BLOCKBUSTER INC - FORM 8-K - EX-99.1 - MONTHLY OPERATING REPORT

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8-K - FORM 8-K - BLOCKBUSTER INC	d267504d8k.htm

Exhibit 99.1

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK


	X

In re:	:	Chapter 11

	:

BB LIQUIDATING INC., et al.¹	:	Case No: 10-14997

	:

Debtors.	:	Jointly Administered

	X

Monthly Operating Report For

October 2011



DEBTORS’ ADDRESS:		2100 Ross Avenue, 21st Floor
		Dallas, Texas 75201

DEBTORS’ ATTORNEYS:		Stephen Karotkin
		WEIL, GOTSHAL & MANGES LLP
		767 Fifth Avenue
		New York, New York 10153
		Telephone: (212) 310-8000
		Facsimile: (212) 310-8007
		-and-
		Martin A. Sosland (admitted pro hac vice)
		WEIL, GOTSHAL & MANGES LLP
		200 Crescent Court, Suite 300
		Dallas, Texas 75201
		Telephone: (214) 746-7700
		Facsimile: (214) 746-7777

This Monthly Operating Report (“MOR”) has been prepared solely for the purpose of complying with the monthly reporting requirements applicable in these chapter 11 cases and is in a format acceptable to the United States Trustee. The financial information contained herein is limited in scope and covers a limited time period. Moreover, such information is preliminary and unaudited, and is not prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States.

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.


/s/ Bruce Lewis				12/1/2011
Bruce Lewis
Principal Executive Officer
Blockbuster Inc.

The Debtors, together with the last four digits of each Debtor’s federal tax identification number, are: BB Liquidating Inc. (5102); BB Liquidating Canada Inc. (1269); BB Liquidating Digital Technologies Inc. (9222); BB Liquidating Distribution, Inc. (0610); BB Liquidating GC, Inc. (1855); BB Liquidating Global Services Inc. (3019); BB Liquidating International Spain Inc. (7615); BB Liquidating Investments LLC (6313); BB Liquidating Procurement LP (2546); BB Liquidating Video Italy, Inc (5068); BB Liquidating ML, LLC (5575); BB Liquidating Trading Zone Inc. (8588); and BB Liquidating B2 LLC (5219).

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011
		Federal Tax I.D. #	52-1655102

CORPORATE MONTHLY OPERATING REPORT


REQUIRED DOCUMENTS	Form No.	Document Attached	Explanation Attached
Schedule of Cash Receipts and Disbursements	MOR-1	x
Bank Reconciliation (or copies of debtor’s bank reconciliations)	MOR-1 (CON’T)	x
Copies of bank statements	MOR-1 (CON’T)		x
Cash disbursements journals	MOR-1 (CON’T)	x
Statement of Operations	MOR-2	x
Balance Sheet	MOR-3	x
Status of Post-petition Taxes	MOR-4	x
Copies of IRS Form 6123 or payment receipt			not applicable
Copies of tax returns filed during reporting period			not applicable
Summary of Unpaid Post-petition Debts	MOR-4	x
Listing of Aged Accounts Payable			x
Accounts Receivable Reconciliation and Aging	MOR-5	x
Taxes Reconciliation and Aging	MOR-5	x
Payments to Insiders and Professionals	MOR-6	x
Post Petition Status of Secured Notes, Leases Payable	MOR-6	x
Debtor Questionnaire	MOR-7	x


		FORM MOR
		Page 2 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

(in millions)


	October 2011			YTD October 2011

Cash flows from operating activities:
Net income (loss)	$	(0.5	)	$	(200.9	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and intangible amortization		—			39.4
Rental library purchases		—			(66.7	)
Rental library amortization		—			113.3
Loss on sale/disposal of store operations		—			—
Impairment of long-lived assets		—			0.6
Non-cash share-based compensation		—			—
Gain on sale of store operations		—			—
Deferred taxes and other		—			2.1
Changes in operating assets and liabilities:					—
Change in receivables		—			13.1
Change in merchandise inventories		—			44.2
Change in prepaid and other assets		—			27.8
Change in liabilities subject to compromise		(0.4	)		229.1
Change in accounts payable		(0.1	)		(139.8	)
Change in accrued expenses and other liabilities		(2.7	)		(128.6	)

Net cash provided by (used in) operating activities		(3.7	)		(66.4	)


Cash flows from investing activities:
Capital expenditures		—			(5.1	)
Change in reserve for Operating Period claims		—			28.1
Proceeds from sale of store operations		—			—
Other investing activities		—			3.4

