blockbuster stockholder presentation

8/14/2019 Blockbuster Stockholder Presentation

1/31

1

AnnualS

tockholders

Meeting

Thursday

,May28,2009

JimKeyes,Chairma

nandCEO


2/31


3/31


4/31

4

TheO

ldBlockbuster

TheNewBlockbuster

IncreasedUn

itAvailability

In2008,Blockbusterimprovedunitavailabilityofrentalproduct,which

enabledustore-engagedourcustomers

anddrasticallyimprovesatisfaction


5/31

5

BecameaBlu-rayDestination

Wealsoestablished

ourpresenceasaBlu-raydestination,offeringdemonstrationkiosks,hard

ware,anda

broadsoftwareasso

rtmentwhilemaintaining

prices


6/31

6

EnhancedRe

tailMerchandising

Additionally,weexp

andedourentertainment

offeringtoincludenewp

roductsfromwell-known

brandsthat

leveragedourvisibility,knowledgeablecustomerservicerepresentativ

esandconvenientstore

locations


7/31

7

ImprovedGa

mesExperience

andProductAs

sortment

Assistingourcorecustomersastheymoveintocasualgamesremain

sasignificantopportunityforboth

Blockbusterandgam

evendors;in2008wee

xpandedourretailprese

ncetoincludegamesandincreased

ourhardwareandsoftwareoffering,whilelev

eraginghighervisibilityb

ystrategicallyplacingthemonthe

newreleasewallandsellingadditionalcomplementaryaccessories


8/31

8

RevivedStor

eEnvironment

RedefiningtheBlockbusterexperienceisimp

ortanttosatisfyingourcustomersnowandinto

thefuture


9/31


10/31

10

BetterBlockbus

terROI

(estimatedinvestment$30-50K)

RocktheBlockROI

(excludingBeverageBar)

(estim

atedinvestment$50-10

0K)

Illustrative-StoreEnhancem

entROI

Ordinary

costofCapital

Currentc

ostofCapital

In2008weenhance

dapproximately600dom

esticstores;inthecurre

ntcapitalconstrainedenvironment

wecontinuetopreserveeventticketing,POS

serversandstoremaintenanceaswellasrefine

RTBstores

wherecapitalhasbeeninvested


11/31

11

TotalRevenues

RentalReven

ues

DomesticSame-StoreSales1

Q108

Q40

7

Q307

Q20

7

Q107

Q208

Q308

(6.3%)

(11.8%)

(9.3%)

(0.9%)

2.9%

14.2%

(4.7%)

(11.9%)

(9.9%)

(5.7%)

0.0%

8.4%

5.1%

(0.4%)

Q408

(2.7%)

4.4%

2

1ThissliderepresentstheCompanysComptrend.

2DoesnotincludePRP(PreviouslyRentedProduct);Doesnotincludeonline

1


12/31

12

Withmodestleverageofapproximately2.8xdebttoEBITDA,year-over-yearadjustedEBITDA

(A)

improvementof77%

,strategicpartnerships,

acompetitivemulti-channeldistributionoffering,a

nda

successfulbusiness

transformationwellunderway,webelieveoureq

uityisunder-valuedand

under-

representedontheStreet

$180

$319

(A)AdjustedEBITDAexcludesthestock

-basedcompensationexpenses,costsassociatedwithleaseterminationsandseverance

AdjustedEBITDA($Millions)

StockPric

e($Dollars)

AdjustedEBITDA(A)FiscalYe

ar-Over-Year

77%

$0

$50

$100

$150

$200

$250

$300

$350

2007

2008

$0

$1

$2

$3

$4

$5

$6

$180

$319


13/31

13

2009StrategicInitiatives

Blockbustercontinuestoexecuteitsstrategic

plan,whilereducingcos

tsandmaximizingcashflow

+

In-stockavailability

Newterms&pricing

Newstudioandve

ndorterms/

partnerships

Expandedproductoffering:

BlockbusterPremieres

Diversification:eventticketingand

consignedproducts

Stores

Gamesby-mailoffering

SamepriceBlu-Ray

By-Mail

Marketentryin2009

Addretailandgames

Pilotdigitaldownload

Vending

FurtherreduceSG&Abyo

ver

$200mm(A)

Continuetopursue

outsourcingcontracts

Pursueaggressiveleasec

ost

reductions

Liquidityenhancements

FinancialInitiatives

Adjusted

EBITDAguidance

of$305m

m-$325mm(B)

Reduce

totaldebt

ImprovedResults

(A)Excludesnegativeimpactsofforeigncurrencye

xchangeandinflation.

