Blockbuster Inc posted lower first-quarter earnings but beat expectations as the top U.S. movie rental chain reined in spending.

The company warned that same-store sales would continue to slip in 2009, but said it remained comfortable with its prior full-year outlook.

Blockbuster chief executive Jim Keyes said on a conference call he expects strong title releases to boost results in the summer, but said he remained cautious.

The company said it secured funding for a $250 million amended and extended credit facility and added that the new financing, combined with cost savings and additional cash, provided sufficient liquidity going forward.

On a call with analysts, Keyes said the company can reduce debt by $400 million in the next two years.

Blockbuster also said it was exploring asset sales in international markets to raise $100 million.

The company said first-quarter revenues fell to $1.12 billion from $1.39 billion, citing a reduction of inventory, lower advertising spending, weaker DVD titles and competition from strong theater box office traffic.

Net income for the first quarter of 2009 fell to $27.7 million, or 12 cents per diluted share, from $45.4 million, or 20 cents per diluted share year earlier.

Excluding items such as severance costs and charges for store closures, earnings were 19 cents a share, surpassing average expectations for 14 cents, according to Reuters Estimates.

The company said it remained comfortable with its prior guidance for fiscal 2009, which includes adjusted earnings before interest, taxes, depreciation and amortization in the range of $305 million to $325 million.

Blockbuster shares traded little changed in after-hours trade after spiking briefly more than 5 percent after the earnings release.

First quarter 2009 domestic same-store sales decreased 10.9 percent, compared to an increase of 2.9 percent in the same period in 2008.

Blockbuster made the best of the situation through cost controls, but the negative same-store sales was bad, said Michael Pachter, analyst with Wedbush Morgan Securities.

(Editing by Carol Bishopric)