UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-21824
HOLLYWOOD ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in charter)
Oregon (I.R.S. Employer Identification No.)
(State or other jurisdiction of 93-0981138
incorporation or organization)
9275 S.W. Peyton Lane, Wilsonville, Oregon 97070
(Address of principal executive office, including zip code)
(503) 570-1600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such short period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
As of May 9, 2000 there were 46,145,809 shares of the registrant's Common Stock
outstanding.
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
March 31, 2000
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
PART II. OTHER INFORMATION 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOLLYWOOD ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------- ---------
2000 1999
---------- ---------
<S> <C> <C>
Revenue:
Rental revenue $272,450 $221,315
Product sales 62,872 45,214
---------- ---------
335,322 266,529
---------- ---------
Cost of sales:
Cost of rental 91,161 68,646
Cost of product 47,407 31,434
---------- ---------
138,568 100,080
---------- ---------
Gross margin 196,754 166,449
Operating costs and expenses:
Operating and selling 162,883 120,693
General and administrative 16,817 18,240
Amortization of intangibles 14,319 14,126
---------- ---------
194,019 153,059
---------- ---------
Income from operations 2,735 13,390
Nonoperating income (expense):
Interest income - 7
Interest expense (14,070) (9,619)
---------- ---------
Income (loss) before income taxes (11,335) 3,778
Provision for income taxes (828) (6,555)
---------- ---------
Loss before cumulative effect of a change in
accounting principle (12,163) (2,777)
Cumulative effect of a change in accounting
principle (net of income tax benefit
of $983) - (1,444)
--------- --------
Net loss $(12,163) $(4,221)
========== ========
Net loss per share before cumulative
effect of a change in accounting principle
Basic $ (0.26) $ (0.06)
Diluted $ (0.26) $ (0.06)
Net loss per share:
Basic $ (0.26) $ (0.09)
Diluted $ (0.26) $ (0.09)
Weighted average shares outstanding:
Basic 46,006 45,212
Diluted 46,006 45,212
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------------- ----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,403 $ 6,941
Accounts receivable 44,698 42,679
Merchandise inventories 80,944 84,373
Income tax receivable 2,862 1,797
Prepaid expenses and other
current assets 14,372 10,377
------------ ----------
Total current assets 147,279 146,167
Rental inventory, net 349,063 339,912
Property and equipment, net 396,496 382,345
Goodwill, net 131,297 145,504
Deferred income tax 55,446 52,691
Other assets, net 13,376 13,558
------------ ----------
$ 1,092,957 $1,080,177
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term
obligations $ 14,493 $14,493
Accounts payable 84,916 111,578
Accrued expenses 47,646 64,566
Accrued revenue sharing 32,234 9,402
Accrued interest 5,102 11,865
----------- ----------
Total current liabilities 184,391 211,904
Long-term obligations, less current portion 565,505 519,413
Other liabilities 47,821 44,331
----------- ----------
797,717 775,648
----------- ----------
Shareholders' equity:
Preferred stock, 19,500,000 shares
authorized; no shares issued
and outstanding - -
Common stock, 100,000,000 shares
authorized; and 46,130,428 and
45,821,537 shares issued
and outstanding, respectively 365,181 362,307
Retained deficit (69,941) (57,778)
----------- ----------
Total shareholders' equity 295,240 304,529
----------- ----------
$ 1,092,957 $1,080,177
=========== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
2000 1999
----------- --------
<S> <C> <C>
Operating activities:
Net loss $ (12,163) $ (4,221)
Adjustments to reconcile net loss to cash
provided by operating activities:
Cumulative effect of a change in
accounting principle - 1,444
Depreciation and amortization 59,789 54,674
Amortization of deferred financing costs 588 374
Change in deferred rent 610 1,042
Change in deferred income taxes 125 443
Net change in operating assets and liabilities:
Accounts receivable (2,019) (3,619)
Merchandise inventories 3,429 (1,141)
Accounts payable (26,662) (17,648)
Accrued interest (6,763) (6,634)
Accrued revenue sharing 22,832 6,077
Other current assets and liabilities (19,692) 6,917
-------- -------
Cash provided by operating activities 20,074 37,708
-------- -------
Investing activities:
Purchases of rental inventory, net (38,308) (57,962)
Purchase of property and equipment, net (30,465) (24,419)
Increase in intangibles and other assets (517) (2,726)
-------- -------
Cash used in investing activities (69,290) (85,107)
-------- -------
Financing activities:
Issuance of long-term obligations 12,511 -
Repayments of long-term obligations (3,419) (6,377)
Tax benefit from exercise of stock option 42 1,872
Proceeds from exercise of stock options 544 2,613
Increase in revolving loan, net 37,000 50,000
------- -------
Cash provided by financing activities 46,678 48,108
------- -------
Increase (decrease) in cash and cash equivalents (2,538) 709
Cash and cash equivalents at beginning of year 6,941 3,975
------- -------
Cash and cash equivalents at end of the first quarter $ 4,403 $ 4,684
======= =======
Non-cash financing activities:
Issuance of common stock as part of a legal
settlement agreement $ 2,288 -
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations,
although the Company believes that the disclosures made are adequate to make
the information presented not misleading. The information furnished reflects
all adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented, and which are of a
normal, recurring nature. These financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1999,
filed with the Securities and Exchange Commission.
