##### Table of Contents



UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549



---

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

OR

 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-31516



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GETTY IMAGES, INC.

(Exact name of registrant as
specified in its charter)



|                         |  |                                     
|------------------------ |  | ------------------------------------
|DELAWARE                 |  | 98-0177556                          
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

601 NORTH 34TH STREET

SEATTLE, WASHINGTON 98103

(206) 925-5000

(Address, including zip code, and telephone number, including area code, of principal executive offices)



---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past ninety
days.  Yes x  No  ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x                                Accelerated filer   ̈                                Non-accelerated
filer   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ̈  No x

At April 30, 2007, there were 59,222,196 shares of the registrants common stock, par value $0.01 per share, outstanding.



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| |  |  |  |                    |  |  |  |          |  |  |  |           |  |  |  |  |  | 
| |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  |  |  |  |  | 
| |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  |  |  |  |  | 



TABLE OF CONTENTS



|                                 |  |                                                                                                                             |  |     
|-------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                 |  |                                                                                                                             |  | PAGE
|                                 | 
|PART I.    FINANCIAL INFORMATION |  |                                                                                                                            
|                                 |  |                                                                                                                            
|ITEM 1.                          |  | Financial Statements (unaudited):                                                                                           |  | 1   
|                                 |  |                                                                                                                            
|                                 |  | Condensed Consolidated Statements of Incomefor the three months ended March 31, 2007 and 2006                              |  | 1   
|                                 |  |                                                                                                                            
|                                 |  | Condensed Consolidated Balance Sheetsat March 31, 2007 and December 31, 2006                                               |  | 2   
|                                 |  |                                                                                                                            
|                                 |  | Condensed Consolidated Statement of Stockholders Equityat December 31, 2006 and for the three months ended March 31, 2007 |  | 3   
|                                 |  |                                                                                                                            
|                                 |  | Condensed Consolidated Statements of Cash Flowsfor the three months ended March 31, 2007 and 2006                          |  | 4   
|                                 |  |                                                                                                                            
|                                 |  | Notes to Condensed Consolidated Financial Statements                                                                        |  | 5   
|                                 |  |                                                                                                                            
|ITEM 2.                          |  | Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A)                                |  | 14  
|                                 |  |                                                                                                                            
|ITEM 3.                          |  | Quantitative and Qualitative Disclosures about Market Risk                                                                  |  | 18  
|                                 |  |                                                                                                                            
|ITEM 4.                          |  | Controls and Procedures                                                                                                     |  | 18  
|                                 | 
|PART II.    OTHER INFORMATION    |  |                                                                                                                            
|                                 |  |                                                                                                                            
|ITEM 1.                          |  | Legal Proceedings                                                                                                           |  | 19  
|                                 |  |                                                                                                                            
|ITEM 1A.                         |  | Risk Factors                                                                                                                |  | 19  
|                                 |  |                                                                                                                            
|ITEM 2.                          |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                 |  | 19  
|                                 |  |                                                                                                                            
|ITEM 3.                          |  | Defaults Upon Senior Securities                                                                                             |  | 19  
|                                 |  |                                                                                                                            
|ITEM 4.                          |  | Submission of Matters to a Vote of Security Holders                                                                         |  | 19  
|                                 |  |                                                                                                                            
|ITEM 5.                          |  | Other Information                                                                                                           |  | 19  
|                                 |  |                                                                                                                            
|ITEM 6.                          |  | Exhibits                                                                                                                    |  | 19  
|                                 | 
|SIGNATURE                        |  | 20                                                                                                                         
|                                 | 
|EXHIBIT INDEX                    |  | 21                                                                                                                         



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|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|1 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



|PART I. |  | FINANCIAL INFORMATION
|------- |  | ---------------------



|ITEM 1. |  | FINANCIAL STATEMENTS
|------- |  | --------------------

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



|                                                            |  |               |   |  |               |  
|----------------------------------------------------------- |  | ------------- | - |  | ------------- | -
|THREE MONTHS ENDED MARCH 31,                                |  | 2007          |   |  | 2006          |  
|                                                            |  |               |   |  |               |  
|(In thousands, except per share amounts)                    |  |               |   |  |               |  
|                                                            |  |              
|Revenue                                                     |  | $  212,650    |   |  | $  200,429    |  
|Cost of revenue (exclusive of items shown separately below) |  | 54,836        |   |  | 52,266        |  
|Selling, general and administrative expenses                |  | 81,403        |   |  | 74,275        |  
|Depreciation                                                |  | 14,544        |   |  | 12,258        |  
|Amortization                                                |  | 5,226         |   |  | 3,731         |  
|Other operating expense (income)                            |  | 934           |   |  | (729          | )
|                                                            |  |               |   |  |               |  
|Operating expenses                                          |  | 156,943       |   |  | 141,801       |  
|                                                            |  |               |   |  |               |  
|Income from operations                                      |  | 55,707        |   |  | 58,628        |  
|Investment income                                           |  | 3,294         |   |  | 4,016         |  
|Interest expense                                            |  | (434          | ) |  | (357          | )
|Other non-operating (expense) income                        |  | (796          | ) |  | 47            |  
|                                                            |  |               |   |  |               |  
|Income before income taxes                                  |  | 57,771        |   |  | 62,334        |  
|Income tax expense                                          |  | (19,741       | ) |  | (23,295       | )
|                                                            |  |               |   |  |               |  
|Net income                                                  |  | $    38,030   |   |  | $    39,039   |  
|                                                            |  |               |   |  |               |  
|Earnings per share                                          |  |               |   |  |               |  
|Basic                                                       |  | $        0.64 |   |  | $        0.63 |  
|Diluted                                                     |  | 0.63          |   |  | 0.60          |  
|                                                            |  |               |   |  |               |  
|Shares used in computing earnings per share                 |  |               |   |  |               |  
|Basic                                                       |  | 59,187        |   |  | 62,328        |  
|Diluted                                                     |  | 60,031        |   |  | 64,955        |  
|                                                            | 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|2 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)



|                                                |  |                |   |  |                  |  
|----------------------------------------------- |  | -------------- | - |  | ---------------- | -
|                                                |  | MARCH 31,2007  |   |  | DECEMBER 31,2006 |  
|                                                |  |                |   |  |                  |  
|(In thousands)                                  |  |                |   |  |                  |  
|                                                |  |               
|ASSETS                                          |  |                |   |  |                  |  
|Current assets                                  |  |                |   |  |                  |  
|Cash and cash equivalents                       |  | $     386,519  |   |  | $     339,466    |  
|Accounts receivable, net                        |  | 126,204        |   |  | 121,232          |  
|Prepaid expenses                                |  | 14,784         |   |  | 13,685           |  
|Deferred income taxes, net                      |  | 12,696         |   |  | 11,142           |  
|Other current assets                            |  | 3,308          |   |  | 1,500            |  
|                                                |  |                |   |  |                  |  
|Total current assets                            |  | 543,511        |   |  | 487,025          |  
|Property and equipment, net                     |  | 151,614        |   |  | 147,133          |  
|Goodwill                                        |  | 1,007,302      |   |  | 1,001,027        |  
|Identifiable intangible assets, net             |  | 72,797         |   |  | 77,234           |  
|Other long-term assets                          |  | 2,444          |   |  | 1,965            |  
|                                                |  |                |   |  |                  |  
|Total assets                                    |  | $  1,777,668   |   |  | $  1,714,384     |  
|                                                |  |                |   |  |                  |  
|                                                |  |               
|LIABILITIES AND STOCKHOLDERS EQUITY            |  |                |   |  |                  |  
|Current liabilities                             |  |                |   |  |                  |  
|Accounts payable                                |  | $       78,362 |   |  | $       74,297   |  
|Accrued expenses                                |  | 39,160         |   |  | 39,412           |  
|Income taxes payable                            |  | 804            |   |  | 6,353            |  
|Deferred revenue                                |  | 13,942         |   |  | 13,139           |  
|                                                |  |                |   |  |                  |  
|Total current liabilities                       |  | 132,268        |   |  | 133,201          |  
|Long-term debt                                  |  | 265,000        |   |  | 265,000          |  
|Deferred income taxes, net                      |  | 25,848         |   |  | 11,596           |  
|Other long-term liabilities                     |  | 62,854         |   |  | 56,350           |  
|                                                |  |                |   |  |                  |  
|Total liabilities                               |  | 485,970        |   |  | 466,147          |  
|                                                |  |                |   |  |                  |  
|Commitments and contingencies (Note 4)          |  |                |   |  |                  |  
|Stockholders equity                            |  |                |   |  |                  |  
|Common stock                                    |  | 627            |   |  | 626              |  
|Additional paid-in capital                      |  | 1,326,147      |   |  | 1,321,645        |  
|Common stock repurchased                        |  | (207,676       | ) |  | (207,676         | )
|Retained earnings                               |  | 125,317        |   |  | 91,459           |  
|Accumulated other comprehensive income (Note 5) |  | 47,283         |   |  | 42,183           |  
|                                                |  |                |   |  |                  |  
|Total stockholders equity                      |  | 1,291,698      |   |  | 1,248,237        |  
|                                                |  |                |   |  |                  |  
|Total liabilities and stockholders equity      |  | $  1,777,668   |   |  | $  1,714,384     |  
|                                                | 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|3 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