(B)Adju

stedEBITDAexcludesthestock-basedcom

pensationexpenses,costsassociatedwithleaseterminations,

severanceandanadjustmentforgameinventory

obsolescenceandthefavorablesettlemen

toffutureliabilities

Digital

Strategicalliances(C

Edevice

manufacturersandin

frastructure)


14/31

14

ChooseYou

rTerms

Wealsoaimtodeliv

eracompellingvaluepropositionthroughCYTrentalthatprovidesconsu

merswiththe

choice,flexibilityandcontrol,whiledrivingstoretrafficandincreasing

revenues


15/31

15

Blockbusterwillcontinuetodeliverholisticim

provementstotheovera

llstoreexperiencewithm

inimal

capitalexpensebyleveragingcurrentCompa

nyresourcesandconsig

nedmodel;asaresult,c

ustomers

willf

inditeasiertom

akeproductselectionst

hroughtheuseofmerchandisingstoriesthatdeliv

er

impactful,relevanta

ndtrustedoptions

ImproveShoppingEnvironmentandProduct

Mix


16/31

16

AdvertisingC

ampaign:Escape-In

Wheredoyouturnforanentertainmentesca

pe?Whetherin-store,by

-mail,vending,onlineor

athome,

BlockbusteroffersthousandsofmoviesandgamesthathelpyouEscape-In


17/31

17

Vending:Blo

ckbusterExpres

s

Capacityforup

toapproximately1000discs,

providinglargerselectionincludingcatalog

titles

17highresolutiontouchscreeninterfac

ewith

robustsearchc

apabilities

Abilitytoreturn

rentalstoanyBlockbuster

Express

Smallfootprintforindoorandoutdoor

placement;targ

etingtraditionalandnon-

traditionalgeog

raphiclocations

Upgradeableto

accommodatedigitalcontent

downloading


18/31

18

MoreConven

ientLocations

Convenient

Convenient

neighborhood

store

neighborhood

store

withCE,content,

withCE,content,

andservic

e

andservic

e

3,000

3,000--5,000s

q.ft.

5,000s

q.ft.

Smallfootprint,new

S

mallfootprint,new

release

release--centric,

centric,

smallproducts

smallproducts

assortment

assortment

1

,000

1

,0002,000sq.ft.

2,000sq.ft.

Convenient,tr

usted

Convenient,tr

usted

sourceforfast,

sourceforfast,

reliableserv

ice

reliableserv

ice

1515--20sq.

ft.

20sq.

ft.

In

ternetReservation

InternetReservation

TechnologyServices

TechnologyServices

Wecandeliveraun

iformvaluepropositionacrossmultipleretailchan

nels,whetheratraditiona

lBlockbuster

store,asmallerfootprinturbanstoreoraven

dingmachineataneighborhoodconvenienceordrugstore;

thetiethatbindsistheBlockbusterexperience:thesamelookandfeel,thesamevaluepropositionsand

thesamereliablese

rvicethatprovidesconve

nience,availability,selectionandprice

SmallBox

SmallBox

SmallBox

Urban

Urban

Urban

Vending

/

Kiosk

Vending

/

Vending

/

Kiosk

Kiosk


19/31

19

DevelopBey

ondtheBoxDe

liveryChannels

DigitalKiosk

DigitalKiosk

DigitalKiosk

Computer

Computer

Computer

PortableD

evice

PortableDevice

PortableDevice

At-Home

AtAt--Home

Home

Blockbusterwillcontinuetoimproveitsdigita

ldistributioncapabilities,

fromdigitalkioskdeploy

menttoat-

homesolutions,ino

rdertoprovidewheneve

r,whereversolutionsto

customers


20/31

20

An

ywhereAnyWay

In-Store

By-Mail

Vending/

Kiosk

Online

At-Home

Rent

Buy

Subscr

ibe

WhyWeWin

Ourcompetitiveedg

eisthatweprovideconv

enientaccesstomediae

ntertainmentacrossallp

latformsand

channels,providing

ourcustomerswiththeflexibilityandcontroltheyrequire


21/31

21

1Q2009FinancialReview

Thursday

,May28,2009

TomCasey,EV

PandCFO


22/31

22

Q1'08

Q1'09

%Increase/

Actual

Actual

(Decreas

e)

