Wide Margins Mark Gaiam 2006 Results

BROOMFIELD, Colo.—Direct-to-consumer sales proved profitable for Gaiam (NASDAQ:GAIA), soaring nearly 74 percent to $125.7 million in fiscal year 2006 (FY06). Add a 34-percent jump in business segment revenues, and FY06 overall revenues were up 54 percent to $219.5 million. Gross margin widened to 64 percent from 57 percent achieved the year prior, due primarily to higher media sales, lower cost of goods sold associated with higher DVD sales volume and the elimination of fees previously paid for third party distribution. This helped improve the bottom line to $5.6 million or $0.23 per share, from $1.3 million or $0.08 per share earned in FY05.

Reflecting these impressive results, Gaiam’ s community and subscription clubs exceeded the 100,000 level, while the company’s market share in the fitness/ wellness DVD category grew to 44.7 percent in 2006 from 41.5 percent in 2005, according to Nielsen’s VideoScan.

“Our media-focused strategy, continued development of community assets, increasing gross margin and additional volume in our centralized distribution center should continue to improve our pretax margin, which during the fourth quarter increased to above 10 percent, from 4.2 percent a year ago,” said Jirka Rysavy, chairman and chief executive officer (CEO) of Gaiam (www.Gaiam.com).