8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 23, 2009

IMAGE ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware	000-11071	84-0685613
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

20525 Nordhoff Street, Suite 200, Chatsworth, California	91311
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 407-9100

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On June 23, 2009, Image Entertainment, Inc. (the “Company”), along with its subsidiaries Egami Media, Inc. and Image Entertainment (UK), Inc., entered into a second amendment (the “Amendment”) to the Loan and Security Agreement with Wachovia Capital Finance Corporation (Western). The Amendment provides that the Company is not required to deliver an unqualified opinion of its independent registered public accounting firm with respect to its audited consolidated financial statements for the fiscal year ended March 31, 2009. As a result of the Amendment, the anticipated modification of the opinion of the Company’s independent registered public accounting firm on the Company’s consolidated financial statements for the fiscal year ended March 31, 2009 with a statement that expresses substantial doubt regarding the Company’s ability to continue as a going concern will not, in and of itself, trigger an event of default under the Loan and Security Agreement. The Amendment required that the Company pay a $50,000 amendment fee.

The Amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 2.02. Results of Operations and Financial Condition.

On June 25, 2009, the Company issued a press release announcing its financial results for its fiscal fourth quarter and year ended March 31, 2009. A copy of the press release is furnished as Exhibit 99.1 hereto.

Following the press release, the Company will hold a telephonic conference call with simultaneous Web cast beginning at 4:30 PM Eastern time to discuss its financial results for its fiscal fourth quarter and year ended March 31, 2009. The call can be accessed by dialing (877) 704-5381 and requesting to join the conference call by stating the confirmation code 2342100. International participants please dial (913) 981-5522. A recording of the call will be available until July 2, 2009. To access the recording, dial (888) 203-1112 and enter the confirmation code of 2342100. International participants please dial (719) 457-0820 and use the same confirmation code. A Web cast of the call is also available at www.image-entertainment.com.

Unless otherwise required by law, the Company disclaims any obligation to release publicly any updates or any changes in its expectations or any change in events, conditions, or circumstances on which any forward-looking statements are based.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Exhibit Description
10.1	Second Amendment to Loan and Security Agreement, dated as of June 23, 2009, between Wachovia Capital Finance Corporation (Western), Image Entertainment, Inc., Egami Media, Inc. and Image Entertainment (UK), Inc.
99.1	Press Release dated June 25, 2009

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 hereunto duly authorized.

	IMAGE ENTERTAINMENT, INC.
Date: June 25, 2009	By:	/s/ JEFF M. FRAMER
		Name Jeff M. Framer Title: President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Second Amendment to Loan and Security Agreement, dated as of June 23, 2009, between Wachovia Capital Finance Corporation (Western), Image Entertainment, Inc., Egami Media, Inc. and Image Entertainment (UK), Inc.
99.1	Press release, dated June 25, 2009.

EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of June 23, 2009, is entered into between WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN), a California corporation, as Agent and Lender (in such capacities, “Lender”), IMAGE ENTERTAINMENT, INC., a Delaware corporation (“Borrower”), EGAMI MEDIA, INC., a Delaware corporation (“Egami”), IMAGE ENTERTAINMENT (UK), INC., a Delaware corporation (“Image (UK)” and together with Egami, collectively, “Guarantors”).

RECITALS

A. Borrower, Guarantors, Home Vision Entertainment, Inc., a Delaware corporation (which has since been merged with and into Borrower), and Lender have previously entered into that certain Loan and Security Agreement dated May 4, 2007 as amended by that certain First Amendment to Loan and Security Agreement dated as of April 28 2008 (as amended, the “Loan Agreement”), pursuant to which Lender has made certain loans and financial accommodations available to Borrower. Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

B. Borrower, Guarantors and Lender now wish to amend the Loan Agreement on the terms and conditions set forth herein.

C. Borrower and Guarantors are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Lender’s rights or remedies as set forth in the Loan Agreement is being waived or modified by the terms of this Amendment.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Amendments to Loan Agreement.