(unaudited)



|                                                                 |  |                                                           |  |              |  |                            |  |                          |   |  |                   |   |  |                                        |  |              |  
|---------------------------------------------------------------- |  | --------------------------------------------------------- |  | ------------ |  | -------------------------- |  | ------------------------ | - |  | ----------------- | - |  | -------------------------------------- |  | ------------ | -
|                                                                 |  | No. of Shares of Common Stock Outstanding $0.01 Par Value |  | Common Stock |  | Additional Paid-In
Capital |  | Common Stock Repurchased |   |  | Retained Earnings |   |  | Accumulated Other Comprehensive Income |  | Total        |  
|                                                                 |  |                                                           |  |              |  |                            |  |                          |   |  |                   |   |  |                                        |  |              |  
|(In thousands)                                                   |  |                                                           |  |              |  |                            |  |                          |   |  |                   |   |  |                                        |  |              |  
|                                                                 |  |                                                           |  |              |  |                            | 
|Balance at December 31, 2006                                     |  | 59,096                                                    |  | $  626       |  | $  1,321,645               |  | $  (207,676              | ) |  | $    91,459       |   |  | $  42,183                              |  | $  1,248,237 |  
|Net income                                                       |  |                                                          |  |             |  |                           |  |                         |   |  | 38,030            |   |  |                                       |  | 38,030       |  
|                                                                 |  |                                                           |  |              |  |                            | 
|Other comprehensive income                                       |  |                                                          |  |             |  |                           |  |                         |   |  |                  |   |  | 5,100                                  |  | 5,100        |  
|Stock-based compensation activity and related income tax effects |  | 123                                                       |  | 1            |  | 4,502                      |  |                         |   |  |                  |   |  |                                       |  | 4,503        |  
|Cumulative effect of adopting FIN No. 48                         |  |                                                          |  |             |  |                           |  |                         |   |  | (4,172            | ) |  |                                       |  | (4,172       | )
|                                                                 |  |                                                           |  |              |  |                            |  |                          |   |  |                   |   |  |                                        |  |              |  
|Balance at March 31, 2007                                        |  | 59,219                                                    |  | $  627       |  | $  1,326,147               |  | $  (207,676              | ) |  | $  125,317        |   |  | $  47,283                              |  | $  1,291,698 |  
|                                                                 | 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|4 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                   |  |             |   |  |             |  
|---------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|THREE MONTHS ENDED MARCH 31,                                                       |  | 2007        |   |  | 2006        |  
|                                                                                   |  |             |   |  |             |  
|(In thousands)                                                                     |  |             |   |  |             |  
|                                                                                   |  |            
|Cash flows from operating activities                                               |  |             |   |  |             |  
|Net income                                                                         |  | $    38,030 |   |  | $    39,039 |  
|Adjustments to reconcile net income to net cash provided by operating activities   |  |             |   |  |             |  
|Depreciation                                                                       |  | 14,544      |   |  | 12,258      |  
|Amortization of identifiable intangible assets                                     |  | 5,226       |   |  | 3,731       |  
|Deferred income taxes                                                              |  | 4,553       |   |  | 10,069      |  
|Employee stock-based compensation                                                  |  | 2,920       |   |  | 3,306       |  
|Bad debt expense                                                                   |  | 875         |   |  | 1,215       |  
|Amortization of debt issuance and exchange costs                                   |  | 33          |   |  |            |  
|Other changes in long-term assets, liabilities and equity                          |  | 1,405       |   |  | 372         |  
|Changes in current assets and liabilities, net of effects of business acquisitions |  |             |   |  |             |  
|Accounts receivable                                                                |  | (6,093      | ) |  | (4,403      | )
|Accounts payable                                                                   |  | 3,487       |   |  | 2,910       |  
|Accrued expenses                                                                   |  | (2,156      | ) |  | (13,327     | )
|Income taxes payable                                                               |  | 2,616       |   |  | 10,306      |  
|Changes in other current assets and liabilities                                    |  | (467        | ) |  | 717         |  
|                                                                                   |  |             |   |  |             |  
|Net cash provided by operating activities                                          |  | 64,974      |   |  | 66,193      |  
|                                                                                   |  |             |   |  |             |  
|Cash flows from investing activities                                               |  |             |   |  |             |  
|Acquisition of property and equipment                                              |  | (16,196     | ) |  | (14,614     | )
|Acquisitions of businesses, net of cash acquired                                   |  | (4,263      | ) |  | (49,117     | )
|Proceeds from available-for-sale investments                                       |  |            |   |  | 90,556      |  
|Acquisition of available-for-sale investments                                      |  |            |   |  | (8,498      | )
|Other investing activities                                                         |  |            |   |  | 300         |  
|                                                                                   |  |             |   |  |             |  
|Net cash (used in) provided by investing activities                                |  | (20,459     | ) |  | 18,627      |  
|                                                                                   |  |             |   |  |             |  
|Cash flows from financing activities                                               |  |             |   |  |             |  
|Proceeds from the issuance of common stock                                         |  | 1,792       |   |  | 1,940       |  
|Other financing activities                                                         |  | (572        | ) |  | 696         |  
|                                                                                   |  |             |   |  |             |  
|Net cash provided by financing activities                                          |  | 1,220       |   |  | 2,636       |  
|                                                                                   |  |             |   |  |             |  
|Effects of exchange rate changes                                                   |  | 1,318       |   |  | (1,126      | )
|                                                                                   |  |             |   |  |             |  
|Net increase in cash and cash equivalents                                          |  | 47,053      |   |  | 86,330      |  
|Cash and cash equivalents, beginning of period                                     |  | 339,466     |   |  | 223,084     |  
|                                                                                   |  |             |   |  |             |  
|Cash and cash equivalents, end of period                                           |  | $  386,519  |   |  | $  309,414  |  
|                                                                                   | 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



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|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|5 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S.) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our consolidated financial statements and revenues and expenses reported during the period. Some of the
estimates and assumptions that require managements most difficult judgments are: a) the appropriateness of the valuation and useful lives, if applicable, of long-lived assets, including goodwill and identifiable intangible assets; b) the
appropriateness of the amount of accrued income taxes, income tax reserves, deferred tax asset valuation allowances and unrecognized tax benefits; c) the designation of certain foreign-currency denominated intercompany balances as long-term
investments; and d) the sufficiency of the allowance for doubtful accounts. These judgments are difficult as matters that are inherently uncertain directly impact their valuation and accounting. Actual results may vary from managements
estimates and assumptions.

Principles of Consolidation

Our consolidated
financial statements and notes thereto include the accounts of Getty Images, Inc. and its subsidiaries, from the respective dates of acquisition. Intercompany balances and transactions have been eliminated.

Quarterly Results

Certain information and footnote disclosures normally included in
annual financial statements, prepared in accordance with accounting principles generally accepted in the U.S., have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). Management
believes that the Condensed Consolidated Financial Statements include all adjustments, which are of a normal recurring nature, necessary to a fair statement of our results of operations, financial position and cash flows for the interim periods
presented. The condensed information should be read in conjunction with the Consolidated Financial Statements and the accompanying notes in our 2006 Annual Report on Form 10-K.

Earnings per Share

Basic earnings per share are calculated based on the weighted average number of common shares outstanding during each
period. Diluted earnings per share are calculated based on the shares used to calculate basic earnings per share plus the dilutive effect of stock options, restricted stock, restricted stock units and our convertible subordinated debentures.



