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PRVT » Topics » Nine months ended September 30, 2006 compared to the nine months ended September 30, 2005These excerpts taken from the PRVT 10-K filed Mar 17, 2008. 2006 compared to 2005 Net sales. Our net sales in 2006 were EUR 29.2 million compared to EUR 27.8 million in 2005, an increase of EUR 1.4 million, or 5%. The increase was attributed to an increase in Internet, broadcasting and wireless sales of EUR 5.7 million, or 65%, which was offset by a reduction in sales of magazines, DVDs and videocassettes of EUR 4.3 million, or 22%. Broadcasting sales increased EUR 4.5 million, or 125%, to EUR 8.1 million as a result of a new Pay-TV licensing agreement for German speaking Europe and an increase in video on demand sales offset by a temporary decrease in channel licensing sales due to the switchover to new channel licensing partners. Wireless sales increased 96% to EUR 2.0 million as a result our content being available with more operators. Internet sales increased EUR 0.2 million, or 6%, to EUR 4.3 million as a result of improved conversion rates. DVD sales decreased EUR 2.5 million, or 17%, to EUR 12.6 million. The decrease in DVD sales was attributable to a reduction in points of sales carrying our DVD products and an industry wide decrease in DVD consumer prices. The reduction of points of sales occurred during the second half of 2005 as a result of the Company’s decrease in releases of new movie productions. The industry wide drop in DVD consumer prices is partly the result of offline sales/rental competing with online sales/rental. Magazine sales decreased EUR 1.5 million, or 39% to EUR 2.3 million as a result of lower quantities sold through certain retail channels during the twelve month period. Videocassette sales decreased EUR 0.3 million to nothing. Net sales in general were unaffected by changes in exchange rates. Fluctuations in exchange rates between the euro and the dollar can affect the comparability of our results from year to year. We translate our consolidated subsidiaries whose functional currency is not the euro into the euro for reporting purposes. Income statement amounts are translated into euros using the average exchange rate for the fiscal year. The was no change in average exchange rate for the fiscal year 2006 compared to 2005. The balance
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sheet is translated at the year-end exchange rate. Due to the significance of the results reported in dollars the impact of the euro/dollar exchange rate on our major categories of revenue and expense can be material. Cost of Sales. Our cost of sales was EUR 14.1 million for 2006 compared to EUR 14.6 million for 2005, a decrease of EUR 0.5 million, or 3%. Cost of sales as a percentage of sales was 48% for 2006, a decrease of 5% compared to 2005. Included in cost of sales is printing, processing and duplication, amortization of library and broadcasting costs. Printing, processing and duplication cost was EUR 6.6 million for 2006 compared to EUR 7.6 million for 2005, a decrease of EUR 1.0 million, or 13%. The decrease was primarily the result of a decrease in sales of magazines and DVDs. Printing, processing and duplication cost as a percentage of sales was 22% for 2006, compared to 27% in 2005. Amortization of library was EUR 6.7 million for 2006 compared to EUR 6.4 million for 2005, an increase of EUR 0.3 million, or 5%. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of three to five years. The increase was the result of higher amounts invested in content released during the period subject to amortization in 2006 compared to 2005. Broadcasting cost was EUR 0.9 million for 2006 compared to EUR 0.6 million for 2005, an increase of EUR 0.3 million. Broadcasting cost represents programming, transmission cost and sales commissions. The increase relates to higher sales commission recorded in the period. Gross Profit. Our gross profit for 2006 was EUR 15.1 million, or 52% of net sales, compared to EUR 13.2 million, or 47% of net sales for 2005. This represented an increase of EUR 1.9 million, or 14%, compared to 2005. Gross profit as a percentage of sales was up 5% for 2006 compared to 2005. The increase in gross profit in both money and as a percentage of sales was primarily the result of the increase in sales of non-physical products carrying no printing, processing and duplication cost and the decrease in sales of physical products