Labor

229

$

183

$

(19.9%)

Occup

ancy

216

$

193

$

(10.5%)

Above-Store

88

$

64

$

(27.1%)

OtherG&A

69

$

53

$

(22.9%)

TotalS

G&A,pre-Mktg.

601

$

493

$

(17.9%)

YOYIncrease/(Decrease)

(108)

$

Marketing

31

$

12

$

(61.3%)

TotalS

G&A

632

$

505

$

(20.0%)

YOYIncrease/(Decrease)

(127)

$

ContinuedReductionofSG&

A

TheCompanycontinuestoexecuteaccordin

gtoplanandisontracktoreduceSG&Abyover

$200Mn(A)in

fiscal2009

(A)

Excludesimpactsofforeigncurrencyexchangeandinflation


23/31

23

CapitalStruc

ture(asofApril5

,2009)

Blockbustersmodestleverageratiois2.7xd

ebttoEBITDA

($inmillions)

4/5/2009

%ofCap

2009EBITDA

Interestrate

Maturity

Cashandequivalents

$107.0

Revolver

$205.0

18.3%

0.6x

L+3.25%

8/20/2009

TermloanAfacility

10.0

0.9%

0.0x

L+3.25%

8/20/2009

TermloanBfacility

333.7

29.8%

1.0x

L+3.50%

8/20/2011

Totalbankdebt

$548.7

49.0%

1.7x

9.00%Seniorsubno

tes

300.0

26.8%

0.9x

9.00%

9/1/2012

Capitalleases

32.5

2.9%

0.1x

Various

Totaldebt

$881.2

78.6%

2.7x

Convertiblepreferred

equity

150.0

13.4%

7.50%Dividend

Perpetual

Bookequity-commo

n

89.4

8.0%

Totalequity

$239.4

21.4%

Totalcapitalization

$1,120.6

100.0%


24/31

24

FundingActi

vity(sinceApril5

,2009)

CashandcashequivalentsasofApril5,2009

107.0

$

ProceedsfromCanadianABL(A)

21.4

$

ProceedsfromAmendedRevolver(B)

2

50.0

Paypre-am

endmentrevolverbalanc

e

(2

05.0)

Payfeeso

namendedcreditfacility

(

24.3)

Netproceedsfromfunding

42.1

Proceedsfromgamesinventorysale

16.4

Cashused

tocollateralizelettersofcredit(C)

(1

18.3)

Netcasho

utflowfromtransactions

(101.9)

Pro-Forma

cashasofMay12,2009

(D)(E)

47.2

$

(A)ConvertedtoUSDollarsbasedo

ntheMay11,2009excha

ngerate

(B)AsofM

ay12,2009

(C)Includesreductioninlettersofcr

edit,includingsettlementoflitigationbond

(D)April5

cashbalancelesscashoutflowfromtransactions

(E)Doesn

otincludecashgenerated

bythebusinessinthemonthleadinguptofunding


25/31


26/31

26

MaximizeCashFlowandLiquidity

Blockbusterscosts

arevariableandcontrollable,allowingtheCompa

nytomaximizecashflow

Capital

Expenditures

Working

Capital

Consistentwithdevelopingprese

nceinretail,Blockbusteraddedretailinventoryin2008

Thecompanyhasbudgetedlessworkingcapitalinvestmentsin

2009,withtheexceptionofnormalseasonalholidaybuilds

Reductioninmerchandiseinventoryandmoreefficientallocationwilldrivetheimprovementinnetworkingcapital

2009roll-outofnewpricingstructure,ChooseYourTerms,willleadtoaninventoryreductioninrentalproduct

CapExwillbemaintenancelevelo

f$30Mnin2009,representingare

ductionofover$80Mncomparedtofiscal2008

PreservesinvestmentinPOSservers,eventticketing,kiosks

andnominalstoremaintenance

Defersmajorstoreremode

ls(e.g.RocktheBlock)

