Getty Images Reports Record Financial Results for the Second Quarter of 2005 and Raises Full-Year Guidance; Revenue Growth Rate Accelerates to More than 20 Percent; Overall Creative Image Volumes Grow More than 17 Percent

Business Wire, July 26, 2005

SEATTLE -- Getty Images, Inc. (NYSE:GYI), the world's leading imagery company, today reported results for the second quarter ended June 30, 2005.

Quarterly Highlights

--Revenue increased 23 percent over the second quarter of 2004

--Operating income grew 39 percent to $55.5 million

--Operating margin of 30 percent

--Reported earnings per diluted share increased to $0.53 from $0.41 in the second quarter of 2004

--Exclusive of accelerated amortization of debt issuance costs of $0.05 per diluted share in the second quarter of 2005, earnings per diluted share increased 41 percent to $0.58 from $0.41

--Digital Vision and Photonica acquisitions completed and integrated

"This quarter is quite possibly the best quarter in our 10-year history," said Jonathan Klein, Getty Images' co-founder and CEO. "All areas of our business delivered great results. The record revenues were driven by the highest level of creative image volume growth we have seen, as well as significant growth in both Editorial and Film. These results confirm our growing leadership position and are further validation of the increasing global demand for imagery and our expanding market opportunities. We are as excited and energized about the future prospects for Getty Images as ever."

Revenue grew 23.3 percent to $185.3 million compared to $150.3 million in the second quarter of 2004. Excluding the effects of changes in currency exchange rates, revenue grew 19.3 percent. Operating income for the second quarter of 2005 grew 39.3 percent to $55.5 million, or 30.0 percent of revenue, compared to $39.8 million, or 26.5 percent of revenue, in the same quarter last year.

Net income for the second quarter was $34.0 million, or $0.53 per diluted share compared to $25.2 million, or $0.41 per diluted share the prior year. Results for the second quarter of 2005 were impacted by accelerated amortization of debt issuance costs equal to $5.0 million, or $0.05 per diluted share on an after-tax basis. On June 21, the company announced a conversion condition had been met for its 0.5% convertible debentures requiring the company to expense the unamortized debt issuance costs associated with the debentures. Excluding this non-cash charge, net income rose 47.9 percent to $37.2 million, or $0.58 per diluted share for the second quarter of 2005 compared to $25.2 million, or $0.41 per diluted share for the second quarter last year.

Gross margin for the quarter was 73.3 percent compared to 72.2 percent in the second quarter of 2004. Selling, general and administrative expenses (SG&A) totaled $64.9 million, up from $54.4 million in the second quarter of 2004. As a percentage of revenue, SG&A declined to 35.0 percent in the second quarter of 2005, compared to 36.2 percent in the same quarter last year.

Cash and short-term investment balances decreased to $418.8 million at June 30, 2005, from $572.7 million at March 31, 2005. The decrease reflects the cash payments within the quarter of approximately $214 million related to the Digital Vision and Photonica acquisitions.

For the first six months of 2005, net cash provided by operating activities rose 19.8 percent to $120.2 million compared to $100.3 million for the same period of 2004. The acquisition of property and equipment totaled $22.8 million, compared to $18.1 million for the first half of 2004.

Business Outlook

The following forward-looking statements reflect Getty Images' expectations as of July 26, 2005. The company currently does not intend to update these forward-looking statements until the next quarterly results announcement.

For the third quarter of 2005 the company expects to report revenue in the range of $180 million to $184 million and earnings per diluted share of $0.56 to $0.58. For 2005, the company is increasing guidance and expects revenue in the range of $728 million to $735 million and earnings per diluted share of $2.20 to $2.26. The number of fully diluted shares assumed in the earnings per share guidance is approximately 65 million.

Web cast information

The company will host a conference call today at 2:00 pm PT. The dial-in number is 1-800-946-0706 (North America) or 1-719-457-2638 (international). A live web cast of the conference call can be accessed from the Investors page in the About Us section of the Getty Images Web site at http://gettyimages.com. The web cast will be archived on the Getty Images Web site and will be available until July 26, 2006. Supplemental statistical information referenced in the conference call will be available in the Investor Relations section of the Web site.

About Getty Images

Getty Images is the world's leading creator and distributor of visual content and the first place creative professionals turn to discover, purchase and manage imagery. The company's award-winning photographers and imagery help customers create inspiring work which appears every day in the world's most influential newspapers, magazines, advertising campaigns, films, television programs, books and Web sites. Headquartered in Seattle, WA and serving customers in more than 100 countries, Getty Images believes in the power of imagery to drive positive change, educate, inform, and entertain. Visit Getty Images at http://gettyimages.com.