EXHIBIT 99.1
[INTEGRITY MEDIA LOGO]
For Immediate Release
INTEGRITY MEDIA, INC. REPORTS THIRD QUARTER OPERATING RESULTS
MOBILE, Alabama (November 5, 2003) - Integrity Media, Inc. (NASDAQ/NMS: ITGR),
a media/communications company that produces, publishes and distributes
Christian music, books and related products, today reported its operating
results for the third quarter and first nine months of 2003.
Net sales for the three months ended September 30, 2003 decreased 5.2% to $21.4
million, compared with $22.6 million in the third quarter of 2002. The Company
reported net income of $1.4 million, or $0.23 per diluted share, in the most
recent quarter, compared with net income of $1.4 million, or $0.23 per diluted
share, in the quarter ended September 30, 2002.
For the nine months ended September 30, 2003, net sales increased 7.1% to $53.4
million, versus $49.8 million in the corresponding period of the previous year.
The Company reported net income of $1.2 million, or $0.20 per diluted share, in
the first nine months of 2003, compared with net income of $1.6 million, or
$0.27 per diluted share, in the prior-year period.
Marketing and fulfillment expenses for the nine months ended September 30, 2003
remained relatively flat at $10 million. For the quarter, marketing and
fulfillment expenses decreased by 17.6% to $3.6 million, compared with $4.3
million in the prior year quarter. The decrease for the quarter is partly
attributable to a new fulfillment arrangement in the INO Records (formerly M2
Communications) division, where the revenue per unit is slightly reduced in
favor of reduced fulfillment expense.
General and administrative expenses for the nine months ended September 30,
2003 increased 17.5% to $14.1 million, compared with $12.0 million in the prior
year period. For the quarter, general and administrative expenses increased
6.9% to $4.9 million, compared with $4.6 million for the same period in 2002.
For the nine months and the quarter ended September 30, 2003, the Integrity
Publishers, INO Records and Sarepta divisions accounted for 71% and 68% of the
increases in general and administrative expenses, respectively. Integrity
Publishers was formed in August 2001 and published its first book titles in the
third quarter of 2002. M2 Communications (name changed to INO Records in
September 2003) was acquired in June 2002, and Sarepta was acquired March 31,
2003.
Net cash provided by operating activities approximated $250,000 in the first
nine months of 2003, compared with net cash provided by operating activities of
$4.1 million in the prior-year period. Cash and cash equivalents on the
Company's balance sheet approximated $1.4 million at September 30, 2003.
Outstanding debt totaled $13.5 million at September 30, 2003, versus $9.5
million at December 31, 2002. "The facilities expansion program at our
corporate headquarters, which is now complete, was primarily responsible for
the increase in long-term debt during the first nine months of 2003," stated
Don Ellington, Chief Financial Officer of Integrity Media, Inc. "Our cash flow
management strategy anticipates a reduction in outstanding debt during the next
twelve months."
"Revenues for the Integrity Music Group (Integrity Music and INO Records)
continue to be affected by weakness in sales to the Christian bookstore (CBA)
retail channel and by digital piracy -- the illegal downloading of music from
the Internet by consumers," noted P. Michael Coleman, President and Chief
Executive Officer of Integrity Media, Inc. "The largest contributor to our
third quarter sales decline was INO Records, where sales decreased to $3.7
million from $4.8 million in the prior-year period, partly attributable to the
new fulfillment arrangement described above. During the third quarter of 2002,
INO Records also benefited from strong new album releases by MercyMe and Sara
Groves. While we are pleased with INO's recent new releases, including Kiss of
Heaven by Darlene Zschech and Throne Room by CeCe Winans, the impact of new
releases upon revenues was less significant in the third quarter of 2003 than
in the quarter ended September 30, 2002. Revenues continued to be negatively
impacted in the most recent quarter by a reduction in sales of Songs4Worship
products to Time Life and through Integrity's continuity club channels."
