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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For The Fiscal Year Ended December 31, 2002

Commission File Number: 000-23747

GETTY IMAGES, INC.

(Exact Name of Registrant as Specified in its Charter)

601 N 34TH STREET

SEATTLE, WASHINGTON 98103

(Address of Principal Executive Offices)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 925-5000

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE

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 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨

The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $885.9 million as of June 28, 2002 (the last business day of the registrant’s most recently completed second fiscal quarter) based upon the closing price of $21.77 on the Nasdaq reported on such date.

As of March 3, 2003, the registrant had 54,016,619 shares of Common Stock, $0.01 par value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Part III of this document is incorporated by reference to certain portions of the company’s definitive Proxy Statement (to be filed) for the Annual Meeting of Stockholders to be held May 5, 2003.

An Index to Exhibits appears at Part IV, Item 15, pages 33 - 34 herein.

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PART I

ITEM 1. BUSINESS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of Getty Images, Inc. We may, from time to time, make written or oral statements that are “forward-looking,” including statements contained in this Annual Report on Form 10-K, the documents incorporated herein by reference, and other filings with the Securities and Exchange Commission. These statements are based on management’s current expectations, assumptions and projections about Getty Images, Inc. and its industry and are made on the basis of management’s views as of the time the statements are made. All statements, analyses and other information contained in this report relative to trends in sales, gross margin, anticipated expense levels and liquidity and capital resources, as well as other statements including, but not limited to, words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “seek,” “intend” and other similar expressions, constitute forward-looking statements. 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 from our past performance and our current expectations, assumptions and projections. Differences may result from actions taken by the company as well as from risks and uncertainties beyond the company’s control. Potential risks and uncertainties include, among others, those set forth herein under “Factors That May Affect the Business,” as well as in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Except as required by law, the company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise. Readers should carefully review the factors set forth in other reports or documents that the company files from time to time with the Securities and Exchange Commission.

In this Annual Report, “Getty Images,” “the company,” “we,” “us,” and “our” refer to Getty Images, Inc. and its consolidated subsidiaries, unless the context otherwise dictates.

GENERAL DEVELOPMENT AND NARRATIVE DESCRIPTION OF THE BUSINESS

Overview

Getty Images, Inc. was founded in 1995 and is a leading provider of imagery and related products and services to businesses worldwide. We deliver our products primarily digitally via the Internet and on CD-ROMs. The company is headquartered in Seattle, Washington, and we sell our products through an international distribution network of company-operated offices in approximately 20 cities and distributors in approximately 55 countries. We pioneered the solution to aggregate and distribute visual content and, since 1995, have brought many of the visual content industry’s leading image collections under one centralized corporate structure.

We provide our high quality, relevant imagery to creative professionals at advertising agencies, graphic design firms, corporations and film and broadcasting companies; press and editorial customers involved in newspaper, magazine, book, CD-ROM and online publishing; and corporate communications departments and other business customers. By aggregating the content of our various leading imagery collections on the Internet and partnering with third-party providers, we offer a comprehensive and user-friendly solution for our customers’ imagery needs, including still and moving images and related products and services. We seek to leverage our internally developed search and e-commerce technology to enhance our position as a leader in the visual content industry.

Background

The company was formed in 1995 as a United Kingdom (U.K.) corporation (now Getty Communications Limited). We commenced operations on March 14, 1995, with the acquisition of Tony Stone Images (now “Stone”), a leading provider of contemporary stock photography. A Delaware corporation was formed on September 4, 1997, under the name of Getty Communications (USA), Inc. The company’s name was changed to Getty Images, Inc. on October 6, 1997. Getty Images became the worldwide corporate entity following the merger into it of Getty Communications Limited and the acquisition of PhotoDisc, Inc. on February 9, 1998.

Products, Services and Customers

PRODUCTS AND SERVICES

We offer our customers a variety of visual content products, including creative, or “stock” imagery (both still and moving images), editorial photography, archival imagery (both still and moving), illustrations and related products and services. Our imagery is offered to customers through our creative photography collections (The Image Bank, Photodisc, Photographer’s Choice, Stone and Taxi), Getty Images Film, Getty Images Editorial and Hulton|Archive, as well as content from third-party providers, such as Digital Vision (a

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provider of stock photography), National Geographic and Time Life Pictures. These products and services are offered through our website, CD-ROMs, catalogs and our international distribution network.

