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UNITED STATES SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549



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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 September 30, 2006

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)



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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  ̈  No x

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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|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|1 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



EXPLANATORY NOTE

In this
Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 (this Form 10-Q), we are restating each of our Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2005 and
amending our Managements Discussion and Analysis of Financial Condition and Results of Operations for these same periods. This Form 10-Q generally does not reflect events that have occurred after the third quarter of 2006, or
modify or update the disclosures presented in this Form 10-Q, except to reflect the effects of the restatement, to update the risks we face as a result of our historical equity compensation grant practices, and to clarify certain related
disclosures.

Immediately prior to filing this Form 10-Q, we filed Amendment No. 1 on Form 10-Q/A to each of our Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2006 (the First Quarter 10-Q/A) and June 30, 2006 (the Second Quarter 10-Q/A), and immediately after we file this Form 10-Q, we will file our Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 (the 2006 Form 10-K). The First Quarter 10-Q/A and Second Quarter 10-Q/A contained restated financial information for the corresponding quarters and year-to-date periods ended March 31, 2006 and March 31,
2005 and June 30, 2006 and June 30, 2005. In this Form 10-Q, we restate our condensed consolidated financial statements for the three and nine months ended September 30, 2005. In the 2006 Form 10-K, we will restate our
(1) consolidated financial statements for our fiscal years ended December 31, 2005 and 2004, (2) selected consolidated financial data for our fiscal years ended December 31, 2005, 2004, 2003 and 2002, and (3) unaudited
quarterly financial data for all quarters in 2005 and the first and second quarters of 2006.

As disclosed in our Current Report on Form 8-K filed with the Securities
and Exchange Commission (the SEC) on April 16, 2007, our previously filed financial statements for fiscal years ended 1998 through 2005, the interim periods contained therein, together with all earnings and other press releases
containing our financial information for those periods and earnings releases for the 2006 quarters ended March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006 should not be relied upon.

Other than by the First Quarter 10-Q/A and Second Quarter 10-Q/A, previously filed periodic reports covering the periods described above have not been amended and should not be
relied upon. You may rely upon this Form 10-Q and our 2006 Form 10-K, which we plan to file immediately after we file this Form 10-Q.

RESTATEMENTS OF CONSOLIDATED
FINANCIAL STATEMENTS AND SPECIAL COMMITTEE AND COMPANY FINDINGS

As announced on November 9, 2006, a Special Committee was established by our Board of
Directors to conduct an independent investigation relating to the companys equity compensation grant practices and related accounting for equity compensation grants. The Special Committee consisted of two independent members of our Board of
Directors, who were assisted in their investigation by independent outside legal counsel.

Together with its independent counsel, the Special Committee conducted an
extensive review of equity compensation grant practices and awards made by the company, or in connection with companies we acquired, between July 14, 1994 and November 1, 2006 (the Relevant Period), which covered 7,102 stock
option grants and 1,062 restricted stock unit (RSU) grants made on 465 occasions. During the investigation, numerous documents were reviewed, and extensive interviews of current and former employees and directors of the company and other
individuals were conducted by the Special Committees independent counsel. On April 10, 2007, the Special Committee presented its findings to the Board of Directors.

As also announced on November 9, 2006, the SEC had earlier notified us that it is conducting an informal inquiry into the companys equity compensation grant practices. We continue to cooperate fully with the SEC in
this informal inquiry.

The Special Committees Conclusions

The
Special Committee concluded that the evidence obtained and reviewed in its investigation did not establish any intentional wrongdoing by current employees, officers or directors of the company. The Special Committee and the companys management
have determined that incorrect measurement dates for certain equity compensation awards were used for financial accounting purposes and certain previously issued grants were modified without properly recording compensation expense and, as a result,
we are restating certain of our prior financial statements to correct the accounting for those awards. The use of incorrect measurement dates resulted from a number of reasons, including delays in the approval of awards, the absence of definitive
documentation and modifications of previously awarded grants. The Special Committee also identified certain awards for which grant dates were selected retroactively. However, the Special Committee has concluded that the evidence does not establish
that there was any intentional wrongdoing in connection with those awards. Nearly all of the grants for which the measurement dates have been changed (approximately 99% of the grants changed) were awarded in 2001 and earlier years.



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|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|2 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



In addition to the adjustments to our previously filed financial statements as described above, the Board of Directors has adopted
the following recommendations of the Special Committee.



| |  |  | Two additional independent directors will be recruited and appointed to the companys Board of Directors.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Membership of the Audit and Compensation Committees of the Board of Directors will be changed.
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | The Equity Compensation Committee has been discontinued.
| | - |  | --------------------------------------------------------



| |  |  | Enhancements will be made in the oversight of the companys corporate governance practices with respect to the companys equity compensation programs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior management will be charged with ensuring that the equity compensation policies and processes are appropriate and provide effective controls, and that the
companys accounting for equity compensation is appropriate.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Certain of the companys equity compensation administrative processes and functions will move from the companys human resources organization to the finance
organization, under the supervision of the Chief Financial Officer.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Board of Directors unanimously adopted an Equity Compensation Grant Policy on April 10, 2007, which provides, among other things, that:
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All terms of each equity grant must be finalized and approved by the Board of Directors or the Compensation Committee on or prior to the grant date;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All stock options must have an exercise price equal to or greater than the average of the high and low market price on the grant date;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All recipients of equity grants must be notified, in writing, of such grants as soon as possible following approval; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Any equity compensation issues or actions will be reported by senior management on a timely basis to the Board of Directors or the Compensation Committee, no less frequently
than quarterly.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Background

Between 1994 and 1996, the
Board of Directors granted stock options to Getty Communications (Getty Images predecessor) employees and in connection with acquisitions, including grants to employees and officers of acquired companies. From 1996 to 1998, the Compensation
Committee had the authority to, and did, grant options to employees, officers and directors. From August 1998 through 2001, the Compensation Committee continued to grant options to executive officers, and created option pools from which
the Chief Executive Officer and Senior Vice Presidents were authorized to grant options to employees and non-executive officers. These pools were used by the executive officers to grant options in connection with the hiring and promotion of
employees or as incentive awards. In August 2001, the Board of Directors created the Stock Option Committee, appointing Chief Executive Officer Jonathan Klein as the sole member with delegated authority to grant options to employees and
non-executive officers. In 2005, the Stock Option Committee was renamed the Equity Compensation Committee and we moved to primarily granting RSUs rather than options.

A total of 7,102 option grants and 1,062 RSU grants were awarded during the Relevant Period, as follows:



| |  |  | Pool options in which pools of options were approved by the Compensation Committee for later grant to employees by executive officers (2,277 grants).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Acquisition option grants in which options were granted by the Board of Directors or Compensation Committee to employees and officers in connection with our
acquisition of other companies and in which outstanding options held by employees of acquired companies were exchanged for Getty Images options at pre-determined conversion ratios (1,464 grants).
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other option grants which cover all remaining stock option grants during the Relevant Period (3,361 grants).
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | RSU grants in which RSUs were granted by the Equity Compensation Committee, the Compensation Committee and the Board of Directors to employees, officers and
directors (1,062 grants).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Special Committee and the company have determined that it is necessary to revise the measurement dates for
approximately 45% of these awards (Adjusted Options). Over half of the awards for which the measurement date is being revised relate to the companys only all employee grant in February of 2000 to employees below the vice president
level. In addition, the measurement dates for many awards are being revised due to: i) the use of the date of the approval of a pool of options as the measurement date as opposed to the date that the terms of each grant were finalized; ii) the use
of the date that a Unanimous Written Consent approving equity awards was faxed to Compensation Committee members for their approval, rather than the date when the approvals of the Compensation Committee members had been faxed back, as the
measurement date for the associated grants; and iii) the absence of a detailed list of recipients and associated grants prior to the date certain grants were entered into our equity award tracking system.



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|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |                 
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|3 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



We previously applied Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and its related Interpretations and provided the required pro forma disclosures under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, through our
fiscal year ended December 31, 2005. We have used the accelerated method of expensing stock options provided in Financial Accounting Standards Board Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable
Stock Option or Award Plans for recording expense and for our pro forma disclosures. Under APB Opinion No. 25, a non-cash, stock-based compensation expense was required to be recognized for any option for which the exercise price was
below the market price on the measurement date. Because most of the companys Adjusted Options had an exercise price below the market price on the measurement date, there should have been a non-cash charge for each of these options under APB
Opinion No. 25 equal to the number of option shares, multiplied by the difference between the exercise price and the market price on the measurement date. That expense should have been amortized over the service period of the option.

The company also reviewed prior modifications made to previously granted options and determined that we did not record the appropriate amount of compensation expense
for some of the modifications (Modified Options). We did not record the appropriate amount of stock-based compensation expense under APB Opinion No. 25 related to Adjusted or Modified Options in our previously issued financial
statements, and are recording these expenses in this Form 10-Q.

Impact of Restatement

The restatements included in this Form 10-Q and the 2006 Form 10-K to be filed immediately after we file this Form 10-Q include equity compensation adjustments arising from the Special Committee investigation and
managements internal review, as well as from deferred tax adjustments related to certain long-term intercompany loans and adjustments to revenue and deferred revenue that were previously considered immaterial to our Consolidated Financial
Statements as well as revisions to our loss on leased properties. The income statement impact of the restatement is as follows:



|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|-------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ----------------------------------- | - |  | ---- | -------- | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------- | - |  | - | ------ | - |  | - | ---- | -
|YEARS ENDEDDECEMBER 31,                      |  | Total effect atDecember 31,2005 |         |   | 2005 |   |         | 2004 |  |   | Cumulativeeffect atDecember 31,2003 |   |  | 2003 |          |   | 2002 |   |        | 2001 |  |   | 2000   |   |  | 1999 |        |   | 1998 |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|(in thousands)                               |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |  
|                                             |  |                                 |         |   |      |   |         |      |  |  
|Net income, as previously reported           |  |                                 |         |   |      | $ | 149,703 |      |  | $ | 106,650                             |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Additional compensation expense1             |  | $                               | (27,204 | ) |      |   |         |      |  |   |                                     |   |  | $    | (27,204  | ) |      | $ | (1,294 | )    |  | $ | (2,706 | ) |  | $    | (4,784 | ) |      | $ | (15,710 | ) |  | $ | (2,481 | ) |  | $ | (229 | )
|Tax related effects                          |  |                                 | 7,862   |   |      |   |         |      |  |   | (128                                | ) |  |      | 7,990    |   |      |   | 1,814  |      |  |   | 676    |   |  |      | 1,110  |   |      |   | 3,847   |   |  |   | 500    |   |  |   | 43   |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Additional compensation expense, net of tax1 |  |                                 | (19,342 | ) |      |   |         |      |  |   | (128                                | ) |  |      | (19,214  | ) |      | $ | 520    |      |  | $ | (2,030 | ) |  | $    | (3,674 | ) |      | $ | (11,863 | ) |  | $ | (1,981 | ) |  | $ | (186 | )
|Other adjustments, net of tax                |  |                                 | (727    | ) |      |   | (342    | )    |  |   | (110                                | ) |  |      | (275     | ) |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Total decrease in net income                 |  | $                               | (20,069 | ) |      |   | (342    | )    |  |   | (238                                | ) |  | $    | (19,489) |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Net income, as restated                      |  |                                 |         |   |      | $ | 149,361 |      |  | $ | 106,412                             |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|                                             | 



|1 |  | Amounts resulted from improper measurement dates for stock awards and modifications.
|- |  | ------------------------------------------------------------------------------------





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|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|4 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



The table below shows the after-tax equity compensation expense as originally reported, the amount of the additional compensation
expense and the restated equity compensation expense for all years that were restated.



|                               |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |   |        |   |  |   |      |  
|------------------------------ |  | ---- | ---- | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------- | - | ---- | - | ------ | - |  | - | ---- | -
|AFTER-TAX COMPENSATION EXPENSE |  | 2003 |      |   | 2002 |   |        | 2001 |  |   | 2000   |   |  | 1999 |         |   | 1998 |  
|                               |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |   |        |   |  |   |      |  
|(in thousands)                 |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |  
|                               |  |      |      |   |      |  
|As Reported                    |  | $    | (302 | ) |      | $ | (23    | )    |  | $ | (172   | ) |  | $    |        |   |      | $ | (814   | ) |  | $ |     |  
|Adjustment                     |  |      | 520  |   |      |   | (2,030 | )    |  |   | (3,674 | ) |  |      | (11,863 | ) |      |   | (1,981 | ) |  |   | (186 | )
|                               |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |   |        |   |  |   |      |  
|As Restated                    |  | $    | 218  |   |      | $ | (2,053 | )    |  | $ | (3,846 | ) |  | $    | (11,863 | ) |      | $ | (2,795 | ) |  | $ | (186 | )
|                               | 

Equity-based compensation is not deductible for corporate income tax purposes in most countries. The after-tax amounts in
the table reflect reduction of compensation expense for tax benefits in the United States in all years and in the United Kingdom in 2003. For the United Kingdom prior to 2003 and for all other countries in all years, there is no tax benefit recorded
for the associated compensation expense.

In addition, in 2001, we analyzed our existing net deferred tax assets (DTAs) and determined that not all the existing DTAs
would be realized over the period covered by our analysis and therefore recorded a valuation allowance equal to approximately $12 million. We performed a similar analysis in 2002 and as a result, increased the valuation allowance associated with the
exercise of employee stock options in 2002 to $15.1 million. In 2003, we updated our estimate of future taxable income and determined that it was now more likely than not that we would realize more of the DTA than the net balance at
December 31, 2003. Therefore, we reduced our valuation allowance by $25.3 million, including the $15.1 million related to stock option exercises. We reviewed the valuation allowance in light of the restatement of equity-based compensation and
determined that an additional valuation allowance of $4.9 million should be recorded at December 31, 2001 and then released at December 31, 2003.

As noted
above, we have also made two adjustments to deferred tax assets that were previously considered immaterial. The first item related to the accounting for unrealized foreign currency gains and losses on long-term intercompany loans between our United
States and United Kingdom subsidiaries. We incorrectly recorded deferred tax assets on the unrealized foreign currency gains and losses in the United Kingdom from 1999 to 2005, instead of recording them as part of the net foreign currency
translation adjustments (losses) gains within accumulated other comprehensive income (loss). The second item related to an intercompany loan established in 2005 for which we did not include the unrealized gains or losses in taxable income, causing
our deferred taxes related to our net operating losses to be misstated and other comprehensive income to also be misstated.

The revenue and deferred revenue
adjustment related to fees paid by photographers for making certain of their images available for license on our website for two years. We had previously recognized these fees when received, as they were previously considered immaterial. We are now
recognizing the fees ratably over the two year period, resulting in a decrease in revenue and an increase in deferred revenue in the periods reported herein.

In
addition, we evaluated the impact of the restatements on our consolidated tax provision. The company and our subsidiaries file tax returns in numerous tax jurisdictions around the world. In the United States for all years reflected above and the
United Kingdom in 2003 and subsequent years, we are able to claim a tax deduction relating to stock options exercised. In those jurisdictions where a tax deduction will be allowed, we have recorded deferred tax assets to reflect future tax
deductions to the extent we believe such assets to be recoverable. In addition, we also determined that, as a result of the changes in the measurement dates, we should not have taken a deduction in the U.S. in prior years for stock option related
amounts pertaining to certain executives under the Internal Revenue Code Section 162(m). Section 162(m) limits the deductibility of compensation above certain thresholds. As a result, our tax liabilities have increased by approximately
$2.4 million.

If certain of the Adjusted or Modified Options are not repriced, the holders of such options will, upon exercise of the options, incur personal income
taxes and penalties in accordance with Internal Revenue Code (IRC) Section 409A (and other state tax laws) beyond what they would have incurred were the options not adjusted or modified. Certain of these options have already been exercised and
therefore incremental taxes and penalties have been incurred by the holders, while other affected options remain outstanding. We are



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|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|5 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



currently evaluating the companys position with respect to reimbursing employees for incremental taxes and penalties incurred and to potentially repricing the
affected options that remain outstanding. If the company takes such actions it will result in a charge to compensation expense in the period the decision is made or the expense is incurred, as applicable.

The following tables reflect the impact of the additional non-cash charges for equity-based compensation expense and other adjustments, and the related tax effects on the:



| |  |  | consolidated statements of income for the years ended December 31, 2005 and 2004;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | consolidated balance sheet as of December 31, 2005;
| | - |  | ---------------------------------------------------



| |  |  | consolidated statements of cash flows for the years ended December 31, 2005 and 2004;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | condensed consolidated statements of income for the three and nine months ended September 30, 2005; and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | condensed consolidated statement of cash flows for the nine months ended September 30, 2005.
| | - |  | --------------------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME



|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|------------------------------------------------------------ |  | --------------------- | - |  | ----------- | - |  | ------------- | - |  | --------------------- | - |  | ----------- | - |  | ------------- | -
|YEARS ENDED DECEMBER 31,                                     |  | 2005                  |   |  | 2004        |  
|                                                             |  |                       |   |  |             |  
|                                                             |  | As previouslyreported |   |  | Adjustments |   |  | As restated   |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated   |  
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|(in thousands, except per share data)                        |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|                                                             |  |                       |   |  |             |  
|Revenue                                                      |  | $  733,729            |   |  | $    (553   | ) |  | $  733,176    |   |  | $  622,427            |   |  | $   (177    | ) |  | $  622,250    |  
|Costs of revenue (exclusive of items shown separately below) |  | 196,887               |   |  |            |   |  | 196,887       |   |  | 172,684               |   |  |            |   |  | 172,684       |  
|Selling, general and administrative                          |  | 252,103               |   |  |            |   |  | 252,103       |   |  | 225,128               |   |  |            |   |  | 225,128       |  
|Depreciation                                                 |  | 48,572                |   |  |            |   |  | 48,572        |   |  | 52,976                |   |  |            |   |  | 52,976        |  
|Amortization                                                 |  | 9,519                 |   |  |            |   |  | 9,519         |   |  | 4,559                 |   |  |            |   |  | 4,559         |  
|Other operating expenses (income)                            |  | 717                   |   |  |            |   |  | 717           |   |  | (1,187                | ) |  |            |   |  | (1,187        | )
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Operating expenses                                           |  | 507,798               |   |  |            |   |  | 507,798       |   |  | 454,160               |   |  |            |   |  | 454,160       |  
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Income from operations                                       |  | 225,931               |   |  | (553        | ) |  | 225,378       |   |  | 168,267               |   |  | (177        | ) |  | 168,090       |  
|Investment income                                            |  | 11,991                |   |  |            |   |  | 11,991        |   |  | 9,133                 |   |  |            |   |  | 9,133         |  
|Interest expense                                             |  | (7,618                | ) |  |            |   |  | (7,618        | ) |  | (3,828                | ) |  |            |   |  | (3,828        | )
|Other non-operating expenses, net                            |  | 350                   |   |  |            |   |  | 350           |   |  | 467                   |   |  |            |   |  | 467           |  
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Income before income taxes                                   |  | 230,654               |   |  | (553        | ) |  | 230,101       |   |  | 174,039               |   |  | (177        | ) |  | 173,862       |  
|Income tax expense                                           |  | (80,951               | ) |  | 211         |   |  | (80,740       | ) |  | (67,389               | ) |  | (61         | ) |  | (67,450       | )
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Net income                                                   |  | $  149,703            |   |  | $    (342   | ) |  | $  149,361    |   |  | $  106,650            |   |  | $   (238    | ) |  | $  106,412    |  
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Earnings per share:                                          |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | $        2.43         |   |  | $          |   |  | $        2.43 |   |  | $        1.81         |   |  | $  (0.01    | ) |  | $        1.80 |  
|Diluted                                                      |  | 2.28                  |   |  | (0.01       | ) |  | 2.27          |   |  | 1.72                  |   |  |            |   |  | 1.72          |  
|                                                             |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Shares used in computing earnings per share:                 |  |                       |   |  |             |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | 61,567                |   |  |            |   |  | 61,567        |   |  | 59,006                |   |  |            |   |  | 59,006        |  
|Diluted                                                      |  | 65,744                |   |  |            |   |  | 65,744        |   |  | 62,031                |   |  |            |   |  | 62,031        |  
|                                                             | 



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |                 
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|6 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



CONSOLIDATED BALANCE SHEET



|                                           |  |                       |   |  |                |   |  |                |  
|------------------------------------------ |  | --------------------- | - |  | -------------- | - |  | -------------- | -
|                                           |  | DECEMBER 31, 2005     |  
|                                           |  |                       |  
|                                           |  | As previouslyreported |   |  | Adjustments    |   |  | As restated    |  
|                                           |  |                       |   |  |                |   |  |                |  
|(in thousands, except per share data)      |  |                       |   |  |                |   |  |                |  
|                                           |  |                       |  
|ASSETS                                     |  |                       |   |  |                |   |  |                |  
|Current assets:                            |  |                       |   |  |                |   |  |                |  
|Cash and cash equivalents                  |  | $     223,084         |   |  | $             |   |  | $     223,084  |  
|Short-term investments                     |  | 295,191               |   |  |               |   |  | 295,191        |  
|Accounts receivable, net                   |  | 107,020               |   |  |               |   |  | 107,020        |  
|Prepaid expenses                           |  | 11,815                |   |  |               |   |  | 11,815         |  
|Other current assets                       |  | 8,553                 |   |  |               |   |  | 8,553          |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total current assets                       |  | 645,663               |   |  |               |   |  | 645,663        |  
|Property and equipment, net                |  | 127,497               |   |  |               |   |  | 127,497        |  
|Goodwill                                   |  | 804,804               |   |  |               |   |  | 804,804        |  
|Identifiable intangible assets, net        |  | 50,206                |   |  |               |   |  | 50,206         |  
|Deferred income taxes, net                 |  | 30,704                |   |  | (877           | ) |  | 29,827         |  
|Other long-term assets                     |  | 4,211                 |   |  |               |   |  | 4,211          |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total assets                               |  | $  1,663,085          |   |  | $        (877  | ) |  | $  1,662,208   |  
|                                           |  |                       |   |  |                |   |  |                |  
|                                           |  |                       |  
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |                       |   |  |                |   |  |                |  
|Current liabilities:                       |  |                       |   |  |                |   |  |                |  
|Accounts payable                           |  | $       72,344        |   |  | $             |   |  | $       72,344 |  
|Accrued expenses                           |  | 38,676                |   |  |               |   |  | 38,676         |  
|Deferred income taxes, net                 |  | 17,677                |   |  | (449           | ) |  | 17,228         |  
|Other current liabilities                  |  | 2,948                 |   |  | 1,174          |   |  | 4,122          |  
|Short-term debt                            |  | 265,000               |   |  |               |   |  | 265,000        |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total current liabilities                  |  | 396,645               |   |  | 725            |   |  | 397,370        |  
|Long-term liabilities                      |  | 23,480                |   |  |               |   |  | 23,480         |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total liabilities                          |  | 420,125               |   |  | 725            |   |  | 420,850        |  
|                                           |  |                       |   |  |                |   |  |                |  
|Commitments and contingencies              |  |                       |   |  |                |   |  |                |  
|Stockholders equity:                      |  |                       |   |  |                |   |  |                |  
|Common stock                               |  | 623                   |   |  |               |   |  | 623            |  
|Additional paid-in capital                 |  | 1,278,048             |   |  | 18,262         |   |  | 1,296,310      |  
|Accumulated deficit                        |  | (18,900               | ) |  | (20,069        | ) |  | (38,969        | )
|Accumulated other comprehensive loss       |  | (16,811               | ) |  | 205            |   |  | (16,606        | )
|                                           |  |                       |   |  |                |   |  |                |  
|Total stockholders equity                 |  | 1,242,960             |   |  | (1,602         | ) |  | 1,241,358      |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total liabilities and stockholders equity |  | $  1,663,085          |   |  | $        (877  | ) |  | $  1,662,208   |  
|                                           | 