carrying printing, processing and duplication cost. Selling, general and administrative expenses. Our selling, general and administrative expenses were EUR 14.0 million for 2006 compared to EUR 14.4 million for 2005, a decrease of EUR 0.4 million, or 3%. We attribute the decrease in selling, general and administrative expenses to a reduction in general expenses, depreciation and bad debt provision of EUR 0.5 million offset by an increase in payroll of EUR 0.1 million. Gain on sale of building. We reported gain on sale of building of EUR 1.3 million for 2005. Operating profit/loss. We reported operating profit of EUR 1.0 million for 2006 compared to an operating profit of EUR 0.0 million for 2005, an improvement of EUR 1.0 million. The increase in operating profit was primarily the result of an increase in gross profit offset by the absence of gain on sale of building we had in 2005. Discounting the non-recurring effect of gain on sale of building of EUR 1.3 million in 2005, operating profit improved by EUR 2.3 million in the period. Interest expense. Our interest expense was EUR 0.6 million for 2006, compared to EUR 0.7 million for 2005. The decrease is the result of less average borrowings outstanding in 2006 compared to 2005 and we expect interest expense to continue to decrease in 2006 as our average borrowings outstanding are expected to be less in 2006. Income tax benefit from continuing operations. Our income tax benefit was EUR 0.5 million for 2006, compared to 0.5 million for 2005. Income from continuing operations. Our income from continuing operations was EUR 1.1 million for 2006, compared to EUR 0.1 million for 2005. We attribute this increase in 2006 of EUR 1.0 million primarily to increased operating profit. Loss from discontinued operations. Our loss from discontinued operations was EUR 0.9 million for 2006, compared to EUR 0.0 million for 2005. Income tax benefit from discontinued operations. Our income tax benefit from discontinued operations was EUR 0.3 million for 2006, compared to 0.0 million for 2005.
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Net Income/loss. Our net income was EUR 0.5 million for 2006, compared to EUR 0.0 million for 2005. We attribute this increase in net income in 2006 of EUR 0.5 million primarily to increased income from continuing operations offset by loss from discontinued operations. 2006 compared to 2005 SIZE="2">Net sales. Our net sales in 2006 were EUR 29.2 million compared to EUR 27.8 million in 2005, an increase of EUR 1.4 million, or 5%. The increase was attributed to an increase in Internet, broadcasting and wireless
Net sales in general were
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Cost of Sales. Our cost of sales was EUR 14.1 million for 2006 cost was EUR 6.6 million for 2006 compared to EUR 7.6 million for 2005, a decrease of EUR 1.0 million, or 13%. The decrease was primarily the result of a decrease in sales of magazines and DVDs. Printing, processing and duplication cost as a percentage of sales was 22% for 2006, compared to 27% in 2005. Amortization of library was EUR 6.7 million for 2006 compared to EUR 6.4 million for 2005, an increase of EUR 0.3 million, or 5%. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of three to five years. The increase was the result of higher amounts invested in content released during the period subject to amortization in 2006 compared to 2005. Broadcasting cost was EUR 0.9 million for 2006 compared to EUR 0.6 million for 2005, an increase of EUR 0.3 million. Broadcasting cost represents programming, transmission cost and sales commissions. The increase relates to higher sales commission recorded in the period. Gross Profit. Our gross profit for 2006 was Selling, general and administrative expenses. Our selling, SIZE="2">Gain on sale of building. We reported gain on sale of building of EUR 1.3 million for 2005. Operating Interest expense. Our interest expense was EUR 0.6 million for 2006, compared to EUR 0.7 million for 2005. The decrease Income from continuing operations. Our income from continuing operations was EUR 1.1 million for 2006, compared to EUR Loss SIZE="2">Income tax benefit from discontinued operations. Our income tax benefit from discontinued operations was EUR 0.3 million for 2006, compared to 0.0 million for 2005. - 39 - Net Income/loss. Our net income was EUR 0.5 million for 2006, compared to EUR 0.0 million for We generate cash from our operating activities, borrowings from