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 April 5, 1998 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: 13,420,805 shares of Common
Stock as of May 12, 1998.
The exhibit index to this report appears at page 10 of 10 consecutively numbered
pages.
<PAGE>
Movie Gallery, Inc.
Index
Part I. Financial Information
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets - April 5, 1998 and January 4, 1998................1
Consolidated Statements of Income - Thirteen weeks ended
April 5, 1998 and April 6, 1997................................................2
Consolidated Statements of Cash Flows - Thirteen weeks ended
April 5, 1998 and April 6, 1997................................................3
Notes to Consolidated Financial Statements (Unaudited) - April 5, 1998.........4
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition..........................................6
Part II. Other Information
Item 1. Legal Proceedings....................................................10
Item 6. Exhibits and Reports on Form 8-K.....................................10
<PAGE>
Movie Gallery, Inc.
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
April 5 January 4
1998 1998
------------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,971 $ 4,459
Merchandise inventory 12,798 13,512
Prepaid expenses 1,522 1,341
Store supplies and other 2,728 2,561
Deferred income taxes 370 531
-------- --------
Total current assets 21,389 22,404
Videocassette rental inventory, net 90,278 92,183
Property, furnishings and equipment, net 48,673 50,321
Deferred charges, net 8,383 8,940
Excess of cost over net assets acquired, net 82,191 83,381
Deposits and other assets 1,945 1,904
-------- --------
Total assets $252,859 $259,133
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 17,646 $ 21,517
Accrued liabilities 6,951 7,014
Current portion of long-term debt 9,965 4,751
-------- --------
Total current liabilities 34,562 33,282
Long-term debt 53,301 63,479
Other accrued liabilities 1,641 1,899
Deferred income taxes 13,837 12,844
Stockholders' equity:
Preferred stock, $.10 par value; 2,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock, $.001 par value; 60,000,000
shares authorized, 13,420,685 and 13,418,885
shares issued and outstanding, respectively 13 13
Additional paid-in capital 131,693 131,686
Retained earnings 17,812 15,930
-------- --------
Total stockholders' equity 149,518 147,629
-------- --------
Total liabilities and stockholders' equity $252,859 $259,133
======== ========
See accompanying notes.
</TABLE>
1
<PAGE>
Movie Gallery, Inc.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
April 5 April 6
1998 1997
-----------------------
<S> <C> <C>
Revenues:
Rentals $ 58,933 $ 55,583
Product sales 11,558 10,095
-------- --------
70,491 65,678
Operating costs and expenses:
Store operating expenses 35,050 33,154
Amortization of videocassette rental inventory 17,302 16,283
Amortization of intangibles 1,747 1,774
Cost of product sales 7,519 5,705
General and administrative 4,260 4,046
-------- --------
Operating income 4,613 4,716
Interest expense, net (1,577) (1,496)
-------- --------
Income before income taxes 3,036 3,220
Income taxes 1,154 1,224
-------- --------
Net income $ 1,882 $ 1,996
======== ========
Basic and diluted earnings per share $ .14 $ .15
======== ========
Weighted average shares outstanding (in thousands):
Basic 13,419 13,421
Diluted 13,818 13,421
See accompanying notes.
</TABLE>
2
<PAGE>
Movie Gallery, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
April 5 April 6
1998 1997
----------------------
<S> <C> <C>
Operating activities
Net income $ 1,882 $ 1,996
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22,248 20,605
Deferred income taxes 1,154 1,224
Changes in operating assets and liabilities:
Merchandise inventory 714 (341)
Other current assets (348) (30)
Deposits and other assets (41) 209
Accounts payable (3,871) (1,796)
Accrued liabilities (321) 29
-------- --------
Net cash provided by operating activities 21,417 21,896
Investing activities
Purchases of videocassette rental inventory, net (15,397) (18,536)
Purchases of property, furnishings and equipment (1,551) (4,291)
-------- --------
Net cash used in investing activities (16,948) (22,827)
Financing activities
Net proceeds from issuance of common stock 7 --
Payments on notes payable (200) --
Proceeds from issuance of long-term debt -- 2,000
Principal payments on long-term debt (4,764) (79)
-------- --------
Net cash (used in) provided by financing activities (4,957) 1,921
-------- --------
(Decrease) increase in cash and cash equivalents (488) 990
Cash and cash equivalents at beginning of period 4,459 3,982
-------- --------
Cash and cash equivalents at end of period $ 3,971 $ 4,972
======== ========
See accompanying notes.
