Movie Gallery: Can't file third-quarter report

Company says net loss would be greater than last year's quarter

By Cindy Spielvogel -- Video Business, 11/13/2007

NOV. 13 | It’s no surprise because of the company’s bankruptcy, but Movie Gallery made a filing with the Securities and Exchange Commission saying it is unable to compile its third-quarter financial report on time.

The company said that in view of the Oct. 16 bankruptcy, it could not file its Q3 report “without unreasonable effort or expense.”

That’s because of asset impairment evaluations currently being conducted in light of the bankruptcy filing and Movie Gallery’s decision to close more than 500 stores, along with the fact that the company is undergoing an accounting review by its external auditors, according to the SEC filing.

When the third-quarter results are determined, they will likely show a greater net loss than the same quarter last year, the company said.

Movie Gallery estimated total revenue would be $577.1 million for the third quarter, compared to $583 million for the same period of 2006.

Same-store revenue increased 1.3%, although rental revenue was down 8.1%, offset by a 41.6% increase in product sales, the company said.

For the first nine months of 2007, Movie Gallery said it expects to report total revenue of $1.79 billion, compared with $1.88 billion for the first nine months of 2006.

Same-store sales for the nine-month period were down 3.3% because of a 9.5% decrease in rental revenue, offset by a 23.8% increase in product sales, the company said.

Movie Gallery said it could not give gross profit, operating loss or net loss estimates for either period because of the asset impairment evaluations and accounting review.

“However, the company expects gross profit to be lower and operating loss and net loss to be greater,” according to the filing.