Exhibit 99.1
Image Entertainment Reports Financial Results for
Fiscal 2008 First Quarter Ended June 30, 2007
CHATSWORTH, Calif.--(BUSINESS WIRE)--Aug. 14, 2007--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, 2007.
Fiscal First Quarter of 2008, Ended June 30, 2007 Financial
Summary
- -- Net revenues decreased 6.6% to $20.9 million, compared to $22.3
million for the first quarter of fiscal 2007.
- -- Gross margins increased to 25.4%, compared to 18.6% for the first
quarter of fiscal 2007.
-- Gross margins were impacted by a positive sales mix of higher-
margin programming as well as comparatively reduced market
development funds provided to our customers.
- -- Selling expenses were 9.8% of net revenues, down from 10.5% of net
revenues for the first quarter of fiscal 2007, as a result of
lower personnel costs.
- -- General and administrative expenses increased to $4,794,000,
compared to $3,846,000 for the first quarter of fiscal 2007, due
to:
-- $639,000 in legal, investment banking and other related expenses
associated with negotiating the BTP merger agreement.
-- $422,000 in accelerated depreciation and amortization of fixed
assets related to the planned closure of our Las Vegas, Nevada
distribution facility.
-- $250,000 in legal expenses associated with the purported class
action shareholder complaint, which was dismissed by the
plaintiff, without prejudice, on August 9, 2007.
- -- Restructuring expenses relating to the planned closure of our Las
Vegas, Nevada distribution facility totaled $246,000 and
represented involuntary employee termination expenses.
- -- Interest expense increased to $793,000, compared to $281,000 for
the first quarter of fiscal 2007.
-- Net noncash charges representing amortization of the Sonopress
manufacturing advance debt discount, convertible note debt
discount and deferred financing totaled $436,000.
- -- Net loss was ($2,599,000), or ($0.12) per diluted share, compared
to a net loss of ($2,314,000), or ($0.11) per diluted share, for
the first quarter of fiscal 2007.
Best selling DVD releases for the quarter included Mythbusters:
Collection 1 (Discovery Channel), Survivorman (Discovery Channel),
Darwin's Nightmare, Sansho the Bailiff (Criterion), The Third Man
(Criterion), The Documentaries of Louis Malle (Criterion), Steven
Wright: When the Leaves Blow Away, and Axis of Evil Comedy Tour.
Martin W. Greenwald, President and Chief Executive Officer of
Image Entertainment, commented, "The biggest news this quarter was
obviously the announcement of our amended merger agreement with BTP.
Not only did we preserve the same cash value as stated in the original
agreement, but we are now able to provide additional value to our
shareholders in the form of ownership in the surviving company, as
well. Once the merger is approved and consummated, existing and new
shareholders will be able to participate in the 'new' Image as we will
remain a public entity."
Mr. Greenwald continued, "A careful review of our first quarter
financials shows that our cost savings initiative, which began
approximately nine months ago, has yielded very positive results. Our
general, administrative and selling expenses are all down compared to
the previous year's quarter. Although sales fell slightly, we did
significantly improve our gross margins. Our bottom line results were
negatively impacted by legal expenses incurred from the merger
process, employment related costs and accelerated depreciation of
fixed assets associated with our decision to close our Las Vegas
distribution center, and legal fees connected with the shareholder
litigation, which to our delight and great satisfaction was recently
dismissed with both the plaintiff's consent and the judge's approval."
Mr. Greenwald concluded, "We've really had quite the roller
coaster ride since the fall of 2005. The ensuing uncertainties facing
the company had a major impact on us, both at retail and among the
investor community. Still, as Nietzsche wrote, 'That which does not
kill us makes us stronger.' I therefore wait with great anticipation
to see what the future holds for Image Entertainment."
Fiscal Year 2008 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 expects its previous annual guidance to
remain unchanged with revenues expected for fiscal 2008 to be in the
range of $100 million to $110 million. The Company has not provided
specific earnings guidance, but anticipates that it will be profitable
for fiscal 2008.
Second Quarter of Fiscal 2008 Ending September 30, 2007 Guidance
The Company believes that net revenues for the second quarter
ended September 30, 2007 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 14, at 4:30 p.m. ET to review the fiscal 2008 first
quarter financial results as well as other corporate events. Image
executive management will be on-line to discuss these results and take
part in a Q & A session. The call can be accessed by dialing
866-409-1555 and requesting to join the conference call by stating the
confirmation code 4257223, or by webcast at
www.image-entertainment.com. Dial-ins begin at approximately 4:20 p.m.
Eastern time, or at any time during the conference call. International
participants please dial (913) 312-1235.
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: 4257223.
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 approximately 3,000 exclusive DVD titles and
approximately 250 exclusive CD titles in domestic release and
approximately 450 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., has digital
download rights to approximately 2,000 video programs and over 250
audio programs containing more than 4,000 tracks. The Company is
headquartered in Chatsworth, California. 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 and the proposed
merger transaction described in this press release. 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 actual 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, and our most recent Quarterly Report on
Form 10-Q. In addition, we may not be able to complete the proposed
merger transaction on the amended terms or other acceptable terms, or
at all, due to a number of factors, including (1) the occurrence of
any event, change or other circumstances that could give rise to the
termination of the merger agreement; (2) the outcome of any legal
proceedings that have been or may be instituted against the Company
and others following announcement of the merger agreement; (3) the
inability to complete the merger due to the failure to obtain
shareholder approval or the failure to satisfy other conditions to the
completion of the merger, including the expiration of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
and the receipt of other required regulatory approvals; (4) the
failure to obtain the necessary financing provided for in commitment
letters received prior to execution of the definitive agreement; (5)
risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention as a
result of the merger; (6) the ability to recognize the benefits of the
merger; (7) the amount of the costs, fees, expenses and charges
related to the merger and the actual terms of certain financings that
will be obtained for the merger; and (8) the impact of the substantial
indebtedness incurred to finance the consummation of the merger. Many
of the factors that will determine the outcome of the subject matter
of this press release are beyond the Company's ability to control or
predict.
