At the end of 2009, Blockbuster Inc. operated more than 5,000 stores and franchisees operated another 1,300. Nine months later the company filed for bankruptcy protection. By the end of 2010, Blockbuster had closed nearly 1,000 company-operated and 300 franchised stores. As part of its bankruptcy reorganization, Blockbuster was acquired by Dish Network in 2011. Dish Network continues to downsize Blockbuster's operations. Selected financial information about Blockbuster prior to its bankruptcy filing follow.

Required:
1. Explain why the amount shown for Cash flow provided by (used in) investing activities in 2007 is a positive number ($77 million) rather than a negative number. You may need to refer back to Chapter 4 and its Statement of Cash Flow discussion.
2. Blockbuster repaid $329 million of debt in 2007. Based only on the information provided, what were the likely sources of cash for this debt repayment?
3. Blockbuster repaid $864 million of debt in 2009 as part of a refinancing completed in October of that year. What were the likely sources of cash for this debt repayment?
4. A financial statement note in the company's 2009 annual report reveals the following scheduled debt payments: $112.5 million in 2010; $90 million in 2011; $390 million in 2012; $90 million in 2013; and $292 million in 2014. Explain why most observers at the time said Blockbuster was characterized by high credit risk.

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$ in millions) Revenue Operating income (pre-tax) Net income Cash flow provided by operations Cash flow provided by (used in) investing activities Cash flow from financing activities 2009 2008 $5,065 (304) (374) 51 (116) 2007 $5,314 27 (73) (56) $4,062 (355) (558) 29 (75) Debt repayments (864) (164) (329)