Industry Leader Accelerates Revenue Growth Rate and Achieves Record Cash Flow from Operations, Operating Margin, Net Income and Earnings per Share in 2005

Quarterly Highlights

• Revenue grew 15 percent over the fourth quarter of 2004
• Operating income grew 33 percent to $58.2 million
• Operating margin improved to 31 percent from 27 percent a year ago
• Net income grew 48 percent to $42.5 million
• Earnings per diluted share increased 39 percent to $0.64
• Net cash provided by operating activities was $75.9 million

For the fourth quarter, revenue grew 14.6 percent to $185.8 million compared to $162.1 million in the fourth quarter of 2004. Excluding the effects of changes in currency exchange rates, revenue grew 16.1 percent. Operating income for the fourth quarter of 2005 grew 32.9 percent to $58.2 million, or 31.3 percent of revenue, compared to $43.8 million, or 27.0 percent of revenue, in the same quarter last year.

Net income grew 48.3 percent to $42.5 million from $28.7 million in the fourth quarter of 2004. Earnings per diluted share rose 39.1 percent to $0.64 from $0.46 a year earlier. Net income and earnings per share benefited from favorable developments related to use of foreign tax credits and tax audits.

Cost of revenue for the quarter was $48.6 million. Cost of revenue as a percentage of revenue declined to 26.2 percent from 27.6 percent in the fourth quarter of 2004.

Selling, general and administrative expenses (SG&A) totaled $63.8 million. As a percentage of revenue, SG&A declined to 34.3 percent from 37.8 percent in the fourth quarter of 2004.

For the fourth quarter, net cash provided by operating activities was $75.9 million, compared to $63.8 million for the same quarter last year. The acquisition of property and equipment was $13.0 million for the quarter compared to $11.0 million in the fourth quarter last year.
 

Full Year Highlights

• Revenue grew 18 percent over 2004
• Operating income grew 34 percent to $225.9 million
• Operating margin improved to 31 percent from 27 percent a year ago
• Net income grew 40 percent to $149.7 million
• Earnings per diluted share increased 33 percent to $2.28
• Net cash provided by operating activities was $257.3 million

For 2005, revenue grew 17.9 percent to $733.7 million compared to $622.4 million in the prior year. Excluding the effects of changes in currency exchange rates, revenue rose 16.6 percent compared to 2004. Operating income for the full year of 2005 rose 34.3 percent to $225.9 million, or 30.8 percent of revenue. In 2004, operating income totaled $168.3 million, or 27.0 percent of revenue.

Net income grew 40.4 percent to $149.7 million from $106.7 million in 2004. Earnings per diluted share rose 32.6 percent to $2.28 from $1.72 for 2004.

Cost of revenue for the year was $196.9 million. Cost of revenue as a percentage of revenue declined to 26.8 percent from 27.7 percent in 2004.

SG&A in 2005 totaled $252.1 million, or 34.3 percent of revenue, compared to $225.1 million, or 36.2 percent of revenue in 2004.

Cash and short-term investment balances decreased $2.4 million during the year to $518.3 million at December 31, 2005 after spending $234.4 million of net cash on business acquisitions during 2005.

For 2005, net cash provided by operating activities was $257.3 million, compared to $202.6 million in 2004. The acquisition of property and equipment was $57.8 million for 2005, compared to $36.7 million for the prior year.

Business Outlook

The following forward-looking statements reflect Getty Images’ expectations as of January 26, 2006. The company currently does not intend to update these forward-looking statements until the next quarterly results announcement.

For the first quarter of 2006, the company expects to report revenue in the range of $196 million to $201 million and earnings per diluted share of $0.62 to $0.66. First quarter diluted earnings per share guidance excludes approximately $0.04 related to expected share-based compensation expense.

For 2006, the company expects to report revenue in the range of $820 million to $840 million and earnings per diluted share of $2.70 to $2.85. Both revenue and earnings per share guidance for 2006 include the impact of year over year currency variations. Excluding this impact, or on a currency-neutral basis, revenue is expected to grow 15 to 17 percent and earnings per diluted share are expected to grow 23 to 29 percent in 2006. Full year earnings per share guidance excludes share-based compensation expense of approximately $0.14 to $0.20.

Company guidance assumes slightly less than 67 million fully diluted shares in the first quarter and approximately 68 million fully diluted shares for the full year.

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.

Some of the statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations, assumptions and projections about Getty Images and its industry as of the time the statements are made. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause our actual results to differ materially from our past performance and our current expectations, assumptions and projections. Differences may result from actions taken by the company as well as from risks and uncertainties beyond the company’s control. For more information on factors that may affect future performance, please review the reports filed by Getty Images with the Securities and Exchange Commission, in particular our Form 10-Q for the quarter ended September 30, 2005 and Annual Report on Form 10-K for the year ended December 31, 2004. Except as required by law, Getty Images undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or other events.