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 JUNE 30, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD OF ___________ TO __________
Commission file number 0-24548
Movie Gallery, Inc.
(Exact name of registrant as specified in its charter)
Delaware 63-1120122
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
739 West Main Street, Dothan, Alabama 36301
(Address of principal executive offices) (Zip Code)
(334) 677-2108
(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 shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
YES X NO _______
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 13,422,534 shares of Common
Stock as of August 12, 1996
The exhibit index to this report appears at page 11 of 14 consecutively numbered
pages.
<PAGE>
Movie Gallery, Inc.
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - June 30, 1996 and December 31, 1995..............1
Consolidated Statements of Income - Three months ended June 30, 1996 and 1995;
Six months ended June 30, 1996 and 1995 ..................................... .2
Consolidated Statements of Cash Flows - Six months ended
June 30, 1996 and 1995.........................................................3
Notes to Consolidated Financial Statements - June 30, 1996.....................4
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition................................................ .......7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.....................................11
<PAGE>
Movie Gallery, Inc.
Consolidated Balance Sheets
(in thousands)
June 30 December 31
1996 1995
----------- -----------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 6,405 $ 5,689
Recoverable income tax 1,340 1,278
Merchandise inventory 9,171 9,511
Accounts receivable 1,634 1,701
Prepaid expenses and other 2,586 1,958
-------- --------
Total current assets 21,136 20,137
Videocassette rental inventory, net 71,285 63,893
Property, furnishing and equipment, net 41,598 33,974
Deferred charges, net 11,691 12,039
Excess of cost over net assets acquired 84,592 76,077
Deposits and other assets 1,358 1,761
-------- --------
Total assets $231,660 $207,881
======== ========
Liabilities and stockholders' equity
Current liabilities:
Note payable $ 42,500 $ 31,000
Accounts payable 16,554 15,575
Accrued liabilities 4,526 3,520
Current portion of long-term debt 5,316 4,988
-------- --------
Total current liabilities 68,896 55,083
Long-term debt 1,408 5,793
Deferred income taxes 12,623 10,634
Stockholders' equity
Preferred stock, $.10 par value; 2,000,000 shares
authorized, no shares issued and outstanding
Common stock, $.001 par value; 30,000,000 shares
authorized, 12,654,161 and 12,108,863 shares
issued and outstanding, respectively 13 12
Additional paid-in capital 126,718 117,463
Retained earnings 22,002 18,896
-------- --------
Total stockholders' equity 148,733 136,371
-------- --------
Total liabilities and stockholders' equity $231,660 $207,881
======== ========
See accompanying notes
1
<PAGE>
Movie Gallery, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
--------- --------- --------- ---------
Revenues:
Rentals $ 45,433 $ 20,855 $ 92,339 $ 40,300
Product sales 7,162 3,358 13,968 6,032
--------- --------- --------- ---------
$ 52,595 $ 24,213 $ 106,307 $ 46,332
Operating costs and expenses:
Store operating expenses 25,730 10,417 50,566 19,831
Amortization of videocassette
rental inventory 19,400 4,583 29,788 8,425
Amortization of intangibles 1,625 579 3,147 1,032
Cost of sales 4,419 2,200 8,379 4,058
General and administrative 3,794 2,092 7,765 3,924
--------- --------- --------- ---------
Operating income (loss) (2,373) 4,342 6,662 9,062
Interest income (expense), net (839) 282 (1,647) 143
--------- --------- --------- ---------
Income (loss) before income
taxes (3,212) 4,624 5,015 9,205
Income taxes (1,217) 1,654 1,909 3,372
--------- --------- --------- ---------
Net income (loss) $ (1,995) $ 2,970 $ 3,106 $ 5,833
--------- --------- --------- ---------
Net income (loss) per share $ (.16) $ .26 $ .25 $ .56
========= ========= ========= =========
Shares used in computing net
income (loss) per share 12,700 11,519 12,519 10,501
========= ========= ========= =========
See accompanying notes
2
<PAGE>
Movie Gallery, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six Months Ended
June 30
1996 1995
-------- --------
OPERATING ACTIVITIES
Net income $ 3,106 $ 5,833
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 32,980 9,619
Amortization 3,147 1,032
Deferred income taxes 1,690 2,438
Changes in operating assets
and liabilities:
Recoverable income tax 156 (310)
Merchandise inventory 490 (1,024)
Other current assets (562) (473)
Deposits and other 404 (705)
Accounts payable 541 297
Accrued liabilities 1,006 328
-------- --------
Net cash provided by operating
activities 42,958 17,035
INVESTING ACTIVITIES
Business acquisitions (7,514) (36,103)
Purchases of videocassette rental
inventory, net (33,355) (17,176)
Purchases of property, furnishings
and equipment (9,339) (7,165)
-------- --------
Net cash used in investing activities (50,208) (60,444)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 524 62,284
Proceeds from issuance of notes payable 11,500 --
Principal payments on long-term debt (4,058) (3,875)
Cash dividends -- (188)
-------- --------
Net cash provided by financing activities 7,966 58,221
-------- --------
Increase in cash and cash equivalents 716 14,812
Cash and cash equivalents at beginning of period 5,689 3,220
-------- --------
Cash and cash equivalents at end of period $ 6,405 $ 18,032
======== ========
See accompanying notes
3
<PAGE>
Movie Gallery, Inc.