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |                 
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|7 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|-------------------------------------------------------------------------------------------- |  | --------------------- | - |  | ----------- | - |  | ------------ | - |  | --------------------- | - |  | ----------- | - |  | ------------ | -
|YEARS ENDED DECEMBER 31,                                                                     |  | 2005                  |   |  | 2004        |  
|                                                                                             |  |                       |   |  |             |  
|                                                                                             |  | As previouslyreported |   |  | Adjustments |   |  | As restated  |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated  |  
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|(in thousands)                                                                               |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|                                                                                             |  |                       |   |  |             |  
|Cash flows from operating activities                                                         |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Net income                                                                                   |  | $    149,703          |   |  | $  (342     | ) |  | $    149,361 |   |  | $  106,650            |   |  | $  (238     | ) |  | $    106,412 |  
|Adjustments to reconcile net income to net cash provided by operating activities:            |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Employee stock-based compensation                                                            |  | 1,269                 |   |  |            |   |  | 1,269        |   |  | 576                   |   |  |            |   |  | 576          |  
|Reduction of income taxes paid due to the tax benefit from employee stock based compensation |  | 65,034                |   |  | 3,754       |   |  | 68,788       |   |  | 3,233                 |   |  | 1,587       |   |  | 4,820        |  
|Depreciation                                                                                 |  | 48,572                |   |  |            |   |  | 48,572       |   |  | 52,976                |   |  |            |   |  | 52,976       |  
|Amortization of identifiable intangible assets                                               |  | 9,519                 |   |  |            |   |  | 9,519        |   |  | 4,559                 |   |  |            |   |  | 4,559        |  
|Amortization of debt issuance and exchange costs                                             |  | 6,060                 |   |  |            |   |  | 6,060        |   |  | 1,915                 |   |  |            |   |  | 1,915        |  
|Deferred income taxes                                                                        |  | 5,898                 |   |  | (3,965      | ) |  | 1,933        |   |  | 51,197                |   |  | (1,526      | ) |  | 49,671       |  
|Bad debt expense                                                                             |  | 2,739                 |   |  |            |   |  | 2,739        |   |  | 3,239                 |   |  |            |   |  | 3,239        |  
|Other changes in long-term assets, liabilities and equity                                    |  | 2,763                 |   |  |            |   |  | 2,763        |   |  | 3,031                 |   |  |            |   |  | 3,031        |  
|Changes in current assets and liabilities, net of effects of business acquisitions:          |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Accounts receivable                                                                          |  | (15,159               | ) |  |            |   |  | (15,159      | ) |  | (16,006               | ) |  |            |   |  | (16,006      | )
|Accounts payable                                                                             |  | (9,783                | ) |  |            |   |  | (9,783       | ) |  | (530                  | ) |  |            |   |  | (530         | )
|Accrued expenses                                                                             |  | (8,776                | ) |  |            |   |  | (8,776       | ) |  | (2,510                | ) |  |            |   |  | (2,510       | )
|Income taxes payable                                                                         |  | (2,486                | ) |  |            |   |  | (2,486       | ) |  | (4,039                | ) |  |            |   |  | (4,039       | )
|Changes in other current assets and liabilities                                              |  | 1,924                 |   |  | 553         |   |  | 2,477        |   |  | (1,709                | ) |  | 177         |   |  | (1,532       | )
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Net cash provided by operating activities                                                    |  | 257,277               |   |  |            |   |  | 257,277      |   |  | 202,582               |   |  |            |   |  | 202,582      |  
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Cash flows from investing activities                                                         |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Acquisitions of businesses, net of cash acquired                                             |  | (234,432              | ) |  |            |   |  | (234,432     | ) |  | (25,611               | ) |  |            |   |  | (25,611      | )
|Acquisition of available-for-sale investments                                                |  | (101,575              | ) |  |            |   |  | (101,575     | ) |  | (341,671              | ) |  |            |   |  | (341,671     | )
|Proceeds from available-for-sale investments                                                 |  | 129,619               |   |  |            |   |  | 129,619      |   |  | 263,398               |   |  |            |   |  | 263,398      |  
|Acquisition of property and equipment                                                        |  | (57,766               | ) |  |            |   |  | (57,766      | ) |  | (36,723               | ) |  |            |   |  | (36,723      | )
|Other investing activities                                                                   |  | (643                  | ) |  |            |   |  | (643         | ) |  | 46                    |   |  |            |   |  | 46           |  
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Net cash used in investing activities                                                        |  | (264,797              | ) |  |            |   |  | (264,797     | ) |  | (140,561              | ) |  |            |   |  | (140,561     | )
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Cash flows from financing activities                                                         |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Proceeds from the issuance of common stock                                                   |  | 42,172                |   |  |            |   |  | 42,172       |   |  | 73,998                |   |  |            |   |  | 73,998       |  
|Other financing activities                                                                   |  | (558                  | ) |  |            |   |  | (558         | ) |  | (1,429                | ) |  |            |   |  | (1,429       | )
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Net cash provided by financing activities                                                    |  | 41,614                |   |  |            |   |  | 41,614       |   |  | 72,569                |   |  |            |   |  | 72,569       |  
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Effect of exchange rate changes                                                              |  | (5,762                | ) |  |            |   |  | (5,762       | ) |  | 3,144                 |   |  |            |   |  | 3,144        |  
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Net increase in cash and cash equivalents                                                    |  | 28,332                |   |  |            |   |  | 28,332       |   |  | 137,734               |   |  |            |   |  | 137,734      |  
|Cash and cash equivalents:                                                                   |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|Beginning of year                                                                            |  | 194,752               |   |  |            |   |  | 194,752      |   |  | 57,018                |   |  |            |   |  | 57,018       |  
|                                                                                             |  |                       |   |  |             |   |  |              |   |  |                       |   |  |             |   |  |              |  
|End of year                                                                                  |  | $    223,084          |   |  | $          |   |  | $    223,084 |   |  | $  194,752            |   |  | $          |   |  | $    194,752 |  
|                                                                                             | 



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |                 
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|8 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|------------------------------------------------------------ |  | ------------------------------------ | - |  | ------------------------------------- | - |  | ------------- | - |  | --------------------- | - |  | ----------- | - |  | ------------- | -
|                                                             |  | NINE MONTHS ENDED SEPTEMBER 30, 2005 |   |  | THREE MONTHS ENDED SEPTEMBER 30, 2005 |  
|                                                             |  |                                      |   |  |                                       |  
|                                                             |  | As previouslyreported                |   |  | Adjustments                           |   |  | As restated   |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated   |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|(in thousands, except per share data)                        |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|                                                             |  |                                      |   |  |                                       |  
|Revenue                                                      |  | $  547,916                           |   |  | $  (406                               | ) |  | $  547,510    |   |  | $  184,516            |   |  | $    (191   | ) |  | $  184,325    |  
|Costs of revenue (exclusive of items shown separately below) |  | 148,260                              |   |  |                                      |   |  | 148,260       |   |  | 47,510                |   |  |            |   |  | 47,510        |  
|Selling, general and administrative                          |  | 188,270                              |   |  |                                      |   |  | 188,270       |   |  | 63,309                |   |  |            |   |  | 63,309        |  
|Depreciation                                                 |  | 36,090                               |   |  |                                      |   |  | 36,090        |   |  | 11,759                |   |  |            |   |  | 11,759        |  
|Amortization                                                 |  | 6,421                                |   |  |                                      |   |  | 6,421         |   |  | 2,744                 |   |  |            |   |  | 2,744         |  
|Loss on leased properties, net                               |  | 838                                  |   |  |                                      |   |  | 838           |   |  | 329                   |   |  |            |   |  | 329           |  
|Other operating expenses                                     |  | 267                                  |   |  |                                      |   |  | 267           |   |  | 148                   |   |  |            |   |  | 148           |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Operating expenses                                           |  | 380,146                              |   |  |                                      |   |  | 380,146       |   |  | 125,799               |   |  |            |   |  | 125,799       |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Income from operations                                       |  | 167,770                              |   |  | (406                                  | ) |  | 167,364       |   |  | 58,717                |   |  | (191        | ) |  | 58,526        |  
|Investment income                                            |  | 8,715                                |   |  |                                      |   |  | 8,715         |   |  | 2,787                 |   |  |            |   |  | 2,787         |  
|Interest expense                                             |  | (7,246                               | ) |  |                                      |   |  | (7,246        | ) |  | (433                  | ) |  |            |   |  | (433          | )
|Other non-operating expenses, net                            |  | 115                                  |   |  |                                      |   |  | 115           |   |  | 464                   |   |  |            |   |  | 464           |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Income before income taxes                                   |  | 169,354                              |   |  | (406                                  | ) |  | 168,948       |   |  | 61,535                |   |  | (191        | ) |  | 61,344        |  
|Income tax expense                                           |  | (62,196                              | ) |  | 155                                   |   |  | (62,041       | ) |  | (22,475               | ) |  | 73          |   |  | (22,402       | )
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Net income                                                   |  | $  107,158                           |   |  | $  (251                               | ) |  | $  106,907    |   |  | $    39,060           |   |  | $    (118   | ) |  | $    38,942   |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Earnings per share:                                          |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | $        1.75                        |   |  | $ (0.01                               | ) |  | $        1.74 |   |  | $        0.63         |   |  | $          |   |  | $        0.63 |  
|Diluted                                                      |  | 1.64                                 |   |  |                                      |   |  | 1.64          |   |  | 0.60                  |   |  | (0.01       | ) |  | 0.59          |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Shares used in computing earnings per share:                 |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | 61,368                               |   |  |                                      |   |  | 61,368        |   |  | 61,820                |   |  |            |   |  | 61,820        |  
|Diluted                                                      |  | 65,299                               |   |  |                                      |   |  | 65,299        |   |  | 65,622                |   |  |            |   |  | 65,622        |  
|                                                             | 



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |                 
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ----------------
|9 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | EXPLANATORY NOTE



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                    |  |                                      |   |  |             |   |  |              |  
|----------------------------------------------------------------------------------- |  | ------------------------------------ | - |  | ----------- | - |  | ------------ | -
|                                                                                    |  | NINE MONTHS ENDED SEPTEMBER 30, 2005 |  
|                                                                                    |  |                                      |  
|                                                                                    |  | As previouslyreported                |   |  | Adjustments |   |  | As restated  |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|(in thousands)                                                                      |  |                                      |   |  |             |   |  |              |  
|                                                                                    |  |                                      |  
|Cash flows from operating activities                                                |  |                                      |   |  |             |   |  |              |  
|Net income                                                                          |  | $    107,158                         |   |  | $  (251     | ) |  | $    106,907 |  
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |                                      |   |  |             |   |  |              |  
|Deferred income taxes                                                               |  | 52,957                               |   |  | (155        | ) |  | 52,802       |  
|Depreciation                                                                        |  | 36,090                               |   |  |            |   |  | 36,090       |  
|Amortization of identifiable intangible assets                                      |  | 6,421                                |   |  |            |   |  | 6,421        |  
|Amortization of debt issuance and exchange costs                                    |  | 6,060                                |   |  |            |   |  | 6,060        |  
|Bad debt expense                                                                    |  | 1,569                                |   |  |            |   |  | 1,569        |  
|Employee stock-based compensation                                                   |  | 944                                  |   |  |            |   |  | 944          |  
|Loss on leased properties, net                                                      |  | 838                                  |   |  |             |   |  | 838          |  
|Other changes in long-term assets, liabilities and equity                           |  | 412                                  |   |  |            |   |  | 412          |  
|Changes in current assets and liabilities, net of effects of business acquisitions: |  |                                      |   |  |             |   |  |              |  
|Accounts receivable, net                                                            |  | (15,461                              | ) |  |            |   |  | (15,461      | )
|Accounts payable                                                                    |  | (6,887                               | ) |  |            |   |  | (6,887       | )
|Accrued expenses                                                                    |  | (10,215                              | ) |  |            |   |  | (10,215      | )
|Income taxes payable                                                                |  | (600                                 | ) |  |            |   |  | (600         | )
|Changes in other current assets and liabilities                                     |  | 2,060                                |   |  | 406         |   |  | 2,466        |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net cash provided by operating activities                                           |  | 181,346                              |   |  |            |   |  | 181,346      |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Cash flows from investing activities                                                |  |                                      |   |  |             |   |  |              |  
|Acquisitions of businesses, net of cash acquired                                    |  | (231,881                             | ) |  |            |   |  | (231,881     | )
|Acquisition of available-for-sale investments                                       |  | (77,768                              | ) |  |            |   |  | (77,768      | )
|Proceeds from sale of available-for-sale investments                                |  | 101,012                              |   |  |            |   |  | 101,012      |  
|Acquisition of property and equipment                                               |  | (44,723                              | ) |  |            |   |  | (44,723      | )
|Other investing activities                                                          |  | (594                                 | ) |  |            |   |  | (594         | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net cash used in investing activities                                               |  | (253,954                             | ) |  |            |   |  | (253,954     | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Cash flows from financing activities                                                |  |                                      |   |  |             |   |  |              |  
|Proceeds from the issuance of common stock                                          |  | 33,216                               |   |  |            |   |  | 33,216       |  
|Other financing activities                                                          |  | (558                                 | ) |  |            |   |  | (558         | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net cash provided by financing activities                                           |  | 32,658                               |   |  |            |   |  | 32,658       |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Effect of exchange rate changes                                                     |  | (3,564                               | ) |  |            |   |  | (3,564       | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net increase in cash and cash equivalents                                           |  | (43,514                              | ) |  |            |   |  | (43,514      | )
|Cash and cash equivalents:                                                          |  |                                      |   |  |             |   |  |              |  
|at beginning of period                                                              |  | 194,752                              |   |  |            |   |  | 194,752      |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|at end of period                                                                    |  | $    151,238                         |   |  | $          |   |  | $    151,238 |  
|                                                                                    | 



---

##### Table of Contents



| |  |  |  |                    |  |  |  |          |  |  |  |           |  |  |  |  |  | 
| |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  |  |  |  |  | 
| |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  |  |  |  |  | 



TABLE OF CONTENTS



|                                 |  |                                                                                                                                              |  |     
|-------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                 |  |                                                                                                                                              |  | PAGE
|                                 | 
|PART I.    FINANCIAL INFORMATION |  |                                                                                                                                             
|                                 |  |                                                                                                                                             
|ITEM 1.                          |  | Financial Statements (unaudited, as restated):                                                                                               |  | 1   
|                                 |  |                                                                                                                                             
|                                 |  | Condensed Consolidated Statements of Incomefor the three and nine months ended September 30, 2006 and 2005 (as restated)                    |  | 1   
|                                 |  |                                                                                                                                             
|                                 |  | Condensed Consolidated Balance Sheetsat September 30, 2006 and December 31, 2005 (as restated)                                              |  | 2   
|                                 |  |                                                                                                                                             
|                                 |  | Condensed Consolidated Statement of Stockholders Equityat December 31, 2005 and for the nine months ended September 30, 2006 (as restated) |  | 3   
|                                 |  |                                                                                                                                             
|                                 |  | Condensed Consolidated Statements of Cash Flowsfor the nine months ended September 30, 2006 and 2005 (as restated)                          |  | 4   
|                                 |  |                                                                                                                                             
|                                 |  | Notes to Condensed Consolidated Financial Statements (as restated)                                                                           |  | 5   
|                                 |  |                                                                                                                                             
|ITEM 2.                          |  | Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) (as restated)                                   |  | 29  
|                                 |  |                                                                                                                                             
|ITEM 3.                          |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                   |  | 45  
|                                 |  |                                                                                                                                             
|ITEM 4.                          |  | Controls and Procedures                                                                                                                      |  | 45  
|                                 | 
|PART II.    OTHER INFORMATION    |  |                                                                                                                                             
|                                 |  |                                                                                                                                             
|ITEM 1.                          |  | Legal Proceedings                                                                                                                            |  | 46  
|                                 |  |                                                                                                                                             
|ITEM 1A.                         |  | Risk Factors                                                                                                                                 |  | 47  
|                                 |  |                                                                                                                                             
|ITEM 2.                          |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                  |  | 47  
|                                 |  |                                                                                                                                             
|ITEM 3.                          |  | Defaults Upon Senior Securities                                                                                                              |  | 47  
|                                 |  |                                                                                                                                             
|ITEM 4.                          |  | Submission of Matters to a Vote of Security Holders                                                                                          |  | 47  
|                                 |  |                                                                                                                                             
|ITEM 5.                          |  | Other Information                                                                                                                            |  | 48  
|                                 |  |                                                                                                                                             
|ITEM 6.                          |  | Exhibits                                                                                                                                     |  | 48  
|                                 | 
|SIGNATURE                        |  | 49                                                                                                                                          
|                                 | 
|EXHIBIT INDEX                    |  | 50                                                                                                                                          



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|1 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



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



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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | - |  | ------------------------------ | - |  | ------------- | - |  | ------------- | -
|                                                                                                                                                                                                                                                                   |  | THREE MONTHS ENDEDSEPTEMBER 30, |   |  | NINE MONTHS ENDEDSEPTEMBER 30, |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |  
|                                                                                                                                                                                                                                                                   |  | 2006                            |   |  | 2005                           |   |  | 2006          |   |  | 2005          |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|(In thousands, except per share amounts)                                                                                                                                                                                                                           |  |                                 |   |  | (as restated)                  |   |  |               |   |  | (as restated) |  
|                                                                                                                                                                                                                                                                   |  |                                 |   | 
|Revenue                                                                                                                                                                                                                                                            |  | $  197,917                      |   |  | $  184,325                     |   |  | $  602,955    |   |  | $  547,510    |  
|Cost of revenue (exclusive of items shown separately below)                                                                                                                                                                                                        |  | 50,298                          |   |  | 47,510                         |   |  | 153,245       |   |  | 148,260       |  
|Selling, general and administrative expenses (including stock-based compensation of $4,249 and $339 for the three months ended September 30, 2006
and 2005, respectively and $11,459 and $944 for the nine months ended September 30, 2006 and 2005, respectively) |  | 73,624                          |   |  | 63,309                         |   |  | 225,761       |   |  | 188,270       |  
|Depreciation                                                                                                                                                                                                                                                       |  | 13,899                          |   |  | 11,759                         |   |  | 39,416        |   |  | 36,090        |  
|Amortization                                                                                                                                                                                                                                                       |  | 5,507                           |   |  | 2,744                          |   |  | 14,420        |   |  | 6,421         |  
|Loss on leased properties, net                                                                                                                                                                                                                                     |  | (134                            | ) |  | 329                            |   |  | 16,793        |   |  | 838           |  
|Other operating expenses (income)                                                                                                                                                                                                                                  |  | 531                             |   |  | 148                            |   |  | (667          | ) |  | 267           |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Operating expenses                                                                                                                                                                                                                                                 |  | 143,725                         |   |  | 125,799                        |   |  | 448,968       |   |  | 380,146       |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Income from operations                                                                                                                                                                                                                                             |  | 54,192                          |   |  | 58,526                         |   |  | 153,987       |   |  | 167,364       |  
|Investment income                                                                                                                                                                                                                                                  |  | 2,295                           |   |  | 2,787                          |   |  | 5,108         |   |  | 8,715         |  
|Interest expense                                                                                                                                                                                                                                                   |  | (394                            | ) |  | (433                           | ) |  | (1,128        | ) |  | (7,246        | )
|Other non-operating income (expenses)                                                                                                                                                                                                                              |  | 185                             |   |  | 464                            |   |  | (437          | ) |  | 115           |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Income before income taxes                                                                                                                                                                                                                                         |  | 56,278                          |   |  | 61,344                         |   |  | 157,530       |   |  | 168,948       |  
|Income tax expense                                                                                                                                                                                                                                                 |  | (18,952                         | ) |  | (22,402                        | ) |  | (57,997       | ) |  | (62,041       | )
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Net income                                                                                                                                                                                                                                                         |  | $    37,326                     |   |  | $    38,942                    |   |  | $    99,533   |   |  | $  106,907    |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Earnings per share                                                                                                                                                                                                                                                 |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Basic                                                                                                                                                                                                                                                              |  | $        0.62                   |   |  | $        0.63                  |   |  | $        1.63 |   |  | $        1.74 |  
|Diluted                                                                                                                                                                                                                                                            |  | 0.62                            |   |  | 0.59                           |   |  | 1.60          |   |  | 1.64          |  
|                                                                                                                                                                                                                                                                   |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Shares used in computing earnings per share                                                                                                                                                                                                                        |  |                                 |   |  |                                |   |  |               |   |  |               |  
|Basic                                                                                                                                                                                                                                                              |  | 59,791                          |   |  | 61,820                         |   |  | 61,200        |   |  | 61,368        |  
|Diluted                                                                                                                                                                                                                                                            |  | 60,577                          |   |  | 65,622                         |   |  | 62,231        |   |  | 65,299        |  
|                                                                                                                                                                                                                                                                   | 

See Note 2. Restatement of Previously Issued Financial Statements of the Notes to Condensed Consolidated
Financial Statements

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



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|2 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)



|                                                       |  |                    |           |   |                   |   |           |  
|------------------------------------------------------ |  | ------------------ | --------- | - | ----------------- | - | --------- | -
|                                                       |  | SEPTEMBER 30, 2006 |           |   | DECEMBER 31, 2005 |  
|                                                       |  |                    |           |   |                   |   |           |  
|(In thousands)                                         |  |                    |           |   | (as restated)     |  
|                                                       |  |                   
|ASSETS                                                 |  |                    |           |   |                   |   |           |  
|Current assets                                         |  |                    |           |   |                   |   |           |  
|Cash and cash equivalents                              |  | $                  | 290,654   |   |                   | $ | 223,084   |  
|Short-term investments                                 |  |                    |          |   |                   |   | 295,191   |  
|Accounts receivable, net                               |  |                    | 121,742   |   |                   |   | 107,020   |  
|Income taxes receivable                                |  |                    | 10,480    |   |                   |   | 3,780     |  
|Prepaid expenses                                       |  |                    | 15,847    |   |                   |   | 11,815    |  
|Deferred income taxes, net                             |  |                    | 11,214    |   |                   |   |          |  
|Other current assets                                   |  |                    | 2,102     |   |                   |   | 4,773     |  
|                                                       |  |                    |           |   |                   |   |           |  
|Total current assets                                   |  |                    | 452,039   |   |                   |   | 645,663   |  
|Property and equipment, net                            |  |                    | 147,767   |   |                   |   | 127,497   |  
|Goodwill                                               |  |                    | 985,244   |   |                   |   | 804,804   |  
|Identifiable intangible assets, net                    |  |                    | 79,210    |   |                   |   | 50,206    |  
|Deferred income taxes, net                             |  |                    |          |   |                   |   | 29,827    |  
|Other long-term assets                                 |  |                    | 1,842     |   |                   |   | 4,211     |  
|                                                       |  |                    |           |   |                   |   |           |  
|Total assets                                           |  | $                  | 1,666,102 |   |                   | $ | 1,662,208 |  
|                                                       |  |                    |           |   |                   |   |           |  
|                                                       |  |                   
|LIABILITIES AND STOCKHOLDERS EQUITY                   |  |                    |           |   |                   |   |           |  
|Current liabilities                                    |  |                    |           |   |                   |   |           |  
|Accounts payable                                       |  | $                  | 73,829    |   |                   | $ | 72,344    |  
|Accrued expenses                                       |  |                    | 35,482    |   |                   |   | 38,676    |  
|Income taxes payable                                   |  |                    | 2,398     |   |                   |   |          |  
|Deferred income taxes, net                             |  |                    |          |   |                   |   | 17,228    |  
|Short-term debt                                        |  |                    |          |   |                   |   | 265,000   |  
|Other current liabilities                              |  |                    | 11,214    |   |                   |   | 4,122     |  
|                                                       |  |                    |           |   |                   |   |           |  
|Total current liabilities                              |  |                    | 122,923   |   |                   |   | 397,370   |  
|Long-term debt                                         |  |                    | 265,000   |   |                   |   |          |  
|Deferred income taxes, net                             |  |                    | 7,388     |   |                   |   |          |  
|Other long-term liabilities                            |  |                    | 47,530    |   |                   |   | 23,480    |  
|                                                       |  |                    |           |   |                   |   |           |  
|Total liabilities                                      |  |                    | 442,841   |   |                   |   | 420,850   |  
|                                                       |  |                    |           |   |                   |   |           |  
|Commitments and contingencies (Note 7)                 |  |                    |           |   |                   |   |           |  
|Stockholders equity                                   |  |                    |           |   |                   |   |           |  
|Common stock                                           |  |                    | 625       |   |                   |   | 623       |  
|Additional paid-in capital                             |  |                    | 1,316,440 |   |                   |   | 1,296,310 |  
|Common stock repurchased                               |  |                    | (175,082  | ) |                   |   |          |  
|Retained earnings (Accumulated deficit)                |  |                    | 60,564    |   |                   |   | (38,969   | )
|Accumulated other comprehensive income (loss) (Note 9) |  |                    | 20,714    |   |                   |   | (16,606   | )
|                                                       |  |                    |           |   |                   |   |           |  
|Total stockholders equity                             |  |                    | 1,223,261 |   |                   |   | 1,241,358 |  
|                                                       |  |                    |           |   |                   |   |           |  
|Total liabilities and stockholders equity             |  | $                  | 1,666,102 |   |                   | $ | 1,662,208 |  
|                                                       | 

See Note 2. Restatement of Previously Issued Financial Statements of the Notes to Condensed Consolidated
Financial Statements

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



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|3 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

(unaudited)



|                                                                          |  |                                            |   |  |              |  |                            |   |  |                         |   |  |                                        |   |  |                                               |   |  |              |  
|------------------------------------------------------------------------- |  | ------------------------------------------ | - |  | ------------ |  | -------------------------- | - |  | ----------------------- | - |  | -------------------------------------- | - |  | --------------------------------------------- | - |  | ------------ | -
|                                                                          |  | No. ofShares ofCommon Stock$0.01 Par Value |   |  | Common Stock |  | Additional Paid-In Capital |   |  | Common StockRepurchased |   |  | Retained Earnings(Accumulated Deficit) |   |  | Accumulated Other Comprehensive Income
(Loss) |   |  | Total        |  
|                                                                          |  |                                            |   |  |              |  |                            |   |  |                         |   |  |                                        |   |  |                                               |   |  |              |  
|(In thousands)                                                            |  |                                            |   |  |              |  |                            |   |  |                         |   |  |                                        |   |  |                                               |   |  |              |  
|                                                                          |  |                                            |   |  |              |  |                           
|Balance at December 31, 2005(as reported)                                 |  | 62,265                                     |   |  | $  623       |  | $  1,278,048               |   |  | $                      |   |  | $  (18,900                             | ) |  | $  (16,811                                    | ) |  | $  1,242,960 |  
|Cumulative effect of restatement on prior years                           |  |                                           |   |  |             |  | 18,262                     |   |  |                        |   |  | (20,069                                | ) |  | 205                                           |   |  | (1,602       | )
|                                                                          |  |                                            |   |  |              |  |                            |   |  |                         |   |  |                                        |   |  |                                               |   |  |              |  
|Balance at December 31, 2005(as restated)                                 |  | 62,265                                     |   |  | 623          |  | 1,296,310                  |   |  |                        |   |  | (38,969                                | ) |  | (16,606                                       | ) |  | 1,241,358    |  
|Net income                                                                |  |                                           |   |  |             |  |                           |   |  |                        |   |  | 99,533                                 |   |  |                                              |   |  | 99,533       |  
|                                                                          |  |                                            |   |  |              |  |                           
|Other comprehensive income                                                |  |                                           |   |  |             |  |                           |   |  |                        |   |  |                                       |   |  | 37,320                                        |   |  | 37,320       |  
|Common stock repurchased                                                  |  | (2,730                                     | ) |  |             |  |                           |   |  | (175,082                | ) |  |                                       |   |  |                                              |   |  | (175,082     | )
|Stock-based compensation expense                                          |  |                                           |   |  |             |  | 12,069                     |   |  |                        |   |  |                                       |   |  |                                              |   |  | 12,069       |  
|Restricted stock unit vesting                                             |  | 18                                         |   |  |             |  |                           |   |  |                        |   |  |                                       |   |  |                                              |   |  |             |  
|Restricted stock units forfeited                                          |  |                                           |   |  |             |  | (340                       | ) |  |                        |   |  |                                       |   |  |                                              |   |  | (340         | )
|Stock options exercised                                                   |  | 257                                        |   |  | 2            |  | 6,824                      |   |  |                        |   |  |                                       |   |  |                                              |   |  | 6,826        |  
|Tax benefit from stock option exercises and restricted stock unit vesting |  |                                           |   |  |             |  | 1,577                      |   |  |                        |   |  |                                       |   |  |                                              |   |  | 1,577        |  
|                                                                          |  |                                            |   |  |              |  |                            |   |  |                         |   |  |                                        |   |  |                                               |   |  |              |  
|Balance at September 30, 2006                                             |  | 59,810                                     |   |  | $  625       |  | $  1,316,440               |   |  | $  (175,082             | ) |  | $   60,564                             |   |  | $   20,714                                    |   |  | $  1,223,261 |  
|                                                                          | 

See Note 2. Restatement of Previously Issued Financial Statements of the Notes to Condensed Consolidated
Financial Statements

