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AnnualS
tockholders
Meeting
Thursday
,May28,2009
JimKeyes,Chairma
nandCEO
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TheO
ldBlockbuster
TheNewBlockbuster
IncreasedUn
itAvailability
In2008,Blockbusterimprovedunitavailabilityofrentalproduct,which
enabledustore-engagedourcustomers
anddrasticallyimprovesatisfaction
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BecameaBlu-rayDestination
Wealsoestablished
ourpresenceasaBlu-raydestination,offeringdemonstrationkiosks,hard
ware,anda
broadsoftwareasso
rtmentwhilemaintaining
prices
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EnhancedRe
tailMerchandising
Additionally,weexp
andedourentertainment
offeringtoincludenewp
roductsfromwell-known
brandsthat
leveragedourvisibility,knowledgeablecustomerservicerepresentativ
esandconvenientstore
locations
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ImprovedGa
mesExperience
andProductAs
sortment
Assistingourcorecustomersastheymoveintocasualgamesremain
sasignificantopportunityforboth
Blockbusterandgam
evendors;in2008wee
xpandedourretailprese
ncetoincludegamesandincreased
ourhardwareandsoftwareoffering,whilelev
eraginghighervisibilityb
ystrategicallyplacingthemonthe
newreleasewallandsellingadditionalcomplementaryaccessories
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RevivedStor
eEnvironment
RedefiningtheBlockbusterexperienceisimp
ortanttosatisfyingourcustomersnowandinto
thefuture
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BetterBlockbus
terROI
(estimatedinvestment$30-50K)
RocktheBlockROI
(excludingBeverageBar)
(estim
atedinvestment$50-10
0K)
Illustrative-StoreEnhancem
entROI
Ordinary
costofCapital
Currentc
ostofCapital
In2008weenhance
dapproximately600dom
esticstores;inthecurre
ntcapitalconstrainedenvironment
wecontinuetopreserveeventticketing,POS
serversandstoremaintenanceaswellasrefine
RTBstores
wherecapitalhasbeeninvested
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TotalRevenues
RentalReven
ues
DomesticSame-StoreSales1
Q108
Q40
7
Q307
Q20
7
Q107
Q208
Q308
(6.3%)
(11.8%)
(9.3%)
(0.9%)
2.9%
14.2%
(4.7%)
(11.9%)
(9.9%)
(5.7%)
0.0%
8.4%
5.1%
(0.4%)
Q408
(2.7%)
4.4%
2
1ThissliderepresentstheCompanysComptrend.
2DoesnotincludePRP(PreviouslyRentedProduct);Doesnotincludeonline
1
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Withmodestleverageofapproximately2.8xdebttoEBITDA,year-over-yearadjustedEBITDA
(A)
improvementof77%
,strategicpartnerships,
acompetitivemulti-channeldistributionoffering,a
nda
successfulbusiness
transformationwellunderway,webelieveoureq
uityisunder-valuedand
under-
representedontheStreet
$180
$319
(A)AdjustedEBITDAexcludesthestock
-basedcompensationexpenses,costsassociatedwithleaseterminationsandseverance
AdjustedEBITDA($Millions)
StockPric
e($Dollars)
AdjustedEBITDA(A)FiscalYe
ar-Over-Year
77%
$0
$50
$100
$150
$200
$250
$300
$350
2007
2008
$0
$1
$2
$3
$4
$5
$6
$180
$319
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2009StrategicInitiatives
Blockbustercontinuestoexecuteitsstrategic
plan,whilereducingcos
tsandmaximizingcashflow
+
In-stockavailability
Newterms&pricing
Newstudioandve
ndorterms/
partnerships
Expandedproductoffering:
BlockbusterPremieres
Diversification:eventticketingand
consignedproducts
Stores
Gamesby-mailoffering
SamepriceBlu-Ray
By-Mail
Marketentryin2009
Addretailandgames
Pilotdigitaldownload
Vending
FurtherreduceSG&Abyo
ver
$200mm(A)
Continuetopursue
outsourcingcontracts
Pursueaggressiveleasec
ost
reductions
Liquidityenhancements
FinancialInitiatives
Adjusted
EBITDAguidance
of$305m
m-$325mm(B)
Reduce
totaldebt
ImprovedResults
(A)Excludesnegativeimpactsofforeigncurrencye
xchangeandinflation.
