Image Entertainment (DISK) increases guidance; reports solid quarter and improved balance sheet

Image Entertainment (DISK) reported results on February 10, 2005 for
the fiscal third quarter 2005.  Below are some highlights.

F3Q05 vs. F3Q04 Results

• Operating EPS: $0.10 vs. ($0.45)
• Total revenues: $34.4M vs. $22.8M (+51%)
• Domestic revenues: $33.1M vs. $21.3M (+56%)
• International & broadcast revenues: $1.3M vs. $1.5M (-15%)
• Gross Profit: $2.2M vs. ($0.2M)
• Gross Margin (current Q): 6.4%
• Net Income: $1.9M vs. ($7.2M)
• Cash: $3.3M vs. $0.5M
• Debt: $1.9M vs. $13M

Fiscal 2005 Guidance:

• Revenue growth of 36%-39%
• Total revenues: $116M - $118M

Quick comments:

• Raised $14.2M in private placement offering of 2.9M shares in December
• Paid down the balance on credit line, resulting in $23M borrowing availability
• Opened London office on February 1, 2005 to strengthen international presence
• Visibility on exclusive programming has increased from 3-6 months to 6-12 months
• Own digital rights to around 300 titles
• Not likely to penetrate children's segment; too dominated by Disney (DIS)
• Opportunity to enter the low-budget horror segment as Lion's Gate (LGF) moves upstream