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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): August 5, 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.)
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ITEM 5. OTHER EVENTS.
On August 5, 1998, Getty Images, Inc., a Delaware corporation (the
"Company" or "Getty Images"), completed the acquisition (the "Acquisition") of
ImageWays, Inc., a New York corporation. ImageWays, Inc. is a high quality
archival footage collection based in New York, which the Company plans to
integrate into its stock footage business, Energy Film Library. The purchase
price of the Acquisition was $1,070,000, consisting of $713,333 in cash and
18,036 shares of the Company's common stock. Getty Images completed the
Acquisition pursuant to a Stock Purchase Agreement by and among the stockholders
of ImageWays, Inc. and Getty Images, Inc. dated August 4, 1998.
Reference is made to the press release issued by the Company on August 6,
1998 regarding its financial results for the second 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 August 6, 1998.
2
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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: August 12, 1998 By: /s/ Jonathan Klein
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Name: Jonathan Klein
Title: Chief Executive Officer
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INDEX TO EXHIBITS
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Exhibit Description
<S> <C>
99.1 Text of press release dated August 6, 1998
</TABLE>
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Getty Reports Another Superb Quarter
LONDON--(BUSINESS WIRE)--Aug. 6, 1998--Getty Images, Inc. (NASDAQ: GETY), one of
the leading international providers of visual content, today announced financial
results for the second quarter of 1998. Sales for the quarter increased by 87%
to $48.1 million over the second quarter of 1998. Reported earnings before
interest, taxes, exchange gains/losses, depreciation and amortization ("EBITDA")
for the quarter were $8.4 million, representing growth of 80% over the second
quarter of 1997. Digital sales for the quarter were $15.3 million, representing
one-third of total sales.
In a separate press announcement today, Getty released details of its agreement
to acquire Imageways, Inc., a noted archival footage library based in New York.
The acquisition fills a gap in Getty's portfolio of high quality visual content.
Getty stated that it intends to integrate the content of Imageways with its
existing stock footage company, Energy Film Library.
Getty's strategy of becoming the world's leading provider of visual content was
further enhanced during the second quarter. The company 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. During the quarter, by beginning
the consolidation of products, services and expertise, and the applying
leading-edge technology, Getty moved closer towards its vision of becoming the
world's most successful electronic commerce business in the visual content
sector.
Co-Chairman, Mark Getty, said "Our strategy to consolidate our fragmented
industry and to make our content available to a broader market is proceeding
according to plan. We believe that we have built the leading visual content
company in the world that comprises many of the very best brands, an enormous
collection of diverse and marketable imagery and the most
experienced web commerce expertise in the industry. We are now increasingly
shifting our focus from significant acquisitions of content to the consolidation
and integration of our businesses, together with the application of digital
technology. We are delighted that we are on track with all these developments
and have also continued to meet expectations."
Jonathan Klein, Chief Executive Officer, said "The second quarter of 1998 was a
tremendous success for us, both strategically and financially. Our businesses
performed very well and we saw further increased demand for our online products.
The move to digital continues to accelerate with almost one-third of our sales
being digital. This will continue. During the quarter, we have made much
progress in the preparation of our content for full electronic commerce and
these initiatives are having a positive impact on the whole business in terms of
technological development, customer awareness and product quality."
Highlights of the second quarter
- Tony Stone Images reported significant volume growth in the quarter
as well as an increase in the average price per image licensed.
Growth was particularly strong in France and Germany.
- In the quarter, Tony Stone Images Client Preview system was
successfully tested. The Preview system will allow customers to
request selections from picture research personnel and have the
required photographs delivered online. The system provides cost
saving
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opportunities for Tony Stone Images and the company's customers,
and Getty believes that it will also prove invaluable as training
ground for full electronic commerce.
- We also announced today that a new agreement with the contributing
photographers of Tony Stone Images has been endorsed by the
Photographers Advisory Group, a representative group of US and
European contributing photographers. This new contract includes a
new rate for online sales: 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.