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



---

##### Table of Contents



|  |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|4 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                   |  |               |   |  |              |  
|---------------------------------------------------------------------------------- |  | ------------- | - |  | ------------ | -
|NINE MONTHS ENDED SEPTEMBER 30,                                                    |  | 2006          |   |  | 2005         |  
|                                                                                   |  |               |   |  |              |  
|(In thousands)                                                                     |  |               |   |  | (restated)   |  
|                                                                                   |  |              
|Cash flows from operating activities                                               |  |               |   |  |              |  
|Net income                                                                         |  | $      99,533 |   |  | $    106,907 |  
|Adjustments to reconcile net income to net cash provided by operating activities   |  |               |   |  |              |  
|Depreciation                                                                       |  | 39,416        |   |  | 36,090       |  
|Loss on leased properties, net                                                     |  | 16,793        |   |  | 838          |  
|Amortization of identifiable intangible assets                                     |  | 14,420        |   |  | 6,421        |  
|Employee stock-based compensation                                                  |  | 11,459        |   |  | 944          |  
|Loss on sale of available-for-sale investments                                     |  | 3,956         |   |  |             |  
|Deferred income taxes                                                              |  | 8,665         |   |  | 52,802       |  
|Bad debt expense                                                                   |  | 3,056         |   |  | 1,569        |  
|Amortization of debt issuance and exchange costs                                   |  | 42            |   |  | 6,060        |  
|Other changes in long-term assets, liabilities and equity, net                     |  | 90            |   |  | 412          |  
|Changes in current assets and liabilities, net of effects of business acquisitions |  |               |   |  |              |  
|Accounts receivable                                                                |  | 10,911        |   |  | (15,461      | )
|Accounts payable                                                                   |  | (14,265       | ) |  | (6,887       | )
|Accrued expenses                                                                   |  | (17,811       | ) |  | (10,215      | )
|Income taxes payable                                                               |  | (412          | ) |  | (600         | )
|Changes in other current assets and liabilities, net                               |  | 5,680         |   |  | 2,466        |  
|                                                                                   |  |               |   |  |              |  
|Net cash provided by operating activities                                          |  | 181,533       |   |  | 181,346      |  
|                                                                                   |  |               |   |  |              |  
|Cash flows from investing activities                                               |  |               |   |  |              |  
|Proceeds from available-for-sale investments                                       |  | 304,443       |   |  | 101,012      |  
|Acquisition of businesses, net of cash acquired                                    |  | (196,018      | ) |  | (231,881     | )
|Acquisition of property and equipment                                              |  | (49,603       | ) |  | (44,723      | )
|Acquisition of available-for-sale investments                                      |  | (9,330        | ) |  | (77,768      | )
|Other investing activities                                                         |  | 300           |   |  | (594         | )
|                                                                                   |  |               |   |  |              |  
|Net cash provided by (used in) investing activities                                |  | 49,792        |   |  | (253,954     | )
|                                                                                   |  |               |   |  |              |  
|Cash flows from financing activities                                               |  |               |   |  |              |  
|Common stock repurchased                                                           |  | (175,082      | ) |  |             |  
|Proceeds from the issuance of common stock                                         |  | 6,826         |   |  | 33,216       |  
|Reduction of income taxes paid due to windfall tax benefits                        |  | 2,385         |   |  |             |  
|Other financing activities                                                         |  | 107           |   |  | (558         | )
|                                                                                   |  |               |   |  |              |  
|Net cash (used in) provided by financing activities                                |  | (165,764      | ) |  | 32,658       |  
|                                                                                   |  |               |   |  |              |  
|Effects of exchange rate changes                                                   |  | 2,009         |   |  | (3,564       | )
|                                                                                   |  |               |   |  |              |  
|Net increase (decrease) in cash and cash equivalents                               |  | 67,570        |   |  | (43,514      | )
|Cash and cash equivalents, beginning of period                                     |  | 223,084       |   |  | 194,752      |  
|                                                                                   |  |               |   |  |              |  
|Cash and cash equivalents, end of period                                           |  | $    290,654  |   |  | $    151,238 |  
|                                                                                   | 

See Note 2. Restatement of Previously Issued Financial Statements of the Notes to Condensed Consolidated
Financial Statements

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



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|5 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, as restated)

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 and deferred tax asset valuation allowances; 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.

Reclassifications

Certain prior period amounts have been reclassified to conform to the
current periods presentation with no effect on previously reported: net assets; net cash flows from operating, investing or financing activities; or net income.

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

The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted
in the United States of America (U.S.). 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 Form 10-K to be filed immediately after we file this Form 10-Q.

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 effect of dilutive stock options, restricted stock, restricted stock units and our convertible subordinated debentures.



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|6 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



|                                                                           |  |                                 |  |                                |  |             |  |              
|-------------------------------------------------------------------------- |  | ------------------------------- |  | ------------------------------ |  | ----------- |  | -------------
|                                                                           |  | THREE MONTHS ENDEDSEPTEMBER 30, |  | NINE MONTHS ENDEDSEPTEMBER 30,
|                                                                           |  |                                 |  |                               
|                                                                           |  | 2006                            |  | 2005                           |  | 2006        |  | 2005         
|                                                                           |  |                                 |  |                                |  |             |  |              
|(In thousands, except per share amounts)                                   |  |                                 |  | (restated)                     |  |             |  | (restated)   
|                                                                           |  |                                 |  |                               
|Basic Earnings per Share                                                   |  |                                 |  |                                |  |             |  |              
|Income available to common stockholders (numerator)                        |  | $  37,326                       |  | $  38,942                      |  | $  99,533   |  | $  106,907   
|Weighted average common shares outstanding (denominator)                   |  | 59,791                          |  | 61,820                         |  | 61,200      |  | 61,368       
|Basic earnings per share                                                   |  | $      0.62                     |  | $      0.63                    |  | $      1.63 |  | $        1.74
|                                                                           |  |                                 |  |                                |  |             |  |              
|                                                                           |  |                                 |  |                               
|Diluted Earnings per Share                                                 |  |                                 |  |                                |  |             |  |              
|Income available to common stockholders (numerator)                        |  | $  37,326                       |  | $  38,942                      |  | $  99,533   |  | $  106,907   
|                                                                           |  |                                 |  |                                |  |             |  |              
|Weighted average common shares outstanding                                 |  | 59,791                          |  | 61,820                         |  | 61,200      |  | 61,368       
|Effect of dilutive securities                                              |  |                                 |  |                                |  |             |  |              
|0.5% convertible subordinated debentures                                   |  |                                |  | 2,514                          |  |            |  | 2,514        
|Stock options                                                              |  | 774                             |  | 1,274                          |  | 1,002       |  | 1,409        
|Restricted stock and restricted stock units                                |  | 12                              |  | 14                             |  | 29          |  | 8            
|                                                                           |  |                                 |  |                                |  |             |  |              
|Total weighted average common shares and dilutive securities (denominator) |  | 60,577                          |  | 65,622                         |  | 62,231      |  | 65,299       
|                                                                           |  |                                 |  |                                |  |             |  |              
|Diluted earnings per share                                                 |  | $      0.62                     |  | $      0.59                    |  | $      1.60 |  | $        1.64
|                                                                          

Approximately 2.0 million and 1.5 million common shares potentially issuable from stock options for the three and
nine months ended September 30, 2006, respectively, were excluded from the computations of diluted earnings per share because they were anti-dilutive. There were no common shares potentially issuable excluded from the computations in 2005.

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 because no shares would be issuable upon conversion at or
below this price. In periods where the average closing price of our common stock exceeds $61.08 per share, we will include the number of shares that would be issuable upon full conversion of the debentures, 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   
|                                                                                                      

The closing price of our common stock on October 31, 2006 was $43.31 per share.

Short-Term Investments

In the second quarter of 2006, we sold all of our short-term
investments and realized an associated $4.0 million loss. We had previously intended to hold these investments until we had substantially recovered the cost of the investments; therefore, we had previously recorded them as unrealized losses within
accumulated other comprehensive income. In the second quarter of 2006, we decided to sell these investments when our Board of Directors authorized an increase in our share repurchase program, and we decided to begin purchasing shares under this
authorization.



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|7 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



We had no short-term investments outstanding at September 30, 2006. Short-term investments consisted of the following
available-for-sale investments at December 31, 2005:



|                             |  |                |  |                        |  |                         |   |  |           
|---------------------------- |  | -------------- |  | ---------------------- |  | ----------------------- | - |  | ----------
|DECEMBER 31, 2005            |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |   |  | Fair Value
|                             |  |                |  |                        |  |                         |   |  |           
|(In thousands)               |  |                |  |                        |  |                         |   |  |           
|                             |  |                |  |                       
|U.S. agency securities       |  | $  175,135     |  | $                     |  | $  (3,369               | ) |  | $  171,766
|Auction rate securities      |  | 70,375         |  |                       |  |                        |   |  | 70,375    
|Corporate bonds              |  | 39,757         |  | 8                      |  | (512                    | ) |  | 39,253    
|U.S. Treasury obligations    |  | 6,035          |  |                       |  | (150                    | ) |  | 5,885     
|Money market funds           |  | 7,912          |  |                       |  |                        |   |  | 7,912     
|                             |  |                |  |                        |  |                         |   |  |           
|Total short-term investments |  | $  299,214     |  | $    8                 |  | $  (4,031               | ) |  | $  295,191
|                            

Accounts Receivable

Accounts
receivable represent trade receivables, net of allowances for doubtful accounts and sales returns of $15.1 million and $13.7 million at September 30, 2006 and December 31, 2005, respectively. Provisions for doubtful accounts recorded
during the three months ended September 30, 2006 and 2005 totaled $0.9 million and $0.2 million, respectively, and for the nine months ended September 30, 2006 and 2005 totaled $3.1 million and $1.6 million, respectively. Estimated sales
returns are recorded as a reduction of revenue and were insignificant in all periods presented. Approximately 9% and 11% of our accounts receivable balance, net of allowances for doubtful accounts and sales returns, was more than 90 days old at
September 30, 2006 and December 31, 2005, respectively. Both of these percentages are within the normal range for our business.

Property and Equipment

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



|                                             |  |  |  |                                           |  |                    |  |                          |   |  |             |  |              |  |                          |   |  |            
|-------------------------------------------- |  |  |  | ----------------------------------------- |  | ------------------ |  | ------------------------ | - |  | ----------- |  | ------------ |  | ------------------------ | - |  | -----------
|                                             |  |  |  |                                           |  | SEPTEMBER 30, 2006 |  | DECEMBER 31, 2005       
|                                             |  |  |  |                                           |  |                    |  |                         
|                                             |  |  |  | Range of EstimatedUseful Lives (in years) |  | Gross Amount       |  | Accumulated Depreciation |   |  | Net Amount  |  | Gross Amount |  | Accumulated Depreciation |   |  | Net Amount 
|                                             |  |  |  |                                           |  |                    |  |                          |   |  |             |  |              |  |                          |   |  |            
|(In thousands, except years)                 |  |  |  |                                           |  |                    |  |                          |   |  |             |  |              |  |                          |   |  |            
|                                             |  |  |  |                                           |  |                    |  |                         
|Contemporary imagery                         |  |  |  | 4                                         |  | $  304,886         |  | $  (241,077              | ) |  | $    63,809 |  | $  266,638   |  | $  (211,889              | ) |  | $    54,749
|Computer software developed for internal use |  |  |  | 3                                         |  | 100,240            |  | (70,660                  | ) |  | 29,580      |  | 82,586       |  | (61,135                  | ) |  | 21,451     
|Leasehold improvements                       |  |  |  | 2-20                                      |  | 35,855             |  | (18,692                  | ) |  | 17,163      |  | 35,998       |  | (16,513                  | ) |  | 19,485     
|Archival imagery                             |  |  |  | 40                                        |  | 21,888             |  | (5,285                   | ) |  | 16,603      |  | 20,445       |  | (4,526                   | ) |  | 15,919     
|Computer hardware and software purchased     |  |  |  | 3                                         |  | 110,416            |  | (94,827                  | ) |  | 15,589      |  | 96,788       |  | (86,160                  | ) |  | 10,628     
|Furniture, fixtures and studio equipment     |  |  |  | 5                                         |  | 34,838             |  | (29,842                  | ) |  | 4,996       |  | 32,226       |  | (27,038                  | ) |  | 5,188      
|Other property and equipment                 |  |  |  | 3-4                                       |  | 471                |  | (444                     | ) |  | 27          |  | 436          |  | (359                     | ) |  | 77         
|                                             |  |  |  |                                           |  |                    |  |                          |   |  |             |  |              |  |                          |   |  |            
|Totals                                       |  |  |  |                                           |  | $  608,594         |  | $  (460,827              | ) |  | $  147,767  |  | $  535,117   |  | $  (407,620              | ) |  | $  127,497 
|                                             |  |  | 

Depreciation of computer software developed for internal use was $4.5 million and $2.9 million for the three months ended
September 30, 2006 and 2005, respectively, and $15.9 million and $9.5 million for the nine months ended September 30, 2006 and 2005, respectively.



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|- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|8 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Goodwill

We performed our annual
goodwill impairment test as of August 31, 2006 for our two operating segments and determined that there was no impairment as of this date. Goodwill changed during the first nine months of 2006 as follows:



|                                        |  |           
|--------------------------------------- |  | ----------
|(In thousands)                          |  |           
|                                       
|                                        | 
|Balance at December 31, 2005            |  | $  804,804
|Acquisitions of businesses              |  | 159,404   
|Effects of foreign currency translation |  | 21,036    
|                                        |  |           
|Balance at September 30, 2006           |  | $  985,244
|                                       

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:



|                                            |  |  |  |                                           |   |  |                    |  |                          |                   |  |            |  |  |              |  |                          |   |  |            | 
|------------------------------------------- |  |  |  | ----------------------------------------- | - |  | ------------------ |  | ------------------------ | ----------------- |  | ---------- |  |  | ------------ |  | ------------------------ | - |  | ---------- | 
|                                            |  |  |  |                                           |   |  | SEPTEMBER 30, 2006 |  |                          | DECEMBER 31, 2005 | 
|                                            |  |  |  |                                           |   |  |                    |  |                          |                   | 
|                                            |  |  |  | Range of EstimatedUseful 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 |  | $    46,649        |  | $  (12,086               | )                 |  | $  34,563  |  |  | $  37,392    |  | $   (8,651               | ) |  | $  28,741  | 
|Customer lists, contracts and relationships |  |  |  | 2-7                                       |   |  | 54,623             |  | (22,685                  | )                 |  | 31,938     |  |  | 32,770       |  | (15,497                  | ) |  | 17,273     | 
|Other identifiable intangible assets        |  |  |  | 2-10                                      |   |  | 20,209             |  | (7,500                   | )                 |  | 12,709     |  |  | 7,179        |  | (2,987                   | ) |  | 4,192      | 
|                                            |  |  |  |                                           |   |  |                    |  |                          |                   |  |            |  |  |              |  |                          |   |  |            | 
|Totals                                      |  |  |  |                                           |   |  | $  121,481         |  | $  (42,271               | )                 |  | $  79,210  |  |  | $  77,341    |  | $  (27,135               | ) |  | $  50,206  | 
|                                            |  |  |  |                                          

|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.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

Based on balances at September 30, 2006, expected amortization of identifiable intangible assets for the next five years,
including amortization recorded during the first nine months of 2006, is as follows:



|               |  |   |       
|-------------- |  | - | ------
|FISCAL YEAR    |  |  
|              
|(In thousands) |  |  
|               | 
|2006           |  | $ | 19,652
|2007           |  |   | 19,116
|2008           |  |   | 16,270
|2009           |  |   | 9,671 
|2010           |  |   | 6,415 
|              

Leases

Rent expense, net of
sublease income, was $4.5 million and $4.7 million for the three months ended September 30, 2006 and 2005, respectively, and $13.5 million and $14.5 million for the nine months ended September 30, 2006 and 2005, respectively. Sublease
income recorded as an offset to rent expense was insignificant in all periods presented. See discussion of losses we have recorded on leased properties in Note 5. Lease Loss Accruals and Note 11. Loss on Leased Properties.



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|9 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Employee Stock-Based Compensation

Through our stock-based compensation program, our Board of Directors is authorized to grant restricted stock units (RSUs), stock options with exercise prices equal to no less than the market price of our common stock on the grant date, and
other stock-based awards. Our stock-based compensation program is intended to attract, retain and motivate employees and directors of the company, and to align stockholder and employee interests.

A total of 16 million shares of our common stock are authorized for issuance through our stock-based compensation program, of which approximately 1.7 million are
available for future issuance as of September 30, 2006. Shares subject to RSUs or options that are forfeited, cancelled or otherwise expire prior to vesting or exercise, as the case may be, are available for re-issuance. All employees are
eligible to receive compensation through the program, though not all employees are issued stock-based compensation each year. RSUs generally have a four-year vesting schedule, with 25% vesting on each anniversary of the grant date. Stock options
generally have a 10-year term and a four-year vesting schedule, with 25% vesting on the first anniversary of the grant date and a pro rata portion of the remainder vesting monthly over the remaining three years. However, we granted stock options to
our chief executive officer in the second quarter of 2006 that vest over four years, with 20%, 20%, 20% and 40% vesting on each subsequent anniversary of the grant date, respectively. Stock options become exercisable when vested and remain
exercisable through the remainder of the term except that we generally cancel options 90 days after the date of termination of the recipients employment or service with us.

IMPACT OF SFAS NO. 123(R) ON 2006 RESULTS OF OPERATIONS

On January 1, 2006, we adopted Statement of Financial Accounting Standards
(SFAS) No. 123(R), Share-Based Payment. See discussion of this statement under Recent Accounting Pronouncements below and illustration of the impact on our 2006 results of operations in the table immediately below:



|                                                                                             |  |                                      |   |  |                                      |  
|-------------------------------------------------------------------------------------------- |  | ------------------------------------ | - |  | ------------------------------------ | -
|                                                                                             |  | THREE MONTHS ENDEDSEPTEMBER 30, 2006 |   |  | NINE MONTHS ENDED SEPTEMBER 30, 2006 |  
|                                                                                             |  |                                      |   |  |                                      |  
|(In thousands, except per share amounts)                                                     |  |                                      |   |  |                                      |  
|                                                                                             |  |                                     
|SFAS No. 123(R) stock-based compensation                                                     |  | $  4,473                             |   |  | $  12,069                            |  
|Amounts capitalized as computer software developed for internal use and contemporary imagery |  | (224                                 | ) |  | (610                                 | )
|                                                                                             |  |                                      |   |  |                                      |  
|Impact on income from operations                                                             |  | 4,249                                |   |  | 11,459                               |  
|Income tax benefit                                                                           |  | (1,423                               | ) |  | (3,842                               | )
|                                                                                             |  |                                      |   |  |                                      |  
|Impact on net income                                                                         |  | $   2,826                            |   |  | $    7,617                           |  
|Impact on basic earnings per share                                                           |  | $     0.05                           |   |  | $      0.12                          |  
|Impact on diluted earnings per share                                                         |  | 0.05                                 |   |  | 0.12                                 |  
|                                                                                             | 



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|10 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



PROFORMA 2005 RESULTS OF OPERATIONS

SFAS
No. 123(R) requires us to disclose pro forma information as if we had adopted the fair-value method of accounting for employee stock-based compensation prior to adoption of SFAS No. 123(R) on January 1, 2006. Under this method,
compensation expense is measured on all awards based on the fair value of the awards at the grant date. The pro forma effect on our net income and earnings per share of applying the fair-value method of accounting, using the accelerated method of
expense allocation for stock options and the straight-line method of expense allocation for RSUs, in 2005 (prior to adoption of SFAS No. 123(R)) would have been as follows:



|                                                                               |  |                                      |   |  |                                     |  
|------------------------------------------------------------------------------ |  | ------------------------------------ | - |  | ----------------------------------- | -
|                                                                               |  | THREE MONTHS ENDEDSEPTEMBER 30, 2005 |   |  | NINE MONTHS ENDEDSEPTEMBER 30, 2005 |  
|                                                                               |  |                                      |   |  |                                     |  
|(In thousands, except per share amounts)                                       |  | (as restated)                        |   |  | (as restated)                       |  
|                                                                               |  |                                     
|Net income                                                                     |  |                                      |   |  |                                     |  
|As reported                                                                    |  | $  38,942                            |   |  | $  106,907                          |  
|Add: APB Opinion No. 25 employee stock-based compensation, net of income taxes |  | 221                                  |   |  | 558                                 |  
|Deduct: SFAS No. 123 employee stock-based compensation, net of income taxes    |  | (11,214                              | ) |  | (14,364                             | )
|                                                                               |  |                                      |   |  |                                     |  
|Pro forma net income                                                           |  | $  27,949                            |   |  | $    93,101                         |  
|                                                                               |  |                                      |   |  |                                     |  
|Basic earnings per share                                                       |  |                                      |   |  |                                     |  
|As reported                                                                    |  | $      0.63                          |   |  | $        1.74                       |  
|Pro forma                                                                      |  | 0.45                                 |   |  | 1.52                                |  
|                                                                               |  |                                      |   |  |                                     |  
|Diluted earnings per share                                                     |  |                                      |   |  |                                     |  
|As reported                                                                    |  | $      0.59                          |   |  | $        1.64                       |  
|Pro forma                                                                      |  | 0.43                                 |   |  | 1.42                                |  
|                                                                               |  |                                      |   |  |                                     |  
|Shares used in computing pro forma earnings per share                          |  |                                      |   |  |                                     |  
|Basic                                                                          |  | 61,820                               |   |  | 61,368                              |  
|Diluted                                                                        |  | 65,717                               |   |  | 65,412                              |  
|                                                                               | 

STOCK OPTIONS

The following table
presents stock option activity for the first nine months of 2006:



|                              |  |                  |   |             |                                 |       |                  |       |                                 |   |      
|----------------------------- |  | ---------------- | - | ----------- | ------------------------------- | ----- | ---------------- | ----- | ------------------------------- | - | -----
|                              |  | OUTSTANDING      |   | EXERCISABLE
|                              |  |                  |   |            
|                              |  | Number of Shares |   |             | Weighted Average Exercise Price |       | Number of Shares |       | Weighted Average Exercise Price
|                              |  |                  |   |             |                                 |       |                  |       |                                 |   |      
|                              |  | (In thousands)   |   |             |                                 |       | (In thousands)   |       |                                
|Balance at December 31, 2005  |  | 3,720            |   |             | $                               | 45.26 |                  | 2,914 |                                 | $ | 42.96
|Granted                       |  | 250              |   |             |                                 | 62.25 |                  |       |                                 |   |      
|Exercised                     |  | (257             | ) |             |                                 | 26.47 |                  |       |                                 |   |      
|Forfeited                     |  | (190             | ) |             |                                 | 64.12 |                  |       |                                 |   |      
|                              |  |                  |   |             |                                 |       |                  |       |                                 |   |      
|Balance at September 30, 2006 |  | 3,523            |   |             |                                 | 46.82 |                  | 2,858 |                                 |   | 44.05
|                             

During the second quarter of 2006, we issued 250,000 stock options to our chief executive officer at a grant date fair value
of $27.67 per share. This fair value was calculated using a Black-Scholes single option valuation model with:



| |  |  | expected share price volatility of 32%;
| | - |  | ---------------------------------------



| |  |  | a risk free rate of return of 4.94%;
| | - |  | ------------------------------------



| |  |  | an expected term of 7 years from the grant date; and
| | - |  | ----------------------------------------------------



| |  |  | no expected dividends.
| | - |  | ----------------------

We calculated the expected share price volatility
as the average of the actual historical volatility of the market price of our common stock for a time period equal to the expected term of the stock option, limited to the time period that our common stock has been listed on the New York Stock
Exchange (since November 6, 2002). The risk free rate of return represents the implied yield available



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on the option grant date for a U.S. Treasury zero-coupon issue with a term equal to the expected term of the stock options. We calculated the expected term based on
actual historical exercise and vesting history for our chief executive officers awards adjusted for the stock options he held at the grant date, which we assumed are exercised ratably over the remaining lives of the awards. We did not issue
any other stock options during the first nine months of 2006.

The weighted average grant date fair value of stock options issued in the first nine months of 2005
was $20.36 per share. This fair value was calculated using a Black-Scholes multiple option valuation model with:



| |  |  | expected share price volatility of 40%;
| | - |  | ---------------------------------------



| |  |  | a risk free rate of return of 3.43%;
| | - |  | ------------------------------------



| |  |  | an expected term from vest date of 2 years; and
| | - |  | -----------------------------------------------



| |  |  | no expected dividends.
| | - |  | ----------------------

The aggregate intrinsic value of stock options
exercised (the market price of our common stock at the time of exercise less the strike price) in the first nine months of 2006 and 2005 was $10.7 million and $65.7 million, respectively.

The following table summarizes information relating to options outstanding and options exercisable at September 30, 2006:



|                         |  |                     |  |                                             |  |                                 |       |                  |       |                                 |   |      
|------------------------ |  | ------------------- |  | ------------------------------------------- |  | ------------------------------- | ----- | ---------------- | ----- | ------------------------------- | - | -----
|                         |  | OPTIONS OUTSTANDING |  | OPTIONS EXERCISABLE                        
|                         |  |                     |  |                                             |  |                                
|RANGE OF EXERCISE PRICES |  | Number of Shares    |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |       | Number of Shares |       | Weighted Average Exercise Price
|                         |  |                     |  |                                             |  |                                 |       |                  |       |                                 |   |      
|                         |  | (In thousands)      |  | (In years)                                  |  |                                 |       | (In thousands)   |       |                                
|                         |  |                     |  |                                             | 
|$    9.88  $  25.43     |  | 626                 |  | 3.21                                        |  | $                               | 19.67 |                  | 626   |                                 | $ | 19.67
|25.44      30.00        |  | 70                  |  | 4.34                                        |  |                                 | 27.65 |                  | 67    |                                 |   | 27.63
|30.01      30.32        |  | 800                 |  | 3.58                                        |  |                                 | 30.32 |                  | 800   |                                 |   | 30.32
|30.33      47.75        |  | 583                 |  | 5.65                                        |  |                                 | 36.15 |                  | 445   |                                 |   | 35.89
|47.76      70.07        |  | 592                 |  | 8.57                                        |  |                                 | 59.21 |                  | 179   |                                 |   | 56.89
|70.08      92.65        |  | 852                 |  | 8.94                                        |  |                                 | 82.54 |                  | 741   |                                 |   | 82.78
|                         |  |                     |  |                                             |  |                                 |       |                  |       |                                 |   |      
|9.88      92.65         |  | 3,523               |  | 6.00                                        |  |                                 | 46.82 |                  | 2,858 |                                 |   | 44.05
|                        

The weighted average remaining contractual life of options exercisable at September 30, 2006 is 5.4 years.

