BLOCKBUSTER INC - FORM 8-K - EX-99.1 - MONTHLY OPERATING REPORT - July 7, 2011

Attached files

file filename
8-K - FORM 8-K - BLOCKBUSTER INCd8k.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

May 2011

 

DEBTORS’ ADDRESS:

      2100 Ross Avenue, 21st Floor
     Dallas, Texas 76092

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

   

5/31/2011

Bruce Lewis

   

Principal Executive Officer

   

Blockbuster Inc.

   

1 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:     May-11
       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 1 of 1

In re

  

BLOCKBUSTER INC., et al.

    Case No.  

10-14997

  Debtor    Reporting Period:  

May-11

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

(in millions)

 

     May 2011     YTD May 2011  

Cash flows from operating activities:

     

Net income (loss)

    $ (4.5 )    $ (197.3 ) 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

     

Depreciation and intangible amortization

      -          39.4   

Rental library purchases

      -          (66.7 ) 

Rental library amortization

      -          113.3   

Loss on sale/disposal of store operations

      -          -     

Impairment of long-lived assets

      -          0.6   

Non-cash share-based compensation

      -          -     

Gain on sale of store operations

      -          -     

Deferred taxes and other

      -          2.1   

Changes in operating assets and liabilities:

        -     

Change in receivables

      -          13.1   

Change in merchandise inventories

      -          44.2   

Change in prepaid and other assets

      -          27.8   

Change in liabilities subject to compromise

      250.0        250.0   

Change in accounts payable

      (150.5 )      (140.1 ) 

Change in accrued expenses and other liabilities

      (148.9 )      (124.0 ) 
                

Net cash provided by (used in) operating activities

      (53.9 )      (37.6 ) 
                

Cash flows from investing activities:

     

Capital expenditures

      -          (5.1 ) 

Change in restricted cash

      31.3        32.1   

Proceeds from sale of store operations

      -          -     

Other investing activities

      -          3.4   
                

Net cash provided by (used in) investing activities

      31.3        30.4   
                

Cash flows from sale of assets to DISH Network:

     

Loss on Sale

      -          (581.9 ) 

Change in rental library on sale

      -          143.4   

Change in merchandise inventories on sale

      -          56.2   

Change in receivables on sale

      -          53.3   

Change in prepaid and other assets on sale

      -          382.2   

Change in fixed assets on sale

      -          87.2   

Change in restricted cash on sale

      -          (20.0 ) 
                

Net cash provided by sale to Dish Network

      0.0        120.4   
                

Cash flows from financing activities:

     

Proceeds from DIP Financing

      -          -     

Repayments on DIP Financing

      -          -     

Repayments on senior secured notes

      (100.0 )      (100.0 ) 

Debt financing costs

      -          -     

Capital lease payments

      -          (0.8 ) 
                

Net cash provided by (used in) financing activities

      (100.0 )      (100.8 ) 
                

Effect of exchange rate changes on cash

      -          -     
                

Net (decrease) increase in cash and cash equivalents

      (122.6 )      12.4   

Cash and cash equivalents at beginning of period

      201.2        66.2   
                

Cash and cash equivalents at end of period

    $ 78.6      $ 78.6   
                

 

FORM MOR-1

Page 1 of 1

In re

   BLOCKBUSTER INC., et al.    Case No.     10-14997
  Debtor    Reporting Period:     May 2011

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  

Cash

   Bank of America   $ 78,572,776      $ -        $ -        $ -        $ 78,572,776   
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
                                             
    Total Cash & Cash Equivalents   $ 78,572,776      $ -        $ -        $ -        $ 78,572,776   

After the sale of substantially all of the Debtors’ assets to DISH Network, the Debtors have one remaining bank account.

 

FORM MOR-1 (CONT.)