(a) Section 9.6(a)(ii) of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

“(ii) within ninety (90) days after the end of each fiscal year, audited consolidated financial statements and unaudited consolidating financial statements of Parent and its Subsidiaries (including in each case balance sheets, statements of income and loss, statements of cash flow, and statements of shareholders’ equity), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and for such fiscal year, together with (other than for the fiscal year of Parent ending March 31, 2009) the unqualified opinion of independent certified public accountants with respect to the audited consolidated financial statements, which accountants shall be an independent accounting firm selected by Administrative Borrower and acceptable to Agent, that such audited consolidated financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Parent and its Subsidiaries as of the end of and for the fiscal year then ended, and”

2. Effectiveness of this Amendment. Lender must have received the following items before this Amendment is effective.

(a) Amendment. This Amendment, fully executed in a sufficient number of counterparts for distribution to all parties.

(b) Amendment Fee. An amendment fee in the amount of $50,000 which shall be due and payable by Borrower, and fully earned by Lender, on the date of this Amendment.

(c) Representations and Warranties. The representations and warranties set forth herein and in the Loan Agreement must be true and correct.

(d) Other Required Documentation. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Lender.

3. Representations and Warranties. Borrower and Guarantors represent and warrant as follows:

(a) Authority. Each of Borrower and Guarantors has the requisite corporate power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Financing Agreements (as amended or modified hereby) to which it is a party. The execution, delivery and performance by Borrower and Guarantors of this Amendment have been duly approved by all necessary corporate action and no other corporate proceedings are necessary to consummate such transactions.

(b) Enforceability. This Amendment has been duly executed and delivered by Borrower and Guarantors. This Amendment and each Financing Agreement (as amended or modified hereby) is the legal, valid and binding obligation of Borrower and Guarantors, enforceable against them in accordance with its terms, and is in full force and effect.

(c) Representations and Warranties. The representations and warranties contained in each Financing Agreement (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are correct on and as of the date hereof as though made on and as of the date hereof.

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(d) Due Execution. The execution, delivery and performance of this Amendment are within the power of Borrower and Guarantors, have been duly authorized by all necessary corporate action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on Borrower or any Guarantor.

(e) No Default. No event has occurred and is continuing that constitutes an Event of Default.

4. Choice of Law. The validity of this Amendment, its construction, interpretation and enforcement, the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the internal laws of the State of California governing contracts only to be performed in that State.

5. Counterparts. This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

6. Reference to and Effect on the Financing Agreements.

(a) Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Financing Agreements to “the Loan Agreement”, “thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as modified and amended hereby.

(b) Except as specifically amended above, the Loan Agreement and all other Financing Agreements, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Borrower and Guarantors to Lender.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Lender under any of the Financing Agreements, nor constitute a waiver of any provision of any of the Financing Agreements.

(d) To the extent that any terms and conditions in any of the Financing Agreements shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as modified or amended hereby.

7. Estoppel. To induce Lender to enter into this Amendment and to continue to make advances to Borrower under the Loan Agreement, Borrower and Guarantors hereby acknowledge and agree that, as of the date hereof, there exists no right of offset, defense, counterclaim or objection in favor of Borrower or any Guarantor as against Lender with respect to the Obligations.

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8. Integration. This Amendment, together with the other Financing Agreements, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

9. Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

[Remainder of Page Left Intentionally Blank]

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IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

IMAGE ENTERTAINMENT, INC.,
a Delaware corporation
By:	/s/ JEFF M. FRAMER
Name:	Jeff M. Framer
Title:	President and Chief Financial Officer
EGAMI MEDIA, INC.,
a Delaware corporation
By:	/s/ JEFF M. FRAMER
Name:	Jeff M. Framer
Title:	President and Chief Financial Officer
IMAGE ENTERTAINMENT (UK), INC.,
a Delaware corporation
By:	/s/ JEFF M. FRAMER
Name:	Jeff M. Framer
Title:	President and Chief Financial Officer
WACHOVIA CAPITAL FINANCE
CORPORATION (WESTERN),
as Agent and Lender
By:	/s/ GARY WHITAKER
	Gary Whitaker, Director

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EX-99.1

Exhibit 99.1

IMAGE ENTERTAINMENT REPORTS FISCAL 2009 FINANCIAL RESULTS

Net Revenues for Fiscal 2009 Fourth Quarter were $26.6 Million

Net Revenues for Fiscal 2009 were $130.7 Million

CHATSWORTH, Calif., June 25, 2009 — Image Entertainment, Inc. (NASDAQ: DISK), a leading independent licensee, and distributor of home entertainment programming in North America, today reported financial results for its fiscal fourth quarter and year ended March 31, 2009.