CUSTOMERS

We serve a variety of customers in three major categories: advertising and design agencies, publishing and media companies and corporate communications departments. Due to the wide variety of customers and channels to and through which our products and services are marketed, as well as their dispersion across many geographic areas, the company is not dependent upon a single customer or a few customers, the loss of which would have a material adverse effect on the company.

Advertising and Design Agencies    For our advertising and design agency customers, we supply images that cover a wide variety of contemporary subjects including lifestyles, business, science, health and beauty, sports, transportation and travel. These customers usually have a commercial, advertising or editorial message they are trying to convey and, consequently, are typically looking for a specific conceptual image. Image quality and relevance are important factors in the customer’s decision. Advertising and design agency customers need to access imagery as part of their everyday working life.

Publishing and Media Companies    We supply images to a customer base of professional image users who are involved in the publication of newspapers, books and magazines, both online and in traditional media, as well as the production of commercial motion pictures, television advertisements and programming, documentaries and other editorial media. The imagery that is provided to these customers ranges from contemporary editorial imagery, to contemporary and archival moving imagery, or “film,” and still imagery covering major political, social and sporting events since the beginning of photography in the early nineteenth century. These customers are looking for imagery that conveys information to illustrate the story they are covering (such as a news, sports or celebrity event) and often require that the imagery be delivered during or immediately following the event.

Corporate Communications Departments    We offer a variety of still and moving imagery to corporate communications departments and other business users. These customers require imagery for a wide range of business communication materials for internal and external use, including brochures, employee communications, annual reports, newsletters, websites and presentations.

Sources and Availability of Content

For our customers requiring creative imagery, we have creative research and imagery teams in London, Los Angeles, Munich, New York, Paris and Seattle that analyze customer requests and buying behavior and perform research in key markets in order to target and source images. We have contractual relationships with contributing photographers to serve creative professionals, including highly respected, internationally renowned professional photographers representing a variety of styles, specialties and backgrounds. In many cases, we provide on-site art direction for our photographers, working with them on location around the world. We accept approximately 30,000 to 40,000 new images into our creative photography collections each year. All new images accepted into our collections are digitized, assigned keywords and posted on our website and are available for search, selection, license and download 24 hours a day, seven days a week. Because we accept imagery from a substantial number of contributors, including photographers and cinematographers, we do not rely on any single or small group of contributors to meet our content needs.

For customers seeking film footage, we maintain and license a growing library of commercially desirable cinematography covering a broad range of contemporary and archival subject matter. Our film collection represents imagery from hundreds of cinematographers and film producers, and is cataloged on computer for quick access and retrieval in film, tape and digital formats.

For our publishing and media customers, availability of imagery is time critical. Our success in this area is dependent on our ability to source imagery from news, sports and celebrity events as they occur and to make them immediately available to customers. To this end, we have production hubs in London, Los Angeles, New York and Sydney to which photographers can submit imagery at any time. To serve our publishing and media customers, we employ staff photographers and have contractual relationships with hundreds of additional photographers. We have identified, digitized and made available on our website, a core collection of archival imagery of interest to editorial customers. We identify upcoming events that will generate demand for particular archival images and we actively market the availability of those images to our editorial customers. We offer in-depth research services for our customers’ more extensive projects in addition to editorial and corporate assignment services, handling the special photo assignment needs of our editorial or corporate customers. We receive hundreds of digital editorial images per week from our photographers around the world, and make these available through a proprietary online subscription service and over the Internet. By using digital technologies, we are able to make new images available online within fifteen minutes of creation from major news, sports and celebrity events.

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In 2002, we expanded the number of images from third-party providers available to customers on our website. We believe that by offering a selection of the highest quality images from other providers of visual content, we enhance our ability to serve our customers and to generate additional sales with minimal incremental cost.

Marketing, Sales and Distribution

MARKETING

We reach our customers through diverse marketing campaigns including print ads, direct mail, e-mail communications, printed catalogs and our website. These campaigns aim to build awareness for the Getty Images brand, promote the latest imagery available on gettyimages.com and, in many cases, act as sales tools in the selection of image products for license. We also serve our international markets by producing localized marketing materials where appropriate. In 2002, we implemented a worldwide communication campaign to promote Getty Images as the premium brand that creates and distributes many types of imagery to a wide range of customers. The campaign channels all of our customers to the gettyimages.com website.