Coleman continued, "Despite the challenges facing CBA stores and the entire
music industry, I am pleased to report a $3.5 million increase in Integrity
Media's total revenues during the first nine months of 2003. The second
audio/visual album under our new iWorship brand was enthusiastically received
by the market. The first iWorship album, which was released in the third
quarter of 2002, continues to sell well and was certified `Platinum' by the
RECORDING INDUSTRY ASSOCIATION OF AMERICA (RIAA) in October 2003."
"Sales continued to rise at Integrity Publishers, which will complete its first
full year of book publications during 2003, and we are particularly excited
about the recent signing of Max Lucado to publish his book Its Not About Me."
"Although revenues were disappointing in the most recent quarter, management is
pleased to report net income that was comparable with last year's third
quarter, and we continue to anticipate earnings of $0.31 to $0.36 per diluted
share for the full year."
"Looking forward, we are confident that our pursuit of revenue diversification
will benefit shareholder value in the long run and should allow Integrity Media
to realize its full potential as a Christian media/communications company. We
are very pleased with Integrity Publishers' initial success in the Christian
book market, and we are moving forward with other strategic initiatives,
including the launch of our Integrity Film/Video division, which will
distribute films via Video/DVD formats to the Christian marketplace," concluded
Coleman.
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Integrity Media, Inc. is a media/communications company that produces,
publishes and distributes Christian music, books and related products. It is a
producer and publisher of products that facilitate a Christian lifestyle.
Integrity's products are sold primarily through retail stores and direct to
consumers throughout the United States and in 168 other countries. The Company
is headquartered in Mobile, Alabama, and its common stock is listed on The
Nasdaq National Market under the symbol "ITGR". Information about Integrity,
including financial and operating performance, is also available at the
company's Web site, www.integritymedia.com/invest/financialpr.html.
THE COMPANY WILL HOST A CONFERENCE CALL TO DISCUSS THIRD QUARTER RESULTS AND
OTHER SUBJECTS AT 11:30 A.M. EST TODAY. SHAREHOLDERS AND OTHER INTERESTED
PARTIES MAY PARTICIPATE IN THE CONFERENCE CALL BY DIALING 800-915-4836
(INTERNATIONAL/LOCAL PARTICIPANTS BY DIALING 973-317-5319) A FEW MINUTES BEFORE
11:30 A.M. EST. THE CALL WILL ALSO BE BROADCAST LIVE ON THE INTERNET AT
HTTP://WWW.FIRSTCALLEVENTS.COM/SERVICE/AJWZ391090454GF12.HTML. A REPLAY OF THE
CONFERENCE CALL WILL BE AVAILABLE TWO HOURS AFTER THE COMPLETION OF THE
CONFERENCE CALL FROM NOVEMBER 5, 2003 UNTIL NOVEMBER 12, 2003 BY DIALING
800-428-6051 FOR PARTICIPANTS IN THE US/CANADA OR FOR INTERNATIONAL/LOCAL
PARTICIPANTS, CALL 973-709-2089 AND ENTERING THE ACCESS ID NUMBER 309777. THE
CALL WILL ALSO BE ARCHIVED FOR 90 DAYS AT
HTTP://WWW.FIRSTCALLEVENTS.COM/SERVICE/AJWZ391090454GF12.HTML.
Some of the statements contained in this press release, particularly those
anticipating future financial performance, business prospects, growth and
operating strategies, new products and similar matters, are forward-looking
statements that involve a number of risks and uncertainties. For those
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. In addition to the factors discussed above, among the other
factors that could cause actual results to differ materially are: potentially
changing consumer tastes and demands with respect to Christian music and books
generally and praise and worship music, adult contemporary and pop/rock
Christian music in particular; the effect on profit margins of changes in the
Company's sales mix; increases in the estimated cost of television advertising,
including production costs and the cost of air time, all of which could
materially affect the financial impact of television advertising initiatives;
the relative success of new products and consumer demand for existing products;
construction delays or overruns at the corporate campus; and the risks
identified from time to time in Integrity's SEC reports, including, but not
limited to, the report on Form 10-K for the year ended December 31, 2002. Any
forward-looking statements represent our estimates only as of the date of this
release and should not be relied upon as representing our estimates as of any
subsequent date. While we may elect to update forward-looking statements at
some point in the future, we specifically disclaim any obligation to do so,
even if our estimates change.