Net cash Net cash provided by our operating activities was EUR 7.4 million for 2006 of net income, as adjusted for non-cash transactions, offset by uses of cash related to changes in operating assets and liabilities. We adjusted our net income of EUR 0 million to reconcile it to net cash flows from operating activities. Adjustments included (1) depreciation of EUR 1.1 million, (2) convertible note adjustment of EUR 0.2 million, (3) bad debt provision of EUR 0.2 million, (4) amortization of goodwill and other intangible assets of EUR 0.1 million and (5) amortization of photographs and videos of EUR 6.4 million making a total of EUR 7.9 million which was offset by EUR 1.3 million from gain on sale of building and EUR 0.5 million from deferred income taxes, providing a net balance of EUR 6.2 million. Changes in operating assets and liabilities reduced the net balance by EUR 2.7 million through trade accounts receivable, related party receivable, accounts payable trade, inventories and prepaid expenses and other current assets totaling EUR 2.9 million, offset by EUR 0.8 million from income taxes payable and accrued other liabilities. The decrease in cash provided by operating activities for 2005 compared to 2004 is primarily the result of both net income and adjustments to reconcile net income to net cash flows from operating activities and changes in operating assets and liabilities. - 40 - This excerpt taken from the PRVT 10-K filed Apr 2, 2007. 2006 compared to 2005 Net sales. Our net sales in 2006 were EUR 29.2 million compared to EUR 27.8 million in 2005, an increase of EUR 1.4 million, or 5%. The increase was attributed to an increase in Internet, broadcasting and wireless sales of EUR 5.7 million, or 65%, which was offset by a reduction in sales of magazines, DVDs and videocassettes of EUR 4.3 million, or 22%. Broadcasting sales increased EUR 4.5 million, or 125%, to EUR 8.1 million as a result of a new Pay-TV licensing agreement for German speaking Europe and an increase in video on demand sales offset by a temporary decrease in channel licensing sales due to the switchover to new channel licensing partners (see discussion under Outlook below). Wireless sales increased 96% to EUR 2.0 million as a result our content being available with more operators. Internet sales increased EUR 0.2 million, or 6%, to EUR 4.3 million as a result of improved conversion rates. DVD sales decreased EUR 2.5 million, or 17%, to EUR 12.6 million. The decrease in DVD sales was attributable to a reduction in points of sales carrying our DVD products and an industry wide decrease in DVD consumer prices. The reduction of points of sales occurred during the second half of 2005 as a result of the Company’s decrease in releases of new movie productions. Currently, and going forward, the Company is releasing the optimal level of new movie productions and subsequently, during 2007, we expect to regain points of sales and improve our margins as a result of having more higher priced new movie productions on sale. The industry wide drop in DVD consumer prices is partly the result of offline sales/rental competing with online sales/rental. Magazine sales decreased EUR 1.5 million, or 39% to EUR 2.3 million as a result of lower quantities sold through certain retail channels during the twelve month period. Videocassette sales decreased EUR 0.3 million to nothing. Going forward, we expect Internet, Broadcasting and Wireless sales to continue to increase (see discussion under Outlook below). Net sales in general were unaffected by changes in exchange rates. Fluctuations in exchange rates between the euro and the dollar can affect the comparability of our results from year to year. We translate our consolidated subsidiaries whose functional currency is not the euro into the euro for reporting purposes. Income statement amounts are translated into euros using the average exchange rate for the fiscal year. The was no change in average exchange rate for the fiscal year 2006 compared to 2005. The balance sheet is translated at the year-end exchange rate. Due to the significance of the results reported in dollars the impact of the euro/dollar exchange rate on our major categories of revenue and expense can be material. Cost of Sales. Our cost of sales was EUR 14.1 million for 2006 compared to EUR 14.6 million for 2005, a decrease of EUR 0.5 million, or 3%. Cost of sales as a percentage of sales was 48% for 2006, a decrease of 5% compared to 2005.
