EX-99 2 photoq1earnings06.htm EARNINGS RELEASE


For Immediate Release

PhotoWorks’ 1st Quarter Digital Sales Surge 76% to $2.3M

 

SEATTLE, WA (February 6, 2006) – PhotoWorks®, Inc. (OTCBB: PHTW), an Internet based digital photo-publishing company, today reported results for the first quarter of fiscal year 2006 ended December 24, 2005.

 

 

•

Digital sales increased 76% over same period last year to $2.3 Million

 

•

35 mm processing and other traditional revenue declined 43% to $1.6 Million

 

•

Gross Margin jumped to 43.7% compared to 32.9% same period last year

 

“PhotoWorks is beginning to show results from its investment in digital photography,” said Philippe Sanchez, Chairman and CEO of PhotoWorks. “We are pleased with the performance of our digital products and services over the holiday period, and we expect this trend to continue.”

 

For the 1st quarter for 2006:

Digital revenue totaled $2.323 Million, an increase of 76% from $1.322 Million in the 1st quarter of 2005. Traditional revenue totaled $1,641 Million, a 43% decline from $2.897 Million. Total net revenue totaled $3,964 Million, a 6% decline.

Gross margin as a percentage of net revenues increased to 43.7% compared to 32.9% in the 1st quarter of fiscal year 2005. The increase of gross margin is the result of higher margin sales and the streamlining of operations.

 

The Company reported a net loss of $328,000 compared to a net loss of $991,000 in the 1st quarter of fiscal year 2005, a 67% improvement.

 

About PhotoWorks, Inc.

PhotoWorks®, Inc. is an Internet based digital photo-publishing company. The company’s web based services allow PC and Mac users to create hard bound photo books, customized greeting cards, calendars, prints and other photography sourced products straight from their computers. Formerly known as Seattle Film Works, PhotoWorks has a 30-year national heritage of helping photographers share and preserve their memories with innovative and inspiring products and services. More information on the Company is available at www.photoworks.com or by e-mailing customercare@photoworks.com.

 

# # #

 

For More Information, contact:

Press: Lisa Amore for PhotoWorks, tel.: 206.322.4658, lisa@amorepr.com

 

PhotoWorks® is a trademark of PhotoWorks, Inc.

 

 

 

 

 

 

 

 

 

PHOTOWORKS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 24,

 

 

September 24,

 

 

 

 

 

2005

 

 

2005

A S S E T S

 

(Unaudited)

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

$

1,792

 

$

1,872

 

 

Current portion of vendor receivable

 

463

 

 

249

 

 

Inventories

 

299

 

 

80

 

 

Prepaid expenses

 

150

 

 

60

 

 

 

TOTAL CURRENT ASSETS

 

2,704

 

 

2,261

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

495

 

 

483

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

 

Long-term vendor receivable

 

81

 

 

175

 

 

Lease deposits

 

33

 

 

33

 

 

 

TOTAL OTHER ASSETS

 

114

 

 

208

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

3,313

 

$

2,952

 

 

 

 

 

 

 

 

 

L I A B I L I T I E S

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

$

1,949

 

$

953

 

 

Accrued compensation

 

343

 

 

463

 

 

Other accrued expenses

 

475

 

 

713

 

 

ITC penalty, current portion

 

256

 

 

252

 

 

Current portion of capital lease obligations

 

11

 

 

6

 

 

Deferred revenues

 

404

 

 

408

 

 

Current portion of subordinated debentures

 

65

 

 

65

 

 

 

TOTAL CURRENT LIABILITIES

 

3,503

 

 

2,860

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

 

ITC penalty, non-current portion

 

276

 

 

274

 

 

Capital lease obligations, net of current portion

 

-

 

 

7

 

 

 

TOTAL LONG-TERM LIABILITIES

 

276

 

 

281

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

3,779

 

 

3,141

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

Common stock

 

 

198

 

 

198

 

 

Additional paid-in capital

 

24,112

 

 

24,061

 

 

Accumulated deficit

 

(24,776)

 

 

(24,448)

 

 

 

TOTAL STOCKHOLDERS' DEFICIT

 

(466)

 

 

(189)

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

$

3,313

 

$

2,952

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

PHOTOWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ended

 

 

Period Ended

 

 

 

 

 

December 24,

 

 

December 25,

 

 

 

 

 

2005

 

 

2004

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

REVENUES

 

$

3,964

 

$

4,219

 

 

 

 

 

 

 

 

 

COST OF GOODS AND SERVICES

 

2,231

 

 

2,828

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

1,733

 

 

1,391

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

Customer service

 

 

159

 

 

149

 

Marketing

 

 

1,064

 

 

734

 

Research and development

 

 

450

 

 

892

 

General and administrative

 

 

441

 

 

566

 

 

TOTAL OPERATING EXPENSES

 

2,114

 

 

2,341

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(381)

 

 

(950)

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

(55)

 

Interest income

 

 

3

 

 

-

 

Other income, net

 

 

50

 

 

14

 

 

TOTAL OTHER INCOME (EXPENSE)

 

53

 

 

(41)

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(328)

 

 

(991)

 

 

 

 

 

 

 

 

 

 

INCOME TAX BENEFIT

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(328)

 

$

(991)

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET LOSS PER COMMON SHARE

 

$

(0.02)

 

$

(0.28)

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF

 

 

 

 

 

 

COMMON STOCK SHARES OUTSTANDING,

 

 

 

 

 

 

BASIC AND DILUTED

 

19,794,672

 

3,549,800

 

 

 

 

 

3