SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 1997
HOLLYWOOD ENTERTAINMENT CORPORATION
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(Exact name of registrant as specified in its charter)
Oregon 0-21824 93-0981138
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
25600 SW Parkway Center Drive, Wilsonville, Oregon 97070
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(Address of principal executive offices) (Zip Code)
(503) 570-1600
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 5. Other Events
On July 22, 1997 Hollywood Entertainment Corporation (the "Company")
announced its financial results for the three and six months ended June 30,
1997. The Company's press release announcing the results is attached hereto as
Exhibit 99.1.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press release dated July 22, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 23, 1997
HOLLYWOOD ENTERTAINMENT CORPORATION
By DOUGLAS A. GORDON
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Douglas A. Gordon, Senior Vice
President of Finance
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EXHIBIT INDEX
Exhibit Description
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99.1 Press release dated July 22, 1997.
EXHIBIT 99.1
Hollywood Entertainment Corporation Reports Record Second Quarter Results
PORTLAND, Ore., July 22 /PRNewswire/ -- Hollywood Entertainment Corporation
(Nasdaq:HLYW), dba Hollywood Video, a chain of 661 corporate owned video
superstores operating in 33 states as of June 30, 1997, today reported revenue
for the quarter ended June 30, 1997 of $110.0 million, an increase of 72%
compared to $63.9 million for the same period in 1996. The Company had net
income of $5.5 million, which was up 83% compared to net income of $3.0 million
for the second quarter of 1996. Net income per share was $0.15, which was up 67%
compared to net income per share of $0.09 for the same period in 1996.
Additionally, the Company announced that it opened a total of 60 new stores
during the quarter and had an increase in same-store sales of 5%.
Commenting on second quarter results, Mark J. Wattles, Chairman and CEO of
Hollywood Entertainment Corporation, said "We believe our second quarter results
continue to show the difference between Hollywood and the other video store
chains. While other public video store chains have experienced weak or negative
same-store sales, Hollywood Entertainment has achieved an increase of 5% in its
same-store sales for both the first and the second quarters of 1997." Mr.
Wattles added, "I am also excited with the Company's plan to issue $200 million
in high yield notes and enter into a new $300 million credit facility. We
believe the combination of both of these transactions, half a billion dollars,
significantly strengthens the Company's financial resources."
Hollywood Video is the second largest video store chain in the United States.
Hollywood Video superstores average approximately 7,500 square feet and
typically carry approximately 10,000 titles and 16,000 videocassettes. According
to video industry analyst Paul Kagan Associates, Inc., the Company operates the
highest volume video stores in the country. Hollywood Video opened 33 new stores
in 1994, 121 new stores in 1995, 250 new stores in 1996, 110 new stores in the
first half of 1997 and plans to open approximately 240 additional new stores in
1997.
Hollywood Entertainment Corporation will be hosting a conference call to review
the second quarter results tomorrow at 8:00 AM, PDT.
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<CAPTION>
HOLLYWOOD ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Six Months
ended June 30, ended June 30,
-------------------------- --------------------------
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenue:
Rental revenue $ 93,035 $ 54,310 $ 184,715 $ 109,059
Product sales 16,967 9,639 35,762 19,963
110,002 63,949 220,477 129,022
Operating costs and expenses:
Cost of product sales 10,828 5,931 22,429 12,176
Operating and selling 80,204 46,517 157,253 92,734
General and administrative 6,197 4,033 12,166 8,489
Amortization of intangibles 1,596 1,483 3,123 3,007
Operating income 11,177 5,985 25,506 12,616
Nonoperating income (expense):
Interest income 26 31 108 128
Interest expense (2,068) (1,007) (3,617) (1,625)
Litigation settlement -- -- (18,874) --
Income before income taxes 9,135 5,009 3,123 11,119
Income taxes 3,654 2,004 1,249 4,387
Net income $ 5,481 $ 3,005 $ 1,874 $ 6,732
Net income per share $0.15 $0.09 $0.05 $0.19
Weighted average
shares outstanding 37,577 34,804 37,465 34,916
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<TABLE>
<CAPTION>
HOLLYWOOD ENTERTAINMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, December 31,
1997 1996
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(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $5,782 $ 12,849
Receivables 23,792 25,785
Merchandise inventories 44,697 45,255
Prepaid expenses and other current assets 4,673 3,232
Total current assets 78,944 87,121
Videocassette rental inventory, net 182,824 144,264
Property and equipment, net 154,639 115,812
Excess of cost over net assets acquired, net 96,517 99,229
Deferred income taxes 4,844 783
Other assets 3,621 2,574
Total assets $521,389 $449,783
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $205 $205
Accounts payable 61,029 67,207
Accrued liabilities 11,079 10,402
Income taxes payable -- 2,914
Total current liabilities 72,313 80,728
Long-term debt, excluding current maturities 9,402 156
Line of credit 130,000 82,000
Deferred rent and other liabilities 7,920 6,452
Deferred income taxes 5,684 5,744
225,319 175,080
Commitments and contingencies -- --
Shareholders' Equity:
Common stock 100,000,000 shares authorized;
36,747,921 and 36,006,201 shares issued
and outstanding, respectively 257,382 238,021
Retained earnings 40,866 38,992
Intangible assets, net (2,178) (2,310)
Total shareholders' equity 296,070 274,703
Total liabilities and shareholders' equity $521,389 $449,783
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<TABLE>
<CAPTION>
HOLLYWOOD ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Six Months Ended
June 30,
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1997 1996
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<S> <C> <C>
Operating activities:
Net income $1,874 $6,732
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 61,811 39,411
Litigation settlement warrants 9,000 --
Deferred rent and other liabilities 1,468 1,135
Deferred income taxes (4,121) 1,162
Changes in operating assets and liabilities:
Merchandise inventories 558 (3,780)
Prepaid expenses and other current assets (1,441) (1,276)
Accounts payable (6,178) (8,396)
Accrued liabilities 677 893
Income taxes payable (2,914) 1,841
Net cash provided by operating activities 60,734 37,722
Investing activities:
Construction and other receivables 1,993 5,087
Purchases of videocassette rental inventory, net (87,501) (41,724)
Purchases of property and equipment, net (48,557) (24,368)
Other assets (1,343) (618)
Net cash used in investing activities (135,408) (61,623)
Financing activities:
Proceeds from the issuance of common stock, net 4,695 --
Proceeds from long-term debt 10,000 --
Repayments of long-term debt (754) (7,288)
Tax benefit from exercise of stock options 2,252 (8)
Proceeds from exercise of stock options 3,414 164
Repurchase of common stock -- (54,250)
Borrowings on line of credit 48,000 60,000
Cash provided by (used in) financing activities 67,607 (1,382)
Increase/(decrease) in cash and cash equivalents (7,067) (25,283)
Cash and cash equivalents:
Beginning of period 12,849 29,980
End of period $5,782 $4,697
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SOURCE: Hollywood Entertainment Corp.
Contact: Doug Gordon, Senior Vice President of Finance of Hollywood
Entertainment Corporation, 503-570-1600