The aggregate intrinsic value of options vested at September 30, 2006 is $42.6 million (based on the market price of our common stock on this date). The aggregate intrinsic
value of options vested plus those not yet vested but expected (at September 30, 2006) to vest is $44.5 million. There are approximately 3.5 million options vested or expected to vest (those outstanding less estimated forfeitures), with a
weighted average exercise price of $46.74 and a weighted average remaining contractual term of 5.7 years.

Total compensation cost not yet recognized for unvested
stock options at September 30, 2006 was $11.0 million, which we expect to recognize over a weighted average period of approximately 2.7 years.

RESTRICTED
STOCK UNITS (RSUs)

The following table presents RSU activity for the first nine months of 2006:



|                              |  |                |   |  |                                                  |      
|----------------------------- |  | -------------- | - |  | ------------------------------------------------ | -----
|                              |  | Number ofUnits |   |  | Weighted-Average Grant Date Fair Value Per Share
|                              |  |                |   |  |                                                  |      
|                              |  | (In thousands) |   |  |                                                 
|                              |  |               
|Balance at December 31, 2005  |  | 59             |   |  | $                                                | 70.83
|Issued                        |  | 755            |   |  |                                                  | 67.90
|Vested                        |  | (23            | ) |  |                                                  | 68.32
|Forfeited                     |  | (28            | ) |  |                                                  | 80.07
|                              |  |                |   |  |                                                  |      
|Balance at September 30, 2006 |  | 763            |   |  |                                                  | 67.67
|                             



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The grant date fair value of an RSU is the market price of our common stock on the date of issuance, 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 nine months of 2006 and 2005 was $1.5 million and $0.3 million, respectively. Total compensation cost not yet recognized
for unvested RSUs at September 30, 2006 was $36.2 million, which we expect to recognize over a weighted average period of 3.4 years.

Advertising and
Marketing

Advertising and marketing costs expensed during the three months ended September 30, 2006 and 2005 totaled $5.5 million and $3.2 million,
respectively, and for the nine months ended September 30, 2006 and 2005 totaled $15.2 million and $8.6 million, respectively. Prepaid marketing materials were insignificant at September 30, 2006 and December 31, 2005.

Recent Accounting Pronouncements

SFAS NO. 123(R), SHARE-BASED PAYMENT

On January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment, which eliminated our ability to account for employee stock options
using the intrinsic value provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations, and generally requires instead that we expense them using a
fair-value-based method. This statement also requires that we reduce stock-based compensation expense by estimated forfeitures of awards rather than reducing expense as forfeitures occur. In addition to requiring us to expense stock-based
compensation, SFAS No. 123(R) requires us to report as financing activities in our statement of cash flows, cash tax savings arising from tax deductions that exceed compensation expense on stock options exercised and RSUs vested in the current
period. These tax benefits were previously reported as cash flows from operating activities.

In connection with the adoption of this statement, we have generally
shifted from issuing stock options to issuing RSUs. We also changed our practice and began capitalizing equity-based compensation with the adoption of SFAS No. 123(R). The fair value of RSUs issued to employees is calculated as the market price
of our common stock on the date of grant multiplied by the number of units issued. This fair value, less estimated forfeitures, is recorded as selling, general and administrative expenses on a straight-line basis over the vesting periods of the
RSUs, with a portion relating to production employees capitalized as computer software developed for internal use and contemporary imagery. This accounting, with the exception of the estimation of forfeitures, is the same as previously required
under APB Opinion No. 25. The fair values of stock options issued are calculated using a Black-Scholes single option valuation model and are expensed, and capitalized as applicable, in the same manner as RSUs. The fair value of unvested options
and RSUs outstanding upon adoption of SFAS No. 123(R) remain as originally calculated for footnote purposes in accordance with SFAS No. 123, Accounting for Stock-Based Compensation, as amended, have been reduced by estimated
forfeitures and are being recorded as selling, general and administrative expenses over the remaining vesting periods or capitalized as applicable.

We adopted SFAS
No. 123(R) using the modified prospective transition method, which means that we will not restate prior period financial statements. The impact of our equity compensation plans on our income statement may vary greatly depending on the number of
RSUs and stock options granted and the future price of our common stock. See our 2006 Form 10-K for the actual impact of this statement on our full fiscal year 2006 financial statements.

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. Management is currently assessing the impact this Interpretation
may have on our financial statements.

FASB INTERPRETATION (FIN) NO. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXESAN INTERPRETATION OF FASB STATEMENT
NO. 109

On July 13, 2006, the FASB issued FIN No. 48, which clarifies the accounting for uncertainty in income taxes effective January 1,
2007. This Interpretation prescribes a two-step process to follow in evaluating a tax position we have taken, or expect to take, in a tax



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return. First, we must determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority based on
the technical merits of the position. Second, we must measure and recognize all tax positions that meet the first threshold in an amount equal to the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement
with the taxing authority. We will recognize tax positions that previously failed to meet the more-likely-than-not recognition threshold in the first financial reporting period in which that threshold is met. We will derecognize previously
recognized tax positions that no longer meet the more-likely-than-not recognition threshold in the first financial reporting period in which that threshold is no longer met.

Upon initial adoption, we will apply the provisions of this Interpretation to all of our tax positions. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date will be recognized or continue to be
recognized. The cumulative effect of applying the provisions of this Interpretation will be reported as an adjustment to the opening balance of retained earnings for 2007. The amount of the cumulative-effect adjustment will be the difference between
the net amount of assets and liabilities recognized in the statement of financial position prior to the application of this Interpretation and the net amount of assets and liabilities recognized as a result of applying the provisions of this
Interpretation. We will record the cumulative effect of the change on retained earnings in the statement of financial position as of the date of adoption. The cumulative-effect adjustment will be to increase the reserves for uncertain tax positions
by approximately $4.2 million and reduce retained earnings by the same amount.

SEC STAFF ACCOUNTING BULLETIN (SAB) NO. 108, CONSIDERING THE EFFECTS OF
PRIOR YEAR MISSTATEMENTS WHEN QUANTIFYING MISSTATEMENTS IN CURRENT YEAR FINANCIAL STATEMENTS

On September 13, 2006, the staff of the SEC issued SAB
No. 108 in order to eliminate the diversity of practice surrounding how public companies quantify financial statement misstatements. Traditionally, there have been two widely-recognized methods for quantifying the effects of financial statement
misstatements: the roll-over method and the iron curtain method. The roll-over method focuses primarily on the impact of a misstatement on the income statementincluding the reversing effect of prior year
misstatementsbut its use can lead to the accumulation of misstatements in the balance sheet. The iron-curtain method, on the other hand, focuses primarily on the effect of correcting the period-end balance sheet with less emphasis on the
reversing effects of prior year errors on the income statement. We currently use the roll-over method for quantifying identified financial statement misstatements. In SAB No. 108, the SEC staff established an approach that requires
quantification of financial statement misstatements based on the effects of the misstatements on each of the companys financial statements and the related financial statement disclosures. This model is commonly referred to as a dual
approach because it requires quantification of errors under both the iron curtain and the roll-over methods.

SAB No. 108 permits existing public companies
to initially apply its provisions either by (i) restating prior financial statements as if the dual approach had always been used or (ii) recording the cumulative effect of initially applying the dual approach as
adjustments to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment recorded to the opening balance of retained earnings. Use of the cumulative effect transition method requires detailed
disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose. SAB No. 108 did not have an impact on our financial statements.

EMERGING ISSUES TASK FORCE (EITF) ISSUE NO. 05-1, THE ACCOUNTING FOR THE CONVERSION OF AN INSTRUMENT THAT BECOMES CONVERTIBLE UPON THE ISSUERS EXERCISE OF A CALL
OPTION THAT OTHERWISE IS NOT CURRENTLY CONVERTIBLE BASED ON A CONTINGENCY

On June 28, 2006, the EITF reached a consensus that the issuance of equity
securities to settle a debt instrument (pursuant to the instruments original conversion terms) that becomes convertible upon the issuers exercise of a call option should be accounted for as a conversion if the debt instrument contained a
substantive conversion feature as of its issuance date. That is, no gain or loss should be recognized related to the equity securities issued to settle the instrument. For purposes of applying this Issue, a substantive conversion feature is a
conversion feature that is at least reasonably possible of becoming exercisable in the future absent the issuers exercise of a call option. The conversion feature within our convertible subordinated debentures is substantive and therefore, we
would recognize no gain or loss on any equity securities issued to settle conversion of the debt.

SEC FINAL RULE RELEASE(FRR) 33-8732A, EXECUTIVE
COMPENSATION AND RELATED PERSON DISCLOSURE

On August 29, 2006, the Securities and Exchange Commission issued FRR 33-8732A. This FRR requires us to
expand our executive compensation disclosures effective with our 2006 Form 10-K and our 2007 Definitive Proxy Statement. We will provide these disclosures in both our 2006 Form 10-K and our 2007 Definitive Proxy Statement.



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NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

As announced on November 9, 2006, a Special Committee was established by our Board of Directors to conduct an independent investigation relating to the companys equity compensation grant practices and related
accounting for equity compensation grants. The Special Committee consisted of two independent members of our Board of Directors. The Special Committee was assisted in their investigation by independent outside legal counsel.

Together with its independent counsel, the Special Committee conducted an extensive review of equity compensation grant practices and awards made by the company, or in connection
with companies we acquired, between July 14, 1994 and November 1, 2006 (the Relevant Period), which covered 7,102 stock option grants and 1,062 restricted stock unit (RSU) grants made on 465 occasions. During the
investigation, numerous documents were reviewed, and extensive interviews of current and former employees and directors of the company and other individuals were conducted by the Special Committees independent counsel. On April 10, 2007,
the Special Committee presented its findings to the Board of Directors.

As also announced on November 9, 2006, the SEC had earlier notified us that it is
conducting an informal inquiry into the companys equity compensation grant practices. We continue to cooperate fully with the SEC in this informal inquiry.

The Special Committees Conclusions

The Special Committee concluded that the evidence obtained and reviewed in its investigation did not
establish any intentional wrongdoing by current employees, officers or directors of the company. The Special Committee and the companys management have determined that incorrect measurement dates for certain equity compensation awards were
used for financial accounting purposes and certain previously issued grants were modified without properly recording compensation expense and, as a result, we are restating certain of our prior financial statements to correct the accounting for
those awards. The use of incorrect measurement dates resulted from a number of reasons, including delays in the approval of awards, the absence of definitive documentation and modifications of previously awarded grants. The Special Committee also
identified certain awards for which grant dates were selected retroactively. However, the Special Committee has concluded that the evidence does not establish that there was any intentional wrongdoing in connection with those awards. Nearly all of
the grants for which the measurement dates have been changed (approximately 99% of the grants changed) were awarded in 2001 and earlier years.

In addition to the
adjustments to our previously filed financial statements as described above, the Board of Directors has adopted the following recommendations of the Special Committee.



| |  |  | Two additional independent directors will be recruited and appointed to the companys Board of Directors.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Membership of the Audit and Compensation Committees of the Board of Directors will be changed.
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | The Equity Compensation Committee has been discontinued.
| | - |  | --------------------------------------------------------



| |  |  | Enhancements will be made in the oversight of the companys corporate governance practices with respect to the companys equity compensation programs.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior management will be charged with ensuring that the equity compensation policies and processes are appropriate and provide effective controls, and that the
companys accounting for equity compensation is appropriate.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Certain of the companys equity compensation administrative processes and functions will move from the companys human resources organization to the finance
organization, under the supervision of the Chief Financial Officer.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Board of Directors unanimously adopted an Equity Compensation Grant Policy on April 10, 2007, which provides, among other things, that:
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All terms of each equity grant must be finalized and approved by the Board of Directors or the Compensation Committee on or prior to the grant date;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All stock options must have an exercise price equal to or greater than the average of the high and low market price on the grant date;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All recipients of equity grants must be notified, in writing, of such grants as soon as possible following approval; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Any equity compensation issues or actions will be reported by senior management on a timely basis to the Board of Directors or the Compensation Committee, no less frequently
than quarterly.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Background

Between 1994 and 1996, the
Board of Directors granted stock options to Getty Communications (Getty Images predecessor) employees and in connection with acquisitions, including grants to employees and officers of acquired companies. From 1996 to



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1998, the Compensation Committee had the authority to, and did, grant options to employees, officers and directors. From August 1998 through 2001, the Compensation
Committee continued to grant options to executive officers, and created option pools from which the Chief Executive Officer and Senior Vice Presidents were authorized to grant options to employees and non-executive officers. These pools
were used by the executive officers to grant options in connection with the hiring and promotion of employees or as incentive awards. In August 2001, the Board of Directors created the Stock Option Committee, appointing Chief Executive Officer
Jonathan Klein as the sole member with delegated authority to grant options to employees and non-executive officers. In 2005, the Stock Option Committee was renamed the Equity Compensation Committee and we moved to primarily granting RSUs rather
than options.

A total of 7,102 option grants and 1,062 RSU grants were awarded during the Relevant Period, as follows:



| |  |  | Pool options in which pools of options were approved by the Compensation Committee for later grant to employees by executive officers (2,277 grants).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Acquisition option grants in which options were granted by the Board of Directors or Compensation Committee to employees and officers in connection with our
acquisition of other companies and in which outstanding options held by employees of acquired companies were exchanged for Getty Images options at pre-determined conversion ratios (1,464 grants).
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other option grants which cover all remaining stock option grants during the Relevant Period (3,361 grants).
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | RSU grants in which RSUs were granted by the Equity Compensation Committee, the Compensation Committee and the Board of Directors to employees, officers and
directors (1,062 grants).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Special Committee and the company have determined that it is necessary to revise the measurement dates for
approximately 45% of these awards (Adjusted Options). Over half of the awards for which the measurement date is being revised relate to the companys only all employee grant in February of 2000 to employees below the vice president
level. In addition, the measurement dates for many awards are being revised due to: i) the use of the date of the approval of a pool of options as the measurement date as opposed to the date that the terms of each grant were finalized; ii) the use
of the date that a Unanimous Written Consent approving equity awards was faxed to Compensation Committee members for their approval, rather than the date when the approvals of the Compensation Committee members had been faxed back, as the
measurement date for the associated grants; and iii) the absence of a detailed list of recipients and associated grants prior to the date certain grants were entered into our equity award tracking system.

We previously applied Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and its related Interpretations and
provided the required pro forma disclosures under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, through our fiscal year ended December 31, 2005. We have used
the accelerated method of expensing stock options provided in Financial Accounting Standards Board Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans for recording expense
and for our pro forma disclosures. Under APB Opinion No. 25, a non-cash, stock-based compensation expense was required to be recognized for any option for which the exercise price was below the market price on the measurement date. Because most
of the companys Adjusted Options had an exercise price below the market price on the measurement date, there should have been a non-cash charge for each of these options under APB Opinion No. 25 equal to the number of option shares,
multiplied by the difference between the exercise price and the market price on the measurement date. That expense should have been amortized over the service period of the option.

The company also reviewed prior modifications made to previously granted options and determined that we did not record the appropriate amount of compensation expense for some of the modifications (Modified Options).
We did not record the appropriate amount of stock-based compensation expense under APB Opinion No. 25 related to Adjusted or Modified Options in our previously issued financial statements, and are recording these expenses in this Form 10-Q.



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Impact of Restatement

The restatements
included in this Form 10-Q and the 2006 Form 10-K to be filed immediately after we file this Form 10-Q include equity compensation adjustments arising from the Special Committee investigation and managements internal review, as well as
deferred tax adjustments related to certain long-term intercompany loans and adjustments to revenue and deferred revenue previously considered immaterial to our Consolidated Financial Statements as well as revisions to our loss on leased properties.
The income statement impact of the restatement is as follows:



|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|-------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ----------------------------------- | - |  | ---- | -------- | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------- | - |  | - | ------ | - |  | - | ---- | -
|YEARS ENDEDDECEMBER 31,                      |  | Total effect atDecember 31,2005 |         |   | 2005 |   |         | 2004 |  |   | Cumulativeeffect atDecember 31,2003 |   |  | 2003 |          |   | 2002 |   |        | 2001 |  |   | 2000   |   |  | 1999 |        |   | 1998 |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|(in thousands)                               |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |  
|                                             |  |                                 |         |   |      |   |         |      |  |  
|Net income, as previously reported           |  |                                 |         |   |      | $ | 149,703 |      |  | $ | 106,650                             |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Additional compensation expense1             |  | $                               | (27,204 | ) |      |   |         |      |  |   |                                     |   |  | $    | (27,204  | ) |      | $ | (1,294 | )    |  | $ | (2,706 | ) |  | $    | (4,784 | ) |      | $ | (15,710 | ) |  | $ | (2,481 | ) |  | $ | (229 | )
|Tax related effects                          |  |                                 | 7,862   |   |      |   |         |      |  |   | (128                                | ) |  |      | 7,990    |   |      |   | 1,814  |      |  |   | 676    |   |  |      | 1,110  |   |      |   | 3,847   |   |  |   | 500    |   |  |   | 43   |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Additional compensation expense, net of tax1 |  |                                 | (19,342 | ) |      |   |         |      |  |   | (128                                | ) |  |      | (19,214  | ) |      | $ | 520    |      |  | $ | (2,030 | ) |  | $    | (3,674 | ) |      | $ | (11,863 | ) |  | $ | (1,981 | ) |  | $ | (186 | )
|Other adjustments, net of tax                |  |                                 | (727    | ) |      |   | (342    | )    |  |   | (110                                | ) |  |      | (275     | ) |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Total decrease in net income                 |  | $                               | (20,069 | ) |      |   | (342    | )    |  |   | (238                                | ) |  | $    | (19,489) |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|                                             |  |                                 |         |   |      |   |         |      |  |   |                                     |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|Net income, as restated                      |  |                                 |         |   |      | $ | 149,361 |      |  | $ | 106,412                             |   |  |      |          |   |      |   |        |      |  |   |        |   |  |      |        |   |      |   |         |   |  |   |        |   |  |   |      |  
|                                             | 



|1 |  | Amounts resulted from improper measurement dates for stock awards and modifications.
|- |  | ------------------------------------------------------------------------------------

The table below shows the after-tax equity compensation expense as originally reported, the amount of the additional compensation expense and the restated equity compensation
expense for all years that were restated.



|                               |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |   |        |   |  |   |      |  
|------------------------------ |  | ---- | ---- | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------- | - | ---- | - | ------ | - |  | - | ---- | -
|AFTER-TAX COMPENSATION EXPENSE |  | 2003 |      |   | 2002 |   |        | 2001 |  |   | 2000   |   |  | 1999 |         |   | 1998 |  
|                               |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |   |        |   |  |   |      |  
|(in thousands)                 |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |  
|                               |  |      |      |   |      |  
|As Reported                    |  | $    | (302 | ) |      | $ | (23    | )    |  | $ | (172   | ) |  | $    |        |   |      | $ | (814   | ) |  | $ |     |  
|Adjustment                     |  |      | 520  |   |      |   | (2,030 | )    |  |   | (3,674 | ) |  |      | (11,863 | ) |      |   | (1,981 | ) |  |   | (186 | )
|                               |  |      |      |   |      |   |        |      |  |   |        |   |  |      |         |   |      |   |        |   |  |   |      |  
|As Restated                    |  | $    | 218  |   |      | $ | (2,053 | )    |  | $ | (3,846 | ) |  | $    | (11,863 | ) |      | $ | (2,795 | ) |  | $ | (186 | )
|                               | 

Equity-based compensation is not deductible for corporate income tax purposes in most countries. The after-tax amounts in
the table reflect reduction of compensation expense for tax benefits in the United States in all years and in the United Kingdom in 2003. For the United Kingdom prior to 2003 and for all other countries in all years, there is no tax benefit recorded
for the associated compensation expense.

In addition, in 2001, we analyzed our existing net deferred tax assets (DTAs) and determined that not all the existing DTAs
would be realized over the period covered by our analysis and therefore recorded a valuation allowance equal to approximately $12 million. We



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##### Table of Contents



|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|17 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



performed a similar analysis in 2002 and as a result, increased the valuation allowance associated with the exercise of employee stock options in 2002 to $15.1
million. In 2003, we updated our estimate of future taxable income and determined that it was now more likely than not that we would realize more of the DTA than the net balance at December 31, 2003. Therefore, we reduced our valuation
allowance by $25.3 million, including the $15.1 million related to stock option exercises. We reviewed the valuation allowance in light of the restatement of equity-based compensation and determined that an additional valuation allowance of $4.9
million should be recorded at December 31, 2001 and then released at December 31, 2003.

As noted above, we have also made two adjustments to deferred tax
assets that were previously considered immaterial. The first item related to the accounting for unrealized foreign currency gains and losses on long-term intercompany loans between our United States and United Kingdom subsidiaries. We incorrectly
recorded deferred tax assets on the unrealized foreign currency gains and losses in the United Kingdom from 1999 to 2005, instead of recording them as part of the net foreign currency translation adjustments (losses) gains within accumulated other
comprehensive income (loss). The second item related to an intercompany loan established in 2005 for which we did not include the unrealized gains or losses in taxable income, causing our deferred taxes related to our net operating losses to be
misstated and other comprehensive income to also be misstated.

The revenue and deferred revenue adjustment related to fees paid by photographers for making certain
of their images available for license on our website for two years. We had previously recognized these fees when received, as they were previously considered immaterial. We are now recognizing the fees ratably over the two year period, resulting in
a decrease in revenue and an increase in deferred revenue in the periods reported herein.

In addition, we evaluated the impact of the restatements on our
consolidated tax provision. The company and our subsidiaries file tax returns in numerous tax jurisdictions around the world. In the United States for all years reflected above and the United Kingdom in 2003 and subsequent years, we are able to
claim a tax deduction relating to stock options exercised. In those jurisdictions where a tax deduction will be allowed, we have recorded deferred tax assets to reflect future tax deductions to the extent we believe such assets to be recoverable. In
addition, we also determined that, as a result of the changes in the measurement dates, we should not have taken a deduction in the U.S. in prior years for stock option related amounts pertaining to certain executives under the Internal Revenue Code
Section 162(m). Section 162(m) limits the deductibility of compensation above certain thresholds. As a result, our tax liabilities have increased by approximately $2.4 million.

If certain of the Adjusted or Modified Options are not repriced, the holders of such options will, upon exercise of the options, incur personal income taxes and penalties in accordance with Internal Revenue Code Section 409A
(and other state tax laws) beyond what they would have incurred were the options not adjusted or modified. Certain of these options have already been exercised and therefore incremental taxes and penalties have been incurred by the holders, while
other affected options remain outstanding. We are currently evaluating the companys position with respect to reimbursing employees for incremental taxes and penalties incurred and to potentially repricing the affected options that remain
outstanding. If the company takes such actions it will result in a charge to compensation expense in the period the decision is made or the expense is incurred, as applicable.

