Image Entertainment Inc. (Nasdaq:DISK), today reported financial results for its fiscal year 2001 third quarter and for the nine months ended Dec. 31, 2000.

Net revenues for the third quarter of fiscal 2001 decreased 1.3% to $24,736,000 from $25,067,000 for the third quarter of fiscal 2000. As a component of overall sales, net revenues of DVD programming for the December 2000 quarter decreased 0.4% to $23,013,000 from $23,100,000 for the December 1999 quarter. Net revenues for the Company’s wholesale distribution segment were negatively impacted by a weaker DVD release schedule when compared to the December 1999 quarter.

Additionally, financial difficulties experienced by several of the Company’s Internet retailing customers resulted in lower comparative quarterly sales. The December 2000 quarter included approximately $1.2 million from a successful sales re-promotion program covering certain of the Company’s exclusive catalog DVD titles. Additionally, the December 2000 quarter included approximately $1.7 million from the international distribution and broadcast of the Company’s licensed entertainment programming compared to $60,000 for the December 1999 quarter.

Gross profit margins for the December 2000 quarter grew to 31.8% from 27.8% for the December 1999 quarter. Operating income for the December 2000 quarter was $1,029,000, down from $1,547,000 for the December 1999 quarter. Net income for the December 2000 quarter declined to $577,000, or $.04 per diluted share, from $1,261,000, or $.08 per diluted share, for the December 1999 quarter.

Net revenues for the nine months ended Dec. 31, 2000, increased 21.2% to $73,826,000 from $60,904,000 for the nine months ended Dec. 31, 1999. As a component of overall net sales, net revenues of DVD programming for the nine months ended Dec. 31, 2000, increased approximately 34.3% to $69,077,000 from $51,416,000 for the nine months ended Dec. 31, 1999.

Gross profit margins for the nine months ended Dec. 31, 2000, grew to 32.1% from 26.1% for the nine months ended Dec. 31, 1999. Operating income for the nine months ended Dec. 31, 2000, grew to $4,578,000 from $387,000 for the nine months ended Dec. 31, 1999. Net income for the nine months ended Dec. 31, 2000, rose to $3,645,000, or $.22 per diluted share, compared to a net loss of $295,000, or $.02 per diluted share, for the nine months ended Dec. 31, 1999. Net income for the nine months ended Dec. 31, 2000, includes a net gain on sale of land of $484,000, or $.03 per diluted share, net of related income tax benefit. EBITDA (earnings before interest, taxes, depreciation and amortization), a measure of cash flow, for the nine months ended Dec. 31, 2000, increased substantially to $6.7 million from $2.1 million for the nine months ended Dec. 31, 1999.