Getty Images Second Quarter

243

August 12, 1999

Getty Images continued their slow rise in sales during the second quarter of

1999 with overall growth in revenue for the quarter about 5.3% over sales in

the previous quarter.

During the quarter they acquired art.com, a business that is only about six

months old, for an estimated cost in excess of $200 million in stock and cash.

This new addition added little in terms of revenue to Getty's bottom line for

the quarter.

According to the SEC report, Art.com's 1998 revenue was $384,075 with costs of

the goods sold at $285,420 for a gross profit of $98,655. However, the net

loss for the company in 1998 was $5.388 million.

Second quarter sales for Getty was $55 million. This was up from $52.2 million

in the 1st quarter of 1999 and $50.1 million in the 4th quarter of 1998.

E-commerce sales for the quarter were $13.8 million or about 25 percent of

total sales. Eighty-five percent of all e-commerce sales were made in North

America. E-commerce sales for the first half of 1999 totaled $24.1 million,

representing approximately 22.5 percent of total sales.

Total digital sales for the 2nd quarter, including CD-ROM sales, were $23.5

million or 42% of total sales. This was up from $20.1 million in the 1st

quarter.

The vast majority of the $9.7 million in CD-ROM sales should have been from

Getty's royalty free brand, PhotoDisc. Since 45% of PhotoDisc's total sales

were e-commerce sales this would mean that the $9.7 million would represent

55% of their total sales and that PhotoDisc's total sales for the quarter

would have been about $17.6 million. That would also mean that $7.9 million

of Getty's $13.8 million in e-commerce sales came from PhotoDisc.

Getty also just announced that it has acquired EyeWire, another RF producer,

(See other story) which currently has gross sales of about $12 million

annually. Next quarter's results should reflect an addition $2 to $3 million

in additional sales as a result of this acquisition.

Getty has 35.1 million shares outstanding and a total market capitalization of

about $653 million which is more than three times this year's expected sales.

The current expected earnings per share are -1.27.

Nearly 25 percent of Tony Stone Images sales in the quarter were made through

their website www.tonystone.com. North America accounted for more than 82

percent of total online sales for Tony Stone Images. Considering that North

America probably represents only 45% to 50% of TSI's total worldwide sales

this means that a

very significant percentage of North American sales are now being made as a

result of web search.

Registrations on the Tony Stone Images website more than doubled over the

first quarter of 1999, reaching nearly 76,000, and user sessions on the site

were approximately 1.3 million in the quarter.

Selling, general and administrative expenses for the quarter were $32.1

million, representing 58.4 percent of sales, compared to 53.7 percent in the

second quarter of 1998. Roughly half of this increase was attributable to the

Art.com acquisition. The remainder was largely due to continued and

accelerated investment in advertising and marketing costs necessary to support

the creation of new websites, as well as increased investment in management,

new sales offices and new business systems.

This represents a slight decrease in revenue after expenses for the 2nd

quarter relative to the 1st quarter ($22.9 million from $23.5 million in the

1st quarter).

The following are some comparative statistics for Getty's various brands.