Online Marketing    Our website acts as a marketing tool as well as a sales tool, making the images of each collection available for research and selection online. For example, we often invite customers to view our latest creative photography in special “galleries” on our website. We also promote images available on CD-ROM and regularly provide a summary of the latest breaking stories in the news section of our website where customers can view, license and download available imagery.

Printed Catalogs and Direct Marketing    Catalogs, direct mail and e-mail communications are part of our integrated marketing campaigns aimed at gaining new customers and promoting our latest imagery to our existing customer base. In 2002, we began to shift our marketing strategy from an emphasis on printed catalogs to a focus on e-mail marketing and new forms of interactive communications. We also launched a magazine, called Taxi, which is designed to communicate the strength of the new Taxi image collection as well as to provide information for customers about visual trends around the world. In addition, we consolidated several catalogs into one Web Companion promoting our latest royalty-free imagery. We believe these forms are more cost-effective than printed catalogs, provide more opportunities for targeted marketing and better meet our customers’ needs.

Demonstration Reels    In addition to specific print advertising, e-mail and direct marketing, we market our film collections through demonstration reels sent directly to our existing and potential customers. These demonstration reels contain samples of available footage. In 2002, we undertook an effort to digitize our core film collection and upload it to our website in order to make the collection more readily available to customers for search and download via the Internet.

SALES AND DISTRIBUTION

We license our imagery through our broad international distribution network of company-operated offices and distributors in approximately 55 countries. We believe that control of our outlets results in more focused sales and marketing activities. A direct sales force and key accounts management team target advertising, publishing and communications companies, as well as other high volume users of images. Our direct sales force focuses on reaching buyers who are generally responsible for significant licenses of imagery. In order to assist our customers in using the images, our sales force includes technical support staff and training personnel who provide assistance to customers. These consultants have expertise in digital image applications, design tools and photo manipulation  methodologies.

We encourage our customers to take advantage of the comprehensive image search capabilities of our website and digital delivery of selected images. Over the past few years, the percentage of our business that originates on our website and is digitally delivered over the Internet to our customers has increased substantially. In 2002, virtually all still imagery was delivered to customers digitally. We believe the ability to search for, select, license and download images over the Internet offers our customers advantages in terms of convenience, speed and cost efficiency, and enables us to achieve greater economies of scale. We will continue to focus on digital delivery as the primary method of delivering images to our customers. Direct communication with our customers, however, remains a significant component of our sales strategy. Our sales representatives assist customers in finding the images they need and keep them informed about new products and services offered by the company. We also support and serve our customers who wish to receive our imagery through traditional analog means, which involves the physical distribution of imagery on duplicate film transparencies and tape. In many instances, we serve customers through a combination of e-commerce and more traditional methods of customer service.

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Product Rights    We maintain control of our products at all times. Customers may license the rights, on an exclusive or non-exclusive basis, to use single images, film clips or CD-ROM products containing multiple images. Customers may also license rights to our editorial images on a subscription basis. Ownership of the images never passes to the customer.

Licensing Methods    There are three primary types of imagery in our collections and three corresponding licensing methods:  1) rights-managed, including still and moving contemporary and archival imagery; 2) royalty-free, including still and moving imagery; and 3) annual subscription, encompassing editorial imagery only.

For rights-managed licensing, the price of the license is based on how the image will be used. The criteria used in establishing the price include geographical distribution, image size, license duration and circulation. For example, an image to be used as an eighth of a page photo in a brochure to be distributed in one city for three months will cost less to license than an image to be used in a global advertising campaign for a year that includes print advertising, billboards and point-of-purchase displays. For an additional fee, customers may also license exclusive rights to an image in a particular geography or industry for a prescribed period of time.

For royalty-free licensing, the price of the license is based on the size of the digital file, from standard resolution (generally one megabyte) to high resolution (generally 48 megabytes). Once the customer has licensed the image, that customer may use the image for any purpose without paying additional fees. Royalty-free images may be licensed on a single image basis or as part of a collection of images on a CD-ROM.