The following tables reflect the impact of the additional non-cash charges for equity-based compensation expense and other adjustments, and the related tax effects on the:



| |  |  | consolidated statements of income for the years ended December 31, 2005 and 2004;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | consolidated balance sheet as of December 31, 2005;
| | - |  | ---------------------------------------------------



| |  |  | consolidated statements of cash flows for the years ended December 31, 2005 and 2004;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | condensed consolidated statements of income for the three and nine months ended September 30, 2005; and
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | condensed consolidated statement of cash flows for the nine months ended September 30, 2005.
| | - |  | --------------------------------------------------------------------------------------------



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##### Table of Contents



|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|18 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONSOLIDATED STATEMENTS OF INCOME



|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|------------------------------------------------------------ |  | --------------------- | - |  | ----------- | - |  | -------------- | - |  | --------------------- | - |  | ----------- | - |  | ------------- | -
|YEARS ENDED DECEMBER 31,                                     |  | 2005                  |   |  | 2004        |  
|                                                             |  |                       |   |  |             |  
|                                                             |  | As previouslyreported |   |  | Adjustments |   |  | As restated    |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated   |  
|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|(in thousands, except per share data)                        |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|                                                             |  |                       |   |  |             |  
|Revenue                                                      |  | $  733,729            |   |  | $  (553     | ) |  | $  733,176     |   |  | $  622,427            |   |  | $  (177     | ) |  | $  622,250    |  
|Costs of revenue (exclusive of items shown separately below) |  | 196,887               |   |  |            |   |  | 196,887        |   |  | 172,684               |   |  |            |   |  | 172,684       |  
|Selling, general and administrative                          |  | 252,103               |   |  |            |   |  | 252,103        |   |  | 225,128               |   |  |            |   |  | 225,128       |  
|Depreciation                                                 |  | 48,572                |   |  |            |   |  | 48,572         |   |  | 52,976                |   |  |            |   |  | 52,976        |  
|Amortization                                                 |  | 9,519                 |   |  |            |   |  | 9,519          |   |  | 4,559                 |   |  |            |   |  | 4,559         |  
|Other operating expenses (income)                            |  | 717                   |   |  |            |   |  | 717            |   |  | (1,187                | ) |  |            |   |  | (1,187        | )
|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Operating expenses                                           |  | 507,798               |   |  |            |   |  | 507,798        |   |  | 454,160               |   |  |            |   |  | 454,160       |  
|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Income from operations                                       |  | 225,931               |   |  | (553        | ) |  | 225,378        |   |  | 168,267               |   |  | (177        | ) |  | 168,090       |  
|Investment income                                            |  | 11,991                |   |  |            |   |  | 11,991         |   |  | 9,133                 |   |  |            |   |  | 9,133         |  
|Interest expense                                             |  | (7,618                | ) |  |            |   |  | (7,618         | ) |  | (3,828                | ) |  |            |   |  | (3,828        | )
|Other non-operating expenses, net                            |  | 350                   |   |  |            |   |  | 350            |   |  | 467                   |   |  |            |   |  | 467           |  
|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Income before income taxes                                   |  | 230,654               |   |  | (553        | ) |  | 230,101        |   |  | 174,039               |   |  | (177        | ) |  | 173,862       |  
|Income tax expense                                           |  | (80,951               | ) |  | 211         |   |  | (80,740        | ) |  | (67,389               | ) |  | (61         | ) |  | (67,450       | )
|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Net income                                                   |  | $  149,703            |   |  | $   (342    | ) |  | $  149,361     |   |  | $  106,650            |   |  | $   (238    | ) |  | $  106,412    |  
|                                                             | 
|Earnings per share:                                          |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | $        2.43         |   |  | $          |   |  | $         2.43 |   |  | $        1.81         |   |  | $  (0.01    | ) |  | $        1.80 |  
|Diluted                                                      |  | 2.28                  |   |  | (0.01       | ) |  | 2.27           |   |  | 1.72                  |   |  |            |   |  | 1.72          |  
|                                                             |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Shares used in computing earnings per share:                 |  |                       |   |  |             |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | 61,567                |   |  |            |   |  | 61,567         |   |  | 59,006                |   |  |            |   |  | 59,006        |  
|Diluted                                                      |  | 65,744                |   |  |            |   |  | 65,744         |   |  | 62,031                |   |  |            |   |  | 62,031        |  
|                                                             | 



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##### Table of Contents



|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|19 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONSOLIDATED BALANCE SHEET



|                                           |  |                       |   |  |                |   |  |                |  
|------------------------------------------ |  | --------------------- | - |  | -------------- | - |  | -------------- | -
|                                           |  | DECEMBER 31, 2005     |  
|                                           |  |                       |  
|                                           |  | As previouslyreported |   |  | Adjustments    |   |  | As restated    |  
|                                           |  |                       |   |  |                |   |  |                |  
|(in thousands, except per share data)      |  |                       |   |  |                |   |  |                |  
|                                           |  |                       |  
|ASSETS                                     |  |                       |   |  |                |   |  |                |  
|Current assets:                            |  |                       |   |  |                |   |  |                |  
|Cash and cash equivalents                  |  | $     223,084         |   |  | $             |   |  | $     223,084  |  
|Short-term investments                     |  | 295,191               |   |  |               |   |  | 295,191        |  
|Accounts receivable, net                   |  | 107,020               |   |  |               |   |  | 107,020        |  
|Prepaid expenses                           |  | 11,815                |   |  |               |   |  | 11,815         |  
|Other current assets                       |  | 8,553                 |   |  |               |   |  | 8,553          |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total current assets                       |  | 645,663               |   |  |               |   |  | 645,663        |  
|Property and equipment, net                |  | 127,497               |   |  |               |   |  | 127,497        |  
|Goodwill                                   |  | 804,804               |   |  |               |   |  | 804,804        |  
|Identifiable intangible assets, net        |  | 50,206                |   |  |               |   |  | 50,206         |  
|Deferred income taxes, net                 |  | 30,704                |   |  | (877           | ) |  | 29,827         |  
|Other long-term assets                     |  | 4,211                 |   |  |               |   |  | 4,211          |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total assets                               |  | $  1,663,085          |   |  | $        (877  | ) |  | $  1,662,208   |  
|                                           |  |                       |   |  |                |   |  |                |  
|                                           |  |                       |  
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |                       |   |  |                |   |  |                |  
|Current liabilities:                       |  |                       |   |  |                |   |  |                |  
|Accounts payable                           |  | $       72,344        |   |  | $             |   |  | $       72,344 |  
|Accrued expenses                           |  | 38,676                |   |  |               |   |  | 38,676         |  
|Deferred income taxes, net                 |  | 17,677                |   |  | (449           | ) |  | 17,228         |  
|Other current liabilities                  |  | 2,948                 |   |  | 1,174          |   |  | 4,122          |  
|Short-term debt                            |  | 265,000               |   |  |               |   |  | 265,000        |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total current liabilities                  |  | 396,645               |   |  | 725            |   |  | 397,370        |  
|Long-term liabilities                      |  | 23,480                |   |  |               |   |  | 23,480         |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total liabilities                          |  | 420,125               |   |  | 725            |   |  | 420,850        |  
|                                           |  |                       |   |  |                |   |  |                |  
|Commitments and contingencies              |  |                       |   |  |                |   |  |                |  
|Stockholders equity:                      |  |                       |   |  |                |   |  |                |  
|Common stock                               |  | 623                   |   |  |               |   |  | 623            |  
|Additional paid-in capital                 |  | 1,278,048             |   |  | 18,262         |   |  | 1,296,310      |  
|Accumulated deficit                        |  | (18,900               | ) |  | (20,069        | ) |  | (38,969        | )
|Accumulated other comprehensive loss       |  | (16,811               | ) |  | 205            |   |  | (16,606        | )
|                                           |  |                       |   |  |                |   |  |                |  
|Total stockholders equity                 |  | 1,242,960             |   |  | (1,602         | ) |  | 1,241,358      |  
|                                           |  |                       |   |  |                |   |  |                |  
|Total liabilities and stockholders equity |  | $  1,663,085          |   |  | $        (877  | ) |  | $  1,662,208   |  
|                                           | 



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##### Table of Contents



|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|20 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|-------------------------------------------------------------------------------------------- |  | --------------------- | - |  | ----------- | - |  | ----------- | - |  | --------------------- | - |  | ----------- | - |  | ----------- | -
|YEARS ENDED DECEMBER 31,                                                                     |  | 2005                  |   |  | 2004        |  
|                                                                                             |  |                       |   |  |             |  
|                                                                                             |  | As previouslyreported |   |  | Adjustments |   |  | As restated |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated |  
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|(in thousands)                                                                               |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|                                                                                             |  |                       |   |  |             |  
|Cash flows from operating activities                                                         |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Net income                                                                                   |  | $   149,703           |   |  | $  (342     | ) |  | $   149,361 |   |  | $   106,650           |   |  | $  (238     | ) |  | $   106,412 |  
|Adjustments to reconcile net income to net cash provided by operating activities:            |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Employee stock-based compensation                                                            |  | 1,269                 |   |  |            |   |  | 1,269       |   |  | 576                   |   |  |            |   |  | 576         |  
|Reduction of income taxes paid due to the tax benefit from employee stock based compensation |  | 65,034                |   |  | 3,754       |   |  | 68,788      |   |  | 3,233                 |   |  | 1,587       |   |  | 4,820       |  
|Depreciation                                                                                 |  | 48,572                |   |  |            |   |  | 48,572      |   |  | 52,976                |   |  |            |   |  | 52,976      |  
|Amortization of identifiable intangible assets                                               |  | 9,519                 |   |  |            |   |  | 9,519       |   |  | 4,559                 |   |  |            |   |  | 4,559       |  
|Amortization of debt issuance and exchange costs                                             |  | 6,060                 |   |  |            |   |  | 6,060       |   |  | 1,915                 |   |  |            |   |  | 1,915       |  
|Deferred income taxes                                                                        |  | 5,898                 |   |  | (3,965      | ) |  | 1,933       |   |  | 51,197                |   |  | (1,526      | ) |  | 49,671      |  
|Bad debt expense                                                                             |  | 2,739                 |   |  |            |   |  | 2,739       |   |  | 3,239                 |   |  |            |   |  | 3,239       |  
|Other changes in long-term assets, liabilities and equity                                    |  | 2,763                 |   |  |            |   |  | 2,763       |   |  | 3,031                 |   |  |            |   |  | 3,031       |  
|Changes in current assets and liabilities, net of effects of business acquisitions:          |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Accounts receivable                                                                          |  | (15,159               | ) |  |            |   |  | (15,159     | ) |  | (16,006               | ) |  |            |   |  | (16,006     | )
|Accounts payable                                                                             |  | (9,783                | ) |  |            |   |  | (9,783      | ) |  | (530                  | ) |  |            |   |  | (530        | )
|Accrued expenses                                                                             |  | (8,776                | ) |  |            |   |  | (8,776      | ) |  | (2,510                | ) |  |            |   |  | (2,510      | )
|Income taxes payable                                                                         |  | (2,486                | ) |  |            |   |  | (2,486      | ) |  | (4,039                | ) |  |            |   |  | (4,039      | )
|Changes in other current assets and liabilities                                              |  | 1,924                 |   |  | 553         |   |  | 2,477       |   |  | (1,709                | ) |  | 177         |   |  | (1,532      | )
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Net cash provided by operating activities                                                    |  | 257,277               |   |  |            |   |  | 257,277     |   |  | 202,582               |   |  |            |   |  | 202,582     |  
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Cash flows from investing activities                                                         |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Acquisitions of businesses, net of cash acquired                                             |  | (234,432              | ) |  |            |   |  | (234,432    | ) |  | (25,611               | ) |  |            |   |  | (25,611     | )
|Acquisition of available-for-sale investments                                                |  | (101,575              | ) |  |            |   |  | (101,575    | ) |  | (341,671              | ) |  |            |   |  | (341,671    | )
|Proceeds from available-for-sale investments                                                 |  | 129,619               |   |  |            |   |  | 129,619     |   |  | 263,398               |   |  |            |   |  | 263,398     |  
|Acquisition of property and equipment                                                        |  | (57,766               | ) |  |            |   |  | (57,766     | ) |  | (36,723               | ) |  |            |   |  | (36,723     | )
|Other investing activities                                                                   |  | (643                  | ) |  |            |   |  | (643        | ) |  | 46                    |   |  |            |   |  | 46          |  
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Net cash used in investing activities                                                        |  | (264,797              | ) |  |            |   |  | (264,797    | ) |  | (140,561              | ) |  |            |   |  | (140,561    | )
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Cash flows from financing activities                                                         |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Proceeds from the issuance of common stock                                                   |  | 42,172                |   |  |            |   |  | 42,172      |   |  | 73,998                |   |  |            |   |  | 73,998      |  
|Other financing activities                                                                   |  | (558                  | ) |  |            |   |  | (558        | ) |  | (1,429                | ) |  |            |   |  | (1,429      | )
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Net cash provided by financing activities                                                    |  | 41,614                |   |  |            |   |  | 41,614      |   |  | 72,569                |   |  |            |   |  | 72,569      |  
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Effect of exchange rate changes                                                              |  | (5,762                | ) |  |            |   |  | (5,762      | ) |  | 3,144                 |   |  |            |   |  | 3,144       |  
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Net increase in cash and cash equivalents                                                    |  | 28,332                |   |  |            |   |  | 28,332      |   |  | 137,734               |   |  |            |   |  | 137,734     |  
|Cash and cash equivalents:                                                                   |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|Beginning of year                                                                            |  | 194,752               |   |  |            |   |  | 194,752     |   |  | 57,018                |   |  |            |   |  | 57,018      |  
|                                                                                             |  |                       |   |  |             |   |  |             |   |  |                       |   |  |             |   |  |             |  
|End of year                                                                                  |  | $   223,084           |   |  | $          |   |  | $   223,084 |   |  | $   194,752           |   |  | $          |   |  | $   194,752 |  
|                                                                                             | 



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|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|21 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|------------------------------------------------------------ |  | ------------------------------------ | - |  | ------------------------------------- | - |  | ------------- | - |  | --------------------- | - |  | ----------- | - |  | ------------- | -
|                                                             |  | NINE MONTHS ENDED SEPTEMBER 30, 2005 |   |  | THREE MONTHS ENDED SEPTEMBER 30, 2005 |  
|                                                             |  |                                      |   |  |                                       |  
|                                                             |  | As previouslyreported                |   |  | Adjustments                           |   |  | As restated   |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated   |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|(in thousands, except per share data)                        |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|                                                             |  |                                      |   |  |                                       |  
|Revenue                                                      |  | $  547,916                           |   |  | $   (406                              | ) |  | $  547,510    |   |  | $  184,516            |   |  | $    (191   | ) |  | $  184,325    |  
|Costs of revenue (exclusive of items shown separately below) |  | 148,260                              |   |  |                                      |   |  | 148,260       |   |  | 47,510                |   |  |            |   |  | 47,510        |  
|Selling, general and administrative                          |  | 188,270                              |   |  |                                      |   |  | 188,270       |   |  | 63,309                |   |  |            |   |  | 63,309        |  
|Depreciation                                                 |  | 36,090                               |   |  |                                      |   |  | 36,090        |   |  | 11,759                |   |  |            |   |  | 11,759        |  
|Amortization                                                 |  | 6,421                                |   |  |                                      |   |  | 6,421         |   |  | 2,744                 |   |  |            |   |  | 2,744         |  
|Loss on leased properties, net                               |  | 838                                  |   |  |                                      |   |  | 838           |   |  | 329                   |   |  |            |   |  | 329           |  
|Other operating expenses                                     |  | 267                                  |   |  |                                      |   |  | 267           |   |  | 148                   |   |  |            |   |  | 148           |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Operating expenses                                           |  | 380,146                              |   |  |                                      |   |  | 380,146       |   |  | 125,799               |   |  |            |   |  | 125,799       |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Income from operations                                       |  | 167,770                              |   |  | (406                                  | ) |  | 167,364       |   |  | 58,717                |   |  | (191        | ) |  | 58,526        |  
|Investment income                                            |  | 8,715                                |   |  |                                      |   |  | 8,715         |   |  | 2,787                 |   |  |            |   |  | 2,787         |  
|Interest expense                                             |  | (7,246                               | ) |  |                                      |   |  | (7,246        | ) |  | (433                  | ) |  |            |   |  | (433          | )
|Other non-operating expenses, net                            |  | 115                                  |   |  |                                      |   |  | 115           |   |  | 464                   |   |  |            |   |  | 464           |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Income before income taxes                                   |  | 169,354                              |   |  | (406                                  | ) |  | 168,948       |   |  | 61,535                |   |  | (191        | ) |  | 61,344        |  
|Income tax expense                                           |  | (62,196                              | ) |  | 155                                   |   |  | (62,041       | ) |  | (22,475               | ) |  | 73          |   |  | (22,402       | )
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Net income                                                   |  | $  107,158                           |   |  | $   (251                              | ) |  | $  106,907    |   |  | $    39,060           |   |  | $    (118   | ) |  | $    38,942   |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Earnings per share:                                          |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | $        1.75                        |   |  | $  (0.01                              | ) |  | $        1.74 |   |  | $        0.63         |   |  | $          |   |  | $        0.63 |  
|Diluted                                                      |  | 1.64                                 |   |  |                                      |   |  | 1.64          |   |  | 0.60                  |   |  | (0.01       | ) |  | 0.59          |  
|                                                             |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Shares used in computing earnings per share:                 |  |                                      |   |  |                                       |   |  |               |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | 61,368                               |   |  |                                      |   |  | 61,368        |   |  | 61,820                |   |  |            |   |  | 61,820        |  
|Diluted                                                      |  | 65,299                               |   |  |                                      |   |  | 65,299        |   |  | 65,622                |   |  |            |   |  | 65,622        |  
|                                                             | 



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|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|22 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                    |  |                                      |   |  |             |   |  |              |  
|----------------------------------------------------------------------------------- |  | ------------------------------------ | - |  | ----------- | - |  | ------------ | -
|                                                                                    |  | NINE MONTHS ENDED SEPTEMBER 30, 2005 |  
|                                                                                    |  |                                      |  
|                                                                                    |  | As previouslyreported                |   |  | Adjustments |   |  | As restated  |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|(in thousands)                                                                      |  |                                      |   |  |             |   |  |              |  
|                                                                                    |  |                                      |  
|Cash flows from operating activities                                                |  |                                      |   |  |             |   |  |              |  
|Net income                                                                          |  | $    107,158                         |   |  | $  (251     | ) |  | $    106,907 |  
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |                                      |   |  |             |   |  |              |  
|Deferred income taxes                                                               |  | 52,957                               |   |  | (155        | ) |  | 52,802       |  
|Depreciation                                                                        |  | 36,090                               |   |  |            |   |  | 36,090       |  
|Amortization of identifiable intangible assets                                      |  | 6,421                                |   |  |            |   |  | 6,421        |  
|Amortization of debt issuance and exchange costs                                    |  | 6,060                                |   |  |            |   |  | 6,060        |  
|Bad debt expense                                                                    |  | 1,569                                |   |  |            |   |  | 1,569        |  
|Employee stock-based compensation                                                   |  | 944                                  |   |  |            |   |  | 944          |  
|Loss on leased properties, net                                                      |  | 838                                  |   |  |             |   |  | 838          |  
|Other changes in long-term assets, liabilities and equity                           |  | 412                                  |   |  |            |   |  | 412          |  
|Changes in current assets and liabilities, net of effects of business acquisitions: |  |                                      |   |  |             |   |  |              |  
|Accounts receivable, net                                                            |  | (15,461                              | ) |  |            |   |  | (15,461      | )
|Accounts payable                                                                    |  | (6,887                               | ) |  |            |   |  | (6,887       | )
|Accrued expenses                                                                    |  | (10,215                              | ) |  |            |   |  | (10,215      | )
|Income taxes payable                                                                |  | (600                                 | ) |  |            |   |  | (600         | )
|Changes in other current assets and liabilities                                     |  | 2,060                                |   |  | 406         |   |  | 2,466        |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net cash provided by operating activities                                           |  | 181,346                              |   |  |            |   |  | 181,346      |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Cash flows from investing activities                                                |  |                                      |   |  |             |   |  |              |  
|Acquisitions of businesses, net of cash acquired                                    |  | (231,881                             | ) |  |            |   |  | (231,881     | )
|Acquisition of available-for-sale investments                                       |  | (77,768                              | ) |  |            |   |  | (77,768      | )
|Proceeds from sale of available-for-sale investments                                |  | 101,012                              |   |  |            |   |  | 101,012      |  
|Acquisition of property and equipment                                               |  | (44,723                              | ) |  |            |   |  | (44,723      | )
|Other investing activities                                                          |  | (594                                 | ) |  |            |   |  | (594         | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net cash used in investing activities                                               |  | (253,954                             | ) |  |            |   |  | (253,954     | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Cash flows from financing activities                                                |  |                                      |   |  |             |   |  |              |  
|Proceeds from the issuance of common stock                                          |  | 33,216                               |   |  |            |   |  | 33,216       |  
|Other financing activities                                                          |  | (558                                 | ) |  |            |   |  | (558         | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net cash provided by financing activities                                           |  | 32,658                               |   |  |            |   |  | 32,658       |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Effect of exchange rate changes                                                     |  | (3,564                               | ) |  |            |   |  | (3,564       | )
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|Net increase in cash and cash equivalents                                           |  | (43,514                              | ) |  |            |   |  | (43,514      | )
|Cash and cash equivalents:                                                          |  |                                      |   |  |             |   |  |              |  
|at beginning of period                                                              |  | 194,752                              |   |  |            |   |  | 194,752      |  
|                                                                                    |  |                                      |   |  |             |   |  |              |  
|at end of period                                                                    |  | $    151,238                         |   |  | $          |   |  | $    151,238 |  
|                                                                                    | 



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|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|23 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



NOTE 3. ACQUISITIONS OF BUSINESSES

On
April 6, 2006, we purchased all of the shares of Pixel Images Holdings Limited, the parent company of Star Media Limited (dba Stockbyte) and Stockdisc Limited (dba Stockdisc) (collectively Stockbyte) for $135.0 million in net cash
(excluding direct acquisition costs). Stockbyte was a privately held stock photography agency based in Tralee, Ireland that licensed royalty-free imagery to its customers through distributors, including Getty Images, Inc., and through its two
websites, www.stockbyte.com and www.stockdisc.com. We have integrated this business into ours, including redirecting both of their websites to www.gettyimages.com. The purchase was funded from existing cash and cash equivalents. The purchase price
(including direct costs of the acquisition and liabilities assumed) was allocated primarily to goodwill ($110.2 million) and identifiable intangible assets ($21.4 million).

On February 9, 2006, we purchased all of the shares of iStockphoto, Inc., a privately held stock photography company located in Calgary, Alberta, Canada, for $50.0 million in cash. iStockphoto, Inc. licenses royalty-free
imagery exclusively through its website, www.istockphoto.com, and is a leader in the micropayment licensing model (i.e. licensing imagery for as little as one dollar). The purchase was funded from existing cash and cash equivalents. The purchase
price (including direct costs of the acquisition and liabilities incurred) was allocated primarily to goodwill ($40.9 million) and identifiable intangible assets ($13.5 million).

We also completed the acquisition of Laura Ronchi, S.p.A, our Italian delegate, in the second quarter of 2006.

All acquisitions were accounted
for using the purchase method of accounting and, accordingly, the results of operations of the acquired businesses since the respective dates of acquisition are included in our consolidated financial statements. All acquisitions year-to-date were
not material, individually or in the aggregate, to the company as a whole and, therefore, pro forma financial information is not presented.

We completed additional
business acquisitions after the third quarter of 2006. Please see discussion of these acquisitions in Note 12. Subsequent Events.

NOTE 4. 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 convertible debt, based on quoted market prices, was approximately $284.6 million at September 30, 2006 and $540.9 million at December 31, 2005. These fair values were $19.6 million and $275.9 million, respectively, higher than the
carrying value of our debt at those dates.

NOTE 5. LEASE LOSS ACCRUALS

We
carry lease loss accruals within accrued liabilities and other long-term liabilities on our balance sheet. The balances of these accruals fluctuate as a result of: entering into or terminating subleases for the associated facilities; material
changes in our assumptions used to calculate the accruals; cash payments and receipts; and the passage of time (accretion expense).

In 2007, we subleased all of our
excess space in New York and Seattle, and this information was factored into our lease loss accruals recorded in the second quarter of 2006. We restated the loss that we had recorded in our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 with our filing of our Second Quarter 10-Q/A that was filed immediately before the filing of this Form 10-Q. The loss was reduced by $1.6 million in the Second Quarter 10-Q/A.



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|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
|24 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 1



Our accrued losses on leased properties changed in 2006 as follows:



|                                                 |  |               |   |  |                    |   |  |            |  
|------------------------------------------------ |  | ------------- | - |  | ------------------ | - |  | ---------- | -
|                                                 |  | Restructuring |   |  | AcquisitionRelated |   |  | Total      |  
|                                                 |  |               |   |  |                    |   |  |            |  
|(In thousands)                                   |  |               |   |  |                    |   |  |            |  
|                                                 |  |               |  
|Balance at December 31, 2005                     |  | $    1,398    |   |  | $  3,351           |   |  | $    4,749 |  
|Additional charges and adjustments               |  | 19,290        |   |  | (278               | ) |  | 19,012     |  
|Reduction of accrued losses due to cash payments |  | (586          | ) |  | (821               | ) |  | (1,407     | )
|Accretion expense                                |  | 464           |   |  | 42                 |   |  | 506        |  
|Effects of foreign currency translation          |  | 6             |   |  | 252                |   |  | 258        |  
|                                                 |  |               |   |  |                    |   |  |            |  
|                                                 |  |               |  
|Balance at September 30, 2006                    |  | $  20,572     |   |  | $  2,546           |   |  | $  23,118  |  
|Current amount                                   |  | 8,094         |   |  | 2,546              |   |  | 10,640     |  
|Long-term amount                                 |  | 12,478        |   |  |                   |   |  | 12,478     |  
|                                                 | 

NOTE 6. DEBT

Our $265.0 million
convertible subordinated debentures may be converted at the holders option if the closing price of our common stock during a relevant measurement period as defined in the indenture is more than $73.30 per share. The ability for the holders to
convert expires on the last day of each quarter unless the conversion condition is met again in that quarter. This conversion condition was met during the quarter ended December 31, 2005 and therefore we classified the $265.0 million of
debentures as short-term debt on our December 31, 2005 balance sheet. The conversion condition was not met during the quarter ended September 30, 2006 and therefore we classified the debentures as long-term on our September 30, 2006
balance sheet. The closing price of our common stock on October 31, 2006 was $43.31 per share.

The conversion contingencies relating to the credit rating
assigned to, and the trading price of the debentures compared to the product of the closing price of our common stock and the conversion rate in effect at such time, as well as the contingent interest feature, represent embedded derivatives. A
valuation of the fair value of these derivatives is performed each quarter. The fair value of these derivatives was insignificant in all periods presented.

During
the fourth quarter of 2006, we received two notices of a purported default from certain holders of our debentures. See discussion of these notices in Note 12. Subsequent Events.

On May 4, 2006, we entered into a $100.0 million unsecured senior revolving credit facility with U.S. Bank National Association. This credit facility is available for share repurchases, acquisitions of businesses and
general corporate purposes. The interest rate on funds drawn down under the credit facility is 30-day LIBOR plus 0.5%, and there are no fees in periods when funds are not drawn down. Any funds drawn down under the credit facility are required to be
repaid within the 364-day term of the facility. The credit agreement does not contain financial covenants requiring us to maintain any financial ratios. The credit agreement does contain customary affirmative and negative covenants, as well as
customary events of default the occurrence of which could result in termination of the facility and the acceleration of all of our obligations thereunder. Our obligations under the facility are guaranteed by our primary U.S. operating company.
No funds had been drawn down under this facility as of September 30, 2006.

In 2007, we replaced this facility with a new facility. For more information, see
Note 12. Subsequent Events.

NOTE 7. COMMITMENTS AND CONTINGENCIES

Commitments

There have been no material changes in our commitments since year end that were outside of the ordinary course of business.

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 necessary model and property releases for an image we license. The standard terms of these indemnification obligations require us to
defend those claims and pay related damages, if any. We typically mitigate this risk by



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|   |  |  |  |                    |  |  |  |          |  |  |  |           |  |        |  |  |  |       
|-- |  |  |  | ------------------ |  |  |  | -------- |  |  |  | --------- |  | ------ |  |  |  | ------
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securing all necessary model and property releases for imagery for which we hold the copyright, and by contractually requiring our contributing photographers and other
imagery partners to do the same prior to submitting any imagery to us. We also require contributing photographers, other imagery partners and sellers of businesses or image collections 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 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 September 30, 2006 and December 31, 2005. As such, we believe the estimated fair value of these liabilities is minimal.

In the
ordinary course of business, we also enter into certain types of agreements that 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 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 indemnification obligations 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 believe the
estimated fair value of these liabilities is minimal, no related liabilities are recorded at September 30, 2006 or December 31, 2005. 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.

Securities and Exchange Commission (SEC) 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 the
Explanatory Note section of this Form 10-Q and the Explanatory Note Regarding Restatements section of the 2006 Form 10-K to be filed immediately after the filing of this Form 10-Q for additional information.

Shareholder Derivative Lawsuits

In connection with the SEC informal inquiry and our
review of historical stock option grant practices, there have been two derivative lawsuits filed against certain executive officers and directors of the company. The first lawsuit, filed in the Superior Court of the State of Washington on
January 29, 2007, seeks 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. The lawsuit was brought
against current and former officers and directors of the company, Jonathan D. Klein, Mark H. Getty, Jeffrey L. Beyle, Christopher H. Sporborg, Andrew S. Garb, James N. Bailey, Michael A. Stein, David Landau, Stephen M. Powell, Elizabeth J. Huebner,
A.D. Bud Albers, Lawrence J. Gould, Christopher J. Roling, Sally Von Bargen, Michael Bernard, Suzanne L. Page, Heather Redman, Mark Torrance, Manny Fernandez and Anthony Stone.