Notes to Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and six-month periods ended
June 30, 1996, are not necessarily indicative of the results that may be
expected for the year ended January 5, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in Movie
Gallery, Inc.'s annual report on Form 10-K for the year ended December 31, 1995.
2. Videocassette Rental Inventory
Effective April 1, 1996, the Company changed its method of amortizing
videocassette rental inventory (which includes video games and audio books).
Under the new method, videocassettes considered to be base stock are amortized
over thirty-six months on a straight-line basis to a $5 salvage value. New
release videocassettes are amortized as follows: (i) the fourth and any
succeeding copies of each title per store are amortized on a straight-line basis
over six months to an average net book value of $5 which is then amortized on a
straight-line basis over the next thirty months or until the videocassette is
sold, at which time the unamortized book value is charged to cost of sales; and
(ii) copies one through three of each title per store are amortized as base
stock. Management believes the new method will result in a better matching of
expenses with revenues in the Company's current operating environment and that
it is compatible with changes made by its primary competitors.
The new method of amortization has been applied to all inventory held at April
1, 1996. The adoption of the new method of amortization has been accounted for
as a change in accounting estimate effected by a change in accounting principle.
The application of the new method of amortizing videocassette rental inventory
increased depreciation expense for the quarter ended June 30, 1996 by
approximately $7.7 million and reduced net income and earnings per share by $4.7
million and $0.38, respectively.
3. Acquisitions
During the three months ended June 30, 1996, the Company acquired the assets and
assumed certain liabilities (principally store leases) of 44 video specialty
stores from eight unrelated sellers for approximately $10.6 million, including
278,757 shares of common stock. The purchase method of accounting was used to
record the acquisitions. The excess of the cost over the estimated fair value of
the assets acquired of $3.2 million will be amortized over 20 years on a
straight-line basis. The results of operations of the acquired stores have been
included in the operations of the Company since their respective dates of
acquisition.
4
<PAGE>
Movie Gallery, Inc.
Notes to Consolidated Financial Statements (Unaudited)(Continued)
3. Acquisitions (Continued)
The following unaudited pro forma information presents the results of operations
as though the aforementioned acquisitions and other acquisitions which have
occurred since January 1, 1996 had occurred as of the beginning of the year in
which the acquisition occurred and the beginning of the immediately preceding
year.
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands, except per share data)
Revenues $ 54,184 $ 51,861 $113,135 $107,928
Net income (loss) (1,785) 4,911 4,021 10,861
Net income (loss) per share $ (.14) $ .39 $ .32 $ .86
4. Subsequent Events
On July 1, 1996, a subsidiary of the Company acquired Home Vision Entertainment,
Inc. ("Home Vision") in a transaction which will be accounted for as a pooling
of interests. Home Vision operates 55 video specialty stores in Maine, New
Hampshire and Massachusetts. The Company issued approximately 731,000 shares of
its common stock to Home Vision shareholders and assumed approximately $12.5
million in liabilities upon consummation of the merger. The actual shares issued
are subject to adjustment within 60 days based on the actual amount of assumed
liabilities and available cash at closing.
On July 1, 1996, a subsidiary of the Company acquired Hollywood Video, Inc.
("Hollywood Video") in a transaction which will be accounted for as a pooling of
interests. Hollywood Video operates 43 video specialty stores in Iowa, Wisconsin
and Illinois. The Company issued approximately 38,000 shares of its common stock
to Hollywood Video shareholders and assumed approximately $11.5 million in
liabilities upon consummation of the merger. The actual shares issued are
subject to adjustment within 60 days based on the actual amount of assumed
liabilities and available cash at closing.
The effects of conforming the accounting policies of the Company, Home Vision
and Hollywood Video are not expected to be material.