For additional information, please contact:
Don Ellington, CFO of Integrity Media, Inc. at (251) 633-9000
or
RJ FALKNER & COMPANY, INVESTOR RELATIONS COUNSEL AT (800) 377-9893 OR
VIA E-MAIL AT INFO@RJFALKNER.COM.
(FINANCIAL HIGHLIGHTS FOLLOW)
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INTEGRITY MEDIA, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
Three Months Ended Nine months Ended
September 30 September 30
------------------------- -------------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net sales $ 21,408 $ 22,582 $ 53,352 $ 49,809
Cost of sales 10,519 11,211 26,816 24,384
-------- -------- -------- --------
Gross profit 10,889 11,371 26,536 25,425
Marketing and fulfillment expenses 3,552 4,311 9,998 10,216
General and administrative expenses 4,915 4,598 14,056 11,958
-------- -------- -------- --------
Income (loss) from operations 2,422 2,462 2,482 3,251
Other expenses
Interest expense, net 114 46 319 186
Other expenses (15) 64 22 161
-------- -------- -------- --------
Income before minority interest
and taxes 2,322 2,352 2,141 2,904
Provision for income taxes 887 884 776 1,066
Minority interest, less applicable taxes 48 64 158 207
-------- -------- -------- --------
Net income $ 1,388 $ 1,404 $ 1,207 $ 1,631
======== ======== ======== ========
Adjustments to determine comprehensive income
Foreign currency translation adjustments (145) 80 (244) 182
-------- -------- -------- --------
Comprehensive income $ 1,243 $ 1,484 $ 963 $ 1,813
======== ======== ======== ========
Net income, basic $ 0.25 $ 0.25 $ 0.22 $ 0.29
======== ======== ======== ========
Net income, diluted $ 0.23 $ 0.23 $ 0.20 $ 0.27
======== ======== ======== ========
Weighted average number of shares outstanding
Basic 5,619 5,595 5,609 5,592
Diluted 5,980 6,002 5,968 6,005
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INTEGRITY MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
Sep 30, 2003 Dec 31, 2002
------------ ------------
(Unaudited)
ASSETS
Current Assets
Cash $ 1,440 $ 4,821
Trade receivables, less allowance for returns and doubtful accounts
of $2,197 and $2,415 11,608 6,842
Other receivables 65 67
Inventories 7,622 5,191
Other current assets 5,705 4,558
-------- --------
Total current assets 26,440 21,479
Property and equipment, net of accumulated depreciation of $6,827 and $6,055 10,759 7,337
Product masters, net of accumulated amortization of $21,784 and $19,387 4,242 3,806
Other assets 7,408 8,237
-------- --------
Total assets $ 48,849 $ 40,859
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 2,690 $ 2,690
Line of Credit 3,000 0
Accounts payable and accrued expenses 5,366 5,298
Royalties payable 6,186 6,256
Other current liabilities 3,714 997
-------- --------
Total current liabilities 20,956 15,241
Long-term debt 7,792 6,780
Other long-term liabilities 446 179
-------- --------
Total liabilities 29,194 22,200
-------- --------
Commitments and contingencies
Minority interest 514 606
-------- --------
Stockholders' Equity
Preferred stock, $.01 par value; 500,000 shares authorized, none
issued and outstanding 0 0
Class A common stock, $.01 par value; 7,500,000 shares authorized;
2,384,783 shares issued and outstanding 24 24
Class B common stock, $.01 par value, 10,500,000 shares
authorized; 3,385,000 shares issued and outstanding 34 34
Additional paid-in capital 13,001 12,956
Unearned compensation (399) (479)
Retained earnings 6,659 5,452
Equity adjustments from foreign translation (178) 66
-------- --------
Total stockholders' equity 19,141 18,053
-------- --------
Total liabilities and stockholders' equity $ 48,849 $ 40,859
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