</TABLE>
3
<PAGE>
Movie Gallery, Inc.
Notes to Consolidated Financial Statements (Unaudited)
April 5, 1998
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, the financial statements 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 thirteen week period
ended April 5, 1998, are not necessarily indicative of the results that may be
expected for the fiscal year ended January 3, 1999. 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 fiscal year ended
January 4, 1998.
2. Financing Obligations
The Company has 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 and currently provides borrowings for up to $83.3
million. The available amount of the Facility reduces quarterly with a final
maturity of June 30, 2000. The interest rate of the Facility is based on LIBOR
plus an applicable margin percentage, which depends on the Company's cash flow
generation and borrowings outstanding. The Company may repay the Facility at any
time without penalty. The more restrictive covenants of the Facility restrict
borrowings based upon cash flow levels. At April 5, 1998, $62.5 million was
outstanding and $20.8 million was available for borrowing under the Facility.
The Company has entered into an interest rate swap agreement with a commercial
bank which effectively fixes the Company's interest rate exposure on $37 million
of the amount outstanding under the Facility at 6.22% plus an applicable margin
percentage. The interest rate swap reduces the risk of increases in interest
rates during the remaining life of the Facility. The Company accounts for its
interest rate swap as a hedge of its debt obligation. The Company pays a fixed
rate of interest and receives payment based on a variable rate of interest. The
difference in amounts paid and received under the contract is accrued and
recognized as an adjustment to interest expense on the debt. There are no
termination penalties associated with the interest rate swap agreement; however,
if the swap agreement was terminated at the Company's option, the Company would
either pay or receive the present value of the remaining hedge payments at the
then prevailing interest rates for the time to maturity of the swap agreement.
The interest rate swap agreement terminates at the time the Facility matures.
3. Earnings Per Share
Effective January 4, 1998, the Company adopted Statement of Financial Accounting
Standards No. 128, Earnings per Share. This statement is effective for fiscal
periods ending after December 15, 1997 and requires restatement of prior
periods' earnings per share data. Under this Statement the calculation of
primary and fully diluted earnings per share is replaced with basic and diluted
earnings per share and requires presentation of both amounts on the income
statement. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of common stock equivalents. Diluted earnings per share is
similar to the previously reported fully diluted earnings per share. Adoption of
this Statement had no significant impact on earnings per share calculations for
any period presented.
4
<PAGE>
Movie Gallery, Inc.
Notes to Consolidated Financial Statements (Unaudited)(continued)
3. Earnings Per Share (continued)
Basic earnings per share is computed based on the weighted average number of
shares of common stock outstanding during the periods presented. Diluted
earnings per share is computed based on the weighted average number of shares of
common stock outstanding during the periods presented, increased solely by the
effects of shares to be issued from the exercise of dilutive common stock
options (399,000 for the thirteen weeks ended April 5, 1998 and none for the
thirteen weeks ended April 6, 1997). No adjustments were made to net income in
the computation of basic or diluted earnings per share.
5
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
And Financial Condition
The following table sets forth, for the periods indicated, statement of
operations data expressed as a percentage of total revenue, the percentage
increase or decrease from the comparable period and the number of stores open at
the end of each period.