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Included in cost of sales is printing, processing and duplication, amortization of library and broadcasting costs. Printing, processing and duplication cost was EUR 6.6 million for 2006 compared to EUR 7.6 million for 2005, a decrease of EUR 1.0 million, or 13%. The decrease was primarily the result of a decrease in sales of magazines and DVDs. Printing, processing and duplication cost as a percentage of sales was 22% for 2006, compared to 27% in 2005. Amortization of library was EUR 6.7 million for 2006 compared to EUR 6.4 million for 2005, an increase of EUR 0.3 million, or 5%. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of three to five years. The increase was the result of higher amounts invested in content released during the period subject to amortization in 2006 compared to 2005. Broadcasting cost was EUR 0.9 million for 2006 compared to EUR 0.6 million for 2005, an increase of EUR 0.3 million. Broadcasting cost represents programming, transmission cost and sales commissions. The increase relates to higher sales commission recorded in the period. Gross Profit. Our gross profit for 2006 was EUR 15.1 million, or 52% of net sales, compared to EUR 13.2 million, or 47% of net sales for 2005. This represented an increase of EUR 1.9 million, or 14%, compared to 2005. Gross profit as a percentage of sales was up 5% for 2006 compared to 2005. The increase in gross profit in both money and as a percentage of sales was primarily the result of the increase in sales of non-physical products carrying no printing, processing and duplication cost and the decrease in sales of physical products carrying printing, processing and duplication cost. Selling, general and administrative expenses. Our selling, general and administrative expenses were EUR 14.0 million for 2006 compared to EUR 14.4 million for 2005, a decrease of EUR 0.4 million, or 3%. We attribute the decrease in selling, general and administrative expenses to a reduction in general expenses, depreciation and bad debt provision of EUR 0.5 million offset by an increase in payroll of EUR 0.1 million. Gain on sale of building. We reported gain on sale of building of EUR 1.3 million for 2005. Operating profit/loss. We reported operating profit of EUR 1.0 million for 2006 compared to an operating profit of EUR 0.0 million for 2005, an improvement of EUR 1.0 million. The increase in operating profit was primarily the result of an increase in gross profit offset by the absence of gain on sale of building we had in 2005. Discounting the non-recurring effect of gain on sale of building of EUR 1.3 million in 2005, operating profit improved by EUR 2.3 million in the period. Interest expense. Our interest expense was EUR 0.6 million for 2006, compared to EUR 0.7 million for 2005. The decrease is the result of less average borrowings outstanding in 2006 compared to 2005 and we expect interest expense to continue to decrease in 2006 as our average borrowings outstanding are expected to be less in 2006. Income tax benefit from continuing operations. Our income tax benefit was EUR 0.5 million for 2006, compared to 0.5 million for 2005. Income from continuing operations. Our income from continuing operations was EUR 1.1 million for 2006, compared to EUR 0.1 million for 2005. We attribute this increase in 2006 of EUR 1.0 million primarily to increased operating profit. Loss from discontinued operations. Our loss from discontinued operations was EUR 0.9 million for 2006, compared to EUR 0.0 million for 2005. Income tax benefit from discontinued operations. Our income tax benefit from discontinued operations was EUR 0.3 million for 2006, compared to 0.0 million for 2005. Net Income/loss. Our net income was EUR 0.5 million for 2006, compared to EUR 0.0 million for 2005. We attribute this increase in net income in 2006 of EUR 0.5 million primarily to increased income from continuing operations offset by loss from discontinued operations.
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This excerpt taken from the PRVT 10-Q filed Nov 14, 2006. Nine months ended September 30, 2006 compared to the nine months ended September 30, 2005 Net sales. For the nine months ended September 30, 2006, we had net sales of EUR 21.9 million compared to net sales of EUR 20.8 million for the nine months ended September 30, 2005, an increase of EUR 1.1 million or 5%. The increase was attributed to an increase in Internet, broadcasting and wireless sales of EUR 4.7 million, or 77%, which was offset by a reduction in sales of magazines, DVDs and video of EUR 3.6 million, or 25%. Broadcasting sales increased EUR 3.7 million to EUR 6.2 million as a result of a new Pay-TV licensing agreement for German speaking Europe and an increase in video on demand sales offset by a temporary decrease in channel licensing sales due to the switchover to new channel licensing partners (see discussion under Outlook below). Wireless sales increased EUR 0.8 million to EUR 1.3 million as a result our content being available with more operators. Internet sales increased EUR 0.2 million to EUR 3.3 million compared to the same period last year. DVD sales decreased EUR 2.0 million to EUR 9.3 million. The decrease in DVD sales