ContinuedSG&Areductionsin2009;over$200Mnforthefullyear,excludingimpactsofforeigncurrenc

yexchangeandinflation

Selectivestoreclosures

Aggressiveleasecostsavings

Outsourcinginitiatives

Further

Reduce

SG&A


27/31

27

$21M

LiquidityEnh

ancements De

scription

Benefit

Internatio

nal

assetsales

SaleofIn

tlassets

Storeclosures

Closureoflessprofitablestores

CanadianABL

TermLoan

LCreduction

$10M

Settlementofunderlyinglitigation

Blockbusterhasrec

entlyenhancedliquidity,

withadditionalopportunitiesplanned

Asset-BasedLoantosupportCanadian

operation

s(U.S.

Dollars)

ViacomL

C

Reduction

ReductioninViacomL

C

ExcessInve

ntory

Reduction

$16M

Saleofex

cessretailg

amessoftware,

har

dware

andaccessories

Completed

Plannedin

2009

Description

Benefit

Over$25M

Over$25M

Over$100M


28/31

28

ThankYou!


29/31

29

Reconciliatio

nofNetIncome

toAdjustedEBITDA($inMillions)

FiscalQuarterEnded

April5,2009

April6,2008

Reconciliationofadju

stednetincome(loss):

Income(loss)fromcontinuingoperations

27.7

$

45.7

$

Adjustmentstoreconcileincome(loss)fromcontinuing

operations

toadjustednetincome

(loss):

Storeclosurecostsincludingleaseterminations

(recurring)

3.4

2.8

Severancecosts

(no

n-recurring)

1.1

-

Gameinventoryobsolesenceadjustment(non-recurring)

16.7

-

Settlementoffutureliability(non-recurring)

(7.6)

-

Adjustednetincome(lo

ss)

41.3

48.5

Preferredstockdivide

nds

(2.8)

(2.8)


ss)applicabletocommonstock

holders

38.5

$

45.7

$


ss)percommonshare-diluted

0.19

$

0.21

$

Reconciliationofadju

stedoperatingincome(loss):

Operatingincome(loss)

50.1

$

70.2

$

Adjustmentstoreconcileoperatingincome(loss)toadjusted

operatingincome(loss)

:

Storeclosurecostsincludingleaseterminations

(recurring)

3.4

2.8

Severancecosts(non

-recurring)

1.1

-

Gameinventoryobsolesenceadjustment(non-recurring)

16.7

-

Settlementoffutureliability(non-recurring)

(7.6)

-

Adjustedoperatinginco

me(loss)

63.7

$

73.0

$


30/31

30

Reconciliatio

nofAdjustedEBITDA($inMillio

ns) F

iscalQuarterEnded

April5,2009

April6,2008

Reconciliationofad

justedEBITDA:

Netincome(loss)

27.7

$

45.4

$

Adjustmentstorecon

cilenetincome(loss)toadjuste

d

(Income)lossfromdiscontinuedoperations,netof

tax

-

0.3

Provisionforincometaxes

5.6

6.8

Interestandotherin

come,net

16.8

17.7

Depreciationandintangibleamortization

34.8

39.9

EBITDA

84.9

$

110.1

$

Leaseterminationc

ostsincurredforstoreclosures

(recurring)

1.1

0.2

Severancecosts(non-recurring)

1.1

-

Stockcompensation

(recurring)

2.0

4.2

Gameinventoryobsolesenceadjustment(non-recu

rring)

16.7

-

Settlementoffuture

liability(non-recurring)

(7.6)

-

AdjustedEBITDA

98.2

$

114.5

$


31/31

31

GuidanceRe

conciliation($in

Millions)

ullYear2009Guidan

ceReconciliation:

Low

High

etincome(loss)

40.0

$

60.0

$

djustmentstoreconcilenetincome(loss)toadjuste

d

BITDA:

Provisionforincometaxes

24.0

24.0

nterestandotherincome,net

99.0

99.0

Depreciationandintangibleamortization

122.0

122.0

Stockcompensation

8.0

8.0

Otheradjustingitems

12.0

12.0

djustedEBITDA

305.0

$

325.0

$

GuidanceRange

blockbuster stockholder presentation

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