Subscription licensing is available only for editorial images. Under this licensing method, editorial customers pay an annual fee based on the number of images they expect to use over the next year. They may then download as many images as they need during the subscription period.

Operations and Technology

In 2001, we completed the first major steps in the implementation of an enterprise-wide initiative to integrate the company’s Web offerings and business processes within one website utilizing one set of back-office support systems. Our objective was two-fold. First, we wanted to enable customers to search, select, license and download all of Getty Images’ digital content (including photographs, film clips and illustrations) and services to manage, present, commission and license imagery from one location, gettyimages.com. Second, we wanted to consolidate sales order processing, customer database management, finance and accounting under one central set of back-office systems to support our website. These new systems span multiple operational activities, including customer interaction, transaction processing, order fulfillment and invoicing. In 2002, we continued the implementation with the launch of localized language websites that enable customers to search for and license imagery and related materials in United States (U.S.) English, U.K. English, French, German and Spanish and complete transactions in U.S. dollars, Euros and British pounds. In addition, we migrated the remainder of our stock photography and editorial collections to gettyimages.com.

The technology architecture supporting gettyimages.com employs a set of software applications to: 1) categorize digital content and embed appropriate keywords and search data (metadata); 2) search large information databases across languages and linguistic context; 3) present detailed information related to specific digital content elements; 4) manage online e-commerce transactions for the license of digital content; 5) manage invoice generation and accounts receivable from customers; and 6) track a broad range of intellectual property rights and permissions.

These services and systems use a combination of our proprietary technologies and commercially available licensed technologies. We focus our internal development efforts on creating and enhancing the specialized proprietary software that is unique to our business. We intend to continue to investigate, qualify and develop technology and internal systems that support key areas of our business to enhance the online and offline experience for our customers. In particular, we have implemented and continue to develop a flexible infrastructure that will facilitate the sale and distribution of third-party digital content through our online e-commerce systems.

Certain of our image search, image selection, rights management, customer interaction, order collection, fulfillment and back-office systems are proprietary. Our online platform architecture is primarily based on Microsoft technologies. These systems were designed to provide reliable e-commerce connectivity and responsive online customer interaction. Our systems infrastructure is hosted internally at multiple locations and externally at Cable & Wireless Internet Services. Both internal and external hosting centers provide 24-hour monitoring, power generators and limited back-up systems.

Competition

The market for visual content and related products and services is highly competitive. We believe that the principal competitive factors are: name recognition; company reputation; the quality, relevance and diversity of the images in a company’s collections; the

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quality of contributing photographers and cinematographers under contract with a company; effective use of developing technology; customer service; pricing; accessibility of imagery; distribution capability and speed of fulfillment. Our current or potential competitors include: other general visual content providers such as Comstock, Corbis Corporation, Photonica, Superstock and Zefa Visual Media; specialized visual content companies that are well established in their local, content or product-specific markets such as Reuters News Service, the Associated Press, Agence France Presse, Action Images plc, WireImage and Zuma Press; stock film footage businesses such as Corbis Motion; and commissioned photographers. There are also hundreds of small stock photography and film footage agencies and image content aggregators throughout the world.

Please see “Factors That May Affect the Business” below for more information about the competitive conditions in the visual content industry.

Intellectual Property

Most of the images licensed by us are obtained from independent photographers and cinematographers on an exclusive basis. Professional photographers and cinematographers prefer to retain ownership of their work. As a result, copyright to an image remains with the contributing photographer or cinematographer in most cases, while we obtain the exclusive right to market the image on their behalf for a period of time. A substantial portion of the editorial images, Hulton|Archive images and certain images in our other collections are owned by us or are in the public domain.

We also own numerous trademarks that are important to our business. Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained and they have not been found to have become generic. Registrations of trademarks generally can be renewed indefinitely as long as the trademarks are in use.

Please see “Factors That May Affect the Business — Our Right to Use the Getty Images Trademarks Is Subject to Forfeiture in The Event We Experience a Change of Control” below for more information about certain of our trademarks.

Factors That May Affect the Business

WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST EXISTING OR POTENTIAL COMPETITORS

The visual content industry is highly competitive. We compete directly with a number of large and small visual content companies, news-wire services, and commissioned photographers to provide imagery to businesses. We believe that the principal competitive factors in the visual content industry are: name recognition; company reputation; the quality, relevance and diversity of the images in a company’s collections; effective use of developing technology; customer service; pricing; accessibility of imagery; distribution capability and speed of fulfillment. Some of our existing and potential competitors may have or may develop resources superior to ours, or other such competitive advantages.

