Exhibit 99.1
Gaiam Reports Second Quarter 2004 Results
Broomfield, CO, August 2, 2004. Gaiam, Inc. (Nasdaq: GAIA) announced results for its second quarter ended June 30, 2004. Gaiam is a multi-channel lifestyle company catering to customers who value natural health, personal development, ecological lifestyles and responsible media.
The company will host a conference call today, August 2, 2004, at 2:30 p.m. M.D.T. (4:30 p.m. E.D.T.) to review its results for the second quarter 2004.
Dial-in No.: (888) 664-9855
Passcode: GAIAM
For the second quarter ended June 30, 2004, Gaiam revenues were $17 million, which was $3.3 million lower than anticipated and than for the same period of last year. As pre-announced, the shortfall came in Gaiam’s domestic business segment. Internal revenue growth in Gaiam’s other businesses for the quarter was solid: Internet business 18%, catalog business 5% and international business 8%.
Mostly because of the revenue shortfall Gaiam has reported a net loss for the quarter of $2.2 million or $0.15 per share, compared to a net loss of $759 thousand or $0.05 per share during the same period of 2003.
However, during the second quarter Gaiam generated positive cash contribution of $1.4 million from its operations, compared to the cash use of $81 thousand in the second quarter of 2003.
For the six months ended June 30, Gaiam reported revenue of $40.8 million compared to $43.3 million for the same period in 2003 and a net loss of $2.5 million or $0.17 per share compared to a net loss of $1.1 million or $0.08 per share for the six months ended June 30, 2003.
For the six month period, Gaiam generated a $4.1 million cash contribution from its operations compared to $1.4 million generated during the first half of 2003.
Gaiam ended the second quarter with $12.6 million in cash; up from $11 million at the end of first quarter and $8.4 million at December 31, 2003. Gaiam still has no debt and an unused $15 million line of credit.
Gaiam expects to generate positive operating cash flow, as well as free cash flow, for its full fiscal year.
“We are definitely not satisfied with our results with the exception of generating positive cash contribution in this quarter, which was above our expectation,” said Jirka Rysavy, Chairman and Chief Executive Officer.
“Our revenue shortfall came from our business segment. Sales declined $1.1 million from distributors supplying mass merchants such as WalMart and Costco as these and other retailers are converting inventories from VHS to DVD. Additionally, revenues from Target dropped $1.0 million as they reduced inventories to prepare for the third quarter reset that will increase the Gaiam space to 12 feet. The Target reset order will start shipping in August,” said Lynn Powers, President.
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 call will begin 1 hour after the end of the call and will continue until August 4th, at 5:00 p.m. E.D.T.
Replay number: (800) 327-0498
Contact: Janet Mathews, Chief Financial Officer (303) 222-3663
http: www.gaiam.com
Gaiam, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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| Three months ended |
| Three months ended |
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| June 30, 2004 |
| June 30, 2003 |
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Net revenue |
| $ | 17,031 |
| 100.0 | % | $ | 20,352 |
| 100.0 | % |
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Cost of goods sold |
| 8,491 |
| 49.9 | % | 9,536 |
| 46.9 | % | ||
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Gross profit |
| 8,540 |
| 50.1 | % | 10,816 |
| 53.1 | % | ||
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Operating expenses |
| 12,174 |
| 71.4 | % | 11,901 |
| 58.4 | % | ||
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Loss from operations |
| (3,634 | ) | (21.3 | )% | (1,085 | ) | (5.3 | )% | ||
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Other income |
| 76 |
| 0.4 | % | 17 |
| 0.1 | % | ||
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Loss before income taxes |
| (3,558 | ) | (20.9 | )% | (1,068 | ) | (5.2 | )% | ||
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Income tax benefit |
| (1,297 | ) | (7.6 | )% | (406 | ) | (2.0 | )% | ||
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Minority interest income (expense) |
| 46 |
| 0.3 | % | (97 | ) | (0.5 | )% | ||
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Net loss |
| $ | (2,215 | ) | (13.0 | )% | $ | (759 | ) | (3.7 | )% |
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Shares outstanding: |
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Basic |
| 14,686 |
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| 14,594 |
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Diluted |
| 14,686 |
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| 14,594 |
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Earnings (loss) per share: |
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Basic |
| $ | (0.15 | ) |
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| $ | (0.05 | ) |
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Diluted |
| $ | (0.15 | ) |
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| $ | (0.05 | ) |
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Gaiam, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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| Six months ended |
| Six months ended |
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| June 30, 2004 |