“In what is perhaps the most challenging retail climate we have ever faced, Image Entertainment continues to navigate through a series of financial and post-merger related challenges,” said Jeff M. Framer, President and Chief Financial Officer of Image Entertainment. “We remain vigilant in our efforts to enhance value to our stockholders, retail partners and content providers. Our digital business has grown significantly as we continue to exploit many forms of content delivery to consumers. And we have made several feature film acquisitions that have elevated the Company’s presence amongst feature film suppliers.”

Mr. Framer added that “Working with our advisors, we have put a process in place to move our company forward. We have significantly reduced our operating costs going forward as our advisors explore various alternatives for the Company.”

Fiscal Fourth Quarter Ended March 31, 2009 Financial Summary

• Net revenues increased 2.3% to $26.6 million, compared to $26.0 million for the fourth quarter of fiscal 2008.

• Net revenues from domestic standard DVD distribution were down 16.4% to $20.0 million, from $23.9 million for the fourth quarter of fiscal 2008, as a result of weakness in the economy.

• Net revenues from Blu-ray Disc^® distribution were $1.3 million, compared to $222,000 for the fourth quarter of fiscal 2008.

• Broadcast revenues were $2.8 million, compared to $224,000 for the fourth quarter of fiscal 2008.

• Net revenues from digital distribution increased 177% to $1.5 million, from $535,000 for the fourth quarter of fiscal 2008.

• Gross margins were 8.1%, compared to negative gross margins of (14.6) %, due to larger writedowns, for the fourth quarter of fiscal 2008.

• In the fourth quarter of fiscal 2009, the Company recorded a charge of $4.8 million, or $0.22 per diluted share, representing accelerated amortization and fair value writedowns of its advance royalty and distribution fees and inventories.

Further contraction in the DVD and CD marketplace, due in part, to the weakened economy, led to a steeper reduction in the Company’s forecasts of future revenues.

• The $4.8 million charge negatively impacted gross margins for the quarter by approximately 18% in the fourth quarter of fiscal 2009.

• In the fourth quarter of fiscal 2008, the Company recorded a charge of $10.4 million, or $0.48 per diluted share, representing accelerated amortization and fair value writedowns of its advance royalty and distribution fees and inventories. The charge resulted primarily from reducing its forecasted future revenues to be generated from deep catalogue programming as a result of trending historical sales and the release of industry market data, regarding the maturation of the DVD industry, in the Company’s fourth quarter.

• The $10.4 million charge negatively impacted gross margins by 40.1% in the fourth quarter of fiscal 2008.

• Selling expenses were 9.9% of net revenues, down from 13.0% of net revenues, for the fourth quarter of fiscal 2008 as a result of reduced advertising and promotional expenditures.

• General and administrative expenses decreased to $5.2 million, from $6.1 million for the fourth quarter of fiscal 2008 primarily as a result of reduced merger and severance expenses.

• In the fourth quarter of fiscal 2009, the Company incurred expenses including:

• $507,000 associated with the terminated merger negotiations with Nyx Acquisitions, Inc. (Nyx).

• $439,000 in severance associated with the February 2009 cost-reduction in personnel.

• $499,000 in severance associated with the March 2009 departure of its former President.

• Offsetting the above expenses were reductions in non-merger related legal expenditures of approximately $290,000 and reduced third party consulting expenses of $156,000.

• In the fourth quarter of fiscal 2008 we incurred expenses including:

• $744,000 associated with the merger negotiations and related disputes with BTP Acquisition Company LLC (BTP).

• $979,000 for the retirement package of its former CEO and other severance accruals.

• $246,000 related to the separation of employment with an executive officer.

• Other income was $3.0 million, compared to other expense of $599,000 for the fourth quarter of fiscal 2008. Other income for the fourth quarter of fiscal 2009 included:

• $1.0 million non-refundable payment received in exchange for an extension of the closing date of the Nyx merger agreement.

• $1.6 million pursuant to the termination of an agreement with a content supplier.

• $400,000 resulting from the noncash change in fair value of a warrant and embedded derivatives compared to a $599,000 noncash charge relating to the same items in the fourth quarter of fiscal 2008.

• Interest expense decreased to $706,000 from $843,000 for the fourth quarter of fiscal 2008.

