Exhibit 99.1
Image Entertainment Reports Financial Results for Fiscal 2006 First Quarter
Ended June 30, 2005
CHATSWORTH, Calif.--(BUSINESS WIRE)--Aug. 11, 2005--Image
Entertainment, Inc. (NASDAQ:DISK), a leading independent licensee,
producer and distributor of home entertainment programming in North
America, today reported financial results for its first quarter ended
June 30, 2005.
Fiscal 2006 First Quarter Financial Highlights
-- Net revenues decreased to $18.6 million, compared to $26.5
million for June 2004 quarter.
-- DVD and CD revenues were 85.1% and 12.6% of revenues,
respectively.
-- Gross margins decreased to 23.5%, compared to 24.2% for June
2004 quarter.
-- Net loss was ($.08) per share, compared to net earnings of
$.05 per share for June 2004 quarter.
-- Total liabilities decreased 6.6% to $31.2 million, from $33.4
million at March 31, 2005.
Martin W. Greenwald, President and Chief Executive Officer of
Image Entertainment, commented, "We were clearly disappointed with our
first quarter financial results. Our business was greatly affected by
an industry wide slow down in DVD sales and the resulting drop in foot
traffic at retail. We suspect this was driven primarily by the limited
number of box office hits released on DVD by the major studios during
the quarter. An ensuing change in retail buying habits took its toll
on our first quarter results. We continue to believe, however, that
this is a temporary speed bump. We expect the industry will see a
return to traditional buying patterns in the back half of the year."
Mr. Greenwald continued, "Importantly, we recently announced the
acquisition of Home Vision Entertainment, a privately held publisher
and distributor of home entertainment programming, specializing in
independent, art house and foreign films. This is a great company that
complements our business and expands our market share. Most
importantly, the deal brings us new exclusive content to distribute.
Through the acquisition of Home Vision and their over 130 active
titles, including the BBC productions of C.S. Lewis' classic books
'The Chronicles of Narnia,' we expect to see revenue contributions in
the range of $14 to $16 million for the balance of fiscal 2006 as well
as bottom line results. In connection with the acquisition, we also
signed a new multi-year exclusive distribution agreement with the
renowned Criterion Collection, whose library contains over 280 active
titles, including Akira Kurosawa's 'Seven Samurai,' Martin Scorsese's
'Last Temptation of Christ' and Terry Gilliam's 'Fear and Loathing in
Las Vegas' to name just a few."
Mr. Greenwald concluded, "Although we saw a significant slowdown
in our first quarter revenues and expect some spill over into our
second quarter, we continue to build on the success of our last fiscal
year. Egami Media, our digital rights subsidiary, is continuing to
make progress in building its library of content and expanding
industry relationships. Our relationship with Dark Horse is also
moving forward. We currently have two feature films in various phases
of production and plan to release both on DVD, one in late 2005 and
the other in early 2006. The Dark Horse relationship is significant
for Image as it is our first venture into the motion picture arena. We
are encouraged with our new release schedule for the balance of our
fiscal year and look forward to recapturing a good portion of our lost
revenues as we move into our historically stronger second half."
Fiscal Year 2006 Guidance
The following statements are based on the Company's current
expectations. These statements are forward-looking, and actual results
may differ materially.
Annual Guidance
At this time, the Company believes that revenues for fiscal 2006
will range between $115 million and $120 million. The Company has not
provided specific earnings guidance but anticipates that it will be
profitable for fiscal 2006.
Second Quarter of Fiscal 2006 Ending September 30, 2005 Guidance
The Company believes that net revenues for the second quarter
ended September 30, 2005, will range between $24 million and $26
million, resulting in a net loss for the quarter.
Corporate Conference Call
Image Entertainment's management will host a conference call
today, August 11, at 4:30 p.m. ET to review the fiscal 2006 first
quarter financial results as well as other corporate events. Martin W.
Greenwald, CEO, Jeff Framer, CFO, and David Borshell, COO, will be
on-line to discuss these results and take part in a Q & A session. The
call can be accessed by dialing 800-500-0920 and requesting to join
the conference call by stating the confirmation code 4970187, or by
webcast at www.image-entertainment.com. Dial-ins begin at
approximately 4:20 PM EASTERN, or at any time during the conference
call. International participants please dial (719) 457-2699.
A replay of the conference call will be available beginning two
hours after the call and for the following five business days by
dialing 888-203-1112 and entering the following pass code: 4970187.
International participants please dial (719) 457-0820 using the same
passcode.
About Image Entertainment:
Image Entertainment, Inc. is a leading independent licensee,
producer and distributor of home entertainment programming in North
America, with more than 2,900 exclusive DVD titles and 175 exclusive
CD titles in domestic release and approximately 300 programs
internationally via sublicense agreements. For many of its titles, the
Company has exclusive audio and broadcast rights and, through its
subsidiary Egami Media, Inc., exclusive video on demand, streaming
video and download rights. The Company is headquartered in Chatsworth,
California, and has a domestic distribution facility in Las Vegas,
Nevada. For more information about Image Entertainment, Inc., please
go to www.image-entertainment.com.
