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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): April 23, 1998
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GETTY IMAGES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 98-0177556
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
2013 FOURTH AVENUE 101 BAYHAM STREET
FOURTH FLOUR LONDON, ENGLAND
SEATTLE, WASHINGTON 98121 NW1 0AG
(206) 441-9355 (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.)
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ITEM 5. OTHER EVENTS.
On April 23, 1998, Getty Images, Inc., a Delaware corporation (the
"Company" or "Getty Images"), through its wholly owned subsidiary Getty
Images Australia Pty Limited, completed the Acquisition (the "Acquisition")
of certain assets from Australian Picture Library Pty Limited, a company duly
incorporated in the State of New South Wales ("APL"). The assets acquired in
the Acquisition included goodwill, certain customer information,
approximately 39,000 images and negatives owned by APL, rights to enter into
relationships with certain photographers and APL's interest in various
business contracts. In addition, five former APL employees have been hired as
Getty Images employees and continue to carry on the business of the sports
division under the name Allsport Australia Pty Limited. The purchase price
of the Acquisition was A$500,000 plus A$500,000 in Getty Images common stock,
which resulted in 12,904 shares being issued. Getty Images completed the
Acquisition pursuant to the Acquisition for Sale and Purchase of Business
Assets Agreement (the "Acquisition Agreement"), dated April 23, 1998, among
Getty Images Australia Pty Limited, a company duly incorporated in the State
of New South Wales and a wholly owned subsidiary of Getty Images, APL, and
Jane Catherine Symons and John Andrew Carnemolia, both of the State of New
South Wales.
Reference is made to the press release issued by the Company on May 7,
1998 regarding the release of the results of its first fiscal quarter, the
text of which is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Text of press release dated May 7, 1998.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATIONS.
In connection with the Acquisition described in Item 5, Getty Images
issued an aggregate of 12,904 shares of Common Stock to APL pursuant to
Regulation S ("Regulation S") under the Securities Act of 1933, as amended
(the "Securities Act").
The issuance of such shares to APL was made in an offshore transaction
within the meaning of Regulation S and no directed selling efforts were made
in the United States in connection with such issuance. APL represented and
warranted to Getty Images, among other things, (i) that such person was not a
U.S. person and was not acquiring shares for the account or benefit of any
U.S. person, (ii) that neither such person nor any of its affiliates engaged
in any directed selling efforts with respect to such shares and that such
persons will comply with the offering restrictions requirements of Regulation
S, (iii) that such person acknowledged that the issuance of such shares was
not registered under the Securities Act and that there were restrictions on
the resale of such shares, (iv) that such person was purchasing such shares
for his own account for investment and not with a view to distribution and
(v) that such person understood that a legend referring to applicable
transfer restrictions would be placed on certificates representing such
shares.
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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: May 8, 1998 By: /s/ Jonathan Klein
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Name: Jonathan Klein
Title: Chief Executive Officer
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INDEX TO EXHIBITS
Exhibit Description
99.1 Text of press release dated May 7, 1998
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FOR IMMEDIATE RELEASE May 7, 1998
GETTY REPORTS ANOTHER QUARTER
OF MAJOR ACHIEVEMENT
Getty Images, Inc. (NASDAQ: GETY), one of the leading international providers
of visual content, today announced financial results for the first quarter of
1998. Sales for the quarter increased by 65 per cent over the first quarter
of 1997 to $37.9 million. Excluding the acquisitions in the quarter, sales,
on a currency neutral basis, grew by 21 per cent. Reported earnings before
interest, taxes, exchange gains/losses, depreciation and amortization
("EBITDA") for the quarter were $6.6 million, representing growth of 51 per
cent above the first quarter of 1997.
In the quarter, Getty completed its transaction with PhotoDisc, a world
leading royalty-free image provider and one of the largest providers of
imagery on the Internet. Additional expansion included the acquisition of
Allsport, a premier international sports photography agency; the launch of
PowerPics, an electronic commerce enabled website providing tailored imagery
to the small office/home office (SOHO) sector; the opening of Energy Film
Library's UK office; and the acquisition of Fototeca Stone, previously a
leading Tony Stone Images agent based in Barcelona and now a key wholly-owned
office in the growing Spanish market.
