MOVIE GALLERY REPORTS TOTAL REVENUES AND SAME-STORE SALES
FOR THE THIRD QUARTER OF 2006
Filing of Form 10-Q Delayed
DOTHAN, Ala., November 14, 2006 - Movie Gallery, Inc. (Nasdaq: MOVI) today
reported total revenues and same-store sales for the third quarter 2006.
* Same-store total revenues for the third quarter of 2006 remained
relatively flat, declining 0.4% versus the comparable period last year.
Same-store total revenues increased 3.0% at Movie Gallery branded stores
and decreased 1.9% at Hollywood branded stores compared to the third
quarter of 2005. Additional details are provided in the supplemental
table accompanying this release.
* For the third quarter of 2006, Movie Gallery's total revenues were
$583.0 million, an increase of 1.8% as compared to total revenues of
$572.4 million in the third quarter of 2005.
* Gross profit totaled $363.2 million in the third quarter of 2006
versus $366.1 million in the comparable year-ago period.
"We are encouraged by the sequential quarterly improvement during 2006
that we have seen in our same-store sales across both brands as well as
our continued progress on various cost savings efforts and our previously
announced real estate initiatives," said Joe Malugen, Chairman, President
and Chief Executive Officer of Movie Gallery. "While our industry
continues to face a number of near-term challenges, we are optimistic
that the strong new release title slate and the launch of new game
platforms will help drive even greater customer traffic through the
fourth quarter of 2006 and into 2007."
The Company also announced today that it is postponing the reporting of
its third quarter financial results and the filing of its quarterly report
on Form 10-Q due to an accounting matter currently under review. Movie
Gallery is working with its independent auditor to review its accounting
treatment for end of term store lease obligations to ensure compliance
with Statement of Financial Accounting Standards No. 143 (SFAS 143)
Accounting for Asset Retirement Obligations. The Company has approximately
5,000 store leases with varying end-of-lease requirements that are in the
process of being reviewed. As a result, Movie Gallery is not yet in a
position to assess the impact, if any, of possible adjustments to its
accounting for these obligations. The company intends to file its quarterly
report on Form 10-Q and issue a press release announcing its complete third
quarter financial results as soon as practicable.
Mr. Malugen added, "The Company is working diligently to evaluate the
impact, if any, of SFAS 143 on our current and historical financial results
and we look forward to providing a full update once this review is
completed."
About Movie Gallery
Movie Gallery is the second largest North American video rental company
with over 4,650 stores located in all 50 U.S. states, Canada and Mexico.
Since the Company's initial public offering in August 1994, Movie Gallery
has grown from 97 stores to its present size through acquisitions and new
store openings. For more information about the Company, please visit our
website at: www.moviegallery.com
Forward Looking Statements
To take advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, you are hereby cautioned that this release
contains forward-looking statements, including descriptions of projected
conditions in the home video rental industry that are based upon the
Company's current intent, estimates, expectations and projections and
involve a number of risks and uncertainties. Various factors exist which
may cause results to differ from these expectations. These risks and
uncertainties include, but are not limited to, the risk factors that are
discussed from time to time in the Company's SEC reports, including, but not
limited to, the Company's annual report on Form 10-K for the fiscal year
ended January 1, 2006 and subsequently filed quarterly reports on Form 10-Q.
In addition to the potential effect of these ongoing factors, the Company's
operations and financial performance may be adversely effected if, among
other factors; (i) same-store revenues are less than projected; (ii) the
Company is unable to successfully restructure its real estate portfolio;
(iii) the Company is unable to comply with the financial or other covenants
contained in its senior credit facility, or to obtain further amendments to
its senior credit facility or alternative financing; (iv) the Company's
operational improvement initiatives fail to generate anticipated cost
reductions; (v) the availability of new movie releases priced for sale
negatively impacts the consumers' desire to rent movies; (vi) the Company is
unable to obtain sufficient product on favorable terms; (vii) the Company's
actual expenses or liquidity requirements differ from estimates and
expectations; (viii) consumer demand for movies and games is less than
expected; (ix) the availability of movies and games is less than expected;
(x) competitive pressures are greater than anticipated; (xi) movie studios
negatively alter revenue sharing programs or (xii) the outcome of the
Company's review of its accounting treatment for end of term store lease
obligations. The Company undertakes no obligation to update any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
Contacts
Analysts and Investors: Michelle K. Lewis, Movie Gallery, Inc.,
503-570-1950
Media: Andrew B. Siegel of Joele Frank, Wilkinson Brimmer Katcher,
212-355-4449 ext. 127
- table follows -
Movie Gallery, Inc.
Supplemental Information
Thirteen Weeks Thirteen Weeks Thirteen Weeks
Ended Ended Ended
April 2, 2006 July 2, 2006 October 1, 2006
Total same-store
revenues (6.5%) (4.6%) (0.4%)
Movie Gallery
same-store revenues (3.7%) 1.6% 3.0%
Hollywood same-store
revenues (7.7%) (7.3%) (1.9%)
Total same-store
rental revenues (7.7%) (5.3%) (1.9%)
Movie Gallery
same-store revenues (5.6%) 1.1% 3.1%
Hollywood same-store
revenues (8.8%) (8.5%) (4.6%)
Total same-store
product sales (0.8%) (1.5%) 6.5%
Movie Gallery
same-store sales 18.2% 6.1% 1.0%
Hollywood same-store
sales (3.9%) (2.9%) 7.5%