<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 1998
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GETTY IMAGES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 000-23747 98-0177556
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
2101 FOURTH AVENUE 101 BAYHAM STREET
FIFTH FLOOR LONDON, ENGLAND
SEATTLE, WASHINGTON 98121 NW1 0AG
(206) 695-3400 (01144171) 544-3456
(Address, including zip code, and telephone,
including area code, of Registrant's principal executive offices)
None
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(Former name or former address, if changed since last report.)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Text of press release dated October 27, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
GETTY IMAGES, INC.
Date: November 4, 1998 By: /s/ Jonathan Klein
------------------------------
Name: Jonathan Klein
Title: Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
99.1 Text of press release dated October 27, 1998
</TABLE>
BW1675 OCT 27,1998 14:12 PACIFIC 17:12 EASTERN
GETTY REPORTS A SUCCESSFUL THIRD QUARTER
LONDON--(BUSINESS WIRE)--October 27, 1998--Getty Images (NASDAQ:
GETY), one of the leading international providers of visual content,
today announced financial results for the third quarter of 1998. Sales
for the quarter increased by 85% over the third quarter of 1997 to $49
million.
Reported earnings before interest, taxes, exchange gains/losses,
depreciation, amortization and non-recurring charges ("EBITDA") for
the quarter were $9.8 million, representing growth of 96% over the
third quarter of 1997. Full web commerce sales for the quarter reached
more than 10% of sales and digital sales for the quarter were $16.8
million, representing 34% of total sales.
Getty's strategy has been to consolidate leading brands in all of
the industry's market sectors and, through the leverage of digital
expertise, to provide full web commerce for all of the company's
products. Getty has already brought together leading image providers
in the areas of historic and contemporary photography and film as well
as in current affairs, sports and photojournalism, and in royalty-free
digital stock photography.
Getty already operates three successful full commerce web sites
and recently launched a fourth, for its largest business, Tony Stone
Images, a world leading stock photography business. Getty plans to
launch full web commerce for Hulton Getty, one of the two largest
archival collections of imagery in the world, next year.
Chairman, Mark Getty said, "We are delighted with the speed with
which our strategy is being implemented. The take up of our online
products among our customers has exceeded our expectations. PhotoDisc
continues to report growth each quarter; Allsport is increasing its
customer base for online delivery, and demand for electronic delivery
among Tony Stone Images' customers has grown impressively from a
standing start four months ago. Full electronic commerce for Tony
Stone Images has just been launched and we are very excited about the
possibilities for growth that it brings."
Jonathan Klein, Chief Executive Officer, said "The third quarter
of 1998 has been our most successful to date with strong sales,
improvements in margin and the introduction of important strategic
initiatives including the Preview service at Tony Stone Images. All of
our businesses performed well with many divisions reporting record
results. Regionally, all of our markets showed strong growth with the
exception of Japan and South East Asia. Although we have had to adjust
our growth expectations for the remainder of this year and for next,
we are confident that our company will continue to report solid
growth."
Highlights of the third quarter
- -- Tony Stone Images launched a full commerce web site at the
beginning of October. In the first week of operation following launch,
volume and value of transactions exceeded expectations. Getty believes
that new and existing customers will be attracted to the added
benefits, greater service levels and extended choice that the web site
brings. Getty expects the web site to increase its customer base,
increase sales opportunities and lower operating costs.
- -- Tony Stone Images' Preview service, launched at the end of last
quarter, exceeded expectations with over 30% of North American
selections and 15% of UK selections being dispatched electronically in
the quarter. The Preview service allows customers to request
selections from picture research personnel and have the required
images delivered online.
- -- Tony Stone Images performed well in all of its key markets.
September was a record month for the business. Regionally, European
offices showed the greatest growth rates.
- -- In the third quarter, Tony Stone Images introduced new contracts
for its contributing photographers that include new rates for online
sales of 40% for in territory sales and 30% for out of territory
sales, which compares to the rate for analog sales of 50% for in
territory sales and 30% for out of territory sales.
- -- In the quarter, Getty acquired an exclusive license to grant
reproduction rights for the Weegee Archive and Collection. A noted
pioneer of tabloid photojournalism, Weegee's collection, until now
housed at the International Center of Photography, comprises
approximately 12,000 images. Getty plans to digitize a core collection
of 1,000 and make them available online through the Hulton Getty full
commerce web site which will be launched next year.
- -- PhotoDisc had its best performance to date in the third quarter,
with total sales growth of 44% over the third quarter of 1997. Web
sales in the quarter sustained rapid growth with $2.1 million being
generated online in September alone and an increase in the overall
average invoice value. Sales in Europe were particularly strong in the
quarter.
- -- Allsport exceeded expectations in the quarter. In the US Allsport's
sales were 35% higher than the third quarter of 1997 due to increased
penetration in all sports as well as an exceptional baseball season
and the onset of NFL pre-season coverage. Motor racing and soccer
sales were strong in the UK and the newly opened Australian office
performed well with extensive coverage of the Commonwealth Games.
- -- Hulton Getty sales improved on the third quarter of last year.
Progress towards full electronic commerce was also made with the
addition of 1,600 Ernst Haas images online. 175,000 images may now be
searched on the Hulton Getty website and full web commerce for the
brand will be introduced next year.