(1) Accounting Policies
The consolidated financial statements included herein have been prepared in
accordance with the accounting policies described in Note 1 to the December
31, 1999 audited consolidated financial statements included in the
Company's annual report on Form 10-K. Certain prior year amounts have been
reclassified to conform to the presentation used for the current year.
These reclassifications had no impact to previously reported net loss or
shareholders'equity.
(2) Statements of Changes in Shareholders' Equity
An analysis of the shareholders' equity amounts for the first quarter ended
March 31, 2000 is as follows:
<TABLE>
<CAPTION>
Common Stock
--------------------- Retained
Shares Amounts Deficit Total
---------- --------- ---------- --------
(In thousands, except share amounts)
<S> <C> <C> <C> <C>
Balance at December 31, 1999 45,821,537 $362,307 $(57,778) $304,529
Issuance of common stock under
option plan 108,891 544 544
Tax benefit from exercise of
stock options 42 42
Issuance of common stock as part
of a legal settlement agreement 200,000 2,288 2,288
Net loss (12,163) (12,163)
---------- --------- ---------- ---------
Balance at March 31, 2000 46,130,428 $ 365,181 $ (69,941) $295,240
========== ========= ========== =========
</TABLE>
(3) Operating Leases
The Company leases all of its stores, corporate offices, distribution
center and zone offices under non-cancelable operating leases. All of the
Company's stores have an initial operating lease term of five to fifteen
years and most have options to renew for between five and fifteen
additional years. Most operating leases require payment of property taxes,
utilities, common area maintenance and insurance. Total rent expense,
including related lease-required cost during the first quarter of 2000 and
1999 were $58,597 and $47,063, respectively.
(4) Earnings per Share
Basic earnings per share are calculated based on income available to common
shareholders and the weighted-average number of common shares outstanding
during the reported period. Diluted earnings per share includes additional
dilution from the effect of potential issuances of common stock, such as
stock issuable pursuant to the exercise of stock options, warrants
outstanding and the conversion of debt.
The following table is a reconciliation of the basic and diluted earnings
per share computations:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------------------
2000 1999
(In thousands, except per share amounts)
------------------------ -----------------------
Per Per
Share Share
Loss Shares Amounts Loss Shares Amounts
------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Basic loss per share: $(12,163) 46,006 $(0.26) $(4,221) 45,212 $(0.09)
Effect of dilutive securities:
Stock options - - - -
-------- ------ ------ ------- ------ ------
Dilutive loss per share: $(12,163) 46,006 $(0.26) $(4,221) 45,212 $(0.09)
======== ====== ====== ======= ====== ======
</TABLE>
Due to the Company's net loss, stock options accounted for using the treasury
stock method would be antidilutive. Accordingly, 578,026 shares and 3.0
million shares have been excluded from diluted net loss per share calculation
for the three months ended March 31, 2000 and 1999, respectively.
(5) Store Preopening Cost
In April 1998, SOP 98-5, "Reporting on the Cost of Start-up Activities,"
was finalized, which required that cost incurred for start-up activities,
such as store openings, be expensed as incurred. The Company adopted SOP
98-5 effective January 1, 1999. The cumulative effect of the change was to
increase net loss in the first quarter of 1999 by $1.4 million, net of tax
benefit.
(6) Segment Reporting
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information," effective for fiscal years beginning after December 15, 1997.
The Company adopted Statement No. 131 in 1998.
The Company identifies its segments based on management responsibility.