Our future performance also depends on our ability to provide timely and unique editorial content, and to review and refresh our creative collections in order to provide our customers with the most relevant content. If we fail to add relevant new imagery in a timely manner, customers requiring such content may use other visual content providers to obtain imagery.

OUR QUARTERLY FINANCIAL RESULTS AND STOCK PRICE MAY FLUCTUATE

Our revenues and operating results are expected to vary from quarter to quarter due to a number of factors, both within and outside of our control, including, but not limited to the following:

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Because of these risks and others, it is possible that some future quarterly results may be below or above the expectations of analysts and investors and our stock price may fluctuate.

THIRD-PARTY IMAGE PROVIDERS ARE IMPORTANT TO OUR BUSINESS

We have entered into commercial agreements with other businesses to host and license their imagery on the gettyimages.com website. These arrangements require resource and personnel commitments by Getty Images, limiting the number of third-party images we may host or integrate during a given period. Additionally, if there are problems with the relevancy, technical quality, or market and customer acceptance of this third-party imagery, our revenues and operating results may be adversely affected.

IMPAIRMENT OF THE VALUE OF SIGNIFICANT ASSETS COULD HAVE AN ADVERSE IMPACT ON OUR OPERATING RESULTS

Our operating results and earnings in future periods may be adversely affected as a result of impairments to the reported value of certain significant assets, the valuation of which requires management’s most difficult judgments as a result of the need to make estimates and assumptions about the effects of matters that are inherently uncertain.

Goodwill and Identifiable Intangible Assets    Goodwill is the excess of the purchase price and related costs over the fair value of net assets acquired in business combinations. Goodwill arising from business combinations prior to July 1, 2001 was amortized over the associated estimated useful lives, ranging from three to 30 years. Amortization of goodwill was $66.1 million and $101.0 million for 2001 and 2000, respectively. Effective January 1, 2002, the company adopted Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” This statement required us to cease amortization of goodwill and alternatively test the net goodwill balance for impairment annually and between annual tests in certain circumstances. When assessing impairment, the company must estimate the implied fair value of its goodwill. This fair value is based on a discounted cash flow model that involves significant assumptions and estimates based on management’s best judgments of current and future circumstances, including currently enacted tax laws, future risk free rates of return, and the company’s future financial performance. As circumstances change, it is reasonably possible that future goodwill impairment tests could result in a charge to earnings. Any impairment would be recognized as a loss on impairment of assets, which would be included in the calculation of income from operations. The net balance of goodwill at December 31, 2002 was $603.0 million.

Identifiable intangible assets are assets that do not have physical representation, but that arise from contractual or other legal rights or are capable of being separated or divided from the company and sold, transferred, licensed, rented or exchanged. For the company, these assets consist mostly of customer lists, covenants not to compete and trademarks, tradenames and copyrights. Identifiable intangible assets are generally valued based on discounted estimated future cash flows, which are inherently uncertain and therefore require management’s most difficult judgments. Should future cash flows associated with these assets not meet management’s current expectations, it is reasonably possible that the company would be required to accelerate the amortization, or write off the impaired portion, of the unamortized balance of such assets. Identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives (two to 10 years), which are determined in most cases based on contractual or other legal terms. The net balance of identifiable intangible assets at December 31, 2002 was $18.6 million.

Certain Long-Lived Assets    The useful lives of certain of the company’s long-lived assets, including capitalized image content costs and hardware and software (included within property and equipment in the Consolidated Balance Sheets), are based on the estimated period over which the assets are expected to provide benefit to the company. Should we determine at some point in the future that the useful lives of these assets are shorter than previously determined, the company would be required to accelerate the depreciation, or possibly write off the impaired portion, of the undepreciated balance of such assets.

The estimated useful lives of image content, ranging from generally four years for contemporary content to 40 years for archival content, are determined based on sales history. Historical sales may not be indicative of future sales, and therefore, these estimated lives are inherently uncertain and require management’s most difficult judgments. The balance of capitalized image content costs, net of accumulated depreciation, was $62.7 million at December 31, 2002.

