Lights Up on Movie Gallery: Fool by Numbers

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On March 16, Movie Gallery (Nasdaq: MOVI) released fourth-quarter earnings for the period ended Dec. 31, 2006.

• Rental revenue was down 5.7%, but product sales were up 10.8%. Unfortunately, product sales couldn't push total revenue growth into positive territory.
• While gross margins declined during the quarter, operating margins, adjusted for impairment charges, rose 70 basis points.
• The company has acquired all the assets of MovieBeam for cash consideration in the first quarter of fiscal 2007.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$663.3	$676.4	(1.9%)
Net Profit	($15.1)	($546.5)	N/A
EPS	($0.47)	($17.34)	N/A
Diluted Shares	31.8	31.5	0.9%

Get back to basics with the income statement.

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	55.9%	57.5%	(1.5)
Operating Margin	2.8%	2.1%**	0.7
Net Margin	(2.3%)	(80.8%)	N/M

*Expressed in percentage points.
**Before impairment charges.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q4 2006	Q4 2005	Change
Cash + ST Invest.	$33.0	$136.5	(75.8%)
Inventory*	$480.6	$508.1	(5.4%)

*Includes rental and merchandize inventories.

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable	$86.4	$237.0	(63.6%)
Long-Term Debt	$1,087.9	$1,083.1	0.4%

The balance sheet reflects the company's health.

Cash Flow Highlights

	2006	2005	Change
Cash From Ops.	($9.8)	$132.1	N/A
Capital Expenditures	$19.6	$58.2	(66.3%)
Free Cash Flow	($29.4)	$73.9	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

• Movie Gallery Fades to Red
• It's in the Box, Movie Gallery
• Foolish Forecast: Movie Gallery's Kick in the Can

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.