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Intermedia going strong

Co. piles cash, beats Street and plans acquisitions

LONDON — While the Neuer Markt collapses around it, IM Internationalmedia AG, better known as Intermedia, just keeps getting stronger.

Its annual results, announced Thursday, paint a picture of a company that’s piling on cash, beating profit predictions and readying itself for some major corporate acquisitions.

Intermedia reported net income of 19.7 million euro ($18.3 million) for 2000, a third higher than analysts were estimating. That’s also nearly double the $9.9 million figure projected by the company at its IPO in May.

Even more impressively, at a time when many other Neuer Markt film companies are fast running out of funds, Intermedia’s cash position remains as strong as when it floated, and is expected to improve further in 2001.

By year’s end, the company still had $178 million in cash, having netted $157.2 million from its IPO to add to the $22.3 million it had prior to its market listing.

Positive cash flow from operations and interest brought in $10.3 million during 2000. But that was offset by $11.9 million spent on a new building in Los Angeles and a 24.9% stake in Brit producer Box TV.

Company is forecasting positive cash flow will increase to $27.6 million this year.

$150 mil shopping fund

Meanwhile, it has set aside a war chest of $150 million for further corporate acquisitions, primarily in the U.S. and the U.K., over the next two or three years.

According to Florian Bollen, chairman of Internationalmedia, these acquisitions will focus on “extending our existing business, which is creating audiovisual content, including TV as well as feature films.” Company also is shopping for libraries, looking to diversify into music and keeping an eye open for opportunities in European film distribution.

Bollen confirmed that talks are under way with two possible corporate targets. “But we are not in any rush,” he added. “We have a great business, we have great growth in sales and earnings already.”

18% growth, sans rules

Sales growth in 2000 was clouded by a change in accounting rules, which meant the year-end figure of $139.2 million was 23% below the IPO forecast. Discounting that technicality, sales would have come out 18% ahead of projections.

Under the change, the company was not allowed to book the sales of two acquired films — “The Gift” and “I See You” — as part of its overall revenues, but was permitted only to include the profit margins.

The change has no impact on Intermedia’s bottom line and was therefore shrugged off by analysts, who were far more impressed by the growth in net profits.

Focus on income

“Accountants have become very restrictive on Neuer Markt companies now,” said Merrill Lynch analyst Bernard Tubeileh. “But in any case, I’ve become much more focused on income than sales, and the net profit is 36% higher than my estimates.”

Intermedia now is predicting sales in the current year will more than double to $330 million. That figure is based solely on the company’s own productions, including “K-19,” “K-Pax” and “The Quiet American,” and does not include acquired films.

Pre-tax profit was $25.6 million in 2000 (up 112% from 1999 and 46% higher than the IPO forecast), and the company is predicting it will reach $43.9 million in 2001.

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