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##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|6 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



|                                                                           |  |                             |  |            
|-------------------------------------------------------------------------- |  | --------------------------- |  | -----------
|                                                                           |  | THREE MONTHS ENDEDMARCH 31,
|                                                                           |  |                            
|                                                                           |  | 2007                        |  | 2006       
|                                                                           |  |                             |  |            
|(In thousands, except per share amounts)                                   |  |                             |  |            
|                                                                           |  |                            
|Basic Earnings per Share                                                   |  |                             |  |            
|Income available to common stockholders (numerator)                        |  | $  38,030                   |  | $  39,039  
|Weighted average common shares outstanding (denominator)                   |  | 59,187                      |  | 62,328     
|Basic earnings per share                                                   |  | $      0.64                 |  | $      0.63
|                                                                           |  |                             |  |            
|                                                                           |  |                            
|Diluted Earnings per Share                                                 |  |                             |  |            
|Income available to common stockholders (numerator)                        |  | $  38,030                   |  | $  39,039  
|                                                                           |  |                             |  |            
|Weighted average common shares outstanding                                 |  | 59,187                      |  | 62,328     
|Effect of dilutive securities                                              |  |                             |  |            
|Convertible subordinated debentures                                        |  |                            |  | 1,441      
|Stock options                                                              |  | 732                         |  | 1,175      
|Restricted stock and restricted stock units                                |  | 112                         |  | 11         
|                                                                           |  |                             |  |            
|Total weighted average common shares and dilutive securities (denominator) |  | 60,031                      |  | 64,955     
|                                                                           |  |                             |  |            
|Diluted earnings per share                                                 |  | $      0.63                 |  | $      0.60
|                                                                          

Approximately 1,370,029 and 941,547 common shares issuable from stock options for the three months ended March 31, 2007
and 2006, respectively, were excluded from the computation of diluted earnings per share because they were anti-dilutive.

For purposes of calculating diluted
earnings per share for all future periods in which our convertible subordinated debentures remain outstanding, we will not include any associated incremental shares in periods where the average closing price of our common stock for the last five
trading days of the reporting period is at or below $61.08 per share. In periods where the average closing price of our common stock exceeds $61.08 per share, we will include up to a theoretical maximum of approximately 6.9 million incremental
shares. The following table shows the approximate number of incremental shares we would include in diluted weighted average shares outstanding at various stock prices, assuming $265.0 million of convertible subordinated debentures outstanding:



|                                                                                                       |  |       |  |        |  |       |  |       |  |        |  |        |  |        |  |        |  |          |  |         
|------------------------------------------------------------------------------------------------------ |  | ----- |  | ------ |  | ----- |  | ----- |  | ------ |  | ------ |  | ------ |  | ------ |  | -------- |  | --------
|                                                                                                      
|                                                                                                       |  |       |  |        |  |       |  |       |  |       
|Average closing price per share of common stock for the last five trading days of the reporting period |  | $  62 |  | $   70 |  | $  80 |  | $  90 |  | $  100 |  | $  120 |  | $  150 |  | $  250 |  | $  1,500 |  | $  2,900
|Incremental dilutive shares outstanding (in thousands)                                                 |  | 129   |  | 1,106  |  | 2,052 |  | 2,788 |  | 3,377  |  | 4,260  |  | 5,144  |  | 5,884  |  | 6,768    |  | 6,853   
|                                                                                                      

Accounts Receivable

Accounts
receivable represent trade receivables, net of allowances for doubtful accounts and sales returns of $16.7 million and $15.7 million at March 31, 2007 and December 31, 2006, respectively. Provisions for doubtful accounts recorded during
the three months ended March 31, 2007 and 2006 totaled $0.9 million and $1.2 million, respectively. Estimated sales returns are recorded as a reduction of revenue and were insignificant in all periods presented. Approximately 6% and 5% of our
accounts receivable balance, net of allowances for doubtful accounts and sales returns, was more than 90 days old at March 31, 2007 and December 31, 2006, respectively.



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|7 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Property and Equipment

Property and
equipment consisted of the following at the reported balance sheet dates:



|                                             |  |                                          |  |                |  |                         |    |  |             |  |             |  |                         |   |  |            
|-------------------------------------------- |  | ---------------------------------------- |  | -------------- |  | ----------------------- | -- |  | ----------- |  | ----------- |  | ----------------------- | - |  | -----------
|                                             |  |                                          |  | MARCH 31, 2007 |  | DECEMBER 31, 2006      
|                                             |  |                                          |  |                |  |                        
|                                             |  | Range of EstimatedUseful Lives(in years) |  | GrossAmount    |  | AccumulatedDepreciation |    |  | Net Amount  |  | GrossAmount |  | AccumulatedDepreciation |   |  | Net Amount 
|                                             |  |                                          |  |                |  |                         |    |  |             |  |             |  |                         |   |  |            
|(In thousands, except years)                 |  |                                          |  |                |  |                         |    |  |             |  |             |  |                         |   |  |            
|                                             |  |                                          |  |                |  |                         |   
|Contemporary imagery                         |  | 4                                        |  | $  323,404     |  | $  (260,775             | )  |  | $    62,629 |  | $  316,729  |  | $  (253,085             | ) |  | $    63,644
|Computer hardware and software purchased     |  | 3                                        |  | 120,899        |  | (101,312                | )  |  | 19,587      |  | 115,163     |  | (98,670                 | ) |  | 16,493     
|Computer software developed for internal use |  | 3                                        |  | 106,714        |  | (77,967                 | )  |  | 28,747      |  | 102,837     |  | (73,938                 | ) |  | 28,899     
|Leasehold improvements                       |  | 2-20                                     |  | 26,747         |  | (9,571                  | )  |  | 17,176      |  | 25,153      |  | (8,945                  | ) |  | 16,208     
|Furniture, fixtures and studio equipment     |  | 5                                        |  | 36,138         |  | (31,602                 | )  |  | 4,536       |  | 35,686      |  | (30,924                 | ) |  | 4,762      
|Archival imagery                             |  | 40                                       |  | 24,714         |  | (5,804                  | )  |  | 18,910      |  | 22,710      |  | (5,642                  | ) |  | 17,068     
|Other property and equipment                 |  | 3-4                                      |  | 525            |  | (496                    | )  |  | 29          |  | 522         |  | (463                    | ) |  | 59         
|                                             |  |                                          |  |                |  |                         |    |  |             |  |             |  |                         |   |  |            
|Totals                                       |  |                                          |  | $  639,141     |  | $  (487,52              | 7) |  | $  151,614  |  | $  618,800  |  | $  (471,667             | ) |  | $  147,133 
|                                            

Depreciation of computer software developed for internal use was $4.2 million and $2.9 million for the three months ended
March 31, 2007 and 2006, respectively.

Goodwill

Goodwill changed
during the first quarter of 2007 as follows:



|                                        |  |             
|--------------------------------------- |  | ------------
|(In thousands)                          |  |             
|                                       
|                                        | 
|Goodwill at December 31, 2006           |  | $  1,001,027
|Acquisitions of businesses              |  | 3,367       
|Effects of foreign currency translation |  | 2,908       
|                                        |  |             
|Goodwill at March 31, 2007              |  | $  1,007,302
|                                       

Identifiable Intangible Assets

We
reassess the remaining useful lives of our identifiable intangible assets each reporting period to determine whether events and circumstances warrant revisions to the remaining periods of amortization. No revisions were determined to be necessary
during the periods presented.

Identifiable intangible assets consisted of the following at the reported balance sheet dates:



|                                            |  |                                            |   |  |                |  |                          |   |  |            |  |              |  |                          |    |  |           
|------------------------------------------- |  | ------------------------------------------ | - |  | -------------- |  | ------------------------ | - |  | ---------- |  | ------------ |  | ------------------------ | -- |  | ----------
|                                            |  |                                            |   |  | MARCH 31, 2007 |  | DECEMBER 31, 2006       
|                                            |  |                                            |   |  |                |  |                         
|                                            |  | Range of Estimated Useful Lives (in years) |   |  | Gross Amount   |  | Accumulated Amortization |   |  | Net Amount |  | Gross Amount |  | Accumulated Amortization |    |  | Net Amount
|                                            |  |                                            |   |  |                |  |                          |   |  |            |  |              |  |                          |    |  |           
|(In thousands, except years)                |  |                                            |   |  |                |  |                          |   |  |            |  |              |  |                          |    |  |           
|                                            |  |                                            |   |  |                |  |                         
|Trademarks, trade names and copyrights      |  | 2-10                                       | 1 |  | $    48,235    |  | $  (14,578)              |   |  | $  33,657  |  | $    47,884  |  | $  (13,395               | )  |  | $  34,489 
|Customer lists, contracts and relationships |  | 4-7                                        |   |  | 57,383         |  | (28,237                  | ) |  | 29,146     |  | 56,867       |  | (25,662                  | )  |  | 31,205    
|Other identifiable intangible assets        |  | 2-10                                       |   |  | 18,697         |  | (8,703                   | ) |  | 9,994      |  | 18,591       |  | (7,051                   | )  |  | 11,540    
|                                            |  |                                            |   |  |                |  |                          |   |  |            |  |              |  |                          |    |  |           
|Totals                                      |  |                                            |   |  | $  124,315     |  | $  (51,518               | ) |  | $  72,797  |  | $  123,342   |  | $  (46,10                | 8) |  | $  77,234 
|                                           

|1 |  | Included in trademarks, trade names and copyrights above is a $2.8 million trade name that has an indefinite life and therefore is
not amortized.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



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|8 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



As of March 31, 2007, amortization of identifiable intangible assets for the next five years, including amortization recorded
during the first quarter of 2007, would be as follows:



|               |  |          
|-------------- |  | ---------
|FISCAL YEAR   
|              
|(In thousands) |  |          
|               | 
|2007           |  | $  20,418
|2008           |  | 17,485   
|2009           |  | 10,917   
|2010           |  | 6,978    
|2011           |  | 6,516    
|              

Leases

Rent expense, net of
sublease income, was $4.0 million and $4.5 million for the three months ended March 31, 2007 and 2006, respectively. Sublease income recorded as an offset to rent expense was insignificant in all periods presented.

