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"New Frontier Media reported solid financial results as compared to the same period last year. We continue to remain focused on strengthening our business and distinguishing ourselves from the competition in this market," said Michael Weiner, chief executive officer of New Frontier Media, Inc. "We expect the fiscal year 2010 outlook for the Transactional TV segment to be positive. We generated nearly $1 million of revenue from new international distribution during the second half of fiscal year 2009 and we added three million new video-on-demand customers domestically in February 2009. We expect to realize a full year benefit from this new distribution in fiscal year 2010. We have also had success adding additional hours of video-on-demand content on existing customer platforms, and we have replaced our competitors' pay-per-view channels in certain geographic markets. We are focused on continuing to distribute the top performing content through our cable and satellite customers. We expect our overall efforts will result in meaningful revenue growth for the Transactional TV segment in fiscal year 2010."
"We are also expecting improved performance from the Film Production segment in fiscal year 2010. We expect to deliver the remaining titles from our third installment of a thirteen episode series in the first quarter of fiscal year 2010. Additionally, we have several other initiatives that should contribute revenue growth to the segment, including a new producer-for-hire agreement, the distribution of our mainstream content to DVD retail businesses and the distribution of mainstream content to video-on-demand homes." Mr. Weiner continued, "We analyzed the Direct-to-Consumer set-top box and certain other new business development activities during the fourth quarter of fiscal year 2009. Based on the analysis, we elected to stream-line those operations in order to adjust to the current economic environment. Overall, we are optimistic about fiscal year 2010 and expect that New Frontier Media will grow its revenue as well as net income and cash flows from operations."
Fourth Fiscal Quarter Financial Highlights: March 31, 2009 Compared to March 31, 2008
-- Revenue was $13.6 million, including $0.9 million of revenue as a result
of the settlement described below, as compared to $12.6 million.
-- Transactional TV segment revenue was $10.7 million in the current
quarter. Pay-per-view revenue was $4.4 million as compared to $5.3
million in the same prior year quarter, and we believe the decline
is due to the continued economic downturn and corresponding
reduction in consumer buys. The pay-per-view revenue decline was
offset by an increase in video-on-demand revenue primarily from a
$0.9 million settlement of historical balances with a domestic cable
customer.
-- Film Production segment revenue increased to $2.6 million as
compared to $1.4 million primarily due to the delivery of owned
content to premium cable channel customers including the partial
delivery of the third installment of a thirteen episode series.
-- Direct-to-Consumer segment revenue declined by approximately $0.2
million due to a reduction in website traffic which we also believe
is primarily related to the economic downturn.
-- Cost of sales increased to $4.6 million from $3.6 million primarily due
to:
-- an increase of $0.3 million from the Transactional TV segment due to
higher transport costs to support additional video-on-demand
distribution, higher transponder costs to support additional
pay-per-view channels and higher amortization costs from
distributing higher quality content;
-- an increase in the Film Production segment's film cost
amortization related to the increase in owned content revenue; and
-- an increase of $0.3 million from the Direct-to-Consumer
segment's set-top box test business model which was
restructured at the end of the current quarter.
-- Operating expenses were $7.0 million as compared to $6.1 million and
were impacted by:
-- an increase in Transactional TV segment promotion and advertising
expense related to new sales initiatives;
-- $1.2 million in restructuring and intangible asset impairment
charges primarily associated with the set-top-box and other
initiatives within the Direct-to-Consumer segment; and
-- a $0.7 million decline in Corporate Administration costs primarily
due to lower compensation expenses compared to the same prior year
quarter.
-- Net income for the quarter was $1.2 million, or $0.06 per share, as
compared to $1.9 million, or $0.08 per share, in the same prior year
quarter.
Full Year Results
For the fiscal year ended March 31, 2009, net sales were $52.7 million as compared to $55.9 million in the prior fiscal year. The Company reported a net loss for fiscal year 2009 of $5.2 million, or $0.24 per share, compared to net income of $8.7 million, or $0.36 per share, in the prior fiscal year. The fiscal year 2009 results included approximately $12.4 million of goodwill, asset impairment and restructuring charges as compared to $1.2 million in fiscal year 2008. Cash flow from operations in fiscal year 2009 increased to $8.5 million from $8.2 million in prior fiscal year.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures as defined in Item 10 of Regulation S-K, including EBITDA and Adjusted EBITDA on a consolidated basis for the quarter and fiscal year ended March 31, 2009 and 2008. The Company believes these measures provide useful information to management and to investors; however, these non-GAAP measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. A reconciliation of EBITDA and Adjusted EBITDA as compared to the most directly comparable GAAP financial measure, net income (loss), is presented in a reconciliation table that follows our presentation of Consolidated Operating Results below. EBITDA is calculated as net income (loss) plus depreciation, amortization, and income taxes, plus or minus other income (expense); and Adjusted EBITDA is calculated as EBITDA less cash paid for content, plus goodwill, asset impairment and restructuring charges.