- PhotoDisc's growth in online sales was sustained in the quarter with
$4.6 million of sales generated on its website. These web sales
represent a growth of over 200% on the second quarter of 1997 and
comprise 34% of PhotoDisc's total sales. New support centers for the
website were introduced in Europe where growth was particularly
noticeable. Strong web sales have continued into July with a record
$1.7 million being generated online in the month.
- The second quarter saw the launch of PhotoDisc's 24 hour customer
service center which operates seven days per week. The company also
launched its color calibration tool which aims to enable customers to
optimize color output from digital files. Getty believes that these
customer service initiatives will further encourage existing and new
customers to shop online.
- Allsport recorded significant growth in the quarter with almost 10%
of total sales generated online through the agency's 1,000 media
contracts. Digital imagery from Allsport's photographers appears
online within ten minutes and can be downloaded immediately by any
of its time sensitive, media group customers. In preparation for the
Olympic Games in 2000, Allsport opened an office in Sydney, Australia.
- Important new contracts for Allsport, in the quarter, included a
retainer with Italian sports manufacturer, FILA, as well as an
extended retainer with SKY Sports. New endorsements include the
Professional Footballers Association; the US Swimming Association;
Major League Baseball Players Association, and the NHL All-Star Game.
- Energy Film Library completed four new show reels and a major European
shoot of some of the famous sights and cities in the continent. Getty
believes that this new content, as well as the introduction of
Imageways, will assist in extending its customer base.
- Energy also made significant progress in the editing of its collection
for international distribution. The UK office had a good initial
quarter of operations and plans are advanced to launch Energy in
Germany later this year. * Hulton Getty now has a focused sales team
in London and has moved the North American sales effort from Tony
Stone Images in Chicago to Liaison Agency in New York. Getty expects
that customer information sharing between Hulton Getty and Liaison
will be valuable for both brands as they lend support for each other
within the editorial market.
- Expansion in the second quarter included the opening of an office in
Brazil. Getty also signed new agents on an exclusive basis in Costa
Rica and Colombia.
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- Getty successfully completed the refinancing of its debt facilities
with a $75 million convertible bond issue in May. The bond issue has
provided the company with the funds required to implement its
strategies at a significantly lower cost than the refinanced term
debt.
- The company incurred charges in the quarter, comprising a $9.1
million integration and restructuring charge and a $800,000
extraordinary charge. The non-recurring integration and
restructuring charge arose from the commencement of the
reorganization program to integrate the principal businesses of the
company. The extraordinary charge comprises the write-off of
unamortized costs of the repaid term debt. The company expects to
incur further integration and restructuring charges of up to $2.4
million in the next quarter.
Financial results for the quarter ended June 30, 1998
Getty's reported sales increased by 87% to $48.1 million in the second quarter
of 1998 compared to $25.7 million in the second quarter of 1997.
Gross margin for the quarter improved to 71% from 62% of sales in the second
quarter of 1997.
Selling, general and administrative expenses were $25.8 million, representing
53.7% of sales compared to 52.1% for the first quarter of this year, and 44.2%
in the second quarter of 1997.
EBITDA for the quarter increased by 80% to $8.4 million compared to $4.7
million in 1997.
Net losses of $14.9 million arose in the quarter compared to a net income of
$1.1 million in the second quarter of 1997. These losses arose after the non-
recurring integration and restructuring charges of $9.1 million, extraordinary
charge of $800,000 and amortization of
goodwill of $10 million.
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, one of the world's
leading providers of contemporary stock photography; (ii) PhotoDisc, a world
leader in digital stock photography and electronic delivery; (iii) Allsport, a
leading world-wide sports picture agency; (iv) Hulton Getty, one of the two
largest privately owned collections of archival photography in the world; (v)
Liaison Agency, a leading North American news and reportage agency; and (vi)
Energy Film Library, one of the world's leading stock footage companies. Further
information is available from the group's website at www.getty-images.com.
CONTACT: Jonathan Klein
Getty Images
011-44-171-544-3456
- - or -
Jim Prout
Taylor Rafferty Associates
212-889-4350
- - or -
Madeline Hardart (media)
Hill & Knowlton
212-885-0417
