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IMAGE ENTERTAINMENT REPORTS RECORD SALES AND EARNINGS FOR THE QUARTER AND NINE MONTHS ENDED DEC. 31, 1991

IMAGE ENTERTAINMENT REPORTS RECORD SALES AND EARNINGS FOR THE QUARTER AND
    NINE MONTHS ENDED DEC. 31, 1991
    CHATSWORTH, Calif., Feb. 14 /PRNewswire/ -- Image Entertainment Inc. (NASDAQ: DISK), one of the largest distributors of programming on laserdisc in the United States, today reported record sales and earnings for the third quarter and nine months ended Dec. 31, 1991.
    Blockbusters such as "Fantasia," "Dances With Wolves" and "The Silence of the Lambs" contributed to quarterly sales of $19.5 million, a 42 percent increase over $13.8 million in the third quarter a year ago. Net income for the quarter was up over 2,400 percent to $861,293, or $.06 per share, from $34,334, less than $.01 per share, in the prior third quarter.
    For the nine months, sales increased 26 percent to $42.1 million from $33.5 million in the same period a year ago.  Net income was $179,545, or $.01 per share, compared with a loss of $478,382, or $.05 per share, in the prior period.
    Martin W. Greenwald, chairman and chief executive officer, said, "This was a milestone quarter for Image Entertainment.  We saw our best holiday season ever.  Sales benefited from the growing number of laserdisc machines and the release of several hit movies.  Additionally, expense management and economies of scale contributed to improved operating results."
    Quarterly Results
    Net sales grew 42 percent to $19.5 million from $13.8 million in the third quarter a year ago.  Operating income almost tripled to $1,428,959 (7.3 percent of sales) from $481,366 (3.5 percent of sales) in the same quarter a year ago.  The results reflect a decline in operating expenses as a percentage of sales.
    Selling expenses increased to $974,405 from $846,708, but declined as a percentage of net sales to 5.0 percent from 6.2 percent a year ago. Greenwald explained, "The increase in selling expenses is attributable to successful marketing and advertising programs, including promotional costs associated with 'Fantasia,' the most successful laserdisc release in history."
    General and administrative expenses increased to $954,301 from $865,274, but declined as a percentage of net sales to 4.9 percent from 6.3 percent a year ago.  Greenwald said, "The percentage decline in administrative expenses reflects our commitment to run a loan organization.  We expect a continued decline in administrative expenses as a percentage of net sales as the company grows."
    Amortization of production costs decreased during the quarter to $715,835 (3.7 percent of sales) from $897,326 (6.5 percent of sales). This decrease is due to lower production costs resulting from the establishment of our in-house production facility and a reduction in titles released, with a focus on higher volume titles.
    Interest expense for the three months increased to $529,954 from $447,032 due to higher debt levels and a higher effective interest rate associated with Image's recent long-term financing arrangement.
    Nine-Month Results
    Net sales for the nine months grew 26 percent to $42.1 million from $33.5 million a year ago.  Operating income more than doubled to $1,689,304 from $659,792 due to cost savings and greater efficiencies. Earnings for the nine months were $179,545, or $.01 per share, compared with a loss of $478,382, or $.05 per share, in the prior year.
    Financial Strength to Support Continued Growth
    During the quarter, Image Entertainment completed a private placement of $20 million in long-term secured notes.  Proceeds were used to retire approximately $14.2 million in short-term indebtedness and to increase working capital.  At quarter's end, Image had cash and short- term investment balances of $6.3 million.
    Greenwald said, "The improvement in our balance sheet allows us to maintain greater inventory depth and improve our customer service.  We believe our improved financial condition helps solidify our position as the market leader in this phenomenally exciting industry."
    Image Entertainment has an estimated 35-40 percent share of the domestic laserdisc market.  The company has the most extensive library of titles, with more than 3,500 programs and exclusive licensing and distribution agreements with some of the most important suppliers of movies, music videos and specialty programming, including Disney's Buena Vista Home Video, FoxVideo, Hanna-Barbera Home Video, Orion Home Video, Turner Home Video and Sony Music Video.  The company has approximately 10.9 million shares outstanding and trades on the NASDAQ National Market System (symbol: DISK).
                        IMAGE ENTERTAINMENT INC.
                        Statements of Operations
                              (Unaudited)
                      Three Months Ended             Nine Months Ended
                            Dec. 31,                      Dec. 31,
                      1991           1990           1991           1990
    Net sales  $19,534,797    $13,779,467    $42,071,650    $33,490,321
      Operating
      Costs and
      Expenses:
    Cost of
     laserdisc
     sales      15,461,297     10,688,793     32,902,173     25,484,933
    Selling
     expenses      974,405        846,708      2,586,068      2,335,867
    General &
     administrative
     expenses      954,301        865,274      2,648,483      2,561,004
    Amortization
     of production
     costs         715,835        897,326      2,245,622      2,448,725
    Total       18,105,838     13,298,101     40,382,346     32,830,529
    Operating
     income      1,428,959        481,366      1,689,304        659,792
      Other Expenses:
    Interest
     expense       529,954        447,032      1,368,734      1,137,374
    Amortization
     of deferred
     financing
     costs          37,712           ---          37,712           ---
    Write-off of
     leasehold
     improvements     ---            ---         102,513           ---
    Income (loss)
     before income
     tax expense   861,293         34,334        180,345       (477,582)
    Income tax
     expense         ---             ---             800            800
    Net income
     (loss)       $861,293        $34,334       $179,545      ($478,382)
    Primary net
     income (loss)
     per share        $.06           $.00           $.01          ($.05)
    Weighted average
     shares outstanding
     used in
     calculating
     primary net
     income (loss)
     per share  13,513,544     10,751,744     12,856,221     10,357,756
    -0-                      2/14/92
    CONTACT:  David DelGrosso (media), 818-407-9100, ext. 275, or Cheryl Lee (investors), 818-407-9100, ext. 256, both of Image Entertainment
    (DISK)
CO:    IMAGE ENTERTAINMENT
IN:    ENT
SU:    ERN
ST:           CALIFORNIA (CA)


-- LA005 -- 9057 02/14/92
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