• Net loss was ($3,339,000), or ($.15) per diluted share, compared to a net loss of ($14,719,000), or ($0.68) per diluted share, for the fourth quarter of fiscal 2008.

Best-selling DVD releases for the quarter ended March 31, 2009 included: feature films In the Electric Mist and My Name is Bruce, and television program Ghost Hunters: Season 4 Part 2.

Fiscal 2009 Financial Summary

• Net revenues increased 36% to $130.7 million, compared to $95.8 million for fiscal 2008.

• Net revenues from domestic standard DVD distribution were up 23.2% to $107.8 million, from to $87.5 million for fiscal 2008, as a result of the Company’s feature film initiative.

• Net revenues from Blu-ray distribution were $8.1 million, compared to $508,000 in fiscal 2008.

• Net broadcast revenues increased 332% to $4.9 million, from $1.1 million in fiscal 2008.

• Net revenues from digital distribution were up approximately 95% to $4.2 million, from $2.1 million for fiscal 2008.

• Gross margins were 21%, compared to 10.8% for fiscal 2008.

• Fiscal 2009 included a fourth quarter charge of $4.8 million, or $0.22 per diluted share, representing accelerated amortization and fair value writedowns of its advance royalty and distribution fees and inventories.

• The $4.8 million fourth quarter charge negatively impacted annual gross margins by 3.7% for fiscal 2009

• The $10.4 million fourth quarter charge negatively impacted annual gross margins by 10.9% for fiscal 2008.

• Selling expenses remained constant at 10.9% of net revenues from fiscal 2008 to 2009.

• General and administrative expenses decreased 11.2% to $16.9 million, from $19.0 million for fiscal 2008. The Company incurred:

• $938,000 in severance for the February 2009 cost reduction lay-off and the March 2009 departure of its former President, as compared to $1,325,000 for the departure of its former Chief Executive Officer and Chief Marketing Officer, including legal costs, in fiscal 2008;

• lower non-operating expenses associated with two separate merger processes for fiscal 2009 as compared to the fiscal 2008 period. During fiscal 2009, the expenses related to the ongoing merger process with Nyx and resolving disputes with BTP. In the prior year, the expenses related to the terminated merger process with BTP.

• The Company incurred $1.2 million in legal, investment banking and other costs related to the merger processes in fiscal 2009, compared to $1.9 million for fiscal 2008;

• lower third-party consulting expenses primarily relating to the Company’s continuing compliance with the requirements of Sarbanes-Oxley Section 404 by $198,000 for fiscal 2009 as compared to fiscal 2008; and

• lower property and equipment depreciation and amortization expenses of approximately $659,000 for fiscal 2009, as a result of the fiscal 2008 closure of its Las Vegas, Nevada distribution facility.

• Partially offsetting the noted comparative annual decreases to general and administrative expenses for fiscal 2009 were higher Board of Director fees (non-merger process related) of $200,000 for fiscal 2009 over fiscal 2008.

• Other income was $5.2 million, compared to $4,000 for fiscal 2008. Other income (expense) for fiscal 2009 included:

• $2.0 million pursuant to a settlement agreement and mutual release relating to the terminated merger agreement and distribution agreement with BTP.

• $1.0 million non-refundable payment received in exchange for an extension of the closing date of the Nyx merger agreement.

• $2.4 million pursuant to the termination of an agreement with a content supplier.

• ($209,000) in noncash expense resulting from the change in fair value of a warrant and embedded derivatives.

• Interest expense was $3.3 million for fiscal 2009 and 2008. The noncash portion of interest expense for fiscal 2009 was $1.5 million, down 12.3% from $1.7 million in fiscal 2008.

• Net loss was ($1,804,000), or ($0.08) per diluted share, compared to a net loss of ($23,053,000), or ($1.06) per diluted share, for fiscal 2008.

Best-selling DVD releases for the fiscal year ended March 31, 2009, in addition to those noted above for the fourth fiscal quarter, included: Comedy program Jeff Dunham: A Very Special Christmas and feature films In the Electric Mist, and Before the Devil Knows You’re Dead.

The Company anticipates that it will receive an opinion from its auditors containing an explanatory paragraph indicating that there is substantial doubt about the Company’s ability to continue as a going concern, which would be included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2009 to be filed by June 29, 2009. On June 23, 2009, the Company and its senior lender, Wachovia Capital Finance Corporation (Western), amended their Loan and Security Agreement to provide that the Company is not required to deliver an unqualified opinion for the fiscal year ended March 31, 2009.

