- Second quarter 2009 net sales grew 8% compared to prior year quarter -
- Transactional TV segment delivered 19% quarterly VOD growth -
- International expansion initiatives providing additional opportunities -
- Generated strong cash flows from operations of $6 million in first half of fiscal 2009 -
'Our strong balance sheet with cash and investments of
Mr. Weiner continued, 'For the past few years we have been leveraging our expertise in our core business by broadening our content offerings. In the Film Production segment, we have begun production on the third season of a thirteen-episode series with a premium cable channel. We are also negotiating a new producer-for-hire agreement and are optimistic we will begin production for that film in the fourth fiscal quarter. These deals along with our recent entry into the mainstream DVD retail business should help drive long-term revenue growth for the Film Production segment. With respect to our IPTV project, we expect to launch key marketing initiatives in the third quarter of fiscal 2009 that will play an important role in calculating additional investment in this space. Looking ahead, we believe we have the resources in place to continue to be a leader in providing branded content to cable and satellite platforms and to expand our reach into promising new markets.'
Second Fiscal Quarter Financial Highlights:
-- Net sales grew to $13.4 million as compared to $12.4 million.
-- Transactional TV segment revenue grew to $10.8 million, increasing
by approximately $0.8 million primarily from improved VOD
performance on several of the top 10 largest cable MSOs in the U.S.
The increase in revenue was partially offset by a $0.3 million
decline from the termination of the C-Band services in the third
quarter of fiscal year 2008.
-- Film Production segment revenue grew to $2.2 million compared to
$2.0 million, reflecting an increase in owned content revenue of
approximately $0.3 million primarily from the delivery of seven
titles from a thirteen episode series to a premium cable channel
customer. This increase was partially offset by a decline of
$0.2 million in repped content revenue related to a softer global
independent film market.
-- Direct-to-Consumer segment revenue was $0.4 million for both
periods.
-- Cost of sales increased to $4.4 million from $3.5 million, primarily
due to additional expenses associated with the set-top box initiative
and an increase in the film cost amortization within the Film
Production segment. The Transactional TV segment gross margin
percentage of 73% was consistent with the same prior year period.
-- Operating expenses increased to $6.8 million as compared to
$5.7 million due to higher advertising and promotion costs within the
Transactional TV segment, higher consultant advisory fees within the
Corporate Administration segment, and from the set-top box initiative.
-- Net income was $1.3 million, or $0.06 per diluted share, as compared to
$2.1 million, or $0.09 per diluted share.
-- Cash flow from operations grew to $1.5 million as compared to cash used
in operations of $0.2 million. The prior year quarter results included
$2.1 million of cash distributions related to a producer-for-hire
production.
For the six months ended
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 three and six month periods ended
Conference Call Information
New Frontier Media, Inc. will be conducting its conference call and web
cast to discuss earnings today at
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 http://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
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 exciting original event programming that is widely distributed on satellite and cable pay-per-view. Through the Lightning Entertainment(R) Group label, this segment also represents the work of a full range of independent U.S. film producers in markets around of the globe.
For more information about New Frontier Media, Inc. contact
Consolidated Operating Results
(in thousands, except per share amounts)
(Unaudited) (Unaudited)
Quarter Ended Six Months Ended
September 30, September 30,
2008 2007 2008 2007
Net sales $13,375 $12,430 $26,436 $25,370
Cost of sales 4,429 3,459 8,358 7,256
Gross margin 8,946 8,971 18,078 18,114
Operating expenses 6,800 5,719 13,946 12,723
Operating income 2,146 3,252 4,132 5,391
Other income 9 149 31 385
Income before provision for income
taxes 2,155 3,401 4,163 5,776
Provision for income taxes (860) (1,256) (1,689) (2,134)
Net income $1,295 $2,145 $2,474 $3,642
Basic income per share $0.06 $0.09 $0.11 $0.15
Diluted income per share $0.06 $0.09 $0.11 $0.15
Dividends declared per common share $- $0.13 $- $0.25
Average outstanding shares of common
stock 23,202 24,120 23,445 24,232
Common stock and common stock
equivalents 23,216 24,225 23,474 24,424
EBITDA and Adjusted EBITDA
(Unaudited) (Unaudited)
Quarter Ended Six Months Ended
September 30, September 30,
2008 2007 2008 2007
Net Income $1,295 $2,145 $2,474 $3,642
Adjustments:
Other income (9) (149) (31) (385)
Provision for income taxes 860 1,256 1,689 2,134
Depreciation and amortization 2,396 1,715 4,575 3,611
EBITDA 4,542 4,967 8,707 9,002
Cash paid for content(1) (2,282) (2,196) (3,671) (4,540)
Adjusted EBITDA $2,260 $2,771 $5,036 $4,462
(1) Amount includes total cash paid for prepaid distribution rights and
capitalized film costs.