The Company has two segments, the Hollywood Video segment, which consists
of the Company's 1,701 retail stores located in 45 states, and the Reel.com
segment, which is the leading video-only store on the Internet. The
Company measures segment profit as operating profit, which is defined as
income before interest expense and income taxes. Information on segments
and a reconciliation to income before income taxes are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
----------------------------------------
Hollywood
Video Reel.com Total
---------- ---------- -----------
<S> <C> <C> <C>
Revenue $321,021 $ 14,301 $ 335,322
Tape amortization 29,047 110 29,157
Other depreciation and amortization 17,629 13,003 30,632
Operating income (loss) 31,164 (28,429)(1) 2,735
Interest expense, net 11,907 2,163 14,070
Total assets 1,020,175 72,782 1,092,957
Purchases of property and
equipment, net 29,154 1,311 30,465
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 2000
----------------------------------------
Hollywood
Video Reel.com Total
---------- ---------- ----------
<S> <C> <C> <C>
Revenue $ 260,174 $ 6,355 $ 266,529
Tape amortization 27,476 118 27,594
Other depreciation and amortization 14,810 12,644 27,454
Operating income (loss) 33,991 (20,601)(1) 13,390
Interest expense, net 9,052 567 9,619
Total assets 889,306 81,575 970,881
Purchase of property and
equipment, net 23,776 643 24,419
</TABLE>
(1) Reel.com's operating loss includes $12.5 million in goodwill
amortization. Excluding the goodwill amortization, Reel.com's operating
loss would have been $15.9 million and $8.1 million for the quarter ended
March 31, 2000 and 1999, respectively.
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Summary Results of Operations
The Company's net loss in the current year first quarter was $12.2 million
compared with a net loss before cumulative effect of a change in accounting
principle of $2.8 million for the corresponding period of the prior year. The
increase in net loss was primarily due to funding the rapid growth of Reel.com.
The following table sets forth (i) selected results of operations data,
expressed as a percentage of total revenue; (ii) other financial data; and
(iii) selected operating data.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
2000 1999
-------- --------
(Unaudited)
<S> <C> <C>
Revenue:
Rental revenue 81.3% 83.0%
Product sales 18.7 17.0
-------- --------
100.0 100.0
Gross margin 58.7 62.5
Operating costs and expenses:
Operating and selling 48.6 45.3
General and administrative 5.0 6.9
Amortization of intangibles 4.3 5.3
-------- --------
57.9 57.5
Income from operations 0.8 5.0
Nonoperating income (expense), net (4.2) (3.6)
-------- --------
Income (loss) before income taxes (3.4) 1.4
Provision for income taxes (0.2) (2.5)
-------- --------
Loss before cumulative effect of
a change in accounting principle (3.6) (1.1)
Cumulative effect of a change in accounting principle - (0.5)
-------- ---------
Net loss (3.6)% (1.6)%
======== =========
Other financial data:
Rental gross margin (1) 66.5% 69.0%
Product gross margin (2) 24.6% 30.5%
EBITDA (3) (In thousands)
Hollywood Video segment EBITDA $77,840 $74,459
Reconciliation to Adjusted EBITDA (4)
Add special charges (5) 1,444
Add non-cash expenses 17,478 11,920
Less existing store investment in new release
inventory (36,322) (37,758)
-------- -------
Adjusted EBITDA Hollywood Video 58,996 50,065
Reel.com segment EBITDA (15,316) (7,839)
-------- -------
Consolidated Adjusted EBITDA $43,680 $42,226
-------- -------
Cash flow from:
Operating activities 20,074 37,708
Investing activities (69,290) (85,107)
Financing activities 46,678 48,108
Operating data:
Number of stores at quarter end 1,701 1,322
Weighted average stores open during the quarter 1,665 1,295
Comparable store revenue increase (6) 2% 18%
</TABLE>
<PAGE>
(1) Rental gross margin as a percentage of rental revenue.
(2) Product gross margin as a percentage of product revenue.
(3) EBITDA consists of operating income before interest, tax, depreciation and
amortization. EBITDA should not be viewed as a measure of financial
performance under Generally Accepted Accounting Principles (GAAP) or as a
substitute for GAAP measurements such as net income or cash flow from
operations. This calculation of EBITDA is not necessarily comparable to
reported EBITDA of other companies due to the lack of a uniform definition of
EBITDA.
(4) Adjusted EBITDA represents income from operations before depreciation and
amortization plus non-cash expenses that reduce EBITDA, less the cost of
acquiring new release rental inventory which is capitalized. Adjusted EBITDA
should not be viewed as a measure of financial performance under GAAP and
should not be considered as an alternative to cash flows from operating
activities (as determined in accordance with GAAP) as a measure of liquidity.
Our calculation of adjusted EBITDA is not necessarily comparable to amounts
reported by other companies due to the lack of a uniform definition of
EBITDA.
(5) The special charge relates to the cumulative effect of a change in
accounting principle resulting from the adoption of SOP 98-5.
(6) A store is comparable after it has been open and owned by the Company for
12 full months. An acquired store converted to the Hollywood Video name and
store design is removed from the comparable store base when the conversion
process is initiated and returned 12 full months after reopening.
