Exhibit 99.1
Gaiam Reports Results for FY 2003
Broomfield, CO, February 26, 2004. Gaiam, Inc. (Nasdaq: GAIA) announced results for its fiscal year ended December 31, 2003. Gaiam is a multi-channel lifestyle company catering to customers who value personal development, healthy living and renewable energy.
The company will host a conference call today, February 26, 2004, at 2:30 p.m. M.S.T. (4:30 p.m. E.S.T.) to review its results for the fiscal year.
Dial-in No.: | (888) 664-9855 |
Passcode: | GAIAM |
For the fourth quarter ended December 31, 2003, Gaiam reported sales of $35.1 million, a decline of 5.7% from $37.3 million for the quarter ended December 31, 2002. Net income for the fourth quarter was $341 thousand or $0.02 per share compared to net income of $2.3 million or $0.16 per share for the same period of 2002.
For the year ended December 31, 2003, Gaiam reported sales of $102 million, a decline of 8.4% from $111.4 million for the same period in 2002. Gaiam recorded a net loss $972 thousand, or $0.07 per share for twelve months ended December 31, 2003, compared to net income of $5.4 million or $0.38 per share for the same period in 2002.
Gross margin for the fourth quarter was 50.3%, down from 52% for the year, primarily due to lower sales in the catalog division. We expect the gross margin for 2004 to be approximately 52%. Depreciation and amortization was $3.2 million for 2003.
For the year ended December 31, 2003 Gaiam generated $3.7 million of cash contribution from its operations, compared to $1.0 million generated for the same period in 2002. Gaiam ended the year with $8.4 million in cash, no debt and availability of $15 million of its line of credit.
“Our fourth quarter results were generally in line with our expectation. Sales in December were lower than expected, especially in catalogs. It was nice to see a positive operating income again, and the $2 million cash contribution from operations in the fourth quarter was above our expectation,” said Jirka Rysavy, Chairman and Chief Executive Officer. “Our recent negative internal growth rate subsided in the fourth quarter and turned positive in the current quarter. We still expect an internal growth rate of 5-10% for the first quarter. As planned, we finished the system consolidation and transferred support for all our accounts to our Ohio facility.”
“As previously forecasted, our business channel experienced the end of negative growth during the fourth quarter, and we expect positive numbers in the current one,” said Lynn Powers, President. “2003 was a difficult consolidation year for us. We have made changes to our business strategy by doubling our sales force, adding new product categories, launching new retail channels, resetting store floor plans, consolidating operations and reducing expenses. We will begin to reap the benefits from these changes in 2004.”
This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as “expect,” “believe,” “will,” “should” or comparable terminology or by discussions of strategy. While the Company believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, introduction of the Company’s new products and services, the successful completion and integration of acquisitions, the possibility of negative economic conditions and other risks and uncertainties included in the Company’s filings with the Securities and Exchange Commission. The Company assumes no duty to update any forward-looking statements.
Additional guidance may be given on the conference call. A replay of the conference call will begin 1 hour after the end of the call and will continue until February 28, 2004, at 5:00 p.m. E.S.T.
