Getty Images Reports Financial Results for the Second Quarter of 2007
Key Initiatives in the Quarter Further the Company's Digital Media Strategy
SEATTLE, Aug. 1 /PRNewswire-FirstCall/ -- Getty Images, Inc. (NYSE:
GYI), the world's leading creator and distributor of visual content, today
reported results for the second quarter ended June 30, 2007.
Quarterly Highlights
* Revenue increased 6.5 percent to $218 million compared to the second
quarter of 2006
* Important strategic acquisitions of WireImage, Punchstock and Pump
Audio were completed during the quarter
* Earnings per diluted share were $0.56 compared to $0.37 in the second
quarter of 2006
* Cash provided by operating activities was $49 million in the quarter
"Soon after we founded Getty Images in 1995, we recognized that the
breadth of creators and users of digital imagery would expand. This trend
continues and we remain the leader in all areas and categories of the
visual content industry from traditional stock photography to microstock.
Furthermore, we are extending our leadership position in editorial imagery,
footage and our imagery-related products and services, all of which have
excellent growth potential," said Jonathan Klein, co-founder and chief
executive officer. "We are making wonderful strides with some of our newer
businesses, including commercial music licensing and the opportunity for
growth in the consumer market while remaining focused on stabilizing our
traditional creative stills business."
Revenue increased 6.5 percent to $218.0 million from $204.6 million in
the second quarter of 2006. Excluding the effects of changes in currency
exchange rates, revenue grew 2.4 percent. Growth in almost all areas of the
business was partly offset by a decline in traditional creative stills
imagery revenue.
As a percentage of revenue, cost of revenue was 26.7 percent, compared
to 24.8 percent in the prior year due primarily to revenue growth in
certain of the company's product lines with average royalties that are
higher than traditional creative stills imagery, in particular in editorial
and microstock imagery.
Selling, general and administrative expenses (SG&A) totaled $84.1
million or 38.6 percent of revenue for the second quarter of 2007, compared
to $77.9 million or 38.1 percent of revenue in the second quarter of 2006.
Excluding $1.3 million of non-recurring professional fees, the effects of
changes in currency exchange rates, and SG&A associated with acquired
companies, SG&A declined on a year over year basis.
Income from operations was $53.1 million or 24.4 percent of revenue in
the second quarter of 2007 compared to $41.2 million in the second quarter
of 2006. Results for the second quarter of 2006 included a restructuring
charge of approximately $16.5 million. Excluding this charge, income from
operations for the second quarter of 2006 was $57.7 million, or 28.2
percent of revenue.
Net income for the second quarter of 2007 was $33.7 million with
earnings per diluted share of $0.56, or $0.57 excluding non-recurring
professional fees, compared to $23.2 million and $0.37 in the second
quarter of 2006. Results for the second quarter of 2006 included a total of
$14.1 million after taxes for a restructuring charge and a loss on the sale
of short-term investments. Excluding these items, net income for the second
quarter of 2006 was $37.3 million or $0.59 per diluted share.
Cash balances were $288.6 million at June 30, 2007. Net cash provided
by operating activities during the second quarter of 2007 was $48.8
million. During the quarter, the company spent a total of $248 million for
acquired businesses, of which $120 million was financed through the
company's senior credit facility and the remaining $128 million paid from
existing cash balances.
Business Outlook
The following forward-looking statements reflect Getty Images'
expectations as of August 1, 2007. The company currently does not intend to
update these forward-looking statements until the next quarterly results
announcement.
The company has announced a restructuring and related reduction in
workforce of about 100 employees that will result in a charge of
approximately $4.0 million in the third quarter of 2007 and is expected to
result in annualized savings of approximately $20 million in staff and
staff related costs. The company continues to focus on managing costs
effectively while investing in the areas of the business that provide the
best opportunities for growth.
For the third quarter of 2007, the company expects revenue of
approximately $210 million and diluted earnings per share of $0.43.
Excluding approximately $0.04 for restructuring costs, diluted earnings per
share would be $0.47.
For full year 2007, the company expects revenue of approximately $855
million and earnings per share of approximately $2.18. Excluding
approximately $0.04 for restructuring costs in the third quarter of 2007,
diluted earnings per share would be $2.22.
Guidance for 2007 assumes just over 60 million fully diluted shares for
both the third quarter and for the full year.
Web cast information
The company will host a conference call today at 2:00 pm PT. The
dial-in number is 877.502.9273 (North America) or 913.981.5582
(international). There will be a live web cast of the conference call,
which can be accessed from the Investors page in the About Us section of
the Getty Images Web site at www.gettyimages.com. The company will also
provide a replay of the conference call at 888.203.1112 (North America) or
719.457.0820 (international), confirmation number 6421437, until August 3,
at 9:00 pm PT. The web cast will be archived on the Getty Images Web site
and will be available until August 1, 2008. Supplemental statistical
information referenced in the conference call will be available in the
Investors section of the Web site.
About Getty Images
Getty Images is the world's leading creator and distributor of visual
content and the first place creative professionals turn to discover,
purchase and manage imagery. The company's award-winning photographers and
imagery help customers create inspiring work which appears every day in the
world's most influential newspapers, magazines, advertising campaigns,
films, television programs, books and Web sites. Headquartered in Seattle,
WA and serving customers in more than 100 countries, Getty Images believes
in the power of imagery to drive positive change, educate, inform, and
entertain. Visit Getty Images at http://gettyimages.com.