<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------------------------
April 5 April 6 Increase
1998 1997 (Decrease)
------- ------- -----------
<S> <C> <C> <C>
Revenues:
Rentals 83.6% 84.6% (1.0)%
Product sales 16.4 15.4 1.0
----- ----- ----
100.0 100.0 --
Operating costs and expenses:
Store operating expenses 49.8 50.5 (0.7)
Amortization of rental inventory 24.5 24.8 (0.3)
Amortization of intangibles 2.5 2.7 (0.2)
Cost of product sales 10.7 8.7 2.0
General and administrative 6.0 6.1 (0.1)
----- ----- ----
Total 93.5 92.8 0.7
----- ----- ----
Operating income 6.5 7.2 (0.7)
Interest expense, net (2.2) (2.3) 0.1
----- ----- ----
Income before income taxes 4.3 4.9 (0.6)
Income taxes 1.6 1.9 (0.3)
----- ----- ----
Net income 2.7% 3.0% (0.3)%
===== ===== ====
Number of stores open at end of period 849 861 (12)
===== ===== ====
</TABLE>
For the thirteen weeks ended April 5, 1998, revenues were $70.5 million, an
increase of 7.3% over the comparable period in 1997. The increase was due
primarily to an increase in same-store sales of 7.3%. The increase in same-store
sales for the first quarter of 1998 was the result of (i) the Company's increase
in depth of copies of hit titles compared to the prior year; (ii) an increase in
the game rental business due to increasing consumer acceptance of the Nintendo
64 and Sony Playstation game platforms; and (iii) successful, chain-wide
internal marketing programs designed to generate more consumer excitement and
traffic in the Company's base of stores.
Product sales as a percentage of total revenue for the thirteen weeks ended
April 5, 1998 was 16.4%, an increase from 15.4% for the comparable period in
1997. This increase was primarily the result of (i) the Company's continued and
increased emphasis on the sale of previously viewed rental inventory and (ii) an
increase in new tape sales associated primarily with better merchandised
product.
Store operating expenses, which reflect direct store expenses such as lease
payments and in-store payroll, decreased as a percentage of revenues to 49.8%
for the thirteen weeks ended April 5, 1998 from 50.5% for the comparable period
in 1997. The decrease in store operating expenses as a percentage of revenues
was primarily due to the same-store sales increase during the quarter, offset,
in part, by an increase in revenue sharing expense and an increase in rent
associated with newly built stores and renewals, expansions and relocations of
existing stores.
6
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
And Financial Condition (continued)
For the first quarter of 1998, amortization of videocassette rental inventory
decreased as a percentage of revenue to 24.5% from 24.8% for the comparable
period in 1997, but increased by approximately $1 million period over period.
The dollar increase in amortization is attributable to the Company's increased
rental inventory purchases, which began in the fourth quarter of 1996 and
continued through the first nine months of 1997 in response to industry-wide
competitive issues. The decrease in amortization as a percentage of revenues is
due primarily to the increased revenues associated with the Company's same-store
sales increase for the quarter.
Cost of product sales includes the costs of new videocassettes, confectionery
items and other goods, as well as the unamortized value of previously viewed
rental inventory sold in the Company's stores. Cost of product sales increased
with the increased revenue from product sales and increased as a percentage of
revenues from product sales from 56.5% for the first quarter of 1997 to 65.1%
for the first quarter of 1998. The decrease in product sales gross margins
resulted primarily from an effort by the Company to market more aggressively
both its new tape inventory and its stock of previously viewed tapes.
General and administrative expenses as a percentage of revenue decreased to 6.0%
for the first quarter of 1998 from 6.1% for the comparable period in 1997. Net
interest expense as a percentage of revenues decreased to 2.2% for the first
quarter of 1998 from 2.3% for the first quarter of 1997. These decreases were
due primarily to the increasing revenues that the Company has achieved.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary capital needs have been for opening and
acquiring new stores and for the purchase of videocassette inventory. Other
capital needs include the remodeling of existing stores, the relocation of
existing stores and the continued upgrading and installation of the Company's
point of sale system and management information systems. The Company has funded
inventory purchases, remodeling and relocation programs, new store opening costs
and acquisitions primarily from cash flow from operations, the proceeds of two
public equity offerings, loans under revolving credit facilities and seller
financing.
