Third quarter revenue increases 23% to $74.4 million Year-to-date
free cash flow increases to $17.2 million BOULDER, Colo., Nov. 4
/PRNewswire-FirstCall/ -- Gaiam, Inc. (NASDAQ: GAIA), a lifestyle
media company, announced today results for its third quarter ended
September 30, 2009. Gaiam will host a conference call today,
November 4, 2009, at 2:30 p.m. MST (4:30 p.m. EST) to review the
results. Dial-in No.: (800) 619-0355 (domestic) or (212) 547-0278
(international) Passcode: GAIAM Revenue for the third quarter ended
September 30, 2009 increased 23.5% to $74.4 million from $60.3
million recorded in the same period last year. The increase in
sales was primarily due to the solar division, and to our trade
business which grew 24.2% in the quarter, partially offset by the
planned reduction in catalog circulation. Gross profit increased to
$35.8 million, or 48.1% of revenue, for the third quarter of 2009,
from $33.8 million, or 56.1% of revenue, in the comparable quarter
last year. The change in gross margin as a percentage of revenue
reflects the growth of the lower margin solar business and the
implementation of media category management at retail. Selling and
operating expenses decreased to $31.6 million or 42.5% of revenue
during the third quarter of 2009, from $34.0 million or 56.5% of
revenue during the same quarter last year, reflecting the
significant cost saving measures, including reducing payroll costs,
optimizing the direct business through reduced catalog prospecting
and closing non-profitable businesses. Operating income for the
quarter increased to $945,000 from a loss of $17.3 million during
the same quarter of the last year. Gaiam's prior year results
included a $13.9 million pre-tax impairment charge related to the
Company's acquired media libraries, website development costs and
related assets. In the third quarter of 2009, Gaiam generated free
cash flow of $1.8 million, an $11.3 million improvement from the
free cash flow use of $9.5 million during the same quarter of the
prior year. For the first nine months of the year, Gaiam's free
cash flow increased to $17.2 million, a $35.6 million improvement
from the use of $18.4 million in cash during the same period last
year. For the first nine months of 2009, the Company generated
$20.9 million in cash from operations and ended the quarter with
$44.4 million in cash, up $12.5 million from the end of 2008, and
up $1.7 million for the quarter. The Company's current ratio
remained strong at 3.4. "We believe we have turned the corner with
respect to our performance. By focusing on our core growth
strategies and cost savings, our operating performance improved in
each of our business segments and we returned to profitability. It
was an especially strong quarter for our trade business, where we
reported over 24% growth in sales to retailers compared to the same
quarter last year. We also leveraged our partnerships, releasing
the first of many-to-come Discovery titles in the non-theatrical
segment, and expanded our media category management in the fitness
segment," said Lynn Powers, CEO and President. "We are seeing
fourth quarter retail orders continue to improve and believe that
we are well positioned from a product and inventory standpoint as
we move into the important holiday season." "We are pleased with
the return to profitability and $17.2 million of free cash flow
year-to-date. The positive trends experienced in the third quarter
have continued and we expect to return to double-digit internal
revenue growth, in-line with our historical rates, in the fourth
quarter. Looking to 2010, we believe that our revenue momentum, new
media relationships and strong balance sheet position us well to
drive top and bottom line growth as well as growth in our market
share in non-theatrical media," said Jirka Rysavy, Chairman. A
replay of the call will begin approximately one hour after the end
of the call and will continue until 11:00 p.m. CST on November 11,
2009. Replay number: (203) 369-3171 For more information about
Gaiam, please visit http://www.gaiam.com/, or call 1-800-869-3603.