Our accrued losses on leased properties changed during the first quarter of 2007 as follows:

|                                                 |  |               |   |  |                    |   |  |         |  
|------------------------------------------------ |  | ------------- | - |  | ------------------ | - |  | ------- | -
|                                                 |  | Restructuring |   |  | AcquisitionRelated |   |  | Total   |  
|                                                 |  |               |   |  |                    |   |  |         |  
|(In thousands)                                   |  |               |   |  |                    |   |  |         |  
|                                                 |  |               |   |  |                    |   |  |         |  
|Balance at December 31, 2006                     |  | $24,021       |   |  | $2,370             |   |  | $26,391 |  
|Additional charges and adjustments               |  | (1,244        | ) |  | (182               | ) |  | (1,426  | )
|Reduction of accrued losses due to cash payments |  |              |   |  | 31                 |   |  | 31      |  
|Accretion expense                                |  | 418           |   |  | 43                 |   |  | 461     |  
|Effects of foreign currency translation          |  |              |   |  | 27                 |   |  | 27      |  
|                                                 |  |               |   |  |                    |   |  |         |  
|Balance at March 31, 2007                        |  | $23,195       |   |  | $2,289             |   |  | $25,484 |  
|Current amount                                   |  | 10,566        |   |  | 434                |   |  | 11,000  |  
|Long-term amount                                 |  | 12,629        |   |  | 1,855              |   |  | 14,484  |  
|                                                 | 

Employee Stock-Based Compensation

Through our stock-based compensation program, our Board of Directors is authorized to grant restricted stock units (RSUs), stock options and other stock-based awards. Our stock-based compensation program is intended to attract, retain and
motivate talented employees and directors of the company, and to align stockholder and employee interests.

Stock-based compensation expense is recorded in selling,
general and administrative expenses, net of estimated forfeitures and less amounts capitalized as computer software developed for internal use and contemporary imagery.



|                                                                                              |  |          |   |  |          |  
|--------------------------------------------------------------------------------------------- |  | -------- | - |  | -------- | -
|THREE MONTHS ENDED MARCH 31,                                                                  |  | 2007     |   |  | 2006     |  
|                                                                                              |  |          |   |  |          |  
|(In thousands, except per share amounts)                                                      |  |          |   |  |          |  
|                                                                                              |  |         
|SFAS No. 123(R) stock-based compensation                                                      |  | $  2,776 |   |  | $  3,438 |  
|Amounts capitalized as computer software developed for internal use and contemporary imagery1 |  | 144      |   |  | (132     | )
|                                                                                              |  |          |   |  |          |  
|Impact of stock-based compensation on income from operations                                  |  | 2,920    |   |  | 3,306    |  
|Income taxes                                                                                  |  | (959     | ) |  | (1,113   | )
|                                                                                              |  |          |   |  |          |  
|Impact of stock-based compensation on net income                                              |  | $  1,961 |   |  | $  2,193 |  
|                                                                                              | 

|1 |  | Capitalized costs are positive for the quarter ended March 31, 2007 due to the reversal of capitalized costs related to
employees who left the company before their equity awards had vested.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|9 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



The following table presents stock option activity for the first quarter of 2007:



|                  |  |                  |   |             |                                 |  |                  |  |                                
|----------------- |  | ---------------- | - | ----------- | ------------------------------- |  | ---------------- |  | -------------------------------
|                  |  | OUTSTANDING      |   | EXERCISABLE
|                  |  |                  |   |            
|                  |  | Number of Shares |   |             | Weighted Average Exercise Price |  | Number of Shares |  | Weighted Average Exercise Price
|                  |  |                  |   |             |                                 |  |                  |  |                                
|                  |  | (In thousands)   |   |             |                                 |  | (In thousands)   |  |                                
|                  |  |                  |   |            
|December 31, 2006 |  | 3,419            |   |             | $  46.75                        |  | 2,862            |  | $  44.28                       
|Exercised         |  | (64              | ) |             | 48.19                           |  |                  |  |                                
|Lapsed            |  | (48              | ) |             | 57.76                           |  |                  |  |                                
|                  |  |                  |   |             |                                 |  |                  |  |                                
|March 31, 2007    |  | 3,307            |   |             | 46.76                           |  | 2,817            |  | 44.33                          
|                 

The weighted average remaining contractual life of options exercisable at March 31, 2007 is 4.9 years.

The aggregate intrinsic value of options vested at March 31, 2007 is $38.8 million (based on the market price of our common stock on that date). The aggregate intrinsic value
of options vested plus those not yet vested but expected (at March 31, 2007) to vest is $39.5 million. There are approximately 3.3 million options vested or expected to vest (those outstanding less estimated forfeitures), with a weighted
average exercise price of $46.69 and a weighted average remaining contractual term of 5.5 years.

Total compensation cost not yet recognized for unvested stock
options at March 31, 2007 was $8.3 million, which we expect to recognize over a weighted average period of approximately 2.4 years.

RESTRICTED STOCK UNITS
(RSUs)

The following table presents RSU activity for the first quarter of 2007:



|                              |  |                 |   |  |                                       
|----------------------------- |  | --------------- | - |  | --------------------------------------
|                              |  | Number of Units |   |  | Weighted-Average Grant Date Fair Value
|                              |  |                 |   |  |                                       
|                              |  | (In thousands)  |   |  |                                       
|                              |  |                
|Unvested at December 31, 2006 |  | 740             |   |  | $  65.64                              
|Granted                       |  | 27              |   |  | 49.85                                 
|Vested                        |  | (63             | ) |  | 87.99                                 
|Forfeited                     |  | (15             | ) |  | 67.06                                 
|                              |  |                 |   |  |                                       
|Unvested at March 31, 2007    |  | 689             |   |  | 62.95                                 
|                             

The grant date fair value of an RSU is the market price of our common stock on the date of grant while the intrinsic value
of an RSU is the market price of our common stock at the time of vesting. The aggregate intrinsic value of RSUs vested in the first quarter of 2007 was $27.2 million. Total compensation expense not yet recognized for unvested RSUs outstanding as of
March 31, 2007 was $31.8 million, which we expect to recognize over a weighted average period of 3 years.

Advertising and Marketing

Advertising and marketing expenses were $5.7 million and $4.3 million for the three months ended March 31, 2007 and 2006, respectively. Prepaid marketing materials were
insignificant at March 31, 2007 and December 31, 2006.

Recent Accounting Pronouncements

SFAS NO. 157, FAIR VALUE MEASUREMENTS

In September of 2006, the FASB issued
SFAS No. 157. This Statement provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS No. 157 emphasizes
that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. Under the Statement, fair value measurements are disclosed by
level within that hierarchy. While the Statement does not add any new fair value measurements, it does change current practice.



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|10 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Changes to practice include a requirement for an entity to include its own credit standing in the measurement of its liabilities and to adjust the value of restricted
stock for the effect of the restriction even if the restriction lapses within one year. The Statement is effective January 1, 2008 and is to be applied prospectively. As this statement is to be applied prospectively, it will not impact our
financial statements upon adoption. However, it will dictate the way we value certain assets in the future.

NOTE 2. FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments consist of cash and cash equivalents, forward foreign currency exchange contracts, accounts receivable, accounts payable and debt.
Forward foreign currency exchange contracts are carried at fair value. The fair value of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to their short-term nature. The fair value of our
debt, based on quoted market prices, was approximately $281.2 million at March 31, 2007 and $261.2 million at December 31, 2006. These fair values were $16.2 million higher and $3.8 million lower, than the carrying value of our debt at
those dates, respectively.

NOTE 3. DEBT

Debentures

We have $265.0 million of series B convertible subordinated debentures outstanding that expire in 2023. The debentures are convertible under certain circumstances as defined in the
indenture governing the debentures. See our 2006 Annual Report on Form 10-K for information on these conversion features. The debentures were not convertible at March 31, 2007 or December 31, 2006.

