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Gaiam Reports Second Quarter Revenue Increases 48% To $45.4 Million

Jirka Rysavy, Chairman of Gaiam, added, “Gaiam’s higher than expected internal revenue growth in the first half of 2012 and significant improvement to the bottom line in our seasonally weakest quarter, as well as new management at Real Goods Solar, position us well for the second part of the year.”

Following the completion of today’s conference call, a replay will be available until August 16, 2012 by dialing 800/633-8284 or 402/977-9140, passcode: 21600769.

About GAIAM

Gaiam, Inc. (NASDAQ: GAIA) is a leading producer and marketer of lifestyle media and fitness accessories. With a wide distribution network that consists of over 60,000 retail doors, over 15,000 store within stores, 5,600 media category management locations, and a digital distribution platform, Gaiam is dedicated to providing solutions for healthy and eco-conscious living. The Company dominates the health and wellness category and releases non-theatrical programming focused on family entertainment and conscious media. In addition, Gaiam has exclusive licensing agreements with Discovery Communications and other licensing partners. For more information about Gaiam, please visit www.gaiam.com or call 1.800.869.3603.

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as “expect,” “intend,” “believe,” “will,” “should” or comparable terminology or by discussions of strategy. While Gaiam believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, introduction of new products and services, completion and integration of acquisitions, the possibility of negative economic conditions, and other risks and uncertainties included in Gaiam’s filings with the Securities and Exchange Commission. Gaiam assumes no duty to update any forward-looking statements.

GAIAM, INC.

2011 RESULTS WITH REAL GOODS SOLAR DECONSOLIDATED

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

       
Three Months Ended Three Months Ended
June 30, 2012 June 30, 2011
Net revenue $ 45,446 100.0 % $ 30,755 100.0 %
Cost of goods sold   17,435   38.4 %   13,513   43.9 %
 
Gross profit 28,011 61.6 % 17,242 56.1 %
Selling and operating 26,896 59.2 % 20,383 66.3 %
Corporate, general and administration   3,081   6.7 %   2,159   7.0 %
 
Loss from operations (1,966 ) -4.3 % (5,300 ) -17.2 %
Interest and other income (expense) (123 ) -0.3 % 70 0.2 %
Loss from equity method investment   (944 ) -2.1 %   (591 ) -1.9 %
 
Loss before income taxes (3,033 ) -6.7 % (5,821 ) -18.9 %
Income tax benefit   (924 ) -2.1 %   (1,827 ) -5.9 %
 
Net loss (2,109 ) -4.6 % (3,994 ) -13.0 %
Net loss attributable to the noncontrolling interest   56   0.1 %   126   0.4 %
 
Net loss attributable to Gaiam, Inc. (a) $ (2,053 ) -4.5 % $ (3,868 ) -12.6 %
 
Weighted-average shares outstanding:
Basic 22,702 23,314
Diluted 22,702 23,314
Net loss per share attributable to Gaiam, Inc. common shareholders:
Basic $ (0.09 ) $ (0.17 )
Diluted $ (0.09 ) $ (0.17 )
(a)   Excluding the losses from our equity method in RSOL, the net loss attributable to Gaiam, Inc. was $1.2 million, or $0.05 per share, during the second quarter of 2012 and $3.3 million, or $0.14 per share, during the second quarter of 2011.

GAIAM, INC.

2011 RESULTS WITH REAL GOODS SOLAR DECONSOLIDATED

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

       
Six Months Ended Six Months Ended
June 30, 2012 June 30, 2011
Net revenue $ 92,779 100.0 % $ 68,142 100.0 %
Cost of goods sold   37,662   40.6 %   30,069   44.1 %
 
Gross profit 55,117 59.4 % 38,073 55.9 %
Selling and operating 51,057 55.0 % 40,494 59.4 %
Corporate, general and administration 5,654 6.1 % 4,500 6.6 %
Acquisition-related costs   1,667   1.8 %     0.0 %
 
Loss from operations (3,261 ) -3.5 % (6,921 ) -10.1 %
Interest and other income (expense) (67 ) -0.1 % 114 0.2 %
Loss from equity method investment   (1,640 ) -1.8 %   (577 ) -0.9 %
 
Loss before income taxes (4,968 ) -5.4 % (7,384 ) -10.8 %
Income tax benefit   (1,561 ) -1.7 %   (2,426 ) -3.5 %
 
Net loss (3,407 ) -3.7 % (4,958 ) -7.3 %
Net loss attributable to the noncontrolling interest   135   0.2 %   84   0.1 %
 
Net loss attributable to Gaiam, Inc. (a) $ (3,272 ) -3.5 % $ (4,874 ) -7.2 %
 
Weighted-average shares outstanding:
Basic 22,700 23,307
Diluted 22,700 23,307
Net loss per share attributable to Gaiam, Inc. common shareholders:
Basic $ (0.14 ) $ (0.21 )
Diluted $ (0.14 ) $ (0.21 )
(a)   Excluding costs related to our acquisition of Vivendi Entertainment and the losses from our equity method investment in RSOL, the net loss attributable to Gaiam, Inc. was $0.6 million, or $0.03 per share, for the first half of 2012 and $4.3 million, or $0.18 per share, for the first half of 2011.

GAIAM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

   
 
June 30, December 31,
2012 2011
Assets
Current assets:
Cash $ 11,460 $ 14,545
Accounts receivable, net 24,825 31,113
Inventory, less allowances 30,783 29,205
Deferred advertising costs 3,301 3,303
Deferred tax assets 6,471 6,686
Receivable from equity method investee 2,183 2,176
Advances 16,198 5,336
Other current assets   2,324   1,969
 
Total current assets 97,545 94,333
Property and equipment, net 23,930 23,664
Media library, net 14,335 14,576
Deferred tax assets 14,497 12,636
Goodwill 9,405 2,673
Other intangibles, net 8,249 569
Equity method investment 12,660 14,300
Other assets   592   539
 
Total assets $ 181,213 $ 163,290
 
Liabilities and Equity
Current liabilities:
Line of credit $ 14,000 $
Accounts payable 18,446 21,069
Participations payable 16,676 7,851
Accrued liabilities   3,744   3,196
 
Total current liabilities 52,866 32,116
Total equity   128,347   131,174
 
Total liabilities and equity $ 181,213 $ 163,290

Non-GAAP Financial Measures For Earnings Before Share-Based Compensation, Interest, Acquisition-Related Costs, Income Taxes, Depreciation and Amortization (Adjusted EBITDA)

The Company has utilized the non-GAAP information set forth below as an additional device to aid in understanding and analyzing its financial results for the three and six months ended June 30, 2012 and 2011, respectively. The Company believes that these non-GAAP measures will allow for a better evaluation of the operating performance of the business and facilitate meaningful comparison of the results in the current period to those in the prior period and future periods. Reference to these non-GAAP measures should not be considered a substitute for results that are presented in a manner consistent with GAAP.

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