Some of the statements in this press release may constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's
expectations, assumptions and projections about our business as of the time
the statements are made. These forward-looking statements are not
guarantees of future performance and are subject to certain risks and
uncertainties that could cause our actual results to differ materially from
our past performance and our current expectations, assumptions and
projections. Differences may result from actions taken by us as well as
from risks and uncertainties beyond our control. These risks and
uncertainties include, among others, the risks associated with currency
fluctuations, changes in the economic, political, competitive and
technological environments, and the risks associated with system security,
upgrades, updates and service interruptions. The foregoing list of risks
and uncertainties is illustrative, but by no means exhaustive. For more
information on factors that may affect future performance, please review
the reports filed by us with the Securities and Exchange Commission, in
particular our Quarterly Report on Form 10-Q for the quarter ended March
31, 2007 and Amended Annual Report on Form 10-K/A for the year ended
December 31, 2006. Except as required by law, we do not intend to update or
revise any forward-looking statements until our next quarterly earnings
release.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2007 2006 2007 2006
(In thousands, except
per share amounts)
Revenue $217,957 $204,608 $430,607 $405,037
Cost of revenue
(exclusive of items
shown separately below) 58,188 50,681 113,024 102,947
Selling, general and
administrative expenses 84,091 77,861 165,494 152,137
Depreciation 15,083 13,260 29,627 25,517
Amortization 7,090 5,182 12,316 8,913
Restructuring costs 443 16,492 1,405 16,927
Other operating income (16) (34) (43) (1,198)
Operating expenses 164,879 163,442 321,823 305,243
Income from operations 53,078 41,166 108,784 99,794
Investment income (loss) 2,321 (1,203) 5,615 2,813
Interest expense (1,714) (377) (2,148) (734)
Other non-operating
income (expenses) 271 (668) (524) (622)
Income before income
taxes 53,956 38,918 111,727 101,251
Income tax expense (20,303) (15,751) (40,044) (39,045)
Net income $33,653 $23,167 $71,683 $62,206
Earnings per share
Basic $0.57 $0.38 $1.21 $1.00
Diluted 0.56 0.37 1.19 0.98
Shares used in
computing
earnings per share
Basic 59,236 61,508 59,212 61,916
Diluted 60,175 62,902 60,142 63,397
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
JUNE 30, DECEMBER 31,
2007 2006
(In thousands)
ASSETS
Current assets
Cash and cash equivalents $288,578 $339,466
Accounts receivable, net 131,738 121,232
Prepaid expenses 19,533 13,685
Deferred income taxes, net 9,548 11,142
Income taxes receivable 13,922 -
Other current assets 3,624 1,500
Total current assets 466,943 487,025
Property and equipment, net 159,709 147,133
Goodwill 1,217,413 1,001,027
Identifiable intangible assets, net 132,397 77,234
Other long-term assets 2,001 1,965
Total assets $1,978,463 $1,714,384
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $94,130 $74,297
Accrued expenses 36,327 39,412
Income taxes payable -- 6,353
Short-term debt 385,000 --
Deferred revenue 15,518 12,897
Other current liabilities 319 242
Total current liabilities 531,294 133,201
Long-term debt -- 265,000
Deferred income taxes, net 40,741 11,596
Other long-term liabilities 66,032 56,350
Total liabilities 638,067 466,147
Stockholders' equity
Common stock 627 626
Additional paid-in capital 1,329,501 1,321,645
Common stock repurchased (207,676) (207,676)
Retained earnings 158,970 91,459
Accumulated other comprehensive income 58,974 42,183
Total stockholders' equity 1,340,396 1,248,237
Total liabilities and stockholders' equity $1,978,463 $1,714,384
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
SIX MONTHS ENDED JUNE 30, 2007 2006
(In thousands)
Cash flows from operating activities
Net income $71,683 $62,206
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation 29,627 25,517
Amortization of identifiable intangible assets 12,316 8,913
Deferred income taxes 10,043 3,218
Changes in income tax reserves 7,005 132
Employee stock-based compensation 6,742 7,210
Bad debt expense 2,230 2,165
Restructuring costs 1,405 16,927
Other changes in long-term assets and
liabilities, net (666) 228
Loss on sale of available-for-sale
investments -- 3,956
Changes in current assets and
liabilities, net of effects of
business acquisitions
Accounts receivable (5,663) 5,186
Accounts payable 8,232 (308)
Accrued expenses (13,796) (16,862)
Income taxes payable (11,717) (834)
Changes in other current assets and
liabilities, net (3,684) 3,758
Net cash provided by operating activities 113,757 121,412
Cash flows from investing activities
Acquisitions of businesses, net of
cash acquired (252,738) (194,943)
Acquisition of property and equipment (35,768) (35,139)
Proceeds from available-for-sale investments -- 304,443
Acquisition of available-for-sale investments -- (9,330)
Other investing activities (451) 300
Net cash (used in) provided by
investing activities (288,957) 65,331
Cash flows from financing activities
Senior credit facility borrowing 120,000 --
Proceeds from the issuance of common stock 1,844 5,600
Common stock repurchased -- (161,449)
Other financing activities (1,798) 2,400
Net cash provided by (used in) financing
activities 120,046 (153,449)
Effects of exchange rate changes 4,266 3,082
Net (decrease) increase in cash and
cash equivalents (50,888) 36,376
Cash and cash equivalents, beginning of period 339,466 223,084
Cash and cash equivalents, end of period $288,578 $259,460
SOURCE Getty Images, Inc.
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