Net cash provided by (used in) investing activities		—			26.4


Cash flows from sale of assets to DISH Network:
Loss on Sale		—			(582.8	)
Change in rental library on sale		—			143.4
Change in merchandise inventories on sale		—			56.2
Change in receivables on sale		—			53.3
Change in prepaid and other assets on sale		—			382.2
Change in fixed assets on sale		—			87.2
Change in restricted cash on sale		—			—

Net cash provided by sale to Dish Network		—			139.5


Cash flows from financing activities:
Proceeds from DIP Financing		—			—
Repayments on DIP Financing		—			—
Repayments on senior secured notes		—			(124.6	)
Debt financing costs		—			—
Capital lease payments		—			(0.8	)

Net cash provided by (used in) financing activities		—			(125.4	)

Effect of exchange rate changes on cash		—			—

Net (decrease) increase in cash and cash equivalents		(3.7	)		(25.9	)
Cash and cash equivalents at beginning of period		44.0			66.2

Cash and cash equivalents at end of period		40.3		$	40.3


		FORM MOR-1
		Page 3 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

BANK RECONCILIATIONS

Continuation Sheet for MOR-1


GL#	Bank Name	Bank Balance		Deposits & Transfers in Transit		Outstanding checks			Other Reconciling Items		GL Balance
Cash	Bank of America	$	43,203,784	$	—	$	(2,923,557	)	$	—	$	40,280,227


	Total Cash & Cash Equivalents	$	43,203,784	$	—	$	(2,923,557	)	$	—	$	40,280,227


Bank of America
Dallas, Texas	Statement date:	10/31/2011


Statement Period	10/01/2011 - 10/31/2011	Statement Beginning Balance	45,493,637.06
Number of Deposits / Credits	0	Amount of Deposits / Credits	—
Number of Checks	716	Amount of Checks	2,275,507.89
Number of Other Debits	2	Amount of Other Debits	14,345.01
		Statement Ending Balance	43,203,784.16

*	The Debtors have submitted their bank statement to the United States Trustee.


		FORM MOR-1 (CONT.)
		Page 4 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

SCHEDULE OF CASH DISBURSEMENTS

(in millions)

Continuation Sheet for MOR-1


			October 2011

Cash Balance as of 9/30/11						$	44,028,960

Cash disbursements during the period:

April professional fees (as shown on MOR 6):
Pricewaterhouse Coopers	(3,955	)
Kurtzman Carson Consultants	(58,334	)
Rothschild Inc	(270,595	)
Cooley Godward Kronish LLP	(44,575	)
Weil Gotshal	(138,579	)

Total April professional fees				(516,038	)
Contract labor:
Legal	(7,700	)
Claims administration	(5,000	)

Total contract labor				(12,700	)
Payments for Administrative Priority Expenses				(385,544	)
Payments for property taxes				(2,743,206	)
Payments for miscellaneous G&A				(91,245	)


Total cash disbursements during the period							(3,748,733)


Cash Balance as of 9/30/11						$	40,280,227


		FORM MOR-1 (Cont - disbursements)
		Page 5 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

STATEMENT OF OPERATIONS (Income Statement)

(in millions)


	October 2011			YTD October 2011

Revenues:
Base rental revenues	$	—		$	303.5
Previously rented product (“PRP”) revenues		—			140.2

Total rental revenues		—			443.7
Merchandise sales		—			63.0
Other revenues		—			12.6

Total Revenue		—			519.3

Cost of sales:
Cost of rental revenues		—			175.9
Cost of merchandise sold		—			68.7

Total cost of sales		—			244.6

Gross profit		—			274.7

Operating expenses:
General and administrative		0.5			460.4
Advertising		—			5.5
Depreciation and intangible amortization		—			39.4
Impairment of goodwill and other long-lived assets		—			0.6

Total Operating Expenses		0.5			505.9

Operating income (loss)		(0.5	)		(231.2	)
Interest expense		—			0.6
Interest income		—			(0.1	)
Other items, net		—			(1.4	)

Income (loss) from continuing operations before reorganization items and income taxes		(0.5	)		(232.1	)
Reorganization items, net (income)/loss		—			(46.9	)
(Benefit)/provision for income taxes		—			1.0
Equity in (income)/loss of non-debtor subsidiaries		—			14.7

Income (loss) from continuing operations		(0.5	)		(200.9	)
(Loss) from sale of assets to DISH Network		—			(582.8	)
Income (loss) from discontinued operations, net of tax		—			—

Net income (loss)		(0.5	)		(783.7	)
Preferred stock dividends		—			—

Net income (loss) applicable to common stockholders	$	(0.5	)	$	(783.7	)


		FORM MOR-2
		Page 6 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

BALANCE SHEET

(in millions)


	As of 10/31/2011
Assets
Current assets:
Cash and cash equivalents	$	40.3
Reserve for Operating Period claims		7.5
Merchandise inventories		—
Rental library, net		—
Prepaid and other current assets		—

