Image Entertainment, Inc. Reports Results For Its First Quarter Ended June 30, 1999
DVD Net Revenues Up 119.7 Percent Compared to Prior-Year June Quarter Gross Profit Margins Expand to 24.4 Percent For The June Quarter June Quarter Net Loss Per Share of $.04 Primarily Due to Las Vegas Distribution Facility Difficulties Image Entertainment, Inc. (NASDAQ:DISK), a leading licensee and distributor of DVD programming in North America, has reported financial results for its first quarter ended June 30, 1999. Net sales for the June 1999 quarter were $18,020,000, an increase of 5 percent over net sales of $17,140,000 for the Company's June 1998 quarter. Net sales of DVD programming for the June 1999 quarter increased 119.7 percent to $14,269,000, or 79.2 percent of net sales, from $6,496,000, or 37.9 percent of net sales, for the June 1998 quarter. Gross profit margins for the June 1999 quarter expanded to 24.4 percent, up from 23.0 percent for the June 1998 quarter. The operating loss for the June 1999 quarter was $633,000 compared to operating income of $367,000 for the June 1998 quarter. The net loss for the June 1999 quarter was $714,000, or $.04 per basic and diluted share, compared to net income of $205,000, or $.02 per basic and diluted share, for the June 1998 quarter. Operating results for the June 1999 quarter included a full quarter of operating results of the Company's Ken Crane's subsidiary (acquired January 11, 1999). Operating results for the June 1999 quarter also included the operating results of Aviva International, LLC, a 50 percent-owned joint venture formed during the June 1999 quarter. The June 1999 quarter's revenue and operating performance was negatively affected by difficulties encountered implementing the software required to run the Company's Las Vegas warehouse and distribution facility. These difficulties were exacerbated by related operational inefficiencies. Expenses associated with 24-hour operation of the facility and overnight shipping, measures instituted to mitigate shipping delays caused by the software implementation problems, contributed to the June 1999 quarter's net loss. The operating performance of Ken Crane's was also negatively affected by the Las Vegas distribution facility's difficulties and contributed to the overall consolidated net loss per share. While the facility is not yet operating at planned efficiency (shipping within 24 hours after receipt of an order), the facility has reached the operating efficiency of the Company's recently closed Chatsworth warehouse (shipping within 48 hours after receipt of an order). Martin W. Greenwald, Image's President and CEO, commented, ""I believe the worst of our difficulties are behind us with respect to the Las Vegas warehouse and distribution facility. Each week, we are seeing substantial improvement in the warehouse operating systems. We are now much closer to achieving our goal of 24 hour turn-around for order processing. Once 24 hour turn-around is achieved, our top priority will be to upgrade the facility's software and hardware to accommodate fulfillment for Ken Crane's, and, eventually, for other third parties"" Greenwald continued, ""Although the June 1999 quarter did not produce positive bottom line results, I am nevertheless pleased with our substantial growth in DVD revenues. We continue to build our DVD product line through aggressive licensing. As the DVD market expands, Image is well-positioned to take advantage of this growth through our comprehensive range of DVD offerings. ""We have also begun to aggressively pursue digital downloading and digital streaming rights to many of the titles we acquire for home video. These rights have strategic value and position the Company to realize potential future revenues as the computer continues to redefine itself as an entertainment platform. I believe that the digital streaming of music will lead the way for the digital streaming of video over the Internet. We are committed to positioning Image to take advantage of this evolving market opportunity,"" Greenwald concluded. Visit Image on-line at http://image-entertainment.com for corporate and marketing information, DTS information and the latest in the Company's DVD, LaserDisc and VHS releases.