The second lawsuit, filed in the Western District Court of the State of Washington on March 2, 2007, seeks remedies from the defendants for purported violations of state law,
including breaches of fiduciary duties, unjust enrichment, statutory violation and other violations of the law. The lawsuit was brought against current and former officers and directors of the company, Jonathan D. Klein, Mark H. Getty, Jeffrey L.
Beyle, M. Lewis Blackwell, Nick Evans-Lombe, Richard R. Ellis, John Z. Ferguson, James C. Gurke, Scott A. Miskimens, William ONeill, Christopher H. Sporborg, Andrew S. Garb, James N. Bailey, Stephen M. Powell, Elizabeth J. Huebner,
A.D. Albers, Christopher J. Roling, Sally Von Bargen, and Warwick K. Woodhouse.

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 alleged 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



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defending, adjudicating or 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, are expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

NOTE 8. SHARE REPURCHASES

Effective May 22, 2006, our Board of Directors approved
an amendment to our share repurchase program authorizing the repurchase of shares of our common stock with an aggregate value of up to $250 million, an increase from the prior authorization of $150 million. During the second and third quarters of
2006, we repurchased a total of 2.7 million shares for $175.1 million under the amended plan. These repurchases occurred in the open market pursuant to a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934. Subsequent to the
third quarter, we repurchased additional shares under this program and then suspended the program when it was determined this Quarterly Report on Form 10-Q could not be filed by the required filing date. For more information, see Note 12.
Subsequent Events.

NOTE 9. COMPREHENSIVE INCOME

Comprehensive income
consisted of the following during the periods presented:



|                                                                                                     |  |                                 |  |           |                                |  |             |  |             |  
|---------------------------------------------------------------------------------------------------- |  | ------------------------------- |  | --------- | ------------------------------ |  | ----------- |  | ----------- | -
|                                                                                                     |  | THREE MONTHS ENDEDSEPTEMBER 30, |  |           | NINE MONTHS ENDEDSEPTEMBER 30, | 
|                                                                                                     |  |                                 |  |           |                                | 
|                                                                                                     |  | 2006                            |  | 2005      |                                |  | 2006        |  | 2005        |  
|                                                                                                     |  |                                 |  |           |                                |  |             |  |             |  
|(In thousands)                                                                                       |  |                                 |  |           |                                |  |             |  |             |  
|                                                                                                     |  |                                 |  |          
|Net income                                                                                           |  | $  37,326                       |  | $  38,942 |                                |  | $    99,533 |  | $  106,907  |  
|Net unrealized gains (losses) on revaluation of long-term intercompany balances, net of income taxes |  | 628                             |  | (2,546    | )                              |  | 10,428      |  | (18,235     | )
|Net foreign currency translation adjustment gains (losses)                                           |  | 769                             |  | 441       |                                |  | 22,869      |  | (2          | )
|Net unrealized gains (losses) on short-term investments1                                             |  |                                |  | (1,188    | )                              |  | 4,023       |  | (1,705      | )
|                                                                                                     |  |                                 |  |           |                                |  |             |  |             |  
|Total comprehensive income                                                                           |  | $  38,723                       |  | $  35,649 |                                |  | $  136,853  |  | $    86,965 |  
|                                                                                                     | 

|1 |  | In the secondquarter of 2006, we transferred $4.0 million in losses out of accumulated other comprehensive income and
into investment (loss) income. Gains and losses transferred out of accumulated other comprehensive income and into investment income (loss) were insignificant in 2005.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|                                                                                                        |  |                   |  |                  |  
|------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ---------------- | -
|                                                                                                        |  | SEPTEMBER 30,2006 |  | DECEMBER 31,2005 |  
|                                                                                                        |  |                   |  |                  |  
|(In thousands)                                                                                          |  |                   |  |                  |  
|                                                                                                        |  |                  
|Accumulated net unrealized gains on revaluation of long-term intercompany balances, net of income taxes |  | $  11,702         |  | $     1,274      |  
|Accumulated net foreign currency translation adjustment gains (losses)                                  |  | 9,012             |  | (13,857          | )
|Accumulated net unrealized losses on short-term investments                                             |  |                  |  | (4,023           | )
|                                                                                                        |  |                   |  |                  |  
|Total accumulated other comprehensive income (loss)                                                     |  | $  20,714         |  | $  (16,606       | )
|                                                                                                        | 

Deferred taxes are not provided on unrealized foreign exchange gains and losses on foreign currency denominated long-term
intercompany balances or on translation adjustments, with the exception of those in the U.K., 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 10. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS

With the acquisition of iStockphoto, Inc. on February 9, 2006, we now operate the company in two segments, traditional licensing and micropayments. 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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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 SEPTEMBER 30, |  | NINE MONTHS ENDED SEPTEMBER 30,
|                                  |  |                                  |  |                                
|                                  |  | 2006                             |  | % of Revenue                    |  | 2005          |  | % of Revenue |  | 2006       |  | % of Revenue |  | 2005          |  | % of Revenue
|                                  |  |                                  |  |                                 |  |               |  |              |  |            |  |              |  |               |  |             
|(In thousands, exceptpercentages) |  |                                  |  |                                 |  | (as restated) |  |              |  |            |  |              |  | (as restated) |  |             
|                                  |  |                                  |  |                                 |  |               |  |             
|United States                     |  | $    74,539                      |  | 38%                             |  | $    79,779   |  | 43%          |  | $  240,157 |  | 40%          |  | $  234,595    |  | 43%         
|United Kingdom                    |  | 28,517                           |  | 14%                             |  | 26,824        |  | 15%          |  | 83,541     |  | 14%          |  | 80,288        |  | 15%         
|Germany                           |  | 17,539                           |  | 9%                              |  | 15,626        |  | 9%           |  | 50,901     |  | 8%           |  | 45,007        |  | 8%          
|France                            |  | 11,507                           |  | 6%                              |  | 9,675         |  | 5%           |  | 35,426     |  | 6%           |  | 31,030        |  | 6%          
|Rest of world                     |  | 65,815                           |  | 33%                             |  | 52,421        |  | 28%          |  | 192,930    |  | 32%          |  | 156,590       |  | 28%         
|                                  |  |                                  |  |                                 |  |               |  |              |  |            |  |              |  |               |  |             
|Total revenue                     |  | $  197,917                       |  | 100%                            |  | $  184,325    |  | 100%         |  | $  602,955 |  | 100%         |  | $  547,510    |  | 100%        
|                                 

NOTE 11. LOSS ON LEASED PROPERTIES

We lease office space in New York through an agreement that expires in March of 2015 and are subleasing a portion of that space to a subtenant through an agreement that expires in February of 2007. During the second quarter of 2006, we
completed our evaluation of our options regarding the use of the subleased facilities and determined that after the sublease expires, we will permanently exit all of the excess (subleased) space. As a result of this decision, we recognized a loss on
leased properties of $16.9 million in the second quarter of 2006 for the expected cost over the remaining term of the lease, write-off of leasehold improvements and adjustments to deferred rent. This amount reflects the effect of subleases entered
into in 2007. See Note 5 and Note 12 for more information.

NOTE 12. SUBSEQUENT EVENTS

Acquisitions of Businesses

On April 25, 2007, we completed our acquisition of all of the outstanding shares of MediaVast, Inc.
(MediaVast) for approximately $202 million in net cash. MediaVast, located in New York, New York, is an entertainment photography company, which licenses imagery primarily under the brand name WireImage. We funded the acquisition with cash on hand
and funds drawn from our senior unsecured revolving credit facility with U.S. Bank National Association (see discussion under Debt below). The majority of the purchase price is expected to be allocated to goodwill and identifiable intangible assets.

Restructuring

On October 18, 2006, we began to implement a plan to
realign resources of the company. Through this realignment plan, we terminated certain employees and consolidated within certain leased facilities in the fourth quarter of 2006. In connection with these actions, we recognized $9.6 million of costs
in the fourth quarter of 2006, comprised of $5.6 million of employee-related costs and a $4.0 million loss on leased facilities for the expected cost over the remaining term of the lease, write-off of leasehold improvements and adjustments to
deferred rent. Of the employee-related costs, $3.8 million was paid in the fourth quarter and the remaining $1.8 million was paid in the first quarter of 2007.

On
March 16, 2007, we entered into a sublease with New York Magazine Holdings, L.L.C. (New York Holdings) for 72,843 square feet of our excess leased space in, New York, NY. On May 3, 2007, we entered into a sublease with Cardinia Real
Estate, L.L.C. (Cardinia) for the remaining 72,960 square feet of our excess leased facilities in New York. Both of these subleases span the remainder of our lease term.

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

The sublease agreements entered into in 2007 have been factored into our loss on leased
properties. See Note 5 and Note 11 for more information.



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Debt

SENIOR CREDIT FACILITY

On March 19, 2007, we replaced our $100.0 million unsecured senior revolving credit facility with U.S. Bank with a new $350 million 364-day senior unsecured
revolving credit facility with U.S. Bank, as Administrative Agent and Sole Lead Arranger (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, provided there shall not have occurred any material adverse changes in the business, assets condition (financial or otherwise), operations, results of operations or prospects of the Company from June 30, 2006
through the date we exercise our rights to increase the available funds. 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 0.50% convertible subordinated debentures (the Debentures), and working capital requirements.

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. Our 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 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. However, we believe the purported default
under the indenture to the Debentures based on our failure to file our Quarterly Report on Form 10-Q for the third quarter of 2006 by the prescribed filing date under SEC regulations (disclosed most recently in our Current Report on Form 8-K dated
February 21, 2007 and further discussed below), will not create an event of default under the Facility. Under the terms of the Facility, we must become current on our periodic SEC filings by June 14, 2007 to avoid an event of default.

Fees paid in connection with the establishment of the Facility are deferred and are being amortized to interest expense over the term of the Facility. In addition to
the Facility, we also have other banking and investment management relationships with U.S. Bank.

To fund a portion of the purchase price of MediaVast, on
April 18, 2007, we drew down an aggregate amount of $80 million under the Facility.

DEBENTURES

On June 9, 2003, we issued $265.0 million in 0.5% convertible subordinated debentures in a private placement, which debentures were subsequently exchanged for new 0.5% Series
B convertible subordinated debentures (the Debentures) in December 2004 and May 2005.

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 this Quarterly Report on
Form 10-Q for the third quarter of 2006 with the SEC, 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.

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 believe any default by us claimed by the Trustee and certain holders of the Debentures, if such a default existed, will be cured by the filing of this Form 10-Q and our 2006 Form 10-K,
which we plan to file immediately after we file this Form 10-Q.



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Equity

Effective May 22, 2006, our
Board of Directors approved an amendment to our share repurchase program authorizing the repurchase of shares of our common stock with an aggregate value of up to $250 million, an increase from the prior authorization of $150 million. During 2006,
we repurchased approximately 3.5 million shares for $207.7 million under the amended plan. The repurchases occurred in the open market pursuant to a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934. Our share repurchase
program was suspended in November 2006 when we were not able to file this Form 10-Q in a timely manner. The stock repurchase program will be reviewed after we become current with our SEC filings and a decision will be made at that time whether to
continue with the program and at what level. Our repurchase activity subsequent to the end of the quarter is summarized in the following table:



|                                      |  |                                    |  |                                  |  |                                                                                  |  |                                                                                                                           |  
|------------------------------------- |  | ---------------------------------- |  | -------------------------------- |  | -------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- | -
|QUARTERLY PERIOD                      |  | (a) Total numberof sharespurchased |  | (b) Averageprice paid pershare 1 |  | (c) Total number ofshares purchased aspart of publiclyannounced plans orprograms |  | (d) Maximum number of shares(or approximate dollar value of shares) that may yet be purchased under
the plans or programs |  
|                                      |  |                                    |  |                                  |  |                                                                                  |  |                                                                                                                           |  
|                                      |  |                                    |  |                                  |  |                                                                                  |  | (in thousands)                                                                                                            |  
|                                      |  |                                    |  |                                 
|October 1, 2006  December 31, 2006 3 |  | 756,555                            |  | $  43.05                         |  | 756,555                                                                          |  | $  42,324                                                                                                                 | 2
|                                      | 



|1 |  | Average price paid per share does not include associated transaction fees.
|- |  | --------------------------------------------------------------------------

|2 |  | This amount is based on an authorization of $250 million.
|- |  | ---------------------------------------------------------

|3 |  | The repurchase program was suspended in November 2006.
|- |  | ------------------------------------------------------



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

Many of the statements made in Item 2 of this Form 10-Q are forward-looking and are based on our current expectations, assumptions and projections about Getty Images, Inc. and its industry and are made on
the basis of our views as of the date this document is filed with the SEC. Examples of such forward-looking statements contained in this Item 2 include, but are not limited to, the statements concerning trends in revenue, costs and expenses,
gross margin, liquidity and capital resources; our accounting estimates, assumptions and judgments; the impact of the restatement of our historical financial statements in connection with the Special Committee investigation and managements
internal review of our historical equity award grant practices and other remedial actions to be taken in connection therewith; the impact of the new accounting rules and pronouncements related to the expensing of stock options; the impact of our
recent business acquisitions and our ability to integrate new operations successfully; the competitive nature of and anticipated growth in our markets; our ability to maintain our competitive position in the industry; the outcome of the ongoing
government inquiry and pending litigation regarding our historical equity grant practices, as well as the claims of default under the indenture governing our 0.5% convertible subordinated debentures; and the impact thereof on our business; our
prospective needs for, and anticipated source of, additional capital and our ability to secure such additional capital. The foregoing and other forward-looking statements can often be identified by words such as anticipate,
believe, plan, estimate, expect, seek, intend, predict, may, might, should, would, could,
potential, continue, ongoing, similar expressions, and variations or negatives of these and other similar words. These forward-looking statements are not guarantees of future performance and are subject to certain
risks and uncertainties that are difficult to predict and that could cause our actual results to differ materially and adversely 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.

Potential risks and uncertainties include, among others, those specifically set forth
in this section and those discussed in Part II, Item 1A. Risk Factors of this Form 10-Q and Part I, Item 1. Business, Part I, Item 1A. Risk Factors, Part II, Item 6. Selected Consolidated
Financial Data and Part IV, Item 15(A) of our 2006 Form 10-K to be filed immediately after we file this Form 10-Q. 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 unless read in conjunction with all of our documents filed with, and furnished to, the SEC thereafter.



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The following should be read in conjunction with our Condensed Consolidated Financial Statements and the notes thereto in this
Form 10-Q as well as with our 2006 Form 10-K to be filed immediately after we file this Form 10-Q.

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL
STATEMENTS

All of the financial information presented in this Item 2 has been adjusted to reflect the restatement of our financial results, which is more
fully described in the Explanatory Note in Part 1, Item 1 and in Note 2 to our Condensed Consolidated Financial Statements in this Form 10-Q.

The restatement
related to our historical equity award practices did not impact our Condensed Consolidated Statements of Income presented in this Form 10-Q. The restatement of our third quarter 2005 Condensed Consolidated Statements of Income was due only to the
revenue adjustment for fees paid by photographers for making certain of their images available for license on our website for two years. This restatement is illustrated below:

RESTATEMENT OF CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|------------------------------------------------------------ |  | ------------------------------------ | - |  | ------------------------------------- | - |  | -------------- | - |  | --------------------- | - |  | ----------- | - |  | ------------- | -
|                                                             |  | NINE MONTHS ENDED SEPTEMBER 30, 2005 |   |  | THREE MONTHS ENDED SEPTEMBER 30, 2005 |  
|                                                             |  |                                      |   |  |                                       |  
|                                                             |  | As previouslyreported                |   |  | Adjustments                           |   |  | As restated    |   |  | As previouslyreported |   |  | Adjustments |   |  | As restated   |  
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|(in thousands, except per share data)                        |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|                                                             |  |                                      |   |  |                                       |  
|Revenue                                                      |  | $  547,916                           |   |  | $   (406                              | ) |  | $  547,510     |   |  | $  184,516            |   |  | $   (191    | ) |  | $  184,325    |  
|Costs of revenue (exclusive of items shown separately below) |  | 148,260                              |   |  |                                      |   |  | 148,260        |   |  | 47,510                |   |  |            |   |  | 47,510        |  
|Selling, general and administrative                          |  | 188,270                              |   |  |                                      |   |  | 188,270        |   |  | 63,309                |   |  |            |   |  | 63,309        |  
|Depreciation                                                 |  | 36,090                               |   |  |                                      |   |  | 36,090         |   |  | 11,759                |   |  |            |   |  | 11,759        |  
|Amortization                                                 |  | 6,421                                |   |  |                                      |   |  | 6,421          |   |  | 2,744                 |   |  |            |   |  | 2,744         |  
|Loss on leased properties, net                               |  | 838                                  |   |  |                                      |   |  | 838            |   |  | 329                   |   |  |            |   |  | 329           |  
|Other operating expenses                                     |  | 267                                  |   |  |                                      |   |  | 267            |   |  | 148                   |   |  |            |   |  | 148           |  
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Operating expenses                                           |  | 380,146                              |   |  |                                      |   |  | 380,146        |   |  | 125,799               |   |  |            |   |  | 125,799       |  
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Income from operations                                       |  | 167,770                              |   |  | (406                                  | ) |  | 167,364        |   |  | 58,717                |   |  | (191        | ) |  | 58,526        |  
|Investment income                                            |  | 8,715                                |   |  |                                      |   |  | 8,715          |   |  | 2,787                 |   |  |            |   |  | 2,787         |  
|Interest expense                                             |  | (7,246                               | ) |  |                                      |   |  | (7,246         | ) |  | (433                  | ) |  |            |   |  | (433          | )
|Other non-operating expenses, net                            |  | 115                                  |   |  |                                      |   |  | 115            |   |  | 464                   |   |  |            |   |  | 464           |  
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Income before income taxes                                   |  | 169,354                              |   |  | (406                                  | ) |  | 168,948        |   |  | 61,535                |   |  | (191        | ) |  | 61,344        |  
|Income tax expense                                           |  | (62,196                              | ) |  | 155                                   |   |  | (62,041        | ) |  | (22,475               | ) |  | 73          |   |  | (22,402       | )
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Net income                                                   |  | $  107,158                           |   |  | $   (251                              | ) |  | $  106,907     |   |  | $     39,060          |   |  | $   (118    | ) |  | $    38,942   |  
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Earnings per share:                                          |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | $         1.75                       |   |  | $  (0.01                              | ) |  | $         1.74 |   |  | $         0.63        |   |  | $          |   |  | $        0.63 |  
|Diluted                                                      |  | 1.64                                 |   |  |                                      |   |  | 1.64           |   |  | 0.60                  |   |  | (0.01       | ) |  | 0.59          |  
|                                                             |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Shares used in computing earnings per share:                 |  |                                      |   |  |                                       |   |  |                |   |  |                       |   |  |             |   |  |               |  
|Basic                                                        |  | 61,368                               |   |  |                                      |   |  | 61,368         |   |  | 61,820                |   |  |            |   |  | 61,820        |  
|Diluted                                                      |  | 65,299                               |   |  |                                      |   |  | 65,299         |   |  | 65,622                |   |  |            |   |  | 65,622        |  
|                                                             | 

GENERAL

The following should be
read in conjunction with our Consolidated Financial Statements and the notes thereto included in Part I, Item 1 of this Form 10-Q and with our 2006 Form 10-K, to be filed immediately after we file this Form 10-Q.

Critical Accounting Policies and Estimates and Assumptions

There have been no material
changes in our critical accounting policies and estimates and assumptions since December 31, 2005.



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|31 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



Loss on Leased Properties

We lease
office space in New York through an agreement that expires in March of 2015 and are subleasing a portion of that space to a subtenant through an agreement that expires in February of 2007. During the second quarter of 2006, we completed our
evaluation of our options regarding the use of the subleased facilities and determined that after the sublease expires, we will permanently exit all of the excess (subleased) space. As a result of this decision, we recognized a non-cash loss on
leased property of approximately $16.9 million in the second quarter of 2006 for the expected cost over the remaining term of the lease, write-off of leasehold improvements and adjustments to deferred rent.

In 2007, we subleased all of our excess space in New York and Seattle, and this information was factored into our lease loss accruals recorded in the second quarter of 2006. We
restated the loss that we had recorded in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 with our filing of our Second Quarter 10-Q/A that was filed immediately before the filing of this Form 10-Q. The loss was
reduced by $1.6 million in the Second Quarter 10-Q/A.

See Subsequent Events below for more information on the subleases entered into in 2007.

Acquisitions of Businesses

On April 6, 2006, we purchased all of the shares of Pixel
Images Holdings Limited, the parent company of Star Media Limited (dba Stockbyte) and Stockdisc Limited (dba Stockdisc) (collectively Stockbyte) for $135.0 million in net cash (excluding direct acquisition costs). Stockbyte was a
privately held stock photography agency based in Tralee, Ireland that licensed royalty-free imagery to its customers through distributors, including Getty Images, Inc., and through its two websites, www.stockbyte.com and www.stockdisc.com. We have
integrated this business into ours, including redirecting both of their websites to www.gettyimages.com. The purchase was funded from existing cash and cash equivalents. The purchase price (including direct costs of the acquisition and liabilities
assumed) was allocated primarily to goodwill ($110.2 million) and identifiable intangible assets ($21.4 million).

On February 9, 2006, we purchased all of
the shares of iStockphoto, Inc., a privately held stock photography company located in Calgary, Alberta, Canada, for $50.0 million in cash. iStockphoto, Inc. licenses royalty-free imagery exclusively through its website, www.istockphoto.com, and is
a leader in the micropayment licensing model (i.e. licensing imagery for as little as one dollar). The purchase was funded from existing cash and cash equivalents. The purchase price (including direct costs of the acquisition and liabilities
incurred) was allocated primarily to goodwill ($40.9 million) and identifiable intangible assets ($13.5 million).

We also completed the acquisition of Laura Ronchi,
S.p.A, our Italian delegate, in the second quarter of 2006.

All acquisitions were accounted for using the purchase method of accounting and, accordingly, the results
of operations of the acquired businesses since the respective dates of acquisition are included in our consolidated financial statements. All acquisitions year-to-date were not material, individually or in the aggregate, to the company as a whole
and, therefore, pro forma financial information is not presented.



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|32 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



RESULTS OF OPERATIONS

Below are selected
highlights of our results of operations. All figures in the tables are shown in thousands, except percentages and price per image figures, and include the impact of changes in foreign currency exchange rates.



|                                                      |  |                                  |   |  |                                |   |  |        |   |  |        |  
|----------------------------------------------------- |  | -------------------------------- | - |  | ------------------------------ | - |  | ------ | - |  | ------ | -
|                                                      |  | THREE MONTHS ENDED SEPTEMBER 30, |   |  | NINE MONTHS ENDEDSEPTEMBER 30, |  
|                                                      |  |                                  |   |  |                                |  
|                                                      |  | 2006                             |   |  | 2005                           |   |  | 2006   |   |  | 2005   |  
|                                                      |  |                                  |   |  |                                |   |  |        |   |  |        |  
|                                                      |  |                                  |   | 
|PORTFOLIO REVENUE AS A PERCENTAGE OF TOTAL REVENUE    |  |                                  |   |  |                                |   |  |        |   |  |        |  
|Rights-managed still imagery                          |  | 39%                              | 4 |  | 42%                            |   |  | 41%    | 4 |  | 43%    |  
|Royalty-free still imagery                            |  | 39%                              |   |  | 38%                            |   |  | 38%    |   |  | 37%    |  
|Editorial imagery                                     |  | 13%                              |   |  | 12%                            |   |  | 12%    |   |  | 12%    |  
|Film                                                  |  | 5%                               |   |  | 5%                             |   |  | 5%     |   |  | 5%     |  
|Other                                                 |  | 4%                               |   |  | 3%                             |   |  | 4%     |   |  | 3%     |  
|                                                      |  |                                  |   | 
|APPROXIMATE AVERAGE PRICE PER IMAGE BY PORTFOLIO 1, 2 |  |                                  |   |  |                                |   |  |        |   |  |        |  
|Rights-managed still imagery                          |  | $  550                           | 4 |  | $  560                         | 3 |  | $  545 | 4 |  | $  575 | 3
|Royalty-free still imagery                            |  | 250                              |   |  | 235                            | 3 |  | 250    |   |  | 235    | 3
|Film                                                  |  | 490                              |   |  | 545                            |   |  | 540    |   |  | 580    |  
|                                                      |  |                                  |   | 
|AVERAGE COST OF REVENUE BY PORTFOLIO                  |  |                                  |   |  |                                |   |  |        |   |  |        |  
|Rights-managed still imagery                          |  | 34%                              | 4 |  | 34%                            |   |  | 34%    | 4 |  | 33%    |  
|Royalty-free still imagery                            |  | 15%                              |   |  | 18%                            |   |  | 16%    |   |  | 21%    |  
|Editorial imagery                                     |  | 27%                              |   |  | 21%                            |   |  | 25%    |   |  | 21%    |  
|Film                                                  |  | 28%                              |   |  | 27%                            |   |  | 28%    |   |  | 28%    |  
|                                                      | 



|1 |  | Because many editorial images are licensed on a subscription basis, price per image is not meaningful and therefore price per
image is not provided for editorial imagery.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2 |  | All price per image figures are rounded to the nearest $5 and represent the approximate prices of single images licensed to our
customers (excluding prepackaged CDs, images licensed through subscriptions, micropayments and imagery licensed through delegates).
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3 |  | These prior period figures have been adjusted to conform to current period presentation.
|- |  | ----------------------------------------------------------------------------------------



|4 |  | The rights-managed figures in this table include rights-ready image licenses.
|- |  | -----------------------------------------------------------------------------

Revenue



|                                |  |            |  |              |  |            |  |              |  |           |  |         
|------------------------------- |  | ---------- |  | ------------ |  | ---------- |  | ------------ |  | --------- |  | --------
|                                |  | 2006       |  | % of revenue |  | 2005       |  | % of revenue |  | $ change  |  | % change
|                                |  |            |  |              |  |            |  |              |  |           |  |         
|                                |  |            |  |              |  |           
|Three months ended September 30 |  | $  197,917 |  | 100.0        |  | $  184,325 |  | 100.0        |  | $  13,592 |  | 7.4     
|Nine months ended September 30  |  | 602,955    |  | 100.0        |  | 547,510    |  | 100.0        |  | 55,445    |  | 10.1    
|                               

Excluding the impact of changes in foreign currency exchange rates, revenue increased approximately $9.8 million, or 5.3%,
for the third quarter of 2006 and approximately $63.3 million, or 11.5%, for the first three quarters of 2006 over the respective periods of 2005. Revenue increased across all geographic areas for the third quarter and first three quarters of 2006
over the corresponding periods in 2005.

