Exhibit 99.1
Image Entertainment Reports
Financial Results for Fiscal 2008 Second Quarter Ended September 30,
2007
CHATSWORTH, Calif.--(BUSINESS WIRE)--Nov. 13, 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 second quarter and
six months ended September 30, 2007.
Fiscal 2008 Second Quarter Ended September 30, 2007 Financial Summary
-- Net revenues were $21.6 million, down 5.3% when compared to
$22.8 million for the second quarter of fiscal 2007, primarily
as a result of lower revenues from audio programming.
-- Digital revenues were $598,000, a 193% increase when
compared to $205,000 for the second quarter of fiscal 2007.
-- Gross margins were 16.4%, compared to 17.5% for the second
quarter of fiscal 2007.
-- Selling expenses, as a percentage of net revenues, improved to
10.1%, down from 11.8% of net revenues for the second quarter of
fiscal 2007, primarily as a result of a reduction in personnel
costs and advertising expenditures.
-- General and administrative expenses declined to $4,035,000,
compared to $4,597,000 for the second quarter of fiscal 2007.
-- Fiscal 2008 includes $307,000 in expenses relating to the
BTP acquisition of Image.
-- Fiscal 2008 includes $108,000 in accelerated depreciation
and amortization resulting from the closure of the
Company's Las Vegas, Nevada distribution facility.
-- Fiscal 2007 includes $416,000 in bad debt expense
resulting from the bankruptcy filing of a retail customer
of the Company.
-- Restructuring expenses related to the closure of the Company's
distribution facility totaled $196,000.
-- Interest expense increased to $808,000, compared to $479,000
for the second quarter of fiscal 2007.
-- Net noncash charges representing amortization of a
manufacturing advance debt discount, convertible note debt
discount and deferred financing totaled $402,000.
-- Net loss was ($3,683,000), or ($0.17) per diluted share,
compared to a net loss of ($3,791,000), or ($0.18) per diluted
share, for the second quarter of fiscal 2007.
Best selling DVD releases for the quarter included:
-- Shark Week: 20th Anniversary Collection (Discovery Channel);
-- Jeff Dunham: Spark of Insanity;
-- Dirty Jobs Collection 1 (Discovery Channel).
Fiscal 2008 Six Months Ended September 30, 2007 Financial Summary
-- Net revenues were $42.5 million, compared to $45.2 million for
the first six months of fiscal 2007.
-- Digital revenues were $1,093,000, a 135% increase when
compared to $465,000 for the first six months of fiscal
2007.
-- Gross margins were 20.8%, compared to 18.0% for the first six
months of fiscal 2007.
-- Selling expenses, as a percentage of net revenues, improved to
9.9%, down from 11.2% of net revenues for first six months of
fiscal 2007, due in part to reductions in personnel costs and
advertising expenditures.
-- General and administrative expenses were up $386,000, or 4.6%,
from that for the first six months of fiscal 2007. Fiscal 2008
includes:
-- $946,000 in expenses relating to the BTP acquisition of
Image.
-- $400,000 in accelerated depreciation and amortization
resulting from the closure of the Company's Las Vegas,
Nevada distribution facility.
-- $250,000 of stockholder claim related expenses.
Fiscal 2007 includes $408,000 in bad debt expense resulting
from the bankruptcy filing of a retail customer of the
Company.
-- Restructuring expenses related to the closure of the Company's
distribution facility totaled $442,000.
-- Interest expense increased to $1,601,000, compared to $760,000
for the first six months of fiscal 2007.
-- Net noncash charges representing amortization of a
manufacturing advance debt discount, convertible note debt
discount and deferred financing totaled $838,000.
-- Net loss of ($6,282,000), or ($0.29) per diluted share,
compared to net loss of ($6,105,000), or ($0.29) per diluted
share for the first six months of fiscal 2007.
Best selling DVD releases for the first six months ended September 30,
2007, in addition to those noted above included:
-- Mythbusters Collection 1 (Discovery Channel);
-- The Third Man (Criterion).
Martin W. Greenwald, President and Chief Executive Officer of
Image Entertainment, commented, "After a long and arduous process, we
are very much looking forward to the closing of our merger with BTP.
The past few quarters have been a time of transition for us, and we
are excited about combining our companies and moving ahead with great
resolve and even greater resources."
Fiscal Year 2008 Guidance
At this time, the Company is not providing annual or quarterly
revenue guidance.
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, the Company's goals, plans and
projections regarding its 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 actual outcomes and results to
differ materially from current expectations.