During the fourth quarter of 2006, we received two notices of a purported default from certain holders of our debentures. Such notices, purportedly representing an aggregate of
approximately 29% of the issued and outstanding debentures, asserted that because we are delinquent in filing our Quarterly Report on Form 10-Q for the third quarter of 2006 with the Securities and Exchange Commission, we are in default under the
indenture dated as of December 16, 2004, between the company, as issuer, and The Bank of New York, as trustee (the Trustee), relating to the debentures. The notices of default demanded that we cure the purported default within sixty days from
their receipt, after which such default would develop into an Event of Default, as defined in the indenture. We have not determined the validity of the notices, including the purported ownership interests represented by the notices. As a
result of the sixty-day cure period expiring, the Trustee gave us a Notice of Event of Default on February 21, 2007.

We believe that we have fully performed our
obligations under the indenture because the indenture does not contain an express covenant requiring us to provide the Trustee or the bondholders with periodic reports such as the Quarterly Report on Form 10-Q for the third quarter of 2006. While
section 314(a) of the Trust Indenture Act of 1939 (the TIA) is incorporated into the indenture by virtue of Section 17.01 thereof and contemplates us providing the Trustee with copies of our periodic reports, we believe that the TIA does not
require such reports to be provided within any prescribed period of time. We intend to furnish to the Trustee copies of our Quarterly Report on Form 10-Q for the third quarter of 2006 now that we have filed such report with the SEC. We believe that
such action would cure any default of the indenture provision in question, if any default exists.

Consequently, in our view, these notices of default are, without
merit. As a result, we have classified the debt as long-term at March 31, 2007. If it is determined that we are in default, the classification would be changed to short-term.

While we have questioned the claimants legal theory as to whether we were in default under the terms of the indenture, if an Event of Default occurred following the sixty day cure period, the Trustee or
holders of at least 25% in aggregate principal amount of the debentures then outstanding would have the contractual right to declare all unpaid principal and accrued interest on the debentures then outstanding to be immediately due and payable. We
believe that if an Event of Default occurred and the debentures are accelerated, we have adequate financial resources to pay any unpaid principal and any interest that would then be due on the debentures.

Senior Credit Facility

On March 19, 2007, we terminated our 364-day $100 million
unsecured senior revolving credit facility entered into with U.S. Bank on May 4, 2006. On the same day, we entered into a new agreement with U.S. Bank, as Administrative Agent and Sole Lead Arranger, for a 364-day senior unsecured revolving
credit facility (the Facility). The Facility initially makes $200 million available for borrowing but allows us to increase the available funds to $350 million within the first six months of the term of the Facility. Funds drawn down under the
Facility may be used for general corporate purposes, including for acquisitions, redemption or repayment of all or a portion of our existing $265 million of debentures, and working capital requirements. Fees paid in connection with the establishment
of the Facility are deferred and amortized to interest expense over the term of the Facility.



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|11 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



The interest rate on funds drawn down under the Facility ranges from LIBOR plus 0.60% to 0.75% depending on our leverage ratio. We
will be charged 0.125% to 0.15% on funds available (initially $200 million and ultimately $350 million should we elect to increase the available funds) but not drawn down. The Facility requires us to maintain a maximum leverage ratio of 2.75
throughout its term. The leverage ratio is defined as our total interest bearing debt divided by a trailing four quarter average of our earnings before interest expense, income tax expense, depreciation, amortization, non-cash items (including
equity-based compensation expense) and any non-recurring items. The Facility is also subject to customary events of default, including events of default on our other outstanding debt, as applicable, upon the occurrence of which we would be required
to immediately repay any funds drawn down under the Facility.

Subsequent to the end of the quarter, we drew down funds under the Facility. See Note 8. Subsequent
Events for more information.

NOTE 4. COMMITMENTS AND CONTINGENCIES

Commitments

There have been no material changes in our commitments outside the normal course of business since year end, other than the unrecognized
tax benefits associated with the adoption of Financial Accounting Standards Board Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes. The current portion of the unrecognized tax benefits at March 31, 2007
was $2.0 million, which is expected to be resolved in the next 12 months. The non-current portion at March 31, 2007 was $38.7 million, the timing of the resolution of which is uncertain.

Contingencies

We indemnify certain customers from claims related to alleged infringements
of the intellectual property rights of third parties, such as claims arising from failure to secure model and property releases for images we license. The standard terms of these indemnifications require us to defend those claims and pay related
damages, if any. We typically mitigate this risk by securing all necessary model and property releases for imagery for which we hold the copyright, by contractually requiring our contributing photographers and other imagery partners to do the same
prior to submitting any imagery to us and by carrying insurance related to such claims. We also require contributing photographers, other imagery partners and sellers of businesses or image collections that we have purchased to indemnify us in
certain circumstances in the event a claim arises in relation to an image they have provided or sold to us. Our other imagery partners are also typically required to carry insurance policies for losses related to such claims. We do not record any
liabilities for these indemnifications until claims are made and we are able to assess the range of possible payments and available recourse from our imagery partners, as applicable. Historically, our exposure to such claims has been immaterial, as
were our recorded liabilities for intellectual property infringement at March 31, 2007 and December 31, 2006.

In the ordinary course of business, we also
enter into certain types of agreements that contingently require us to indemnify counterparties against third-party claims. These may include:



| |  |  | agreements with vendors and suppliers, under which we may indemnify them against claims arising from our use of their products or services;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | agreements with customers other than those licensing images, under which we may indemnify them against claims arising from their use of our products or services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | agreements with delegates, under which we may indemnify them against claims arising from their distribution of our products or services;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | real estate and equipment leases, under which we may indemnify lessors against third-party claims relating to use of their property;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | agreements with directors and officers, under which we indemnify them to the full extent allowed by Delaware law against claims relating to their service to us;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | agreements with purchasers of businesses we have sold, under which we may indemnify the purchasers against claims arising from our operation of the businesses prior to sale;
and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | agreements with initial purchasers and underwriters of our securities, under which we indemnify them against claims relating to their participation in the transactions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The nature and terms of these indemnifications vary from contract to contract, and generally a maximum obligation is not stated. Because we are
unable to estimate our potential obligation, and because we do not expect these indemnifications to have a material adverse effect on our consolidated financial position, results of operations or cash flows, no related liabilities were recorded at
March 31, 2007 or December 31, 2006. We hold insurance policies that mitigate potential losses arising from certain indemnifications, and historically, we have not incurred significant costs related to performance under these obligations.



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|12 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Securities and Exchange Commission (SEC) Informal Inquiry

As announced in November 2006, we had been informed by the SEC that they were initiating an informal inquiry into our historical stock option grant practices. As a result, in November 2006, we set up a Special Committee of the
Board of Directors to perform, with the help of independent counsel, a review of our equity compensation grant practices and related accounting for equity compensation grants. See our 2006 Annual Report on Form 10-K for additional information.

Shareholder Derivative Lawsuits

As a result of the SEC informal inquiry,
there have been two derivative lawsuits filed against certain current and former executive officers and directors of the company. The lawsuits, seek remedies from the defendants for purported violations of state law, including breaches of fiduciary
duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment.

We have been, and may continue to be, subject to legal claims from
time to time in the ordinary course of our business, including those related to alleged infringements of the intellectual property rights of third parties, such as the failure to secure model or property releases for imagery we license. Claims may
also include those brought by photographers and filmmakers relating to our handling of images submitted to us or to the companies we have acquired. We have accrued a liability for the anticipated costs of settling claims for which we believe a loss
is probable. There are no pending legal proceedings to which we are a party or to which any of our property is subject that, either individually or in the aggregate, we believe are expected to have a material adverse effect on our consolidated
financial position, results of operations or cash flows.

NOTE 5. COMPREHENSIVE INCOME

Comprehensive income consisted of the following during the periods presented:



|                                                                                            |  |           |  |          
|------------------------------------------------------------------------------------------- |  | --------- |  | ---------
|THREE MONTHS ENDED MARCH 31,                                                                |  | 2007      |  | 2006     
|                                                                                            |  |           |  |          
|(In thousands)                                                                              |  |           |  |          
|                                                                                            |  |          
|Net income                                                                                  |  | $  38,030 |  | $  39,039
|Net unrealized gains on revaluation of long-term intercompany balances, net of income taxes |  | 550       |  | 1,982    
|Net foreign currency translation adjustment gains                                           |  | 4,550     |  | 1,565    
|Net unrealized gains on short-term investments                                              |  |          |  | 27       
|                                                                                            |  |           |  |          
|Total comprehensive income                                                                  |  | $  43,130 |  | $  42,613
|                                                                                           

Accumulated other comprehensive income consisted of the following at the reported balance sheet dates:



|                                                                                                        |  |                |  |                  
|------------------------------------------------------------------------------------------------------- |  | -------------- |  | -----------------
|                                                                                                        |  | MARCH 31, 2007 |  | DECEMBER 31, 2006
|                                                                                                        |  |                |  |                  
|(In thousands)                                                                                          |  |                |  |                  
|                                                                                                        |  |               
|Accumulated net unrealized gains on revaluation of long-term intercompany balances, net of income taxes |  | $  17,812      |  | $  17,262        
|Accumulated net foreign currency translation adjustment gains                                           |  | 29,471         |  | 24,921           
|                                                                                                        |  |                |  |                  
|Total accumulated other comprehensive income                                                            |  | $  47,283      |  | $  42,183        
|                                                                                                       

Deferred taxes are not provided on unrealized foreign exchange gains and losses on foreign currency denominated long-term
intercompany balances or on translation adjustments, except on long-term intercompany loans in the United Kingdom, because we expect that these investments in our foreign subsidiaries will be permanent. It is not practicable to calculate the
unrecognized deferred tax liability for temporary differences related to these investments.