The three-year estimated useful life of hardware and software is determined based on prior experience with related technology and the expected future utility of the assets to the company. As hardware and software providers’ future support of today’s technology and the future of technology in general are inherently uncertain, these estimated lives require management’s most difficult judgments. The balance of hardware and software, net of accumulated depreciation, was $42.9 million at December 31, 2002.

Deferred Income Taxes    Deferred income taxes, reflecting the impact of temporary differences between financial and tax reporting and of tax loss carryforwards, are based on currently enacted tax laws. Deferred tax assets are reduced by a valuation allowance if,

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based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are classified into net current and net non-current amounts, based on the balance sheet classification of the related asset or liability.

As of December 31, 2002, we had net deferred tax assets of $56.1 million, net of a valuation allowance of $17.5 million that was established in 2001 at $12.8 million and increased by $4.7 million in 2002. Approximately $4.4 million of the increase was associated with the exercise of employee stock options in the U.S., and $0.3 million was related to a capital loss that will likely not be recognized for tax purposes. While we generated taxable income from our primary U.S. operations in 2002, we had not consistently done so in prior years. It will be necessary to generate taxable income from our primary U.S. operations of approximately $153 million in order to utilize enough of the domestic tax loss carryforwards to realize the associated deferred tax asset. Furthermore, there may be significant limitations on the ability of the company to realize the tax benefits attributable to these domestic tax loss carryforwards in the event of a change in ownership.

During 2002, we implemented cost reduction programs designed to improve both U.S. and foreign levels of current and prospective taxable income and also implemented tax-planning strategies that increased U.S. taxable income. Management believes it is currently reasonable to estimate the impact of these actions on the results of near-term future periods and has computed the net deferred tax asset at December 31, 2002 accordingly. Although realization is not assured, management believes, based on its current estimates of near-term future taxable income for the company’s U.S. operations and tax-planning strategies, that it is more likely than not that the net deferred tax assets will be realized within a reasonable period of time and substantially prior to the expiration of the net operating loss carryforwards between 2018 and 2021. In the event that actual results differ from management’s current expectations, the valuation allowance could materially change, directly impacting our Consolidated Financial Statements. Management will reevaluate the valuation allowance at least annually, most likely early in the fourth quarter. This timing is appropriate, as it will coincide with completion of our tax filings for the prior year, updating of estimated results of operations for the current year, and preparation of the budget for the following year. If such evaluation indicates that we are able to utilize more of the deferred tax asset than the net balance, all or a portion of the valuation allowance will be credited to income tax expense or additional paid-in capital in the period that such a determination is made. If the evaluation indicates that we are unable to utilize all or a portion of the net deferred tax asset balance, a greater valuation allowance will be recorded and charged to income tax expense in the period of that determination, which could be in advance of the expiration of the loss carryforwards.

Allowance for Doubtful Accounts    The accounting policies and methodology used to estimate our allowance for doubtful accounts are based on historical losses as a percentage of sales, existing economic conditions, and specific account analysis of at-risk customers and distributors. Historical losses and existing economic conditions may not necessarily be indicative of future losses, and the impact of economic conditions on each of our customers is difficult to estimate, therefore, the allowance for doubtful accounts requires management’s most difficult judgments. Should future uncollectible amounts not reflect management’s current estimates, it is reasonably possible that we would be required to increase the allowance for doubtful accounts or write off specific uncollectible balances through bad debt expense included in selling, general and administrative expenses in the Consolidated Statements of Operations. The recorded investment in trade receivables, net of allowances for doubtful accounts, past due 90 days or more as of December 31, 2002 and 2001 was $10.0 million and $10.4 million, respectively.

SYSTEMS SECURITY RISKS AND CONCERNS MAY HARM OUR BUSINESS

A significant barrier to e-commerce and online communications is the secure transmission of confidential information over public networks. Developments in computer capabilities, viruses, or other events could result in compromises or breaches of our systems or those of other websites and networks, jeopardizing our proprietary and confidential information, or causing potentially serious interruptions in our services, sales or operations. We may be required to expend significant additional resources to protect against the threat of security breaches or to alleviate problems caused by such breaches. Additionally, any well-publicized compromises of our security system or the Internet may generally reduce our customers’ desire to transact business over the Internet.