(B)Adju
stedEBITDAexcludesthestock-basedcom
pensationexpenses,costsassociatedwithleaseterminations,
severanceandanadjustmentforgameinventory
obsolescenceandthefavorablesettlemen
toffutureliabilities
Digital
Strategicalliances(C
Edevice
manufacturersandin
frastructure)
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ChooseYou
rTerms
Wealsoaimtodeliv
eracompellingvaluepropositionthroughCYTrentalthatprovidesconsu
merswiththe
choice,flexibilityandcontrol,whiledrivingstoretrafficandincreasing
revenues
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Blockbusterwillcontinuetodeliverholisticim
provementstotheovera
llstoreexperiencewithm
inimal
capitalexpensebyleveragingcurrentCompa
nyresourcesandconsig
nedmodel;asaresult,c
ustomers
willf
inditeasiertom
akeproductselectionst
hroughtheuseofmerchandisingstoriesthatdeliv
er
impactful,relevanta
ndtrustedoptions
ImproveShoppingEnvironmentandProduct
Mix
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AdvertisingC
ampaign:Escape-In
Wheredoyouturnforanentertainmentesca
pe?Whetherin-store,by
-mail,vending,onlineor
athome,
BlockbusteroffersthousandsofmoviesandgamesthathelpyouEscape-In
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Vending:Blo
ckbusterExpres
s
Capacityforup
toapproximately1000discs,
providinglargerselectionincludingcatalog
titles
17highresolutiontouchscreeninterfac
ewith
robustsearchc
apabilities
Abilitytoreturn
rentalstoanyBlockbuster
Express
Smallfootprintforindoorandoutdoor
placement;targ
etingtraditionalandnon-
traditionalgeog
raphiclocations
Upgradeableto
accommodatedigitalcontent
downloading
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MoreConven
ientLocations
Convenient
Convenient
neighborhood
store
neighborhood
store
withCE,content,
withCE,content,
andservic
e
andservic
e
3,000
3,000--5,000s
q.ft.
5,000s
q.ft.
Smallfootprint,new
S
mallfootprint,new
release
release--centric,
centric,
smallproducts
smallproducts
assortment
assortment
1
,000
1
,0002,000sq.ft.
2,000sq.ft.
Convenient,tr
usted
Convenient,tr
usted
sourceforfast,
sourceforfast,
reliableserv
ice
reliableserv
ice
1515--20sq.
ft.
20sq.
ft.
In
ternetReservation
InternetReservation
TechnologyServices
TechnologyServices
Wecandeliveraun
iformvaluepropositionacrossmultipleretailchan
nels,whetheratraditiona
lBlockbuster
store,asmallerfootprinturbanstoreoraven
dingmachineataneighborhoodconvenienceordrugstore;
thetiethatbindsistheBlockbusterexperience:thesamelookandfeel,thesamevaluepropositionsand
thesamereliablese
rvicethatprovidesconve
nience,availability,selectionandprice
SmallBox
SmallBox
SmallBox
Urban
Urban
Urban
Vending
/
Kiosk
Vending
/
Vending
/
Kiosk
Kiosk
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DevelopBey
ondtheBoxDe
liveryChannels
DigitalKiosk
DigitalKiosk
DigitalKiosk
Computer
Computer
Computer
PortableD
evice
PortableDevice
PortableDevice
At-Home
AtAt--Home
Home
Blockbusterwillcontinuetoimproveitsdigita
ldistributioncapabilities,
fromdigitalkioskdeploy
menttoat-
homesolutions,ino
rdertoprovidewheneve
r,whereversolutionsto
customers
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An
ywhereAnyWay
In-Store
By-Mail
Vending/
Kiosk
Online
At-Home
Rent
Buy
Subscr
ibe
WhyWeWin
Ourcompetitiveedg
eisthatweprovideconv
enientaccesstomediae
ntertainmentacrossallp
latformsand
channels,providing
ourcustomerswiththeflexibilityandcontroltheyrequire
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1Q2009FinancialReview
Thursday
,May28,2009
TomCasey,EV
PandCFO
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Q1'08
Q1'09
%Increase/
Actual
Actual
(Decreas
e)
Labor
229
$
183
$
(19.9%)
Occup
ancy
216
$
193
$
(10.5%)
Above-Store
88
$
64
$
(27.1%)
OtherG&A
69
$
53
$
(22.9%)
TotalS
G&A,pre-Mktg.
