BUSINESS NEWS: Gaiam Announces Record Fourth Quarter 2009 Results

Gaiam has announced financial results for the fourth quarter of 2009. The Company's fourth quarter 2009 net revenue, as well as the operating income and EPS, are the best that Gaiam has ever recognized in any quarter since its inception. The strong performance is the result of streamlining the business during last few quarters and internal revenue growth of 18.7%.

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Gaiam Announces Record Fourth Quarter 2009 Results

BOULDER, Colo., /PRNewswire-FirstCall/ -- Gaiam, Inc. , a lifestyle media company, announced today results for its fourth quarter ended December 31, 2009. Gaiam will host a conference call today, March 8, 2010, at 2:30 p.m. MST (4:30 p.m. EST) to review the results.

The Company's fourth quarter 2009 net revenue, as well as the operating income and EPS, are the best that Gaiam has ever recognized in any quarter since its inception. The strong performance is the result of streamlining the business during last few quarters and internal revenue growth of 18.7%.

Net revenue for the fourth quarter ended December 31, 2009 increased 17.6% to $87.6 million from $74.5 million recorded in the same quarter last year. The increase in net revenue was primarily due to the business segment which grew 44.1% and strong growth in the solar segment, partially offset by a planned reduction in catalog circulation.

Gross profit increased to $45.9 million, or 52.3% of net revenue, for the fourth quarter of 2009, from $38.3 million, or 51.4% of net revenue, during the comparable quarter last year. The improvement in gross profit as a percentage of revenue primarily reflects higher sales of media.

Selling and operating expenses decreased to $35.4 million, or 40.4% of net revenue, during the fourth quarter of 2009, from $39.7 million, or 53.3% of net revenue, during the same quarter last year, reflecting leverage from sales growth and the significant cost saving measures implemented earlier this year. The 1290 basis point improvement was the result of reducing payroll costs, optimizing the direct to consumer segment through reduced catalog prospecting and closing an unprofitable business.

Operating income for the quarter increased to $6.7 million from a loss of $47.2 million during the same quarter of last year. The results during the comparable quarter last year included a $42.3 million pre-tax charge primarily related to goodwill and intangible asset impairments and the disposition of an unprofitable business.

The Company recorded net income of $4.0 million during the quarter, or $0.17 per share, compared to a net loss of $30.3 million, or a loss of $1.26 per share, during the same quarter last year. Excluding the impairment charges discussed above and a gain from the issuance of Real Goods Solar stock, the Company's net loss during the fourth quarter of 2008 would have been $2.6 million or $0.11 per share.

For the year ended December 31, 2009, Gaiam recorded net revenue of $278.5 million, an 8.3% increase from $257.2 million during 2008. The Company recorded net income of $296,000, or $0.01 per share, compared to a net loss of $35.6 million, or a loss of $1.46 per share, last year. Prior year results included impairment charges primarily related to goodwill and acquired media libraries and a gain on the issuance of Real Goods Solar stock. Excluding these items, the Company would have recognized a loss of $2.0 million, or a loss of $0.08 per share, during 2008.

During the quarter, the Company generated free cash flow of $5.6 million, a $17.2 million improvement from the use of free cash flow of $11.6 million during the fourth quarter last year. For the year, free cash flow increased to $22.8 million, a $52.8 million improvement from the use of $30.0 million in free cash flow during last year.

For the year ended December 31, 2009, the Company generated $28.1 million in cash from operations and ended the year with $48.3 million in cash, up $16.4 million from the end of 2008, even after the Company's repurchase of 932,000 shares of its common stock during 2009. Since the inception of the authorized share buyback program, the Company has repurchased 4.8 million shares, which is over 20% of the 23.1 million shares currently outstanding. The Company still has 2.7 million shares remaining in its authorized share repurchase program.

"Our focus on growth strategies and cost savings initiatives during 2009 has enabled us to deliver a significant improvement in results in the last half of the year," commented Lynn Powers, Gaiam's President & CEO. "We ended the year on a very positive note. Our fourth quarter revenue, operating income and EPS results were the best in the Company's history. It was an especially good quarter for our business segment, where we reported over 44% growth in net sales to retailers compared to the same quarter last year."

"At the end of last year we set goals to grow revenue and focus on free cash flow. We are pleased with 2009 record revenues and free cash flow of $22.8 million. Looking forward to 2010, we believe that our revenue momentum and new media relationships will result in good top and bottom line growth," said Jirka Rysavy, Chairman. "In addition, our tax loss carryforwards, accumulated mostly from our intangible write-offs taken in 2008 and acquired net operating losses, will result in the next $30 million of our earnings being tax free. We are in a good position to take advantage of growth opportunities as well as to cover the cost of capital to our shareholders."

On March 8, 2010, Gaiam's board of directors declared the payment of an annual cash dividend of $0.15 per common share. This annual dividend is intended to cover the cost of capital for Gaiam shareholders. This "cost of the capital" dividend is funded by cash flows resulting from the excess of our annual depreciation and amortization over capital expenditures. The dividend is payable in late April 2010 to common stock shareholders of record as of the close of business on April 1, 2010.

SOURCE: PR Newswire