For the quarter, the overall increase in revenue was due primarily to licensing of micropayment images (which we did not
license in 2005) and secondarily to an increase in the average price per royalty-free image licensed (excluding micropayment licenses) and increased revenue from licensing of editorial imagery. The increase in the average price per royalty-free
image licensed arose primarily through selective price increases tied to increased quality and investment in this imagery. This revenue growth was offset in part by declines in the volume of both rights-managed and royalty-free images licensed and a
decline in the average price per rights-



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|33 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



managed image licensed. The rights-managed volume declines were seen primarily in the Americas, while the royalty-free volume declines were seen in both the Americas
and Europe. The decline in the average price per rights-managed image licensed arose primarily through a shift in license mix towards lower priced uses of imagery.

Year-to-date, the overall increase in revenue compared to the first three quarters of 2005 was due mainly to: licensing of micropayment images; an increase in the average price per royalty-free image licensed (excluding micropayment images
licensed); an increase in the volume of rights-managed imagery licensed; and increased revenue from licenses of editorial imagery. These increases were experienced for the same reasons as discussed above for the quarter. The rights-managed volume
increase was experienced worldwide early in the year, and has been partially offset by declines in more recent months. Volumes of rights-managed image licenses have declined sequentially for the past two quarters in each of our regions. In addition,
volumes of royalty-free image licenses (excluding micropayment images licensed) have declined sequentially for the past two quarters in the Americas and Europe.

Cost of Revenue



|                                |  |      |         |              |      |      |   |              |  |          |  |          |       |  |    
|------------------------------- |  | ---- | ------- | ------------ | ---- | ---- | - | ------------ |  | -------- |  | -------- | ----- |  | ---
|                                |  | 2006 |         | % of revenue |      | 2005 |   | % of revenue |  | $ change |  | % change
|                                |  |      |         |              |      |      |   |              |  |          |  |          |       |  |    
|                                |  |      |         |              |      |     
|Three months ended September 30 |  | $    | 50,298  |              | 25.4 |      | $ | 47,510       |  | 25.8     |  | $        | 2,788 |  | 5.9
|Nine months ended September 30  |  |      | 153,245 |              | 25.4 |      |   | 148,260      |  | 27.1     |  |          | 4,985 |  | 3.4
|                               

Cost of revenue, which consists primarily of royalties owed on imagery licensed, increased for the third quarter and first
three quarters of 2006 over the corresponding periods in 2005 due to increased revenue. However, as a percentage of revenue, cost of revenue declined primarily due to a lower average royalty rate on licenses of royalty-free imagery that resulted
mainly from the acquisition of Stockbyte and Digital Vision, which eliminated the royalties we paid to them. The decline in cost of revenue as a percentage of revenue was offset in part by an increase in the average royalty rate on licenses of
editorial imagery that resulted mainly from licenses of exclusive entertainment imagery, which generally carries a higher royalty rate than other editorial imagery.

Selling, General and Administrative Expenses (SG&A)



|                                |  |      |         |              |      |      |   |              |  |          |  |          |        |  |     
|------------------------------- |  | ---- | ------- | ------------ | ---- | ---- | - | ------------ |  | -------- |  | -------- | ------ |  | ----
|                                |  | 2006 |         | % of revenue |      | 2005 |   | % of revenue |  | $ change |  | % change
|                                |  |      |         |              |      |      |   |              |  |          |  |          |        |  |     
|                                |  |      |         |              |      |     
|Three months ended September 30 |  | $    | 73,624  |              | 37.2 |      | $ | 63,309       |  | 34.3     |  | $        | 10,315 |  | 16.3
|Nine months ended September 30  |  |      | 225,761 |              | 37.4 |      |   | 188,270      |  | 34.4     |  |          | 37,491 |  | 19.9
|                               

Excluding the impact of changes in foreign currency exchange rates, SG&A increased approximately $9.6 million, or 15.2%,
for the third quarter of 2006 and approximately $40.6 million, or 21.6%, for the first three quarters of 2006 over the corresponding periods in 2005. These increases were due mainly to increased payroll costs, including: increased stock-based
compensation expense; increased payroll for employees who have joined the company through business acquisitions; additional sales people hired in 2006; and annual salary increases effective April of 2006. Advertising and marketing expenses also
increased over the corresponding periods in 2005.

As a percentage of revenue, SG&A increased approximately three percentage points in the first three quarters of
2006 compared to the same period in 2005. Approximately two percentage points of this increase was due to increased stock-based compensation. The remainder of the increase was generated by the other items discussed above.



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|34 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



Income from Operations



|                                |  |      |         |                 |      |      |   |                 |  |          |  |   |          |   |  |      |  
|------------------------------- |  | ---- | ------- | --------------- | ---- | ---- | - | --------------- |  | -------- |  | - | -------- | - |  | ---- | -
|                                |  | 2006 |         | Operatingmargin |      | 2005 |   | Operatingmargin |  | $ change |  |   | % change |  
|                                |  |      |         |                 |      |      |   |                 |  |          |  |   |          |   |  |      |  
|                                |  |      |         |                 |      |     
|Three months ended September 30 |  | $    | 54,192  |                 | 27.4 |      | $ | 58,526          |  | 31.8     |  | $ | (4,334   | ) |  | (7.4 | )
|Nine months ended September 30  |  |      | 153,987 |                 | 25.5 |      |   | 167,364         |  | 30.6     |  |   | (13,377  | ) |  | (8.0 | )
|                                | 

Income from operations and operating margin decreased for the first three quarters of 2006 compared to the corresponding
period in 2005 due to net losses related to leased properties ($16.8 million for the three quarters ended September 30, 2006). See further discussion of the foregoing in the GeneralLoss on Leased Properties section contained
above in this MD&A. Income from operations and operating margin for the third quarter and first three quarters of 2006 were also lowered by increased selling, general and administrative expenses (as discussed above) and amortization, which
increased due to the acquisition of businesses late in the second quarter of 2005 and in 2006. These items were offset, in part, by the lower average royalty rate, primarily on licenses of royalty-free imagery (as discussed above).

Investment Income



|                                |  |          |  |              |  |          |  |              |  |             |   |  |          |  
|------------------------------- |  | -------- |  | ------------ |  | -------- |  | ------------ |  | ----------- | - |  | -------- | -
|                                |  | 2006     |  | % of revenue |  | 2005     |  | % of revenue |  | $ change    |   |  | % change |  
|                                |  |          |  |              |  |          |  |              |  |             |   |  |          |  
|                                |  |          |  |              |  |         
|Three months ended September 30 |  | $  2,295 |  | 1.2          |  | $  2,787 |  | 1.5          |  | $      (492 | ) |  | (17.7    | )
|Nine months ended September 30  |  | 5,108    |  | 0.8          |  | 8,715    |  | 1.6          |  | (3,607      | ) |  | (41.4    | )
|                                | 

In the second quarter of 2006, we sold all of our short-term investments and realized an associated $4.0 million loss. This
loss and lower short-term investment balances resulting from acquisitions of businesses and repurchases of our common stock caused the decrease in interest income year over year, offset in part by an increase in interest rates. We had no short-term
investments outstanding at September 30, 2006.

Income Tax Expense



|                                |  |           |  |                    |  |           |  |                    |  |           |   |  |          |  
|------------------------------- |  | --------- |  | ------------------ |  | --------- |  | ------------------ |  | --------- | - |  | -------- | -
|                                |  | 2006      |  | Effective tax
rate |  | 2005      |  | Effective tax
rate |  | $ change  |   |  | % change |  
|                                |  |           |  |                    |  |           |  |                    |  |           |   |  |          |  
|                                |  |           |  |                    |  |          
|Three months ended September 30 |  | $  18,952 |  | 33.7               |  | $  22,402 |  | 36.5               |  | $  (3,450 | ) |  | (15.4    | )
|Nine months ended September 30  |  | 57,997    |  | 36.8               |  | 62,041    |  | 36.7               |  | (4,044    | ) |  | (6.5     | )
|                                | 

Our income tax expense and effective rate for the third quarter of 2006 decreased from the prior year due primarily to
favorable developments in tax audits that resulted in the release of income tax reserves and a shift in the mix of income to jurisdictions with lower tax rates.

FINANCIAL CONDITION

Liquidity



|                                                     |  |                    |  |                  
|---------------------------------------------------- |  | ------------------ |  | -----------------
|                                                     |  | SEPTEMBER 30, 2006 |  | DECEMBER 31, 2005
|                                                     |  |                    |  |                  
|(In thousands, except current ratio)                 |  |                    |  |                  
|                                                     |  |                   
|Cash and cash equivalents and short-term investments |  | $  290,654         |  | $  518,275       
|Working capital                                      |  | $  329,116         |  | $  248,293       
|Current ratio                                        |  | 3.68               |  | 1.62             
|                                                    

A reclassification of our debentures from short-term to long-term due to a conversion condition no longer having been met,
as further described in Note 6 to the financial statements included in this Form 10-Q, caused the increase in our working capital and current



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ratio in 2006. Had we not reclassified the debentures, our working capital and current ratio would have been $64.1 million and 1.17, respectively, at
September 30, 2006. Working capital as of September 30, 2006 has been impacted by $196.0 million in cash paid for businesses acquired and $175.1 million in cash paid for repurchases of our common stock, offset in part by cash flows
generated from operations. Cash flows provided by operating activities were flat for the first three quarters of 2006 compared to the corresponding period of 2005. Growth within operating cash flows was offset in part by a significant increase in
cash paid for income taxes, which were $51.7 million for the first three quarters of 2006 compared to $12.5 million for the first three quarters of 2005.

CASH
FLOWS PROVIDED BY INVESTING ACTIVITIES

Cash flows provided by investing activities increased $303.7 million in 2006 over the first three quarters of 2005, due
mainly to the sale of all of our short-term investments and a decrease in cash paid for businesses acquired, offset in part by an increase in capital expenditures. Capital expenditures increased $4.9 million for the first three quarters of 2006 over
the corresponding period in 2005 primarily due to increased acquisitions of imagery.

CASH FLOWS USED IN FINANCING ACTIVITIES

Cash flows used in financing activities increased for the first three quarters of 2006 over the corresponding period in 2005 primarily due to the repurchase of common stock and
decreased proceeds from the issuance of common stock through stock option exercises. During the second and third quarters of 2006, we repurchased a total of 2.7 million shares of our common stock in the open market for $175.1 million. Our
current authorization from our Board of Directors allows us to repurchase up to $250.0 million of our common stock.

On May 4, 2006, we entered into a $100.0
million unsecured senior revolving credit facility with U.S. Bank National Association. This credit facility is available for share repurchases, acquisitions of businesses and general corporate purposes. The interest rate on funds drawn down under
the credit facility is 30-day LIBOR plus 0.5%, and there are no fees in periods when funds are not drawn down. Any funds drawn down under the credit facility are required to be repaid within the 364-day term of the facility. The credit agreement
does not contain financial covenants requiring us to maintain any financial ratios. The credit agreement does contain customary affirmative and negative covenants, as well as customary events of default the occurrence of which could result in
termination of the facility and the acceleration of all of our obligations thereunder. Our obligations under the facility are guaranteed by our primary U.S. operating company. No funds had been drawn down under this facility as of
September 30, 2006.

We expect that our current cash and cash equivalents plus cash generated through future operating activities and our credit facility will
meet our liquidity needs for at least the next 12 months. See Subsequent Events below for updated information on our credit facility, which will expire in March 2008, at which time we will need to repay any outstanding balances or obtain replacement
financing. We currently do not expect our 0.5% convertible subordinated debentures to be converted in the next 12 months, but if they are, we may need to obtain additional financing to meet that obligation.

Contractual Obligations and Rights

There have been no material changes in our commitments
since year end that were outside of the ordinary course of business.

RECENT ACCOUNTING PRONOUNCEMENTS

SFAS No. 123(R), Share-Based Payment

On January 1, 2006, we adopted SFAS
No. 123(R), Share-Based Payment, which eliminated our ability to account for employee stock options using the intrinsic value provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations, and generally requires instead that we expense them using a fair-value-based method. This statement also requires that we reduce stock-based compensation expense by estimated forfeitures of awards rather
than reducing expense as forfeitures occur. In addition to requiring us to expense stock-based compensation, SFAS No. 123(R) requires us to report as financing activities in our statement of cash flows, cash tax savings arising from tax
deductions that exceed compensation expense on stock options exercised and RSUs vested in the current period. These tax benefits were previously reported as cash flows from operating activities.

In connection with the adoption of this statement, we have generally shifted from issuing stock options to issuing RSUs. We also changed our practice and began capitalizing
equity-based compensation with the adoption of SFAS No. 123(R). The fair value of RSUs issued to employees is calculated as the market price of our common stock on the date of grant multiplied by the number of units issued. This fair value,
less estimated forfeitures, is recorded as selling, general and administrative expenses on a straight-line



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basis over the vesting periods of the RSUs, with a portion relating to production employees capitalized as computer software developed for internal use and
contemporary imagery. This accounting, with the exception of the estimation of forfeitures, is the same as previously required under APB Opinion No. 25. The fair values of stock options issued are calculated using a Black-Scholes single option
valuation model and are expensed, and capitalized as applicable, in the same manner as RSUs. The fair value of unvested options and RSUs outstanding upon adoption of SFAS No. 123(R) remain as originally calculated for footnote purposes in
accordance with SFAS No. 123, Accounting for Stock-Based Compensation, as amended, have been reduced by estimated forfeitures and are being recorded as selling, general and administrative expenses over the remaining vesting periods
or capitalized as applicable.

We adopted SFAS No. 123(R) using the modified prospective transition method, which means that we will not restate prior period
financial statements. The impact of our equity compensation plans on our income statement may vary greatly depending on the number of RSUs and stock options granted and the future price of our common stock. See our 2006 Form 10-K for the actual
impact of this statement on our full fiscal year 2006 financial statements.

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. Management is currently assessing the impact this Interpretation may have on our financial statements.

FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109

On July 13, 2006, the FASB issued FIN No. 48, which clarifies the accounting for uncertainty in income taxes effective January 1, 2007. This Interpretation prescribes a two-step process to follow in evaluating a tax position
we have taken, or expect to take, in a tax return. First, we must determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority based on the technical merits of the position.
Second, we must measure and recognize all tax positions that meet the first threshold in an amount equal to the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority. We will
recognize tax positions that previously failed to meet the more-likely-than-not recognition threshold in the first financial reporting period in which that threshold is met. We will derecognize previously recognized tax positions that no longer meet
the more-likely-than-not recognition threshold in the first financial reporting period in which that threshold is no longer met.

Upon initial adoption, we will apply
the provisions of this Interpretation to all of our tax positions. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date will be recognized or continue to be recognized. The cumulative effect of applying
the provisions of this Interpretation will be reported as an adjustment to the opening balance of retained earnings for 2007. The amount of the cumulative-effect adjustment will be the difference between the net amount of assets and liabilities
recognized in the statement of financial position prior to the application of this Interpretation and the net amount of assets and liabilities recognized as a result of applying the provisions of this Interpretation. We will record the cumulative
effect of the change on retained earnings in the statement of financial position as of the date of adoption. The cumulative-effect adjustment will be to increase the reserves for uncertain tax positions by approximately $4.2 million and reduce
retained earnings by the same amount.

SEC Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements When Quantifying
Misstatements in Current Year Financial Statements

On September 13, 2006, the staff of the SEC issued SAB No. 108 in order to eliminate the
diversity of practice surrounding how public companies quantify financial statement misstatements. Traditionally, there have been two widely-recognized methods for quantifying the effects of financial statement misstatements: the
roll-over method and the iron curtain method. The roll-over method focuses primarily on the impact of a misstatement on the income statementincluding the reversing effect of prior year misstatementsbut its use can
lead to the accumulation of misstatements in the balance sheet. The iron-curtain method, on the other hand, focuses primarily on the effect of correcting the period-end balance sheet with less emphasis on the reversing effects of



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prior year errors on the income statement. We currently use the roll-over method for quantifying identified financial statement misstatements. In SAB No. 108, the
SEC staff established an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the companys financial statements and the related financial statement disclosures. This
model is commonly referred to as a dual approach because it requires quantification of errors under both the iron curtain and the roll-over methods.

SAB
No. 108 permits existing public companies to initially apply its provisions either by (i) restating prior financial statements as if the dual approach had always been used or (ii) recording the cumulative effect of
initially applying the dual approach as adjustments to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment recorded to the opening balance of retained earnings. Use of the
cumulative effect transition method requires detailed disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose. SAB No. 108 did not have an impact on
our financial statements.

Emerging Issues Task Force (EITF) Issue No. 05-1, The Accounting for the Conversion of an Instrument That Becomes Convertible
Upon the Issuers Exercise of a Call Option That Otherwise is Not Currently Convertible Based on a Contingency

On June 28, 2006, the EITF reached
a consensus that the issuance of equity securities to settle a debt instrument (pursuant to the instruments original conversion terms) that becomes convertible upon the issuers exercise of a call option should be accounted for as a
conversion if the debt instrument contained a substantive conversion feature as of its issuance date. That is, no gain or loss should be recognized related to the equity securities issued to settle the instrument. For purposes of applying this
Issue, a substantive conversion feature is a conversion feature that is at least reasonably possible of becoming exercisable in the future absent the issuers exercise of a call option. The conversion feature within our convertible subordinated
debentures is substantive and therefore, we would recognize no gain or loss on any equity securities issued to settle conversion of the debt.

SEC Final Rule
Release (FRR) 33-8732A, Executive Compensation and Related Person Disclosure

On August 29, 2006, the Securities and Exchange Commission issued
FRR 33-8732A. This FRR requires us to expand our executive compensation disclosures effective with our 2006 Form 10-K and our 2007 Definitive Proxy Statement. We will provide these disclosures in both our 2006 Form 10-K and our 2007 Definitive Proxy
Statement.

SUBSEQUENT EVENTS

Acquisitions of Businesses

On April 25, 2007, we completed our acquisition of all of the outstanding shares of MediaVast, Inc. (MediaVast) for approximately $202 million in net cash. MediaVast,
located in New York, New York, is an entertainment photography company, which licenses imagery primarily under the brand name WireImage. We funded the acquisition with cash on hand and funds drawn from our senior unsecured revolving credit facility
with U.S. Bank National Association (see discussion under Debt below). The majority of the purchase price is expected to be allocated to goodwill and identifiable intangible assets.

Restructuring

On October 18, 2006, we began to implement a plan to realign resources of the company. Through this realignment plan,
we terminated certain employees and consolidated within certain leased facilities in the fourth quarter of 2006. In connection with these actions, we recognized $9.6 million of costs in the fourth quarter of 2006, comprised of $5.6 million of
employee-related costs and a $4.0 million loss on leased facilities for the expected cost over the remaining term of the lease, write-off of leasehold improvements and adjustments to deferred rent. Of the employee-related costs, $3.8 million was
paid in the fourth quarter and the remaining $1.8 million was paid in the first quarter of 2007.

On March 16, 2007, we entered into a sublease with New York
Magazine Holdings, L.L.C. (New York Holdings) for 72,843 square feet of our excess leased space in, New York, NY. On May 3, 2007, we entered into a sublease with Cardinia Real Estate, L.L.C. (Cardinia) for the remaining 72,960 square feet of
our excess leased facilities in New York. Both of these subleases span the remainder of our lease term.



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

The sublease agreements entered into in 2007 have been factored into our loss on leased properties. See the discussion under General, Loss on Leased Properties above for more
information.

Debt

SENIOR CREDIT FACILITY

On March 19, 2007, we replaced our $100.0 million unsecured senior revolving credit facility with U.S. Bank with a new $350 million 364-day senior unsecured revolving credit
facility with U.S. Bank, as Administrative Agent and Sole Lead Arranger (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, provided there shall not have occurred any material adverse changes in the business, assets condition (financial or otherwise), operations, results of operations or prospects of the Company from June 30, 2006 through the
date we exercise our rights to increase the available funds. 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 0.5%
convertible subordinated debentures (the Debentures), and working capital requirements.

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. Our 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 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. However, we believe the purported default under the
indenture to the Debentures based on our failure to file this Quarterly Report on Form 10-Q for the third quarter of 2006 by the prescribed filing date under SEC regulations (disclosed most recently in our Current Report on Form 8-K dated
February 21, 2007 and further discussed below), will not create an event of default under the Facility. Under the terms of the Facility, we must become current on our periodic SEC filings by June 14, 2007 to avoid an event of default.

Fees paid in connection with the establishment of the Facility are deferred and are being amortized to interest expense over the term of the Facility. In addition to
the Facility, we also have other banking and investment management relationships with U.S. Bank.

To fund a portion of the purchase price of MediaVast, on
April 18, 2007, we drew down an aggregate amount of $80 million under the Facility.

DEBENTURES

On June 9, 2003, we issued $265.0 million in 0.5% convertible subordinated debentures in a private placement, which debentures were subsequently exchanged for new 0.5% Series
B convertible subordinated debentures (the Debentures) in December 2004 and May 2005.

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 SEC, 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.

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



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does not require such reports to be provided within any prescribed period of time. We believe any default by us claimed by the Trustee and certain holders of the
Debentures, if such a default existed, will be cured by the filing of this Form 10-Q and our 2006 Form 10-K, which we plan to file immediately after we file this Form 10-Q.

Equity

Effective May 22, 2006, our Board of Directors approved an amendment to our share repurchase program authorizing the repurchase of shares
of our common stock with an aggregate value of up to $250 million, an increase from the prior authorization of $150 million. During 2006, we repurchased approximately 3.5 million shares for $207.7 million under the amended plan. The repurchases
occurred in the open market pursuant to a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934. Our share repurchase program was suspended in November 2006 when we were not able to file this Form 10-Q in a timely manner. The stock
repurchase program will be reviewed after we become current with our SEC filings and a decision will be made at that time whether to continue with the program and at what level. Our repurchase activity subsequent to the end of the quarter is
summarized in the following table:



|                                      |  |                                    |  |                                  |  |                                                                                  |  |                                                                                                                           |  
|------------------------------------- |  | ---------------------------------- |  | -------------------------------- |  | -------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- | -
|QUARTERLY PERIOD                      |  | (a) Total numberof sharespurchased |  | (b) Averageprice paid pershare 1 |  | (c) Total number ofshares purchased aspart of publiclyannounced plans orprograms |  | (d) Maximum number of shares(or approximate dollar value of shares) that may yet be purchased under
the plans or programs |  
|                                      |  |                                    |  |                                  |  |                                                                                  |  |                                                                                                                           |  
|                                      |  |                                    |  |                                  |  |                                                                                  |  | (in thousands)                                                                                                            |  
|                                      |  |                                    |  |                                 
|October 1, 2006  December 31, 2006 3 |  | 756,555                            |  | $  43.05                         |  | 756,555                                                                          |  | $  42,324                                                                                                                 | 2
|                                      | 

|1 |  | Average price paid per share does not include associated transaction fees.
|- |  | --------------------------------------------------------------------------

|2 |  | This amount is based on an authorization of $250 million.
|- |  | ---------------------------------------------------------

|3 |  | The repurchase program was suspended in November 2006.
|- |  | ------------------------------------------------------

CAUTIONARY STATEMENT RELATING TO OUR HISTORICAL EQUITY COMPENSATION AWARD GRANT PRACTICES

The Special Committee Investigation of our Equity Compensation Grant Practices, the Ongoing Informal Inquiry by the SEC and Restatement of our Past Financial Statements May Have Continuing Adverse Consequences

As discussed in the Explanatory Note section of this Form 10-Q and the Explanatory Note Regarding Restatements section of the 2006 Form 10-K to be filed
immediately after the filing of this Form 10-Q, the Special Committee of our Board of Directors has conducted an independent investigation relating to our equity compensation grant practices, with the assistance of independent outside legal counsel.
The Special Committee and our management have determined that incorrect measurement dates for certain equity compensation awards were used for financial accounting purposes and certain other previously issued grants were modified without properly
recording compensation expense.

Although the Special Committee did not find any evidence of intentional wrongdoing, as a result of the foregoing events, we may be
subject to significant risks. Each of these risks could have an adverse effect on our business, financial condition and results of operations:



| |  |  | we are subject to, and cooperating fully with, the ongoing informal SEC inquiry, which may require further management time and attention and cause us to incur additional
accounting and legal expense and/or substantial fines or other penalties;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may be subject to additional formal or informal regulatory proceedings, actions or litigations with the SEC or other governmental authorities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may be subject to further civil litigations arising from the Special Committees investigation, the SEC inquiry, or our restatement of our past financial statements,
including but not limited to shareholder class action lawsuits and derivative claims made on behalf of us; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | many members of our senior management team and our Board of Directors may be required to devote a significant amount of time on matters relating to the continuing informal
SEC investigation, our outstanding periodic reports, remedial efforts and potential further litigation.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We May Not be Able to Obtain External
Financing or Service Our Indebtedness

While we currently anticipate that our current cash and cash equivalents and future operating cash flows will be sufficient
to meet our needs for working capital and capital expenditures for at least the next 12 months, we could be required to obtain external financing



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should our financial results not meet our expectations, if our 0.5% convertible subordinated debentures become convertible and require repayment or should we need
additional funds to acquire selected businesses or otherwise achieve our objectives.

In addition, our convertible subordinated debentures require cash repayment of
up to the $265.0 million of principal borrowed upon maturity in 2023, which repayment may be accelerated in full upon the occurrence of an Event of Default as defined under the indenture governing the debentures. Such an acceleration of
the debentures has been threatened. On February 21, 2007, the Trustee under the indenture governing the debentures notified us that, in connection with our delay in filing our Quarterly Report on Form 10-Q for the third quarter of 2006, an
Event of Default under the indenture had occurred. Although we believe that such an assertion is without merit and any default under the indenture, to the extent it exists, is cured by our filing of our Quarterly Report on Form 10-Q
for the third quarter of 2006, our business could be harmed if any such Event of Default were to occur and the repayment on the debentures were accelerated. See discussion of the terms of these debentures in the Financial
Condition section of Managements Discussion and Analysis of Financial Condition and Results of Operations under Part II, Item 7 of our 2006 Form 10-K to be filed immediately after we file this Form 10-Q.