Conference Call Information
New Frontier Media, Inc. will be conducting its conference call and web cast to discuss earnings today at 11 a.m. Eastern Time. The participant phone number for the conference call is (888) 549-7880. To participate in the web cast please log onto www.noof.com and click on "Investor Relations" and then "Calendar of Events". A replay of the conference call will be available for seven days beginning after 1 p.m. Eastern Time on June 11, 2009 at (800) 406-7325, access code 4091972. The replay will also be archived for twelve months on the corporate web site at www.noof.com. This press release can be found on the company's corporate web site, www.noof.com, under "Investor Relations/News Releases".
Cautionary Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements are based on current expectations, estimates and projections made by management. These forward-looking statements are covered by the safe harbor provisions for forward-looking statements. Words such as "anticipates", "expects", "intends", "plans", "believes'', "seeks", "estimates", or variations of such words are intended to identify such forward-looking statements. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by any forward-looking statements. All forward-looking statements made in this press release are made as of the date hereof, and the Company assumes no obligation to update the forward-looking statements included in this news release whether as a result of new information, future events, or otherwise. Please refer to the Company's most recent Form 10-K and other filings with the Securities and Exchange Commission ("SEC") for additional information regarding risks and uncertainties, including, but not limited to, the risk factors listed from time to time in such SEC reports. Copies of these filings are available through the SEC's electronic data gathering analysis and retrieval (EDGAR) system at www.sec.gov.
ABOUT NEW FRONTIER MEDIA, INC.
New Frontier Media, Inc. is a leading producer and distributor of branded television networks and on-demand programming. The Company delivers nine full-time transactional adult-themed pay-per-view networks to cable and satellite operators across the United States. These services reach over 190 million network homes. Additionally, the Company is a leading provider of content to video-on-demand platforms on cable and satellite. The Company's programming originates at New Frontier Media's state of the art digital broadcast center in Boulder, Colorado. The Company owns thousands of hours of digital content and partners with movie studios to bring together a variety of transactional adult entertainment available today.
New Frontier Media's Film Production segment produces original motion pictures that are distributed in the U.S. on premium movie channels, such as Cinemax(R) and Showtime(R), and internationally on similar services. The Film Production segment also develops and produces original event programming that is widely distributed on satellite and cable pay-per-view. This segment also represents the work of a full range of independent film producers in markets around of the globe.
For more information about New Frontier Media, Inc. contact Grant Williams, Chief Financial Officer, at (303) 444-0900, extension 2185, and please visit our web site at www.noof.com.
Consolidated Operating Results
(in thousands, except per share amounts)
(Unaudited)
Quarter Ended Year Ended
March 31, March 31,
------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
(Unaudited)
Net sales $13,599 $12,620 $52,654 $55,911
Cost of sales 4,582 3,558 17,060 17,686
----- ----- ------ ------
Gross margin 9,017 9,062 35,594 38,225
Operating expenses excluding
impairment and restructuring
charges 5,718 6,128 26,171 23,987
Goodwill, asset impairment
and restructuring charges 1,232 9 12,433 1,150
----- ---- ------ -----
Total operating expenses 6,950 6,137 38,604 25,137
----- ----- ------ ------
Operating income (loss) 2,067 2,925 (3,010) 13,088
Other income (expense) (49) 91 418 651
--- --- --- ---
Income (loss) before
provision for income taxes 2,018 3,016 (2,592) 13,739
Provision for income taxes (827) (1,130) (2,596) (5,079)
---- ------ ------ ------
Net income (loss) $1,191 $1,886 $(5,188) $8,660
====== ====== ======= ======
Basic income (loss) per share $0.06 $0.08 $(0.24) $0.36
===== ===== ====== =====
Diluted income (loss) per
share $0.06 $0.08 $(0.24) $0.36
===== ===== ====== =====
Dividends declared per
common share $- $0.13 $- $0.50
=== ===== === =====
Average outstanding shares
of common stock 19,921 23,782 22,039 24,020
====== ====== ====== ======
Common stock and common
stock equivalents 19,921 23,839 22,039 24,148
====== ====== ====== ======
EBITDA and Adjusted EBITDA
(Unaudited) (Unaudited)
Quarter Ended Year Ended
March 31, March 31,
------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income (Loss) $1,191 $1,886 $(5,188) $8,660
Adjustments:
Other income (expense) 49 (91) (418) (651)
Provision for income taxes 827 1,130 2,596 5,079
Depreciation and
amortization 2,524 1,766 9,102 8,285
----- ----- ----- -----
EBITDA 4,591 4,691 6,092 21,373
Cash paid for content(1) (1,279) (2,139) (6,933) (8,646)
Goodwill, asset impairment
and restructuring charges 1,232 9 12,433 1,150
----- ---- ------ -----
Adjusted EBITDA $4,544 $2,561 $11,592 $13,877
====== ====== ======= =======
(1) Amount includes total cash paid for prepaid distribution rights
and capitalized film costs.