601
$
493
$
(17.9%)
YOYIncrease/(Decrease)
(108)
$
Marketing
31
$
12
$
(61.3%)
TotalS
G&A
632
$
505
$
(20.0%)
YOYIncrease/(Decrease)
(127)
$
ContinuedReductionofSG&
A
TheCompanycontinuestoexecuteaccordin
gtoplanandisontracktoreduceSG&Abyover
$200Mn(A)in
fiscal2009
(A)
Excludesimpactsofforeigncurrencyexchangeandinflation
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CapitalStruc
ture(asofApril5
,2009)
Blockbustersmodestleverageratiois2.7xd
ebttoEBITDA
($inmillions)
4/5/2009
%ofCap
2009EBITDA
Interestrate
Maturity
Cashandequivalents
$107.0
Revolver
$205.0
18.3%
0.6x
L+3.25%
8/20/2009
TermloanAfacility
10.0
0.9%
0.0x
L+3.25%
8/20/2009
TermloanBfacility
333.7
29.8%
1.0x
L+3.50%
8/20/2011
Totalbankdebt
$548.7
49.0%
1.7x
9.00%Seniorsubno
tes
300.0
26.8%
0.9x
9.00%
9/1/2012
Capitalleases
32.5
2.9%
0.1x
Various
Totaldebt
$881.2
78.6%
2.7x
Convertiblepreferred
equity
150.0
13.4%
7.50%Dividend
Perpetual
Bookequity-commo
n
89.4
8.0%
Totalequity
$239.4
21.4%
Totalcapitalization
$1,120.6
100.0%
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FundingActi
vity(sinceApril5
,2009)
CashandcashequivalentsasofApril5,2009
107.0
$
ProceedsfromCanadianABL(A)
21.4
$
ProceedsfromAmendedRevolver(B)
2
50.0
Paypre-am
endmentrevolverbalanc
e
(2
05.0)
Payfeeso
namendedcreditfacility
(
24.3)
Netproceedsfromfunding
42.1
Proceedsfromgamesinventorysale
16.4
Cashused
tocollateralizelettersofcredit(C)
(1
18.3)
Netcasho
utflowfromtransactions
(101.9)
Pro-Forma
cashasofMay12,2009
(D)(E)
47.2
$
(A)ConvertedtoUSDollarsbasedo
ntheMay11,2009excha
ngerate
(B)AsofM
ay12,2009
(C)Includesreductioninlettersofcr
edit,includingsettlementoflitigationbond
(D)April5
cashbalancelesscashoutflowfromtransactions
(E)Doesn
otincludecashgenerated
bythebusinessinthemonthleadinguptofunding
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MaximizeCashFlowandLiquidity
Blockbusterscosts
arevariableandcontrollable,allowingtheCompa
nytomaximizecashflow
Capital
Expenditures
Working
Capital
Consistentwithdevelopingprese
nceinretail,Blockbusteraddedretailinventoryin2008
Thecompanyhasbudgetedlessworkingcapitalinvestmentsin
2009,withtheexceptionofnormalseasonalholidaybuilds
Reductioninmerchandiseinventoryandmoreefficientallocationwilldrivetheimprovementinnetworkingcapital
2009roll-outofnewpricingstructure,ChooseYourTerms,willleadtoaninventoryreductioninrentalproduct
CapExwillbemaintenancelevelo
f$30Mnin2009,representingare
ductionofover$80Mncomparedtofiscal2008
PreservesinvestmentinPOSservers,eventticketing,kiosks
andnominalstoremaintenance
Defersmajorstoreremode
ls(e.g.RocktheBlock)
ContinuedSG&Areductionsin2009;over$200Mnforthefullyear,excludingimpactsofforeigncurrenc
yexchangeandinflation
Selectivestoreclosures
Aggressiveleasecostsavings
Outsourcinginitiatives
Further
Reduce
SG&A
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$21M
LiquidityEnh
ancements De
scription
Benefit
Internatio
nal
assetsales
SaleofIn
tlassets
Storeclosures
Closureoflessprofitablestores
CanadianABL
TermLoan
LCreduction
$10M
Settlementofunderlyinglitigation
Blockbusterhasrec
entlyenhancedliquidity,
withadditionalopportunitiesplanned
Asset-BasedLoantosupportCanadian
operation
s(U.S.