Total current assets		47.8
Property and equipment, net		—
Deferred income taxes		—
Investment in non-debtor subsidiaries		—
Intangibles, net		—
Restricted cash		—
Other assets		—

Total Assets	$	47.8


Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	3.7
Accrued expenses		0.5
Debtor-in-possession loan		—
Deferred income taxes		—

Total current liabilities		4.2
Other liabilities		—

Total Liabilities before LSTC		4.2
Liabilities subject to compromise		1,353.6

Total Liabilities		1,357.8

Total stockholders’ equity (deficit)		(1,310.0	)

Total Liabilities and Stockholders’ Equity (Deficit)	$	47.8


		FORM MOR-3
		Page 7 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

STATUS OF POST-PETITION TAXES


Federal	Beginning Tax		Amount Withheld and/or Accrued		Amount Paid			Ending Tax
Withholding	$	—	$	—	$	—		$	—
FICA-Employee		—		—		—			—
FICA-Employer		—		—		—			—
Unemployment		—		—		—			—
Income		—		—		—			—
Other:				—		—

Total Federal Taxes		—		—		—			—


State and Local
Withholding		—		—		—			—
Sales		—		—		—			—
Excise				—		—
Unemployment		—		—		—			—
Real Property*		—		—		—			—
Personal Property*		3,289,205		—		(2,743,206	)		545,999
Other: Income/Franchise		—		—		—			—
Total State and Local		3,289,205		—		(2,743,206	)		545,999


Total Taxes	$	3,289,205	$	—	$	(2,743,206	)	$	545,999

SUMMARY OF UNPAID POST-PETITION DEBTS


Attach aged listing of accounts payable.
	Number of Days Past Due
DESCRIPTION	Current		0-30		31-60		61-90		Over 91		Total
AP - Product	$	—	$	—	$	—	$	—	$	—	$	—
AP - Legal & Professional Fees		545,999		—		—		—		—		545,999
AP - Other		—		—		—		—		—		—

TOTAL POST-PETITION DEBTS	$	545,999	$	—	$	—	$	—	$	—	$	545,999

*	The Real Property and Personal Property taxes are considered “postpetition” based off of when the payment is assessed by the taxing authority.

The detail of the AP - Legal and Professional Fees can be seen on MOR-6. The bar date of 6/15/11 for administrative claims required all other AP to be reclassified to liabilities subject to compromise.

The Debtors did not file Form 6123 during this period.


		FORM MOR-4
		Page 8 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

ACCOUNTS RECEIVABLE RECONCILIATION AND AGING


Accounts Receivable Reconciliation	Amount
Total Accounts Receivable at the beginning of the reporting period	$	—
Plus: Amounts billed during the period		—
Less: Amounts collected during the period		—
Less: Amounts written off during the period		—
Less: Amounts reserved during the period		—
Change in store accounts receivable, net		—
Accounts Receivables sold to DISH Network		—

Total Accounts Receivable at the end of the reporting period	$	—


Accounts Receivable Aging	9/30/2011
0 - 30 days old	$	—
31 - 60 days old		—
61 - 90 days old		—
91 - 120 days old		—
121+ days old		—
Total Aged Accounts Receivable		—
Store Accounts Receivable		—
Total Accounts Receivable		—
Less: Bad Debts (Amount considered uncollectible)		—
Net Accounts Receivable***	$	—

TAXES RECONCILIATION AND AGING


Taxes Payable	Current		1-30 Days		31-60 Days		61-90 Days		91+ Days		Total
Federal	$	—	$	—							$	—
State and Local		—										—
Other		545,999		—								545,999

Total Taxes Payable	$	545,999	$	—	$	—	$	—	$	—	$	545,999


		FORM MOR-5
		Page 9 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

PAYMENTS TO INSIDERS AND PROFESSIONALS


INSIDERS
NAME	TYPE OF PAYMENT	AMOUNT PAID	TOTAL PAID TO DATE
(1) NONE








TOTAL PAYMENTS TO INSIDERS

(1)	No payments other than ordinary wages and benefits occurred during the reporting period.