WE MAY EXPERIENCE SYSTEM FAILURES AND SERVICE INTERRUPTIONS

A key component of our business and our growth strategy is the increased digitization of our imagery and the distribution of such imagery and related products and services over the Internet. As a result, our revenues are dependent on the ability of our customers to access our website. In the past, we have experienced infrequent system interruptions that made our website unavailable or prevented us from efficiently taking or fulfilling orders. While we have made improvements in this area, we cannot guarantee that we can prevent these interruptions in the future. Additionally, we have certain dependencies on third-party software and system providers for the processing and distribution of our imagery and related products. System failures or interruptions, whether as a result of our internally developed systems or those of the third party providers, will inconvenience our users, may result in negative publicity and may reduce the volume of images we license online and the attractiveness of our online products and services to our customers.

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We have focused significant resources and attention on the installation and development of enterprise systems for technology, business processes, sales and marketing systems, finance and royalty systems, customer interfaces, and other corporate administrative functions. We will need to continue upgrading these enterprise systems as well as our network infrastructure to accommodate increased traffic on our website, sales volume, and the processing of the resulting information. Without continued focus on the integration of and improvement to our enterprise systems and network infrastructure, we may face system interruptions, poor response times, diminished customer service, impaired quality and speed of order fulfillment, and delays in and potential problems with our financial reporting. We cannot project the precise rate or timing of any increases in traffic or sales volume on our website and, therefore, the integration, effectiveness, timing and cost of these upgrades are uncertain.

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. We do not have full redundancy for all of our computer and telecommunications facilities.

OUR ABILITY TO SERVICE OUR INDEBTEDNESS WILL DEPEND ON OUR FUTURE PERFORMANCE

Our level of indebtedness may pose substantial risks to our security holders, including the risk that we may not be able to generate sufficient cash flow to satisfy our obligations under our indebtedness or to meet our capital requirements. A portion of our cash flow will be dedicated to the payment of principal and interest on any amounts outstanding under our senior credit facility and on our 5.0% convertible subordinated notes due in 2007. Our ability to service our indebtedness will depend on our future performance, which will be affected by general economic conditions and financial, business and other factors, many of which are beyond our  control.

OUR INDEBTEDNESS COULD REDUCE OUR FLEXIBILITY

Restrictive covenants in our senior credit facility may limit our flexibility in planning for, or reacting to, changes in our business and competitive environment. While we currently anticipate that our available sources of liquidity will be sufficient to meet our needs for working capital and capital expenditures for at least the next 12 months, changes in U.S. and global capital markets and economies, including significant fluctuations in interest rates and the price of our equity securities, or fluctuations in the results of our operations may impede our access to, or increase the cost of, external financing for our operations and any acquisitions.

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.

The Getty Group collectively owned approximately 20% of the outstanding shares of our common stock as of December 31, 2002, and comprises the following persons and entities: Getty Investments L.L.C.; The October 1993 Trust; The JD Klein Family Settlement; Mr. Mark Getty, our Executive Chairman; and Mr. Jonathan Klein, our Chief Executive Officer.

The Torrance Group collectively owned approximately 6% of the outstanding shares of our common stock as of December 31, 2002, and comprises the following persons and entities: PDI, L.L.C.; Mr. Mark Torrance; Ms. Wade Ballinger (the former wife of Mr. Torrance); and certain of their family members.

As a result of their share ownership, the Getty Group and the Torrance Group each have significant influence over all matters requiring approval of our stockholders, including the election of directors and the approval of business combinations. The substantial percentage of our stock held by the Getty Group and the Torrance Group could also 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 common stock, certain members of the Getty Group and the Torrance Group have management and/or director roles within our company that increase their influence over us.

WE MAY NOT SUCCEED IN ESTABLISHING THE “GETTY IMAGES” BRAND

We have consolidated our company’s image collections and the associated Web-based offerings, technology platforms and business practices under the Getty Images brand name. We believe that brand positioning is important to our future success. Securing the Getty Images trademarks is an important part of our branding strategy, and barriers arising from third parties or trademark officials in various countries may hinder our effort to secure trademarks in key markets or trademark classes.

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OUR RIGHT TO USE THE “GETTY IMAGES” TRADEMARKS IS SUBJECT TO FORFEITURE 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 the above 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. (Getty Investments) has the right to call for an assignment to it, for a nominal sum, of 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.