Page 1 of 1

In re     BLOCKBUSTER INC., et al.    Case No.     10-14997
  Debtor    Reporting Period:     May 2011

STATEMENT OF OPERATIONS (Income Statement)

(in millions)

 

             May 2011                   0
    YTD  May 2011    		  

Revenues:

         

Base rental revenues

        $ -                  $ 303.5     

Previously rented product (“PRP”) revenues

      -                140.2     
                    

Total rental revenues

      -                443.7     

Merchandise sales

      -                63.0     

Other revenues

      -                12.6     
                    

Total Revenue

      -                519.3     
                    

Cost of sales:

         

Cost of rental revenues

      -                175.9     

Cost of merchandise sold

      -                68.7     
                    

Total cost of sales

      -                244.6     
                    

Gross profit

      -                274.7     
                    

Operating expenses:

         

General and administrative

      4.5              456.8     

Advertising

      -                5.5     

Depreciation and intangible amortization

      -                39.4     

Impairment of goodwill and other long-lived assets

      -                0.6     
                    

Total Operating Expenses

      4.5              502.3     
                    

Operating income (loss)

      (4.5)              (227.6)     

Interest expense

      -                0.6     

Interest income

      -                (0.1)     

Other items, net

      -                (1.4)     
                    

Income (loss) from continuing operations before reorganization items and income taxes

      (4.5)              (228.5)     

Reorganization items, net (income)/loss

      -                (46.9)     

(Benefit)/provision for income taxes

      -                1.0     

Equity in (income)/loss of non-debtor subsidiaries

      -                14.7     
                    

Income (loss) from continuing operations

      (4.5)              (197.3)     

(Loss) from sale of assets to DISH Network

      -                (581.9)     

Income (loss) from discontinued operations, net of tax

      -                -       
                    

Net income (loss)

      (4.5)              (779.2)     

Preferred stock dividends

      -                -       
                    

Net income (loss) applicable to common stockholders

        $ (4.5)                $ (779.2)     
                    

 

FORM MOR-2

Page 1 of 1

In re     BLOCKBUSTER INC., et al.    Case No.     10-14997
  Debtor    Reporting Period:     May 2011

BALANCE SHEET

(in millions)

 

         As of 5/31/2011      

Assets

   

Current assets:

   

Cash and cash equivalents

        $ 78.6     

Receivables, less allowances

      -       

Receivables from non-debtor subsidiaries

      -       

Merchandise inventories

      -       

Rental library, net

      -       

Prepaid and other current assets

      -       
        

Total current assets

      78.6     

Property and equipment, net

      -       

Deferred income taxes

      -       

Investment in non-debtor subsidiaries

      -       

Intangibles, net

      -       

Restricted cash

      22.2     

Other assets

      -       
        

Total Assets

        $ 100.8     
        

Liabilities and Stockholders’ Equity (Deficit)

   

Current liabilities:

   

Accounts payable

        $ 3.4     

Accrued expenses

      5.3     

Debtor-in-possession loan

      -       

Deferred income taxes

      -       
        

Total current liabilities

      8.7     

Other liabilities

      -       
        

Total Liabilities before LSTC

      8.7     

Liabilities subject to compromise

      1,397.6     
        

Total Liabilities

      1,406.3     
        

Total stockholders’ equity (deficit)

      (1,305.5)    
        

Total Liabilities and Stockholders’ Equity (Deficit)

        $ 100.8     
        

 

FORM MOR-3

Page 1 of 1

In re

   BLOCKBUSTER INC., et al.         Case No.     10-14997
   Debtor         Reporting Period:     May 2011

STATUS OF POST-PETITION TAXES

 

Federal   Beginning
Tax		     Amount
Withheld and/or
Accrued		     Amount
Paid		     Ending Tax  

Withholding

   $ (13,542 )    $ 13,542      $             -        $ -     

FICA-Employee

     -          -          -          -     

FICA-Employer

     (15,713 )      15,713        -          -     

Unemployment

     109,133        -          (109,133 )      -     

Income

     -          -          -          -     

Other:            