Consolidated Balance Sheets
(in thousands)
March 31, 2009 March 31, 2008
-------------- --------------
Assets (Unaudited)
Current assets:
Cash and cash
equivalents $16,049 $18,325
Restricted cash 16 38
Marketable securities 90 930
Accounts receivable, net 10,242 13,873
Taxes receivable 683 -
Deferred tax assets 358 620
Prepaid and other
assets 1,652 1,899
----- -----
Total current assets 29,090 35,685
------ ------
Equipment and
furniture, net 5,573 4,774
Prepaid distribution
rights, net 10,933 10,381
Recoupable costs and
producer advances, net 4,999 2,448
Film costs, net 6,672 7,626
Goodwill 8,599 18,608
Other identifiable
intangible assets, net 1,630 3,120
Other assets 1,043 1,019
----- -----
Total assets $68,539 $83,661
======= =======
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable $2,144 $2,937
Dividend payable - 2,982
Taxes payable - 760
Producers payable 950 1,012
Deferred revenue 737 984
Accrued compensation 1,188 1,817
Deferred producer
liabilities 1,970 2,862
Short-term debt 4,000 -
Accrued other
liabilities 2,112 2,257
----- -----
Total current liabilities 13,101 15,611
------ ------
Deferred tax liabilities 903 795
Taxes payable 242 216
Other long-term liabilities 718 1,002
--- -----
Total liabilities 14,964 17,624
------ ------
Commitments and contingencies
Shareholders' equity:
Common stock 2 2
Additional paid-in
capital 54,702 61,854
Retained earnings
(accumulated deficit) (997) 4,191
Accumulated other
comprehensive loss (132) (10)
---- ---
Total shareholders' equity 53,575 66,037
------ ------
Total liabilities and
shareholders' equity $68,539 $83,661
======= =======
Consolidated Statements of Cash Flows
(In thousands)
Year Ended March 31,
-----------------
2009 2008
---- ----
Cash flows from
operating activities: (Unaudited)
Net income (loss) $(5,188) $8,660
Adjustments to reconcile
net income (loss)
to net cash provided
by operating
activities:
Depreciation and
amortization 9,102 8,285
Tax benefit from
option/warrant
exercises - 227
Share-based
compensation 902 906
Deferred taxes 212 (288)
Charge for goodwill
impairment 10,009 -
Charge for asset
impairments other
than goodwill 2,235 1,150
Reversal of
uncertain tax
positions (429) -
Reversal of interest
expense for
uncertain tax
position (429) -
Changes in operating assets
and liabilities
Accounts receivable 3,631 (1,624)
Accounts payable (458) 694
Prepaid
distribution
rights (4,171) (4,553)
Capitalized film
costs (2,762) (4,093)
Deferred revenue (247) 95
Producers payable (62) (37)
Taxes receivable
and payable, net 182 237
Accrued
compensation (629) (1,481)
Recoupable costs
and producer
advances, net (2,751) (1,360)
Other assets and
liabilities, net (642) 1,366
----- -----
Net cash provided by
operating activities 8,505 8,184
----- -----
Cash flows from investing
activities:
Purchase of marketable
securities (2,011) (2,828)
Redemption of marketable
securities 2,846 11,201
Purchases of equipment and
furniture (2,700) (2,058)
Purchases of
intangible assets (810) (400)
Payment of related
party note arising
from business
acquisition (21) (626)
------ -----
Net cash
provided by
(used in)
investing
activities (2,696) 5,289
------ -----
Cash flows from financing
activities:
Purchases of common
stock (9,058) (3,874)
Payment of dividends (2,982) (9,023)
Proceeds from line
of credit 4,000 -
Proceeds from stock
option and warrant
exercises - 511
Excess tax shortfall
from option/warrant
exercises - (107)
------ -------
Net cash used in
financing
activities (8,040) (12,493)
------ -------