Forward-Looking Statements:
This press release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
relating to, among other things, our goals, plans and projections
regarding our financial position, results of operations, market
position, product development and business strategy. These statements
may be identified by the use of words such as "will," "may,"
"estimate," "expect," "intend," "plan," "believe," and other terms of
similar meaning in connection with any discussion of future operating
or financial performance. All forward-looking statements are based on
management's current expectations and involve inherent risks and
uncertainties, including factors that could delay, divert or change
any of them, and could cause action outcomes and results to differ
materially from current expectations.
These factors include, among other things, our inability to raise
additional working capital, changes in debt and equity markets,
increased competitive pressures, changes in our business plan, and
changes in the retail DVD and entertainment industries. For further
details and a discussion of these and other risks and uncertainties,
see "Forward-Looking Statements" and "Risk Factors" in our most recent
Annual Report on Form 10-K. Unless otherwise required by law, we
undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise.
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, 2005 and March 31, 2005
ASSETS
(In thousands) June 30, 2005 March 31,
2005
----------------------------
Current assets:
Cash and cash equivalents $949 $6,339
Accounts receivable, net of allowances
of $8,307 - June 30, 2005;
$8,646 - March 31, 2005 21,680 22,993
Inventories 16,384 15,408
Royalty and distribution fee advances 8.358 8,142
Prepaid expenses and other assets 1,033 803
----------------------------
Total current assets 48,404 53,685
----------------------------
Noncurrent inventories, principally
production costs 2,512 2,189
Noncurrent royalty and distribution
advances 13,951 12,563
Property, equipment and improvements, net 6,290 6,563
Other assets 186 186
----------------------------
$71,343 $75,186
============================
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, 2005 and March 31, 2005
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands, except share data) June 30, 2005 March 31,
2005
------------- --------------
Current liabilities:
Accounts payable $5,753 $6,175
Accrued liabilities 3,225 3,300
Accrued royalties and distribution fees 9,049 12,423
Accrued music publishing fees 4,630 4,617
Deferred revenue 6,542 5,392
Revolving credit and term loan facility 916 --
Subordinated note payable - Ritek
Taiwan 1,003 1,337
Capital lease obligations 44 109
------------- --------------
Total liabilities - all current 31,162 33,353
------------- --------------
Shareholders' equity:
Preferred stock, $1 par value,
3,366,000 shares authorized; none
issued and outstanding -- --
Common stock, no par value, 30,000,000
shares authorized; 21,252,000 issued
and outstanding at June 30, 2005 and
March 31, 2005, respectively 47,513 47,513
Additional paid-in capital 3,774 3,774
Accumulated deficit (11,106) (9,454)
------------- --------------
Net shareholders' equity 40,181 41,833
------------- --------------
$71,343 $75,186
============= ==============
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended June 30, 2005 and 2004
(In thousands, except per share data) 2005 2004
---------------- ---------------
NET REVENUES $18,586 100.0% $26,541 100.0%
---------------- ---------------
OPERATING COSTS AND EXPENSES:
Cost of sales 14,213 76.5 20,115 75.8
Selling expenses 2,691 14.5 1,880 7.1
General and administrative
expenses 3,326 17.9 3,437 12.9
---------------- ---------------
20,230 108.8 25,432 95.8
---------------- ---------------
EARNINGS (LOSS) FROM OPERATIONS (1,644) (8.8) 1,109 4.2
OTHER EXPENSES (INCOME):
Interest expense, net 12 0.1 204 0.8
Other (4) (0.0) (6) (0.0)
---------------- ---------------
8 0.1 198 0.7
---------------- ---------------
EARNINGS (LOSS) BEFORE INCOME TAXES (1,652) (8.9) 911 3.4
INCOME TAX EXPENSE -- -- 21 0.1
---------------- ---------------
NET EARNINGS (LOSS) $(1,652) (8.9)% $890 3.4%
================ ===============
NET EARNINGS (LOSS) PER SHARE:
--------- ---------
Net earnings (loss) - basic and
diluted $(.08) $.05
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 21,252 18,268
========= =========
Diluted 21,252 18,588
========= =========
CONTACT: Image Entertainment, Inc.
Jeff Framer, 818.407.9100 ext. 299
jframer@image-entertainment.com
Investor Relations:
MKR Group, LLC
Charles Messman / Todd Kehrli, 818.556.3700
ir@mkr-group.com
Corporate/Press:
THE HONIG COMPANY, INC.
Steve Honig, 310.246.1801
press@honigcompany.com