Revenue increased 13 percent - Operating income grew 120 percent to $23.8 million - Operating margin increased to 18.6 percent from 9.5 percent - Earnings per share rose 187 percent to $0.23 from $0.08
SEATTLE, Wednesday, July 23, 2003 - Getty Images, Inc. (NYSE:GYI), the world's leading imagery company, today reported results for the second quarter ended June 30, 2003. Revenue grew to $127.7 million, a 12.7 percent increase over revenue of $113.3 million in the second quarter of 2002, and included a 6.9 percent benefit from foreign currency translation. Operating income for the second quarter of 2003 grew 120 percent to $23.8 million, or 18.6 percent of revenue, compared to $10.8 million, or 9.5 percent of revenue, in the same quarter last year. Net income for the second quarter was up 194 percent to $13.2 million, or $0.23 per diluted share, compared to $4.5 million, or $0.08 per diluted share, for the same quarter in 2002.
“Once again, we are pleased to report significant growth in sales, operating margin, free cash flow and earnings, notwithstanding a market environment that continues to be challenging,” said Jonathan Klein, Getty Images' co-founder and CEO. “We have made substantial progress in expanding our products and enhancing the customer experience in many key areas, including royalty-free stock photography, film and editorial imagery. We are having an excellent year and remain very confident that the strength of our business model, the power of our platform and our industry leadership put us in a wonderful position to build on the solid progress we have made in recent quarters.”
Revenue for the six months ended June 30, 2003, was $258.0 million, a 13.6 percent increase over the $227.2 million reported for the same period in 2002, and included a 6.7 percent benefit from foreign currency translation. Operating income for the first half of 2003 was up 148 percent to $47.7 million, compared to $19.2 million for the first half of 2002. For the six months ended June 30, 2003, net income grew by 269 percent to $26.4 million, or $0.46 per diluted share, from $7.2 million, or $0.13 per diluted share.
Cash and short-term investment balances increased to $454.7 million at June 30, 2003, up from $133.6 million at the end of the first quarter, including net proceeds of $257.7 million from the issuance of $265 million of 0.5 percent convertible subordinated debentures on June 9, 2003. The proceeds of the new debentures were used to redeem the company's $250 million of 5 percent convertible notes, which were redeemed on July 10, 2003. Therefore, starting in the third quarter of 2003, interest expense on convertible debt will decrease from approximately $3.1 million per quarter to approximately $330,000 per quarter.
For the first six months of 2003, net cash provided by operating activities was $61.2 million, compared to $40.2 million in the first half of 2002. The acquisition of property and equipment was $15.0 million in the first half of 2003, compared to $19.1 million in the same period of 2002.
Business Outlook
The following forward-looking statements reflect Getty Images' expectations as of July 23, 2003. The company intends to continue its practice of not updating forward-looking statements until the next quarterly results announcement, other than in publicly available statements.
For the third quarter of 2003, the company expects to report revenue in the range of $127 million to $131 million. Results for the third quarter will include a debt extinguishment charge of approximately $11.8 million related to the $250 million of 5 percent convertible notes redeemed at par plus a premium of 2.9 percent, as well as the unamortized debt issuance costs on these notes. The company expects to report third quarter diluted earnings per share of $0.12 to $0.14, including $0.12 per share of debt extinguishment costs. For the third quarter of 2003, excluding the debt extinguishment costs of $0.12, the company expects to report third quarter diluted earnings per share of $0.24 to $0.26.
For 2003, the company expects revenue in the range of $505 million to $515 million and earnings per share, including debt extinguishment costs of $0.12, of $0.78 to $0.85. Excluding debt extinguishment costs of $0.12, the company expects earnings per share of $0.90 to $0.97 for 2003.
Webcast information
The company will host a conference call today at 2:00 pm PT. The dial-in number is 800.361.0912 (North America) or 913.981.5559 (international), confirmation number 762647. There will be a live webcast of the conference call, which can be accessed from the Investors section of the Getty Images Web site at www.gettyimages.com. The company will also provide a replay of the conference call at 888.203.1112 (North America) or 719.457.0820 (international), confirmation number 762647, until Friday, July 25 at 9:00 pm PT. The webcast will be archived on the Getty Images Web site and will be available until July 23, 2004.
Some of the statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's expectations, assumptions and projections about Getty Images and its industry as of the time the statements are made. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause our actual results to differ materially from our past performance and our current expectations, assumptions and projections. Differences may result from actions taken by the company as well as from risks and uncertainties beyond the company's control. These risks and uncertainties include, among others, the risks associated with changes in the economic, political, competitive and technological environments, and the risks associated with system security and service interruptions. The foregoing list of risks and uncertainties is illustrative, but by no means exhaustive. For more information on factors that may affect future performance, please review the reports filed by Getty Images with the Securities and Exchange Commission, in particular our Form 10-Q for the quarter ended March 31, 2003 and Annual Report on Form 10-K for the year ended December 31, 2002. Except as required by law, Getty Images undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or other events.
About Getty Images
Getty Images is the world's leading imagery company, creating and providing the largest and most relevant collection of still and moving images to communication professionals around the globe. From sports and news photography to archival and contemporary imagery, Getty Images' products are found each day in newspapers, magazines, advertising, films, television, books and Web sites. Getty Images' Web site, www.gettyimages.com, is the first place customers turn to search, purchase and download powerful imagery. Seattle-headquartered Getty Images is a global company, and has customers in more than 50 countries.