Getty's strategy to enable full electronic commerce for all of the company's
products is supported by the success, in the first quarter, of those business
that are already conducting business online. Digital sales for the quarter
were 23 per cent of group sales at $8.6 million. Sales for PhotoDisc's
electronic commerce enabled website for the full quarter were $4.2 million,
an increase of 282% on its first quarter of 1997 and growth of some 35 per
cent on the fourth quarter. One third of PhotoDisc's sales were generated
online. Getty currently operates three electronic commerce enabled websites,
and the company plans to launch another, for Tony Stone Images, in the fourth
quarter of 1998.
Co-Chairman, Mark Getty, said "The first quarter of 1998 was significant for
being our most successful to date. In less than three years we have built a
company that is home to many of the leading image brands in the world, offers
an impressive depth and range of content that is hard to beat, manages two
highly successful and targeted online channels and has recently launched a
third. Our objective has always been to become the world's leading provider
of visual content; we are pleased with our rapid progress."
Jonathan Klein, Chief Executive Officer, said "The first quarter of 1998 was
an important one for us, both strategically and financially. The growth in
sales of 65 per cent was largely driven by the new additions to the group -
leading brands in the areas of sports photography, royalty-free photography
and online image sales - which have performed very well. We also saw
increased demand for all our products across the group and in almost all
geographical markets. We are particularly satisfied by the growth in digital
sales while we also continue to benefit from growth in demand for the analog
products. In addition, we have grown the customer base for all of our
businesses and we have targeted new markets in the SOHO sector."
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HIGHLIGHTS OF THE FIRST QUARTER
Getty's acquisition of PhotoDisc greatly enhances the company's potential to
launch online delivery channels for all of the businesses in the group.
PhotoDisc's significant expertise in this area is evidenced by growth in
online sales of 282 per cent over the first quarter of 1997 and by 35 per
cent over the forth quarter. Approximately one third of PhotoDisc sales in the
quarter were generated on its electronic commerce enabled website. Getty
believes that the rapid growth in online sales evidences the company's ability
to produce relevant imagery and market its web service effectively.
The Getty Online Group was created in the first quarter. The division has
responsibility for the launch of online services to better respond to
increased demand from existing customers, as well as expansion into new
market sectors. Getty expects to invest $11 million in digital development in
1998.
Tony Stone images had an excellent quarter. Initiatives such as the
introduction of scan-on-demand facilities, an increased focus on extending
sales programs and the global launch of new catalogs and CD-ROMs contributed
to the good performance in the quarter.
The acquisition of Allsport reflects Getty's determination to provide the
best imagery to the broadest customer base. With clients that include most of
the world's media, as well as corporate sports sponsors and the major sports
governing bodies, Allsport is well established in the industry. The agency
has also made strides in electronic commerce with a sophisticated online
subscription service which added significantly to growth in the quarter.
Allsport's commitment to exploiting the opportunities created by
technological advancement includes the tactical use of the latest in digital
camera technology. The new cameras enable the posting of newly shot imagery
to the agency's website within ten minutes. Getty believes that this strong
focus on customer service keeps Allsport at the forefront of its market
sector.
Energy Film Library reported growth in the quarter of 25 per cent over the
first quarter of 1997 reflecting the success of the many initiatives
implemented over the last six months. Energy opened a wholly-owned office in
London in March and also launched a customised content collection for the UK
market. The agency also launched several new show reels in the quarter, and
has digitized several new collections for inclusion on the web.
An updated website for Hulton Getty was finalised and tested in the quarter.
The new version has been designed for greater accessibility and simplicity
and Getty believes that it will encourage greater usage of the Hulton Getty
online search system.
The Hulton Getty Picture Gallery had many successful exhibitions during the
quarter, and Getty expects to open more of these popular consumer outlets
within the next 24 months.
