		(42.1	)		(78.6	)
Preferred stock dividends		—			—

Net income (loss) applicable to common stockholders	$	(42.1	)	$	(78.6	)

FORM MOR-2

Page 5 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

BALANCE SHEET

(in millions)


	As of 11/28/2010
Assets
Current assets:
Cash and cash equivalents	$	61.1
Receivables, less allowances		30.1
Receivables from non-debtor subsidiaries		14.7
Merchandise inventories		111.8
Rental library, net		199.5
Prepaid and other current assets		83.5

Total current assets		500.7
Property and equipment, net		138.6
Deferred income taxes		70.6
Investment in non-debtor subsidiaries		277.4
Intangibles, net		5.9
Restricted cash		34.3
Other assets		38.1

	$	1,065.6

Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	133.1
Accrued expenses		195.1
Debtor-in-possession loan		23.3
Deferred income taxes		70.7

Total current liabilities		422.2
Other liabilities		12.2

		434.4
Liabilities subject to compromise		1,165.0

		1,599.4

Total stockholders’ equity (deficit)		(533.8	)

	$	1,065.6

FORM MOR-3

Page 6 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

STATUS OF POST-PETITION TAXES


Federal	Beginning Tax		Amount Withheld and/or Accrued		Amount Paid			Ending Tax
Withholding	$	1,142,352	$	2,510,767	$	(2,352,197	)	$	1,300,922
FICA-Employee		1,072,697		2,374,870		(2,276,912	)		1,170,656
FICA-Employer		1,072,697		2,374,870		(2,276,912	)		1,170,656
Unemployment		71,656		52,974		—			124,630
Income									—
Other:

Total Federal Taxes		3,359,402		7,313,481		(6,906,020	)		3,766,864

State and Local
Withholding		356,236		788,531		(383,587	)		404,944
Sales		8,707,884		10,904,835		(11,910,052	)		7,702,666
Excise		—		—		—
Unemployment		344,836		222,017		—			566,853
Real Property^1,2		10,255		50,143		—			60,398
Personal Property²		3,822,859		522,660		(891,496	)		3,454,023
Other: Income/Franchise³		1,671,083		208,852		(31,067	)		1,848,868
Total State and Local		14,913,152		12,697,038		(13,216,201	)		14,037,753

Total Taxes	$	18,272,554	$	20,010,520	$	(20,122,222	)	$	17,804,617

SUMMARY OF UNPAID POST-PETITION DEBTS

Attach aged listing of accounts payable.


			Number of Days Past Due
DESCRIPTION	Current		0-30			31-60			61-90			Over 91			Total
AP - Product	$	54,220,577	$	3,958,389		$	(8,286,322	)	$	(6,575,248	)	$	(429,151	)	$	42,888,245
AP - Legal & Professional Fees		1,218,457		(205,640	)		353,412			—			—			1,366,229
AP - Other		7,082,270		1,006,679			(550,940	)		(111,701	)		(538,379	)		6,887,930

TOTAL POST-PETITION DEBTS⁴	$	62,521,305	$	4,759,428		$	(8,483,850	)	$	(6,686,949	)	$	(967,530	)	$	51,142,404

Explain how and when the Debtor intends to pay any past due post-petition debts.

Past due product amouts pending accomodation agreements. Past due legal amounts pending other requirements.

Other past due amounts reflect normal processing lag time, vendors not submitting invoices in a timely manner and certain contracts under negotiation.

Items delayed by processing lag are normally paid within 60 days. Balances related to contracts under negotiation will be paid upon resolution.

Past due credits reflect payments in advance and product return credits.

1 - Blockbuster leases the substantial majority of its stores. Accordingly, real property taxes paid pursuant to such lease obligations are not reported herein as such payments are captured within leases payable.

2 - The Real Property and Personal Property taxes are considered “postpetition” based off of when the payment is due to the taxing authority.

3 - Although Franchise/Income taxes are “incurred” on an accrual basis, we have included prepetition accruals since the payments for these taxes will be based on the entire year.

4 - Variance to total accounts payable on Balance Sheet is due to pre-petition balances that are not subject to compromise and have been approved for payment by order of the Bankruptcy Court or relate to various accounts payable accrual amounts that are not aged.

5 - Due to the voluminous nature of the request for the Debtors’ listing of aged accounts, a summary has been provided.

6 - Due to the voluminous nature of this request, the Debtors have not included copies of Form 6123 and tax returns filed during this period.

FORM MOR-4

Page 7 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

ACCOUNTS RECEIVABLE RECONCILIATION AND AGING


Accounts Receivable Reconciliation	Amount
Total Accounts Receivable at the beginning of the reporting period	$	28,571,477
Plus: Amounts billed during the period		6,695,714
Less: Amounts collected during the period		(4,368,778	)
Less: Amounts written off during the period		—
Less: Amounts reserved during the period		(268,781	)
Change in store accounts receivable, net		(570,444	)

Total Accounts Receivable at the end of the reporting period	$	30,059,188


Accounts Receivable Aging	11/28/2010
0 - 30 days old	$	14,832,963
31 - 60 days old		839,775
61 - 90 days old		1,256,626
91 - 120 days old		1,784,484
121+ days old		880,895
Total Aged Accounts Receivable		19,594,743
Store Accounts Receivable¹		16,612,460
Total Accounts Receivable		36,207,203
Less: Bad Debts (Amount considered uncollectible)		(6,148,015	)

Net Accounts Receivable	$	30,059,188

1 - All store accounts receivable are less than 90 days.