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.
Important Legal Information:
In connection with the Company's proposed merger with BTP
Acquisition Company, LLC, the Company has filed a preliminary proxy
statement with the Securities and Exchange Commission ("SEC") dated
July 25, 2007. This proxy statement is only a preliminary version of
the definitive document, however, and should not be relied upon until
such time as the definitive proxy statement is filed with the SEC.
Before making any voting or investment decision, investors and
security holders of the Company are urged to carefully read the entire
definitive proxy statement, when it becomes available, and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information about the proposed merger transaction. A definitive proxy
statement will be sent to the stockholders of the Company in
connection with the proposed merger transaction. Investors and
security holders may obtain a free copy of the definitive proxy
statement (when available) and other documents filed by the Company at
the SEC's website at http://www.sec.gov. The definitive proxy
statement and such other documents may also be obtained for free from
the Company by directing such request to Image Entertainment, Inc.,
20525 Nordhoff Street, Suite 200, Chatsworth, California 91311,
Attention: Dennis Hohn Cho, Corporate Secretary, Telephone: (818)
407-9100.
The Company, its directors, executive officers and other members
of its management, employees, and certain other persons may be deemed
to be participants in the solicitation of proxies from the Company's
stockholders in connection with the proposed merger transaction.
Information about the interests of the Company's participants in the
solicitation is set forth in the Company's proxy statements and Annual
Reports on Form 10-K, previously filed with the SEC, and will be
included in the definitive proxy statement relating to the merger
transaction when it becomes available.
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, 2007 and March 31, 2007
- ----------------------------------------------------------------------
ASSETS
(In thousands) June 30, 2007 March 31, 2007
---------------- ---------------
Current assets:
Cash and cash equivalents $ 353 $ 2,341
Accounts receivable, net of
allowances of
$8,239 - June 30, 2007;
$8,956 - March 31, 2007 15,091 19,360
Inventories 17,347 16,742
Royalty and distribution fee
advances 13,303 13,118
Prepaid expenses and other assets 1,468 1,302
---------------- ---------------
Total current assets 47,562 52,863
---------------- ---------------
Noncurrent inventories, principally
production costs 2,663 2,808
Noncurrent royalty and distribution
advances 25,395 23,397
Property, equipment and improvements,
net 4,088 4,692
Goodwill 5,715 5,715
Other assets 1,197 1,221
---------------- ---------------
$ 86,620 $ 90,696
================ ===============
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, 2007 and March 31, 2007
- ----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands, except share data) June 30, 2007 March 31, 2007
---------------- ---------------
Current liabilities:
Accounts payable $ 6,128 $ 7,431
Accrued liabilities 5,948 6,039
Accrued royalties and distribution
fees 8,664 9,881
Accrued music publishing fees 5,847 5,945
Deferred revenue 5,504 5,039
Revolving credit facility 1,067 --
Current portion of long-term debt,
net of debt discount 1,718 1,612
---------------- ---------------
Total current liabilities 34,876 35,947
---------------- ---------------
Long-term debt, net of debt discount
and current portion 21,320 21,948
Other long-term liabilities, less
current portion 3,012 3,221
---------------- ---------------
Total liabilities 59,208 61,116
---------------- ---------------
Stockholders' equity:
Preferred stock, $.0001 par value,
25 million shares authorized; none
issued and outstanding -- --
Common stock, $.0001 par value, 100
million shares authorized;
21,737,000 and 21,577,000 issued
and outstanding at June 30, 2007
and March 31, 2007, respectively 2 2
Additional paid-in capital 52,347 51,847
Accumulated other comprehensive
income 3 3
Accumulated deficit (24,940) (22,272)
---------------- ---------------
Net stockholders' equity 27,412 29,580
---------------- ---------------
$ 86,620 $ 90,696
================ ===============
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended June 30, 2007 and 2006
- ----------------------------------------------------------------------
(In thousands, except per share data) 2007 2006
--------------- ---------------
NET REVENUES $20,878 100.0 % $22,347 100.0 %
--------------- ---------------
OPERATING COSTS AND EXPENSES:
Cost of sales 15,579 74.6 18,192 81.4
Selling expenses 2,043 9.8 2,342 10.5
General and administrative expenses 4,794 23.0 3,846 17.2
Restructuring expenses 246 1.1 -- --
--------------- ---------------
22,662 108.5 24,380 109.1
--------------- ---------------
LOSS FROM OPERATIONS (1,784) (8.5) (2,033) (9.1)
OTHER EXPENSES:
Interest expense, net 793 3.8 281 1.3
--------------- ----------------
LOSS BEFORE INCOME TAXES (2,577) (12.3) (2,314) (10.4)
INCOME TAXES 22 0.1 -- --
--------------- ---------------
NET LOSS $(2,599) (12.4)% $(2,314) (10.4)%
=============== ===============
NET LOSS PER SHARE:
-------- --------
Net loss - basic and diluted $ (.12) $ (.11)
======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 21,696 21,296
======== ========
CONTACT: Image Entertainment, Inc.
Jeff Framer, 818.407.9100, ext. 299
jframer@image-entertainment.com