These factors include, among other things, The Company's inability
to raise additional working capital, changes in debt and equity
markets, increased competitive pressures, changes in the Company's
business plan, compliance with financial and operating covenants
contained in debt instruments, 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 the Company's most recent Annual
Report on Form 10-K, and the Company's most recent Quarterly Report on
Form 10-Q. In addition, the Company may not be able to complete its
proposed merger transaction with BTP Acquisition Company, LLC 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
circumstance 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, the Company undertakes 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)
September 30, 2007 and March 31, 2007
- ----------------------------------------------------------------------
ASSETS
(In thousands) September 30, 2007 March 31, 2007
------------------ --------------
Current assets:
Cash and cash equivalents $ 1,498 $ 2,341
Accounts receivable, net of
allowances of
$8,476 - September 30, 2007;
$8,956 - March 31, 2007 16,665 19,360
Inventories 17,744 16,742
Royalty and distribution fee
advances 14,885 13,118
Prepaid expenses and other assets 1,326 1,302
------------------ --------------
Total current assets 52,118 52,863
------------------ --------------
Noncurrent inventories, principally
production costs 2,518 2,808
Noncurrent royalty and distribution
advances 22,806 23,397
Property, equipment and
improvements, net 3,651 4,692
Goodwill 5,715 5,715
Other assets 1,054 1,221
------------------ --------------
$87,862 $90,696
================== ==============
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, 2007 and March 31, 2007
- ----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands, except share data) September 30, 2007 March 31, 2007
------------------ ---------------
Current liabilities:
Accounts payable $ 8,334 $ 7,431
Accrued liabilities 4,961 6,039
Accrued royalties and
distribution fees 7,321 9,881
Accrued music publishing fees 5,824 5,945
Deferred revenue 5,523 5,039
Revolving credit facility 6,667 --
Current portion of long-term
debt, net of debt discount 1,926 1,612
------------------ ---------------
Total current liabilities 40,556 35,947
------------------ ---------------
Long-term debt, net of debt
discount and current portion 20,745 21,948
Other long-term liabilities, less
current portion 2,819 3,221
------------------ ---------------
Total liabilities 64,120 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;
21,740,000 and 21,577,000
issued and outstanding at
September 30, 2007 and March
31, 2007, respectively 2 2
Additional paid-in capital 52,359 51,847
Accumulated other comprehensive
income 4 3
Accumulated deficit (28,623) (22,272)
------------------ ---------------
Net stockholders' equity 23,742 29,580
------------------ ---------------
$ 87,862 $ 90,696
================== ===============
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended September 30, 2007 and 2006
- ----------------------------------------------------------------------
(In thousands, except per share
data) 2007 2006
----------------- -------------------
NET REVENUES $21,633 100.0 % $ 22,842 100.0 %
-------- -------- --------- --------
OPERATING COSTS AND EXPENSES:
Cost of sales 18,083 83.6 18,856 82.5
Selling expenses 2,178 10.1 2,701 11.8
General and administrative
expenses 4,035 18.7 4,597 20.1
Restructuring expenses 196 0.9 -- --
-------- -------- --------- --------
24,492 113.2 26,154 114.5
-------- -------- --------- --------
LOSS FROM OPERATIONS (2,859) (13.2) (3,312) (14.5)
OTHER EXPENSES:
Interest expense, net 808 3.7 479 2.1
-------- -------- --------- --------
LOSS BEFORE INCOME TAXES (3,667) (17.0) (3,791) (16.6)
INCOME TAXES 16 0.1 -- --
-------- -------- --------- --------
NET LOSS $(3,683) (17.0)% $ (3,791) (16.6)%
======== ======== ========= ========
NET LOSS PER SHARE:
-------- ---------
Net loss - basic and diluted $ (.17) $ (.18)
======== =========
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 21,739 21,498
======== =========
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Six Months Ended September 30, 2007 and 2006
- ----------------------------------------------------------------------
(In thousands, except per share
data) 2007 2006
--------------- ----------------
NET REVENUES $42,511 100.0 % $45,189 100.0 %
-------- ------ -------- ------
OPERATING COSTS AND EXPENSES:
Cost of sales 33,662 79.2 37,048 82.0
Selling expenses 4,221 9.9 5,043 11.2
General and administrative
expenses 8,829 20.8 8,443 18.7
Restructuring expenses 442 1.0 -- --
-------- ------ -------- ------
47,154 110.9 50,534 111.8
-------- ------ -------- ------
LOSS FROM OPERATIONS (4,643) (10.9) (5,345) (11.8)
OTHER EXPENSES:
Interest expense, net 1,601 3.8 760 1.7
-------- ------ -------- ------
LOSS BEFORE INCOME TAXES (6,244) (14.7) (6,105) (13.5)
INCOME TAXES 38 0.1 -- --
-------- ------ -------- ------
NET LOSS $(6,282) (14.8)% $(6,105) (13.5)%
======== ====== ======== ======
NET LOSS PER SHARE:
-------- --------
Net loss - basic and diluted $ (.29) $ (.29)
======== ========
WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 21,718 21,387
======== ========
CONTACT: Image Entertainment, Inc.
Jeff Framer, 818-407-9100, ext. 299
jframer@image-entertainment.com