was attributable to a reduction in points of sales carrying our DVD products and an industry wide decrease in DVD consumer prices. The reduction of points of sales occurred during the second half of 2005 as a result of the Company’s decrease in releases of new movie productions. Currently, and going forward, the Company is releasing the optimal level of new movie productions and subsequently, during the remainder of 2006, we expect to regain points of sales and improve our margins as a result of having more higher priced new movie productions on sale. The industry wide drop in DVD consumer prices is partly the result of offline sales/rental competing with online sales/rental. Video sales decreased EUR 0.2 million to EUR 0.0 million since the Company no longer sells video cassettes. Magazine sales decreased EUR 1.3 million, to EUR 1.7 million as a result of lower quantities sold through certain retail channels during the nine month period. Going forward, we expect Broadcasting, Internet and wireless sales to increase (see discussion under Outlook below). Cost of Sales. Our cost of sales was EUR 10.8 million for the nine months ended September 30, 2006 compared to EUR 11.8 million for the nine months ended September 30, 2005, a decrease of EUR 1.0 million, or 8%. Included in cost of sales is printing, processing and duplication, amortization of library and broadcasting costs. Printing, processing and duplication cost was EUR 5.3 million for the nine months ended September 30, 2006 compared to EUR 6.2 million for the nine months ended September 30, 2005. Printing, processing and duplication cost as a percentage of sales was 26% for the nine months ended September 30, 2006, which represents a decrease of 4%. The decrease was primarily the result of an increase in sales of non-physical products such as Internet, broadcasting and wireless which carries no printing, processing and duplication cost. Amortization of library was EUR 4.9 million for the nine months ended September 30, 2006 compared to EUR 5.0 million for the nine months ended September 30, 2005, which represents a decrease of EUR 0.2 million. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of three to five years. The decrease was the result of lower amounts invested in content released during the period subject to amortization compared to the same period last year. Broadcasting cost was EUR 0.6 million for the nine months ended September 30, 2006 compared to EUR 0.5 million for the nine months ended September 30, 2005. Broadcasting cost represents programming and transmission cost.
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Gross Profit. In the nine months ended September 30, 2006, we realized an increase in gross profit of EUR 2.1 million, or 23% compared to the same period last year. Gross profit for the nine months ended September 30, 2006 was EUR 11.1 million, or 51% of net sales compared to EUR 9.0 million, or 43% of net sales for the nine months ended September 30, 2005. The increase in gross profit in both money and as a percentage of sales was primarily the result of sales mix, i.e. the increase in sales of non-physical products carrying no printing, processing and duplication cost and the decrease in sales of physical products carrying printing, processing and duplication cost. Selling, general and administrative expenses. Our selling, general and administrative expenses were EUR 10.5 million for the nine months ended September 30, 2006 compared to EUR 10.4 million for the nine months ended September 30, 2005. The increase is primarily related to payroll. Gain on sale of building. We reported gain on sale of building of EUR 1.3 million for the nine months ended September 30, 2005. Operating profit (loss). We reported an operating profit of EUR 0.6 million for the nine months ended September 30, 2006 compared to an operating loss of EUR 0.2 million for the nine months ended September 30, 2005. The increase in operating profit of EUR 0.8 million was primarily the result of an increase in gross profit offset by the absence of gain on sale of building we had in 2005. Discounting the non-recurring effect of gain on sale of building of EUR 1.3 million in 2005, operating profit improved by EUR 2.1 million in the period. Interest expense. We reported interest expense of EUR 0.5 million for the nine months ended September 30, 2006, compared to EUR 0.5 million for the nine months ended September 30, 2005. Income tax benefit. We reported income tax benefit of EUR 0.7 million for the nine months ended September 30, 2006, compared to EUR 0.5 million for the nine months ended September 30, 2005. The increase in income tax benefit is a result of higher losses being recorded in jurisdictions with higher corporate tax rates. Net income/loss. We reported net income of EUR 1.0 million for the nine months ended September 30, 2006, compared to net income of EUR 0.0 million for the nine months ended September 30, 2005. Discounting the non-recurring effect of gain on sale of building in 2005, net income improved by EUR 2.3 million in the period. This excerpt taken from the PRVT 10-Q filed Aug 14, 2006. Six months ended June 30, 2006 compared to the six months ended June 30, 2005 Net sales. For the six months ended