- -- Liaison showed strong performance in the quarter, particularly in
North America. The integration of the brand's stock photography
business into Tony Stone Images, has meant a greater focus, for
Liaison, on its core strength of photojournalism and press activities.
- -- Energy Film Library reported increases in sales at its offices in
New York and Los Angeles as well as the continued success of sales to
the motion picture industry. Energy's footage will appear in many new
releases including Universal's 'Psycho'; Disney's 'My Favorite
Martian', and 'Next Stop Hollywood' from Miramax. In the quarter,
Energy also began the integration of Imageways, a notable collection
of archival footage that was acquired by Getty in August this year.
Financial results for the quarter ended September 30, 1998
- -- Getty's reported sales increased by 85% to $49 million in the third
quarter of 1998, compared to $27 million in the third quarter of 1997.
- -- Gross margin for the quarter improved to 72.3% from 62.6% of sales
in the third quarter of 1997.
- -- Selling, general and administrative expenses were $25.6 million,
representing 52.4% of sales, compared to 53.7% for the second quarter
of this year.
- -- EBITDA for the quarter increased by 96% to $9.8 million compared to
$5.0 million in 1997.
- -- The EBITDA margin was 19.9%, up from 17.4% in the second quarter of
1998 and 18.8% in the third quarter of 1997.
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the company notes that certain statements made
in this release, including those related to Getty's expectations for financial
results in 1998 and 1999, product introductions and digitization, and growth
of online products, are forward-looking statements and are only predictions.
Actual events or results may differ materially as a result of risks and
uncertainties facing the Company including global economic conditions and the
risk factors outlined in the filings of Getty Images, Inc. with the SEC,
including those in the Company's Form 10K for 1997, as amended, and available
from Getty Images and from the SEC. The Company disclaims any obligation to
update any such factors or to announce publicly the result of any revision to
any forward-looking statements in this release or to make corrections to
reflect future work or developments.
NOTES TO EDITORS
Description of Getty Images, Inc.
Getty Images (NASDAQ: GETY) is one of the leading international providers of
visual content to a diverse range of professional users of images, including
advertising and design agencies, magazines, newspapers, broadcasters,
production companies and traditional and new media publishers. Getty Images
markets rights to images and footage through its international network of
wholly owned offices in London, Chicago, New York, Los Angeles, Seattle,
Toronto, Munich, Hamburg, Paris, Amsterdam, Brussels, Copenhagen, Stockholm,
Vienna, Barcelona, Sydney, Tokyo and Hong Kong and agents in 54 countries.
Getty Images' high quality visual content collections are: (i) Tony Stone
Images (www.tonystone.com), one of the world's leading providers of
contemporary stock photography; (ii) PhotoDisc (www.photodisc.com), a world
leader in digital stock photography and electronic delivery; (iii) Allsport
(www.allsport.com), a leading world-wide sports picture agency; (iv) Hulton
Getty (www.hultongetty.com), one of the two largest privately owned
collections of archival photography in the world; (v) Liaison Agency
(www.liaisonphoto.com), a leading North American news and reportage agency;
and (vi) Energy Film Library (www.digital-energy.com), one of the world's
leading stock footage companies. Further information is available from the
group's website at www.getty-images.com.
<TABLE>
CONSOLIDATED INCOME STATEMENT HIGHLIGHTS
(Unaudited, in thousands)
<CAPTION>
Getty Images Inc. Getty Images Inc.
Three Months Ended Three Months Ended
September '98 September '97
$'000 $'000
<S> <C> <C>
Sales $48,975 $26,542
Cost of sales 13,564 9,933
Gross profit 35,411 16,609
Selling, general and
administrative expenses 25,646 11,618
Amortization 10,007 931
Depreciation 3,795 2,055
Non-recurring
integration/restructuring 4,618
Operating income/(loss) (8,655) 2,005
Net interest received/(expensed) (800) 296
Exchange gains/(losses) (57) 135
Income/(loss) before tax (9,512) 2,436
Income taxes (188) (1,149)
Net income/(loss) (9,700) 1,287
EBITDA (1) $9,765 $4,991
<FN>
<F1>
Notes: (1) EBITDA is defined as earnings before interest, taxes, exchange
gains/(losses), depreciation, amortization and non-recurring
integration/restructuring items.
</FN>
</TABLE>
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
<CAPTION>
Unaudited Audited
Getty Images Inc. Getty Images Inc.
At September 30, 1998 At December 31, 1997
$'000 $'000
<S> <C> <C>
Cash and cash equivalents $29,540 $29,234
Other current assets 53,849 31,270
Total current assets 83,389 60,504
Fixed assets, net 57,865 39,853
Intangible assets 332,679 66,870
Deferred assets 6,891 4,411
TOTAL ASSETS $480,824 $171,638
Short term borrowings $254 $2,096
Other current liabilities 59,745 35,346
Total current liabilities 59,999 37,442
Long term debt 72,173 14,657
Shareholders' equity 348,652 119,539
TOTAL LIABILITIES &
SHAREHOLDERS EQUITY $480,824 $171,638
</TABLE>
--30--bh/ny*
CONTACT: Jonathan Klein
Getty Images
011-44-171-544-3456
or
Jim Prout
Taylor Rafferty Associates
212-889-4350
KEYWORD: NEW YORK
INDUSTRY KEYWORD: PUBLISHING COMPUTERS/ELECTRONICS
TELECOMMUNICATIONS COMED EARNINGS