PROFESSIONALS
NAME	DATE OF COURT ORDER AUTHORIZING PAYMENT		AMOUNT APPROVED		AMOUNT PAID October 2011		TOTAL PAID TO DATE		TOTAL INCURRED & UNPAID*
SIDLEY AUSTIN LLP (1)		9/27/2010	$	3,544,061	$	—	$	3,544,061	$	—
JEFFERIES & COMPANY INC (1)		9/27/2010		1,550,496		—		1,550,496		—
ALVAREZ & MARSAL NORTH AMERICA LLC (3)		10/27/2010		5,313,678		—		5,113,678		200,000
ROTHSCHILD INC (3)		11/2/2010		3,205,405		270,595		3,205,405		—
KURTZMAN CARSON CONSULTANTS LLC (3)		9/23/2010		4,191,609		58,334		4,113,349		78,260
DJM ASSET MANAGEMENT LLC (3)		11/23/2010		150,000		—		150,000		—
RETAIL REGROUP INC (3)		11/23/2010		150,000		—		150,000		—
DELOITTE TAX LLP (3)		11/9/2010		583,711		—		467,248		116,463
SKADDEN ARPS SLATE MEAGHER & FLOM LLP (1)		9/27/2010		211,440		—		211,440		—
KORN/FERRY INTERNATIONAL (3)		11/10/2010		142,132		—		142,132		—
COOLEY GODWARD KRONISH LLP (2)		11/23/2010		2,769,127		44,575		2,180,059		589,068
FTI CONSULTING (2)		12/2/2010		909,331		—		718,563		190,768
BLOODWORTH CARROLL & BANOWSKY PC (3)		11/23/2010		164,395		—		131,516		32,879
RAY & GLICK LTD. (3)		11/23/2010		959,250		—		767,400		191,850
CHAIKEN LEGAL GROUP PC (3)		11/23/2010		350,055		—		280,044		70,011
SHEPPARD MULLIN (1)		9/27/2010		327,327		—		327,327		—
WEIL GOTSHAL (3)		10/27/2010		7,755,554		138,579		6,085,358		1,670,196
PRICEWATERHOUSE COOPERS (3)		2/8/2011		1,811,368		3,955		1,478,461		332,907
DELOITTE FINANCIAL ADVISORY (3)		2/8/2011		363,993		—		288,837		75,156
ERNST & YOUNG (3)		4/4/2011		524,806		—		416,514		108,292

TOTAL PAYMENTS TO PROFESSIONALS			$	34,977,738	$	516,038	$	31,321,888	$	3,655,850

*	INCLUDE ALL FEES INCURRED, BOTH APPROVED AND UNAPPROVED

(1)	Fees paid pursuant to the DIP Financing Order for professionals of the DIP lenders and DIP Agent.

(2)	Fees for professionals retained to represent Unsecured Creditors’ Committee

(3)	Fees for professionals retained to represent Blockbuster Inc.

POST-PETITION STATUS OF SECURED NOTES, LEASES PAYABLE

AND ADEQUATE PROTECTION PAYMENTS

NAME OF CREDITOR

SCHEDULED MONTHLY
PAYMENT DUE

AMOUNT PAID
DURING MONTH

TOTAL UNPAID POST-
PETITION

DIP Financing

—

DIP Interest

—

Leases Payable

—

Adequate Assurance Payments - Utilities

—

Adequate Assurance Payments - Insurance

—

TOTAL PAYMENTS

—


		FORM MOR-6
		Page 10 of 11


In re	BB LIQUIDATING INC., et al.	Case No.	10-14997
	Debtor	Reporting Period:	October 2011

DEBTOR QUESTIONNAIRE


	Must be completed each month. If the answer to any of the questions is “Yes”, provide a detailed explanation of each item. Attach additional sheets if necessary.	Yes	No
1	Have any assets been sold or transferred outside the normal course of business this reporting period?		X
2	Have any funds been disbursed from any account other than a debtor in possession account this reporting period?		X
3	Is the Debtor delinquent in the timely filing of any post-petition tax returns?		X
4	Are workers compensation, general liability or other necessary insurance coverage expired or cancelled, or has the debtor received notice of expiration or cancellation of such policies?	X
5	Is the Debtor delinquent in paying any insurance premium payment?		X
6	Have any payments been made on pre-petition liabilities this reporting period?		X
7	Are any post petition receivables (accounts, notes or loans) due from related parties?		X
8	Are any post petition payroll taxes past due?		X
9	Are any post petition State or Federal income taxes past due?		X
10	Are any post petition real estate taxes past due?		X
11	Are any other post petition taxes past due?		X
12	Have any pre-petition taxes been paid during this reporting period?		X
13	Are any amounts owed to post petition creditors delinquent?		X
14	Are any wage payments past due?		X
15	Have any post petition loans been received by the Debtor from any party?		X
16	Is the Debtor delinquent in paying any U.S. Trustee fees?		X
17	Is the Debtor delinquent with any court ordered payments to attorneys or other professionals?		X
18	Have the owners or shareholders received any compensation outside of the normal course of business?		X

4	The Debtors have only one employee and are not required to maintain workers compensation insurance.

The Debtors have received notice that the prior workers compensation insurance is being cancelled.


		FORM MOR-7
		Page 11 of 11

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