New Frontier Media Reports Fiscal 2009 Third Quarter Results
New Frontier Media Reports Fiscal 2009 Third Quarter Results
- Transactional TV segment delivered 6% quarterly revenue growth including $0.5 million of international revenue -
- Company reported $11.1 million of non-cash goodwill and asset impairment charges related to MRG Entertainment, Inc. which was the primary cause of a quarterly net loss of $8.9 million, or $0.42 per share -
- Company has generated $6.7 million of cash flows from operations during the nine months ended December 31, 2008 -
BOULDER, Colo., Feb. 9 /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 third quarter and nine-month period ended December 31, 2008.
"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 Michael Weiner, chief executive officer of New Frontier Media, Inc. "During the quarter, we continued to build on our previous successes in the Transactional TV segment and launched our content to more than two million international pay-per-view network homes and over 5.5 million international video-on-demand network homes. International distribution contributed $0.5 million in revenue during the current quarter. A large portion of the international revenue is related to content that was launched in early November 2008 and we expect this revenue to ramp in future quarters. Domestically, we also secured a new contract to distribute video-on-demand content to more than three million network homes, and we hope to launch content on that platform during the fourth quarter of fiscal 2009. We believe the company is well positioned to continue to grow the Transactional TV segment revenue as we have demonstrated through the first nine months of fiscal 2009."
"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 $10.0 million. Although we believe the business climate for this segment is still challenging, we are optimistic about its long-term growth prospects. For example, we recently completed production on the third season of a thirteen-episode series and expect delivery of this series during the next two quarters, and we have also begun production on a new producer-for-hire agreement and have begun distributing our mainstream content to DVD retail businesses. Additionally, we have leveraged our Transactional TV operations to expand the distribution of the Film Production segment's mainstream content and are now distributing that content to more than 10 million VOD homes. With respect to the Direct-to-Consumer segment IPTV project, we are continuing this test initiative and will provide a more detailed status update after the fiscal year results have been assessed."
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: December 31, 2008 Compared to December 31, 2007
-- 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. -- 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 December 31, 2008, net sales were $39.1 million as compared to $43.3 million in the same period last year. The Company reported a net loss for the nine months ended December 31, 2008 of $6.4 million, or $0.28 per share, compared to net income of $6.8 million, or $0.28 per share, in the same prior year period. Cash flow from operations during the nine month period ended December 31, 2008 increased to $6.7 million from $4.6 million in the same prior year period.
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 December 31, 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 (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, less other income; and Adjusted EBITDA is calculated as EBITDA less cash paid for content, plus goodwill and other asset impairment 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 (800) 240-5318. To participate in the web cast please log onto www.noof.com and click on "Investor Relations" and then "Webcasts & Events." A replay of the conference call will be available for seven days beginning after 1 p.m. Eastern Time on February 9, 2009 at (800) 405-2236, access code 11126222#. 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 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 www.noof.com.
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.
First Call Analyst:
FCMN Contact:
Source: New Frontier Media, Inc.
CONTACT: Grant Williams, Chief Financial Officer, +1-303-444-0900 x2185,
gwilliams@noof.com, or Investor Relations, Becky Herrick, Lippert/Heilshorn &
Associates, +1-415-433-3777, bherrick@lhai.com
Web Site: http://www.noof.com/
Profile: International Entertainment
posted by EntertainmentNews @ 4:03 AM
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