During the first quarter of 1998, the Company generated approximately $11.7
million in Adjusted EBITDA versus approximately $7.2 million for the first
quarter of 1997, an increase of approximately 62.9%. The increase in Adjusted
EBITDA is attributable primarily to both the same-store sales increase of 7.3%
and the Company's leveraging of rental inventory purchases in the first quarter
of 1998 versus the comparable period in 1997. "Adjusted EBITDA" is earnings
before interest, taxes, depreciation and amortization, less the Company's
purchase of videocassette rental inventory which excludes inventory purchases
specifically for new store openings. This definition differs from previous
disclosures, because the Company now excludes new store inventory purchases from
the calculation of Adjusted EBITDA. Adjusted EBITDA does not take into account
capital expenditures, other than purchases of videocassette rental inventory,
and does not represent cash generated from operating activities in accordance
with generally accepted accounting principles ("GAAP"), is not to be considered
as an alternative to net income or any other GAAP measurements as a measure of
operating performance and is not indicative of cash available to fund cash
needs. The Company's definition of Adjusted EBITDA may not be identical to
similarly titled measures of other companies. The Company believes that in
addition to cash flows and net income, Adjusted EBITDA is a useful financial
performance measurement for assessing the operating performance of the Company
because, together with net income and cash flows, Adjusted EBITDA is widely used
in the videocassette specialty retailing industry to provide investors with an
additional basis to evaluate the ability of the Company to incur and service its
debt and to fund growth.
7
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
And Financial Condition (continued)
Net cash provided by operating activities was $21.4 million for the first
quarter of 1998 as compared to $21.9 million for the first quarter of 1997. The
decrease was primarily due to a decrease in accounts payable and other accrued
liabilities, offset in part by an increase in depreciation and amortization, as
well as a decrease in merchandise inventory.
Net cash used in investing activities was $16.9 million for the first quarter of
1998 as compared to $22.8 million for the first quarter of 1997, primarily as a
result of a decrease in the expenditures of capital for both videocassette
rental inventory and property, furnishings and equipment.
Net cash used in financing activities was $5.0 million for the first quarter of
1998 as compared to net cash provided by financing activities of $1.9 million
for the first quarter of 1997. This change resulted directly from the Company's
improved Adjusted EBITDA performance and allowed the Company to decrease its
debt outstanding at quarter end versus an increase in debt in the comparable
quarter of the prior year.
The Company has 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 and currently provides borrowings for up to $83.3
million. The available amount of the Facility reduces quarterly with a final
maturity of June 30, 2000. The interest rate of the Facility is based on LIBOR
plus an applicable margin percentage, which depends on the Company's cash flow
generation and borrowings outstanding. The Company may repay the Facility at any
time without penalty. The more restrictive covenants of the Facility restrict
borrowings based upon cash flow levels. At April 5, 1998, $62.5 million was
outstanding and $20.8 million was available for borrowing under the Facility.
The Company grows its store base through internally developed and acquired
stores and may require capital in excess of internally generated cash flow to
achieve its desired growth. To the extent available, future acquisitions may be
completed using funds available under the Facility, financing provided by
sellers, alternative financing arrangements such as funds raised in public or
private debt or equity offerings or shares of the Company's stock issued to
sellers. However, there can be no assurance that financing will be available to
the Company on terms which will be acceptable, if at all.
At April 5, 1998, the Company had a working capital deficit of $13.2 million,
due to the accounting treatment of its videocassette rental inventory.
Videocassette rental inventory is treated as a noncurrent asset under generally
accepted accounting principles because it is not an asset which is 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 this asset as noncurrent results in its
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.
The Company believes its projected cash flow from operations, borrowing capacity
with the Facility, cash on hand and trade credit will provide the necessary
capital to fund its current plan of operations for Fiscal 1998, including its
anticipated new store openings. However, to fund a resumption of the Company's
acquisition program, or to provide funds in the event that the Company's need
for funds is greater than expected, or if certain of the financing sources
identified above are not available to the extent anticipated or if the Company
increases its growth plan, the Company will need to seek additional or
alternative sources of financing. This financing may not be available on terms
satisfactory to the Company. Failure to obtain financing to fund the Company's
expansion plans or for other purposes could have a material adverse effect on
the Company.
