- Transactional TV segment delivered 6% quarterly revenue growth including
- Company reported
- Company has generated
'Even in a very challenging economic environment, New Frontier Media grew its core Transactional TV quarterly revenue by 6% and maintains a solid financial foundation,' said
'Our Film Production segment was impacted this quarter by the difficult economic conditions. As a result, we determined a goodwill impairment analysis was necessary and based on that analysis, we recorded an impairment charge of
Mr. Weiner stated, 'We continue to be diligent about our expense management and believe our cash flows will provide us opportunities to generate shareholder value. During the current quarter, we seized such an opportunity and acquired 2.6 million shares of our common stock at a very attractive price.'
Third Fiscal Quarter Financial Highlights:
- Revenue was
$12.6 million as compared to$17.9 million .
- Transactional TV segment revenue grew to $10.5 million, increasing
by approximately 6% due to $0.5 million in incremental revenue from
international distribution and improved VOD performance on several
of the top 10 largest U.S. cable MSOs.
- Film Production segment revenue declined to $1.8 million as
compared to $7.6 million due to an expected $3.6 million decline
from a producer-for-hire deal and thirteen episode series that were
delivered in the prior year quarter but did not recur in the
current quarter. Revenue was also lower due to a general decline
in owned and repped content revenue as a result of unfavorable
economic conditions.
- Direct-to-Consumer segment revenue was $0.4 million for both
periods.
- Cost of sales declined to
$4.1 million from$6.9 million , primarily related to the decline in Film Production segment revenue. Partially offsetting this decline was a$0.3 million increase in costs associated with the Direct-to-Consumer set-top box test initiative. - Operating expenses were
$17.7 million as compared to$6.3 million and included:- an increase in expense from a
$10.0 million Film Production segment goodwill impairment charge; $1.1 million in impairment charges for certain Film Production segment film content and recoupable cost assets; and- an increase in expenses of
$0.3 million related to the set-top box test initiative.
- an increase in expense from a
- The Company reversed uncertain tax position liabilities during the current quarter in connection with the expiration of the statute of limitations. The impact on the statement of operations from the reversal was a decrease in interest expense of
$0.4 million and a decrease in tax provision expense of$0.4 million . - Net loss for the quarter was
$8.9 million , or$0.42 per share, as compared to net income of$3.1 million , or$0.13 per share, in the same prior year quarter.
For the nine 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 nine 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 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
Company Contact:
Grant Williams
Chief Financial Officer
(303) 444-0900 x 2185
gwilliams@noof.com
Investor Relations Contact:
Becky Herrick
Lippert/Heilshorn & Associates
(415) 433-3777
bherrick@lhai.com
Consolidated Operating Results
(in thousands, except per share amounts)
(Unaudited) (Unaudited)
Quarter Ended Nine Months
December 31, Ended December 31,
2008 2007 2008 2007
---- ---- ---- ----
Net sales $12,619 $17,921 $39,055 $43,291
Cost of sales 4,120 6,872 12,478 14,128
----- ----- ------ ------
Gross margin 8,499 11,049 26,577 29,163
Operating expenses excluding
impairment charges 6,572 5,499 20,453 17,859
Goodwill and other asset
impairment charges 11,136 778 11,201 1,141
------ --- ------ -----
Total operating expenses 17,708 6,277 31,654 19,000
------ ----- ------ ------
Operating income (loss) (9,209) 4,772 (5,077) 10,163
Other income 436 175 467 560
--- --- --- ---
Income (loss) before
provision for income taxes (8,773) 4,947 (4,610) 10,723
Provision for income taxes (80) (1,815) (1,769) (3,949)
--- ------ ------ ------
Net income (loss) $(8,853) $3,132 $(6,379) $6,774
======= ====== ======= ======
Basic income (loss) per share $(0.42) $0.13 $(0.28) $0.28
====== ===== ====== =====
Diluted income (loss) per
share $(0.42) $0.13 $(0.28) $0.28
====== ===== ====== =====
Dividends declared per
common share $- $0.13 $- $0.38
== ===== == =====
Average outstanding shares
of common stock 21,314 23,805 22,732 24,088
====== ====== ====== ======
Common stock and common
stock equivalents 21,314 23,878 22,732 24,241
====== ====== ====== ======
EBITDA and Adjusted EBITDA
(Unaudited) (Unaudited)
Quarter Ended Nine Months
December 31, Ended December 31,
------------- -----------------
2008 2007 2008 2007
---- ---- ---- ----
Net Income (Loss) $(8,853) $3,132 $(6,379) $6,774
Adjustments:
Other income (436) (175) (467) (560)
Provision for income taxes 80 1,815 1,769 3,949
Depreciation and
amortization 2,003 2,908 6,578 6,519
----- ----- ----- -----
EBITDA (7,206) 7,680 1,501 16,682
Cash paid for content(1) (1,983) (1,967) (5,654) (6,507)
Goodwill and other asset
impairment charges 11,136 778 11,201 1,141
------ --- ------ -----
Adjusted EBITDA $1,947 $6,491 $7,048 $11,316
====== ====== ====== =======
(1) Amount includes total cash paid for prepaid distribution
rights and capitalized film costs.