June 30, 2006, we had net sales of EUR 14.1 million compared to net sales of EUR 14.5 million for the six months ended June 30, 2005, a decrease of EUR 0.4 million or 3%. The decrease was attributed to a reduction in sales of magazines, DVDs and video which was offset by increases in Broadcasting and wireless sales. DVD sales decreased EUR 2.0 million to EUR 6.3 million. The decrease in DVD sales was attributable to a reduction in points of sales carrying our DVD products and an industry wide decrease in DVD consumer prices. The reduction of points of sales occurred during the second half of 2005 as a result of the Company’s decrease in releases of new movie productions. Currently, and going forward, the Company is releasing the optimal level of new movie productions and subsequently, during the remainder of 2006, we expect to regain points of sales and improve our margins as a result of having more higher priced new movie productions on sale. The industry wide drop in DVD consumer prices is partly the result of offline sales/rental competing with online sales/rental. Video sales decreased EUR 0.2 million to EUR 0.0 million since the Company no longer sells video cassettes. Magazine sales decreased EUR 1.0 million, to EUR 1.2 million as a result of lower quantities sold through certain retail channels during the six month period. Internet sales increased EUR 0.1 million to EUR 2.1 million compared to the same period last year. Broadcasting sales increased EUR 2.4 million to EUR 3.8 million as a result of a new Pay-TV licensing agreement for German speaking Europe and an increase in video on demand sales offset by a temporary decrease in channel licensing sales due to the switchover to new channel licensing partners. Wireless sales increased EUR 0.5 million to EUR 0.8 million as a result our content being available with more operators. Going forward, we expect Broadcasting, Internet and wireless sales to increase (see discussion under Outlook below). Cost of Sales. Our cost of sales was EUR 7.6 million for the six months ended June 30, 2006 compared to EUR 8.7 million for the six months ended June 30, 2005, a decrease of EUR 1.1 million, or 12%. Included in cost of sales is printing, processing and duplication, amortization of library and broadcasting costs. Printing, processing and duplication cost was EUR 3.9 million for the six months ended June 30, 2006 compared to EUR 5.0 million for the six months ended June 30, 2005. Printing, processing and duplication cost as a percentage of sales was 28% for the six months ended June 30, 2006, which represents a decrease of 7%. The decrease was primarily the result of an increase in sales of non-physical products such as broadcasting and wireless which carries no printing, processing and duplication cost. Amortization of library was EUR 3.3 million for the six months ended June 30, 2006 compared to EUR 3.3 million for the six months ended June 30, 2005, which represents no change. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of six to five years. Broadcasting cost was EUR 0.4 million for the six months ended
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June 30, 2006 compared to EUR 0.3 million for the six months ended June 30, 2005. Broadcasting cost represents programming and transmission cost. Gross Profit. In the six months ended June 30, 2006, we realized an increase in gross profit of EUR 0.7 million, or 11% compared to the same period last year. Gross profit for the six months ended June 30, 2006 was EUR 6.5 million, or 46% of net sales compared to EUR 5.8 million, or 40% of net sales for the six months ended June 30, 2005. The increase in gross profit in both money and as a percentage of sales was primarily the result of sales mix, i.e. the increase in sales of non-physical products carrying no printing, processing and duplication cost and the decrease in sales of physical products carrying printing, processing and duplication cost. Selling, general and administrative expenses. Our selling, general and administrative expenses were EUR 6.9 million for the six months ended June 30, 2006 compared to EUR 7.1 million for the six months ended June 30, 2005, a decrease of EUR 0.2 million. Gain on sale of building. We reported gain on sale of building of EUR 1.3 million for the six months ended June 30, 2005. Operating profit (loss). We reported an operating loss of EUR 0.4 million for the six months ended June 30, 2006 compared to an operating profit of EUR 0.0 million for the six months ended June 30, 2005. The decrease in operating profit of EUR 0.4 million was primarily the result of the absence of gain on sale of building in 2005. Discounting the non-recurring effect of gain on sale of building in 2005, operating profit improved by EUR 0.9 million in the period. Interest expense. We reported interest expense of EUR 0.3 million for the six months ended June 30, 2006, compared to EUR 0.4 million for the six months ended June 30, 2005. Income tax benefit. We reported income tax benefit of EUR 0.6 million for the six months ended June 30, 2006, compared to EUR 0.3 million for the six months ended June 30, 2005. The increase in income tax benefit is a result of higher losses being recorded in jurisdictions with