New Frontier Media Reports Fiscal 2009 Second Quarter Results
New Frontier Media Reports Fiscal 2009 Second Quarter Results
- 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 -
BOULDER, Colo., Nov. 5 /PRNewswire-FirstCall/ -- New Frontier Media, Inc. (NASDAQ:NOOF) , a leading producer and distributor of branded television networks and on-demand programming, reported its results for the fiscal 2009 second quarter and six-month period ended September 30, 2008.
"Our strong balance sheet with cash and investments of $15 million and no debt continues to provide us with a solid foundation from which to execute growth initiatives for existing and new markets," said Michael Weiner, chief executive officer of New Frontier Media. "New agreements in the Transactional TV segment increased our video-on-demand (VOD) content distribution by over one million network homes. We also added almost two million pay-per-view (PPV) network homes as we deepened an existing relationship with one of the largest multiple system operators (MSOs) in the country. Internationally, we are building our Transactional TV presence in regions such as Latin America, Canada and Europe, as demonstrated by our execution of recent agreements that bring our international distribution to 8 million network homes."
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: September 30, 2008 Compared to September 30, 2007
-- 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 September 30, 2008, net sales grew to $26.4 million from $25.4 million in the same period last year. Net income was $2.5 million or $0.11 per diluted share, compared to $3.6 million or $0.15 per diluted share in the same prior year period. Cash flow from operations increased to $6.0 million from $0.9 million primarily due to a) the producer-for-hire cash disbursements, b) increased cash collections within the Transactional TV and Film Production segments, c) a decline in fiscal year 2008 bonuses paid during the first quarter of fiscal year 2009, and d) a decline in the use of cash for the Film Production segment content creation.
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 September 30, 2008 and 2007. 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, is presented in a reconciliation table that follows our presentation of Consolidated Operating Results below. EBITDA is calculated as net income plus depreciation, amortization, and income taxes, less other income; and Adjusted EBITDA is calculated as EBITDA less cash paid for content.
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 (800) 240-5318. To participate in the web cast please log onto http://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 November 5, 2008 at (800) 405-2236, access code 11121990#. The replay will also be archived for twelve months on the corporate web site at http://www.noof.com/. This press release can be found on the company's corporate web site, http://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 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 the United States. These services reach over 179 million network homes. Additionally, the Company is a leading provider of content to video-on-demand platforms on cable and satellite. New Frontier Media is the exclusive distributor of Penthouse branded adult television in the U.S. 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 more than 130 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 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 Grant Williams, Chief Financial Officer, at (303) 444-0900, extension 2185, and please visit our web site at http://www.noof.com/.
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.
First Call Analyst:
FCMN Contact:
Source: New Frontier Media, Inc.
CONTACT: Grant Williams, Chief Financial Officer of New Frontier Media,
Inc., +1-303-444-0900, ext. 2185, gwilliams@noof.com; or Investors, Becky
Herrick of Lippert|Heilshorn & Associates, +1-415-433-3777, bherrick@lhai.com,
for New Frontier Media, Inc.
Web site: http://www.noof.com/
Profile: International Entertainment
posted by EntertainmentNews @ 3:57 AM
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