Fiscal Year 2010 Guidance

At this time, the Company is not providing annual or quarterly revenue guidance for fiscal 2010.

Corporate Conference Call

Image Entertainment’s management will host a conference call today, June 25, at 4:30 p.m. ET to review the fiscal 2009 fourth quarter and year end financial results. Image executive management will be on-line to discuss these results and take part in a Q & A session. The call can be accessed by dialing (877) 704-5381 and requesting to join the conference call by stating the confirmation code 2342100, or by webcast at www.image-entertainment.com. Dial-ins begin at approximately 4:15 p.m. Eastern time, or at any time during the conference call. International participants please dial (913) 981-5522.

A replay of the conference call will be available beginning two hours after the call and for the following five business days by dialing (888) 203-1112 and entering the following pass code: 2342100. International participants please dial (719) 457-0820 using the same passcode.

About Image Entertainment:
Image Entertainment, Inc. is a leading independent licensee and distributor of entertainment programming in North America, with approximately 3,200 exclusive DVD titles and approximately 340 exclusive CD titles in domestic release and approximately 400 programs internationally via sublicense agreements. For many of its titles, the Company has exclusive audio and broadcast rights and, through its subsidiary, Egami Media, Inc. has digital download rights to approximately 2,000 video programs and over 300 audio titles containing more than 5,100 individual tracks. The Company is headquartered in Chatsworth, California. For more information about Image Entertainment, Inc., please go to www.image-entertainment.com.

Forward-Looking Statements:
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, among other things, the Company’s goals, plans and projections regarding the Company’s financial position, results of operations, market position, product development and business strategy. These statements may be identified by the use of words such as “will,” “may,” “estimate,” “expect,” “intend,” “plan,” “believe,” and other terms of similar meaning in connection with any discussion of future operating or financial performance or other events or developments. All forward-looking statements are based on management’s current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations.

These factors include, but are not limited to, (a) the Company’s ability to continue as a going concern, (b) the Company’s ability to secure media content on acceptable terms, (c) the Company’s ability to service it’s principal and interest obligations on it’s outstanding debt or otherwise renegotiate or refinance such outstanding debt, (d) the ability of the Company’s common stock to continue trading on NASDAQ, (e) changes in the retail DVD and digital media and entertainment industries, (f) changes in the Company’s business plan, (g) the Company’s limited working capital and the Company’s inability to raise additional working capital on acceptable terms or at all, (h) the Company’s ability to borrow against the Company’s revolving line of credit, (i) heightened competition, including with respect to pricing, entry of new competitors, the development of new products by new and existing competitors, (j) changes in general economic conditions, including the performance of financial markets and interest rates, (k) difficult, adverse and volatile conditions in the global and domestic capital and credit markets, (l) claims that the Company infringed other parties’ intellectual property, (m) changing public and consumer taste and changes in customer spending patterns, (n) decreasing retail shelf space for the Company’s industry, (o) the performance of business partners upon whom the Company depends upon, (p) changes in accounting standards, practices or policies, (q) adverse results or other consequences from litigation, arbitration or regulatory investigations, and (r) further sales or dilution of the Company’s equity, which may adversely affect the market price of the Company’s common stock.

For further details and a discussion of these and other risks and uncertainties, see “Forward-Looking Statements” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K, and the Company’s most recent Quarterly Reports on Form 10-Q. Many of the factors that will determine the outcome of the subject matter of this press release are beyond Image Entertainment’s ability to control or predict. Actual results for the periods identified may differ materially from management’s expectations. Unless otherwise required by law, the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact: Steve Honig
The Honig Company, Inc.
818-986-4300
press@honigcompany.com

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[Tables Follow]

IMAGE ENTERTAINMENT, INC.
and Subsidiaries

CONSOLIDATED BALANCE SHEETS
(unaudited)