NOTE 6. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

We operate the company in two segments, traditional licensing and micropayment. However, we aggregate these two segments for reporting purposes because they have met the
aggregation criteria in SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.



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|13 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Our revenue is generated through a diverse customer base, and there is no reliance on a single customer or small group of
customers; no customer represented 10% or more of our total revenue in the periods presented. Revenue is summarized below based on customers billing addresses, with countries generating 5% or more of total revenue in a reportable period shown
separately. Due to the impact of foreign currency translation, these figures may not reflect the relative performance of the individual countries.



|                                   |  |                              |  |              |  |             |  |             
|---------------------------------- |  | ---------------------------- |  | ------------ |  | ----------- |  | ------------
|                                   |  | THREE MONTHS ENDED MARCH 31,
|                                   |  |                             
|                                   |  | 2007                         |  | % of Revenue |  | 2006        |  | % of Revenue
|                                   |  |                              |  |              |  |             |  |             
|(In thousands, except percentages) |  |                              |  |              |  |             |  |             
|                                   |  |                              |  |             
|United States                      |  | $    83,341                  |  | 39%          |  | $    84,181 |  | 42%         
|United Kingdom                     |  | 30,440                       |  | 14%          |  | 26,625      |  | 13%         
|Germany                            |  | 18,381                       |  | 9%           |  | 16,171      |  | 8%          
|France                             |  | 12,826                       |  | 6%           |  | 11,708      |  | 6%          
|Rest of world                      |  | 67,662                       |  | 32%          |  | 61,744      |  | 31%         
|                                   |  |                              |  |              |  |             |  |             
|Total revenue                      |  | $  212,650                   |  | 100%         |  | $  200,429  |  | 100%        
|                                  

NOTE 7. INCOME TAXES

On
January 1, 2007, we adopted the provisions of Financial Accounting Standards Board Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes. As result of the adoption, we applied the provisions of this
Interpretation to all of our tax positions. Tax positions that met the more-likely-than-not recognition threshold at January 1, 2007 were recognized. In some instances this resulted in a different reserve than what was previously recorded. This
difference was recorded as a cumulative effect adjustment to the opening balance of retained earnings in 2007. The cumulative-effect adjustment increased the reserves for uncertain tax positions by approximately $4.2 million and reduced retained
earnings by the same amount. As of the adoption date, we had unrecognized tax benefits of $37.5 million, of which $35.5 million is non-current and $2.0 million is current and is expected to be resolved in the next 12 months. We anticipate the
reserve to increase during the year for items that arise in the ordinary course of business. Such amounts will be reflected as an increase in the amount of unrecognized tax benefits and an increase to the current period tax expense. These amounts
are contemplated in our annual effective tax rate. The entire reserve, if recognized, would affect our effective tax rate.

We recognize interest and penalties
related to unrecognized tax benefits in income tax expense. The amount of interest and penalties included in the unrecognized tax benefit amount of $37.5 million is insignificant. Prior to the adoption of FIN No. 48 we recognized interest and
penalties related to unrecognized tax benefits in interest expense.

We conduct business globally and, as a result, our parent company (Getty Images, Inc.) or our
subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major
jurisdictions as the U.S. and U.K. With few exceptions, we are no longer subject to income tax examinations outside of the U.S. for years prior to 2001. The statute of limitations remains open with respect to our U.S. income tax returns for tax
years 2003 and subsequent. As of March 31, 2007, we are under examination for tax years 2002 and 2003 by the tax authorities in the United Kingdom.

NOTE 8.
SUBSEQUENT EVENTS

Stock Option Review

As announced on November 9,
2006, we had received notice of an informal inquiry from the Securities and Exchange Commission (SEC) into our historical stock option grant practices. As also announced on November 9, 2006, a Special Committee of the Board of Directors was
established by our Board of Directors to conduct an independent investigation relating to our historical equity award grant practices and related accounting for equity compensation. Their review and the review conducted by the company were completed
in April 2007, prior to the filing of our 2006 Annual Report on Form 10-K. As a result of the review, we restated certain prior years financial statements through our 2006 Annual Report on Form 10-K and recorded $27.2 million in additional
equity compensation expense from 1998 to 2003. The SEC inquiry is ongoing and we are cooperating fully with the SEC.

Financing

On April 18, 2007, we drew down $80 million under the Facility to fund, in part, the acquisition of MediaVast, Inc.



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|14 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Acquisitions

On April 25, 2007, we
purchased all the shares of MediaVast, Inc. for approximately $202 million in net cash. MediaVast, Inc., located in New York, N.Y., is an entertainment photography company, which licenses imagery primarily under the brand name Wire Image. The
majority of the purchase price is expected to be allocated to goodwill and other identifiable intangible assets.

Restructuring

On May 14, 2007, we entered into a sublease with Google, Inc. (Google), for the remainder of our excess leased facilities in Seattle. Google will sublease approximately 56,000
square feet in Seattle, for a term beginning June 1, 2007 and ending August 11, 2013, the end of our lease term.

On May 3, 2007, we entered into a
sublease with Cardinia Real Estate, L.L.C. (Cardinia) for the remainder of our excess leased facilities in New York. Cardinia will sublease approximately 72,970 square feet in, New York for a term beginning June 1, 2007 and ending
March 30, 2015, the end of our lease term.

As these subleases were entered into prior to issuing our 2006 Annual Report on Form 10-K, the impact of the
subleases was factored into our 2006 losses on leased properties and thus are not anticipated to impact 2007 results of operations.



|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
|------- |  | --------------------------------------------------------------------------------------------

INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

Many of the statements in this Quarterly Report on Form 10-Q are
forward-looking statements and are based on our current expectations, assumptions and projections about Getty Images, Inc. and the market in which we operate. We intend such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. All forward-looking statements are made on the basis of our views as of the date this document is filed with the Securities and Exchange
Commission (SEC). These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that are difficult to predict with respect to timing, extent and likelihood and that could cause our
actual results to differ materially from our past performance and our current expectations, assumptions and projections. Differences may result from actions taken by us as well as from risks and uncertainties beyond our control. These
forward-looking statements are subject to a number of risks and uncertainties, including but not limited to the following:



| |  |  | Increased competition could reduce our revenues, margins and operating results;
| | - |  | -------------------------------------------------------------------------------



| |  |  | Our financial results and stock price may fluctuate;
| | - |  | ----------------------------------------------------



| |  |  | We may not be successful in acquiring or integrating businesses;
| | - |  | ----------------------------------------------------------------



| |  |  | We may experience system and service disruptions and difficulties;
| | - |  | ------------------------------------------------------------------



| |  |  | Systems security risks and concerns may harm our business;
| | - |  | ----------------------------------------------------------



| |  |  | Our business and prospects would suffer if we are unable to protect and enforce our intellectual property rights;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Our products and services may infringe on intellectual property rights of third parties and any infringement could require us to incur substantial costs and distract our
management;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Third parties may claim we infringe their intellectual property rights;
| | - |  | -----------------------------------------------------------------------



| |  |  | We have claims and lawsuits against us that may result in adverse outcomes;
| | - |  | ---------------------------------------------------------------------------



| |  |  | Certain of our stock holders can exercise significant influence over our business and affairs;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | We may lose the right to use Getty Images trademarks in the event we experience a change in control;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | Our business depends on our ability to attract and retain talented employees;
| | - |  | -----------------------------------------------------------------------------



| |  |  | An increase in government regulation of the internet and e-commerce could have a negative impact on our business;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | We may have additional tax liabilities;
| | - |  | ---------------------------------------



| |  |  | If our goodwill or other intangible assets become impaired we may be required to record a significant charge to earnings;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | We may not be able to obtain external financing or service our indebtedness;
| | - |  | ----------------------------------------------------------------------------



| |  |  | Changes in accounting may affect our reported earnings and operating income;
| | - |  | ----------------------------------------------------------------------------



| |  |  | We operate a global business that exposes us to additional risks;
| | - |  | -----------------------------------------------------------------



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|15 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



| |  |  | Certain provisions of our corporate documents and Delaware corporate law may deter a third party from acquiring us;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | We have been named a party to two shareholder derivative lawsuits relating to historical stock option practices, and we may be named in additional lawsuits;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The informal inquiry by the SEC into our historical stock option grant practices is ongoing and the outcome of this inquiry may have adverse consequences and;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The delay in filing our prior reports with the SEC may result in adverse consequences for the company.
| | - |  | ------------------------------------------------------------------------------------------------------

Potential risks and uncertainties also include, among others, those specifically set forth in this section and those in Part I, Item 1A. Risk Factors and
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) of our 2006 Annual Report on Form 10-K. New risks emerge from time-to-time that may cause actual results to differ
materially from those contained in any forward-looking statements. This should not be construed as a complete list of all factors that could adversely affect our consolidated financial position, results of operations or liquidity. Except as required
by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise. Readers should carefully review all documents that we file with, and furnish to, the SEC, as we
will periodically update these forward-looking statements through these documents. Therefore, these forward-looking statements should not be considered current beyond the date this document is filed with the SEC except as updated in any of our
documents filed with, and furnished to, the SEC after the date this document is filed with the SEC.