REVENUE
Revenue increased by $68.8 million, or 26%, in the current year first quarter
compared with the corresponding period of the prior year primarily due to the
addition of 386 new superstores in the twelve months ended March 31, 2000.
Revenue was also favorably impacted by an increase of 2% in comparable store
revenue in the current year first quarter and Reel.com's 133% increase in on-
line revenue.
GROSS MARGIN
Rental margin as a percentage of rental revenue decreased in the first quarter
of 2000 to 66.5% from 69.0% in the corresponding period of the prior year. The
decrease in margin primarily relates to a 33% decrease in new release
videocassettes purchased at sell through pricing. Prior to revenue sharing,
studios had two primary options for pricing new release titles. The first,
rental pricing, was to price each cassette at around $65 and focus sales to
video rental outlets. The second, sell through pricing, was to price each
cassette under $20 and sell to all distributors of videocassette movies. The
biggest hits each year were priced for sell through and generally came with a
substantial marketing push from the studio. The low unit price, and studio
advertising, made these types of purchases the Company's best performers in
terms of margin, including revenue sharing purchases. Over the last two years,
as revenue sharing has gained acceptance, the percentage of titles released at
sell through pricing has substantially decreased.
Product margin as a percentage of product sales decreased from 30.5% in the
prior year first quarter to 24.6% in the current year first quarter. The
Company's gross margin on product sales has been affected by an increase in the
percentage of sales from previously viewed movies and an increase in the
percentage of sales from Reel.com. The average sales price of previously viewed
movies has declined in recent quarters as copy depth programs across the
industry have greatly increased the supply. Reel.com product margins continue
to improve, but are still much lower than the Hollywood Video stores. Product
sales from Reel.com accounted for 22% of the Company's product sales in the
first quarter of 2000 compared to 13% in the corresponding period of the prior
year. In the current year first quarter, product margins were 29.9% and 5.9%
for the Hollywood Video stores, and Reel.com respectively, compared to 34.6%
and 2.5% for the first quarter of 1999.
OPERATING COSTS AND EXPENSES
Operating and Selling
Total operating expenses of $162.9 million for the first quarter of 2000
increased $42.2 million from $120.7 million in the prior year first quarter.
Operating and selling expenses increased as a percentage of total revenue to
48.6% in 2000 compared to 45.3% in 1999, primarily due to a decrease in the
average revenue generated per store caused by the addition of new stores. The
increase in total operating expenses resulted from an increase in store labor
cost of $12.1 million, occupancy costs of $11.4 million, other store operating
expenses of $9.1 million and an increase in Reel.com operating costs of $9.6
million. With the exception of Reel.com, operating expenses increased due to
the growth in the number of superstores operated by the Company.
General and Administrative
General and administrative expenses decreased by $1.4 million to $16.8 million
from $18.2 million in the prior year, primarily due to lower payroll and
related costs.
Amortization of Intangibles
Amortization of intangibles was relatively flat at $14 million in the current
year first quarter and corresponding period of the prior year. Amortization of
goodwill associated with the Reel.com acquisition was $12.5 million in each
respective quarter.
NONOPERATING INCOME (EXPENSE), NET
Interest expense, net of interest income increased by $4.5 million in the
current year first quarter compared to the corresponding period of the prior
year due to increased levels of borrowings under the Company's revolving credit
facility.
INCOME TAXES
The Company's effective tax rate was a provision of 7% in the current year
first quarter compared to a provision of 173% in the prior year first quarter.
The significant decrease is due to the Company's net loss for both financial
and income tax reporting purposes. The large prior year first quarter
provision was primarily caused by the non-deductibility of goodwill
amortization associated with the Reel.com acquisition.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The amount of cash generated from operations in the current year first quarter
significantly exceeded the current debt service requirements of the Company's
long-term obligations. The capital expenditures (including purchases of rental
inventory) of the Company are primarily funded by the excess operating cash
flow and through loans under a revolving line of credit. The Company has a
$300 million revolving line of credit available to address the timing of
certain working capital and capital expenditure
disbursements.
At March 31, 2000, the Company had cash and cash equivalents of $4.4 million
and a working capital deficit of $39.4 million. Rental inventories are
accounted for as non-current assets under generally accepted accounting
principles because they are not assets which are reasonably expected to be
completely realized in cash or sold in the normal business cycle. Although the
rental of this inventory generates a substantial portion of the Company's
revenue, the classification of these assets as non-current excludes them from
the computation of working capital. The acquisition cost of rental
inventories, however, is reported as a current liability until paid and,
accordingly, included in the computation of working capital. Consequently, the
Company believes working capital is not as significant a measure of financial
condition for companies in the video retail industry as it is for companies in
other industries. Because of the accounting treatment of rental inventory as a
non-current asset, the Company may, from time to time, operate with a working
capital deficit.