             -          -             

Total Federal Taxes

     79,878        29,255        (109,133 )      -     

State and Local

                                

Withholding

     83,201        -          (83,201 )      -     

Sales

     3,269,929        95,000        (3,165,938 )      198,991   

Excise

             -          -             

Unemployment

     575,532        -          (575,532 )      -     

Real Property1,2

     54,979        -          -          54,979   

Personal Property2

     2,701,526        -          -          2,701,526   

Other: Income/Franchise

     2,320,480        -          -          2,320,480   

Total State and Local

     9,005,648        95,000        (3,824,671 )      5,275,977   
                                 

Total Taxes

   $     9,085,525      $     124,255      $ (3,933,804 )    $         5,275,977   

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

   $ -        $             -        $             -        $             -        $             -        $ -     

AP - Legal & Professional Fees

     3,406,655        -          -          -          -          3,406,655   

AP - Other

     -          -          -          -          -          -     

TOTAL POST-PETITION DEBTS

   $       3,406,655      $ -        $ -        $ -        $ -        $     3,406,655   

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 assessed by the taxing authority.

The detail of the AP - Legal and Professional Fees can be seen on MOR-6. The bar date of 6/15/11 for administrative claims required all other AP to be reclassified to liabilities subject to comromise.

 

FORM MOR-4

Page 1 of 1

In re  

   BLOCKBUSTER INC., et al.      Case No.     10-14997
   Debtor      Reporting Period:     May 2011

ACCOUNTS RECEIVABLE RECONCILIATION AND AGING

 

Accounts Receivable Reconciliation     Amount  

Total Accounts Receivable at the beginning of the reporting period

  

   $                      -   

Plus: Amounts billed during the period

  

     -   

Less: Amounts collected during the period

  

     -   

Less: Amounts written off during the period

  

     -   

Less: Amounts reserved during the period

  

     -   

Change in store accounts receivable, net

  

     -   

Accounts Receivables sold to DISH Network

  

     -   

Total Accounts Receivable at the end of the reporting period

  

   $ -   
   
Accounts Receivable Aging   4/25/2011        

0 - 30 days old

   $                      -       

31 - 60 days old

     -       

61 - 90 days old

     -       

91 - 120 days old

     -       

121 + days old

     -       

Total Aged Accounts Receivable

     -       

Store Accounts Receivable

     -       

Total Accounts Receivable

     -       

Less: Bad Debts (Amount considered uncollectible)

     -       

Net Accounts Receivable***

   $ -       

 

TAXES RECONCILIATION AND AGING        
                                     
Taxes Payable   Current     1-30 Days     31-60 Days     61-90 Days     91+ Days     Total  

Federal

   $ -        $ -                                $ -     

State and Local

     -                                          -     

Other

     (5,076,986 )      (198,991 )                              (5,275,977 ) 

Total Taxes Payable

   $         (5,076,986 )    $         (198,991 )    $                      -        $                      -        $                    -        $         (5,275,977 ) 

Sales taxes of $198,991 is past due at 5/31/11 due to processing delays after sale of assets to DISH Networks.

 

FORM MOR-5

Page 1 of 1

In re   BLOCKBUSTER INC., et al.    Case No.     10-14997
  Debtor    Reporting Period:     May 2011

PAYMENTS TO INSIDERS AND PROFESSIONALS

 

INSIDERS

 

NAME

       TYPE OF PAYMENT           AMOUNT PAID           TOTAL PAID TO DATE
(1) NONE                                                           
             
             
             
             
             
             
             

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
May 2011		     TOTAL PAID
TO DATE		    

TOTAL INCURRED &

UNPAID*

  

SIDLEY AUSTIN LLP (1)

     9/27/2010      $ 3,742,271      $ -          $ 3,742,271      $ -       
JEFFERIES & COMPANY INC (1)     9/27/2010        1,550,496        -            1,550,496        -       
ALVAREZ & MARSAL NORTH AMERICA LLC (3)     10/27/2010        4,913,864        428,927        4,788,864        125,000   
ROTHSCHILD INC (3)     11/2/2010        3,090,204        104,680        2,847,063        243,141   
KURTZMAN CARSON CONSULTANTS
LLC (3)		     9/23/2010        3,992,552        148,380        3,742,552        250,000   
DJM ASSET MANAGEMENT LLC (3)     11/23/2010        150,000        -            150,000        -       
RETAIL REGROUP INC (3)     11/23/2010        150,000        -            150,000        -       
DELOITTE TAX LLP (3)     11/9/2010        573,010        104,882        452,408        120,602   
SKADDEN ARPS SLATE MEAGHER &
FLOM LLP (1)		     9/27/2010        211,440        11,640        211,440        -       
KORN/FERRY INTERNATIONAL (3)     11/10/2010        161,056        -            142,132        18,924   
COOLEY GODWARD KRONISH LLP (2)     11/23/2010        2,386,981        -            1,889,585        497,396   
FTI CONSULTING (2)     12/2/2010        798,839        100,823        639,071        159,768   
BLOODWORTH CARROLL &
BANOWSKY PC (3)		     11/23/2010        131,516        47,516        131,516        -       
RAY & GLICK LTD. (3)     11/23/2010        767,400        238,000        767,400        -       
CHAIKEN LEGAL GROUP PC (3)     11/23/2010        280,044        44,704        280,044        -       
SHEPPARD MULLIN (1)     9/27/2010        327,327        -            327,327        -       
WEIL GOTSHAL (3)     10/27/2010        5,705,599        -            4,304,749        1,400,850   
PRICEWATERHOUSE COOPERS (3)     2/8/2011        1,733,180        169,213        1,318,544        414,636   
DELOITTE FINANCIAL ADVISORY (3)     2/8/2011        361,046        -            288,837        72,209   
ERNST & YOUNG (3)     4/4/2011        520,643        -            416,514        104,129   
TOTAL PAYMENTS TO PROFESSIONALS      $ 31,547,468      $ 1,398,765      $ 28,140,813      $ 3,406,655   

* INCLUDE ALL FEES INCURRED, BOTH APPROVED AND UNAPPROVED

(1) Fees paid pursuant to the DIP Financing Order for professionals of the DIP lenders and DIP Agent.

(2) Fees for professionals retained to represent Unsecured Creditors’ Committee

(3) Fees for professionals retained to represent Blockbuster Inc.

 

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

   $     -          $             -          $             -       

DIP Interest

                        

Leases Payable

         -                        -                        -       

 

Adequate Assurance Payments - Utilities

         -                        -                        -       

 

Adequate Assurance Payments - Insurance

         -                        -                        -       
                         
                         
                         

TOTAL PAYMENTS

  

   $ -               

FORM MOR-6

Page 1 of 1

In re

    BLOCKBUSTER INC., et al.    Case No.      10-14997
   Debtor    Reporting Period:      May 2011

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

 

4   Post 4/25/11 the Debtors have only one remaining employee and are not required to maintain workers compensation insurance.

 

13   Past due amounts reflect normal processing lag time, vendors not submitting invoices in a timely manner, certain contracts under negotiation, and Pre-Sale Period Administrative Claims (as defined in the Order Pursuant to 11 U.S.C. §§ 105, 363, 364, 365 and 503 and Fed. R. Banker. P. 2002, 4001, 6004, 6006, 9008, 9014, and 9019 Approving (A) Bid Procedures, (B) Stalking Horse Expense Reimbursement, (C) Notice of Sale, Auction and Sale Hearing, (D) Assumption Procedures and Related Notices, (E) Incurrence of Sale-Related Administrative Priority Claims, and (F) Imposition of an Administrative Stay [Doc. No. 1223]). Items delayed by processing lag are normally paid within 60 days.

 

FORM MOR-7

Page 1 of 1

BLOCKBUSTER INC Reports