Getty's first online product targeted at the SOHO markets was launched in the
first quarter. PhotoDisc collaborated with Hewlett-Packard to produce
PowerPics, an electronic commerce enabled website which provides high
quality, affordable imagery. The website provides a targeted selection of
imagery spanning common business themes which may be paid for and downloaded
directly onto the customer's desktop. Getty believes that PowerPics answers a
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need in the SOHO and general business markets for affordable, relevant
imagery for use in internal documents, presentations, brochures and
newsletters.
Scan-on-demand facilities were introduced at Liaison Agency in the first
quarter and 600,000 images have been converted from videodisk to a digitized
format which now provides a more efficient online picture research facility
for the agency. It is planned that these will be made available, online, to
clients later in 1998.
Fototeca Stone, an exclusive agent for Tony Stone Images in Spain since 1985,
was acquired by Getty. The acquisition is part of Getty's strategy to own
offices in key markets in order to extend the reach of the group's products
and to offer enhanced customer service. Following the acquisition, Fototeca
Stone will provide ISDN and scan-on-demand services to the agency's customer
base, and will be a base for the introduction of further Getty group products
into this market.
As announced separately today, Getty has acquired the sports division of
Australian Picture Library, an exclusive agent for Allsport, based in Sydney.
The market for sports imagery is strong in Australia, and is expected to
grow, particularly in connection with the Olympic Games in Sydney in 2000. As
official photographer for the International Olympic Committee, Allsport will
be well placed to take advantage of this expected growth.
FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 1997
Getty's reported sales increased by 65 per cent to $37.9 million in the first
quarter of 1998 compared to $23.0 million in the first quarter of 1997.
Excluding the acquisitions in the quarter, sales, on a currency neutral
basis, grew by 21 per cent.
Gross margin for the quarter improved from 62.4 per cent of sales in the
first quarter of 1997 to 69.4 per cent. The increase primarily reflected the
higher proportion of sales of owned imagery following the Allsport
acquisition and the lower cost of sales at PhotoDisc. In line with the
company's strategy of increasing its sales of wholly owned content, the
proportion of sales of wholly owned imagery increased from 5 per cent in the
first quarter of 1997 to 12 per cent in the first quarter of 1998.
Selling, general and administrative expenses were $19.7 million, representing
52.1 per cent of sales compared to 43.4 percent in the first quarter of 1997.
The increase in selling, general and administrative expenses was primarily
due to the acquisitions of PhotoDisc and Allsport where these expenses are
substantially higher, as a percentage of sales, than in the existing
businesses.
EBITDA for the quarter increased by 51 per cent to $6.6 million compared to
$4.4 million in 1997. The net loss for the quarter was $5.2 million compared
to $1.3 million of net income in the first quarter of 1997 and this was
primarily due to an amortization charge of $6.9 million in the quarter. The
amortization charge resulted from $290 million of intangibles arising on the
acquisitions of PhotoDisc and Allsport.
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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 owner 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 53 countries.
Getty Images' high quality visual content collections are: (i) Allsport, a
leading world-wide sports picture agency; (ii) Energy Film Library, one of
the world's leading stock footage companies; (iii) Hulton Getty, one of the
two largest privately owned collections of archival photography in the world;
(iv) Liaison Agency, a leading North American news and reportage agency; (v)
PhotoDisc, a world leader in digital stock photography and electronic
delivery; and (vi) Tony Stone Images, one of the world's leading providers of
contemporary stock photography. Further information is available from the
group's website at
www.getty-images.com.
ENQUIRIES:
GETTY IMAGES JONATHAN KLEIN (44 171)544 3381
Chief Executive Officer
LAWRENCE GOULD (44 171)544 3383
Chief Financial Officer
COLETTE FUREY (44 171)544 3391
Group Communications Manager
TAYLOR RAFFERTY Jim Prout (1 212)889 4350
HUDSON SANDLER Andrew Hayes (44 171)796 4133