8
<PAGE>
Movie Gallery, Inc.
Management's Discussion and Analysis of Results of Operations
And Financial Condition (continued)
OTHER MATTERS
The Company has performed an analysis of its operating systems to determine
systems' compatibility with the upcoming year 2000. Substantially all of the
Company's operating systems are year 2000 compliant, and the Company does not
believe that there will be any material exposure related to year 2000
compatibility.
This report contains certain forward-looking statements regarding the Company.
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and in that regard is
cautioning the readers of this report that a number of important risk factors
could affect the Company's actual results of operations and may cause changes in
the Company's strategy with the result that the Company's operations and results
may differ materially from those expressed in any forward-looking statements
made by, or on behalf of, the Company. These risk factors include competitive
factors and weather conditions within the Company's geographic markets, adequate
product availability from Hollywood and the risk factors that are discussed from
time-to-time in the Company's SEC reports, including, but not limited to, the
report on Form 10-K for the fiscal year ended January 4, 1998.
9
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings
In June 1997, certain former shareholders of Home Vision Entertainment, Inc.
("Home Vision") filed a complaint against the Company in the U. S. District
Court for the District of Maine asserting a claim for breach of contract in
connection with the merger of the Company and Home Vision in July 1996. These
shareholders ultimately sought damages in excess of $10 million plus costs. On
March 19, 1998, the Company received a jury verdict in its favor with respect to
all claims brought against it and does not expect to pay any monetary damages
associated with this case.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27 Financial Data Schedule
27.1 Financial Data Schedule - Restated for April 6, 1997
b) Reports on Form 8-K
None.
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: May 20, 1997 /s/ J. Steven Roy
---------------------------------------
J. Steven Roy, Executive Vice President
and Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FROM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000925178
<NAME> Movie Gallery, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> JAN-05-1998
<PERIOD-END> APR-05-1998
<CASH> 3,971
<SECURITIES> 0
<RECEIVABLES> 401
<ALLOWANCES> 0
<INVENTORY> 12,798
<CURRENT-ASSETS> 21,389
<PP&E> 261,036 <F1>
<DEPRECIATION> 122,085 <F2>
<TOTAL-ASSETS> 252,859
<CURRENT-LIABILITIES> 34,562
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 149,505
<TOTAL-LIABILITY-AND-EQUITY> 252,859
<SALES> 11,558
<TOTAL-REVENUES> 70,491
<CGS> 7,519
<TOTAL-COSTS> 65,878
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,577
<INCOME-PRETAX> 3,036
<INCOME-TAX> 1,154
<INCOME-CONTINUING> 1,882
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,882
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
<FN>
<F1> Includes $183,321 of videocassette rental inventory.
<F2> Includes $93,043 of accumulated amortization on videocassette rental
inventory.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FROM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000925178
<NAME> Movie Gallery, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-04-1998
<PERIOD-START> JAN-06-1997
<PERIOD-END> APR-06-1997
<CASH> 4,972
<SECURITIES> 0
<RECEIVABLES> 910
<ALLOWANCES> 0
<INVENTORY> 11,078
<CURRENT-ASSETS> 20,974
<PP&E> 266,013<F1>
<DEPRECIATION> 121,890<F2>
<TOTAL-ASSETS> 264,823
<CURRENT-LIABILITIES> 30,552
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 148,707
<TOTAL-LIABILITY-AND-EQUITY> 264,823
<SALES> 10,095
<TOTAL-REVENUES> 65,678
<CGS> 5,705
<TOTAL-COSTS> 60,962
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,496
<INCOME-PRETAX> 3,220
<INCOME-TAX> 1,224
<INCOME-CONTINUING> 1,996
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,996
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
<FN>
<F1> Includes $195,204 of videocassette rental inventory.
<F2> Includes $103,022 of accumulated amortization on videocassette rental
inventory.
</FN>
</TABLE>