TAXES RECONCILIATION AND AGING


Taxes Payable	Current		1-30 Days	31-60 Days	61-90 Days	91+ Days	Total
Federal	$	3,766,864					$	3,766,864
State and Local		14,037,753						14,037,753
Other

Total Taxes Payable	$	17,804,617					$	17,804,617

FORM MOR-5

Page 8 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 -11/28/2010

PAYMENTS TO INSIDERS AND PROFESSIONALS

INSIDERS

NAME

TYPE OF PAYMENT

AMOUNT PAID

TOTAL PAID TO DATE

(1)

TOTAL PAYMENTS TO INSIDERS

(1)	No payments other than ordinary wages and benefits occurred during the reporting period.


PROFESSIONALS
NAME	DATE OF COURT ORDER AUTHORIZING PAYMENT		AMOUNT APPROVED		AMOUNT PAID		TOTAL PAID TO DATE		TOTAL INCURRED & UNPAID*
Sidley Austin LLP**		9/27/2010	$	737,041	$	321,766	$	737,041	$	—
Jefferies & Company Inc**		9/27/2010		343,473		118,473		343,473		—
Skadden, Arps, Slate, Meagher & Flom LLP**		9/27/2010		28,343		28,343		28,343		—

TOTAL PAYMENTS TO PROFESSIONALS			$	1,108,856	$	468,582	$	1,108,856	$	—

*	INCLUDE ALL FEES INCURRED, BOTH APPROVED AND UNAPPROVED

**	Fees paid pursuant to the DIP Financing Order for professionals of the DIP lenders and DIP Agent.

POST-PETITION STATUS OF SECURED NOTES, LEASES PAYABLE

AND ADEQUATE PROTECTION PAYMENTS


NAME OF CREDITOR	SCHEDULED MONTHLY PAYMENT DUE		AMOUNT PAID DURING MONTH		TOTAL UNPAID POST- PETITION
DIP Financing***	$	—	$	1,646,980	$	23,253,020
DIP Interest***				—		176,637
Leases Payable		28,223,188		27,844,728		378,460
Adequate Assurance Payments - Utilities		134,270		134,270		—
Adequate Assurance Payments - Insurance		2,000,000		2,000,000		—

TOTAL PAYMENTS			$	31,625,978	$	23,808,117

***

During the period, Debtor borrowed $53.8 million and repaid $30.5 million. In accordance with the Final Order (I) Authorizing Postpetition Superpriority Secured Financing Pursuant to 11 U.S.C. §§ 105(a), 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e), (II) Authorizing Postpetition Use of Cash Collateral Pursuant to 11 U.S.C. § 363, and (III) Granting Adequate Protection Pursuant to 11 U.S.C. §§ 361, 362, 363 and 364 [Docket No. 432] (the “DIP Financing Order”), payments are not scheduled on a monthly basis, but are due based on certain covenants in the DIP Financing Order or at the discretion of the Debtors.

FORM MOR-6

Page 9 of 10


In re	BLOCKBUSTER INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	11/1/2010 - 11/28/2010

DEBTOR QUESTIONNAIRE


	Must be completed each month. If the answer to any of the questions is “Yes”, provide a detailed explanation of each item. Attach additional sheets if necessary.	Yes	No
1	Have any assets been sold or transferred outside the normal course of business this reporting period?		X
2	Have any funds been disbursed from any account other than a debtor in possession account this reporting period?		X
3	Is the Debtor delinquent in the timely filing of any post-petition tax returns?		X
4	Are workers compensation, general liability or other necessary insurance coverages expired or cancelled, or has the debtor received notice of expiration or cancellation of such policies?		X
5	Is the Debtor delinquent in paying any insurance premium payment?		X
6	Have any payments been made on pre-petition liabilities this reporting period?	X
7	Are any post petition receivables (accounts, notes or loans) due from related parties?	X
8	Are any post petition payroll taxes past due?		X
9	Are any post petition State or Federal income taxes past due?		X
10	Are any post petition real estate taxes past due?		X
11	Are any other post petition taxes past due?		X
12	Have any pre-petition taxes been paid during this reporting period?	X
13	Are any amounts owed to post petition creditors delinquent?	X
14	Are any wage payments past due?		X
15	Have any post petition loans been received by the Debtor from any party?	X
16	Is the Debtor delinquent in paying any U.S. Trustee fees?		X
17	Is the Debtor delinquent with any court ordered payments to attorneys or other professionals?		X
18	Have the owners or shareholders received any compensation outside of the normal course of business?		X

6	Pre-petition amounts have been paid under respective Court orders.

Subject to the provisions of the DIP Financing Order and agreement with the lenders thereunder, the Debtors are authorized to enter into certain limited ordinary course intercompany transactions with their foreign non-debtor affiliates. During this period, the Debtors have entered into such ordinary course transactions that have resulted in receivables from these foreign non-debtor affiliates.

12	Pre-petition taxes have been paid under the Final Order Pursuant to 11 U.S.C. §§ 105(a), 363(b), 507(a)(8), and 541 and Fed R. Bank. P.6003 and 6004 Authorizing Debtors to Pay Prepetition Taxes and Assessments [Docket No. 355].

13	Other past due amounts reflect normal processing lag time, vendors not submitting invoices in a timely manner and certain contracts under negotiation. Items delayed by processing lag are normally paid within 60 days. Balances related to contracts under negotiation will be paid upon resolution.

15	In accordance with the DIP Financing Order, borrowings of $53.8 million and payments of $30.5 million were made during the period. As of November 28, 2010, there was a $23.3 million outstanding balance under the revolving loans.

FORM MOR-7

Page 10 of 10

Attached files

BLOCKBUSTER INC Reports

Also read