Cash Provided by Operating Activities
Net cash provided by operating activities decreased by $17.6 million in the
current year first quarter compared with the corresponding period of the prior
year, primarily due to lower results of operations caused by an increase in net
loss from Reel.com, and net changes in certain working capital accounts
requiring the use of cash.
Cash Used in Investing Activities
Net cash used in investing activities decreased by $15.8 million in the current
year first quarter compared with the corresponding period of the prior year.
This decrease was due to an increase in the percentage of new release rental
videocassettes acquired under revenue sharing agreements as opposed to
traditional methods.
Cash Provided by Financing Activities
Net cash provided by financing activities decreased by $1.4 million in the
current year first quarter compared with the corresponding period of the prior
year, primarily due to a decrease in proceeds generated from the exercise of
stock options, mostly offset by a decrease in repayments of long-term
obligations. The Company has the availability of up to $300 million in
revolving credit loans. The Company may utilize the revolving credit facility
as needed for working capital, capital expenditures and general corporate
purposes. As of March 31, 2000, $277 million was outstanding under the
revolving credit agreement.
Capital Expenditures
The Company's capital expenditures include product for stores, store equipment
and fixtures, remodeling a certain number of existing stores, implementing and
upgrading office, warehouse and store technology and opening for new store
locations. Each new store opening requires initial capital expenditures,
including leasehold improvements, inventory, equipment and costs related to
site location, lease negotiations and construction permits. We currently
anticipate that capital expenditures based on opening 250 stores to be
approximately $125 million in 2000, of which $110 million is anticipated to
relate to new, relocated, remodeled stores and game departments. The remaining
balance relates to corporate capital expenditures. We expect the total
investment per new store to approximate $420,000, which includes rental and
merchandise inventory, leasehold improvement, signage, furniture, fixtures and
equipment. However, the cost of opening a new store can vary based on size,
construction costs in a particular market, and other factors. These capital
expenditures will be funded primarily by cash generated by operations,
supplemented by the availability of the senior revolving line of credit or
other forms of equipment financing and/or leasing if necessary.
<PAGE>
Year 2000 Compliance
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date sensitive software may recognize a date using "00" as the year 1900
rather than year 2000. To be in "Year 2000 compliance" a computer program must
be written using four digits to define years. As a result, computer systems
and/or software used by many companies may have required upgrading to comply
with such "Year 2000" ("Y2K") requirements.
The century rollover to January 1, 2000 went extremely well for Hollywood
Entertainment Corporation. All mission-critical systems performed as
anticipated. The thousands of programs and applications that had been
remediated continued to function without interruption or failure as we moved
into the Year 2000.
Hollywood continues to monitor date-related systems matters. Based upon the
performance of our programs, applications, and systems to date, we believe that
Y2K issues are no longer of any material concern to the Company and its
business. The cost of the Y2K effort was approximately $1.2 million.
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27.1 Financial data schedule (electronic filing only)
(b) Reports of Form 8-K.
None filed during the quarter.
<PAGE>
HOLLYWOOD ENTERTAINMENT CORPORATION
SIGNATURES
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 thereunto duly authorized.
HOLLYWOOD ENTERTAINMENT CORPORATION
--------------------------------------------------------
(Registrant)
May 12, 2000 /S/David G. Martin
- ----------------- --------------------------------------------------------
(Date) David G. Martin
Executive Vice President and Chief Financial Officer
(Authorized Officer and Principal Financial and
Accounting Officer of the Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,403
<SECURITIES> 0
<RECEIVABLES> 44,698
<ALLOWANCES> 0
<INVENTORY> 80,944
<CURRENT-ASSETS> 147,279
<PP&E> 555,789
<DEPRECIATION> 159,293
<TOTAL-ASSETS> 1,092,957
<CURRENT-LIABILITIES> 184,391
<BONDS> 250,000
0
0
<COMMON> 365,181
<OTHER-SE> (69,941)
<TOTAL-LIABILITY-AND-EQUITY> 1,092,957
<SALES> 335,322
<TOTAL-REVENUES> 335,322
<CGS> 138,568
<TOTAL-COSTS> 138,568
<OTHER-EXPENSES> 194,019
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,070
<INCOME-PRETAX> (11,335)
<INCOME-TAX> 828
<INCOME-CONTINUING> (12,163)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,163)
<EPS-BASIC> (.26)
<EPS-DILUTED> (.26)
</TABLE>