GENERAL

The following should be read in conjunction with our Condensed Consolidated Financial Statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on
Form 10-Q.

Critical Accounting Policies and Estimates and Assumptions

There were no material changes in our critical accounting policies and estimates and assumptions since December 31, 2006.

RESULTS OF OPERATIONS

Below are selected financial highlights from our results of operations. All figures are shown in thousands, except percentages.



|        |  |                             |  |                |  |            |  |              |  |           |  |         
|------- |  | --------------------------- |  | -------------- |  | ---------- |  | ------------ |  | --------- |  | --------
|        |  | THREE MONTHS ENDEDMARCH 31, |  | YEAR OVER YEAR
|        |  |                             |  |               
|        |  | 2007                        |  | % of revenue   |  | 2006       |  | % of revenue |  | $ change  |  | % change
|        |  |                             |  |                |  |            |  |              |  |           |  |         
|        |  |                             |  |                |  |           
|Revenue |  | $  212,650                  |  | 100.0          |  | $  200,429 |  | 100.0        |  | $  12,221 |  | 6.1     
|       

Excluding the impact of changes in foreign currency exchange rates, revenue increased approximately $3.2 million or 1.6%
year over year, due mainly to an increase in micropayment licenses and an increase in the volume of royalty-free imagery licensed. Editorial imagery revenue also grew, led by strong growth in entertainment. This growth in revenue was offset in part
by a decline in rights-managed revenue (both volumes and price per image licensed) and declines in the average price per royalty free image licensed. For 2007, we expect to report single digit percentage growth in revenue.



|                                             |  |                             |  |                |  |           |  |              |  |          |  |         
|-------------------------------------------- |  | --------------------------- |  | -------------- |  | --------- |  | ------------ |  | -------- |  | --------
|                                             |  | THREE MONTHS ENDEDMARCH 31, |  | YEAR OVER YEAR
|                                             |  |                             |  |               
|                                             |  | 2007                        |  | % of revenue   |  | 2006      |  | % of revenue |  | $ change |  | % change
|                                             |  |                             |  |                |  |           |  |              |  |          |  |         
|                                             |  |                             |  |                |  |          
|Selling, general and administrative expenses |  | $  81,403                   |  | 38.3           |  | $  74,275 |  | 37.0         |  | $  7,128 |  | 9.6     
|                                            

The increase in selling, general and administrative expenses was due mainly to significant costs (approximately $4.1
million) associated with our review of our equity compensation grant practices and related accounting and termination of a planned acquisition. Marketing expenses also increased year over year, as did staff costs, due primarily to lower wages
capitalized in connection with the development of internal use software and imagery.



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|16 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



|                       |  |                             |  |                  |  |           |  |                  |  |            |  |         
|---------------------- |  | --------------------------- |  | ---------------- |  | --------- |  | ---------------- |  | ---------- |  | --------
|                       |  | THREE MONTHS ENDEDMARCH 31, |  | YEAR OVER YEAR  
|                       |  |                             |  |                 
|                       |  | 2007                        |  | operating margin |  | 2006      |  | operating margin |  | $ change   |  | % change
|                       |  |                             |  |                  |  |           |  |                  |  |            |  |         
|                       |  |                             |  |                  |  |          
|Income from operations |  | $  55,707                   |  | 26.2             |  | $  58,628 |  | 29.3             |  | $  (2,921) |  | (5.0)   
|                      

Income from operations and operating margin decreased year over year primarily due to the increase in selling, general and
administrative expenses, as well as due to higher depreciation primarily related to capitalized imagery and increased amortization associated with recent acquisitions.



|                  |  |                             |  |                |  |          |  |              |  |          |   |  |         
|----------------- |  | --------------------------- |  | -------------- |  | -------- |  | ------------ |  | -------- | - |  | --------
|                  |  | THREE MONTHS ENDEDMARCH 31, |  | YEAR OVER YEAR
|                  |  |                             |  |               
|                  |  | 2007                        |  | % of revenue   |  | 2006     |  | % of revenue |  | $ change |   |  | % change
|                  |  |                             |  |                |  |          |  |              |  |          |   |  |         
|                  |  |                             |  |                |  |         
|Investment income |  | $  3,294                    |  | 1.5            |  | $  4,016 |  | 2.0          |  | $  (722  | ) |  | (18.0)  
|                 

Investment income decreased in 2007 due primarily to a decrease in the average investment balance in the first quarter of
2007 as compared to the corresponding period in 2006.



|                   |  |                             |  |                    |  |             |  |                    |  |          |  |  |         
|------------------ |  | --------------------------- |  | ------------------ |  | ----------- |  | ------------------ |  | -------- |  |  | --------
|                   |  | THREE MONTHS ENDEDMARCH 31, |  | YEAR OVER YEAR    
|                   |  |                             |  |                   
|                   |  | 2007                        |  | effective tax rate |  | 2006        |  | effective tax rate |  | $ change |  |  | % change
|                   |  |                             |  |                    |  |             |  |                    |  |          |  |  |         
|                   |  |                             |  |                    |  |            
|Income tax expense |  | $  (19,741)                 |  | 34.2               |  | $  (23,295) |  | 37.4               |  | $  3,554 |  |  | 15.3    
|                  

The decrease in our 2007 income tax expense and effective tax rate from the comparable quarter of 2006 is primarily a result
of an increased earnings in non-US jurisdictions with lower tax rates.

LIQUIDITY AND CAPITAL RESOURCES



|                                     |  |                |  |                  
|------------------------------------ |  | -------------- |  | -----------------
|                                     |  | MARCH 31, 2007 |  | DECEMBER 31, 2006
|                                     |  |                |  |                  
|(In thousands, except current ratio) |  |                |  |                  
|                                     |  |               
|Cash and cash equivalents            |  | $  386,519     |  | $  339,466       
|Working capital                      |  | $  411,243     |  | $  353,824       
|Current ratio                        |  | 4.11           |  | 3.66             
|                                    

Cash and cash equivalents balances increased in the first quarter of 2007 due to cash provided by operations, offset in part
by $16.2 million in cash paid for capital expenditures. Management expects capital expenditures to total approximately $60 million for the full year of 2007.

Subsequent to the end of the quarter we acquired MediaVast, Inc. for approximately $202.0 million. See the discussion under Subsequent Events below for more information.

During the fourth quarter of 2006, we received two notices of a purported default from certain holders of our debentures. Such notices, purportedly representing an aggregate of approximately 29% of the issued and outstanding
debentures, asserted that because we are delinquent in filing our Quarterly Report on Form 10-Q for the third quarter of 2006 with the Securities and Exchange Commission, we are in default under the indenture dated as of December 16, 2004,
between the company, as issuer, and The Bank of New York, as trustee (the Trustee), relating to the debentures. The notices of default demanded that we cure the purported default within sixty days from their receipt, after which such default would
develop into an Event of Default, as defined in the indenture. As a result of the sixty-day cure period expiring, the Trustee gave us a Notice of Event of Default on February 21, 2007.



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|17 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



We believe that we have fully performed our obligations under the indenture because the indenture does not contain an express
covenant requiring us to provide the Trustee or the bondholders with periodic reports such as the Quarterly Report on Form 10-Q for the third quarter of 2006. While section 314(a) of the Trust Indenture Act of 1939 (the TIA) is incorporated into the
indenture by virtue of Section 17.01 thereof and contemplates us providing the Trustee with copies of our periodic reports, we believe that the TIA does not require such reports to be provided within any prescribed period of time. We intend to
furnish to the Trustee copies of our Quarterly Report on Form 10-Q for the third quarter of 2006 now that we have filed such report with the SEC. We believe that such action would cure any default of the indenture provision in question, if any
default exists.