Dollars)
ViacomL
C
Reduction
ReductioninViacomL
C
ExcessInve
ntory
Reduction
$16M
Saleofex
cessretailg
amessoftware,
har
dware
andaccessories
Completed
Plannedin
2009
Description
Benefit
Over$25M
Over$25M
Over$100M
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ThankYou!
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Reconciliatio
nofNetIncome
toAdjustedEBITDA($inMillions)
FiscalQuarterEnded
April5,2009
April6,2008
Reconciliationofadju
stednetincome(loss):
Income(loss)fromcontinuingoperations
27.7
$
45.7
$
Adjustmentstoreconcileincome(loss)fromcontinuing
operations
toadjustednetincome
(loss):
Storeclosurecostsincludingleaseterminations
(recurring)
3.4
2.8
Severancecosts
(no
n-recurring)
1.1
-
Gameinventoryobsolesenceadjustment(non-recurring)
16.7
-
Settlementoffutureliability(non-recurring)
(7.6)
-
Adjustednetincome(lo
ss)
41.3
48.5
Preferredstockdivide
nds
(2.8)
(2.8)
Adjustednetincome(lo
ss)applicabletocommonstock
holders
38.5
$
45.7
$
Adjustednetincome(lo
ss)percommonshare-diluted
0.19
$
0.21
$
Reconciliationofadju
stedoperatingincome(loss):
Operatingincome(loss)
50.1
$
70.2
$
Adjustmentstoreconcileoperatingincome(loss)toadjusted
operatingincome(loss)
:
Storeclosurecostsincludingleaseterminations
(recurring)
3.4
2.8
Severancecosts(non
-recurring)
1.1
-
Gameinventoryobsolesenceadjustment(non-recurring)
16.7
-
Settlementoffutureliability(non-recurring)
(7.6)
-
Adjustedoperatinginco
me(loss)
63.7
$
73.0
$
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Reconciliatio
nofAdjustedEBITDA($inMillio
ns) F
iscalQuarterEnded
April5,2009
April6,2008
Reconciliationofad
justedEBITDA:
Netincome(loss)
27.7
$
45.4
$
Adjustmentstorecon
cilenetincome(loss)toadjuste
d
(Income)lossfromdiscontinuedoperations,netof
tax
-
0.3
Provisionforincometaxes
5.6
6.8
Interestandotherin
come,net
16.8
17.7
Depreciationandintangibleamortization
34.8
39.9
EBITDA
84.9
$
110.1
$
Leaseterminationc
ostsincurredforstoreclosures
(recurring)
1.1
0.2
Severancecosts(non-recurring)
1.1
-
Stockcompensation
(recurring)
2.0
4.2
Gameinventoryobsolesenceadjustment(non-recu
rring)
16.7
-
Settlementoffuture
liability(non-recurring)
(7.6)
-
AdjustedEBITDA
98.2
$
114.5
$
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GuidanceRe
conciliation($in
Millions)
ullYear2009Guidan
ceReconciliation:
Low
High
etincome(loss)
40.0
$
60.0
$
djustmentstoreconcilenetincome(loss)toadjuste
d
BITDA:
Provisionforincometaxes
24.0
24.0
nterestandotherincome,net
99.0
99.0
Depreciationandintangibleamortization
122.0
122.0
Stockcompensation
8.0
8.0
Otheradjustingitems
12.0
12.0
djustedEBITDA
305.0
$
325.0
$
GuidanceRange