Consolidated Balance Sheets
(in thousands)
September 30, March 31,
2008 2008
Assets (Unaudited)
Current assets:
Cash and cash equivalents $13,544 $18,325
Restricted cash 109 38
Marketable securities 1,474 930
Accounts receivable, net 11,193 13,873
Deferred tax asset 601 620
Prepaid and other assets 1,384 1,899
Total current assets 28,305 35,685
Equipment and furniture, net 6,096 4,861
Prepaid distribution rights, net 11,101 10,381
Recoupable costs and producer advances 3,883 2,448
Film costs, net 7,383 7,626
Goodwill 18,608 18,608
Other identifiable intangible assets, net 2,983 3,033
Other assets 1,040 1,019
Total assets $79,399 $83,661
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $2,358 $2,937
Dividend payable - 2,982
Taxes payable 1,944 760
Producers payable 957 1,012
Deferred revenue 1,257 984
Accrued compensation 1,448 1,817
Deferred producer liabilities 2,009 2,862
Accrued liabilities and other 3,068 2,257
Total current liabilities 13,041 15,611
Deferred tax liability 677 795
Taxes payable 216 216
Other long-term liabilities 771 1,002
Total liabilities 14,705 17,624
Commitments and contingencies
Shareholders' equity:
Common stock 2 2
Additional paid-in capital 58,088 61,854
Retained earnings 6,665 4,191
Accumulated other comprehensive loss (61) (10)
Total shareholders' equity 64,694 66,037
Total liabilities and shareholders' equity $79,399 $83,661
Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Six Months Ended
September 30,
2008 2007
Cash flows from operating activities:
Net income $2,474 $3,642
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 4,575 3,611
Tax benefit from option/warrant exercises - 167
Share-based compensation 537 563
Deferred tax asset and liability, net (99) (508)
Charge for asset disposition and impairment 65 363
Changes in operating assets and liabilities
Accounts receivable 2,680 987
Accounts payable (263) 195
Prepaid distribution rights (2,504) (2,388)
Capitalized film costs (1,167) (2,152)
Deferred costs - (2,106)
Deferred revenue 273 242
Producers payable (55) (411)
Taxes receivable and payable 1,184 275
Accrued compensation (369) (1,547)
Other assets and liabilities (1,347) (45)
Net cash provided by
operating activities 5,984 888
Cash flows from investing activities:
Purchase of investments available-for-sale (1,730) (2,671)
Redemption of investments available-for-sale 1,184 7,532
Purchase of equipment and furniture (2,222) (1,160)
Purchase of intangible assets (688) -
Payment of related party note arising
from business acquisition (21) (555)
Net cash (used in) provided
by investing activities (3,477) 3,146
Cash flows from financing activities:
Proceeds from exercise of stock
options/warrants - 512
Purchase of common stock (4,303) (3,618)
Payment of dividend (2,982) (6,042)
Excess tax benefit from
option/warrant exercise - (26)
Net cash used in
financing activities (7,285) (9,174)
Net decrease in cash and cash equivalents (4,778) (5,140)
Effect of exchange rate changes on
cash and cash equivalents (3) -
Cash and cash equivalents,
beginning of period 18,325 17,345
Cash and cash equivalents, end of period $13,544 $12,205
Segment Summary Data (1)
(In millions)
(Unaudited) (Unaudited)
Quarter Ended Six Months Ended
September 30, September 30,
2008 2007 %change 2008 2007 %change
Net sales
Transactional TV $10.8 $10.0 8% $21.3 $20.4 4%
Film Production 2.2 2.0 10% 4.2 4.1 2%
Direct-to-Consumer 0.4 0.4 0% 0.9 0.9 0%
Total net sales 13.4 12.4 8% 26.4 25.4 4%
Cost of sales
Transactional TV(2) 2.9 2.7 7% 5.5 5.5 0%
Film Production 1.0 0.5 # 1.9 1.3 46%
Direct-to-Consumer(2) 0.5 0.2 # 0.9 0.4 #
Total cost of sales 4.4 3.5 26% 8.4 7.3 15%
Operating expenses
Transactional TV 2.4 2.1 14% 4.8 4.6 4%
Film Production 1.1 1.0 10% 2.4 2.5 -4%
Direct-to-Consumer 0.5 0.2 # 1.1 0.4 #
Corporate Administration 2.7 2.4 13% 5.6 5.2 8%
Total operating expenses 6.8 5.7 19% 13.9 12.7 9%
Operating income (loss)
Transactional TV 5.5 5.1 8% 11.0 10.2 8%
Film Production - 0.4 # - 0.3 #
Direct-to-Consumer (0.7) 0.1 # (1.2) 0.1 #
Corporate Administration (2.7) (2.4) -13% (5.6) (5.2) -8%
Total operating income $2.1 $3.3 -36% $4.1 $5.4 -24%
(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.
# Represents an increase or decrease in excess of 100%.
Supplemental Revenue Data (1)
(In millions)
(Unaudited) (Unaudited)
Quarter Ended Six Months Ended
September 30, September 30,
2008 2007 %change 2008 2007 %change
Transactional TV(2)
VOD $5.6 $4.7 19% $10.8 $9.3 16%
PPV 5.0 4.9 2% 10.0 10.2 -2%
C-Band and other 0.2 0.4 -50% 0.4 0.9 -56%
Total $10.8 $10.0 8% $21.3 $20.4 4%
Film Production(3)
Owned content $1.7 $1.4 21% $3.4 $2.8 21%
Repped content 0.3 0.5 -40% 0.7 1.0 -30%
Other 0.1 0.1 0% 0.2 0.3 -33%
Total $2.2 $2.0 10% $4.2 $4.1 2%
Direct-to-Consumer
Net membership $0.3 $0.3 0% $0.7 $0.7 0%
Other 0.1 0.1 0% 0.1 0.2 -50%
Total $0.4 $0.4 0% $0.9 $0.9 0%
(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.
