Information available from Movie Gallery's 2005 10-K and second quarter 2006 10-Q were used in preparing this assessment. The website to locate Movie Gallery's 2005 10-K and second quarter 2006 (10-Q) can be located in the "investor relations" section on Movie Gallery's website at www.moviegallery.com.
Movie Gallery, Inc.'s (the Company) most recent annual report was for the year-ended January 1, 2006 (the 2005 annual report year). The Company operates on a 52 / 53 week year with the year-end date being the Sunday following December 30. This results in some years having 53 weeks of income recorded even though the Company reflects depreciation on a twelve month basis (52 weeks).
For the most recent year-end, the Company incurred a net loss before taxes of almost $550 million. This loss is non consistent with historical amounts reported by the Company. Two significant factors contribute to the loss.
One was the acquisition of Hollywood Video. Hollywood was strapped......
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