| June 30, 2003 |
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Net revenue |
| $ | 40,806 |
| 100.0 | % | $ | 43,324 |
| 100.0 | % |
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Cost of goods sold |
| 19,590 |
| 48.0 | % | 20,184 |
| 46.6 | % | ||
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Gross profit |
| 21,216 |
| 52.0 | % | 23,140 |
| 53.4 | % | ||
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Operating expenses |
| 25,179 |
| 61.7 | % | 24,722 |
| 57.1 | % | ||
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Loss from operations |
| (3,963 | ) | (9.7 | )% | (1,582 | ) | (3.7 | )% | ||
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Other income |
| 132 |
| 0.3 | % | 43 |
| 0.1 | % | ||
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Loss before income taxes |
| (3,831 | ) | (9.4 | )% | (1,539 | ) | (3.6 | )% | ||
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Income tax benefit |
| (1,413 | ) | (3.5 | )% | (604 | ) | (1.4 | )% | ||
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Minority interest expense |
| (126 | ) | (0.3 | )% | (177 | ) | (0.4 | )% | ||
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Net loss |
| $ | (2,544 | ) | (6.2 | )% | $ | (1,112 | ) | (2.6 | )% |
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Shares outstanding: |
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Basic |
| 14,650 |
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| 14,587 |
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Diluted |
| 14,650 |
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| 14,587 |
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Earnings (loss) per share: |
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Basic |
| $ | (0.17 | ) |
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| $ | (0.08 | ) |
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Diluted |
| $ | (0.17 | ) |
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| $ | (0.08 | ) |
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GAIAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
|
| June 30, |
| December 31, |
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| 2004 |
| 2003 |
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| (Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 12,551 |
| $ | 8,384 |
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Accounts receivable, net |
| 7,031 |
| 17,818 |
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Income tax and other receivables |
| 3,641 |
| 2,091 |
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Inventory, less allowances |
| 16,669 |
| 16,629 |
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Deferred advertising costs |
| 1,749 |
| 1,649 |
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Other current assets |
| 1,371 |
| 1,280 |
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Total current assets |
| 43,012 |
| 47,851 |
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Property and equipment, net |
| 9,233 |
| 10,314 |
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Investments |
| 7,865 |
| 7,865 |
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Capitalized production costs, net |
| 5,893 |
| 6,094 |
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Media library, net |
| 5,750 |
| 6,084 |
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Goodwill and other intangibles |
| 9,559 |
| 9,509 |
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Deferred tax assets |
| 3,312 |
| 3,488 |
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Other assets |
| 440 |
| 655 |
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Total assets |
| $ | 85,064 |
| $ | 91,860 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
| $ | 8,061 |
| $ | 12,459 |
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Accrued liabilities |
| 4,067 |
| 4,904 |
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Income taxes payable |
| 1,027 |
| 902 |
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Capital lease obligations, current |
| 18 |
| 55 |
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Total current liabilities |
| 13,173 |
| 18,320 |
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Deferred tax liabilities |
| 802 |
| 735 |
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Total liabilities |
| 13,975 |
| 19,055 |
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Minority interest |
| 3,492 |
| 3,320 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Class A common stock, $.0001 par value, 150,000,000 shares authorized, 9,306,277 and 9,203,056 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
| 1 |
| 1 |
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Class B common stock, $.0001 par value, 50,000,000 shares authorized, 5,400,000 issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
| 1 |
| 1 |
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Additional paid-in capital |
| 54,366 |
| 53,831 |
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Deferred compensation |
| (36 | ) | (72 | ) | ||
Accumulated other comprehensive income |
| 610 |
| 525 |
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Retained earnings |
| 12,655 |
| 15,199 |
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Total stockholders’ equity |
| 67,597 |
| 69,485 |
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Total liabilities and stockholders’ equity |
| $ | 85,064 |
| $ | 91,860 |
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