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Gaiam First Quarter Revenue Rises 19.6% to $56.6 Million



  Gaiam First Quarter Revenue Rises 19.6% to $56.6 Million

             - Internal Revenue Growth of $3.1 Million or 6.6% -

          - Cash Flow Provided by Operations Improves $7.0 Million -

Business Wire

BOULDER, Colo. -- May 7, 2013

Gaiam, Inc. (NASDAQ: GAIA), a lifestyle media company, today reported
financial results for the first quarter ended March 31, 2013.

Conference Call: Gaiam is hosting a conference call today, May 7, 2013,
beginning at 2:30 p.m. MT (4:30 p.m. ET). The conference call dial-in numbers
are (212) 231-2937 or (415) 226-5361. Questions will be reserved for analysts
and investors.

2013 First Quarter Financial Results Highlights

  * Net revenue increased $9.3 million, or 19.6%, to $56.6 million and
    includes internal revenue growth of 6.6%, or $3.1 million.
  * Gross profit increased $5.1 million, or 18.8%, to $32.2 million.
  * Operating income improved by $1.5 million to $0.2 million.
  * Cash flow provided by operations improved by $7.0 million year-over-year.

Lynn Powers, Chief Executive Officer of Gaiam, commented, “Gaiam’s operating
results for the first quarter of 2013 included approximately 21%
year-over-year internal revenue growth for the business segment, as well as
solid revenue improvements in the core e-commerce, catalog and travel
businesses, as compared to the prior year period. Including the Vivendi
Entertainment acquisition, the business segment’s revenues increased
approximately 45%. Gaiam’s revenue increases from these operations more than
offset a year-over-year decline in direct response television marketing
revenue, which faced a challenging comparison with the exceptional year-ago
results.

“Our business segment revenue continues to benefit from the growing content
library of Gaiam Vivendi Entertainment following its acquisition late in the
first quarter last year as well as strong sales from the Gaiam and Gaiam
Restore branded products. We are also encouraged by the progress in our direct
to consumer segment, as the recent repositioning of our Gaiam Brands
initiatives continue to be favorably received as reflected in the 4.3%
year-over-year improvements in catalog and e-commerce revenue on a 15% decline
in catalog circulation.”

2013 First Quarter Financial Review

The table below summarizes the Company’s 2013 and 2012 first quarter results:

 
                                                         For the Quarter Ended
                                                         March 31,
                                                          
(in millions, except per share data)                       2013        2012   
Net revenues                                             $ 56.6      $ 47.3
Gross profit                                               32.2        27.1
Operating expenses                                         32.1        28.4
Operating income (loss)                                    0.2         (1.3  )
Loss from equity method investment in RSOL                 —           (0.7  )
Net loss attributable to Gaiam                             (0.3  )     (1.2  )
Net loss per share attributable to Gaiam, Inc.             (0.01 )     (0.05 )
shareholders
 

In the quarter ended March 31, 2013, net revenue rose 19.6% to $56.6 million,
compared to net revenue of $47.3 million in the prior-year period. Net revenue
for the Company’s business segment increased $11.5 million, or 44.7%, to $37.3
million for the first quarter of 2013, inclusive of internal revenue growth of
21.0% (which excludes revenue related to the acquisition of Vivendi
Entertainment late in the 2012 first quarter). Revenue for the direct to
consumer segment was $19.4 million in the 2013 first quarter, compared to
$21.6 million for the prior year quarter. The decrease in direct to consumer
revenue primarily reflects the return to historical quarterly sales levels for
the Company’s direct response television marketing business, compared to the
first quarter of 2012, which benefited from very high sales volumes of the
Jillian Michaels Body Revolution media fitness program following its
introduction early in 2012. Revenues generated by the Company’s catalog and
e-commerce businesses increased $0.2 million, or 4.3%, compared to the
year-ago quarter.

Gross profit for the 2013 first quarter increased $5.1 million to $32.2
million, or 56.9% of net revenue, compared to gross profit of $27.1 million,
or 57.3% of net revenue, in the first quarter of 2012. The decrease in gross
margin primarily reflects lower net revenues in the higher margin direct
response television marketing business, partially offset by the 100% margin
(net fee revenue) of the Gaiam Vivendi Entertainment business.

Operating expenses were $32.1 million, or 56.6% of net revenue, in the 2013
first quarter period, compared to $28.4 million, or 60.0% of net revenue, in
the first quarter of 2012. Included in operating expenses for the 2013 first
quarter is $0.4 million of non-cash amortization expense related to the Gaiam
Vivendi Entertainment acquisition, with no such similar expense in the
prior-year period.