The following table summarizes the unaudited consolidated pro forma results of
operations, assuming the Home Vision and Hollywood Video acquisitions described
above had occurred at the beginning of each of the following periods. This pro
forma summary does not necessarily reflect the results of operations as they
would have been had the Company and the acquired entities constituted a single
entity during such periods.
5
<PAGE>
Movie Gallery, Inc.
Notes to Consolidated Financial Statements (Unaudited)(Continued)
4. Subsequent Events (Continued)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands, except per share data)
Revenues $ 60,305 $ 30,494 $122,805 $ 58,764
Net income (loss) (2,435) 2,983 2,706 5,828
Net income (loss) per share $ (.18) $ .24 $ .20 $ .52
On July 10, 1996, the Company entered into a Credit Agreement with First Union
National Bank of North Carolina with respect to a Reducing Revolving Credit
Facility (the "Facility"). The Facility is unsecured, provides borrowings for up
to $125 million and replaces the Company's existing line of credit agreement.
The available amount of the Facility will reduce quarterly beginning on March
31, 1998 with a final maturity of June 30, 2000. The interest rate of the
Facility is LIBOR-based and the Company may repay the Facility at any time
without penalty. The more restrictive covenants of the Facility require the
Company to maintain certain cash flow levels. At August 12, 1996, $65 million
was outstanding under the Facility with additional availability of approximately
$6 million.
6
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations
The following table sets forth, for the periods indicated, statement of income
data expressed as a percentage of total revenue, the percentage increase or
decrease from the comparable period and number of stores open at the end of each
period.
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
Increase Increase
1996 1995 (Decrease) 1996 1995(Decrease)
----- ----- ----- ----- ----- -----
Revenues:
Rentals 86.4% 86.1% 0.3% 86.9% 87.0% (0.1)%
Product sales 13.6 13.9 (0.3) 13.1 13.0 0.1
----- ----- ----- ----- ----- -----
100.0 100.0 -- 100.0 100.0 --
Operating costs and expenses:
Store operating expenses 48.9 43.0 5.9 47.6 42.8 4.8
Amortization of rental
inventory 36.9 18.9 18.0 28.0 18.2 9.8
Amortization of
intangibles 3.1 2.4 0.7 2.9 2.2 0.7
Cost of sales 8.4 9.1 (0.7) 7.9 8.8 (0.9)
General and
administrative 7.2 8.6 (1.4) 7.3 8.4 (1.1)
----- ----- ----- ----- ----- -----
Total 104.5 82.0 22.5 93.7 80.4 13.3
----- ----- ----- ----- ----- -----
Operating income (4.5) 18.0 (22.5) 6.3 19.6 (13.3)
Interest income
(expense), net (1.6) 1.1 (2.7) (1.6) 0.3 (1.9)
----- ----- ----- ----- ----- -----
Income before income
taxes (6.1) 19.1 (25.2) 4.7 19.9 (15.2)
Income taxes (2.3) 6.9 (9.2) 1.8 7.3 (5.5)
----- ----- ----- ----- ----- -----
Net income (3.8)% 12.2% 16.0% 2.9% 12.6% (9.7)%
===== ===== ===== ===== ===== =====
Number of stores open
at end of period 764 391 373 764 391 373
===== ===== ===== ===== ===== =====
7
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
For the three months and six months ended June 30, 1996, revenues were $52.6
million and $106.3 million, increases of 117.2% and 129.4%, respectively over
the same periods in 1995. The increases were a result of an increase in the
number of stores operated by the Company. Same store sales decreased 2% for the
quarter and were essentially flat for the six months ended June 30, 1996 at
stores operated by the Company for at least 13 months. The same store sales
decrease for the quarter is primarily the result of unusually dry weather in the
south and southwest, where the majority of the Company's stores are located, and
due to continued softness in the video game rental market.
Store operating expenses, which reflect direct store expenses such as lease
payments and in-store payroll, increased as a percentage of revenues from 43.0%
for the three months ended June 30, 1995 to 48.9% for the three months ended
June 30, 1996. For the six months ended June 30, 1996, store operating expenses
as a percentage of revenue were 47.6%, an increase from 42.8% for the comparable
period in 1995. The increase in store operating expenses is primarily due to (i)
the decrease in same store sales during the second quarter; (ii) an increase in
rent and other expenses in connection with the integration of developed and
acquired stores into the Company's store base; and (iii) incremental store-level
costs incurred during the installation of the Company's new point-of-sale system
in over 270 stores during the quarter.
Effective April 1, 1996, the Company changed its method of amortizing
videocassette rental inventory (which includes video games and audio books).