Replay number: (800) 810-4038
Contact: Janet Mathews, Chief Financial Officer (303) 222-3663
http: www.gaiam.com
GAIAM, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | December 31, | |
| | 2003 | | 2002 | |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 8,383,934 | | $ | 11,422,435 | |
Accounts receivable, net of allowance for doubtful accounts of $801,182 in 2003 and $854,131 in 2002 | | 17,818,513 | | 20,950,394 | |
Tax and other receivables | | 2,090,785 | | 1,949,832 | |
Inventory, less allowances | | 16,629,078 | | 14,768,045 | |
Deferred advertising costs | | 1,648,560 | | 2,417,211 | |
Other current assets | | 1,280,461 | | 1,194,484 | |
Total current assets | | 47,851,331 | | 52,702,401 | |
| | | | | |
Property and equipment, net | | 10,313,835 | | 9,543,231 | |
Investments | | 7,865,192 | | 7,865,192 | |
Capitalized production costs, net | | 6,094,295 | | 4,983,824 | |
Media library, net | | 6,083,556 | | 5,262,586 | |
Goodwill | | 9,508,837 | | 6,326,894 | |
Deferred tax assets | | 3,487,820 | | 3,714,845 | |
Other assets | | 655,363 | | 768,043 | |
Total assets | | $ | 91,860,229 | | $ | 91,167,016 | |
| | | | | |
Liabilities and stockholders’ equity | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 12,459,035 | | $ | 11,998,087 | |
Accrued liabilities | | 4,904,465 | | 5,204,438 | |
Capital lease obligations, current | | 54,528 | | 269,290 | |
Income taxes payable | | 902,420 | | 1,286,558 | |
Total current liabilities | | 18,320,448 | | 18,758,373 | |
| | | | | |
Capital lease obligations, long-term | | — | | 54,529 | |
Deferred tax liabilities | | 735,103 | | 848,653 | |
Other liabilities | | — | | 1,962,000 | |
Total liabilities | | 19,055,551 | | 21,623,555 | |
| | | | | |
Minority interest | | 3,319,872 | | 172,481 | |
| | | | | |
Commitments and contingencies | | | | | |
Stockholders’ equity: | | | | | |
Class A common stock, $.0001 par value, 150,000,000 shares authorized, 9,203,056 and 9,134,098 shares issued and outstanding at December 31, 2003 and 2002, respectively | | 920 | | 913 | |
Class B common stock, $.0001 par value, 50,000,000 shares authorized, 5,400,000 shares issued and outstanding at December 31, 2003 and 2002, respectively | | 540 | | 540 | |
Additional paid-in capital | | 53,831,750 | | 53,343,046 | |
Deferred compensation | | (71,865 | ) | (143,865 | ) |
Accumulated other comprehensive income | | 524,870 | | — | |
Retained earnings | | 15,198,591 | | 16,170,346 | |
Total stockholders’ equity | | 69,484,806 | | 69,370,980 | |
Total liabilities and stockholders’ equity | | $ | 91,860,229 | | $ | 91,167,016 | |
Gaiam, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| | Year Ended
December 31, 2003 | | Year Ended
December 31, 2002 | |
| | | | | | | | | |
Net Revenue | | $ | 102,000 | | 100.0 | % | $ | 111,406 | | 100.0 | % |
| | | | | | | | | |
Cost of goods sold | | 48,927 | | 48.0 | % | 45,475 | | 40.8 | % |
| | | | | | | | | |
Gross profit | | 53,073 | | 52.0 | % | 65,931 | | 59.2 | % |
| | | | | | | | | |
Operating expenses | | 54,355 | | 53.3 | % | 57,180 | | 51.3 | % |
| | | | | | | | | |
Income (loss) from operations | | (1,282 | ) | (1.3 | )% | 8,751 | | 7.9 | % |
| | | | | | | | | |
Interest (net) and other | | 546 | | 0.6 | % | (261 | ) | (0.3 | )% |
| | | | | | | | | |
Profit (loss) before income taxes | | (736 | ) | (0.7 | )% | 8,490 | | 7.6 | % |
| | | | | | | | | |
Income tax expense (benefit) | | (461 | ) | (0.5 | )% | 3,002 | | 2.7 | % |
| | | | | | | | | |
Income (loss) before minority interest | | (275 | ) | (0.2 | )% | 5,488 | | 4.9 | % |
| | | | | | | | | |
Minority interest income (expense) | | (697 | ) | (0.7 | )% | (40 | ) | 0.0 | % |
| | | | | | | | | |
Net income (loss) | | $ | (972 | ) | (0.9 | )% | $ | 5,448 | | 4.9 | % |
| | | | | | | | | |
Shares outstanding: | | | | | | | | | |
Basic | | 14,594,089 | | | | 14,107,390 | | | |
Diluted | | 14,594,089 | | | | 14,488,783 | | | |
| | | | | | | | | |
Earnings (loss) per share: | | | | | | | | | |
Basic | | $ | (0.07 | ) | | | $ | 0.39 | | | |
Diluted | | $ | (0.07 | ) | | | $ | 0.38 | | | |