higher corporate tax rates. Net income/loss. We reported net income of EUR 0.0 million for the six months ended June 30, 2006, compared to net income of EUR 0.0 million for the six months ended June 30, 2005. Discounting the non-recurring effect of gain on sale of building in 2005, net income improved by EUR 1.3 million in the period. This excerpt taken from the PRVT 10-Q filed May 15, 2006. Three months ended March 31, 2006 compared to the three months ended March 31, 2005 Net sales. For the three months ended March 31, 2006, we had net sales of EUR 6.4 million compared to net sales of EUR 7.4 million for the three months ended March 31, 2005, a decrease of EUR 1.0 million or 14%. DVD sales decreased EUR 0.5 million, or 12%, to EUR 3.6 million. The decrease in DVD sales was primarily attributable to a reduction in points of sales carrying our DVD products. The reduction of points of sales occurred during 2005 as a result of the Company’s decrease in releases of new movie productions. Currently, and going forward, the Company is releasing the optimal level of new movie productions and subsequently, during 2006, we expect to regain the points of sales. Video sales decreased EUR 0.1 million
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to EUR 0.0 million since the Company no longer sells video cassettes. Magazine sales decreased EUR 0.7 million, or 57% to EUR 0.5 as a result of lower quantities sold through certain retail channels during the three month period. Internet sales was EUR 1.0 million, which represents no change compared to the same period last year. Broadcasting sales increased EUR 0.1 million to EUR 0.9 million as a result of an increase in video on demand sales offset by a temporary decrease in channel licensing sales due to the switchover to new channel licensing partners. Wireless sales increased EUR 0.3 million to EUR 0.4 million as a result our content being available with more operators Going forward, we expect DVD, Internet, wireless and Broadcasting sales to increase (see discussion under Outlook below). Cost of Sales. Our cost of sales was EUR 3.6 million for the three months ended March 31, 2006 compared to EUR 4.5 million for the three months ended March 31, 2005, a decrease of EUR 0.9 million, or 20%. Included in cost of sales is printing, processing and duplication, amortization of library and broadcasting costs. Printing, processing and duplication cost was EUR 2.0 million for the three months ended March 31, 2006 compared to EUR 2.8 million for the three months ended March 31, 2005. Printing, processing and duplication cost as a percentage of sales was 31% for the three months ended March 31, 2006, which represents a decrease of 6%. The decrease was the result of an increase in average price on products sold Amortization of library was EUR 1.5 million for the three months ended March 31, 2006 compared to EUR 1.5 million for the three months ended March 31, 2005, which represents no change. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of three to five years. Broadcasting cost was EUR 0.1 million for the three months ended March 31, 2006 compared to EUR 0.2 million for the three months ended March 31, 2005. Broadcasting cost represents programming and transmission cost. Gross Profit. In the three months ended March 31, 2006, we realized a gross profit of EUR 2.8 million, or 44% of net sales compared to EUR 3.0 million, or 40% of net sales for the three months ended March 31, 2005. The increase in gross profit as a percentage of sales was the result of sales mix and increased margins on DVD sales. Selling, general and administrative expenses. Our selling, general and administrative expenses were EUR 3.4 million for the three months ended March 31, 2006 compared to EUR 3.5 million for the three months ended March 31, 2005, a decrease of EUR 0.1 million, or 2%. Gain on sale of building. We reported gain on sale of building of EUR 1.3 million for the three months ended March 31, 2005. Operating profit (loss). We reported an operating loss of EUR 0.6 million for the three months ended March 31, 2006 compared to an operating profit of EUR 0.7 million for the three months ended March 31, 2005. The decrease in operating profit of 1.3 was primarily the result of the absence of gain on sale of building in 2006.
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Interest expense. We reported interest expense of EUR 0.2 million for the three months ended March 31, 2006, compared to EUR 0.2 million for the three months ended March 31, 2005. Income tax benefit. We reported income tax benefit of EUR 0.2 million for the three months ended March 31, 2006, compared to EUR 0.1 million for the three months ended March 31, 2005. The increase in income tax benefit is a result of higher losses being recorded in jurisdictions with higher corporate tax rates. Net income/loss. We reported net loss of EUR 0.5 million for the three months ended March 31, 2006, compared to net income of EUR 0.7 million for the three months ended March 31, 2005. We attribute the change in net income in 2006 of EUR 1.2 million compared to 2005 primarily to the absence of gain on sale of building in 2006. | EXCERPTS ON THIS PAGE:
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