Yahoo - Integrity Incorporated Reports 1999 Results, With Strong Sales,
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Tuesday February 22, 10:59 am Eastern Time
Company Press Release
SOURCE: Integrity Incorporated
Integrity Incorporated Reports 1999 Results, With Strong Sales, Operating Income and Cash Flow
MOBILE, Ala., Feb. 22 /PRNewswire/ -- Integrity Incorporated (Nasdaq: ITGR - news) today reported record sales for the fourth quarter and year ended December 31, 1999, with increases of 31 percent and 17 percent, respectively. Sales for the quarter were $12.5 million compared with $9.5 million in the year-earlier period. For the year sales increased to $45.6 million from $38.8 million.
Operating income in the quarter increased 34 percent to $990,000 from the year-ago $740,000. For the year, operating income rose to $3.5 million from $3.3 million. Net income for the quarter was $652,000, or $0.12 per basic share, compared with $784,000, or $0.14 per basic share, in the same period of 1998. Net income for the year was $1.7 million, or $0.30 per basic share, compared with $1.9 million, or $0.34 per basic share, in 1998. Net income in 1998 included a net tax benefit of $369,000, or $0.07 per basic share, compared with a net tax provision of $692,000, or $0.12 per basic share, in 1999.
Net income in 1999 and 1998 reflects the impact of reductions in the company's valuation allowance against its deferred income tax asset, including non-cash benefits of $180,000, or $0.03 per basic share, in 1999 and $600,000, or $0.11 per basic share, in 1998. In 1999 there was also a favorable insurance settlement of $189,000, net of taxes of $111,000, for a claim filed during 1998.
Integrity said it continued to generate strong earnings before interest, taxes, depreciation and amortization, including amortization of product masters, with $8.5 million in 1999 compared with $8.2 million in 1998.
``Integrity made significant progress in 1999,' said P. Michael Coleman, chairman, president and chief executive officer. ``With the continuing high level of cash generated from operating activities, we were able to substantially pay down debt by $4.4 million, step up marketing programs, and invest in significant strategic initiatives. We are well prepared to take advantage of opportunities in the growing Christian music market.'
During 1999 Integrity reduced debt by more than 33 percent, resulting in year-end 1999 debt level of $8.6 million, compared with $13.0 million at year-end 1998.
Coleman said Integrity experienced significant increases in net sales in many of its segments during 1999. International sales rose by 12 percent to $7.1 million; direct to consumer rose by 6 percent to $14.2 million, and retail sales rose by 39 percent to $20.4 million, attributed to strong product catalog sales and important product releases in 1999, such as WoW Worship.
As Integrity's market has become more retail-oriented compared with the direct-to-consumer sales, the cost of sales and marketing and fulfillment expenses have reset at higher levels, although they are commensurate with increases in sales. ``A major contributor to Integrity's recent success has been the burgeoning retail market,' Coleman noted. ``According to SoundScan, which tracks music industry sales at Christian Booksellers Association (CBA) stores, Integrity has 58 percent market share of the praise and worship non-artist titles, clearly the number one position in that industry segment. If you include artist titles, we still have the number one position, with half the praise and worship music market. We've been able to expand our market share even as the industry has grown. That is a key strategy for Integrity, and one in which we continue to invest.'
According to the Gospel Music Association, the Christian music market grew 11.5 percent in 1999, while the music market overall expanded 6.2 percent. Sales of Christian music albums and singles exceeded 50 million units in 1999, equaling seven Christian music sales for every 10 in country music. Christian music now represents the fifth-largest selling genre in the U.S. music industry, according to SoundScan.
Because SoundScan statistics do not include direct-to-consumer sales, Coleman noted, Integrity's reach in the Christian music market is greater than the market share numbers indicate.
``Our leadership position both reflects and encourages many of the initiatives Integrity has under way for continued growth,' Coleman observed. He cited several recent announcements, including an agreement with Time Life Music for a multi-volume ``Songs 4 Worship' series, the platinum certification of the fast-selling WoW Worship Blue and preparations to introduce WoW Worship Orange to the market, and compilations of industry statistics showing Integrity's expanding leadership position. ``We continue to recognize segments within this fast-growing market of Christian music, from youth to urban to stadium-sized gatherings. And we continue to apply every means of distribution that our customers use, from direct-to-consumer, including our online store, to retail stores and church distribution. There are tremendous opportunities in the market, and we are prepared to take advantage of them,' Coleman said.
Integrity Incorporated is a leading producer and publisher of Christian music, including praise and worship, children's and gospel. Is audio and video products are sold throughout the United States and in 143 other countries worldwide.
Some of the statements contained in this press release, particularly those anticipating future financial performance, business prospects, growth and operating strategies, new products and similar matters, are forward-looking statements that involve a number of risks and uncertainties. For those statements, Integrity claims the protection of the safe harbor for forward- looking statements contained in the Private Securities Litigation Reform Act of 1995. In addition to the factors discussed above, among the other factors that could cause actual results to differ materially are: the Company's ability to successfully manage an increased level of retail sales; potentially changing consumer tastes and demands with respect to Christian music and music generally; unexpected production or distribution delays which could affect the Company's ability to release the WoW Worship and Songs 4 Worship albums on schedule; the significant increase in marketing and distribution costs associated with the WoW Worship and Songs 4 Worship releases if such costs cannot be recovered through increased revenues for the Company; the success of marketing the Songs 4 Worship series pursuant to the agreement with Time Life Music; and the risks identified from time to time in Integrity's SEC reports, including, but not limited to, the report on Form 10-K for the year ended December 31, 1998.
Integrity Incorporated
Condensed Consolidated Statement of Operations
(In thousands, except share data)
Quarter Ended Year Ended
December 31 December 31
1999 1998 1999 1998
Net sales $12,466 $9,520 $45,571 $38,847
Cost of sales 6,243 4,703 21,936 17,985
Gross profit 6,223 4,817 23,635 20,862
Marketing and
fulfillment expenses 2,499 2,177 10,404 9,023
General and administrative
expenses 2,734 1,900 9,751 8,557
Income from operations 990 740 3,480 3,282
Other (expenses) income
Interest expense, net (254) (405) (1,292) (1,529)
Other income 410 18 352 -
Income before minority
interest and taxes 1,146 353 2,540 1,753
Provision for (benefit from)
income taxes 443 (515) 692 (369)
Minority interest, less
applicable taxes (51) (84) (184) (268)
Net income $652 $784 $1,664 $1,854
Earnings per share
Basic $0.12 $0.14 $0.30 $0.34
Diluted $0.11 $0.13 $0.28 $0.32
Weighted average number of
shares outstanding
Basic 5,614 5,514 5,579 5,514
Diluted 5,996 5,941 6,032 5,805
SOURCE: Integrity Incorporated |