This press release includes forward-looking statements relating to
matters that are not historical facts. Forward-looking statements
may be identified by the use of words such as "expect," "intend,"
"believe," "will," "should" or comparable terminology or by
discussions of strategy. While Gaiam believes its assumptions and
expectations underlying forward-looking statements are reasonable,
there can be no assurance that actual results will not be
materially different. Risks and uncertainties that could cause
materially different results include, among others, introduction of
new products and services, completion and integration of
acquisitions, the possibility of negative economic conditions, and
other risks and uncertainties included in Gaiam's filings with the
Securities and Exchange Commission. Gaiam assumes no duty to update
any forward-looking statements. GAIAM, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per
share data) Three Months Ended Three Months Ended September 30,
2009 September 30, 2008 ------------------ ------------------ Net
revenue $74,439 100.0 % $60,285 100.0 % Cost of goods sold 38,628
51.9 % 26,440 43.9 % ------ ------ Gross profit 35,811 48.1 %
33,845 56.1 % Selling and operating 31,641 42.5 % 34,049 56.5 %
Corporate, general and administration 3,225 4.3 % 3,126 5.2 % Other
expenses, net - 0.0 % 13,947 23.1 % --- ------ Income (loss) from
operations 945 1.3 % (17,277) -28.7 % Interest and other income 86
0.1 % 355 0.6 % -- --- Income (loss) before income taxes 1,031 1.4
% (16,922) -28.1 % Income tax expense (benefit) 388 0.5 % (6,922)
-11.5 % --- ------ Net income (loss) 643 0.9 % (10,000) -16.6 % Net
(income) attributable to the noncontrolling interest (278) -0.4 %
(115) -0.2 % ---- ---- Net income (loss) attributable to Gaiam, Inc
$365 0.5 % $(10,115) -16.8 % ==== ======== Weighted-average shares
outstanding: Basic 23,085 24,020 Diluted 23,167 24,020 Net income
(loss) per share attributable to Gaiam, Inc. common shareholders:
Basic $0.02 $(0.42) Diluted $0.02 $(0.42) GAIAM, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands,
except per share data) Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008 ------------------
------------------ Net revenue $190,837 100.0 % $182,675 100.0 %
Cost of goods sold 92,594 48.5 % 71,699 39.2 % ------ ------ Gross
profit 98,243 51.5 % 110,976 60.8 % Selling and operating 96,269
50.5 % 102,686 56.2 % Corporate, general and administration 9,431
4.9 % 9,601 5.3 % Other expenses, net - 0.0 % 40,655 22.2 % ---
------ Loss from operations (7,457) -3.9 % (41,966) -22.9 %
Interest and other income 221 0.1 % 32,363 17.7 % --- ------ Loss
before income taxes (7,236) -3.8 % (9,603) -5.2 % Income tax
benefit (2,699) -1.4 % (4,031) -2.2 % ------ ------ Net loss
(4,537) -2.4 % (5,572) -3.0 % Net loss attributable to the
noncontrolling interest 803 0.4 % 251 0.1 % --- --- Net loss
attributable to Gaiam, Inc. $(3,734) -2.0 % $(5,321) -2.9 % =======
======= Weighted-average shares outstanding: Basic 23,370 24,611
Diluted 23,370 24,611 Net loss per share attributable to Gaiam,
Inc. common shareholders: Basic $(0.16) $(0.22) Diluted $(0.16)
$(0.22) GAIAM, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands) September 30, December 31, 2009 2008
------------- ------------ Assets Current assets: Cash and cash
equivalents $44,437 $31,965 Accounts receivable, net 31,383 33,664
Inventory, net 26,011 40,782 Deferred advertising costs 3,496 2,578
Receivable and deferred tax assets 14,090 15,448 Other current
assets 4,528 4,795 ----- ----- Total current assets 123,945 129,232
Property and equipment, net 28,341 27,381 Media library, net 12,541
12,102 Deferred tax assets, net 7,184 6,076 Goodwill 24,166 23,180
Other intangibles, net 714 880 Notes receivable and other assets
3,193 3,247 ----- ----- Total assets $200,084 $202,098 ========
======== Liabilities and Equity Current liabilities: Accounts
payable $28,650 $26,567 Accrued liabilities 7,948 6,885 ----- -----
Total current liabilities 36,598 33,452 Total equity 163,486
168,646 Total liabilities and equity $200,084 $202,098 ========
======== DATASOURCE: Gaiam, Inc. CONTACT: Carole Buyers, VP
Corporate Finance and Investor Relations of Gaiam, Inc.,
+1-303-222-3808, ; or John Mills, Senior Managing Director, ICR,
+1-310-954-1105, , for Gaiam, Inc. Web Site: http://www.gaiam.com/
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