Operating income for the three months ended March 31, 2013 was $0.2 million,
compared to a loss of $1.3 million in the first quarter of 2012.

Gaiam reported a net loss for the 2013 first quarter of $0.3 million, or $0.01
per share, compared to a net loss of $1.2 million, or $0.05 per share, for the
first quarter of 2012.

Cash flow provided by operations increased $7.0 million to $6.2 million in the
first quarter of 2013 from cash flow used in operations of $0.8 million in the
prior year period.

Jirka Rysavy, Chairman of Gaiam, commented, “We are pleased with our continued
top line internal growth and overall net revenue improvement on the back of
solid results from our Vivendi Entertainment acquisition last year, as well as
with the significant improvement in our cash flows provided by operations.”

Following the completion of today’s conference call, a replay will be
available until May 14, 2013 by dialing (800) 633-8284 or (402) 977-9140,
passcode: 21655809.

About GAIAM

Gaiam, Inc. (NASDAQ: GAIA) is a leading producer and marketer of lifestyle
media and fitness accessories. With a wide distribution network that consists
of over 60,000 retail doors, 15,000 store within stores, and 6,000 media
category management locations, and a digital distribution platform, Gaiam is
dedicated to providing solutions for healthy and eco-conscious living. The
Company dominates the health and wellness category and releases non-theatrical
programming focused on family entertainment and conscious media. In addition,
Gaiam has exclusive licensing agreements with Discovery Communications and
other licensing partners. For more information about Gaiam, please visit
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
                                   March 31, 2013         March 31, 2012
Net revenue                        $ 56,633     100.0 %   $ 47,333     100.0 %
Cost of goods sold                   24,428     43.1  %     20,227     42.7  %
                                                                        
Gross profit                         32,205     56.9  %     27,106     57.3  %
Selling and operating                28,229     49.8  %     24,161     51.1  %
Corporate, general and               3,825      6.8   %     2,573      5.4   %
administration
Acquisition-related costs            —          —     %     1,667      3.5   %
                                                                        
Income (loss) from operations        151        0.3   %     (1,295 )   -2.7  %
Interest and other income            (229   )   -0.4  %     56         0.1   %
(expense)
Loss from equity method              —          —     %     (696   )   -1.5  %
investment
                                                                        
Loss before income taxes             (78    )   -0.1  %     (1,935 )   -4.1  %
Income tax expense (benefit)         144        0.3   %     (637   )   -1.3  %
                                                                        
Net loss                             (222   )   -0.4  %     (1,298 )   -2.8  %
Net (income) loss attributable       (54    )   -0.1  %     79         0.2   %
to the noncontrolling interest
                                                                        
Net loss attributable to Gaiam,    $ (276   )   -0.5  %   $ (1,219 )   -2.6  %
Inc.
                                                                        
Weighted-average shares
outstanding:
Basic                                22,732                 22,698
Diluted                              22,732                 22,698
Net loss per share attributable
to Gaiam, Inc. common
shareholders:
Basic                              $ (0.01  )             $ (0.05  )
Diluted                            $ (0.01  )             $ (0.05  )
 

GAIAM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)
                                                    
                                         March 31,   December 31,
                                         2013        2012
Assets
Current assets:
Cash                                     $ 7,117     $   9,858
Accounts receivable, net                   43,691        57,533
Inventory, less allowances                 28,588        29,840
Deferred advertising costs                 3,832         4,324
Deferred tax assets                        7,747         9,129
Receivable from equity method investee     45            64
Advances                                   15,233        13,197
Other current assets                       2,651         2,463
                                                      
Total current assets                       108,904       126,408
Property and equipment, net                23,884        23,998
Media library, net                         12,928        13,090
Deferred tax assets                        16,051        14,692
Goodwill                                   10,011        9,405
Other intangibles, net                     5,292         5,608
Other assets                               682           661
                                                      
Total assets                             $ 177,752   $   193,862
                                                      
Liabilities and Equity
Current liabilities:
Line of credit                           $ 8,328     $   16,231
Accounts payable                           29,029        26,738
Participations payable                     16,172        28,046
Accrued liabilities                        4,940         3,975
                                                      
Total current liabilities                  58,469        74,990
Total equity                               119,283       118,872
                                                      
Total liabilities and equity             $ 177,752   $   193,862

Contact:

Gaiam, Inc.
Steve Thomas, 303-222-3782
Chief Financial Officer
steve.thomas@gaiam.com
or
JCIR
Joseph N. Jaffoni, Norberto Aja, Richard Land
212-835-8500 or gaia@jcir.com
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