Net increase (decrease) in
cash and cash equivalents (2,231) 980
Effect of exchange
rate changes on cash
and cash equivalents (45) -
Cash and cash
equivalents, beginning
of period 18,325 17,345
------- -------
Cash and cash
equivalents, end of
period $16,049 $18,325
======= =======
Segment Summary Data (1)
(In millions)
(Unaudited) (Unaudited)
Quarter Ended Year Ended
March 31, March 31,
------------- ------------
2009 2008 % change 2009 2008 % change
---- ---- -------- ---- ---- --------
Net sales
Transactional TV $10.7 $10.7 0% $42.6 $41.0 4%
Film Production 2.6 1.4 86% 8.6 13.1 -34%
Direct-to-Consumer 0.3 0.5 -40% 1.5 1.8 -17%
--- --- --- ---
Total net sales 13.6 12.6 8% 52.7 55.9 -6%
---- ---- ---- ----
Cost of sales
Transactional TV(2) 3.0 2.7 11% 11.5 11.0 5%
Film Production 1.1 0.6 83% 3.6 5.9 -39%
Direct-to-Consumer(2) 0.5 0.2 # 2.0 0.8 #
--- --- --- ---
Total cost of sales 4.6 3.6 28% 17.1 17.7 -3%
--- --- ---- ----
Operating expenses
Transactional TV 2.3 2.0 15% 9.5 8.6 10%
Film Production(3) 1.2 1.1 9% 15.9 5.0 #
Direct-to-Consumer(4) 1.7 0.5 # 3.3 1.2 #
Corporate
Administration 1.8 2.5 -28% 9.9 10.4 -5%
--- --- --- ----
Total operating
expenses 7.0 6.1 15% 38.6 25.1 54%
--- --- ---- ----
Operating income (loss)
Transactional TV 5.4 6.1 -11% 21.6 21.4 1%
Film Production 0.3 (0.3) # (10.9) 2.2 #
Direct-to-Consumer (1.9) (0.3) # (3.8) (0.2) #
Corporate
Administration (1.8) (2.5) 28% (9.9) (10.4) 5%
---- ---- ---- -----
Total operating
income (loss) $2.1 $2.9 -28% $(3.0) $13.1 #
==== ==== ===== =====
(1) Amounts in this schedule may not sum due to rounding.
(2) The Company has reclassified certain prior year prepaid distribution
rights amortization from the Transactional TV segment to the
Direct-to-Consumer segment to conform with the current period
presentation.
(3) The fiscal year ended March 31, 2009 operating expenses include a
$10.0 million goodwill impairment charge and a $1.1 million film cost
impairment charge. The fiscal year ended March 31, 2008 operating
expenses include a $0.7 million film cost impairment charge.
(4) The quarter and fiscal year ended March 31, 2009 operating expenses
include a $0.9 million intangible asset impairment charge and a $0.2
million restructuring charge.
# Represents an increase or decrease in excess of 100%.
Supplemental Revenue Data (1)
(In millions)
(Unaudited) (Unaudited)
Quarter Ended Year Ended
March 31, March 31,
------------ ----------
2009 2008 % change 2009 2008 % change
---- ---- -------- ---- ---- --------
Transactional TV(2)
VOD $6.1 $5.3 15% $22.2 $18.9 17%
PPV 4.4 5.3 -17% 19.5 20.8 -6%
C-Band and other 0.2 0.2 0% 0.8 1.3 -38%
--- --- --- ---
Total $10.7 $10.7 0% $42.6 $41.0 4%
===== ===== ===== =====
Film Production(3)
Owned content $2.1 $1.1 91% $6.7 $8.1 -17%
Repped content 0.3 0.3 0% 1.3 2.0 -35%
Other 0.1 0.1 0% 0.5 2.9 -83%
--- --- --- ---
Total $2.6 $1.4 86% $8.6 $13.1 -34%
==== ==== ==== =====
Direct-to-Consumer
Net membership $0.3 $0.4 -25% $1.3 $1.4 -7%
Other - 0.1 -100% 0.2 0.4 -50%
- --- --- ---
Total $0.3 $0.5 -40% $1.5 $1.8 -17%
==== ==== ==== ====
(1) Amounts in this schedule may not sum due to rounding.
(2) Prior year net revenue from advertising has been reclassified from PPV
to C-Band and other revenue to conform with the current period
presentation.
(3) Other revenue was previously classified within owned content revenue
and has been reclassified to conform with the current period presentation.
SOURCE New Frontier Media, Inc.
http://www.noof.com
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