Under the new method, videocassettes considered to be base stock are amortized
over thirty-six months on a straight-line basis to a $5 salvage value. New
release videocassettes are amortized as follows: (i) the fourth and any
succeeding copies of each title per store are amortized on a straight-line basis
over six months to an average net book value of $5 which is then amortized on a
straight-line basis over the next thirty months or until the videocassette is
sold, at which time the unamortized book value is charged to cost of sales; and
(ii) copies one through three of each title per store are amortized as base
stock. Management believes the new method will result in a better matching of
expenses with revenues in the Company's current operating environment and that
it is compatible with changes made by its primary competitors.
The new method of amortization has been applied to all inventory held at April
1, 1996. The adoption of the new method of amortization has been accounted for
as a change in accounting estimate effected by a change in accounting principle.
The application of the new method of amortizing videocassette rental inventory
increased depreciation expense for the quarter ended June 30, 1996 by
approximately $7.7 million and reduced net income and earnings per share by $4.7
million and $0.38, respectively. Net of the approximately $7.7 million charge
discussed above, videocassette amortization expense as a percentage of revenue
under the new method was approximately 22.3% for the second quarter of 1996, and
20.8% for the six months ended June 30, 1996.
Cost of sales increased with the increased revenue from product sales and
decreased as a percentage of revenues from product sales from 67.3% for the six
months ended June 30, 1995 to 60.0% for the six months ended June 30, 1996. For
the three months ended June 30, 1996 and 1995, cost of sales as a percentage of
revenues from product sales was 61.7% and 65.5%, respectively. The increase in
product sales gross margins resulted primarily from an increase in the sale of
previously viewed rental inventory, the unamortized value of which is expensed
to cost of sales and generally generates higher margins than other product
categories, and from an increase in margins on sell-through products.
8
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
General and administrative expenses as a percentage of revenue decreased to 7.2%
for the three months ended June 30, 1996 versus 8.6% for the comparable period
in 1995. For the six month period ended June 30, 1996, general and
administrative expenses as a percentage of revenue was 7.3% versus 8.4% for the
same period in 1995. The decrease is primarily due to operating efficiencies
attained through a larger revenue base.
Amortization of intangibles increased as a percentage of revenue to 3.1% for the
three months ended June 30, 1996 from 2.4% for the three months ended June 30,
1995. For the six months ended June 30, 1995 and 1996, amortization of
intangibles increased from 2.2% to 2.9%, respectively. These increases are due
to the effect of the substantial number of acquisitions which occurred
subsequent to the Company's initial public offering in August 1994 and
throughout 1995 which were accounted for under the purchase method of
accounting.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs are for acquiring and opening new stores and
for the purchase of videocassette inventory. Other capital needs include the
remodeling of existing stores and the continued upgrading and installation of
the Company's point-of-sale and management information systems. Typically, the
Company has funded its inventory purchases, its remodeling program and a
majority of its new store opening costs from cash flow from operations. The
Company has funded the balance of its capital needs, primarily for the
acquisition of additional video stores, from the proceeds of two public
offerings, loans under revolving credit facilities, the issuance of the
Company's shares to sellers and seller financing.
Net cash provided by operating activities was $43.0 million for the six months
ended June 30, 1996 as compared to $17.0 million for the comparable period of
1995. The increase was primarily due to; (i) higher net income before
depreciation, amortization and deferred taxes; (ii) a decrease in merchandise
inventory; and, (iii) an increase in both accounts payable and accrued
liabilities.
Net cash used in investing activities was $50.2 million for the six months ended
June 30, 1996 as compared to $60.4 million for the six months ended June 30,
1995, primarily as a result of a decrease in the total cash expended for stores
acquired during the first six months of 1996 versus 1995, offset by a net
increase in the purchase of videocassette rental inventory resulting from the
Company's growth.
Net cash provided by financing activities decreased from $58.2 million in the
first six months of 1995 to $8.0 million in the comparable period in 1996. This
decrease was primarily the result of a secondary common stock offering in 1995,
offset partially by an increase in notes payable in 1996.
On July 10, 1996, the Company entered into a Credit Agreement with First Union
National Bank of North Carolina with respect to a Reducing Revolving Credit
Facility (the "Facility"). The Facility is unsecured, provides borrowings for up
to $125 million and replaces the Company's existing line of credit agreement.
The available amount of the Facility will reduce quarterly beginning on March
31, 1998 with a final maturity of June 30, 2000. The interest rate of the
Facility is LIBOR-based and the Company may repay the Facility at any time
without penalty. The more restrictive covenants of the Facility require the
Company to maintain certain cash flow levels. At August 12, 1996, $65 million
was outstanding under the Facility with additional availability of approximately
$6 million.