Should we need to obtain external financing, through debt or equity, our ability to do so could be affected by changes in U.S. and global capital markets and economies,
significant fluctuations in interest rates, the price of our equity securities, fluctuations in the results of our operations, and other financial and business conditions, many of which are beyond our control.

We Have Been Named as a Party to Two Shareholder Derivative Lawsuits Relating to our Historical Stock Option Grant Practices, and we May be Named in Additional Lawsuits in the
Future

Two derivative actions were filed against certain of our current and former directors and officers purporting to assert claims on the companys
behalf relating to our historical stock option grant practices. There may be additional lawsuits of this nature filed in the future. We cannot predict the outcome of these lawsuits, nor can we predict the amount of time and expense that will be
required to resolve these lawsuits.

If the plaintiffs ultimately prevailed in these lawsuits, our insurance coverage would not cover our total liabilities and
expenses associated with the lawsuits because we have significant deductibles on certain aspects of the coverage. In addition, subject to certain limitations, we are obligated to indemnify our current and former directors, officers and employees in
connection with the investigation and litigation of our historical stock option grant practices and the related government inquiries. We currently hold insurance policies for the benefit of our directors and officers.

The Delay in Filing our Reports with the SEC May Result in Adverse Consequences for the Company

We did not meet the required filing dates for our Quarterly Reports on Form 10-Q for the quarters ended September 30, 2006 and March 31, 2007 and the 2006 Form 10-K. With the planned filing of such reports, we believe we will be
current with our SEC filings. However, should we fail to make our filings with the SEC current, there may be consequences that arise from the delay in filing the reports related to our convertible subordinated debentures, our other senior debt or
our stock award plans.

CAUTIONARY STATEMENTS RELATING TO OUR BUSINESS

Increased Competition Could Reduce our Revenues, Margins and Operating Results

The visual content industry is and has been intensely competitive, and
we expect competition to intensify in the future. We expect competition to increase because of changes in the media industry, changing advertising practices, technological advances leading to relatively inexpensive creation, marketing and
distribution of visual content, and a lack of substantial barriers to entry.

Our competitors range in size from significant media companies to individual visual
content producers. While we believe the breadth of our businesses and product and service portfolio offers benefits to our customers that are a competitive advantage, our current or potential competitors may develop products, licensing models,
technology or services comparable or superior to those that we develop or may adapt more quickly than we do to new or emerging technologies or evolving industry trends. Increased competition or more effective competitors could result in lost market
share, having to reduce prices or otherwise having reduced revenue, lower margins, increased capital expenditures, or otherwise have poorer operating results. There can be no assurance that we will be able to compete successfully against current and
future competitors.

See the listing of some of our current and potential competitors under the heading Competition in Item 1 of our 2006 Form 10-K
to be filed immediately after we file this Form 10-Q.



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Our Financial Results and Stock Price May Fluctuate

We expect our revenues and operating results to vary from quarter to quarter due to a number of factors, both within and outside of our control. Some of the factors that may affect our revenues and operating results include the
following:



| |  |  | demand for our existing and new imagery and related services, and those of our competitors;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | changes in our pricing or licensing models, policies and practices and those of our competitors;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | changes in the mix of imagery licensed and services sold, including the mix of licensed uses, company-owned versus contributor-supplied imagery, and the geographic
distribution of such licenses, each of which affects the price of a license and/or the royalty we pay on the license;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to attract and retain customers;
| | - |  | --------------------------------------------



| |  |  | our ability to manage the costs of our business, including the costs associated with maintaining and developing our websites, customer support, and international and product
line expansion;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | costs related to potential acquisitions and the development and/or use of technology, services or products;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | fluctuations in foreign currency exchange rates, changes in global capital markets and economic conditions, and changes to applicable tax laws and regulations;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the termination or expiration of certain image partner, distributor or other material agreements; and
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | changes in estimates and assumptions made by us in preparing our financial statements, including those discussed in the Critical Accounting Policies and Estimates and
Assumptions section of Managements Discussion and Analysis of Financial Condition and Results of Operations under Item 7 in Part II of our 2006 Form 10-K to be filed immediately after we file this Form 10-Q.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of these risks and others, it is possible that our future results may differ from our expectations and the expectations of analysts and
investors, causing our stock price to fluctuate. You should not rely on the results for any period as an indication of future performance.

Our Acquisition
Strategy May be Dilutive to Existing Shareholders, and We May Not be Successful in Acquiring or Integrating Businesses

As part of our business strategy, we have
in the past acquired and invested in, and may in the future seek to acquire or invest in businesses, products or technologies that could complement or expand our business. Acquisitions may require significant capital infusions or investments, and
may negatively impact our results of operations. Further, the evaluation and negotiation of potential acquisitions, as well as the integration of acquired businesses, may divert management time and other resources. Certain other risks related to
acquisitions that may have a material impact on our business or prevent us from benefiting from an acquisition or investment include:



| |  |  | costs incurred in performing due diligence and professional fees relating to potential acquisitions;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | use of cash resources, incurrence of debt or stockholder dilution through issuances of our securities to fund acquisitions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | assumption of actual or contingent liabilities, known and unknown;
| | - |  | ------------------------------------------------------------------



| |  |  | amortization expense related to acquired intangible assets, impairment of any goodwill acquired and other adverse accounting consequences;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties and expenses in integrating the sales, marketing, operations, products, services, technology, financial and information systems of an acquired company;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | retention of key employees, customers, and suppliers of an acquired business; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | an adverse review of an acquisition or potential acquisition, or limitations put on such acquisitions, by a regulatory body.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------

We May Experience System and Service Disruptions and Difficulties

The digitization and
Internet distribution of our visual content is a key component of our business. As a result, we are particularly dependent upon, and have expended significant resources to ensure, the efficient functioning of our websites (and the technology behind
them) to allow our customers to access and conduct transactions through our websites. We also have focused significant resources and attention on the installation and development of systems for technology, business processes, sales and marketing
systems, royalty and other finance systems, customer interfaces, and other corporate administrative functions, on which we depend to manage and control our operations.



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We will need to continue to improve our websites and systems, as well as our network infrastructures, to improve our customer
experience and to accommodate anticipated increased traffic, sales volume, and processing of the resulting information. If we experience significant disruptions or difficulties as a result of or during any such updates or upgrades, we may face
system interruptions, poor website response times, diminished customer services, impaired quality and speed of order fulfillment, and potential problems with our internal control over financial reporting. Substantial or repeated system disruption or
failures would reduce the attractiveness of our websites significantly.

In the past, we have experienced infrequent and brief system interruptions that made portions
of our websites unavailable or prevented us from efficiently uploading images to our website, or taking, processing or fulfilling orders. Our websites have in the past occasionally experienced slow response times. Additionally, we depend on certain
third-party software and system providers for the processing and distribution of our imagery and related services. System disruptions and difficulties, whether as a result of our internally developed systems or those of the third-party providers,
may inconvenience our customers and/or result in negative publicity, and may negatively affect our ability to provide services and the volume of images we license and deliver over the Internet. These types of occurrences in the future could cause
users to perceive our sites as not functioning properly and cause them to use another website or other methods to obtain the products or services we offer.

Additionally, the computer and communications hardware necessary to operate our corporate functions are located in metropolitan areas worldwide. Any of these systems and operations could be damaged or interrupted by fire, flood, power loss,
telecommunications failure, earthquake and similar events. In certain of our offices and facilities, we may not have complete redundancy for all of our network and telecommunications facilities.

Systems Security Risks and Concerns May Harm our Business

An important component of our
business is the secure transmission of confidential information and the transaction of commerce over the Internet. Developments in computer capabilities, viruses, or other events could result in compromises or breaches of our systems, website or
networks, jeopardizing proprietary and confidential information belonging to us or our customers, or causing potentially serious interruptions in our services, sales or operations. We continue to expend significant resources to protect against the
threat of security breaches or to alleviate problems caused by such breaches. Significant compromises of our security system or the Internet may reduce our customers desire to transact business over the Internet.

Our Business and Prospects Would Suffer if We are Unable to Protect and Enforce our Intellectual Property Rights

We rely upon copyright, patent, trade secret and trademark law, assignment of invention and confidentiality agreements and license agreements to protect our proprietary technology,
processes, content and other intellectual property. The steps we might take may not be adequate to protect against infringement and misappropriation of our intellectual property by third parties. Similarly, third parties may be able to independently
develop similar or superior technology, processes, content or other intellectual property. The unauthorized reproduction or other misappropriation of our intellectual property rights could enable third parties to benefit from our technology and
imagery without paying us for it. If this occurs, our business and prospects could be materially and adversely affected. In addition, disputes concerning the ownership or rights to use intellectual property could be costly and time-consuming to
litigate, may distract management from other tasks of operating the business, and may result in our loss of significant rights and the impairment of our ability to operate our business.

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

From time to time we receive notices from third parties claiming we infringe their intellectual property rights. If we are subject to any such infringement claims or are infringing
the rights of third parties, we may not be able to obtain licenses to use those rights on commercially reasonable terms, may have to stop selling or to redesign affected products, or may have to pay damages or satisfy indemnification commitments to
our customers. Furthermore, a party making such a claim could secure a judgment that requires us to pay damages and also could get an injunction or other court order that could prevent us from using the affected intellectual property. Claims of
infringement can be expensive to defend, even if the claim is invalid, and may distract our management from our business.

We Have Claims and Lawsuits against Us
that May Result in Adverse Outcomes

We are subject to a variety of claims and lawsuits. Adverse outcomes in some or all of the claims pending against us may
result in significant monetary damages or injunctive relief against us. While management currently believes that resolving all of these matters,



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|43 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



individually or in the aggregate, will not have a material adverse impact on our financial position or results of operations, the litigation and other claims are
subject to inherent uncertainties and managements view of these matters may change in the future. There exists the possibility of a material adverse impact on our financial position and the results of operations for the period in which the
effect of an unfavorable final outcome becomes probable and reasonably estimable.

Certain of Our Stockholders Can Exercise Significant Influence over Our Business
and Affairs

Some of our stockholders own substantial percentages of the outstanding shares of our common stock. See Item 12 of our 2006 Form 10-K to be
filed immediately after we file this Form 10-Q for a list of those stockholders that hold more than 5% of our outstanding shares.

Additionally, Getty Investments
L.L.C., the October 1993 Trust, the JD Klein Family Settlement, Mr. Mark H. Getty, our Chairman, and Mr. Jonathan D. Klein, our Chief Executive Officer (collectively the Getty Group), owned approximately 19% of the
outstanding shares of our common stock at April 30, 2007. Getty Investments alone owned approximately 15% of the outstanding shares of our common stock at April 30, 2007. Mr. Getty serves as the Chairman of the Board of Directors of
Getty Investments, and Mr. Klein serves on the Board of Directors of Getty Investments.

As a result of their share ownership, these shareholders have
significant influence over all matters requiring approval of our stockholders, including the election of directors and the approval of business acquisitions. The substantial percentage of our common stock held by these shareholders also could make
us a less attractive acquisition candidate or have the effect of delaying or preventing a third party from acquiring control over us at a premium over the then-current price of our common stock.

In addition to ownership of our common stock, the Getty Groups influence over us is increased by Mr. Gettys role as the Chairman of our Board of Directors, and
Mr. Kleins role as Chief Executive Officer and as a member of our Board of Directors.

We May Lose the Right to Use Getty Images Trademarks
in the Event we Experience a Change of Control

We own trademarks and trademark applications for the name Getty Images. We use Getty
Images as a corporate identity, as do certain of our subsidiaries, and we use Getty Images as a product and service brand. We refer to these trademarks and trademark applications as the Getty Images Trademarks. In the event that a
third party or parties not affiliated with the Getty family acquires control of Getty Images, Getty Investments L.L.C. has the right to call for an assignment to it, for a nominal sum, all rights to the Getty Images Trademarks. In the event of an
assignment, we will have 12 months to continue to use the Getty Images Trademarks, after which time we no longer would have the right to use them. Getty Investments right to cause such an assignment might have a negative impact on the amount
of consideration that a potential acquirer would be willing to pay to acquire our common stock.

Our Business Depends on our Ability to Attract and Retain Talented
Employees

Our business is based in part on our ability to successfully attract and retain talented employees. The market for highly skilled workers is extremely
competitive. If we are unable to retain and motivate key employees or are less successful in our recruiting efforts, our ability to create and distribute superior products and properly service our customers may be adversely affected.

An Increase in Government Regulation of the Internet and E-Commerce Could Have a Negative Impact on our Business

We are subject to a number of laws and regulations directly applicable to e-commerce. State, federal and foreign governments have adopted, and may continue to adopt, legislation
regulating the Internet and e-commerce. Such regulation could both increase our cost of doing business and impede the growth of our business or of the Internet, while decreasing the Internets acceptance or effectiveness as a communications and
commerce medium.

Existing or future laws and other regulations that may impact our business include, but are not limited to, those that govern or restrict:



| |  |  | privacy issues and data collection, processing, retention and transmission;
| | - |  | ---------------------------------------------------------------------------



| |  |  | pricing and taxation of goods and services offered over the Internet;
| | - |  | ---------------------------------------------------------------------



| |  |  | website content, or the manner in which products and services may be offered and/or marketed over the Internet; and
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | sources of liability for companies involved in Internet services or e-commerce.
| | - |  | -------------------------------------------------------------------------------

We May Have Additional Tax Liabilities

We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant
judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, we are involved in many transactions



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|44 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 2



where the ultimate tax determination may be uncertain. We are regularly under audit by tax authorities. Although we believe our tax provisions are reasonable, the
final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and reserves. The final determination of such tax liabilities, could have a material effect on our income tax
provision, net income, earnings per share, or cash flows in the period or periods for which that determination is made.

If Our Goodwill or Other Intangible Assets
Become Impaired, We May be Required to Record a Significant Charge to Earnings

Under generally accepted accounting principles, we review our intangible assets
for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating
that the carrying value of our goodwill or intangible assets may not be recoverable include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry. We may be required to record
a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or other intangible assets is determined, negatively impacting our results of operations.

Changes in Accounting May Affect our Reported Earnings and Operating Income

Generally
accepted accounting principles and accompanying accounting pronouncements, implementation guidelines, and interpretations for many aspects of our business, such as treatment of tax liabilities, goodwill or intangible assets, are highly complex and
involve subjective judgments. Changes in these rules or their interpretation or changes in our products or business could significantly change our reported earnings and operating income and could add significant volatility to those measures, without
a comparable underlying change in cash flow from operations. For discussion of some of the significant accounting pronouncements that are currently or we expect will affect our business, see the recent pronouncements under the heading Recent
Accounting Pronouncements in the Managements Discussion and Analysis of Financial Condition and Results of Operations under Part II, Item 7 of our 2006 Form 10-K to be filed immediately after we file this Form 10-Q.

We Operate a Global Business that Exposes Us to Additional Risks

We operate
in numerous countries and a significant part of our revenue comes from sales outside the United States. Operations outside of the United States may be affected by changes in regulatory requirements affecting trade and investment; social, political,
labor or economic conditions in a specific country or region; and difficulties in staffing and managing foreign operations. While we hedge a portion of our international currency exposure, significant fluctuations in exchange rates between the U.S.
dollar and foreign currencies may adversely affect our revenues, operating income, net income and earnings per share, as well as future cash flows.

Certain
Provisions of Our Corporate Documents and Delaware Corporate Law May Deter a Third Party from Acquiring Us

Our Board of Directors has the authority to issue up
to five million shares of preferred stock and to fix the rights, preferences, privileges and restrictions of such shares without any further vote, approval or action by our stockholders. This authority, together with certain provisions of our
restated certificate of incorporation, may have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us. This could occur even if our stockholders consider such
change in control to be in their best interests. In addition, the concentration of beneficial ownership of our common stock in the Getty Group, along with certain provisions of Delaware law, may have the effect of delaying, deterring or preventing a
takeover of us.



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|45 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 3



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

INTEREST RATE RISK

During the second quarter of 2006, we sold all of our short-term investments, thereby significantly reducing our exposure to interest rate risk. We remain
exposed to interest rate risk through our convertible subordinated debentures, which carry a fixed interest rate of 0.5%.

FOREIGN CURRENCY EXCHANGE RATE RISK

Based on our forward foreign currency exchange contracts outstanding at September 30, 2006 and December 31, 2005, a hypothetical 10% strengthening of
the U.S. dollar against the exchange rates for the foreign currencies bought or sold through our forward foreign currency exchange contracts would result in exchange gains of approximately $2.1 million and $3.1 million, respectively. A
hypothetical 10% weakening of the U.S. dollar would result in losses of similar amounts. However, these hypothetical losses or gains would be offset, at least in part, by gains or losses generated from revaluing the underlying exposures certain of
these contracts are hedging.

Based on our forward foreign currency exchange contracts outstanding at September 30, 2006 and December 31, 2005, a
hypothetical 10% strengthening of the British pound against the exchange rates for the foreign currencies to be bought or sold through our forward foreign currency exchange contracts would result in exchange gains of approximately $0.4 million and a
negligible exchange loss, respectively. A hypothetical 10% weakening of the British pound would result in a loss and a gain of 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 certain of these contracts are hedging.

Based on our forward foreign currency exchange contracts outstanding at
September 30, 2006 and December 31, 2005, a hypothetical 10% strengthening of the Euro against the exchange rates for the foreign currencies bought or sold through our forward foreign currency exchange contracts would result in exchange losses
of approximately $0.6 million and $2.4 million, respectively. A hypothetical 10% weakening of the Euro would result in gains of 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 certain of these contracts are hedging.

There have been no other material changes in our exposure to market risks
since December 31, 2005.



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

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer have re-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 September 30, 2006. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2006, these
disclosure controls and procedures were effective. In arriving at this conclusion, management considered, among other things, the control deficiencies related to accounting for equity compensation and the conclusions of the Special Committee
following an extensive review of our equity compensation grant practices. They considered specifically that while we used incorrect accounting measurement dates for certain equity compensation grants, those errors were not a result of fraud and that
our equity compensation grant practices had improved significantly since 2002. The control deficiencies related to accounting for equity compensation and the control environment resulted in the need to restate our previously-issued financial
statements as disclosed in Note 2. Restatement of Previously Issued Financial Statements to our Condensed Consolidated Financial Statements. Management has concluded that such control deficiencies that resulted in the restatement of the
previously-issued financial statements did not constitute a material weakness as of September 30, 2006 because management determined that as of September 30, 2006 there were effective controls designed and in place to prevent or detect a
material misstatement and, therefore, the current likelihood of our financial statements being materially misstated is remote.

MANAGEMENTS CONSIDERATION OF
THE RESTATEMENT

As disclosed in Note 2, Restatement of Previously Issued Financial Statements to our consolidated financial statements, we have
restated previously issued financial statements. The restatement resulted from the findings of a Special Committee of the Board of Directors and consisted primarily of additional equity compensation charges resulting from changes in measurement
dates and modifications to previously issued equity awards. The restatement resulted in additional pre-tax charges for equity compensation of $27.2 million from 1998 to 2003.



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|46 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART I |  |  |  | ITEM 4



In coming to the conclusion that our disclosure controls and procedures and our internal control over financial reporting were
effective as of September 30, 2006, we considered the process and controls that resulted in the need to restate our previously issued financial statements. In 2004, in compliance with the requirements of the Sarbanes-Oxley Act of 2002, we
implemented improved procedures, documentation and processes to provide improved internal controls over our stock option granting, accounting and administration. These improvements included adding reviews and reconciliations around the equity
granting process, improved documentation, increased communication between departments regarding the equity award granting and accounting processes and standardized processes for recommending and approving new awards.

The company believes that these changes remediated the historical deficiency in internal control over equity award accounting. Consequently, this matter does not constitute a
control deficiency as of September 30, 2006.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the period covered by this Form 10-Q, there were no changes in our internal control over financial reporting identified in connection with managements re-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.



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



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

SEC 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 the
Explanatory Note section of this Form 10-Q and the Explanatory Note Regarding Restatements section of the 2006 Form 10-K to be filed immediately after we file this Form 10-Q for additional information.

Shareholder Derivative Lawsuits

In connection with the SEC informal inquiry and our
review of historical stock option grant practices, there have been two derivative lawsuits filed against certain executive officers and directors of the company. The first lawsuit, filed in the Superior Court of the State of Washington on
January 29, 2007, seeks 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. The lawsuit was brought
against current and former officers and directors of the company, Jonathan D. Klein, Mark H. Getty, Jeffrey L. Beyle, Christopher H. Sporborg, Andrew S. Garb, James N. Bailey, Michael A. Stein, David Landau, Stephen M. Powell, Elizabeth J. Huebner,
A.D. Bud Albers, Lawrence J. Gould, Christopher J. Roling, Sally Von Bargen, Michael Bernard, Suzanne L. Page, Heather Redman, Mark Torrance, Manny Fernandez and Anthony Stone.

The second lawsuit, filed in the Western District Court of the State of Washington on March 2, 2007, seeks remedies from the defendants for purported violations of state law,
including breaches of fiduciary duties, unjust enrichment, statutory violation and other violations of the law. The lawsuit was brought against current and former officers and directors of the company, Jonathan D. Klein, Mark H. Getty, Jeffrey L.
Beyle, M. Lewis Blackwell, Nick Evans-Lombe, Richard R. Ellis, John Z. Ferguson, James C. Gurke, Scott A. Miskimens, William ONeill, Christopher H. Sporborg, Andrew S. Garb, James N. Bailey, Stephen M. Powell, Elizabeth J. Huebner,
A.D. Albers, Christopher J. Roling, Sally Von Bargen, and Warwick K. Woodhouse.

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 alleged 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 defending, adjudicating or 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, are expected to have a material adverse effect on our
consolidated financial position, results of operations or cash flows.



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|47 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART II |  |  |  | ITEM 1A



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

A description of our risk factors is included in Part I, Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations and is incorporated by reference herein. The description updates and replaces the risk factors previously disclosed in our Annual Report on Form
10-K for the year ended December 31, 2005 and our subsequent filings with the SEC. The reader should read such risk factors in conjunction with those contained in our 2006 Form 10-K to be filed immediately after we file this Form 10-Q. Set
forth below is a summary of the material changes to the risk factors that we have previously disclosed:



| |  |  | We have updated the risk factors relating to the review of our stock option practices and pending regulatory inquiries and litigation; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have updated the risk factors relating to:
| | - |  | ---------------------------------------------



| |  |  | the competition we face in the industry;
| | - |  | ----------------------------------------



| |  |  | the potential fluctuation of our financial results and stock price;
| | - |  | -------------------------------------------------------------------



| |  |  | our ability to protect our intellectual property rights and to defend from third-party claims relating to intellectual property;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to attract and retain talented employees;
| | - |  | -----------------------------------------------------



| |  |  | any potential tax liability and asset impairment; and
| | - |  | -----------------------------------------------------



| |  |  | the effect of any change in the accounting rules to which we are subject.
| | - |  | -------------------------------------------------------------------------



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



|(c) |  | Issuer Purchases of Equity Securities
|--- |  | -------------------------------------

Effective May 22, 2006, our Board of Directors
approved an amendment to our share repurchase program authorizing the repurchase of shares of our common stock with an aggregate value of up to $250 million, an increase from the prior authorization of $150 million. During the third quarter of 2006,
we repurchased 214,211 shares for $13.6 million under the amended plan. The repurchases occurred in the open market pursuant to a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934. Our repurchase activity is summarized by month
in the following table:

|                                       |  |                                    |  |                                  |       |                                                                                  |         |                                                                                                                           |   |        |  
|-------------------------------------- |  | ---------------------------------- |  | -------------------------------- | ----- | -------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------------------------------------------------- | - | ------ | -
|MONTHLY PERIOD                         |  | (a) Total numberof sharespurchased |  | (b) Averageprice paid pershare 1 |       | (c) Total number ofshares purchasedas part of publiclyannounced plansor programs |         | (d) Maximum number of shares(or approximate dollar value of shares) that may yet be purchased under
the plans or programs |  
|                                       |  |                                    |  |                                  |       |                                                                                  |         |                                                                                                                           |   |        |  
|                                       |  |                                    |  |                                  |       |                                                                                  |         | (in thousands)                                                                                                            |  
|                                       |  |                                    |  |                                 
|July 1, 2006 - July 31, 2006           |  | 214,211                            |  | $                                | 63.61 |                                                                                  | 214,211 |                                                                                                                           | $ | 74,918 | 2
|August 1, 2006 - August 31, 2006       |  |                                   |  |                                  |      |                                                                                  |        |                                                                                                                           |   | 74,918 | 2
|September 1, 2006 - September 30, 2006 |  |                                   |  |                                  |      |                                                                                  |        |                                                                                                                           |   | 74,918 | 2
|                                       |  |                                    |  |                                  |       |                                                                                  |         |                                                                                                                           |   |        |  
|                                       |  | 214,211                            |  |                                  |       |                                                                                  | 214,211 |                                                                                                                           |   |        |  
|                                       | 

|1 |  | Average price paid per share does not include associated transaction fees.
|- |  | --------------------------------------------------------------------------

|2 |  | This amount is based on an authorization of $250 million.
|- |  | ---------------------------------------------------------



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

See discussion of a purported event of default on our
convertible subordinated debentures in our subsequent events discussions in Note 12 to our Condensed Consolidated Financial Statements and Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.



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

None



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|48 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | FORM 10-Q |  | PART II |  |  |  | ITEM 5



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

On September 11, 2006, the Compensation Committee of our Board
of Directors approved a new non-executive director compensation plan. The plan is as follows:



| |  |  | $60,000 annual cash retainer for each director;
| | - |  | -----------------------------------------------



| |  |  | $5,000 annual retainer for the chair of the Audit Committee;
| | - |  | ------------------------------------------------------------



| |  |  | $2,500 annual retainer for the chair of the other committees;
| | - |  | -------------------------------------------------------------



| |  |  | No meeting fees for Board or committee meeting attendance;
| | - |  | ----------------------------------------------------------



| |  |  | Payment of the cash component of the compensation in arrears on a calendar quarter basis;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | An annual award of restricted stock units (RSUs) in the amount of $100,000 that vests ratably each year over a 4-year period; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | An award of RSUs in the amount of $100,000 for every director who joins the Board that vests ratably each year over a 4-year period.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------

Our chairman, Mr. Mark Getty, does not participate in this compensation plan.



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

Reference is made to the Exhibit Index beginning on page 50 for a list of all
exhibits filed as part of this Form 10-Q.



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|49 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | 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 (Principal Financial and Accounting Officer)


June 12, 2007



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|50 |  |  |  | GETTY IMAGES, INC. |  |  |  | Q3  2006 |  |  |  | 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