March 31, 2009 and 2008

ASSETS

(In thousands)	2009		2008
Current assets:
Cash and cash equivalents	$	802	$	1,606
Accounts receivable, net of allowances of $10,217 — 2009; $8,548 — 2008		19,376		17,430
Inventories		14,629		16,379
Royalty and distribution fee advances		16,570		13,939
Prepaid expenses and other assets		1,545		1,488
Total current assets		52,922		50,842
Noncurrent inventories, principally production costs		2,506		2,632
Noncurrent royalty and distribution advances		21,188		21,356
Property, equipment and improvements, net		2,161		3,089
Goodwill		5,715		5,715
Other assets		221		736
Total assets	$	84,713	$	84,370

IMAGE ENTERTAINMENT, INC.
and Subsidiaries

CONSOLIDATED BALANCE SHEETS
(unaudited)

March 31, 2009 and 2008

LIABILITIES AND STOCKHOLDERS’ EQUITY

(In thousands, except share data)	2009			2008
Current liabilities:
Accounts payable	$	12,761		$	11,387
Accrued liabilities		5,626			5,877
Accrued royalties and distribution fees		20,777			13,961
Accrued music publishing fees		6,222			5,971
Deferred revenue		5,035			10,155
Revolving credit facility		10,933			5,165
Current portion of long-term debt, net of debt discount		10,094			5,759
Total current liabilities		71,448			58,275
Long-term debt, net of debt discount and current portion		5,663			16,309
Other long-term liabilities, less current portion		2,105			2,560
Total liabilities		79,216			77,144
Stockholders’ equity:
Preferred stock, $.0001 par value, 25 million shares authorized; none issued and outstanding		—			—
Common stock, $.0001 par value, 100 million shares authorized; 21,856,000 issued and outstanding at 2009 and 2008, respectively		2			2
Additional paid-in capital		52,693			52,618
Accumulated deficit		(47,198	)		(45,394	)
Total stockholders’ equity		5,497			7,226
Total liabilities and stockholders’ equity	$	84,713		$	84,370

IMAGE ENTERTAINMENT, INC.
and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

For the Three Months Ended March 31, 2009 and 2008

	Three Months Ended
(In thousands, except per share data)	2009					2008
NET REVENUES	$	26,569		100.0	%	$	25,964		100.0	%
OPERATING COSTS AND EXPENSES:
Cost of sales		24,414		91.9			29,755		114.6
Selling expenses		2,639		9.9			3,375		13.0
General and administrative expenses		5,169		19.5			6,114		23.5
		32,222		121.3			39,244		151.1
LOSS FROM OPERATIONS		(5,653	)	(21.3	)		(13,280	)	(51.1	)
OTHER EXPENSES (INCOME):
Interest expense, net		706		2.7			843		3.3
Other		(2,983	)	(11.3	)		599		2.3
		(2,277	)	(8.6	)		1,442		5.6
LOSS BEFORE INCOME TAXES		(3,376	)	(12.7	)		(14,722	)	(56.7	)
INCOME TAX BENEFIT		(37	)	(0.1	)		(3	)	(0.0	)
NET LOSS	$	(3,339	)	(12.6	)%	$	(14,719	)	(56.7	)%
NET LOSS PER SHARE:
Net loss — basic and diluted	$	(.15	)			$	(.68	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		21,856					21,750

IMAGE ENTERTAINMENT, INC.
and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

For the Years Ended March 31, 2009 and 2008

(In thousands, except per share data)	2009					2008
NET REVENUES	$	130,691		100.0	%	$	95,818		100.0	%
OPERATING COSTS AND EXPENSES:
Cost of sales		103,237		79.0			85,450		89.2
Selling expenses		14,225		10.9			10,412		10.9
General and administrative expenses		16,879		12.9			19,014		19.8
Restructuring expenses		—		—			612		0.6
		134,341		102.8			115,488		120.5
LOSS FROM OPERATIONS		(3,650	)	(2.8	)		(19,670	)	(20.5	)
OTHER EXPENSES (INCOME):
Interest expense, net		3,320		2.5			3,345		3.5
Other		(5,205	)	(3.9	)		(4	)	(0.0	)
		(1,885	)	(1.4	)		3,341		3.5
LOSS BEFORE INCOME TAXES		(1,765	)	(1.4	)		(23,011	)	(24.0	)
INCOME TAXES		39		0.0			42		0.1
NET LOSS	$	(1,804	)	(1.4	)%	$	(23,053	)	(24.1	)%
NET LOSS PER SHARE:
Net loss — basic and diluted	$	(.08	)			$	(1.06	)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		21,856					21,734