9
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
and Financial Condition (continued)
It is anticipated that future acquisitions will be completed using funds
available under its Facility, financing provided by sellers, alternative
financing arrangements such as capital raised in public or private debt or
equity offerings and the use of the Company's Common Stock. The Company
currently has registered and available for issuance in future acquisitions over
$100 million of its Common Stock. Since the last quarter of 1995, the Company
has issued an aggregate of 1,278,571 shares of its Common stock in connection
with the acquisition of 154 additional stores, which includes the acquisitions
of Home Vision Entertainment, Inc. and Hollywood Video, Inc., which were
consummated subsequent to June 30, 1996 but prior to the filing of this Form
10-Q.
At June 30, 1996, the Company had a working capital deficit of $47.8 million,
due to the accounting treatment of its inventory. Videocassette and video game
rental inventory are treated 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 the major portion of the Company's
revenue, the classification of these assets as noncurrent results in their
exclusion from working capital. The aggregate amount payable for this inventory,
however, is reported as a current liability until paid and, accordingly, is
included in working capital. Consequently, the Company believes that working
capital is not an appropriate measure of its liquidity and it anticipates that
it will continue to operate with a working capital deficit.
10
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits -
11 Computation of Earnings Per Share
18 Change in Accounting Principle
27 Financial Data Schedule
b) Reports on Form 8-K
A Form 8-K reporting on Items 2, 5, and 8 was filed on July 15,
1996.
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.
Movie Gallery, Inc.
(Registrant)
Date: August 14, 1996 /s/ J. Steven Roy
-----------------
J. Steven Roy, Senior Vice President
and Chief Financial Officer
11
<PAGE>
Exhibit 11
Movie Gallery, Inc.
Computation of Earnings Per Share
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
------------ ----------- ----------- -----------
Net income (loss) $(1,995,000) $ 2,970,000 $ 3,106,000 $ 5,833,000
============ =========== =========== ===========
Shares:
Weighted average common
shares outstanding 12,437,483 11,168,846 12,288,897 10,191,577
Net effect of dilutive
stock options 262,844 350,301 230,514 309,209
----------- ----------- ----------- -----------
Weighted average common
and common equivalent
shares outstanding 12,700,327 11,519,147 12,519,411 10,500,786
=========== =========== =========== ===========
Income (loss) per common
and common equivalent
share $ (.16) $ .26 $ .25 $ .56
=========== =========== =========== ===========
12
<PAGE>
Exhibit 18
August 9, 1996
Mr. J. Steven Roy
Senior Vice President and
Chief Financial Officer
Movie Gallery, Inc.
739 W. Main Street
Dothan, Alabama 36301
Dear Sir:
Note 2 of the financial statements of Movie Gallery, Inc. included in its Form
10Q for the six months ended June 30, 1996 describes a change in the method of
amortizing the cost of videocassette and video game rental inventory to an
accelerated method with increased amortization for "new release" rental. You
have advised us that you believe that the change is to a preferable method in
your circumstances because (i) it will result in a better match of the cost of
videocassettes with their revenues in the Company's current operating
environment and (ii) it is consistent with industry practice.
We conclude that the change in the method of amortizing videocassette rental
inventory, including video games and audio books, is to an acceptable
alternative method, which, based on your business judgment to make this change
for the reasons cited above is preferable in your circumstances. We have not
conducted an audit in accordance with generally accepted auditing standards for
any financial statements of the Company as of any date or for any period
subsequent to December 31, 1995, and therefore we do not express any opinion on
any financial statements of Movie Gallery, Inc. subsequent to that date.
Very truly yours,
/s/ Ernst & Young LLP
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,405
<SECURITIES> 0
<RECEIVABLES> 1,634
<ALLOWANCES> 0
<INVENTORY> 9,171
<CURRENT-ASSETS> 21,136
<PP&E> 178,130<F1>
<DEPRECIATION> 65,247<F2>
<TOTAL-ASSETS> 231,660
<CURRENT-LIABILITIES> 68,896
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 148,720
<TOTAL-LIABILITY-AND-EQUITY> 231,660
<SALES> 13,968
<TOTAL-REVENUES> 106,307
<CGS> 8,379
<TOTAL-COSTS> 99,645
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,647
<INCOME-PRETAX> 5,015
<INCOME-TAX> 1,909
<INCOME-CONTINUING> 3,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,106
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES $128,133 OF VIDEOCASSETTE RENTAL INVENTORY.
<F2>INCLUDES $56,848 OF ACCUMULATED AMORTIZATION ON VIDEOCASSETTE RENTAL
INVENTORY.
</FN>
</TABLE>