Consequently, in our view, these notices of default are, without merit. As a result, we have classified the debt as long-term at March 31, 2007.
If it is determined that we are in default, the classification would be changed to short-term.

While we have questioned the claimants legal theory as to
whether we were in default under the terms of the indenture, if an Event of Default occurred following the sixty day cure period, the Trustee or holders of at least 25% in aggregate principal amount of the debentures then outstanding
would have the contractual right to declare all unpaid principal and accrued interest on the debentures then outstanding to be immediately due and payable. We believe that if an Event of Default occurred and the debentures are
accelerated, we have adequate financial resources to pay any unpaid principal and any interest that would then be due on the debentures.

There were no material
changes in our contractual obligations and rights outside of the ordinary course of business or other material changes in our financial condition during the first quarter of 2007, other than the unrecognized tax benefits associated with the adoption
of Financial Accounting Standards Board Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes. The current portion of the unrecognized tax benefits at March 31, 2007 was $2.0 million, which is expected to
be resolved in the next 12 months. The non-current portion at March 31, 2007 was $38.7 million, the timing of the resolution of which is uncertain.

RECENT
ACCOUNTING PRONOUNCEMENTS

SFAS No. 157, Fair Value Measurements

In September of 2006, the FASB issued SFAS No. 157. This Statement provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets
and liabilities. SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. Under the
Statement, fair value measurements are disclosed by level within that hierarchy. While the Statement does not add any new fair value measurements, it does change current practice. Changes to practice include a requirement for an entity to include
its own credit standing in the measurement of its liabilities and to adjust the value of restricted stock for the effect of the restriction even if the restriction lapses within one year. The Statement is effective January 1, 2008 and is to be
applied prospectively. As this statement is to be applied prospectively, it will not impact our financial statements upon adoption. However, it will dictate the way we value assets in the future.

SUBSEQUENT EVENTS

Stock Option Review

As announced on November 9, 2006, we had received notice of an informal inquiry from the Securities and Exchange Commission (SEC) into our historical stock option grant
practices. As also announced on November 9, 2006, a Special Committee of the Board of Directors was established by our Board of Directors to conduct an independent investigation relating to our historical equity award grant practices and
related accounting for equity compensation. Their review and the review conducted by the company were completed in April 2007, prior to the filing of our 2006 Annual Report on Form 10-K. As a result of the review, we restated certain prior
years financial statements through our 2006 Annual Report on Form 10-K and recorded $27.2 million in additional equity compensation expense from 1998 to 2003. The SEC inquiry is ongoing and we are cooperating fully with the SEC.

Financing

On April 18, 2007, we drew down $80 million under the Facility to fund, in
part, the acquisition of MediaVast, Inc.

Acquisitions

On April 25,
2007, we purchased all the shares of MediaVast, Inc. for approximately $202 million in net cash. MediaVast, Inc., located in New York, N.Y., is an entertainment photography company, which licenses imagery primarily under the brand name Wire Image.
The majority of the purchase price is expected to be allocated to goodwill and other identifiable intangible assets.



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|18 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



As these subleases were entered into prior to issuing our 2006 Annual Report on Form 10-K, the impact of the subleases was
factored into our 2006 losses on leased properties and thus are not anticipated to impact 2007 results of operations.

Restructuring

On May 14, 2007, we entered into a sublease with Google, Inc. (Google), for the remainder of our excess leased facilities in Seattle. Google will sublease approximately 56,000
square feet in Seattle, for a term beginning June 1, 2007 and ending August 11, 2013, the end of our lease term.

On May 3, 2007, we entered into a
sublease with Cardinia Real Estate, L.L.C. (Cardinia) for the remainder of our excess leased facilities in New York. Cardinia will sublease approximately 72,970 square feet in, New York for a term beginning June 1, 2007 and ending
March 30, 2015, the end of our lease term.

As these subleases were entered into prior to issuing our 2006 Annual Report on Form 10-K, the impact of the
subleases was factored into our 2006 losses on leased properties and thus are not anticipated to impact 2007 results of operations.



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- |  | ----------------------------------------------------------

FOREIGN CURRENCY
EXCHANGE RATE RISK

Based on the forward foreign currency exchange contracts outstanding at March 31, 2007 and December 31, 2006, a hypothetical 10%
strengthening of the U.S. dollar against the exchange rates for the foreign currencies bought or sold through forward foreign currency exchange contracts would result in exchange gains of approximately $2.2 million and $1.6 million,
respectively. A hypothetical 10% weakening of the U.S. dollar would result in losses of a similar amount. However, these hypothetical losses or gains would be offset, at least in part, by gains or losses generated from revaluing the underlying
exposures these contracts are hedging.

Based on the forward foreign currency exchange contracts outstanding at March 31, 2007 and December 31, 2006, a
hypothetical 10% strengthening of the British pound against the exchange rates for the foreign currencies to be bought or sold through forward foreign currency exchange contracts would result in an exchange gain of approximately $2.3 million and a
loss of $0.8 million, respectively. A hypothetical 10% weakening of the British pound would result in a loss and a gain in similar amounts. However, these hypothetical gains or losses would be offset, at least in part, by losses or gains generated
from revaluing the underlying exposures these contracts are hedging.

Based on the forward foreign currency exchange contracts outstanding at March 31, 2007 and
December 31, 2006, a hypothetical 10% strengthening of the euro against the exchange rates for the foreign currencies to be bought or sold through forward foreign currency exchange contracts would result in an exchange loss of approximately
$1.7 million and a gain of $1.5 million, respectively. A hypothetical 10% weakening of the euro would result in a gain and a loss in similar amounts. However, these hypothetical gains or losses would be offset, at least in part, by losses or gains
generated from revaluing the underlying exposures these contracts are hedging.

There have been no other material changes in our exposure to market risks since
December 31, 2006.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2007. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2007, these disclosure controls and
procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the period covered by this report, there were no changes in our internal control over financial reporting identified in connection with managements evaluation of the effectiveness of our internal control over financial
reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------- |  |  |  | ------
|19 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  | PART II |  |  |  | ITEM 1



|PART II. |  | OTHER INFORMATION
|-------- |  | -----------------



|ITEM 1. |  | LEGAL PROCEEDINGS
|------- |  | -----------------

As a result of the SEC informal inquiry, there have been two
derivative lawsuits filed against certain current and former executive officers and directors of the company. The lawsuits, seek remedies from the defendants for purported violations of state law, including breaches of fiduciary duties, abuse of
control, gross mismanagement, waste of corporate assets and unjust enrichment.

We have been, and may continue to be, subject to legal claims from time to time in the
ordinary course of our business, including those related to alleged infringements of the intellectual property rights of third parties, such as the failure to secure model or property releases for imagery we license. Claims may also include those
brought by photographers and filmmakers relating to our handling of images submitted to us or to the companies we have acquired. We have accrued a liability for the anticipated costs of settling claims for which we believe a loss is probable. There
are no pending legal proceedings to which we are a party or to which any of our property is subject that, either individually or in the aggregate, we believe are expected to have a material adverse effect on our consolidated financial position,
results of operations or cash flows.



|ITEM 1A. |  | RISK FACTORS
|-------- |  | ------------

There have been no material changes in our risk factors since those
disclosed in our 2006 Annual Report on Form 10-K.



|ITEM 2. |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- |  | -----------------------------------------------------------

None



|ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES
|------- |  | -------------------------------

None



|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- |  | ---------------------------------------------------

None



|ITEM 5. |  | OTHER INFORMATION
|------- |  | -----------------

None



|ITEM 6. |  | EXHIBITS
|------- |  | --------

Reference is made to the Exhibit Index beginning on page 21 for a list of all
exhibits filed as part of this report.



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|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  |  |  |  |  | ---------
|20 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  |  |  |  |  | SIGNATURE



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.



GETTY IMAGES, INC.By:

/s/    THOMAS OBERDORFThomas Oberdorf Senior Vice President and Chief Financial
Officer


June 12, 2007



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|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  |  |  |  |  | -------------
|21 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q1  2007 |  |  |  | FORM 10-Q |  |  |  |  |  | EXHIBIT INDEX



EXHIBIT INDEX



|               |  |                                                                      
|-------------- |  | ---------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                               
|               |  |                                                                      
|               | 
|12.1           |  | Statement Regarding Computation of Ratio of Earnings to Fixed Charges
|               | 
|31.1           |  | Section 302 Certification by Jonathan D. Klein, CEO                  
|               | 
|31.2           |  | Section 302 Certification by Thomas Oberdorf, CFO                    
|               | 
|32.1           |  | Section 906 Certification by Jonathan D. Klein, CEO                  
|               | 
|32.2           |  | Section 906 Certification by Thomas Oberdorf, CFO