Consolidated Balance Sheets
(in thousands)
December 31, March 31,
2008 2008
------------ ----------
Assets (Unaudited)
Current assets:
Cash and cash
equivalents $14,092 $18,325
Restricted cash 18 38
Marketable securities 1,277 930
Accounts receivable,
net 10,092 13,873
Taxes receivable 1,113 -
Deferred tax asset 456 620
Prepaid and other
assets 1,224 1,899
----- -----
Total current assets 28,272 35,685
------ ------
Equipment and
furniture, net 5,819 4,861
Prepaid distribution
rights, net 11,220 10,381
Recoupable costs and
producer advances, net 4,738 2,448
Film costs, net 6,893 7,626
Goodwill 8,599 18,608
Other identifiable
intangible assets, net 2,805 3,033
Other assets 1,037 1,019
----- -----
Total assets $69,383 $83,661
======= =======
Liabilities and
shareholders' equity
Current liabilities:
Accounts payable $2,139 $2,937
Dividend payable - 2,982
Taxes payable - 760
Producers payable 1,005 1,012
Deferred revenue 922 984
Accrued compensation 1,410 1,817
Deferred producer
liabilities 1,979 2,862
Short-term debt 4,000 -
Accrued other
liabilities 3,269 2,257
----- -----
Total current
liabilities 14,724 15,611
------ ------
Deferred tax liabilities 603 795
Taxes payable 240 216
Other long-term
liabilities 748 1,002
--- -----
Total liabilities 16,315 17,624
------ ------
Commitments and contingencies
Shareholders' equity:
Common stock 2 2
Additional paid-in
capital 55,349 61,854
Retained earnings
(accumulated deficit) (2,188) 4,191
Accumulated other
comprehensive loss (95) (10)
--- ---
Total shareholders'
equity 53,068 66,037
------ ------
Total liabilities and
shareholders' equity $69,383 $83,661
======= =======
Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Nine Months
Ended December 31,
------------------
2008 2007
---- ----
Cash flows from operating activities:
Net income (loss) $(6,379) $6,774
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 6,578 6,519
Tax benefit from option/warrant exercises - 211
Share-based compensation 792 713
Deferred tax asset and liability, net (28) (893)
Charge for goodwill impairment 10,009 -
Charge for film cost, recoupable cost and fixed
asset impairments 1,192 1,141
Reversal of uncertain tax positions (1,598) -
Reversal of interest expense for uncertain
tax position (429) -
Changes in operating assets and liabilities
Accounts receivable 3,781 (3,514)
Accounts payable (463) (256)
Prepaid distribution
rights (3,548) (3,493)
Capitalized film costs (2,106) (3,014)
Deferred revenue (62) 6
Producers payable (7) (63)
Taxes receivable and
payable, net 806 1,738
Accrued compensation (407) (1,993)
Other assets and
liabilities, net (1,438) 743
----- -----
Net cash provided by operating
activities 6,693 4,619
----- -----
Cash flows from investing activities:
Purchase of investments available-for-sale (2,011) (2,736)
Redemption of investments available-for-sale 1,664 8,844
Purchase of equipment and furniture (2,427) (1,527)
Purchase of intangible assets (764) -
Payment of related party note arising from
business acquisition (21) (615)
------ -----
Net cash (used in) provided by investing
activities (3,559) 3,966
------ -----
Cash flows from financing activities:
Proceeds from exercise of stock options/warrants - 512
Purchase of common stock (8,355) (3,844)
Payment of dividend (2,982) (6,042)
Proceeds from short-term debt 4,000 -
Excess tax shortfall from option/warrant exercise - (136)
------ ------
Net cash used in financing activities (7,337) (9,510)
------ ------
Net decrease in cash and cash equivalents (4,203) (925)
Effect of exchange rate changes on cash and cash
equivalents (30) -
Cash and cash equivalents, beginning of period 18,325 17,345
------- -------
Cash and cash equivalents, end of period $14,092 $16,420
======= =======
Segment Summary Data (1)
(In millions)
(Unaudited) (Unaudited)
Quarter Nine Months
Ended Ended
December 31, December 31,
------------- -------------
2008 2007 % change 2008 2007 % change
---- ---- -------- ---- ---- --------
Net sales
Transactional TV $10.5 $9.9 6% $31.8 $30.3 5%
Film Production 1.8 7.6 -76% 6.0 11.7 -49%
Direct-to-
Consumer 0.4 0.4 0% 1.2 1.4 -14%
--- --- --- ---
Total net sales 12.6 17.9 -30% 39.1 43.3 -10%
---- ---- ---- ----
Cost of sales
Transactional
TV(2) 2.9 2.7 7% 8.5 8.3 2%
Film Production 0.6 4.0 -85% 2.5 5.3 -53%
Direct-to-
Consumer(2) 0.6 0.2 # 1.5 0.6 #
--- --- --- ---
Total cost of
sales 4.1 6.9 -41% 12.5 14.1 -11%
--- --- ---- ----
Operating expenses
Transactional TV 2.3 2.0 15% 7.2 6.6 9%
Film
Production(3) 12.3 1.4 # 14.7 3.9 #
Direct-to-
Consumer 0.5 0.2 # 1.6 0.7 #
Corporate
Administration 2.5 2.6 -4% 8.1 7.8 4%
--- --- --- ---
Total operating
expenses 17.7 6.3 # 31.7 19.0 67%
---- --- ---- ----
Operating income (loss)
Transactional TV 5.2 5.1 2% 16.2 15.4 5%
Film Production (11.2) 2.2 # (11.3) 2.5 #
Direct-to-
Consumer (0.7) - # (1.9) 0.1 #
Corporate
Administration (2.5) (2.6) 4% (8.1) (7.8) -4%
---- ---- ---- ----
Total operating
income (loss) $(9.2) $4.8 # $(5.1) $10.2 #
===== ==== ===== =====
(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 quarter and nine month period ended December 31, 2008 operating
expenses include a $10.0 million goodwill impairment charge and a
$1.1 million film cost impairment charge. The quarter and nine month
period ended December 31, 2007 operating expenses include a
$0.7 million film cost impairment charge and a $0.5 million
reversal of earn-out expense.
# Represents an increase or decrease in excess of 100%.
Supplemental Revenue Data (1)
(In millions)
(Unaudited) (Unaudited)
Quarter Nine Months
Ended Ended
December December
31, 31,
---------- ----------
2008 2007 % change 2008 2007 % change
---- ---- -------- ---- ---- --------
Transactional TV(2)
VOD $5.2 $4.4 18% $16.1 $13.7 18%
PPV 5.1 5.3 -4% 15.1 15.4 -2%
C-Band and other 0.2 0.2 0% 0.6 1.1 -45%
--- --- --- ---
Total $10.5 $9.9 6% $31.8 $30.3 5%
===== ==== ===== =====
Film Production(3)
Owned content $1.2 $4.2 -71% $4.6 $7.0 -34%
Repped content 0.4 0.7 -43% 1.0 1.8 -44%
Other 0.2 2.6 -92% 0.4 2.9 -86%
--- --- --- ---
Total $1.8 $7.6 -76% $6.0 $11.7 -49%
==== ==== ==== =====
Direct-to-Consumer
Net membership $0.3 $0.3 0% $1.0 $1.0 0%
Other 0.1 0.1 0% 0.2 0.3 -33%
--- --- --- ---
Total $0.4 $0.4 0% $1.2 $1.4 -14%
==== ==== ==== ====
(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.