Getty Investments owns approximately 18% of the outstanding shares of our common stock as of December 31, 2002. Mr. Mark Getty, our Executive Chairman serves as the Chairman of the Board of Directors of Getty Investments, while Mr. Jonathan Klein, our Chief Executive Officer, and Mr. Andrew Garb, a member of our Board of Directors, serve on the Board of Directors of Getty Investments.

CERTAIN PROVISIONS OF OUR CORPORATE DOCUMENTS AND DELAWARE CORPORATE LAW MAY DETER A THIRD PARTY FROM ACQUIRING OUR COMPANY

Our Board of Directors has the authority to issue up to 5 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 our company. 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 and the Torrance Group, along with certain provisions of Delaware law, may have the effect of delaying, deterring or preventing a takeover of our company.

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 regulations applicable to businesses generally, as well as laws and regulations directly applicable to e-commerce. Although existing laws and regulations affecting e-commerce are not unduly burdensome, state, federal and foreign governments have and may continue to adopt legislation regulating the Internet and e-commerce. Such legislation or regulation could both increase our cost of doing business and impede the growth of the Internet while decreasing its acceptance or effectiveness as a communications and commerce medium. If a decline in the use of the Internet occurs, existing or potential customers may decide not to license or use our online products and services.

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

Relationship With Our Employees

At December 31, 2002, we had 1,649 employees. Of these, 855 were located in North America, 652 in Europe and 142 in the rest of the world. We believe that we have satisfactory relations with our employees.

Governmental Regulation

All of our facilities, including those in the U.S., are subject to environmental laws and regulations. Compliance with these provisions has not had, and we do not expect such compliance to have, any material adverse effect upon our capital expenditures, earnings or competitive position.

FINANCIAL INFORMATION ABOUT SEGMENTS AND GEOGRAPHIC AREAS

The information required herein is contained in Note 12 to the Consolidated Financial Statements “Business Segments and Geographic Areas” in Part IV, Item 15(A) of this Annual Report on Form 10-K and is incorporated by reference herein.

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AVAILABLE INFORMATION

We file reports with the Securities and Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. We maintain an Internet site, http://www.gettyimages.com, where we make these reports and related amendments available free of charge as soon as reasonably practicable after we electronically file such material with the SEC.

ITEM 2. PROPERTIES

Our principal executive offices and worldwide headquarters are located in Seattle, Washington. We also have a significant presence in London, England and New York City, New York. All facilities data included in this Item is as of March 1, 2003.

In Seattle, we lease approximately 209,822 square feet of office space under three leases. Leases covering approximately 29,600 square feet and 180,300 square feet expire in September of 2004 and August of 2013, respectively. Approximately 14,200 square feet of the total leased space has been identified as excess, of which 7,100 square feet is currently subleased.

In London, we lease approximately 68,900 square feet of office space under five leases. Leases covering approximately 1,500 square feet, 23,200 square feet, 9,800 square feet, 14,400 square feet and 20,000 square feet expire in June of 2004, October of 2010, March of 2014, October of 2015 and September of 2016, respectively.

In New York, we lease approximately 246,500 square feet of office space under three leases, which expire in March of 2015. Approximately 145,800 square feet of the total leased space has been identified as excess, all of which is currently subleased.

In addition, we lease office space for our wholly owned offices throughout the world in key business centers.

Our existing facilities are adequate and appropriate for our operations.

ITEM 3. LEGAL PROCEEDINGS

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 infringement of the intellectual property rights of third parties, such as the failure to secure model and property releases. Claims may also include those brought by photographers and cinematographers relating to our handling of images submitted to us or the companies we have acquired. We have accrued a liability for the estimated costs of settlement or adjudication of 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 Statements.

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

No matter was submitted to a vote of the company’s stockholders, through solicitation of proxies or otherwise, during the fourth quarter of fiscal year 2002.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock was traded on the Nasdaq National Market (Nasdaq) under the symbol “GETY” through November 4, 2002. Beginning November 5, 2002, our common stock has been traded on the New York Stock Exchange (NYSE) under the symbol “GYI.” The following table sets forth, for each of the quarterly periods indicated, the high and low sale prices of our common stock as reported on the Nasdaq and the NYSE, as applicable: